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Falling Up Friday – Closing the Week GREEN!

SPY 5 MINIn case you were on vacation, here’s what you missed:

The Dow is down 2.6% for the week, the S&P is down 2.3% and the Nasdaq is down 1.2%.  Very likely, by the end of the day, these losses will be erased and we should have a nice, green close.  For some reason (can’t imagine why) the VIX went up to 45, where we shorted the Hell out of it.  One trade idea we had was on Wednesday Morning, where we sold the Aug $45 calls for $1.45 against the Sept $45 calls at $1.40.  Even yesterday that one was looking good with the Augs down to .85 and the Sept $45s still $1.30 so the net .05 spread turned into net .45, a nice 800% gain in two days.

On Wednesday afternoon, Nicha had a great idea to short VXX as well, so we did the Sept $36/32 bear put spread at $2.50, selling the Aug $38 calls for $1.55 for net $1 on the $4 spread.  Those Aug $38 calls have already dropped to $1 and the bear put spread is $2.60 so that’s net $1.60 – up 60% in two days on that one.  This is why we ALWAYS sell into the initial excitement.  On the whole, we have been TRYING to follow my philosophy, which I reminded everyone of of in last Friday’s Member Chat, of "Don’t Just Do Something, Stand There!" – which is still some of the best crisis management advice I can give people.  

What does our Big Chart look like since last Friday?

Wow, those were four very silly days, weren’t they?  As I noted above, we’re down about 2.5% for the week but the week isn’t over and we could still turn this puppy around and do you know what that would be?  It would be a VERY bullish bottom candle on a weekly chart!    In fact, if we can finish August back at that +5% line (a 10% gain into the month’s end), THAT would form a VERY bullish candle on a MONTHLY chart.  

So Greece blah, blah and Italy, blah, blah and Merkel, Sarkozy, B-B-B-Bennie and the Fed, Inflation, Deflation, Unemployment, Debt and Taxes – whatever…  Just wake us up when it’s over and we’ll consider pulling our cash off the sidelines.  Meanwhile, as I lectured Members in this Morning’s Chat, CASHY AND CAUTIOUS remains a prudent strategy and we can use some of that cash to take a nice vacation and ignore this nonsense until they either announce QE3 and sent the markets on an upward path or fail to do so and send us straight to Hell.  

SPY DAILY You don’t NEED to be "in the market" when the market is acting stupid.   Let’s say we were 80% in cash with a few favorite long-term positions held on to through the downturn.  If it’s a $100K portfolio and we had $80K in cash and we allocated just net $200 (0.25%) to the VIX spread (40 contracts) with a stop at a $200 loss (risking 1/4 of 1%), the trade is already up $1,600, which is 1.6% of the ENTIRE portfolio in just 2 days.  THAT is what you can do with cash – you take the opportunities that present themselves, which is much easier to do when you can focus on one trade you intend to get in and out of rather than sweating over 20 positions as the market jumps up and down 5% a day, right?  

As David Fry notes: "In the end this volatility and manic behavior is a massive turn-off to Main Street. The powers that be (TPTB) are pulling out all the stops to thwart action they don’t like. Margin requirements were raised on gold because rising gold prices are a Bronx Cheer to the Fed, Treasury and Administration. The Swiss National Bank is discussing a “euro peg” in order to stop the franc’s rally. Not only are the Swiss suffering with export difficulties but Swiss banks have been a large creditor to emerging European countries who must pay back loans in francs. And, just released news, France, Italy, Spain and Belgium have announced a 15 day short sale restriction for banks within these countries. This defies a ruling from the EU chief regulator and is being done unilaterally by each country. Will this solve things? It will for 15 days and that’s all you can say. Meanwhile, Sarkozy is having another date with Merkel to make sure they’re on the same page with regard to bailouts. She’s become very unpopular in Germany given the Germans will carry the lion’s share of the bailouts. And so it goes." 

As I mentioned on Wednesday – THAT’S THE PLAN – "They" want Main Street out of the markets ahead of QE3.  You listen to the MSM and the analysts on CNBC and you do not get the impression that we are in month 23 of an EXPANSION, nor do you get the feeling that this recession, although bad, is NOTHING like the Great Depression – yet there are many, many stocks (CSCO, WFR, IMAX..) trading as if we’re in the middle of Great Depression Part II.  I’ll have more to say about this over the weekend but, for today, we’re just going to sit back and enjoy the rally – watching the Dollar to stay below that 74.50 line and give the markets a boost (as I predicted in Member Chat this morning).  

Meanwhile, here’s a very cool chart on the Geography of Job Losses Over Time from Barry Rithotz’s site and I would encourage my Conservative friends to play with this and contemplate the utter catastrophe that faced our new President in 2009 and I would encourage the Bears out there to contemplate how much LESS BAD things are now.  No, we did not immediately add back 10M lost jobs – that would require economic stimulus that is NOT in the form of tax cuts.   Even bailouts only "save" jobs – they don’t create them.  

 

Click on the map to see the animation.

 

No wonder people in Texas think everything is fine!   They are fine in New York City too but we are a bunch of bleeding-heart Liberals who care what goes on in the rest of the country (see the Katrina damage in late 2005 on the chart!) – or maybe it’s just because all our Mothers are in Florida and we have friends in California (more Liberals!) and Chicago (more Traders!), so we’re a little more in touch with what’s going on in the country than people who think an island getaway is taken at South Padre or Galveston.  

Have a great weekend,

- Phil

 


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  1. More from Dylan Ratigan I’m Mad As Hell. How About You?


  2. Oil Lines
    R3 – 91.89
    R2 – 88.93
    R1 – 86.95
    PP – 84
    S1 – 82
    S2 – 79.05
    S3 – 77.07
    Yesterday’s high and low – 85.97 / 81.03
    Breakout lines – 93.96 / 68.09 


  3. Keep in mind that the real temptation of this market is the high VIX. There is mega premium to be sold. For instance, and I may not be able to resist, you could sell the SPX Q3 strangle – 950puts and 1270 calls for a bit over $10 a side (as of thursday close). After the scare I got yesterday about the SET, I think Im going to wind down my monthly strangles in favor of a mix of weeklies and quarterlies, since they expire immediately at the end of the trading day.


  4. Phil,
    I went into the Aug 11 $50 QQQ puts at $0.6 yesterday and it ended the day at $0.48. Sounds like we are expecting a bullish day today but maybe a crash next week. This being the case should I just sit tight and wait till next week to unload or roll into Sep?


  5. Phil,
     
    thanks for your advice; you helped to clarify a couple of things that I was very unsure of.  Mainly, on the short term hedge vs the long term puts.  I learned a lot over this week, and the second round of WFR puts were one of the things I learned. Another one that I failed to mention was that if you are going to play a range, you have to trust the range.
     
    I might have some questions over the weekend, but, for now, I am not sure about one thing.  You said that one would be crazy not to have a disaster hedge over the weekend.  I have the SEPT TZA spread, so it has 5 weeks till expiration.  Would you hold on to that over the weekend or dump it for as much as I can get today and just hang onto my short puts?
     
    I understand that I need a long term hedge for those, and I will look at that, but, I am not sure what a disaster hedge over the weekend (or short term) looks like for me.  Thanks in advance, and sorry to be such a nub :)
     
    scot.


  6. No PP for today, as TOS is having a few problems….I hope it is not a sign to come.


  7. PP / Pharm – Here are the lines I have (R3/R2/R1/PP/S1/S2/S3)
    SPY – 128.53 / 123.72 / 120.45 / PP – 115.64 / 112.37 / 107.56 / 104.29
    IWM – 76.78 / 73.61 / 71.29 / PP – 68.12 / 65.8 / 62.63 / 60.31
    DIA – 121.09 / 116.96 / 114 / PP – 109.86 / 106.91 / 102.77 / 99.81
    They are usually close to your lines 


  8. Phil/UYG
    I have UYG Aug 48 calls at $3.95 now $1.28.. I was considering a roll to Sept $51, selling Sept $53 calls. Does that make sense or is there something better? Thanks.


  9. Phil – it wasn’t me who wanted to short the VXX on Wednesday.


  10. Retails sales ok #


  11. Phil
     
    Any one-day wonder calls to buy this am?


  12. Dont be sorry Scot, questions are helpful for many of us who don’t do this professionally.
    Phil, i would like a comment re when to exit and adjust. Yesterday morning i bought the SDS Sept 26/32 BCS for 1.46. At the end of the day it was valued at about .83c. this would mean if we continue climbing it is time to move along to something else, right? Do i close and enter another spread as a hedge or pay to roll the long lower and out? When you advise us to leave a trade when it’s 20% against us, does the 20% apply to the spread alone? One shouldn’t include  the sold put in that calculation, should they?
    thanks


  13. strether
    AAPL Aug 385 for 3.00


  14. Phil:
    Any interest taking a stab at XRT. retail sales surprisingly strong in this environment (JC Penney had very good results as well so not just the high-end stores like Nordstroms) and with, another QE around the corner may bode very well for XMAS season? Your thoughts.


  15. strether
    soory AAPL change already to 4.00


  16. Phil:
    Great point today about matching your hedges to the plays you hold. So there is no "one size fits all" hedge. Look forward to your response to Morx.(above). Thanks.


  17. Pharmboy: I had to update TOS today. Try this.


  18. Phil:
    Ouch, the only thing that hurts more than the Costanzian hit I took this morning for being heavy short (congrats to those doing the opposite) is the last paragraph of your commentary.


  19. FAS Money Position Recap

     
    Long Strangle – Jan 12 12 Puts (3.25 now 2.90) and 2x 18.33 Calls (2.11 average cost now 2.92) 
     
    Weekly – Short August 22 Puts (2.87 now 6.95)
    Monthly – Short August 23 Puts (3.65 now 7.75)   


  20. Fib retracements for the SPX from the top and bottom: Lets Talk Retracements


  21. Art Cashin On The Market’s Incredible Volatility Streak

    Read more: http://www.businessinsider.com/art-cashin-on-the-markets-incredible-volatility-streak-2011-8#ixzz1Up22tuOH


  22. TOS not working for me – updated to 1800.105
    placed order – shows placed but no fill
    canceled – show cancel is working but no cancel
    time to call !


  23. Good morning! 

    Things are looking good.  Up about 1% on the futures coming into the open but the Dollar is testing 75.60 from below and we’re in an iffy zone between 75.60 and 75.80 and over 75.80 is absolutely bearish.  The Pound was rejected at $1.63 and the Euro was rejected at $1.63 and the Yen popped back off 76.50 and we’re going to need all those to break if the Dollar is going to go down and give us an easy 2.5% today.  

    We COULD go up anyway, but it’s a lot harder.  Oil is at $87 and $87.50 should be a good top to short so we’ll be watching for that as a nice, weekend bear hedge.  What’s going on at the NYMEX is that, despite the sharp sell-off this month ($97.50 to $82.50), there are STILL 247M open barrels for Sept delivery at the NYMEX because they too are holding on in hopes of QE3.  If we don’t get QE3 by next Friday, the pressure is going to get intense to sell and there are currently 600M barrels in the front 3 months and a ridiculous 800M in the front 4 months due to the log-jam we’ve been watching in December for quite a while:

    Click for
    Chart
    Current Session Prior Day Opt’s
    Open High Low Last Time Set Chg Vol Set Op Int
    Sep’11
    -
    -
    -
    79.30 20:10
    Aug 11
    85.72
    2.83 449291 82.89 247528 Call Put
    Oct’11
    -
    -
    -
    87.30 20:10
    Aug 11
    86.04
    2.79 144352 83.25 214494 Call Put
    Nov’11
    -
    -
    -
    78.01 20:10
    Aug 11
    86.43
    2.72 86361 83.71 133336 Call Put
    Dec’11
    -
    -
    -
    101.31 20:10
    Aug 11
    86.82
    2.68 94074 84.14 205277 Call Put
    Jan’12
    -
    -
    -
    95.45 20:07
    Aug 11
    87.22
    2.64 27354 84.58 62942 Call 

    The Jan count (62,942 1,000-barrel contracts) is "normal" for a 4th month.  So December has about 140M extra barrels already and, if they were purchased since last Thanksgiving, there’s almost no chance they were bought below $82.50 so this can get very ugly for NYMEX traders if something doesn’t take oil back up very soon.  

    The SCO Aug $56/58 bull call spread is .90 and you can sell the VLO Sept $19 puts for .85 so a risk of .05 to make $2 on oil turning back down and the VLO puts can be rolled but they already held $18 as oil crashed to $75 and now, back at $21 – I bet you wish you bought them then!  

    That’s my bearish idea, our bullish ideas should all be paying off very well today and back to CASHY and CAUTIOUS over the weekend – we’ll see what looks like a good hedge as the day moves on. 

    Retail sales were great, up 0.5% ex-auto so WHAT RECESSION?   

     Friday’s economic calendar:
    8:30 Retail Sales
    9:55 Reuters/UofM Consumer Sentiment
    10:00 Business Inventories
    10:00 Fed’s Dudley (NY): ‘Job Creation in the Region’ 

    At the open: Dow +0.81% to 11233. S&P +0.53% to 1179. Nasdaq +0.54% to 2506.
    Treasurys: 30-year +0.67%. 10-yr +0.23%. 5-yr +0.07%.
    Commodities: Crude +1.34% to $86.87. Gold -0.42% to $1744.20.
    Currencies: Euro +0.17% vs. dollar. Yen +0.26%. Pound +0.33%.

    Market preview: The quiet before the storm, or could markets actually be settling in for a quiet day? S&P futures (+0.7%) extend gains following a solid rise in retail sales and the new ban on short selling in several European markets. Nvidia surges after reporting a strong Q2 and a positive outlook. Still ahead: consumer confidence, business inventories, Dudley speaks. 

    FOMC member Narayana Kocherlakota makes the rather unusual move to explain publicly his dissenting vote at this week’s Fed meeting. He says monetary policy was already "well-calibrated" for economic conditions, pointing out PCE inflation has risen "notably" and unemployment dropped since November. (Watch video)

    Surprise!  AAII’s update of investor sentiment shows that individual investors are growing a bit more positive into the stock decline. But their actions speak differently, as mutual funds and ETFs of almost every category suffered big outflows in the week ended Aug. 10, Lipper says. Stock funds saw withdrawals of $14.4B, the biggest total since May 2010. 

    July Retail Sales: +0.5% vs. +0.6% expected, +0.3% (revised) prior. Ex-auto +0.5% vs. 0% expected, 0% prior.

    June eurozone industrial production -0.7% M/M, the largest fall in six months, +2.9% Y/Y. Germany -0.8% M/M, France -1.7%, Italy -0.6%, Spain -0.8%.

    FT Alphaville puts this week’s global stock market gyrations in a different context by plotting the standard deviation on a Richter scale-like graph. While 2008 recorded a major jolt of 9.2, this week’s market action registers a less-serious tremor of around 5. 

    European shares are in full melt-up mode, the Stoxx 50 (FEZ) at its high of the day, +4.2%. Italy (EWI) is the biggest gainer,+5.2%. The short-selling ban looks to have won the day, for the moment. European indices are about 10% higher since the idea was floated about 24 hours ago. 

    France’s big miss on GDP, will give renewed strength to calls for an independent body to make forecasts for growth that can be used for government budgeting purposes. Stop the presses, but the OECD says government estimates are "systematically upwardly biased."

    Greece’s Q2 GDP shrinks 6.9% Y/Y vs. an 8.1% slide in Q1, actually slightly better than forecast. It’s the 5th straight quarter of contraction, and the country continues in recession for the 3rd consecutive year.

    Censorship is the answer!  David Cameron considers temporarily blocking social networking sites and messaging services used to incite and organize riots, but tech experts say the plan is doomed. They point out it’s unrealistic to expect Twitter, Facebook and Research in Motion (RIMM) to coordinate and stop the individual instigators.

    The PBOC reports Chinese loan growth falling to a lower than expected $77B in July, the slowest pace this year. The bank also says M2 money supply growth fell to 14.7% from 15.9% in June. The news gives more fuel to those who say the monetary policy tightening cycle is at an end.

    In its quarterly report, the PBOC says it will aim to keep the yuan at a "reasonable and balanced level," but reiterates its use of "multiple policy tools," including interest rates, exchange rates and bank reserve requirements, to check inflation.

    China attempts to give local shares a lift in its own subtle fashion, using little more than a headline – "The stock market fall is not reasonable" – in the main state-run financial newspaper. While markets are more mature than years ago, it’s a reminder that the government hand never strays too far. - And how is that different from our Government? 

    In spite of massive increases in central bank balance sheets, inflation fears in developed countries may be a red herring. Citi’s Richard Cookson thinks many countries are in the same position Japan’s been in for the last two decades, with private sector deleveraging keeping a lid on inflation in the face of high deficit spending. 

    Fund manager William Greiner (SCGLXthinks stocks will move higher as investors give more emphasis to corporate income statements than sovereign debt fears. Greiner is positive on Apple (AAPL) due to rapidly growing corporate sales; on Cracker Barrel (CRBL) due to appealing demographics; and on Honda (HMC) due to strong Chinese exposure.

    A Chinese government agency estimates there were 485M Internet users in the country at the end of June, up 6.1% from the beginning of 2011. While impressive, this figure only translates into a penetration rate of 36.2%, suggesting there are still a lot of viewers for the likes of BIDUSINASOHUNTES, and YOKU to pick up.

    Pfizer (PFE) discloses it has provided info to authorities about potentially improper payments the firm made abroad. According to a SEC filing, the DOJ is conducting investigations into the promotional practices and pricing of Protonix. The crackdown on anti-foreign bribery laws has also swept up Eli Lilly (LLY) and Johnson & Johnson (JNJ) this year.

    On for the Buy List:  Home Depot (HD), whose shares have fallen 18% in August, believes it can perform well even if the housing market remains weak. The company’s strategy for boosting growth includes overhauling stores to increase sales per square foot; upgrading IT systems; and investing in online and mobile initiatives. Home Depot reports earnings on Tuesday. 

    China cracks down on illegal Apple (AAPL) stores in the nation, as local government officials in Kunming move to stop 22 stores from displaying the firm’s well-known logo after a subsidiary accuses them of trademark violations.


  24. Phil,
    I currently have the TZA Sept BCS 60 / 70 in at $1.95 as a disaster hedge.  Would you roll down at this point or keep it as is for insurance. 


  25. http://www.businessinsider.com/sec-probing-insider-trading-at-s-and-p-2011-8
    this is th ebest news i ve seen today..they can’t have enough pain as far as i ma concerned..one of th earchitects of our current and past misery..


  26. FYI – Seasonality is bullish the next Monday as according to Stock Trader’s Almanac, Monday before August expiration, Dow up 11 of last 15.


  27. Shake-out I:
    Following up on Phils article. If my indicator is right the shake out should be over (+/- some days) and we are heading for higher prices:
    http://www.pentaxon.com/psw/viyindicator.html
    Ain’t it strange that this market movement could be foreseen more than a month ago??
    Shake-out II:
    CME raised margins for several FX and interest rate and metal (!) contracts. (worked very well on silver when they did it last time)


  28. Phil / DX — did you switch to a different $ symbol? I’m assuming you meant 74.* on /DX and not 75.*


  29. Does anyone have a good site for real time dollar?
     
    I’m using market watch for DXY but its screwy and not useful for Phils updates.


  30. /dx in TOS exec.



  31. @Pharmboy
    Earlier you mentioned a shadow on SPY.  Could you refer me to your original post as I didn’t quite understand it from the the followups.
    thx.


  32. Selling premium/Barf – That’s just what we do love to do in a market dive, especially the short puts as you get a double whammy on the way back up as the stock goes higher AND the VIX goes lower.  Good idea keeping the time-frames short.  

    QQQ/Cjji – One thing I can absolutely guarantee you about the QQQ $50 puts is that the .35 in PURE PREMIUM THAT IS $3.36 out of the money (6.3%) will be COMPLETELY GONE on Friday, whether the Nasdaq falls 6.3% or not.  If we don’t get a nice pullback today (or even if we do) I’d get out ahead of the weekend and look for something longer-term.  

    TERRIBLE Consumer Sentiment number – 54 vs. 63 expected.  That’s going to hurt at least a bit.  If we don’t turn red on this bad news – that’s bullish though.  


  33. TZA/Scott – Well the decision process there is that you will lose .10-.20 on the spread when you cash it and then another .10-.20 setting up a new spread so it’s really not worth changing vs. just waiting until Monday to see where we go.  The nice thing about buying a bullish spread in a down market is you are selling more premium than you are buying so, when the market goes up, your caller suffers more than you do and that stops the spread from getting away from you on a bounce (usually).  

    TOS not confirming cancelled order – VERY BAD! 

    Inventories not good either, RUT Futures (/TF) back below our line at 690 so same short play as earlier.  Dow has not crossed the 11,100 line (now 11,131) so not too bearish yet  but, as expected, the Dow does not get affected by US Consumer Sentiment and Inventories as the RUT does.  See – the markets do make a little bit of sense!  


  34. Some perspective on yesterday’s bond auction that was supposedly bad:
    http://ftalphaville.ft.com/blog/2011/08/12/651931/was-the-30-year-ust-auction-really-that-bad/
    Apparently, not so much… 


  35. Gee, that TOS update this morning is really working out well… 


  36. Phil—still think the mkt goes higher even w the bad #s?


  37. TOS is failing me for the first time since I moved there, scary (and costly) to day trade with a broken platform.  How often do they break?


  38. Phil:
    I have a SSO trade we had initiated tuesday of last week (it seems like years ago)  when SSO was around 48.   SSO 48-50 bull call spread at 1.25 and sold 47 puts at 1.28, for a net credit of $0.03. Of course, now with SSO near 41.1 all of them are lossy. How do I roll these as we approach expiration week?


  39. Ha ha, and TOS chat is overloaded "All operators are currently assisting others. Thanks for your patience."


  40.  TOS failing here too.  


  41.  TOS orders are not filling for me and customer support isn’t talking back to me…..


  42. Its TOS switching to new system….and it BLOWS.  Does not portend well for next week…


  43. China is really kicking a potentially big can down the road…
    http://ftalphaville.ft.com/blog/2011/08/11/650431/there-are-many-ways-to-count-chinese-debt/
    It’s not going to end well…. 


  44.  TOS – what a nightmare – and this is BEFORE the big conversion


  45. what is tos


  46. TOS /  MrM – TOS has a bad update last year as well and had to revert to the previous version the day after. 


  47.  angelcur – ThinkorSwim brokerage. Recently purchased by TD Ameritrade. 


  48. angelcur
    The stock broker Thinkorswim


  49. Phil, thanks much. if i can get out of the TZA on this down turn, I will take the money and run and look for guidance over the weekend.  I really appreciate your time and patience :) .


  50. oh thank you!


  51.  the TOS platform is really the best, IMO, for what we do here…however, it is very disappointing that TDAmeritrade conversion is causing so many problems already….this could be scary, but I will give them a chance to make it right


  52. Thanks Enni
     
    This market is feels scared today.  The Bots are doing a good job of making it look like the bottom is falling out.,


  53. stjeanluc
    Is it possible to make your links go to a "new tab" rather than changing an existing page? I notice on some links that when I select them they create a new tab (using Firefox browser). This is convenient because I can save the story for later reading without having to re-open the site I am currently on. On the other hand, when I select your links it changes the site I am on (Phil’s site) which means I have to open a new tab and re-open Phil’s site (unconvenient). Just a request and hope I am not being too petty. I can deal regardless.  Thank you for all of your contributions.


  54. Phil in one of my acc I have no short puts nor short calls only the longs as set up originally any plays or wait until Monday?


  55. TOS …..If i was jabobeast i would cuss……How can they work so hard to screw up a great thing.


  56. dclark
     
    making it a new page under your control.  goto tools>internet options>general (tab) >tab (settings)


  57. Links / Dclark – This seems to be the default behavior when members post links. I would need to play with the attributes next time, but maybe Phil can tell us how he sets his links! Or the default behavior could be changed on the server. 


  58. angelcur – TOS = Thinkorswim
    Though a "tosser" is something quite different (I hope we don’t consider TOS users tossers!).  Brits would know what that means.  ;-)


  59.  Holding down the Control key as you click on a link will make it open the link in a new tab regardless of how the link has been setup. Just fyi.


  60. Phil,
    A possibility for the watch list. WM


  61. Sank,
     
    That’s interesting…..what about if you want to open in a new window?


  62. Now I’m too scared to trade today’s opex plays on TOS, what if they go down in the last hour and I’m stuck in a bunch of positions?  Looks like a day off  from trading.


  63. @HOSS18  and others
     
    re:  TOS
    Not having any problem with it on two fills, one cancel, and 2 working orders.
    What is the problem? 


  64. williex/stjeanluc
    williex: On MAC. Not the same options under tools as you suggested.
    Thank you stjeanluc. Don’t sweat it if it’s too difficult.


  65. sank1:
    Thanks that works! Sheesh! Its like I am a first time user!


  66. Dclark – Also, I use Chrome (on a PC but runs on MAC as well) and if you right click on the link, you have the option to open it in a new tab! 


  67.  mr mocha      Good idea to not trade today.  I went long oil off the 86 line earlier and the trade would not show as filled but i also could not cancel it.  It put me in at my price but was sweating bullets…..got lucky as oil ramped up.


  68.  now if only i could come up with trade ideas like holding the Control key as i enter a trade to guarantee that it will be profitable…. :-) i would have actually achieved something.
    exec
    opening up a tab or a window is a setting at your browser. if you have it setup to open new tabs, simplest way to do what you ask is to let it open the new tab and then you can just drag the tab out of its place and that will have it move to a new window. not sure that i’ve explained that well.


  69. Sank,
     
    Got it.


  70. Phil, Your take on the TBT Aug Calls and TLT Sept 104 Puts?
    If markets go up then money should flow out from Treasuries also into markets. One thing to observe is the plight to safety on any concern in Europe which will pull TBT down. Lot of parameters affect TBT I guess.
    thanks.


  71. 355/350 Bull Put Spread on AAPL is paying pretty well for low-risk investment. Risk $550 to make $50.


  72. Interesting: Dollar up stocks up? Delayed reaction perhaps?


  73. UYG/Brook – HALF!  Don’t let things go below half!  Also, don’t buy premium etc. but you HAVE to be bored hearing that by now, right?  I’d sell 1/2 the $46 calls for $1.90 and spend that .95 per call to roll to the FAS Jan $20s at $2.10.  If you don’t have the margin to hold UYG naked short calls, you can always cover with Jan $60s ($2.70) until the Augs expire (just 1/2 of course).  

    VXX/Nicha – Sorry, for some reason I was answering you (or so I thought) at the time.  

    Day trades/Streth – Never good to try to force them, when something looks obvious, you can trust me to say something.  Note my lack of bearish calls into the dip.  News was not bad enough to do anything more than a quickie trade on the futures.  Dow never even made it down.  Since Dollar at 74.71 (middle of neutral zone) – not much to do but watch how things play out.  

    Europe up about 2.5% after pulling back from 3%, we’ll keep an eye on them too!  At the moment, markets are doing well DESPITE Dollar strength – same as yesterday and that worked out well in the end.  

    SDS/Morx – If you buy the bull call spreads WITHOUT a bullish offset, you are taking a highly risky directional trade.  And yes, the sold put should be included in calculating the loss as that’s part of the whole thing but maybe not the way you think.  If you take the SDS Sept $26/32 bull call spread at $1.46 and offset it with VLO Sept $18 puts at $1, that’s net .46 but you don’t get out if it goes to net .37.  You have to set a stop loss you can live with, like -.25 and that’s where you get out.  It’s the cost of the INSURANCE as opposed to a bet you expect to win.   So if the spread drops to .83 and now the VLO puts are .65, your net is still .17 and the trade is not in trouble.  Also, you say the spread is .83 but keep in mind that your $26 calls are still $1.60 – it doesn’t matter what the caller thinks he’s worth if you’re not going to pay him, does it?  Then the calculation becomes different depending on what you intend to do.  If the S&P goes over, for example, 1,200, you may just stop out the $26 calls for about $1.25 and leave the naked $32s to expire (and you just buy a new cover if the S&P breaks down or stop out the $32s).  Or, you may take advantage of the rise in the S&P and the drop in the VIX to roll out to the SDS Jan $30 calls (now $2.40) for .85 and then you have a nice, longer-term hedge and, if the short calls and short puts expire worthless, it’s a pretty cheap one.  Like chess – you’re next move always depends on what the 2 moves after that are likely to be.  You should always know what you will do next if the stock or ETF goes up 20%, down 20% or stays flat in the very least – that will keep you from being "surprised" by things.  

    XRT/DC – SOME retail is strong.  I would not play XRT long with consumer sentiment at 54.  Retail Sales have been mixed, not strong but the ones that are strong have been generally higher end plus gasoline has pushed the broad numbers way up.  If we get QE3, totally different story but I wouldn’t gamble on it.  

    Are you from Texas Dsheara? 

    FAS Money – Must roll those weekly Aug $22 puts, of course, now $7.50 to the Aug $22 puts even.  Doesn’t really matter if we wait or not as the Deltas are about the same.  I still expect us to finish the day up 2.5% but it’s not going to change the fact that we’re very deep in the money.  That means, of course, I have no desire to change the monthly puts yet but we’re looking at getting an even roll to the Sept $22 puts on a move up so no harm in asking for it that way – a sharp move up should drive the price of the Aug puts down faster than the Septembers and allow an even roll but, no hurry as we have all of next week but any time we can get $1 in position for free, it’s a good roll!  

    Gold $1,730!  

    Dollar 74.71

    Fibs/Rain – Thanks!  

    TZA/Button – You need a 20% move in TZA to get in the money and that’s a 7% drop on the RUT.  Do you think the RUT is likely to fall 7% in 35 days AND do you NEED that insurance?  You paid $1.95 for the hedge but the $60 calls are still worth $5.20 and there’s very little net loss so you can wait for the weekend to see what happens but, as I mentioned earlier – if the time-frame of your "hedge" does not match the time-frame of the positions you are protecting – then it’s a BET, not a hedge and should be treated accordingly.  

    S&P/Angel – Why is that?  Are we going to really punish anyone who dares to question or nation’s credit (excuses for punishment aside).  What next – do we allow companies to sue analysts who don’t like their prospects?  Forget that they were, in part, responsible for the housing crisis with all their BS ratings – if this is the result of them trying to make an honest assessment of our nation’s credit DESPITE all the political pressure – we may as well live in Russia or China and only read the State-owned newspapers.  

    DX/Rain – Yes, I meant 74.  

    74.82 now – we’re not going to make any headway like this.  Have to wait out the EU close at 11:30 (still very bullish there, just not their currencies).  


  74. sank1
    If your successful with the "control key trading" you will be the one (like Phil) fielding all the questions such as: When to hit the button?  And why is my control key not working as well as yours?! :)


  75. FAS Money / Phil – We are already in the August Puts in both the weekly and monthly trades. We skipped a week of weeklies in the last roll because of the downward "velocity"…. 


  76. GLD Puts/Phil – i pickup up some sept 142 puts last week.. and gold has been dropping, but the put premium has been getting crushed and these are NOT performing as expected. is this due to the vix dropping?


  77. flips – I don’t have a write up on the shadow bars, but if you look at the 3 min chart of SPY AH, you will notice not one, not 2, but many retraces back to 112.xx.  This has been going on for quite some time and I tend to watch those for direction the next day.   More often than not they are showing the next days movement.  Also, you have to watch the b’f open ones.  I am wondering if it is not the HFT bots telegraphing what they want to do…..


  78. From Barry’s site:
    http://www.ritholtz.com/blog/2011/08/10-myths-that-politicians-want-you-to-believe/
    Of course, we keep believing these scumbags…. 


  79. Phil – agree idiot move;  originally part of a spread and the second leg didn’t fill…thanks.


  80. That was yesterday flips.  The day before it was 117.xx.  Day before that was 112.xx….etc.


  81. CMG is creeping up again and is less than 20 points from an all-time high?  WTF?
    FU CMG!!


  82. FXE is in a descending flag.  It needs to break out, but I am not sure it will.  My target is 1.20, with a stop at 1.30.


  83. Corporations Are People Too! 
     
    http://www.youtube.com/watch?v=RrWWSkKaZ8U
     
     
    ;)


  84. Good morning,

     

    IWM  66.03,  66.65,  67.02,  67.38,  68.10,  68.67,  68.97,  69.70,  70.18,  70.66,  71.38,  72.75,  73.74, and   75.33

    As I said yesterday, short term bottom appears to be in; today should end green !! ( barring news, of course)

    And a different calculation from SHJ:

    I’m in cash, waiting for an entry,  Good hunting !!

     


  85.  Phil what do you think of selling call aug 131 now at .32 on   FXV, etf of Swiss currency? Do you think it’s possible a recover on swiss currency? 


  86. JRW, while we are waiting- Am with Schwab using SSPro, happy with it, but any thoughts re the new Edge program. Looks like you are using pattern recognaition like Edge has.  If you have time to respond, Thanks


  87. FXE / Pharm – What’s your timeline for 1.20 on the euro! Seems pretty ambitious, they would have to debase their currency faster that we do! Descending triangles can go both ways – actually, a breakout upward is the one of the most reliable pattern with only 9% failure to make a 10% gain. Volume generally help deciding the direction as rising volume point up and declining volume points down. The unknown factor in this trade is political of course… I tend to agree with you that the euro is going down, but the race to debase currencies is rather close! 


  88. Romney / 1020 – Apparently, the Supreme Court agrees with him! 


  89. StJ – I am looking for something rapid in the coming months to the 1.30, then a longer retrace to 1.20 (next year or so).  We know what happened when we banned short selling here, and I am expecting something similar there.  I am trying to pay attention to the PIIGS movements in the bond market for establishing a timeline.  We have bad banks that own land/houses, they have bad banks that own countries!  I think our problem pales in comparison.  We have not even talked about the smaller countries that were in the Soviet bloc that borrowed…..granted their taxes are higher and have tech employees….but still.


  90.  i cant gauge how much of europe is just short-covering or something real….our XLF may be under pressure as funds reposition shorts….i dont like the feel of trading but europe was very strong…im just watching xlf very closely again


  91. Loopster / Edge

    I use both, to watch different technicals, but my main screen uses a propriatary program !!


  92. Phil,
    If EDZ is up today and that moves in anticipation of emerging markets, is this a bearish sign for the day?


  93. Should that flag break higher (1.44ish), I will get out and wait for a retrace to my lines.  the 50% retrace is 138.xx.


  94. Jabobeast-TOS… Excuse me TDAmeritrade not taking my orders Via my phone platform and had to wait on hold for 20 minutes during lunch to get a USO put order processed- puts were .09 more expensive by the time they completed my order… FU TDAmeritrade!!!!


  95. Phil/Texas
    I was born in New Jersey and transplanted to Texas. I’ve spent years here trying to explain that Jersey is way prettier than just what you see flying into Newark and that not everyone that lives there is Tony Soporano or one of the Housewives, and neither are they Jersey Shore juice-head Guidos nor are they Jerseylicious.
     
    But the corollary to that is that in Texas we are not all beer-drinking, boot-wearing, pickup-truck-driving, drawl-speaking, knuckle-dragging, bull-riding, gun-toting, bible-clinging, big-hatted conservative redneck morons. Some of us are just beer-drinking Catholic morons with a slightly conservative bias. 
     
    Texas has issues, but all places do. And, yes, the beaches suck, but you only know that if you are from one of the coasts. Plus Florida is only 10 hours drive away (and you can overnight the trip in New Orleans)! And we have very good airports and are no more than 4 hours flight to everywhere.
     
    Whereas I can and do temporarily “ignore this user” for certain people when they are over political or disparaging, doing so for you limits the site’s usefulness really. So I let today’s comments roll off my back because I assume they were due to Governor Good Hair announcing his candidacy.
     
    On the upside, things are bound to improve here as 3 of my last 5 new neighbors were from Chicago. With all those right kind of people moving in, Texas should improve in no time.
     
    Then again, the Costanza rule may apply to that so Texas may be f’d.


  96. TRGT/Pharm – do you have a positive opinion on these guys still?


  97. 2/3 in TNA ($44.30), looking at another 1/3 over IWM 69.98 !!


  98. Bond auction/StJ – I thought it was bad.  As to the TOS update, I never allow it until after hours.  

    Higher/Jabob – I’m sure that’s the plan and I can’t see them taking all this hard work and letting it go to waste.  Also, risk of QE3 or stimulus announcement is highest over the weekend so could be less sellers and more buyers this afternoon.  

    TOS/MrM – They NEVER broke until Ameritrade started messing around with them.  They are doing some huge shift soon and making a big mess of things.  

    SSO/Etrad – That was from the 1st.  Seems like ages ago and we rolled those $48 calls out to Sept $47s and the $47 puts to Sept $43 puts last week BEFORE they lost 50% of their value.  Don’t ever buy any kind of ultra ETF trade is you are not Ready, Willing and ABLE to actively monitor it and take action when they move against you.  At the moment, the $48 calls are just .07 so nothing to salvage there and it’s just a matter of working down the loss on the $47 puts, now $5.80 and you can roll them Down to the Sept $46 puts about even and they are not so far out of the month but, if the S&P fails to hold 1,150, you need to make a more aggressive roll, like the Jan $39 puts, now $4.80 and be THRILLED if you get out of this losing just $1.  Of course it would also be smart if you buy something bearish on the way down too!  

    I wonder how many retail brokerages are "off-line" ahead of QE3?  Poor retail traders are liquidated out of the market without a failure (on double the volume) but the market starts coming back and suddenly orders aren’t filling.  Call me paranoid but that just seems really coincidental..  I imagine you guys can see how this is another benefit of being cashy and cautious – not caring if you broker explodes!  

    You’re welcome Scott.  

    TOS/Hoss – I agree, the platform is so good I’m willing to put up with some crap. 

    Tabs/DC – If you right-click on a link you can choose to open it in a new tab or new window (which I prefer in case there is crap in it and I want to shut it down).  

    All long/Yodi – Well I hope you have some kind of cover.  I think that we have a run-up in anticipation of QE3 or SOMETHING.  Merkel and Sarkozy are meeting Tuesday so hope should spring eternal until then and maybe even through the end of the month at Jackson Hole so you might get away with no covers but it’s sure not what I like.  We have all those very fine disaster hedges from yesterday’s post on the subject and they are all much cheaper now than when I wrote it.  I know I’d sleep better with a little protection over the weekend. 

    Links/StJ – Whenever I paste a link with the little linky tool, I click on the tab that says "target" and pull the menu down to "new window".  Do it a few thousand times and you won’t even think about it…  8-) 

    WM/RJ – That’s a good company. 

    Oil under $86 now.  Dollar 74.73, rejected at 74.80, which is encouraging into the EU close. 

    TBT/Pat – Aug you take the money and run, Sept can be waited on.  As long as people are nervous, TBT will have trouble getting traction.  From the $25KP, we were in the Sept $104 puts at $2.15, now $2.95 but they were $3.80 yesterday and I already said that we blew the chance to get out at that price yesterday morning so I don’t know what to say if you are still in it after giving back 60% of the profits.  If you didn’t want to get out at $3.80 (up 76%), what is your plan up "just" 37% now with only 5 days left, where any move against you can wipe you out next week with no time to recover?  I still think TBT turns up long-term, but that’s no reason not to take profits along the way – When in doubt, you can always sell half…

    AAPL/David – Speaking of negative risk/reward ratios I hate…  If you are bullish on AAPL, why not just sell the Sept $340 puts for $5.50 because they are easy to roll and you don’t lose 10x your investment unless AAPL is below $285, rather than below $350 and, of course, you have the flexibility to roll it if it gets in trouble.  With AAPL at $378, a 10% drop in the stock on poor overnight news instantly costs you 1,100% and you are trapped in the vertical.  I think calling that a "low-risk investment" is ridiculous.   And please don’t say you don’t have the margin to trade AAPL puts naked because, if that’s the case, then you have no business making 1:11 bets then, do you?  

    Europe finishing up 3% across the board, Dollar down to 74.65 – time to get the US party started.  


  99. Short selling bans / Pharm – It’s really funny as I was thinking the exact same thing this morning. The ban on short selling actually led to bigger downdrafts in the long run here.
    Anyway, thanks for the analysis. And more information to support your theory:
    http://ftalphaville.ft.com/blog/2011/08/12/651896/a-european-collateral-crunch/ 


  100. phil, what is your target for the dow today? thanks.


  101. Costanza is shorting the DJIA at 11330…


  102. TRGT – yes, scott.  Depression is still looking for drugs to work.  It is a small position for a move higher or big pharma to come to the rescue and pick them up cheap.  At $450M market cap (lost 25% on this last dip, I like them so much more than MDVN…..oohhh sooo much.  But keep the positions small for these types so they don’t do major blow ups to the portfolio.  I am a bit more risky on some, such as PLX and CRIS.


  103. Last  1/3 TNA at  $45.45 !!


  104. Phil I do not follow All long/Yodi – Well I hope you have some kind of cover. I am holding long FAS Jan 28 call pd 2.39 now .72 and the 18.33 p pd 2.39 now 6.45 what puts and calls do you sugest to sell against them? thks


  105.  Fas/StJ – Oh, well no change then!  8)

    FAS Aug $14/15 bull call spread at .60, selling $12 puts at .40 is .20 in the $1 spread for next week.  


  106. dsheara / Shorting

    Could be painful; good luck !!


  107. Just FYI on the browser tabs thing, if you ctrl click a link it will open in a new tab, shift clicking will spawn a new browser (under all major Windows browsers anyway, you are on your own in the mac/linux world :) ).


  108.  until someone tells me how germany saves all of europe…i dont think this bottom holds….but can go higher short-term


  109. GLD/Scott – Yes, that’s the problem with BUYING PREMIUM with a high VIX.  That trade would have worked better if gold collapsed WITH the market, not against it.  Still, gold is going down and dropped $10 on GLD since yesterday with 35 days to go on Sept so I wouldn’t give up until next week or you could sell the Aug $162 puts for .62 and spend .70 to roll up to the Sept $155 puts (now .87).  

    10 Myths/StJ – All should read this:

    From John DeFeo at TheStreet.com, comes these 10 Myths That Politicians Want You to Believe (but you shouldn’t)

    10. Quantitative Easing Helps the Economy
    Yes, quantitative easing is “printing” money. No, it won’t help the economy. Make no mistake, quantitative easing is a gift to bankers and nothing else. The Federal Reserve is giving bankers risk-free trading profits and causing food and gas prices to surge (making it even harder for Americans to get out of debt).

    9. Republicans Are Fiscal Conservatives
    From 1946-2010:
    Democratic President
    * Total Years: 29
    * Average Inflation Adjusted Deficit: $150.73 billion

    Republican President
    * Total Years: 36
    * Average Inflation Adjusted Deficit: $202.28 billion

    8. President Obama Is an Enemy of Wall Street
    * The two men who served as principal negotiators for banking deregulation: Gene Sperling and Larry Summers.
    * The two men who President Obama appointed to become his top economic advisers: Gene Sperling and Larry Summers.
    * Two guys who happen to be paid millions of dollars in consulting and speaking fees by “too big to fail” banks: Gene Sperling and Larry Summers.

    7. The Financial System Is Safer Today Than in 2008
    The majority of “too big to fail” banks are even bigger. Meanwhile, high-frequency trading is alive and well and the causes of the Flash Crash have not been addressed.

    6. The ‘Bush Tax Cuts’ Increased Tax Revenue
    Washington has always had a spending problem, but since the “Bush Tax Cuts,” we have a revenue problem as well. From 1990 to 2000, U.S. tax revenue had a period of exceptional growth. Following the 2001 tax cuts, revenue plummeted — then recovered — then plummeted again.

    5. ‘No One’ Could Have Seen the Financial Crisis Coming
    No one — except for everyone who did. TheStreet has interviewed numerous economists and money managers who have been pounding the table for years.

    4. If You Support Capitalism, You Support Big Business
    Can a corporation be socialist? Corporations and governments are very similar entities, and both can have capitalist or socialist leanings. If a politician praises big business while chastising big government, or the other way around, be skeptical.

    3. Republicans Are a Bunch of Fat-Cat Millionaires
    The average congressperson is a millionaire, and if you break down the 50 richest members of Congress by political party, here’s the split:
    Republican: 22
    Democrat: 28

    2. The U.S. Has the Highest Standard of Living in the World
    According to the United Nations’ most recent Human Poverty Index (from 2008), the U.S. standard of living ranks 17 of 19 among developed countries.  The ranking is a composite of life expectancy, literacy, long-term unemployment and income equality — while this data is over three years old, it’s not unthinkable that our situation has worsened in the aftermath of the Great Recession.

    1. U.S. GDP Is Growing
    U.S. GDP has increased by 4.26% from 2007 to 2010, according to data compiled by the U.S. Bureau of Economic Analysis. In the same period of time, the U.S. national debt has increased by 61.6%, according to the U.S. Treasury. Looking at these numbers, you don’t need to be an economist to see that something is very, very wrong.

    We’ve lost our way, misled by Republicans and Democrats alike.

    Go read the full article here.


  110. its likely that the scenario of rally for few weeks then fall swoon occurs unless things change dramatically.


  111.  Phil, have the Sept FAZ 74/81 call spread and the Sept SQQQ 32/40 call spreads as hedges (against RIMM Aug 22.5 puts that make the hedges free). Any suggestions on how to adjust the hedges since rolling them would be a good idea now.


  112.   i also have no idea how this super committee is going to come up with solution due to both sides choices….so market will begin to anticipate across the board cuts in fall


  113. Why use another super committee..????  Just take the recommendations of the very first one Obama put together and NO ONE listened/followed their advice…..unreal that they waist so much time coming to the same conclusion. 


  114. Phil,
    I am out of TBT weekly calls as of yesterday (AFTER YOUR HAMMER ON MY HEAD :-) ) with an avg price of 1.7. But from the 5 TLT Sep 104 Put I took 2 yesterday for 3.75 and the remaining 3 are at 3.05 now.
    I was thinking that if markets move higher then there is a possibility of TBT moving higher too and hence wanted to know whether you have any trade idea for that. I know that you would definitly put it out there if there is one but thought of just running it by you.
    Thanks.


  115. they are all looking very bad right now..collectively we are fed the ef up with all of this rich poor right left..remmeber what brought down lousi in th efrechies revolution it was when th emiddle class was getting cornholed..we are at the point of epiphany


  116. What is the median salary of middle class and upper class now?  I’m sure it varies from location but does anyone know generally what that is?


  117. JR – came out of that intraday wedge to the upside perfectly.  I sold when it hit the underside of yesterday’s rising channel on the button.  Check your email when time permits for a nice chart I made.


  118. 119 is a big line on SPY, going back to last November. It’s a 50% retracement line from the lows of last July. It held as support last Friday! We hit it yesterday on the way up and bots seem to sell at that point. The same thing happened early this morning. If we can punch through it, 123 is the next target. 


  119.  Phil,
    Looking to get more into cash, what would you do with 3 Jan 12 sold $29 puts on Best Buy and 40 sold $3.50 puts on Chimera? Is it worth rolling either, or should they just be taken out?
     
    What would you think of a fairly wholesale dump of stocks and Canadian trusts: an overdone panic, or a judicious exit to cash in anticipation of a reasonably likely major move down? I keep hearing that line from Crosby, Stills, Nash & Young "confusion has its cost" in my head, but maybe it’s just because I like the song.


  120. Jrw- cant find link to post where you explained your lines/methods…when you have a min…thanks


  121. ss / chart

    I agree on the wave count, but I’ve got a target of 1220,24, or 42 on SPX, then down; we’ll see !!


  122. All….bookmark below.

    sns – here.


  123. TNA/JRW…out on a break of the 8ema on the 3 min chart??


  124. thanks Pharm


  125. Your week at the ECB and some thoughts on their change of tactic:
    http://ftalphaville.ft.com/blog/2011/08/12/652081/that-was-the-ecb-bond-buying-week-that-was/ 
    One liner:

    It’s a “change in tactics” in so far as napalm is a change in tactics in a forest counterinsurgency. It works. In a way. 


  126. This view may be better, sorry !!


  127. Phil,  "Rage against the machines" by your favorite buddy/pal Jim Cramer:
    http://www.thestreet.com/p/rmoney/jimcramerblog/11219307.html


  128. topher7 8EMA Break

    The break was not confirmed by an engulfing candle below the line on the next bar !!


  129. if THEY are going to pin XLF to 13 today, we may not get required financial leadership


  130. Great call on that diamond chart the other day JRW.  

    Romney/1020 – He actually deals with it quite well.  By the way NOTE TO FLIPS and ZZ – Quote from Romney "Corporations ARE People."  

    FXV/Smala – They way these things move, I’d hardly call that low risk!  They artificially pushed it down so it could spring back up (ask the BOJ!).  

    EDZ/Rustle – Well they had a super-lame reaction to our great day yesterday so I guess there are pretty major underlying concerns.  I still like EDZ as my favorite overall hedge because China could fall like a house of cards from 19,500 – they were at 11,344 in March of ’09 and that was over our crisis – not their own!   The other EMs have huge inflation and, if commodity prices drop, they also have no money.   

    LOL Dsheara – Thanks for clearing that up!  Actually, Tina’s family is from Houston so I go there a lot.  I like the way you say you only know the beaches suck if you are from one of the coasts – do Texas people really believe ALL beaches have water you can light on fire?  Anyway, I know many fine people in Texas – unfortunately they are not the ones in charge!  

    CNBC now using the Jefferson quote on banking of all things!  

    Dow target/Lunar – I will be surprised if they don’t get us back to 11,450, which would be flat for the week.  Otherwise, what was the point of Tuesday’s insane buying into the close?  

    There you go, Dsheara confirms we’re going to 11,450.  8) 

    FAS/Yodi – I’m confused.  Are you LONG on the Jan puts?  If so, then you are way up on the combo so why not take it off the table or at least the puts and maybe the calls come back. 

    Germany/Angel – I think their last plan to "save" Europe was rejected by the Allies…  

    FAZ/Mampcs – Wow did they get creamed yesterday!   Anyway, that’s the point of the "free" part of the free insurance, if they don’t pay off, then you have a good chance that RIMM stays over $22.50 and it turns out you didn’t need it – end of story.  Next week, if RIMM puts expire worthless then whatever small amount remains in the spread is profit so why worry about them?  At that point, you can sell puts in something else and use that money to improve the hedges.  If you just want to improve it now, you can spend $2 to roll down to the $64 calls and pick up $1 rolling the $81s down to the $74s and that’s a better spread than you started with for $1 more, which you can make up by selling a Sept something put when the RIMMs expire (and if they don’t expire worthless then your spread is in good shape and you don’t need the $1 back).   Same logic on SQQQ as you can roll those $32s down to the $27s for $1 and I wouldn’t even roll the calls until after the weekend.  

    TLT/Pat – I hope you have picked up on my very subtle theme that the markets are VERY uncertain and the smartest move is NOT TO PLAY.   Cashy and Cautious, sadly, does not mean not taking profits off the table.  It also does not mean you should not wait PATIENTLY over the weekend to see what actually happens, rather than guessing on a Binary event that, yes, might make you a lot of money or – it might lose you a lot of money.  If you won’t listen to me or the ghost of Ty Cobb – at least please watch this instructional video:  


  131. Out of TNA at $45.20 for 52 cents, disappointing !!


  132. Jani Lane from Warrant died today and what I found interesting is his real name is John Kennedy Oswald.  Kind of a weird joke to play on a kid’s name.  He was born in 1964.  Be stranger if he was born in 1962.


  133. ‘we will have peace in our time’
    i dont think merkel gives a flip about what o or anyone other than her coalition thinks…things are giong to be fine in germany in three years they will finally get to officially rule europe ..if only heidigger were around to see it!


  134. The bear case based on the McClellan Oscillator: This Is No Ordinary Selloff


  135. ss,

    Nice call on that trend line, I should have at least sold 1/3 there…………..Oh well !!


  136. Back in TNA 1/3 on the bounce off IWM 69.70 at $44.63 !!  I will buy 1/3 more over IWM 69.80  !!


  137. CNBC is talking up Jamie Dimon as though he’s market Jesus…


  138. there is huge pressure form many powerful people for her to do the savior swoop…but suddenly she sees who these fools are..she’s a tough bird..better to lose an arm and come back fiercer to the fight again..people have gotten wrong  the german psyche wrong forever…and think what its cost us in th epast?….they have little interest in things not zenophobic….i am still in the they bail camp..hegemony or not…


  139. Broke lower trend line, glad I’m out, up $253 etrade up $224 on trades, they didn’t work for it.


  140. nazz needs to close in here for a decent short at strong close


  141. Commented yesterday, that CNBC was trying real hard to scare people into selling today.  They had one guy who said the S&P was going to 570 and two others who said the up day yesterday was meaningless and we’re going right back down to break the lows.


  142. JR – in also at the bottom of the bull flag at 69.60.  We need to break up over the open price of 69.99 for another good run. 


  143. appelate court rules health insurance mandate unconstitutional…DOH


  144. super intent but you put pelosi out front of anything (other than a minefield column sweep) and this was assured


  145. Jr – successful backtest of the bull flag, now hopefully we carry on.


  146. hey modest but broad rise in retail..thats good


  147. FWIW: Chart shows what happened at the top in April 2000 and June 2008. Watching MA 377 (now at 1210).


  148. Phil/Romney   Yes, he did quite well…. Nice man, but out of touch….


  149. ss / Hopefully !!

    I’m still only 2/3 in !!


  150. JR – I am back out.  Waiting for either direction to play out.


  151. Phil/11450
    Correct, Costanza is short the DJIA and flips bullish at 11500.  I am the typical retail moron.  Play accordingly.


  152. This may be IT !!


  153. Epiphany/Angel – More like they need to come out of their coma.  

    Median Salary/Rustle – It depends what you want to call upper and middle class.  Only people above the top 10% make $100K a year, the bottom 90% make about $35,000 on average (guessing for 2010) although possibly the same $30,000 as it was in 2006 – hard to get figures.  I’d say it’s the 20%-10% group that would be called "middle class" and they are probably $50-100K with the bottom 80% just dragging that average right to Hell.  If you stretch it (as the Heritage Foundation does) I suppose you can call the 40-20% group making about $38,000 "Middle Class" because they are mainly two-income families so they end up with over $50,000 – just like the 20-10% group!  

    123/StJ – THAT would be a big move.  

    BBY/Kevin – I’d wait and see if you get a Santa Clause rally (or QE3).  CIM is all premium so not much to do there but wait and see what happens.  I imagine you, along with other CIM investors, are not aware that Chimera means "an impossible or foolish fantasy" – doesn’t exactly inspire confidence, does it?  As to trusts – oil went way down and the tax treatment of trust payouts is in question so a lot of people are getting while the getting is good because most people are in them for the dividends.  If you value them as stocks without dividends, then it’s OK to go bargain hunting.

    Dollar flatlined at 74.75, markets flatlined too. 

    Cramer/Leon – Unfortunately, I’m not a subscriber.  

    Jani Lane/Rustle – That is a messed up couple of parents. 

    Heidigger/Angel – Had to sing my philospher’s song on that one.  

    Not ordinary/Rain – I agree with the observation but not the conclusion.  The sell-off in 2010 violated the rule because it was forced nonsense and had nothing to do with real trading.  This rally is very likely the same and, had it not been for 2008, I would be gung-ho bullish but we’ve seen how fast artificial panic can turn into real panic and it’s a very dangerous game they are playing with our economy.  

    chart


  154. Craigzooka
    Whatever happen with the craigbot?


  155. HFT pick up the pace in the down move!


  156. Out with a loss of 8 cents !!


  157. Jani Lane
    But if your last name is already Oswald and some crazy of the same surname kills the country’s favorite president, how better to give honor three months later than to name in memory what is most precious to you?  Can you imagine being "an Oswald" in grade school after something like that?  Perhaps "John Kennedy" as a given name provided some protection.


  158. JRW
    Tuff day to call, by the time moves are confirmed the run is about over, waiting for a fail takes the rest away. Not a very good game to play today. I may watch Phil’s clip again!


  159. Bunches O charts here, considering home/energy/food/unemployment.. im amazed how well spending has held up..most likely tied to market performance over the last 12 months. Consumer sentiment and recent market performance my signal we’ve peaked.
    http://cr4re.com/charts/charts.html?Retail#category=Retail&chart=BKQ22011.jpg


  160.  Phil,
    I have a large position in GS that I would like to hedge from further possible declines. I have 50 of the Sept 135 Puts sold at $10 that I am concerned with. 
    I was considering buying some Jan ’13 100 Puts @ $14 and then rolling them up if GS recovers. I am planning on rolling my short GS 135 P along as I am long term optimistic of GS’s prospects.
    Any thoughts on how to better establish this protection.
    TIA


  161. BUY Program !!

    2/3 in TNA at  $45.07 ; 1/3 at $45.26 !!  All in !!


  162. If this thing stalls here, I may just take the rest of the day off !!

    Back testing the trend line (now at IWM 69.88)


  163. Big move / Phil – Well, I was not thinking about going to 123 today and actually we can’t even punch through 119 right now. But this seems to be the week for big moves, so who knows! So far, we are averaging swings around 7 points per day on the last 6 trading days! The low being 116, 7 points would take you to 123 by end of day. You heard it here first! 


  164. Phil / conclusion — My memory must be shot. What forced the sell-off in 2010? I’m just worried that GS retaliates with a leg down if Ben doesn’t hand them a lolipop at Jackson Hole. The sooner they force his hand, the quicker the money can be made. I’m concerned about panic as well since there is likely fewer retail investors to take from and the hedgies have been hit hard as well. Who else is left to target?


  165.  Phil,
    Just as an FYI, most of the Canadian royalty trusts have converted to corporations; most of the ones that haven’t were REIT type structures that were exempt from the changes instituted in the so called Halloween  Massacre. I think that it’s a misconception that they are in danger regarding a change in tax status.


  166.  Headline from my former hometown newspaper in Boone, Iowa:
     
                                                                                    A BANKRUPT NATION.
    United States Almost a Mendicant in Money Centers.
    Republicans have had no part in the great drama of national dishonor — Democrats  unable to fill their contract. 
    Read the full story here, but note the date for a little historical perspective on how long this has been going on.
     


  167. From Slope:

     


  168. NAK is enjoying a nice rebound.  up 25% since monday. 


  169. I guess it worked to some extent:
    http://andrewsullivan.thedailybeast.com/2011/08/the-big-lie-ctd.html
    Maybe add that to the list of lies from poliicians! 


  170. Im very suspicious of the markets with GS JPM and MS (down by 5%) underperforming the today.


  171. stjeanluc / list — Make your life much easier and keep a list of truths.


  172. 2:00  buy bot’s clock running fast.


  173. @Felipe
    re:  Corps being people. 
    So are rapists, serial killers, murderers, child molesters, pornographers, Investment Banksters, Bush, Clinton, Kennedy, Frank, Pelosi, Gingrich, McCain, Byrd, Watters, Conyers, Geithner, Rubin, Greenspan, Summers, Kashkari, Orszag, Cox, Rumsfeld, Weiner, lawyers, abortionists, communists, socialists, polluters, Jerry Springer and fans, Oprah and her audience, Dr.Phil (not you), reality TV participants and audiences, and Hooters critics.
    What’s yer point?   : – ))


  174. VIX is back where it needs to be to give confirmation of yesterday’s Buy Signal for equities !!

    BTW< watch out at IWM 70.18, 70.31


  175. Here we go, as you know "they" like to break through as many resistance points as possible at one time. The resistant trend line is now at R/S 70.18 !!


  176. This could have an impact:
    http://ftalphaville.ft.com/blog/2011/08/12/652166/the-feds-secret-qe-equivalent/
    This could also explain why QE3 has not been tabled yet. It is becoming increasingly difficult to understand all the zig and zag from the various central banks. I am not even sure that the understand all the implications from their actions. Where is Watson when we need him? 


  177. That’s just plain ass wicked.  I was up 2% on that move.  Got out with about .5%. 


  178. Thought this was a great Dilbert:
     
    http://www.dilbert.com/strips/comic/2011-08-12/


  179. TLT setting up for a re-short but best wait until Monday.  Also may be QE3 anticipation.  

    Dimon/Otto – They already have a Republican Jesus:

    GS/Oncmed – I am never a fan of betting against yourself.  I would roll them down to 2x the 2013 $90 puts at $11, which should be the same margin and your worst case is getting 2x for net $85 vs 1x for net $125 so you commit to 50% more cash for double the shares.  If you think GS is worse off than that, better to take the loss now, don’t you think?  IF GS does head lower, you can then cover, say buying front-month puts as a momentum play below $110 that have a higher delta than your long puts (.23 on the $90s) and then, when those stop out, you put those profits into rolling the puts even lower.  Even if you only end up collecting $5 off the long puts over time, it’s still 50% of margin over 18 months – not a terrible rate of return.  

    2010/Rain – Mostly it was Greek nonsense that caused the sell-off along with the end of QE1.  This economy is nothing without QE??? and it will all end in tears most likely but not before they do it again.  Without QE3, I see no reason for us not to drop at least another 10% to about S&P 1,000 and panic can take us much lower.  With QE3 – we extend and pretend again until rioting erupts in DC, Miami, Chicago, LA – wherever there is 20%+ unemployment for young people when the checks stop coming.  

    Taxes/Kevin – Oh I mean the tax ON dividends (now 15%).  That’s a big deal if they raise it to 25%.  Plus the states are going to want a bite of those too.  

    NAK/Terra – Nice long-term play. 

    Stimulus/StJ – It wasn’t enough and half of the money was wasted on more tax breaks.  What you see there is the effect of $400Bn, not $800Bn.

    Suspicions/Kustomz – That’s why it’s an excellent day for cash.  

    Yes Flips, people are people too!  I think you are getting it…

    Very low volume since this morning.  140M on the Dow at 2:15.   

    QE3/StJ – It’s all about getting the investors to believe in it, mechanics matter less than perception.  

    Funny how we’re up 1% and more and people are disappointed today…


  180. Damn, out with 26 cents; this surely is the flush before the run !!


  181. No rhyme or reason to the moves today I think I’ll call it quits with a $250.00 loss and consider myself lucky


  182. Took a stab at FAZ..again not looking for a home run just some pocket change.


  183. Support at IWM 69.52, 69.36, and 68.98; I don’t believe we go that low, BWDIK  !!


  184. stick seems broken..that is why we are unhappy with 1%
    but we do have 90+ minutes
    TNA and fas down ;-(


  185. watch goldie 115 50


  186. @Felipe
    Maybe not. 
    I’m lumping Corporations in with cultural, economic, and social smarminess. The worst of our people.


  187. Phil / QE — Oh, yeah, that nonsense. So, we’re back in the same boat with the end of QE2 and substituting Italy,  playing the same games. A QE3 announcement will spike the market. When does the market tank without QE3? Are there any other events that the IB’s will wait for? I’m guessing the down move won’t be as quick as an upside move.
     
    JRW — Please remove your cat from your trading computer’s sell button, would you please? :)


  188. Phil — I’m looking to take a long-term bullish position on LNG — what would you suggest? Thanks --


  189. Piling on S&P
    http://www.nakedcapitalism.com/2011/08/sp-our-ratings-in-the-mortgage-backed-securities-area-were-not-venal.html
    Introduction:

    So S&P downgrades the US, and Treasuries rally. Then S&P affirms that France is a AAA rating, and the markets freaked out about Eurozone and Eurobank risk. France is “now in the crosshairs”. What should be clear by now is that S&P isn’t doing actual credit analysis. It is being a part of a community of financial oligarchs that for their own reasons want to see various communities and countries threatened with a downgrade. 


  190. phil..its not that they are oigng to drop th eleper healing programs..its now you only get a leper’s bell..it’s called SAVINGS>>>>


  191. They could still push it up 400 points from here, its happened before….Tuesday, as a matter of fact!


  192. Stimulus / Phil – If that is the case, these $400 billions did a lot of good. More please!
    And I am with you on perception. It bears to repeat:

    "Things that are perceived to be true, are true in their consequences!" 


  193. Right back to yesterday’s close on IWM.  Is this what fish feel like in a heavily fished pond?  I can just imagine those slime balls on wall street putting lures in the water to jerk us out of our chair.  Sooner or later we will just stop eating.


  194. from a friend with whom i completely disagree..he’s march smarter than me btw
     
    European policymakers and regulators are using the same weapons they deployed during the crisis of 2008 — rhetoric and short selling bans — to fight the speculators they feel are responsible for the financial market turmoil in the past week. However this does not mean we are due for a re-run of 2008′s travails. The ECB is a more experienced organization with battle-tested liquidity tools — and European politicians continue to slowly move towards the Federal Europe that is needed to ensure the survival of the Euro….federal europe uhoh..when did i last hear someone wanting something like that?
    ========
     


  195. That’s quite good, Stj, thanks.   Any idea how the strings are getting pulled?


  196. Phil, 
    What is the difference in leverage between regular margin and PM (in %) 
    Thx


  197. 1/3 TNA at $44.53

    rainman,

    LOL !!  Smiley


  198. The slipery slope to the Japanization (is that a word?) of US Banks!
    http://ftalphaville.ft.com/blog/2011/08/12/652026/are-us-banks-turning-japanese/ 


  199. Pharm (and others playing ARIA) – in addition to my long-term pool of ARIA (in at 4, out 1/3 at 12, DD at 8) I have been daytrading it, it’s prone to some nice moves either way.  But if you do this, I have noticed that it almost always dives before the close, so best to get out or cover around 2pm.


  200. Whoops "DD at 8" made a smiley due to parens !!


  201. Stimulus – And that stimulus was spread over two years. So it turns out to be less than 2% of GDP per year (my estimate is 1.6%).  That was our giant stimulus!


  202.  Bonds are up. My TLT put is getting curt down.
     
    Troubling (and annoying) for the market in general that bonds are showing strength.


  203. JR – fwiw I am playing it down on the assumption that no one wants to hold into the weekend after this week.


  204. Strings / Zero – You tell me! And we find out, can we get a turn at pulling? 


  205. As I was saying, that 119 line on SPY is now like a bot "sell" trigger or a frakin’ force field depending on your point of view! 


  206. AAAAAND im out..


  207. Buying another 1/3 at $44.25 off IWM 69.36 !!


  208. wouldn’t it be nice to at least have a stick before the weekend???
    I can’t believe I want a stick now—after hating the stick for so long!
    Phil--you are rubbing off on me..thanks, I think ;-)


  209. 02:00 PM On the hour: Dow +1.53%. 10-yr +0.41%. Euro +0.03%vs. dollar. Crude +0.86% to $86.46. Gold -0.46% to $1743.50. 

    The Philadelphia Fed issues a survey of economic forecasters showing 37 panelists now see Q3 growth to come in at 2.2%, down from 3.4% in a previous reading. The economists ratcheted up the unemployment rate forecast to 9.1% from 8.7% for Q3, and only see a minor drop in the rate to 8.6% over the next year.

    Nouriel Roubini tells WSJ the risk of a global recession is greater than 50%, and the next two to three months will reveal the economy’s direction. He also says he’s putting his money into cash: "This is not the time to be in risky assets." 

    New York Fed President William Dudley doesn’t say anything to upset the market’s craving for Fed assistance. The drop in interest rates since Tuesday’s FOMC decision should provide additional support for economic activity, he says; he’s revising down his expectations of the recovery, mirroring the FOMC’s outlook; and the long-term inflation picture remains stable.

    For anybody who would even consider selling anything because consumer confidence hit a 30 year low, bond trader Ed Bradford notes the series hit an all-time high in January 2000 … the S&P declined 25% over the following 15 months. 

    The WSJ‘s MarketBeat blog notes "economically sensitive" stocks such as Boeing (BA +4.3%), Caterpillar (CAT +3.4%), and Disney (DIS +3.3%) are outperforming today, a sign recession fears may be ebbing. Other recession-sensitive names moving higher:MGM +5.2%WYNN +4.1%HON +3.4%LULU +7.5%URBN+5.4%

    With prices still weak and sales continuing to decline, Barry Ritholtz expects home prices to "drift lower for a couple of years," and perhaps "go sideways for a decade." Ritholtz is also skeptical government plans to rent the 248K homes now owned by Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) will accomplish much.

    RBS notes the latest ECB bond-buying program looks like the bank is targeting a specific yield – around 5% – for 10 year Italian and Spanish paper rather than its stated goal of just supplying liquidity. If so, this would suggest a commitment by the ECB far beyond its previous efforts.

    “I am fundamentally for the euro, but not at any price – above all not at the price of socializing the debts of other countries," says Linde CEO Wolfgang Reitzle, summing up Germany’s view. For the moment, Germany stands behind the ECB and the euro. Whether it will continue to do so "is what is really eating away at the markets."

    U.S. prime money market funds pared their European debt holdings by $38B-$40B in July, with the 6 largest funds completely exiting their positions in the 2 largest Italian and Spanish banks. This further adds to fears of a credit crunch developing for Euro banks perceived to be at-risk; French banks are seen as especially vulnerable.

    More Gang of 12 manipulation:  Big Q2 drops in oil production at more than 20 major oil companies are startling, even accounting for lost Libyan production, Deutsche Bank says, and are not likely to be offset by unconventional deepwater or shale E&P projects, except at XOM,OXY and MRO. Wall Street will need to ratchet down its estimates, and oil prices could rise to $120/barrel. - Total is about 1.3Mbd decline which INCLUDES lost Libyan production.  A real analyst would wonder why supplies are at record highs DESPITE the lower production

    Forget about the drop in oil prices converting to cheaper prices at the pump this weekend, says one industry watchdog. E-mails just went out to millions of members of man-in-the-street price reporter Gasbuddy.com that pump prices are going up, despite oil prices down 11% over the last two weeks. (earlier

    Royal Dutch Shell PLC (RDS.A +1.9%) is reporting an oil spill at its Gannet Alpha platform in the U.K. North Sea, but says it’s largely contained. Shell runs the platform jointly with Exxon Mobil (XOM +1.5%) . - They never spill oil when it’s over $100 a barrel

    Canadian Oil and Gas driller Baytex Energy (BTE +6.5%) trades higher on a Toronto Dominion upgrade, after the company reported earnings on Thursday that nearly doubled analysts’ estimates.

    Fitch, as usual: Valero Energy (VLO +1.7%) gains after Fitch raises its outlook on the company to stable from negative, citing improved performance despite softening demand and an oversupply of global refining capacity. 

    The Appeals Court for 11th Circuit, based in Atlanta, rules the President’s healthcare law unconstitutional for requiring individuals to purchase insurance or be penalized. The rest of the law, however, may remain in effect. Next stop: Supreme Court.

    Jefferies is out with a cautious note on the hotel space due to the recent market volatility. The firm ratchets down estimates anddowngrades five companies: LaSalle Hotel Properties (LHO -1%), Host Hotels (HST -1.9%), Gaylord Entertainment (GET +0.8%) and Starwood Hotels & Resorts (HOT -1.7%) are all cut to hold, and Orient-Express (OEH -5.7%) is reduced to underperform. 

    Three lunchtime reads:
    1) The stress of carrying cash
    2) Ratings agencies are the darnedest things
    3) Build My Portfolio: Steering a Silicon Valley power couple away from tech


  210. Phil,
    I sold GS Sep $120 puts for a tiny $0.90 to finance some hedges.  That was when GS was $135-ish.  During the free fall, I cashed out the hedges, but I must have lost track of this position and didn’t stop out.
    So, do I wait and see, or roll?
    Thanks.


  211.  I mentioned the idea yesterday that an appreciating Yuan could support U.S and European exporters.  A financial advisor based in Europe coincidentally bought some FPM Germany for my account this morning without us having spoken, which I shall take as a confirmation, and to which I am adding BMW.  For what it’s worth.


  212. Last 1/3 at $44.39; all in !!

    Welcome to the Matrix !!


  213. Phil you mentioned looking for a good hedge as the day moved on. Anything coming to mind?


  214. Phil : In general,do you recommend rolling option on my Jan. 2012 buy writes to 2013  on stocks I want to hold (ABT<GE ,PFE  ,KFT etc)


  215. whats with the tbt shorting…sometime but with qe3 rumors..forget it…consdiering europe this is crap action


  216. …feels like a friday fade is coming.


  217. A break through of IWM 69.70 gives us a target of 70.31 or better !! Can we start a SQUEEZE ??


  218. Doubling down the Constanza short.


  219. jabobeast

    You got my attention !!


  220. The French securities regulator recalled World War II, saying "They
    [the market] wanted to test French resistance. This is our response,
    as always very determined, and it will be so for all those who want
    to put us to the test


  221. jabo — LOL! 


  222. is that over the top declaration of premature efficacy?


  223.  Angel:  I don’t think the French should be pointing to World War II as a symbol of French virility "frankly."


  224. Lets hear it for our saviour..the Euro!! Big round of applause everyone!! Great tool to get the bots rolling. What will they use now if the sell off is fast and furious?


  225. LNG/Kimisk –  I’m not too keen on liquid nat gas.   It’s kind of like ethanol was in 2005 – sounds good but doesn’t actually work in practice.  I’d just sell the 2013 $5 puts for $1.30 and buy the $5/10 bull call spread for $1.70 for net .40 on the $5 spread that’s $2.84 in the money.  Worst case is you own them at net $5.40, which is 30% below the current price.  

    PM/Amatta – Typically, PM assumes a 20% drop in the stock but I think it varies from broker to broker.  More importantly, it takes into account your whole position, which is good for spreads, buy/writes etc.  There’s a post on it from a long time ago in the education archives.  

    Weekend/SS – Cash is good! 

    You are welcome Jabob – it’s all a matter of going with the flow, then you can go from annoyed to amused.  

    GS/Cwan – I’d wait because $120 does seem like it can be taken back so why give up time. 

    Hedge/Morx – Not at the moment (and I know it’s late) because I am still expecting a stick.  Have to give up soon I guess.  Of course the SCO hedge from the morning Alert still stands and that pays 1,900% if it works so I’m not sure how much of a hedge you need over the weekend.   

    2013/Dflam – Only if you don’t believe the 2012 levels are likely (60/40) to be taken back, otherwise, waiting is good.  

    Crap/Angel – Yes but why the crap?  It doesn’t make a lot of sense.  Data, other than sentiment, was not that bad.


  226. I am sooooooooooooo disappointed; out of TNA on the failure of IWM 69.70 at $ 44.84 for 45 cents !!


  227.  Stj:  I’ll post John Cleese’s view of the matter after the bell.


  228. If we fail IWM 69.53 I will have to buy TZA , fwiw !!  (all in below 69.33 if time permits)


  229. JRW
    Sorry! That was the first time I went all in today for .05 still 1.9% today. All done.


  230. Phil data/sentiment
    Clears it up pretty well
    http://www.zerohedge.com/news/charting-wtf-economy


  231. CMG Jan $310/250 bear put spread at $19, selling Aug $320 calls for $5 with the idea being to sell $5 (at least) each month for 4 months or until they start dropping below $310.   Short $320 calls can be rolled to Sept $340 calls (now $5.50).  

    GMCR Jan $115/95 bear put spread at $10.50, selling Sept $110 calls for $4.60 is net $5.90 on the $20 spread. 

    Going the other way: 

    XLF Jan $12/13 bull call spread at .60, selling $10 puts for .62 is a 0.2 credit on the $1 spread and worst case is you are in XLF at $9.98.  According to TOS, net margin is $1 on the short puts plus .60 cash to make $1 is a very nice 5-month 62% return on cash and margin if XLF holds $13.  

     


  232.  Phil – FAS Money – are we going to cover by selling calls today?


  233. i thought retail sales were ok…sentiment back to recession levels…yields: everything has borken qe2 lows except the 30 year


  234. Good chart Kustomz:  

    Dollar still in no-man’s land at 74.72 and we’re still drifting around the 1% line BUT we’re up 1% on no Dollar move today – that’s good because a real rally will be one we get WITHOUT having to sacrifice the Dollar.  

    03:00 PM On the hour: Dow +1.17%. 10-yr -0.09%. Euro +0.05%vs. dollar. Crude -0.52% to $85.27. Gold -0.37% to $1745.10.

    I like this guy!  Harry Rady is shorting the investments that have been spiking lately, including gold, the Swiss franc and the VIX – "by far our largest position," the self-described contrarian says, believing that volatility will compress in the coming months, as it has "95% of the time." He’s going long high quality, dividend paying multinationals, such as VOD and TEF

    One driver for future growth in stocks could be the allure of higher yields for investors sitting in cash or T-bills. The DJIA boasts a3.1% yield - comparing nicely to a 5-year Treasury’s 0.99% yield or the average on a 5-year bank CD of 1.5% APY% - and the S&P 500 isn’t too far behind at 2.09%

    Electric utility stocks have slipped along with everything else, but they’ve still got those juicy dividends. Jeff Bailey looks ateight utilities with attractive dividend yields, five whose payouts are well covered by earnings - DUKETRPPLAEPDTE - and three who aren’t - EDEHEBKH

     "The equivalent of a subsidy of 20% on all China’s exports and an additional tariff of 20% on all China’s imports," says Fred Bergsten of intervention which keeps the yuan undervalued. (It’s) "the largest protectionist measure … probably in all of history," he adds. He suggests the U.S. file a case with the WTO.

    One credit blogger takes a dim view of politicians, saying it will take – not just weeks or months – but years to fill the top CFPB spot because both sides stand to gain in a drawn out nomination process. Republicans can play to their base by portraying the CFPB as overbearing, while Dems can paint the GOP as anti-consumer.


  235. In the last two tournaments, Tiger Woods old caddie made more than Tiger Woods.  Tiger missed the cut today.


  236. "They" cannot let this happen !! (Evening star)

    Very bad !!


  237. Too late in the day for me; 2 1/2% day.

    Have a great weekend all !!

    Download beach smileys for free at emoticons.funwebproducts.com.


  238. JWR
    what’s interesting, if you BH./AH then you get completely different story
     
    http://www.oljstudio.com/tmp/spy.jpg


  239. I though they are going to pin XLF, bu they did it for FAS -14


  240. That Kustomz chart above is about as schizoid as another one I’ve seen.
    "I don’t feel so good so I’ll go spend some money and if that doesn’t work to restore my confidence, I’ll go spend more".
    A more appropriate parallel for TARP, QE1-10, and TALF, would be impossible to devise.


  241. where’s that stick?


  242. shadow / 1.9%

    You can never go broke taking profits !!   Have a great weekend !!


  243. This is interesting.  RVT very closely follows the RUT but pays a 6% dividend while doing it.  Very nice while the RUT is off.  Too bad no options!  

    And talk about no progress for 5 years!  

    Notice in a major crash, the Nas has a long way to fall to catch up so SQQQ will remain a good hedge against a major catastrophe.   Since the Nas can fall 15% just to catch up to the others, 30% up on SQQQ would be about $35 so the Sept $30/35 bull call spread at .70 is a VERY reasonable hedge and you can offset that with WFR Jan $5 puts at .40 or offset 10 of them with an AAPL $350 put at $7.20.  If you assume that it’s doubtful AAPL would drop below $350 without a catastrophic QQQ move (and they are 10% of the index) then you have a good chance of collecting $50 for each long put so you are really good down to AAPL $300 (more than 20%).  If that makes you nervous you can sell the AAPL 2013 $180 puts for $6.75 and if you don’t want AAPL for net $173.25 – you are REALLY bearish on the Nas!  

    ISRG Jan $240 puts also fetch $7 – another nice buy at the price!  


  244. Phil / Amoral    One of the factors which might underpin the mkts:  Ben has effectively robbed retired folks of their interest income for 3 years and plans to continue through 2013.  This is a huge gift to corp profitability (through refinancing) at the expense of risk averse savers.  They are now also being bullied into risk assets which they don’t know how to manage.  This is a massive wealth transfer which no politician acknowledges.


  245. Here comes the Euro…again…makes me very uneasy when they try to mask a weak market. FU to whoever is trying to save this, manipulating bastards. Im done for the day, no need to make a mistake and lose my profits.

    Great weekend people…JRW and gang …very impressive work..Phil thanks for saving me countless times this week as I tend to get over bearish at times…and never forget to fear the Bernank.


  246. FAS Money/Palotay – No, I think we should give it the weekend to see if things improve.   We’re priced for a global financial collapse again.  I guess it could happen but is it really something you want to bet on?  

    Wealth transfer/Tusca – Yes, we can only regret we didn’t let Bush bet our remaining Social Security funds on $140 oil..

    Thanks Kustomz and thanks to everyone else for a very exciting week!  

    Have a nice weekend – NOW I’ll have to go through the Income Portfolio to see where we stand so that’s my weekend project.  


  247. baby stick ;-)


  248. This has been a "dull" week… More excitement next week I am sure.
     
    In any case Premier League restarts in England this weekend (at least in places where they didn’t burn down the stadiums!). Go Gunners! (although ready for another letdown!). 


  249.  Phil, this is my first week as a member.  I’m finding it all very interesting.  I’m a retired registered rep (30 yrs) and finding I still have much to learn.            


  250. Phil/AGNC
    : Might be a good prospect for the income portfolio. Better recommendations than NLY, several recent upgrades, and higher dividend (19%)



  251. Nice seeing the RUT exactly on our -10% line.  Always good to know the Bots are hitting their marks!  

    I’ve given some thought to the Retail Sales vs. Consumer Confidence chart above and I’ve decided it’s a reflection of forced or compulsory spending.  In other words, consumers used to have discretionary income which they would use or not use depending on their mood.  Beginning in 2008, consumers had less money but the price of commodities shot up and that has kept consumer spending high – but that doesn’t mean they are happy about it.  

    Consider that in 1999 or even 2004, a consumer would have $100 in their pocket and drive to the mall and buy a tank of gas for $30 and have $70 left to spend.  In 2011, the same consumer (if he still has a job) has the same $100 (assuming health care costs didn’t go up and he eats 40% less) and he stops for gas and now it’s $75 and he has $25 left to spend.  He’s still going to spend that whole $100 – but don’t expect him to be HAPPY about it!  


  252.  Tusca: Great comment.  The QE programs have vacuumed up the savings of fixed income Americans by dropping the dollar like a stone.  Inflation is not the Great Leveler.  It favors those with with capital to invest and workers whom can cost of living salary increases.  
     
    An economy in trouble looks for easy targets from which to finance itself, and Grandma is on the list.  Probably her son as well. Just inflate away those savings with free money while the punters buy FCX, BHP, BTU.
     
     You are exactly right in calling it an amoral confiscation of wealth, done consciously as part of the U.S. government’s highly secret plan to inflate away the value of China’s T-Bonds.  The masters of the universe that came up with intergenerational theft have undoubtedly argued to their bosses  that "there is no choice."  Query whether American passivity in the face of galloping impoverishment remains a constant.


  253. Definitely an interesting week. The BTFD’rs must be scratching there heads wondering what happened.

    It’s curious how the big boys are tipped off a day or two before the news hits us common folk….like the downgrade for example….they were bailing on Thursday while the BTFD’rs were being rounded up for slaughter.

    Not a big bounce on Friday so you have to wonder if there is more downside to come.


  254. Phil

    I’ve been predicting that “they”……(the manipulators) would pull back the markets to justify QE3. I also predict that that they will time QE3 so that it extends through the next election cycle since they don’t want to the Republicans to take over before the Socialization on America is completed.

    Lately all of the talking heads have been indicating that QE3 is a non-starter, yet you’ve been making comments lately that QE3 is a given. Do you know something or are you just speculating?


  255. exec – hoss18 had a comment a few days back where he was in line with you. He thinks the announcement of QE3 comes in December and QE going on till after elections so that Obama can be relected.


  256. stop thinking obama is choreographing the announcement of any of the feds decisions it just isn’t realistic..if the  market (really) pukes ben will do it quickly…and obama’s re election propects will have nothing to do with it whatever…this is a guy ( O ) who has blown every chance to advance his agenda and stifle his critics (right and left) and you cannot believe that suddenly he has the strategic vision to alter ben’s thinking or timing..silly..stimulus will come when it MUST..which is much lower than friday’s close


  257. Phil/QE3- I’m really beginning to think QE3 will never happen. From Zerohedge :
    "The system is so broken, it doesn’t matter how much liquidity the Fed creates because it won’t be able to get any further than the immediate banking community. And that’s because banks still can’t find enough credit worthy people to lend to. That the majority of loans still have a greater default risk than the banks are prepared to weather. That loans equal capital deterioration. And only loans to the most credit worthy people (of which there are not enough) are worthwhile.
    If banks do indeed perceive that capital deterioration risk from lending is much greater than a self-imposed haircut on the most liquid and safe security, they’re prepared to take that haircut — especially in a world with no alternative — because it guarantees some sort of remaining capital preservation. The haircut, of course, is the negative interest rate.
    If that is the case, the worse thing the Fed could do is more asset purchases"
    This could  explain why I’m seeing so many branch banks being built locally. They don’t have anyone else they can safely loan the money so they finance themselves. If true, then alot of QE3 hopefuls are about to get a wake up call and the sh!t is getting ready to hit the fan.



  258. What if the disaster that the bondholders anticipate doesn’t materialize? Germany and France realize that they can’t do without the rest of Europe any more than China can give up its US markets. They will do what they must, which is what China continues to do: finance the debt as everyone deleverages. The alternative is mutual destruction. Will it take a horrible crisis for Merkel to sell it? Perhaps. Will it cost Germany and France their AAA ratings. Definitely. The S&P downgrade of the US, though proved that a downgrade can be lived though. The West must deleverage a step at a time, and the market must not be allowed to force unreasonable rates on Spain and Italy as the process goes forward as George Soros is saying. There must be an ECB capable of managing its own affairs. They must have a Eurobond. This is SO clear, as the Fed is not going to be in a position to rescue them again. Germany can bitch all it wants to about devaluing the Euro, but EVERYONE has to go down in step by step fashion if we are to avoid going down in an explosion. The QE3 effect on equities will be when US bondholders realize that the world is really not ending, because rational people prevailed. It will be characterized by a loud sucking sound in the bond markets, and an explosion in equities, which in 2009 dollars closed on 8/10/11 at 8987 on the dow and 939 on the S&P. It will be really scary if you don’t understand what is happening, but terror is what causes otherwise rational investors to accept a negative real return, and it can only be sustained for so long.


  259. PS: I was at Best Buy last night and it was packed.


  260.  Nice, Sparky!!  No Eurobond, no united currency Europe.  Has to be true, given the mathematics of doing othewise.  It’s either hang together, or hang separately — Germany/Netherlands and others could always bail, but then the political project — which is the root of the Euro — goes belly up and let’s hope they don’t start WWIII, since Europe did a pretty good job on WW I & II.
     
    It’s enough to convince me, against all other evidence, that I should be loading up the truck with TBT!!


  261.  All of the antics we are watching from Washington and the Federal Reserve are about power, pure and simple.  For example, my supposition that QE3 will be announced with a particular nod to the timing of the next Presidential election cycle merely derives from looking at the balance of power between the banks, the Federal Reserve and the government, especially President Obama.
     
    Start with the banks.  They have done EXTREMELY well under Obama and the current government.  They have had ZIRP(which will now extend for another 18-24 months), a steep Treasury curve, QE1 & 2, open SWAP lines and taxpayers bailouts.  Plus, the Frank-Dodd bill really does not even count as regulation, and at best might be considered closing the barn door after the horses have escaped.  There have been no significant prosecutions or investigations of the banks or their role in the collapse.  Power within the banking industry has consolidated around a few TBTF institutions which are re-leveraging themselves with the full confidence that when another collapse happens, they will be bailed out and the President will once again stand aside.  So they want to maintain the status quo.
     
    The Federal Reserve has been allowed to try experimental monetary policy with little or no questioning from government.  They have been allowed to expand their balance sheet and maintain and easy money policy without significant examination or question.  And there appears to be no significant headwind coming from the government or President to interfere with their actions in the near future.  Basically, they get to fleece the American public and then leave taxpayers holding the bag.  Great gig if you can get it.  The Tea Party movement has significant issues with the Federal Reserve, and the Republicans appear as bullies who use austerity to threaten and cajole into getting what they want.  Why would the Fed ever throw in with either of them?  Bernanke has to be on one of the greatest power trips of all, the man is simply the most powerful person in the world at the moment.  However, his term is up in 2013 after the Presidential election.  So to say he doesn’t have an interest in at least paying attention to getting Obama re-elected, is to fail to understand the dynamics at play.  He wants to stay at his post, and Obama’s the best way to get there.
     
    Finally, Obama’s in bed with the banksters now, and has been pretty much since the beginning (Larry Summers, Gene Sperling, Timothy Geithner…and the list goes on).  I won’t go into detail here, as I don’t want to make this a big debate about him as a President.  Rather, I want to keep this about the power balance going on between these forces, and highlight how they align in support of doing what is required to get Obama re-elected.  Suffice it to say, Obama has wanted little more than to be re-elected since he took office.
     
    So, where does this leave us?  Well, commodity prices, especially oil, are simply too high to launch QE3 right now.  China is struggling internally, and they are our bankers, and much of the rest of the world is teetering on the edge because of inflation, think MENA, peripheral EU countries, etc. 
     
    Then, to think like Bernanke, the reasoning might go something like…well, the economy is showing significant signs of slowing, and unemployment has not eased as much as we would like, but let’s wait another quarter or so to see if continuing data confirms this slow down.  In the meantime, we stand ready to utilize our market tools to protect the economy and maintain our mandate.  Nothing about Obama, nothing about the elections, just normal, Fed speak, but think about the underlying power struggle.  Hence, in plain sight, QE3 doesn’t happen until the timing is better, probably announced in December, launched in March, barring some external force that becomes so great(ie Europe blowing up), the its forced early to protect our banks.  Nobody has to say anything, but I wouldn’t be surprised if they didn’t at least think about it.


  262. Sparky, I’m with you.  Plus , the middle class is now getting a slight "tax cut"  as a result of lower gas prices (however temporary). I just do not want Countrywide to  go bankrupt or Italy to default. That could be another tipping point.


  263. Bernanke ( who I believe still buys his suits from Joseph Banks)*  was blindsided by the derrivatives explosion after the Lehmans collapse, but my guess is that he knows where Countrywide’s bodies are buried this time. As for Italy, time will tell, but Germany does like to sell them military hardware and prob doesn’t want to get paid in Lira.
    *maybe not a sign of meglamania yet Hoss


  264. Silent- Oops I must have had Greece on the brain with the military hardware -seems like yesterday.  Italy would be a mixed bag of chemical and engineering products, but the point is the same.


  265. Oh by the way TOS called me (I guess I should be honored) to tell me they will be down until tomorrow afternoon as they decided to do the big fix this week.

    Also – an this is going to blow your minds! – As of tomorrow night, you will no longer have a funded futures account because, for the next 30 days – it will no longer be linked to your trading account and you must SPECIFICALLY fund you futures account separately from options.   

    The system will go back to where it was in 30 days (they say) but, if you want to allocate money for futures trading, it has to get funded separately which is, of course, ridiculous because of margin issues as it’s the unused margin from the stock and options account that makes futures trading viable in the first place.  

    They said they will be sending out an Email but they wanted me to know as we apparently have their attention with our futures activity.  


  266. Howdy. Heckuva week, eh Timmy ?

    Hope everyone is doing well.

    It’s a challenging and risky environment so be careful.

    Phil that TOS news is unreal – are they kidding ? Guess not. I don’t use them.

    Maybe try Tradestaion, who I also don’t use (yet).


  267. I think, that the reason TOS is going through this step is because TDA is going in opposite direction. TDA users had to have 2 separate linked accounts (Futures and Standard) up until now. I belive starting next week these 2 accounts will be combined.


  268. Welcome Kermir!  You picked a heck of a week to start.  

    AGNC/Dflam – It’s in there already. 

    Confiscation/ZZ – Speaking of amoral confiscations, municipalities are already cutting existing retirement benefits, something I’ll be talking about in the Political post later.  This is the first step towards rolling back all the promises made to workers, now that the bill has come due. 

    Tipped off/Exec – We were "tipped off" too – you just have to pay attention.  What was I saying the whole time the VIX was hitting lows?  That "they" were using the unnaturally low VIX to stock up on cheap puts so they could dump the crap out of their positions at any price without consequences.  That was going on all during the great flatline and we were prepping for disaster at the end of July.  Now I’m thinking we’ve bottomed as mission has been accomplished and retailers have capitulated and puts have now been SOLD for a fortune so it’s time to take the market back up – most likely on QE3.  If we do break below the 20% lines though, then it’s possible they’ve lost control but, other than that – just the normal BS they like to pull.  As Angel says, it’s not Obama that pulls these strings – as soon as the banks are in trouble, the money will flow again – THAT’s the only emergency that matters.

    QE3/Jake – There’s a difference between whether it will happen or whether it will be effective.  Also, it was very effective as it transferred hundreds of Billions of Dollars of wealth from the bottom to the top – what can be better than that?  Keeping rates low allows Bankers to pay savers less, screwing people on fixed incomes while allowing rich people to borrow money at record low rates which they can take the foreclosure sale and confiscate the poor people’s land.   As you say, credit worthy has been redefined as RICH.   No more competition for capital – the rules have changed and, if you’re not already rich – you don’t get any!  Who’s going to stop QE3 – poor people?  Are the rich people going to say they don’t want more free money to play the markets with?  Are Corporations upset because they can borrow at 3% and buy out their struggling competitors?

    Felonious Munk/Jake – Wow, do you really believe that’s an actual guy who used to support Obama but has become disenchanted?   I do hope you are joking.  There is no existence of this guy prior to these critical videos.  There has long been a guy named Thelonious Monk, which is what gives this the air of legitimacy but seriously, do you think a real person, even a rapper or whatever this guy is supposed to be, would call themselves "Felonious" and then misspell Monk?  I suppose there are many people who believe black people will do anything – even when this particular guy would seem like he’s had enough school to know how to spell Monk.  

    Anyway, this video hits ALL the conservative talking points.  I’m very sure this guy specifically voted for Obama because he was concerned about Gay Rights (first thing he says).  Marijuana legalized (2nd thing) makes more sense.  Then he says "how can we get more money for roads, more money for schools (as if that’s not what Obama wants) and then complains about balancing the budget, which takes away the money for roads and schools.  I can see why this is such a popular video with Conservatives as it’s about is ridiculous as their usual logic…

    How do you even approach the Debt ceiling?  Well it’s been approached 176 other times and voted up so I guess it’s not just a question for Obama is it?  Then there’s the dig at the Ivy League educations because we all know how wrong those are for people running the country.  How do we owe China?  Maybe it was Bush granting the Most Favored Nation status against the wishes of the Democratic Congress?   "We got a black President – you acting like one B – pay your bills."  Wow, that is some nasty, prejudiced stuff – do you REALLY believe this is not scripted by Conservatives?  What’s the theme that’s being drummed in here – Balance the budget, pay the bills (to the Bankers and Bondholders) – sacrifice everything else to do that.  

    Also, it takes all of 30 seconds to find the web site of Samuel Rogers, who produced and directed this video and then go back through his archives and who do we find as a model in some of his photo shoots?   Why it’s the "comedian" now known as Felonious Munk as recently as March, before he got his "protest" gig!

    photo

    I don’t know what’s sadder, that this kind of manufactured, manipulative media BS is done in first place or that our nation is filled with so many people who unquestioningly accept this trash as reality just because it presses all their little buttons.  As Malcome X said:

     “The media’s the most powerful entity on earth. They have the power to make the innocent guilty and to make the guilty innocent, and that’s power. Because they control the minds of the masses.”


  269.  The system is completely broken (whatever the system is).  FUBAR.
     
    And why are some folks so insistent on defending President Downgrade ?  I don’t get that …


  270.  Market –  Be prepared for continued volatility for at least another 3-4 weeks.  And a test or even failure of the lows of last week.  
     
    Jakester – Felonious Munk.  That was hilarious.  Reminded me of the guy in FL who used to do videos where he smashed electronic stuff w/ a baseball bat while bitching about the economy.  Must get those 2 guys together.
    And Phil, that was clearly comedy … what upsets you so ?


  271. Cap- When it comes to preaching the good liberal message, Phil doesn’t have much sense of humor these days….


  272. Munk – Just another dumb f*ckhead, talking about sh*t he knows nothing about…
     
    How’d I do?  ;)