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Which Way Wednesday – 1,200 or Bust!

SPY WEEKLY Remember 1,333 or bust?  

That post was less than a month (and 10%) ago (July 20th), when I warned that earnings were NOT looking good when measured in constant currency and that the Greek crisis was spreading like a cancer and it was ridiculous to pretend that it could be "fixed" with the BS solutions that were being proposed at the time.  

Yesterday we all waited anxiously for Merkozy to come up with their proposal and the disappointment was palpable from the markets as soon as they came out (we picked up some nice short trades in Member Chat!).  There was no expected increase in the size of the Euro-Zone Fund, which is looking inadequate now that Italy has been thrown into the bailout mix.  That sent Gold back to $1,800 and TBills back to the lows.  

"We can’t solve problems in a big bang," Ms. Merkel told reporters after a meeting with Mr. Sarkozy. "What we are proposing will allow us to regain confidence step by step."  Fortunately God did not feel that way when he created the universe or we’d still be waiting for him to finish the first 100 Million Galaxies.  "A fundamental discrepancy remains between what markets need and what politicians can offer," said Jacques Cailloux, chief European economist at Royal Bank of Scotland, predicting more tensions in markets.  

Mr. Sarkozy and Ms. Merkel set out the following proposals:
  • Elect a euro-zone president with a 2½-year mandate
  • Enshrine fiscal discipline in the constitutions of the 17 euro-zone countries
  • Introduce a tax on financial transactions within euro zone
  • Align French and German corporate-tax rates
  • Prepare French and German future annual budgets on the basis of shared macroeconomic analysis

Wow!  It took them all day to come up with that?  So after waiting over a week for this historic meeting we get NOTHING at all to fix anything NOW.  At least the US Congress tells you they can’t agree on anything – so you KNOW you are screwed.  These guys do nothing and pretend they accomplished something.  They did accomplish freaking out the Financials by proposing a tax that would impact High-Frequency Trading, which is estimated to be about 70% of all market activity.  While that may be bad for a few IBanks (which makes it very unlikely it will actually pass), it’s great for the non-robotic market players as it would be very nice to trade with PEOPLE once again, who buy stocks with the intention of holding them for more than the next 5 minutes.  

Nonetheless, a positive statement from the EU leaders promising to do something or other sometime in the future should be enough to calm the panic in the EU markets and that should be enough to strengthen the Euro and weaken the Dollar to prop up our markets but let’s not be fooled by a "Weak Dollar" rally.  

I already sent out an Alert to Members this morning, warning that the Dollar has been knocked down over half a point early this morning (our usual 3am trade) so anything LESS than a half-point pop in the Futures is bearish and we looked at shorting S&P Futures (/ES) below the 1,200 line and the Russell Futures (/TF) below the 710 line.  

We are, on the other hand, patiently waiting for inventories (10:30) to short oil.  There was a major refinery outage last week that caused a draw in gasoline but the reason doesn’t matter as long as there’s an excuse to pump up the prices but this will be a fantastic shorting opportunity back near $90 a barrel and we can once again stick it to the NYMEX pump crew by agreeing to sell them barrels for the $90 they are going to pretend to want them at by shorting the (/CL) Futures.

As you can see from our Big Chart – we’re still struggling to get the NYSE over that -5% line and anything other than an up day is going to form a pattern that is both ugly and lame in our indexes, which are already suffering the indignity of "Death Crosses" across the board so those Must Hold levels are going to be VERY difficult to retake – even under the best conditions.  As I have been saying all month – ONLY QE3 can save us at this point and today is not likely to be the day with Fisher speaking at 1:20.  

 You can see how the SOX and Transports are already curling over from their weak bounces (25%) and the lower they stay, the faster those 20-day moving averages drop away from the 50 dma – giving us uglier Technical Patterns.  We’re not getting any help with today’s data as the Core PPI was up a blazing 0.4% in July, double what was expected by the Economorons who predict this sort of thing for a living.  That’s going to make it very hard for the Fed to justify more Quantitative Easing.

The BOE, on the other hand, has given up fighting inflation, with rates there over 4% – about the same levels we had in the US when Nixon imposed both wage and price controls (didn’t help) in the 70s.  Meanwhile, in the US, Rasmussen finds a record number of people saying they are paying more for groceries than ever before with only 4% saying they are not spending more than they were last year.  

Whether those people are great shoppers or merely clueless is not known.  On top of that, the Rasmussen poll finds: "Confidence among Americans in the stability of the nation’s banking industryhas hit rock bottom" and "Overall consumer confidence as measured in the Rasmussen Consumer Index is now hovering above the lowest levels of the post-9/11 era."

Vietnam’s annual inflation is hitting 21% and China is practically begging us to stop the madness and are finally de-pegging the Yuan with a $3.1Bn auction now scheduled to begin giving them some volume to free-market pricing of their currency.  Meanwhile, the US is talking about QE3 AND Stimulus Measures but I’m not sure that we can drive the Dollar low enough to reprice our equities and commodities higher – more likely, the dip in the Dollar is just masking another round of selling as people run for the exits and back to the relative safety of our declining Dollars.  

Trade your stocks and commodities for Dollars while they are cheap and please, be careful out there!  

 


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  1.  Good Morning Everyone,
    Phil, which USO September puts can I look to add today for a shorting opportunity?  What should I be looking for to add them?
    RIMM has earnings for September 9th.  Do you have any suggestions for a RIMM earnings play?  
    With selling RIMM Sept $22.50 puts to finance a SQQQ play, how would you look to "protect" those from earnings results and also from the changes in IV that frequently occur around earnings?  I do understand that we are selling puts only on things that we REALLY want to own, I am just wondering if you can help me understand your approach even better 8-)
    Thanks,
    Dan


  2. Oil Lines
    R3 – 90.50
    R2 – 89.21
    R1 – 88.19
    PP – 86.90
    S1 – 85.88
    S2 – 84.59
    S3 – 83.57
    Yesterday’s high and low – 87.93 / 85.62 
    Breakout lines – 91.66 / 79.57
    Today is inventory day!


  3. Phil, this one is for your Merkozy file….
    Caption – "I admire the German model"
    http://av.r.ftdata.co.uk/files/2011/08/I-admire-the-German-model-Der-Spiegel.jpg 


  4.  Phil: Income trade TBT
    Like your FAS play TBT has moved hard to the downside and left me out of position on the puts, My longs were(20) Jan 28P and Jan 38C’s but I was not in position to trade one day and panic rolled my short puts to Jan 32 leaving me with no premium to sell.  To get back in the game on the put side was thinking of rolling my long 28′s to perhaps 1.5X 26′s so I can at least sell be selling 10 short puts, or do I need to keep the number of calls and puts equal and put more cash in?  TIA


  5. Interesting
    Silicon Valley billionaire funding creation of artificial libertarian islands
    http://news.yahoo.com/blogs/lookout/silicon-valley-billionaire-funding-creation-artificial-libertarian-islands-140840896.html


  6. I wish we would follow the Euro zone lead and tax HFT transactions.  What a source of revenue that would be.  Since they should be illegal anyway for frontrunning and they basically are just printing money, they should be taxed at a high rate.


  7. Phil,
    Your rec for the best vehicle to hedge MLPs (energy transmission, some cmdy pr risk).  ERY (@17 now, range 12-60) tracks AMZ well but lo vol.
    Thanks


  8. Phil,
    correction re MLP inquiry. Vol on ERY is in millions, my mistake.


  9. Pharm,
    PLX got acceptance by the FDA for the application for Gauchers disease drug.  This should be the turn and I would expect PLX to at least fill the gap to $5.61.  What do you think?


  10.  JRW’s lines again today with a need to hold over the 70.66 and break over 71.01.


  11. Lincoln – there are probably a few of us tangled up in TBT puts so it is good to see how you are working your way through it. Thanks for posting your trades and ideas. I will be on the watch for the answers.


  12. Good morning,

     

    IWM  68.10,  68.67,  68.97,  69.70,  70.18,  70.66,  70.98,  71.31,  71.72,  71.98,  72.76,  and  73.74

    No change today as yesterday’s lines worked very well; if we don’t have a green day today, we will be in "technical hell" !!


  13. PLX/button – they only accepted the letter…in other words, they accepted the format and it was submitted properly.  Now comes the crucial time for reviewing.  I think they have 90d, but could be more.  I need to look it up.  Overall, I think they hold the last bottom area, unless it is rejected.  This is really a non-event.

     

    No PP for today, TOS still has issues with Myshare and Prodigio.  I have them calculated in an excel sheet, but it is not as pretty…..as soon as it is up, I will post.  Been real busy with the integration of the companies…..


  14. 1/3 TNA off IWM 70.98, and I will be buying more on the break trough IWM 71.31 !!


  15. Good morning!

    Hard to be enthusiastic about this open (in case you couldn’t tell from my post!) with the Dollar jammed down to 73.54 and the indexes STILL not getting over yesterday’s highs – that’s not good!  Oil blew the doors off yesterday’s high and topped out at $88.50 and that’s a good spot to short (/CL), of course but tight stops as we STILL expect a run-up into the 10:30 inventory report.  

    It would be nice to get a failed run-up in anything to short into this morning as it’s super-doubtful that Fisher is going to boost the Markets at 1:20.  

    We’re drifting between our Must Hold lines and the 5% down lines, right about the -2.5% level and which side of the middle 3 of our 5 indexes drift to will tell the tale today.  If the NYSE can’t take out 7,473 – it doesn’t matter what games the other indexes are playing – that will be bearish as we don’t want to see resistance there.  

    As I said earlier, we like the Futures short at RUT (/TF) 710 and S&P (/ES) 1,200 but the big play today will be shorting oil (/CL) below the $88.50 line or, hopefully, below the $90 mark if they get that high.  Expect the Dollar to re-test 73.50 and, if they hold it, then it’s a great time to hit the shorts but, with oil, we’re waiting on that inventory report at 10:30.  

    As an overall short on oil, the Sept $32 puts are down to .65 and .60 is a good spot to DD in the $25KP (10 more).  AFTER that, with an average of .75 per contract, we want to consider rolling up to the Sept $33 puts, now .90 for .30 or less.

    Another fun way to play an oil sell-off is the SCO Aug $53/54 bull call spread at .60, selling the XOM Aug $72.50 puts for .27 for net .33 on the $1 spread that’s 100% in the money at the moment.  

    Thank goodness we have a nice pop in FAS and we’ll look to do another 1/2 sale of the Aug $15s if they get back to .85.  

    So we should LOOK good as long as the Dollar is down near 73.50.  If the Dollar breaks below 73.50, then I am wrong about how low we can go and bear bets are off.  If we hold that line and bounce off, things can get ugly fast.   At the moment, the Pound IS over $1.65 and the Euro is right on the $1.45 line and the Yen is below 76.50.  Those are all the targets I do not expect to break (even though they have) and still do not expect to last.  

    At the open: Dow +0.20% to 11428.56. S&P +0.30% to 1196.36. Nasdaq +0.16% to 2527.51.
    Treasurys: 30-year +0.41%. 10-yr +0.27%. 5-yr +3.33%.
    Commodities: Crude +1.83% to $88.24. Gold +0.29% to $1788.00.
    Currencies: Euro +0.58% vs. dollar. Yen -0.42%. Pound +0.24%.

    Market preview: S&P futures +0.3% and pointing to a recovery following yesterday’s "Merkozy" disappointment, and despite PPI rising more than forecast. The focus is back on earnings, withStaples +8.4% and Target +5.4% after both beat forecasts and gave strong guidance. However, Dell -7% following its revenue warning. Treasurys and the dollar slip a bit.

    Notable earnings after Wednesday’s close: JDSULTD,NTAPPETMSINASNPS

    The greenback is again testing postwar lows vs. the yen,after giving up all of its gains following the Japanese intervention a few days back. "Mr. Yen" says we haven’t seen anything yet. Dollar buys ¥76.50.

    "Pegs Can’t Fly," is Citi’s Steven Englander’s response to today’s moves by the Swiss to devalue their currency. "The SNB is still reluctant to intervene in the FX spot market and that investors expecting such measures … could be disappointed." While the Swiss may have halted the franc’s rise, actually weakening the currency is a different story.

    Interesting:  IMF chief Lagarde urges Western nations to stop focusingso much on near-term fiscal austerity, saying markets won’t reward such behavior if they believe the cost is a faltering recovery. While deficit reduction is vitally important, efforts should be made to implement cuts when economies can better withstand them.

    Bond rates remain higher (prices lower) following the fast PPI report, the U.S. 10 year yielding 2.24%. Market participants hoping for a repeat of Ben Bernanke’s Jackson Hole salve (his address is on Aug. 26) could be disappointed as 7.2% Y/Y producer inflation may tie his hands. 

    Cigarette manufacturers file suit in an attempt to prevent an FDA requirement for graphic cigarette package warnings from going into effect. Lorillard (LO), Reynolds American (RAI), Imperial Tobacco (ITYBY.PK) and Liggett (VGR) claim the proposed changes violate their freedom of speech. Philip Morris parent Altria (MO) hassupported the new labels. 

    The NYSE will delist the ADRs of Chinese software company Longtop Financial (LFT), which have been halted since May amid concerns about accounting irregularities. During that month, Longtop’s auditor and CFO quit, and the SEC opened an inquiry into unspecified auditing issues.

    China’s state-owned CCTV is continuing its attack on Baidu (BIDU), now accusing the search giant of tolerating "slanderous" posts on its message boards. CCTV has also set up a site primarily focused on criticizing Baidu’s behavior. Speculation is growing over the possibility the attacks reflect broader government anger towards Baidu. (previously

    Apple (AAPL) continues to use its massive cash pile tosecure component supplies at favorable prices: MF Global’s David Rubenstein says it’s "highly possible" Apple will make a $1B investment in a Sharp (SHCAY.PK) LCD plant to obtain displays for the iPhone and iPad. Samsung (SSNLF.PK), locked in a bitter legal battle with Apple, could be a loser in this deal.


  16. Phil..permission to cry Sir..its…its the dollar SIr…doesnt look like its going to make it  :-(

    QE3 in the bag by the looks of it.


  17. FAS Money Position Recap

     
    Long Strangle – Jan 12 12 Puts (3.25 now 2.37) and 2x 18.33 Calls (2.11 average cost now 2.45) 
     
    Weekly – Short August 22 Puts (2.87 now 6.82)
    Monthly – Short August 23 Puts (3.65 now 7.82)   


  18. USO/Danosu – See above.   RIMM I think will do well but they already came back nicely so I’m not too keen on new bullish plays.  I think I picked them about 20 different times when they were way down 2 weeks ago and now it feels like chasing since they are up almost 20%.  You don’t "protect" a short put sale – you either believe in the stock enough (AND have the money) to own the position long-term or you should not be selling it short.  If you start spending money to hedge your hedges, things get silly fast.  The idea is you take an SQQQ play as insurance you EXPECT to lose.  Then, if you find a stock you REALLY want to own IF the Nasdaq falls far enough to put your SQQQ play in the money – THEN that becomes a good offset to the insurance money you are spending.  As you notices, I was generally bullish with the SQQQ spreads lately, always picking offsets that fully covered the spread that were OPPOSITE bets (bullish short puts).  When we are REALLY bearish, our offsets are short puts on SQQQ to give us super returns on a dip.

    Dollar 73.55 and falling.  Indexes up about 1% on 0.75% drop in the buck.  Our test is coming very soon.  

    TBT/Lincoln – Your logic is good, you don’t need to stay even as you are selling into the excitement on the short side.  Inflation is everywhere, just not in our bond market – yet.  

    Libertarian Islands/Vic – That will last until the first one is taken over by pirates and all the people are ransomed off – then watch them cry for "Government!"  

    HFT/Rustle – It won’t generate much revenues because they’ll just stop doing it – unless the rate is pretty darned low.  I’m all for it because the churn of these stocks, especially the financials, is ridiculous.  

    FAS Money – Since I am bearish here (Dollar 73.50), how about we sell 1/2 the Aug $14 calls at $1.35 with a stop at $1.45 (over the earlier high).  Worth risking a dime I think.  


  19. Out of TNA; TZA may be the way today, and if so, maybe for a while !!


  20. Phil/QE3 Note that CAC40 is sharply up today. I guess that the Europeans gradually realize that QE3 is already underway in the form of Italian and Spanish bond purchase by ECB.
    The amounts per week are comparable with those during QE2. QE2 lifted not only US stocks
    but European stocks as well. I hope that European QE3 will lift US markets.


  21. Made 50 cents on 1/3, even on the rest; 3 minite chrt did not confirm the sell, so back in over IWM 71.31. 1/3 in now !!


  22. JR/Technical hell,
     
    Don’t you think the Bots know that?


  23. LOL – ANF will pay "The Situation" (from Jersey Shore) NOT to wear their stuff!  

    MLP/8800 – If you have a lot of them, I’d find the one you think is most overpriced and short it.  You can do something like a Mattress Play and, if you find one that fits the bill (I don’t watch them much) that has options, I can suggest a spread.  

    73.515 was the bottom on that test, now back to 73.61.

    Technical Hell/JRW – My feelings exactly.  

    Dollar/Kustomz – LOL:  

    Oops – Suddenly we are taking off.  Dropped a dime on FAS Money but the $15 calls are .10 more and those are what we really wanted to sell (or the $16s if we keep going up) so no biggie yet unless we miss the turn.

    That push higher came despite the Dollar moving up to 73.63 but the Dow futures still getting stuck at 11,500 (about 11,525) and oil having trouble at $89 so far with inventories in 10 mins.  


  24. Really? AAPL’s website being down makes news? Really?


  25. Phil or anyone – can anyone suggest a good lawyer to go after a brokerage?  The discount broker whom I am with did not sufficiently notify regarding changes in margin requirements, nor answer questions during the last selloff, resulting in lots of losses for me – anyone know of a good attorney to go after them?


  26.  Morx: TBT
    You gotta love Phils response above, as long as we can sell premium and or roll along his is the voice of calm.  If you had asked me I would have said "Holy sh$$T, how did I get into this mess, and how will I ever get out of it!"
     I really am learning to look ahead to adjustments, still plenty of times I end up sitting here scratching my head without a clue, but I am getting better.
    FYI I know you’re in CLT, I’m up in the mtns, (Newland) for the summer, it was low 50′s last night and we needed all the blankets we have, fall’s on the way ;)


  27. FAS Money / Phil – Got stopped out in a hurry on these 14 Calls…. They are coming back down again though!


  28. @Felipe

    Your recommendation for selling the BRK.B puts has once again proven very profitable: 100% in less than  a week.
    Thanks again, many times over.


  29. Lincoln – it’s even windows open in Clt today. very nice. spent a few days in Bryson City and Nantahala last week. slightly warm but that’s good cause those mountain streams feel so nice. hope you enjoy the rest of the summer.


  30. Oil inventories are up 4.23M, distilates up 2M,  gasoline down 3.5m (as expected) – very bad inventory so game on with the shorts of course!  


  31. Phil, I think the giant switch yesterday may have ben more nefarious than we think.  I might just be paranoid but I have noticed my option purchases not getting fills like they used to.  I just had the USO puts go from .62 x .63 to .63 x .64. to .64 x .65 bid x ask as I moved my order up a penny at a time.  That never used to happen with TOS.  If Ameritrade is fucking my order routing I am done with them this afternoon.


  32. Ouch, and out !!


  33. 10:00 AM On the hour: Dow +0.84%. 10-yr +0.63%. Euro +0.73%vs. dollar. Crude +2.49% to $88.81. Gold +0.21% to $1786.2.

    "Policy should be set according to the state of the economy, not according to the calendar," says the St. Louis Fed’s Bullard (non-voter on FOMC), explaining why he would have dissentedfrom the bank’s promise to hold rates low until at least mid-2013.

     Now it’s Charles Plosser’s turn to explain. After Narayana Kocherlakota created a video last week for the Minneapolis Fed’s website to explain his dissenting vote, Plosser took to a more old-fashioned medium. In an interview on Bloomberg radio, he says "there is a price to be paid" for monetary policy – adding the decision was "inappropriate policy at an inappropriate time."

    The ECB’s latest tender operation for emergency 7 day liquidity – a dollar-denominated discount window for Europe, if you will – shows just one bank borrowing $500M. Why of interest? Nobody has borrowed from this facility since March 2011 and no one has borrowed in size since March 2010. Some lender is feeling the heat.

    Here we go again:  Shell (RDS.A) faces mounting criticism over its reaction to a large oil spill in the North Sea. Der Spiegel reports the company will not respond to requests for specifics regarding the extent of damage from the leaking pipeline, while Greenpeace weighs in saying the German government and EU have fallen for "cover-up maneuvers."

    First Solar (FSLR) is down 5.2% after disclosing the head of its Utility Systems Business Group will be leaving. Utility sales are seen as a major growth opportunity for First Solar, whose panels aren’t ideal for residential deployments. Meanwhile, Goldman is removing the company from its Conviction Buy list, citing "near-term uncertainty" in solar.

    Verizon (VZtells 45,000 striking workers it will suspend basic medical benefits at the end of the month if they haven’t returned to their jobs, a move union officials call a “scare” tactic. Verizon is asking the employees to pay more for health benefits, while the unions say the company is profitable and executive compensation is healthy.

    Oslo, Zurich and Geneva occupy the top three places in UBS’s (UBS) rankings of the world’s most expensive cities, with New York 14th when excluding property rental and London 15th. In a study, UBS compared the prices and earnings in 73 cities for a basket of 122 goods and services.


  34. reading lots of social unrest articles out of india all of a sudden


  35.  Protests swelled across India on Wednesday in support of a self-styled Gandhian anti-corruption campaigner fasting to the death in jail, with Prime Minister Manmohan’s Singh’s beleaguered government apparently unable to end the standoff.


  36. Phil -

    I want to play KO but trying to figure out entry and best way to play it.

    Any thoughts? ideas?


  37. QE3/Alik – CAC not up that impressively.   They fell from 4,000 to 3,000 and now testing 3,300 – same weak bounce we’re all getting.    Also keep in mind that if the bounce is slower than the drop, you are not really on track for a full reversal unless you have reason to believe a lot of new money is pouring into the markets (not likely).  QE3 doesn’t count until Bernanke blesses it. 

    73.70. 

    Lawyer/Jerconn – I’m not sure who would fit but you want to find a class-action type firm.  Maybe you can be the lead plaintiff.  Better than pouring a ton of money into prosecuting it on your own I would think.

    FAS Money/StJ – As long as XLF is holding $13.15 it’s good that we stopped out as it’s more likely we go to $13.25 or even $13.50, which would be up $1 on FAS.  I’d watch that line and watch 73.70 on the Dollar as I still think it’s a smart play (1/2 short Aug $14 puts, now $1.40) below $13.15 (and above 73.70) as oil may drag us all down if they break here. 

    Order fills/Craig – That would be the last straw!  Nothing is more important than good execution.  

    India/Angel – Yes, that food inflation is really hitting hard out there so it doesn’t take much to set them off.  Government supports all kinds of prices so they think everything is the Government’s fault but they are going broke just trying to keep fuel and cooking oil affordable.  

    EIA Petroleum Inventories: Crude +4.2M vs. consensus of -0.5M. Gasoline -3.5M vs. consensus of -2.3M. Distillates +2.4Mvs. consensus of +0.7M. Futures +1.9% to $88.30. 



  38.  ubs-bloomy ag spot index up big again today….NO WAY qe3 is imminent….and if it is..all hell breaks lose in emg markets.


  39. India – protests against corruption have been going on and off for the past year. It is gaining momentum now especially after the arrest of India’s modern day Gandhi – Anna Hazare.


  40. FAS Money – If I understand well, we broke below 13.15 on XLF and are above 73.70 on the dollar now so would be a good time to short the FAS August 14 Calls now at  $1.33!


  41. JR,
    Are you using the trend line from 1:00 yesterday?


  42. exec
    I have a ne must hold of 70.80 about that lower trend line.


  43. Thanks Shadow.
     
    Apparently a lot of traders are figuring that line will hold and jumped in.


  44. Phil / SQQQ Spread
    I had a few simple questions about trade mechanics on the SQQQ Spread.
    I bought 10 of the SQQQ 25/28 for 1.20
    I sold 15 of the FCX 41′s for .95
     
    Both of these trades were done in the morning, and then I had to leave for the day and couldn’t watch the markets.  It seems to me like yesterday the SQQQ spread might have been up more than 20%.  Would you suggest that I should have entered a order to sell the spread at a 20% gain?  The spread is about even.  
     
    Today the FCX puts are up about 30%.  FCX is a stock that I would like to own, but I think the prudent thing to do is sell the FCX puts for the 30% gain and redeploy.  Again, would you have just entered a limit order for a 20% gain as soon as you did the trade?    As a more general question, once you enter into a "trade", what type of orders do you put out in the market to protect your upside and downside?  
     
    And last question.  I see that many times in your morning write up the trades reccommended will make 400% or 500%.  Isn’t the philosophy to take a 20% profit on all trades?  As we scale into trades, is there a way that we scale out of trades to let some of the money run and achieve a 400% gain?  
     
    Thanks,
    Burr


  45. Same ol games with the dollar.


  46. Phil, how are you feeling about those GOOG 550s (now $1.70). Pain is at 555.


  47. exec
    What worries me is if this were only a correction IWM should be over 73.35 ish the upper trend line and around Phil’s must hold line. Maybe this time is different but Phil doesn’t seem to buy it and JRW is looking south.


  48. exec, I should add that I got the upper line from the 20 day 60min.


  49. All in TZA !!


  50. Phil / Oil   Surprised it’s not falling more on the poor inventory report?  I guess we need a stronger $ first?


  51. Crystal balls for 2012:
    http://www.ritholtz.com/blog/2011/08/the-2012-crystal-ball/
    As of 8/12 the trailing P/E for the S&P 500 was 14.08 (from the WSJ, Shiller calculates it differently) so based on the earning predictions from these analysts (assuming a stable P/E ratio – I know big assumption but we close historically), that would give us the S&P at around  1460 by end of 2012…. That would be 21% above today. I guess we’ll see.


  52. And more possibly incorrect assumptions on BAC would not bode well for the future of that bank:
    http://www.ritholtz.com/blog/2011/08/bacs-accounting-subprime-cdo/ 


  53. Phil – do you have a low target for oil.  I entered DUG on your short oil call.


  54. Phil – btw, I used DUG because TOS has me locked out of /cl as well.


  55. Phil / All
    In order to best follow the action here at PSW what screens should I have open?  Dollar, Oil,  Any particular charts most relevant for an everyday foundation?    Have my accounts with Options House     What do you guys use    Suggestions???


  56. Shadow,
     
    I hear ya.  I road TZA down to the trend.  Jumped off figuring they may play games with the dollar now that it’s 11:30.


  57. KO/David – You missed the really nice dip to $64 and now over $69 again is no longer cheap.  The dividend is just 2.8% so I’d go for selling the Jan $65 puts for $2.10 or the 2013 $62.50 puts for $4.50 as an initial entry as that’s more than the dividend anyway.  If you want to be bullish, you can just spend another $2.50 on the Jan $67.50/72.50 bull call spread and that’s not too much premium (.70) rather than spending $69.23 for the stock.  

    Bonds/StJ – Sounds like a good idea to me.  

    Thanks Nicha!  

    FAS Money/StJ – Yes, better safe than sorry at the moment.  

    73.80

    SQQQ/Burrben – That’s the Friday options?  If so, then it’s all about whether you are on or off track.  20% is not a lot but your risk reward shifted from $1.20/1.80 to $1.35/1.65 so, at a certain point, you are risking more than you can gain and then you do need to strongly consider stopping out.  But you also can’t take it in isolation.  Was it a BET or are you protecting a bullish play?  Also, consider the fact that it’s insurance and now it looks like there is no way FCX fails $41 by Friday (now $47.25) so it’s FREE insurance – in which case the question is more like "I have some free lottery tickets – should I cash them in for $1 or see if I won?"  There’s a very good reason rule #2 (and we only have 2) is "When in doubt, sell half" – you have a net .35 spread and you are up more like 100% total on that and that’s pretty good.  If you take 1/2 off the table and put a stop on the rest at even, you lock in a 50% gain.  That 20% thing applies to directional bets, with spreads we generally aim to do better.  

    GOOG/DrC – Funny you should say that, I hope Burrben is reading this as that’s an example of one you should have taken some off the table on as they jammed up to $3.45 at yesterday’s close.  As I went bearish this morning and as my bearish premise is playing out, I’d say it’s a little too dangerous to hang onto at the moment as the clock is ticking and I’m not sure we have enough time to recover.  

    Oil/Tusca – This may be one of those days where we get an ugly sell-off into the close.  I’d like to see $85 get tested.  

    BAC/StJ – I like that chart.  

    Oil/SS – See above, I want to see $85 tested at least.  

    73.835

    Screens/Sampur – My futures set is S&P, Nas, Dow, RUT, Oil, Gold, Dollar, TBT and XLF – that’s the group I watch the most.  Then I have a forex screen with Euro, Pound and Yen, Silver, Nikkei, Dollar (can’t look at the Dollar too often), Copper, Nat gas and gasoline.  After that, I usually mention the things I’ll be watching closely in the mornings.  As to brokers – bad time to ask as most of us are on TOS and very pissed about it.


  58. FAS Money / Phil – I have a line for the dollar at around 73.90. What are your expectations? Do we take back 74? That would not be great for the market and I would think that they would try to make a stand there. In the meantime, we have made back that dime on FAS with the 14 Calls so far and it might make sense to take that back and see what happens…


  59. FAS Money – Dollar seems to be hitting resistance here, so watch the 14 Calls short if you have sold them!


  60. TOS/Phil – I would think the fact that most of PSW is pissed with TDA would be something they’d want to know and would want to remedy. However, given your time on hold yesterday, not sure how to communicate this. And maybe your nefarious futures paranoia is right. Even so…..this is a major users group here.


  61. We ARE failing here, it would seem !!   (and this is really the last support)


  62. Wheeeeeeeeee!

    FAS/StJ – Once they are below $15, you just want to keep a stop if they take it back.  Of course we expect some bounce, falling from $15.35 to $15 so EITHER you have to be tolerant of a 20% bounce ($15.07) or you may as well cash out at the resistance line because you ARE going to get some kind of bounce off resistance.  Same goes for the Dollar, which fell from 74.31 to 73.51 (.8) so at least a bounce of .16 back to 73.67 is expected and now we’d want to watch that line as a new breakdown for the Dollar.  Oil testing $87.50 (which we think they’ll fail) is important because we think that’s going to drag everything else down and Fisher speaks at 1:20 and that was my premise for the low of the week anyway so, on the whole, I’d hang on a bit longer. 

    TDA/Snow – If there were something to be done, I would want to do it as a group but the fact is TDA is moving things to their clearing house and we can scream until we’re blue in the face and it’s still going to happen so all we can really do is see if we hate it and leave if we do. 

    That’s right JRW – Wheeeeeeeeeeeeeeeeeeeeeee!  


  63. The pickup in core inflation makes the current environment different from last year’s, when deflation worries persisted, and could delay another round of monetary policy accommodation. 


  64. thats from ned davis


  65.  import prices just up 14% yoy…QE3…QE3…QE3..go GS go!!!


  66. Utilities are rocking …Duke, SO, ES, SRE.  Well, they were when I started typing 20 min ago!


  67. China’s main state broadcaster has unleashed a series of attacks against Baidu, the country’s largest online search company, in a move certain to fuel concerns among foreign investors about the risks of operating in the Chinese internet industry.

    In a barrage of investigative reports, microblog posts and commentary, CCTV criticizes Baidu as a “monopolist” which it alleges abuses its power and fails to manage content on its site in a responsible way.  UHOH


  68. danger danger


  69. Phil-- went short GS aug 115 puts @1.95 per your reco yesterday—just bought back for .76 based on your fas premise
    thx great trade


  70. Good place for us to bottom right here.  If not, what’s happening is what should have happened yesterday.  No Eurobonds-


  71. Time for the dollar to "save the day".


  72. Last trend line support here (IWM 69.89)

    I’ve got a target of IWM 69.50ish, but we could see 68.98 if this fails !!


  73. Hi Phil, et al.
    Scott Brown from Sabrient here.  Just finally getting a chance to come up for air after the Gradient Analytics acquisition a few weeks ago.  I would also like to introduce Rebekah Norris who will be spending more time in chat participating in q/a.  She has a direct connection to the Sabrient Staff and Gradient for that matter so while she may not know the answer in seconds like Phil, she can contact the right person and assist in answering the quesitons.
    I hope all is well with everyone and just an aside that I like KRO and TEO as longs this week.  TEO’s 9.6% forward dividend yield is quite nice with the companies growth and non-dependance on US economy :) .
    Best,
    Scott




  74. JR,
     
    Where are you pulling the 69.89 line from?


  75. From Cobra – the past 3 days, we have had a pull back, then up from there….


  76. ToS Users – Are all of your accounts accurate right now?  I still have some nonsense regarding cash balances and "day trades" available showing up.  Am I the only one?


  77. matt / bottom

    Could be a good call, push coming; if so the question is "can we get past IWM 70.47 and then 71.00?"



  78.   jcaesar – my cash balance was off this is what they sent me on support tab - 

    We sweep idle funds to the money market account so you earn interest on your cash.
    you may absolutely use the money that was swept to the money market account today to trade,
    as it is reflected in your buying power figures.
    Keep in mind that when we perform the cash sweep to the money market,
    you may still use the funds to trade; but you may see that your cash balance will go below zero. You will not be charged any interest on the negative cash balance as we will sweep funds back to your equity account overnight to cover any trades you made during the day.
     


  79. jcaesar/TOS – no.  My accounts still have problems.


  80. JR, Shadow – the VIX above 30 has now become a good turn indicator again.  Use a 1 min chart and keep drawing short term lines of resistance and support.  I have been using this with the normal indicators over the last few days with great results.  When the the s/r is broken I exit and look for the opposite entry if desired. 


  81. Good call Matt


  82.   msb back baby! second day in a row we stop swoon on a dime at midday


  83. Dirk,
     
    When did you bail?  12:13 on the broken trend?


  84. exec – 12:12:26 to be exact.


  85. willsons/Pharm – Thanks.


  86.  Phil, 
    I have -20 113 DIA Puts (sold for 1.50 as part of a hedge that expired worthless so if I keep the whole 1.50 I come out about even on that hedge). All premium  now, but with this violent market I would hate to have them go in the money again before friday exp. Would you hold on?
    Thx


  87.  jcaesar – I have been calling TDA after seeing phil on hold for so long yesterday. Never waited more than a couple minutes so you might call them and they either solve it or transfer you to TOS support.


  88. DLTR/ David..   Earning tomorrow morning..   Bought small sept 75 calls yesterday…  add on this weakness…Thoughts??


  89. What time is Obama speaking? 


  90. Merkel and Sarkozy have proposed far reaching integration of Germany and France — and invited Italy and Spain to join them — creating an elite economic zone within an economic zone. This marks a new strategy of strengthening the core through integration, rather than protecting it from contagion by propping up unstable peripheral countries. We think it marks a major turning point — the discovery of a durable solution to Europe’s debt crisis.
    euro analyst


  91. my own view of the euo ‘solution’ above
     
     if that is what they are doing…it possibly positive long-term, but a short-term disaster…if they are abandoning periphery….german/french banks collapse


  92. Topher -

    Well we sold on the move to 70 as that was my target pre-earnings…if earnings are good it should move much higher…but not liking this sell-off pre-earnings.


  93. Phil/HCBK: bought 1000 shares at $$7.90 (after closing $7.50 C for $.10) and sold $7.50 P @ $.50 for net $7.30 .Stock now at $6.08 and P at $1.70 . Time to go to 2x or wait ?


  94. David..  ok..  I was playing for a 75 target post earnings


  95. Topher -

    Then stick with it…this is a very good stock that has been very good to its longs.


  96. David I stupidly hung on to CMA.  Down 36%.  Would you recommend it as a long term hold?
    Phil any Idea’s on selling calls.  It’s in my IRA so no margin.
    Lori


  97.  TOS trade execution – I sold some XOM calls on Etrade and then on TOS. Etrade executed  at its normal speed which is normally slower than TOS. Then went to TOS and could not get fill and had to lower the sell by .05 and it still took some time to fill. I am going to watch in the future. Also their P&L is adding cash in as Profit YTD which is wrong. Just FYI


  98. Personally, I don’t think we’re done going down here.  But if we reverse now.. well played you bastards!


  99. FAS Money – There is over 0.30 on the table now with the 14 Calls (over 22% profit)… No need to say that we should protect that!


  100. BIDU/Angel – Uh oh is right.  Falling out of favor in China is still a possible death sentence.  How about the Sept $120 puts at $3.65?

    GS/Savi – You are welcome!

    Hey Scott (and Rebekah) – Welcome back.  

    TOS/JC – Looks about right to me.  

    FAS/StJ – Of course, now we watch the $13 line on XLF.  

    DIA/Amatta – Well they were .31 this morning and now .84 so it was a stop issue more than anything.  Can we drop another 200 and screw you?  Absolutely but, on the bright side, you can roll them to Sept $106.75 puts (now $1.50) and pick up another .75 ish to wait another month.  If you don’t find that attractive, you should have gotten out 160% ago but at least there is still time before you lose your next 100%.  

    Buffett/Angel – Yes, he sure didn’t make any friends, did he?  

    EU/Angel – Whuck?  If they don’t do something as a group, things could spin out of control.  

    HCBK/Dflam – I’d wait.  They are off with the Banks at the moment but very bad and we could go lower.  As you are down about $3,000 – at a certain point you need to consider whether there are better opportunities, like JPM, who is pretty low and more diversified (so hopefully better able to weather a severe storm).  Your commitment is to buy 2,000 at $7.30 ($14,600) and you are down $3K ish  and rather than DD on HCBK, perhaps look at selling 10 JPM 2013 $30 puts, now $3.80 for $3,800 and the obligation to buy 1,000 at net $26.20.   I’m not saying now but good to keep an eye on in case we get another big dip.  

    73.80 – keeping us from going lower.  Still waiting for Fisher.  Maybe he flips doveish and the markets take off?  


  101. exec / 69.89

    Trend line lows of last 3 days !! (minus yesterday from 1:00 to 1:30)


  102. TOS / txchili – I noticed the P&L discrepancy as well. We better make sure that it’s corrected in the tax forms as that would be a big problem. Bad execution would be a big problem as well! It would be a good idea to get more facts from other members as well.


  103. A fail of 69.84ish this time shold have a good run down.


  104. Phil FAS 22 Aug p has no premium left would it not be a good idea to roll to Sept 20p


  105. JR
     
    Christ……how many people are using your lines?  The instant it hits the line everyone bails and kills the rally.


  106.  Fisher says the FOMC should not have announced low rates into 2013.  No incentive for business to invest and expand.
    http://www.marketwatch.com/story/fisher-fomc-pledge-keeps-businesses-sidelined-2011-08-17?link=MW_home_latest_news


  107. TOS – Yes I noticed that all my available cash is shown as "Overall P/L YTD."


  108. exec
    Don’t forget that he uses lines that others use, not the most, and JRW’s real value is he shares his trade ideas with us!


  109. Damn, they are really supporting this bee-atch.  Go ahead and pop it- I did!


  110. That’s better!  But given the fight here.. I doubt we take out yesterday’s low in IWM-


  111. 12:00 PM On the hour: Dow -0.09%. 10-yr -0.14%. Euro +0.19% vs. dollar. Crude +0.85% to $87.39. Gold +0.20% to $1782. 

    01:00 PM On the hour: S&P -0.33%. 10-yr -3.57%. Euro +0.22% vs. dollar. Crude +1.58% to $88.02 Gold +0.24% to $1,789.30.

     

    Told you so!  Fiscal misfeasance" by Congressional lawmakers has prevented a more robust economy recovery from taking hold, a top official at the Federal Reserve said Wednesday.  Dallas Federal Reserve President Richard Fisher, one of three dissenting voters at the Fed’s August recent rate-setting meeting, explained that the Federal Reserve has done enough to support the economy.
     
    In defending his dissenting vote, Fisher said that it was unwise to offer further accommodation when the financial system is already awash with cheap and abundant liquidity.  "With the leadership of the nation — Republicans and Democrats alike — and every talking head in the media making clear hour after hour, day after day in the run-up to Aug. 2 that a financial disaster was lurking around the corner, it does not take much imagination to envision consumers deciding to forego or delay some discretionary expenditure they had planned," he said.

    The WH is touting a major speech by the Presidentplanned for early September at which he will announce proposals to boost hiring, increase infrastructure investment, and cut the deficit even more than the $1.5T planned as part of the recent debt ceiling agreement. 

    S&P cuts its forecast for U.S. growth for the remainder of 2011 as well as 2012 and 2013. The agency says comparisons to 2008 aren’t apt as sovereign solvency issues are far more severe than those of an investment bank. 

    President Hugo Chavez of Venezuela, speaking on state TV, says he plans to nationalize gold production and processing, using the proceeds to bump up his country’s international reserves.

    Japan’s DPJ announces plans to hold a leadership election on August 28 or 29. The winner will succeed Naoto Kan as Prime Minister. 

    Intervention:  Swiss economy minister Schneider-Ammann begins a briefing on a CHF 2B government aid package to assist those battered by the franc’s rise. He calls the currency’s level overvalued and promises "real" steps to combat it. After big gyrations earlier today, the swissie isn’t doing much at the moment. FXF flat.

    The dollar and euro turn decidedly lower vs. the swissie  as Swiss finance minister Widmer-Schlumpf (appearing with economy minister Schneider-Ammann) – while voicing support for recent SNB actions – says the franc’s level is not a matter for politicians. FXF+0.6%.

    Singapore’s lofty AAA-rating is attracting a flood of safe-haven inflows, pushing some interest rate measures negative. Traders speculate the Monetary Authority of Singapore may be intervening in an effort to discourage strength in the local currency, following similar efforts in South Korea and by the Swiss

    Data from ICI shows mutual funds saw $40.3B in outflowslast week and $17B the week before. It’s the largest 2 week move out of funds since October 2008

    Light volume likely signals the end of bargain hunting, so the market now faces a new dilemma: buyer exhaustion, Bob Pisani says. "If macro headlines continue to be light, the risk is to the downside because only a small group have shown any enthusiasm in buying a bottom. That group is likely done."

    More from Plosser: The FOMC should have waited to see how the economy performed before committing to a two-year rate lock. The Fed will probably need to raise rates before mid-2013. (previously)

    The Fed’s policy of keeping short-term rates close to zero until 2013 could wind up inhibiting demand for homes. The two-year timeline may tell house hunters to stay on the fence to wait for prices to drop further and still lock in a cheap rate. In these not-normal times, a prospect of higher mortgage rates might actually help spark housing demand.

    Presidential candidate Perry’s crack linking QE and treason may be little more than flowery language from the man who threatened Texas’ secession awhile back, but Bruce Krasting believes the statement is likely to tie Bernanke’s hands. "There will be no more from the Fed." 

    Michael Pettis attempts to drive a stake through groundless worries about what China might do regarding U.S. Treasuries. Chinese purchases of U.S. paper is little more than the completion of a basic mathematical equation. If China doesn’t do the buying then the dollars will flow elsewhere and someone else will buy. Is trade policy an issue? Yes. China and Treasuries? No.

    Six cheap dividend champions Ben Graham might have liked, or so thinks Becca Lipman: Community Trust Bancorp (CTBI), Cincinnati Financial (CINF), AT&T (T), Aflac (AFL), Black Hills (BKH), CenturyLink (CTL). Each has increased dividends for 25 straight years, and appears undervalued according to "the Graham number."

    Solar stocks (TAN -2.3%) move lower, as the sector continues its strong propensity to gain or slump together. Today’s decline was kicked off when First Solar (FSLR -5.1%lost its Conviction Buy tag from Goldman and a key exec. Losers: TSL -4.6%LDK -1.4%JASO -1.4%YGE -3.4%

    Like healthcare companies dependent on Medicare, defense contractors such as LMTNOCGDRTN have a lot to losefrom the recent budget deal. After soaring from $220.6B in 2001 to $551.8B in 2009, the value of government contracts fell slightly to $532B last year, and is likely to drop further in the coming years.

    Total SA (TOT +2.3%) gains after Korea Gas says it will sign long-term contracts to buy a combined total of 5.64M metric tons of liquefied natural gas a year from the company and Royal Dutch Shell (RDS.A +0.5%). The volume is equivalent to about 17% of South Korea’s gas consumption last year, the South Korean commerce ministry said in a statement.

    survey of 350 Netflix (NFLX) subscribers found 15% still planning to cancel by next month, when its price hike goes into effect. Nonetheless, Piper Jaffray’s Michael Olsen thinks the data suggests Netflix could meet the Street’s Q3 estimates. Olsen also sees Coinstar’s (CSTR) Redbox gaining from both cancellations and the migration to streaming-only plans.

    Three lunchtime reads:
    1) Emerging markets: the new defensives?
    2) Wells Fargo: Gold market is a ‘bubble poised to burst’
    3) Six stocks insiders are snapping up 


  112. Was that a buy program or sell program……IWM?


  113. ss / Down

    I agree !!


  114. Wow!  Closing my TZA position here, locking in a gain.  There’s a real battle going on and I don’t want to be a part of it.


  115. what did just happened?
    Why is this huge volume spike?


  116.  Phil,
    I was a little over enthusiastic selling Puts. As you suggested, I made a list of want/don’t want  and bought back 20% of some. Still, if we have a BIG drop, I’d probably get squeezed on margin and have problems. Pretty much all had a 20% cushion; some still have 20% and more of cushion. How aggressive would you be at this point in rolling to lower strikes, as opposed to buying back in whole or in part? They’re pretty much all solid stocks. Some examples: (JAN 12 expire) COP $52.50, PEP $57.50, KO $57.50, BA $60.


  117. lol, it’s called the Plunge Protection Team.  Pretty sure they were standing by at the ready to snuff out any damage from Fisher’s message.


  118. exec
    Programs are bipolar now, but money flow is in other than USO! Hope this helps.


  119. Matt,
     
    I hope the Plunge Protection team has some more bullets because it doesn’t fell like anyone is buying but them.


  120. Fundamental things I don’t understand:
     
    Why do people buy bonds? (e.g. why is TBT is down?)
     
    If the Euro is so "screwed" how does it command 1.44 to the dollar? (e.g. why is FXE up?)
     
    All I know is something is rotten in Denmark, and I’m part of the problem because my rational thought is nobody in their right mind would be US debt for 0.0000000000000000002% annual yield and yet I continue to lose money on the biggest piece of shit ever, TBT.  $50,000 and counting. Oh well.


  121. exec, that’s the problem with them.  If other’s don’t follow, all that money to support goes up in smoke.  Don’t worry though.. it’s not like it’s our money.  It’s China’s and they ain’t getting it back!


  122. My contribution to plunge protection – I just bot IWM puts, that should signal the low of the day!


  123. As they say, "we either go up or down from here" !!  Maybe time to switch to TNA !! 8EMA pierced on the 3 minute; sell orders keyed in !! Selling TZA !!  "They" have to have a GREEN DAY !!


  124. FAS/Yodi – Today (now) was supposed to be the low of the week, from this point forward, we expect more positive outlook on QE3.  I was right about the low of the week so it would be kind of strange to suddenly decide I’m wrong about the bounce just because we’re at the low I predicted, don’t you think?  

    Good idea Matt!  

    Hopefully this will be the ned of the sell/off so let’s cash the short positions (FAS Money too).  QQQ $52 calls have very little premium at $1.33 so 10 in the $25KP with another decision if they hit $1.17 but maybe a DD.  

    Still good on the USO Sept $32 puts in $25KP, now .76, hoping for a bigger move down but half out even is the way to play!  .  


  125. exec
    We just pased the 50 min SMA, 60/40 = stick.


  126. JR
     
    Are you jumping on the stick?  Target?


  127. Below 50 SMA but bounced on 20 SMA and a buy program. That means should be up but max pain is ??????


  128. JR – something I never tried before, I bought equal dollar amount of TNA at 69.84 while still holding tza.  Protecting my nice gains for today and not believing the up move just yet.  Will bail on it if we head down.


  129. ss
    I have considered that, please let me know how it works out.


  130. DLTR/ David..  ok..  do you think an earnings surprise tomorrow?..  your last few earnings calls have been right on..??


  131. Phil, what would you think buying TBT calls today? (Trying to raise a little  cash to pay for future Sept put roll)


  132. exec / Stick

    I’m in cash now, waiting for a Buy program or a failure of the support tren line now at IWM 69.80 !!


  133. Shadow – well I am protecting a 5+% gain so I feel like I am in a bit of a prisoner’s dilemma. I am not a fan of playing the counter trend within the overall trend, so I may just hold like this until I see the next down setup and then sell tna.


  134. Phil / EDZ  So sell now as you think we’ve seen the lows of the day, but hold oil shorts?


  135. Puts/Kevin – If you are satisfied with what you have, then why not just buy some DIA Jan $104.75 puts for $4.25, which begins protecting you after a 10% drop and then you can sell 1/2 the Sept $106.75 puts for $1.50 and then your longs are net $3.50 and if you manage to sell another $1.50 on 1/2x in Oct and November, you cut your insurance cost down to $2 and the October $104 puts are $2 now so figure you can stop out of this trade with a net $1 loss which is your "on track" target and that is, hopefully, all you have to spend to protect your other positions for a few months.  

    PPT/Matt – Or, like me, they’ve made the same analysis on the week and this is where they are pulling the buy trigger.  I put up a bunch of short puts yesterday as I figured we’d bottom out about the same today – some people aren’t as confident and wait for the event but I doubt I’m the only person who assumed this pattern.  

    Why bonds/BDC – Because people are scared and, when you have $1Bn, it doesn’t fit under your pillow.  Money flowing into bonds means Government doesn’t have to offer attractive rates and TBT goes down.  When the market heats up, even if it heats up on QE3 (which is the Fed promising to keep bond rates down), bond rates go up as people look to sell them for cash (to put back into the markets and commodities) and now the government has to bid higher to compete for cash.  On the Euro, they may be screwed but we are F’d.  It’s all relative.  

    Speaking of which, back to the well on TLT – Let’s buy 10 Sept $106 puts for $2.20 in the $25KP!  


  136. Thanks ss


  137. FAS Money – The short 14 Calls should have been bought back (around 0.98) now that that XLF has gotten back to 13. Picked up about $0.30 of premium this time.


  138. Topher -

    Yeah I think they should pop on earnings…look for 3-5% then you can get a nice follow-through to 75 next week.

    They are getting slammed on some sellers and then that they are part of the Nasdaq…


  139. All in TNA !!  Watch out at IWM 70.18, 70.42, and 70.80 !!


  140.  stjeanluc
    IB (interactive brokers)  don’t charge modification/cancellation fee for spreads
    Also their ALERT has the ACTION field that allows to submit order when alert is triggered. it’s awkward, but they don’t charge for changing ALERTS


  141. Nicely done Mr. M!  Have you ever tried buying 1 put to offset 10 calls you already own or is it the net balance of your position which determines the opposite direction the market will go?

    TBT/Morx – I think the TLT puts look like more fun at the moment.  

    EDZ/Tusca – Yes, of course, that was a nice run.  Oil, as I noted, getting 1/2 out and holding on for the big drop (if it comes) is the way to go. 

    QQQ $52 calls in $25KP already $1.60 so stop at $1.50 as we have no faith in these things if we don’t keep going up.   After $1.75, it’s a .15 trailing stop.  


  142. exec / Target

    IWM 70.50ish or better !!


  143. JRW, already in.  Thanks for the juice!
     
    Phil, you’re probably right.  But the others you mention, prolly include the PPT!


  144. David…..   gotcha…thnx..   fwiw buying some sept 75 c @ .30


  145. JR – this may be a bear flag.


  146. IB / Ed3524 – Thanks for the information. I’ll have to look into that then! Another advantage that I see is that I can automate orders from my charting programs… 


  147. I hope this is a back test of the upper trend line as support !!


  148. David What do you think about CMA?  Thanks.


  149. JRW / TNA..  was your entry based on the full candle above the 8ema on the 3 min?.. 


  150. Oil held up pretty well into the NYMEX close so a lot more iffy holding USO now.  The Sept puts are fine but Aug way too dangerous. 

    NYSE strangely positive.  

    QQQ calls right on the line but that’s why we don’t like hard stops.  Just have to watch to see if they trend down or up off there (Nas 2,500)

    And what JRW said!  

    PPT/Matt – Oh that goes without saying!  


  151. IB charge cancel fee only if exchange charges it. It’s kind of pass-to-you charge.
     
    For spreads – they don’t rout your order to exchange until they see that both legs can be executed. That’s why there is no fee to change spreads.


  152. Now THAT’s the point you give up on the QQQ calls ($25KP) we failed 2,500 and done at $1.45.  That’s how you play a stop, when you get near it, you find some resistance point to focus on and then hit the button if it fails!  

    On the whole, no big deal if we test bottom again but but breaking through that bottom would be very bearish.  

    NYSE turning red would be a bad sign (below 7,394).  


  153. Too many sell signals. if we cross the 50SMA again the stick is on again.


  154. And for once, can we stop talking about China being worried about our debt…
    http://ftalphaville.ft.com/blog/2011/08/17/655816/stop-worrying-about-china-and-us-treasuries/
    As I said before, they need it! 


  155. Lori –

    Not a company I follow too heavily. I remember I liked them for an earnings play in April…they have a downward price channel that was broken. Got support at 24 it looks like and holding there. They do have actual revenue growth and huge earnings growth YoY. Future P/E below 10…definitely a value play.

    I’d wait for some financial strength signal before playing too heavily because more breakdown could occur.


  156. AKS looks cheap? value trap?  How about DOW for the income portfolio 3.4% div ok option prices?


  157. Phil, Do you like T long term. Would you buy stock and sell covered calls or do you have a more interesting play.
    TIA


  158. Thanks David.


  159. screw the chinese..without us they are doing re runs of mao swimming in the yalu river..its perfectly absurd that there is a greater level of awareness (intelligence) about …  who da daddy here!…they are perpetrating a complete blue smoke and mirror operation that is overlooked by msm..buckle up if they decide to take their foot off th ebrakes


  160. topher7 / candle

    Yes, the confirmation candle at 2:10 !!


  161. chinese miralcle..i may open a company there called lulu lemon just to make my chinese partners say


  162.  i think that the market plunged and that most investors think global growth deceleration is priced in and that europe has had another can kicking moment…..we could rally a few weeks, but i still think odds of new recession are much higher and perceived and that europe still huge problem.


  163. (i know lullulemon exists..but it wont matter we can decorate our store and clothing labels any way we want!!)


  164. Someone give the market a sedative today?


  165. know but that guy who was v agitated last night seems to have taken one?


  166. IB / stjeanluc
    also their Excel API allows to submit order automatically from spreadsheet (proficiency is required in Excel and VB).
    As I understand if an order stays on their computer (and they have many order types they don’t send to exchange, but keep on their computer)—there is no fee for can/mod
    there are many Excel experts here (craigzooka I think one of them) 


  167. Phil / tomorrow    Hard to see how Dudley can offset the news flow which will likely all be very bad…Consumer Price, Jobless, Consumer confidence, Phil Fed, Leading indicators.  Would you short into the close today?


  168. I am out 1.?% today but up! Got to go.


  169. tuscadog
    Thinking about shorting close too.  I am guessing most news flow is bad also.


  170. Check out the fail stick!


  171. angel – Yeah I think his sciatica  (or whatever that was) is doing better.  Wasn’t it a joy learning about his medical problems?!?   


  172. AKS/Joel – I think I feel a bit more comfortable with MT as they are much bigger and more interesting as a long-term hold.  You can buy MT for $22.27 and sell the 2013 $20 puts acn calls for $9.50 for net $12.77/16.39, which makes the .64 dividend 5%.   If you wanted to play AKS, I’d go for the stock at $8.75 and sell the 2013 $7.50 calls for $3.05 and the $5 puts for .80 for net $4.90/4.95 and that makes the .20 dividend  4.1%.  

    T/Rehat – I like VZ better because they added AAPL and stand to gain while T lost their exclusivity and stand to lose a bit.   Both are excellent long-term plays.  It turns out T has a nicer combo but maybe BECAUSE people are worried about AAPL revs being lost.  At $29.22, you can sell the 2013 $27.50 calls for $3.10 and  the $22.50 puts for $1.52 for net $22.88/22.69, which is a nice 22% discounted entry and the $1.72 dividend becomes 7.5% while you wait.  On VZ, you can buy in for $35.64 and sell the 2013 $30 calls for $6.20 and the $35 puts for $5 for net $24.43/29.17 so a more aggressive entry but a better call away and the $1.95 dividend is 8% there. 

    ROR Angel!  

    Dudley/Tusca – How?  All he has to say is "QE" or just "E" or "support" or "under consideration" – Fisher just said "not on your life" and we’re holding up pretty well.  

    Nice job Shadow. 

    03:00 PM On the hour: Dow -0.26%. 10-yr -3.56%. Euro +0.25% vs. dollar. Crude +1.05% to $87.56 Gold +0.55% to $1794.80.

    President Obama says the government can get the housing market in gear again, and it’ll take time - probably until 2013 - until prices start moving higher. Right or wrong, it’s likely closer to reality than this forecast.

    The third member (III) of the FOMC to dissent at last week’s meeting has now weighed in publicly. Dallas Fed’s Richard Fisher says the commitment to freeze rates removes the incentive for business to spend and hire, adding observers can now infer a "Bernanke put" – the notion the FOMC guides policy based on supporting the stock market.

    Doug Kass is buying into the beaten-down financial sector, thinking that the selling is overdone. But just because bank stocks are cheap, history shows that it doesn’t necessarily mean they’re going to get better.

    Though J.P. Morgan is bullish on gold, Wells Fargo believes it’s a "bubble that’s poised to burst," and asserts "there could be substantial risk to gold once the fear that the world is coming to an end subsides." Gold futures are up 26% this year, and have tacked on another 0.6% today to reach $1,795/oz.

    In an interview with Charlie Rose, Warren Buffett argues for two steps to prevent additional financial mayhem: limit the leverage institutions can have, and create "proper incentives" to stop excessive risk-taking. However, Buffett, an investor in Wells Fargo (WFC), opposes breaking up "too big to fail" banks, believing such institutions are necessary.

    Tech has been the heaviest drag on today’s trade, particularly cloud stocks such as Salesforce.com (CRM -6.1%), Citrix (CTXS -3.3%) and Red Hat (RHT -3.2%), after Oppenheimer lowers its estimates and price targets for the broader group “to reflect the slowing worldwide economy," adding that software firms “are often the last impacted" by a weaker economy.

    Prepare to mutate!  Monsanto (MON +1.4%) will bring genetically modified corn to grocery stores earlier than planned, according to a company rep. The firm bumped its timetable up to this fall, after previously setting 2012 as its rough target.

    United Auto Workers President Bob King tells union locals representing Ford (F -1.3%) plants to hold their rank-and-file strike authorization vote by Sept. 2, intensifying pressure on the automaker to reach a new labor deal before its existing contract expires Sept. 14. Ford is the most vulnerable U.S. automaker since it is the only one lacking a no-strike agreement with the union.


  173. Phil,  My newly funded Interactive Brokers account is going to be used for my long term and may be some income, I want to start up the positions by using  buy/ write strategy. I like Three stocks GE-INTC-T , I know I have missed the lower prices on all three but I have til October hopefully we will see better prices, all three have over 4% dividend.
    Buying GE, selling selling JAN 2013, 15 puts and calls
    Buying INTC, selling JAN 2013, 20 puts and calls
    Buying T, selling JAN 2013 , 30 puts and calls
     
    Your help will be greatly appreciated:
    - What do you think about the stradegy? and how would you do this
    - Is this safe engough strategy to use margin? as you know IB has margin of 5x cash with very low intrest.
    - what do you think of these three stocks?
    Thanks


  174. I would be very weary shorting TLT in here.  If you make 20%, then take it.  I think it will break through 108. 

    BDC/why buy bonds – b’c it is 100% return on capital.  The US will not default, and this market is rigged.  The 10 yr note will go below 2%.  Just wait and see!


  175.  Is cash still the way to go?  Your calls were amazing today Phil, thanks. 


  176. I bought F bonds three years ago (noted on this board) for 35c on the dollar, due next month.  Best investment I ever made, besides where I work of course!


  177. Hello DSX.


  178. Stocks/RRahbar – Those are all good stocks but see my more conservative play on T above.  The key is to scale in (see our Strategy Section) and no, margin with a strategy like that is not safe at all.  Margin is leverage, pure and simple, you can make 5x or you can lose 5x but when you lose 5x they tend to shut down your account and there is no bouncing back.  Never sell a put on ANYTHING you don’t fully intend to own for the long haul after it’s 20% or more below your entry price.  If you go back through the Portfolio archives, you’ll see 3 articles on "Smart Portfolio Management" – you should check those out too.  

    TLT/Pharm – Yes to taking 20% but, even if they go higher, I very much doubt they hold it for long.  

    Cash/Bruce – Cashy and Cautious is still the way to be – this is an insane market to get stuck with commitments in!  

    F Bonds/Pharm – Very nice! 


  179. Out of TNA at $45.91 for 40 cents; flow is changing SOX making new low, on top of a weak Bull push !!


  180. caesar i was quite flummoed by his YEW NORK comment..sound like an illegal who has gone off th edeep end..like an arsoninst being a fireman?


  181.   turkey starts bombing raids on northern iraq


  182. PHIL! ROFROR


  183. ROR/Angel – Reminds me of the end of this sketch:  


  184. "They" still have 11 minutes to get it GREEN !!


  185. No, not the end, 3rd question…

    They are trying JRW but not looking good.  


  186. NYSE holds green


  187. IF THIS IS ALL ‘THEY ‘ GOT WE SOME SCHLEWED!


  188. Oh noooooooooo, who could have guessed ? !!  8-)

    5% on a poooly played day, see you all tomorrow !!


  189. TOS issues at the end of the day. My order to buy back a sold put wouldn’t go thru even though the price entered was above ask.


  190. Very interesting on NYSE as they were the only ones under the -5% line.  

    Dollar finishing at 73.80, oil $87.44, gold $1,794.  

    More fun in store tomorrow, I’m sure….


  191. Great EOD call Phil- A Python injection!


  192.   The China Development Bank Corp. cds has gone parabolic over the last month and is not pulling back with most other cds, rising another +6.3 bps today to 225.30 bps THAT IS THE ENTITY THAT DOES LENDING TO LOCAL GOV’TS


  193. nicha – I had the same issue trying to buy a few calls…..FWIW.


  194.  Great calls today Phil, thank you!


  195. also had same issue buying puts………no problems with stocks. UNACCEPTABLE!


  196. PLX is a class 2 response, so 6 mo from now.  Feb 2012.


  197. TOS…None of my option orders were filled at the end of the day!


  198.  Phil,
    How do you feel about the economic data points that are on the calendar for tomorrow?


  199. I thought that governments didn’t create jobs:
    http://jaredbernsteinblog.com/another-look-at-government-job-growth-in-texas/
    Well, except in Texas that is…. 


  200. Anybody know of a place to upload large video files and share it with others to view? TIA


  201. JDSU not doing well after hours… As usual, not bad numbers, but guidance is killing them! 


  202. PHIL /INTC:
    I bought INTC at $18.86 and sold 2013 $22.50 C at $2.64 for net $16.16 hoping for a 22 % return/yr. If I roll the calls down to the $20 C @ $2.75, my new net  is $18.01 which would also give me a 22 %/yr return. I know you don’t like to tweak 2013 positions,but doesn’t it make sense for me to roll down since I reduce my risk and end up with the same return ? thank you.


  203. Today’s levels.


  204. stjeanluc/Texas
    Yes, well, a quick hit on Google and you will find the number of state government jobs in Texas is 1.2% of the population (2009 numbers), about on par with that of California (1.1%); whereas New Jersey’s ratios is 1.8%. That means Texas would have to increase the number of people on its government payroll 46% to catch up to the same ratio as NJ, so is 7% that big a deal?  Further, there has been a good amount of growth in Texas’ population during the time period referenced in that P.O.S. article.  I could not find hard numbers specifc to 2007-2010 but computed it at about 6%+; on par with the growth of government jobs.


  205.  Nicha/Video – Vimeo.com is a pretty slick site that should do what you need.


  206.  Nicha/Video – Vimeo.com is a pretty slick service, that should do what you need.


  207. Nkhan/Econmic Calendar
     
    I use Yahoo! biz.yahoo.com/c/e.html


  208. hi phil, do we still believe in the GLD sept 170 puts?
    at $2.70 they are about 20% down since purchase.  thanks.


  209. Texas / Dsheara – You missed my point. I would actually argue that Texas could probably use more government employees, for example teachers given the education issues in the state:
    http://www.texaslsg.org/texasonthebrink/texasonthebrink.pdf
    Scholastic Assessment Test (SAT) Scores – 45th in the nation
    Percent of Population 25 and Older with a High School Diploma – 50th in the nation
    High School Graduation Rate – 43rd in the nation
    Or health related employees:

    Percent of Children Fully Immunized – 34th in the nation
    Per Capita State Spending on Mental Health – 50th in the nation
    And so on. 
    My point was that the argument from conservatives is that government should actually shrink and not grow no matter what the factors are. Case in point, the GOP plan is to limit the size of government to 18% of GDP which is what it was when Eisenhower was president. As you correctly mention, population growth alone should have an impact and as far as I know, there are more of us since 1960, we are on average older and require more health care spending (private and public). In an age where competing in the world will require a better educated workforce, we will also have to spend more on education (if possible higher education). And if we don’t, we will require more police and firefighters to keep angry citizens from the McMansions and put out the fires if the police fails! And by the way, our infrastructure is failing as well… 
     
    As Ed Kilgore says:

    "Eventually, someone will draw attention to the fact that if Perry’s low-tax, low-services, corporate-subsidizing policies really were an economic cure-all, similar conditions should have made states like Alabama and Mississippi world-beating dynamos years ago."

    Large oil and gas reserves can go a long way to cure financial problems.


  210. Apparently, a big crash in the market is not really predictive of a recession:
    http://www.economist.com/blogs/dailychart/2011/08/us-stockmarket-declines-and-gdp 


  211. But a decline of more than 10% over 10 days could be bad news:
    http://www.economist.com/blogs/dailychart/2011/08/us-stockmarket-crashes-and-gdp-0 


  212. Really bad day for New Jersey – First we get downgraded to AA- by Fitch (new austerity measures on the way – I guess we’ll fire more teachers and policemen) and the final stab in the heart by ANF with "The Situation"…. We apparently can’t catch a break. And apparently Speedo is thinking about asking Chris Christie not to wear their bathing suits!
     
    http://blogs.wsj.com/marketbeat/2011/08/17/the-fitch-uation-new-jersey-downgraded/


  213.  Phil,
    I would like to scale into AGNC and NLY since it appears that these stocks may do okay as long as  the fed keeps rates low and they pay nice dividends. I would especially like to scale in and own them 20% lower than the current prices. Can you suggest a nice buy/write strategy that also sells puts against the position?
     
    Thanks


  214. Thanks StJ for posting the Texas "miracle" links. Our newbie Gov here in FL holds TX in very high esteem,
    as the model of the future. Maybe Mr Perry can apply that 27 Billion shortfall lesson for TX this year to the US and save us all.


  215. Rapid Orders
     
    High-frequency trading is a technique that relies on the rapid and automated placement of orders, many of which are immediately updated or canceled, as part of strategies such as market making and statistical arbitrage and tactics based on momentum. It accounted for about 53 percent of trading earlier this year, down from 61 percent in 2009, according to Tabb Group LLC, a New York-based financial industry research firm. In 2006 it was 26 percent of the market, Tabb said.
     
    Wedbush estimated the firms have made up 75 percent of American equity volume in August. They have boosted trading in shares of Apple Inc. (AAPL), Google Inc., Bank of America Corp. and Goldman Sachs Group Inc. since early July after reducing business the first half of 2011, Wedbush said. The traders are active in the SPDR S&P 500 ETF Trust, iShares Russell 2000 Index Fund and other exchange-traded funds, he said
     
    Wedbush, which has about 1,000 employees including about 400 in Los Angeles, has been the largest provider of bids to buy and offers to sell shares on Nasdaq every month this year…
     
    Bloomberg


  216. “You can look at a VIX chart and that’s almost perfectly correlated to high-frequency trading volumes,” said Wedbush
     
    63% of Volume
     
    Tim Quast, founder of ModernNetworks IR LLC, a Denver-based consulting firm that advises Cisco Systems Inc., Accenture Plc and other companies about market structure and trading, estimates that high-frequency firms are handling about 63 percent of U.S. equities volume, up from about 61 percent in July and down from last year’s 70 percent.


  217. Hmmm…first post hung up in moderation…try again below…
     
    Wedbush estimated the firms have made up 75 percent of American equity volume in August. They have boosted trading in shares of Apple, Google Inc., Bank of America Corp. and Goldman Sachs Group Inc. since early July after reducing business the first half of 2011, Wedbush said. The traders are active in the SPDR S&P 500 ETF Trust, iShares Russell 2000 Index Fund and other exchange-traded funds, he said

    Wedbush, which has about 1,000 employees including about 400 in Los Angeles, has been the largest provider of bids to buy and offers to sell shares on Nasdaq every month this year…

    Bloomberg


  218. S&P downgrade story just got amped up another notch. Justice investigating sub-prime ratings decisions.
     
    http://www.reuters.com/article/2011/08/18/us-mortgage-probe-sp-idUSTRE77H0LK20110818


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    StJ/Texas
    No, I am sorry, but I respectfully disagree.  Initially, you mocked what you infer to be a far right position by parroting “Governments can’t create jobs”, referenced the article "Another Look At Government Job Growth in Texas” (the point of your post) and ended on the snide remark “except I guess in Texas”.  I exactly got your point and I countered it directly with data by showing the growth in Texas government is 1:1 with Texas population growth.   I did not appreciate your remark, and I found the referenced article to be telling only part of the story; thus my initial reply.
     
    You then in your follow-on post changed the subject (to several educational topics, health care and “so on”) and then restated your initial point as being an entirely different point about conservatives which included plans of the GOP, the aging of the US population and an associated increase in the cost of health care, the globally competitive workplace, education again, and (tongue-in-cheek) the increased need for civil servants during a coming collapse of society – and oh yes, threw in infrastructure deterioration, ending with a Kilgore quote of an article based on Krugman (with whose article I almost completely disagree – even the compliments). 
     
    Can’t you just say you dislike Rick Perry as a candidate for president and we can all start discussing his specific record or something?  Why you gotta’ hate on Texas?


  220. Doro
    Texas’ budget is for two years, not one.  The projected shortfall (because the comptroller can only conservatively estimate tax revenues for 2012-2013) was estimated in the range $15 billion – $27 billion; however I think $4 billion of that is for the 2010-2011 period.  Note too, however, that Texas has somewhere near $10 billion in rainy day funds.  Two unfortunate points (my opinion) are that the government relies on property tax and sales tax instead of state income tax and has thus been hurt by the economic and housing downturns (but would have faired better using income tax due to lower than US average unemployment), and that because the budget is always so slim, the only places to cut are usually health and education – which as pointed out by StJ numerous times on this site are already two areas needing improvement.
    I think Texas does so well because it attracts so many people, like any good ponzi scheme.  The trick to the miracle is keeping it going.


  221. Good morning!

    Dollar all the way back to 74 coming into 3am with the Yen back at 76.65, $1.44 to the Euro and $1.65 to the Pound.  The Euro is down 1 since yesterday morning and the the Yen is up (weaker) 0..25 but the failure of the Euro to hold $1.44 and the ability of the Yen to get over 76.50 indicates real Dollar strength and, unfortunately for our long TBT/short TLT plays, continued panic into TBills. 

    The Swiss Franc is down 1% and we know they are manipulating so all currency moves are suspect today.  

    Futures are down 1% as Asia takes a tumble with the Hang Seng Down 0.9% (an hour left and low of day), Shanghai off 1.4% along with India and the Nikkei down 1.25%.  EU futures are down about 1% too just ahead of the bell. 

    Oil just failed the $87 line, which was yesterday’s low so Yay on that one, gasoline is $2.86 and natural gas fell to $3.905.  Gold is still $1,796, silver $40.38 and copper $4.01.  

    EU banks are still leading the charge lower with the transaction tax gloom and miners are joining them because, without the Bots – who’s going to keep pumping up the commodities.  Also, people are finally realizing World-wide demand may not be so good this year.  

    Anyway, nothing too exciting going on at 3:13.  If the Dollar falls back below 74, that could be bullish on the futures and we have the S&P (/ES) 1,180 as a bullish play with very tight stops below that line and 11,300 on the Dow (/YM) as a good bullish line to play the cross.  RUT (/TF) futures are not good plays at 695 but below that line is a good signal NOT to be bullish and above 700 is going to be a bullish signal.  

    I’m still expecting Dudley to boost the markets at 8:35 with some kind of rumor of QE3 and, if he fails us, we have a tough data day ahead.

    Thursday’s economic calendar:
    8:30 Consumer Price Index
    8:30 Initial Jobless Claims
    8:30 Real Earnings
    10:00 Existing Home Sales
    10:00 Leading Indicators
    10:00 Philly Fed Business Outlook
    10:30 EIA Natural Gas Inventory
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

    Notable earnings before Thursday’s open: DLTRGME,ROSTSHLD

    Notable earnings after Thursday’s close: ADSKARO,BRCDCRMFLGPSHPQINTUMRVL

    German Q2 employment +553K Y/Y, or +1.4%, to 41M, the highest level of employment in any Q2 since German unification. Q/Q employment +449K, or +1.1%.

    Laying foundation for today’s QE3 rumors:  The Fed’s promise to maintain the current rock-bottom federal funds rate for another two years violates "one of the most revered canons of central banking: Always keep your options open," former Fed vice chairman Alan Blinder writes. It tells him that "the FOMC majority is very worried. So unless the storm clouds lift quickly, there is probably more easing to come." 

    David Blanchflower rips George Osborne for taking a bow for positive U.K. employment figures this morning. Adjusting for hours worked, 250K jobs created Y/Y becomes a decline of 188K, argues Blanchflower. "We are destroying jobs in this economy. My policy is in disarray," would have been a more appropriate reaction.

    Wall Street sees a healthy 16% gain in the S&P 500 from today’s close of 1194, according to a recent Bloomberg survey of major strategists. Deutsche sits on the top end of the range with a 30% prediction, while Bank of Montreal is the bear in the group (so to speak) with a 2% bet after marking down its initial PT.

    BlackRock’s Bob Doll doesn’t expect a recession to happen, but only expects stocks to make a "slow creep higher" regardless, and is thus skeptical of the effectiveness of a buy-and-hold strategy. Doll thinks a selloff such as August’s represents a good time to invest in cyclical sectors such as tech and energy.

    Beware the dead-cat bounce. We’ve had a good move off last week’s lows, but most of the buying has been very stock specific, based on earnings or "fire-sale" valuation upgrades without much carryover into respective sectors. Narrow moves higher without broad, sector-wide participation are classic signs of a bear market rally.

    Rosie’s elevator ride pitch on why the double-dip is imminent makes a pretty clear case. "No reason to be fearful," he says. "(Get) long high-quality, non-cyclical(s) with strong balance sheets and dividend growth … while (selling) small-caps that are highly cyclical and expensive."

    Fitch downgrades New Jersey’s GO bonds to AA- from AA, and moves its outlook from negative to stable. The agency cites "continued funding level deterioration" for pensions and employment benefit liabilities "despite recent significant action to contain future growth." 

    The next scandal as Banksters attack the SEC:  A whistleblower alleges the SEC has been destroying records of closed investigations, erasing a trove of valuable information that would have assisted other inquiries. "Far more than an administrative accident or bureaucratic (mess), it’s a symptom of the agency’s terminal brain damage," writes Matt Taibbi, describing an authority compromised by ties to the industry it’s supposed to police.

    Not a scandal, just business:  In Washington’s pay-to-play world, the defense industry’s paltry contributions to members of the Congressional super-committee may translate into a tough time fending off cuts to the Pentagon’s budget, according to a recent study by the Center for Responsive Politics. Who are the committee’s largest donors? Why, that would be Wall Street, of course. 

    Brazil’s economy shows a monthly contraction for the first time since December 2008, the June economic activity index falling 0.26%. May’s expansion was revised sharply lower as well. STIR futures jump as traders bet the central bank rate hike cycle can now end. Next meeting: August 31. EWZ +2%

    The weakness of U.S. consumers is "China’s wake-up call," and may cause China to stop buying more Treasurys as it focuses on internal consumption rather than exports, Morgan Stanley’s Stephen Roach warns. For the U.S., it could mean higher interest rates and/or a weaker dollar, and "we’re not going to be able to fund ourselves on the terms we have been funding ourselves externally."

    China Mobile (CHL): H1 net profit +6.3% Y/Y to 61.28B yuan (US$9.59B), beats by $0.82B yuan. Operating revenue +8.8% to 250.08B yuan, beats by 3.44B yuan. Declares H1 dividend of HK$1.58 ($0.20), up from HK$1.417 a year earlier. (PR)

    Amazon (AMZN) registered an impressive 282M visitors in June, according to comScore’s latest ranking of retail and auction sites by traffic. The number of visitors translates into a reach of 20.4% of the world’s internet audience, placing AMZN ahead of eBay (EBAY) 16.2%, Alibaba (ALBCF.PK) 11.3% and Apple (AAPL) 9.7%.


  222. Thanks Dogtown!

    China Bank/Angel – What do you think that means?  

    You’re welcome Enni.

    Data/Nkhan – CPI should be high, Jobs same old thing, Real Earnings heading lower, Home Sales and Leading Indicators will continue to suck as will the Philly Fed so news so bad that it’s GOOD is what I’m hoping for today.  Plenty of ammunition for Dudley to say that the deteriorating data means QE3 is a necessity or something like that.  

    RUT failed to hold 695 so nothing to be bullish about at the moment.  S&P 1,177 and Dow 11,279 so no action until/unless they cross over our lines.  Oil failing $87 would also be a bearish sign as they are right on that line again. 


  223. Texas/StJ – They are one of those states that get far more money back from the Federal Government than they send in.  

    Video/Nicha – Too big for YouTube?  

    INTC/Dflam – I don’t understand your math as $18.86 less $2.64 is $16.22 and if you buy back the $22.50 calls for $1.72 that’s net $17.94 and then if you sell the 2013 $20s for $2.75, that drops your net back to $15.19 and that’s just fine but I would sell the Jan 2012 $20 calls for $1.88 as they expire a lot sooner and you can just roll them out to whatever 2013 call works in 6 months – keeping you a bit more flexible.

    A good INTC entry from scratch is the 2013 $20/25 bull call spread at $1.75, selling the $15 calls for $1.15 for net .60 on the $5 spread that’s .67 in the money.  So you make every penny that INTC gains through $25 and your worst-case net entry is $15.60 if INTC is below $15 (25% down) in Jan 2013.  

    Big Chart – As I feared, we are curling over into an ugly pattern that suggests a re-test of last week’s lows.  If we don’t get a big save from Dudley today – back to bearish we go with plenty of room to fall!

    GLD/Lunar – I am amazed they are still holding up but the question is always the time-frame.  How long can the panic last?  I do still like them but over $1,800 the prudent move will be selling Aug $174 puts for $1 and rolling to Oct $170 puts for + $2 so paying net $1 to buy a month (and GLD has weeklies to sell).  

    18% Government/StJ – What a BS figure!  In 1950, FICA revenues were 7% of all revenues and Corporate Taxes were 50%.  In 2010, FICA revenues are 41% of revenues and corporate taxes are 7%.  FICA spending, on the other hand is 37% – still a surplus there.  Federal Revenue, without FICA is 9% of GDP.  Outside of FICA, Federal Spending is $2.16Tn, 15% of GDP now, which is about 1/3 LESS than the lowest developed country in the World!  These Conservatives try to baffle people with BS numbers but the reality is the only way to "cut" Government spending is to screw over the SS and Medicare crowd, who are the only people running a surplus!  They are like rapists who show up in court and testify that, not only did their victims love it but, as soon as they get out, they’ll be coming back for more and the voters are the jury that not only lets the rapist go but awards legal fees too!

    U.S Federal Receipts per GDP.jpg

    Thumbnail image for 2010 Federal Receipts by Source.jpg

    Wow, markets getting much worse and Dollar not doing it – frozen at 74.  Down about 1.25% now.  Asia finished down about 1.5% with a bad close on poor Japan export numbers.  


  224. By the way – THIS is what is wrong with our country!  We have a VERY OBVIOUS problem – that Corporations do not pay their fair share of taxes.  Since those same Corporations control virtually everything you see and hear, this is not allowed to be part of your conversation or even your thought process and it’s certainly not allowed to be a consideration in the political process so the United States of America is forced to make poor decision after poor decision because we completely ignore the ACTUAL problem.  

    The stupidest thing I am hearing now is that taxing the Rich and Corporations won’t fix the deficit.  Of course it won’t because they have been undertaxed for decades and we’ve built up such a massive deficit that NOTHING is going to fix it quickly.  Oh wait, yes something would – PUNITIVE taxation that redresses the damages would work but we have all been brainwashed to consider that downright unAmerican – even I don’t think that’s fair because you don’t know FOR SURE that the people you are taxing today are the same people who benefited in the first place.  

    Don’t forget this chart INCLUDES FICA, the actual number is 41% LESS!

    LOL StJ but damn you for that image in my head!  

    And now, a word from our Corporate Sponsors:  "Erin Burnett Defends Using Tax Havens: "Isn’t It Your Obligation In This Country…To Pay As Little As You Can?"

     

  225. We are like some kind of Lord of the Flies society where the children have taken control and they are going to stay up late and not go to school and they won’t eat their vegetables etc – and God help anyone who tells them it might not be a good idea.  Consequences are never anyone’s problem but always someone else’s fault…

    REITs/l4real – You might want to go back in the Portfolio archives to see how we set those up in the first couple of Income Portfolio posts – it’s key to protect them as things are very unstable at the moment – despite the free money.  I like just selling puts as an entry, you can pick up $2.25 for selling the Jan $19 puts and that either puts you in the stock at net $16.75 in Jan (if they are below $19) or pays you 13.4% (against the $16 – much better on margin) in 6 months if you don’t happen to get the stock at a discount.  AGNC is not as good for selling puts against – I really like the NLY play. 

    Dollar down to 73.9 not helping the futures – now down 1.5%.

    EU stocks track Asia lower in early trading as attention returns to the stuttering global economy. EURO STOXX 50 -1.4%, London -1.8%, Paris -1.7%, Frankfurt -1.8%.

    Japan exports -3.3% Y/Y vs. forecast of -2.6% and -1.6% prior. Surplus in trade of goods ¥72.5B ($946M) vs. ¥70.1B expected and ¥68.6B prior. Exports were hit by the strong yen and falling global demand

    German Q2 employment +553K Y/Y, or +1.4%, to 41M, the highest level of employment in any Q2 since German unification. Q/Q employment +449K, or +1.1%

    Because of the EU debt crisis, the NY Fed is reportedly demanding more information from big European banks about whether their U.S. units have the ability to fund themselves. In some cases, the Fed is pushing the banks to revamp their U.S. structures.

    Carole Sirou, who heads S&P in France, tells RTL radio that the agency is confident of maintaining the country’s AAA rating, saying the grade was not dependent on specific budgetary commitments but on a "trajectory."

    Oh, that’s where all the money is going!  Coca-Cola (KOintends to invest $4B in China over the next three years, adding to the $3B it has spent since 2009, as it looks to build on double-digit growth in its third-largest market. The new spending is greater than PepsiCo’s (PEP), which last year unveiled a 3-year $2.5B program.

    The Justice Department is reportedly investigating whether S&P (MHP) improperly rated dozens of mortgage securities prior to the financial crisis. The probe began before S&P downgraded the U.S. The SEC is also investigating S&P for any wrongdoing, and possibly Moody’s (MCO) and Fitch (FMLCF.PK) as well.

    Moderation/Troy – Probably sounded like a solicitation for a brokerage.  

    Wow, I hope this is a blow-off spike down and not the new trend – getting ugly already.  Oil down to 86.70 and falling, RUT down almost 2% now and testing 690 – was a very reliable indicator earlier so watch that level closely.  1,173 on S&P (/ES) is another critical line (-5%).  


  226. WTF?  Should have known from yesterday’s save.  Was a very flat bounce.


  227. Your right Matt…..I don’t know what that spike in IWM was in the afternoon, but it saved the market yesterday. 
     
    I hope they have another rabbit in the hat for today.


  228. Militants attack in Isreal.  Wonder if this is a prelude to an attack on Iran?  This should help move the markkets with everything else thrown into the mix.


  229. This is clearly a RISK OFF day.


  230. Texas / dsheara – I guess we’ll disagree on this one. And I like Texas just fine, been there many times. I do think though that the average Texan could do better with an upgrade of their politicians and not just Perry who constitutionally doesn’t have that much power any way!