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TGIF – Are We There Yet?

EWG WEEKLY Where is the bottom?  

We are now officially getting silly, with Germany falling another 3% this morning, now down close to 30% in less than a month (see David Fry’s chart) with the banking sector off 50% and more.  To keep that in perspective, the S&P is down less than 20% and even our super-lame Transports (which go down with oil for some reason) are down "just" 24%.  So – do we have another 10% (at least) left to fall or is it kind of ridiculous that AAA-rated Germany, with arguably the World’s strongest economy, should drop 30% in 30 days?  

It looks like EWG is going to open around $19.50 this morning and you should be able to sell the Sept $19 puts for $1+ or the Jan $17 puts for $1.25+, giving Germany another 16% buffer before you have to give that $1.25 back at net $15.75, which is back at the non-spike lows of the crash.  

The VIX spiked up to $42.50 yesterday, that’s higher than it was in April’s sell off and that made an excellent short at the time.  You can sell VXX Sept $45 calls for $3.25 and buy the $45/40 bear put spread for $3.40 for net .15 on the $5 spread.  If the VIX and VXX do move higher, a 2x roll to the Sept $55s (now $1.60) is about even or the Dec $62 calls are currently $3.10 so it would take a pretty major, sustained move up in volatility for the short puts to really hurt.  

Here we are, back at our March lows for the Nikkei and 15% BELOW the March lows for the DAX and 10% below the March lows for the S&P.  REALLY?  Were we too optimistic in March by 15%?  We just had earnings reports and the numbers were generally fine – it’s the outlook that got gloomy, due to all the economic uncertainty.  That’s what happens when your Congress is a bunch of buffoons who are willing to sacrifice the Nation and it’s Citizens in order to improve their political posture

Other than the imaginary problems of debt (it’s been worse) and austerity (a poor solution to address the debt non-issue) and the real problem of the deficit (easily fixable by collecting taxes and cutting military spending) and a slightly slowing economy (caused by the idiotic austerity measures), what is the reason exactly that IMAX (got ‘em), for example, has fallen 60% since June?  

$15 – are you freakin’ kidding me?  That’s under $1Bn in market cap for a rapidly expanding company that dropped $100M to the bottom line last year!  Yes, this year is going to be more like $60M for various reasons but that’s still pretty good.  You can sell 2013 $15 puts for $4 for a net $11 entry, another 26% discount off the current price.  

XOM hit $70, dropping their market cap below $350Bn, neck and neck with AAPL to be the World’s most valuable company.  But XOM has $400Bn in sales and is on pace to drop $40Bn to the bottom line this year WHILE PAYING A 2.5% DIVIDEND.  REALLY?!?  Even if you don’t like XOM at $70, you can buy the stock and sell the 2013 $55 calls for $18.65 which drops your net to $51.35 so a 7% profit if you are called away (better than T-Bills).  I prefer to pair that trade with the sale of the 2013 $57.50 puts at $5.20 and that puts you in for net $46.15 and now a 19% profit if XOM holds $57.50 through Jan 2013 and the worst case is you own 2x of XOM at an average of $51.83, 26% below the current price.  That net $46.15 entry makes the $1.88 dividend more like 4% while you wait.  

These are the kind of trade ideas we use in Member chat as we look to pick up excellent opportunities along the bottom (even if we’re not there yet).  We’ve been doing a little bit of bottom fishing this week and I made some aggressively bullish calls on the Futures (Russell (/TF) 650, Nasdaq (/NQ) 2,050 and Oil (/CL) $80) in my early morning Alert to Members and those are doing quite well this morning ahead of Dudley’s 8:30 comments – the only major news of the morning and, of course, we’re not going to be greedy as the Dollar is testing 74 again and, if that holds – down we go again!  

When we scale into our positions, like the ones above, we don’t care if the markets fall another 20% because we’ve already got that kind of protection built in.  In fact, if they don’t fall another 20%, we will be slightly disappointed as we won’t get to buy more shares cheaply but, in a flat or up market, we lock in very nice gains anyway.  It’s a simple strategy and also very boring – perfect for long-term portfolios geared towards real retirement savings and not the gambling casino short-term markets have turned into!  

Of course we’re not giving up our hedges either – just taking a few bullish positions now that we are retesting our own 20% drops.  While we don’t want to overcommit – we also don’t want to miss the kind of pop we might get if the Fed turns the FREE MONEY spigots back on – something that becomes more and more likely the lower the markets fall.  

Another odd thing I’ve noticed this week is how the entire Gang of 12 has launched a coordinated attack on investor confidence.  This morning, JPM stepped up to the plate and batted down expectations for Q4 GDP to 1% – from 2.5%!  Q1 2012 has been lowered from 1.5% to 0.5% – these are 66% downward growth revisions!  BUT – it’s NOT a recession.  At this point, the markets are pricing in negative growth, not just NO GROWTH.  

Hedge Funds are at their most bearish levels since July of 2009 (when they were wrong!) as the economic slowdown and European debt crisis spur the biggest losses in almost three years.  An index of hedge fund assets from International Strategy & Investment Group dropped to 45.8 on Aug 16th, showing the most short selling in two years. The ratio of bullish to bearish investments in U.S. equities has dropped to 11.7 from this year’s peak of 13.2 in May, according to New York-based Data Explorers, which provides research on short sales and stock lending. 

Barton Briggs agrees with me this morning, saying stocks may be experiencing a classic retest of the lows of 10 days ago and close to reaching a bottom.  “If analysts and investors really believed the S&P earnings estimates, the market wouldn’t be selling where it is… The market is already priced for a 10-15% percent decline in earnings.”  Bill Dudley once again failed to give us a hint on QE3 with Jackson Hole now one week away, but we did get the nice pop in the futures that we expected ahead his speech anyway (all gone now except oil) so congrats to those players (less now with the mess TOS made of their account transitions!).  

J.D. Power reduces its forecast for auto sales in FY11 and FY12, by 300K and 600K respectively, noting the anticipated "snap-back" following the Japan earthquake never hit. A rep says, "ascending from the recession is proving to be just as bumpy as the decline into it."  So no – we are NOT gung-ho bullish by any measure but we are getting "bottomish" here – time to do a little fishing while we wait – PATIENTLY – for a real tun back up.  

Have a great weekend, 

- Phil 

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  1. HPQ a bit over done..

  2. Phil,

    What to do with short HPQ 36 Aug 36 puts? (sold for 1.10 as part of an old hedge). You think this is a ridiculous overreaction warranting a 35% drop in the stock since last quarter? Would u DD and roll? To what?

  3. Oil Lines
    R3 – 92.41
    R2 – 89.95
    R1 – 85.70
    PP – 83.24
    S1 – 79
    S2 – 76.53
    S3 – 72.28
    Yesterday’s high and low – 87.5 / 80.79
    Breakout lines – 98.35 / 63.22 (the bottom breakout line proved to a bottom yesterday, but the lines were much tighter as well. I would be surprised to see that happened today!) 

  4. Yeah!  TOS is finally (maybe) working somewhat normal again….PP for today.

  5. Cramer basically did an infomercial for Sodastream on his show yesterday.

  6. HPQ – wow. 

  7. From Dr. John Faessel:
    Investor sentiment and consumer confidence is hideous. On Monday August 8th the McClellan Oscillator posted its lowest reading EVER at minus 438 and early the following day the market put in its lows at (SPX) 1101.
    Yesterday’s plunge could well be the "test" of a double bottom, but the McClellan is only in neutral at minus 70. However, all other technical indicators suggest hyper oversoldness already. While the lows yesterday were put in later in the day the pattern suggests that we "pretty much" consolidated over the entire session except for the first 45 minutes. A plus! So, I think it’s very possible that we may well test those lower reaches of (SPX) of 1101 today and possibly exceed them-somewhat based on the early futures, but I think there is a strong chance that we’ve got a 9-day base that could hold up. That’s the best case scenario. Worst-case, we blow lower another leg and that would almost certainly suggest recession. We are already off 16% from the highs, perilously close to the 20% signpost of Bear markets.
    Coming off the all-time oversoldness and appallingly fearful sentiment has set the stage for some good lows. Recall we were off 16% last year from April to June.

    We’re already past half way through Q3 and I believe it’s unlikely that we go into a negative GDP this quarter. FedEx traffic is up, as is UPS’s. Retail sales are up and rail car and truck loadings are also putting in plusses. Gasoline prices are at recent lows. In addition there’s been some improvement in Cap-X spending. Most analysts had GDP projections of 3% growth so I think it’s unlikely that this recent shock will negatively influence the economy to the degree that it puts us in a recession this quarter.
    Also, corporate America is flush with cash and our banks are awash in liquidity. And as the old saying goes, "don’t fight the Fed." Importantly, the Fed just told us that interest rates will be at the super low levels for two years.
    The S&P 500 forward price earnings ratios are the lowest since the 1980s and importantly they’re sitting on $2 trillion in cash. 60% of the (SPX) out-yields the Treasury 10-year yield.
    Resistance in the in the S&P 500 (SPX) is at 1150. The 200-day moving average resistance is at 1285. The 50- moving average resistance is at (SPX) 1274.
    Price support in the S&P 500 (SPX) is at 1144 then 1101(the low of the down stroke). The (SPX) closed on yesterday at 1140.65

  8. SODA / Rustle – And surprisingly enough, SODA is up pre-market this morning! Fool me once, shame on me, fool me every night…. booya! 

  9.  Phil: "see no evil"
    Well, I did look and pleasantly found I’m up a little for the month.  Where I messed up is in put spreads on the momo’s where I started in June and I failed to manage the short puts well.  Some of the moves in those stocks had me going to a full cover too quickly.  Then they bounced so violently when I tried to adjust the putters I messed up and when I left them alone the stocks crashed and left me with very narrow out of the money spreads with little premium to sell between now and January.   Will seek your advice on weekend. 

  10. dollar down .5%.  Euro up.  Now if that ain’t Fantasy Island for ye’!

  11. SPX in perspective:

  12. Phil-  I’m in a huge bind.  I own Sept 60 TZA calls at $50 strike but I have 60 Aug $50 TZA calls sold against them. I sold the Aug calls at $1.40 earlier in the week (hoping to cash in on the expiring month, not expecting TZA to go beyond $50) and they’ve skyrocketed by $4 trading at $5.40.  Any trade ideas on how I should play it from this point?  I’m tempted to roll the calls I sold to $57 and let them expire today BUT I’m afraid my Sept calls might drop by 40% on Monday (if the market goes up 5% and Vix drops by 30%) if I leave them uncovered over the weekend.  If I do cover them over the weekend, I’m giving up all my potential profit.

  13. update-- those effing Aug TZA $50 calls I sold are now worth ~$7.40.

  14. Oil down almost 1%, market down 80pts, USO up!?!? Wtf!?

  15. Looks like it could be one of those miraculous up days…. as always though, looks are deceiving.  Do they have the muscle to the put holders’ money today?  Of course they do.  But will they… 

  16. Good morning!  

    We were looking good for a while there but Dudley was a dud and JPM and C both downgraded GDP along with the JD Power lower auto forecast but it’s just 600,000 out of 15,000,000 less cars (worst-case), which is just 4% and we see sales of various manufacturers go up and down 20% on each report so why does this make F worth 35% less than it was in April? 

    We may not be at THE bottom yet but now there are stocks that are getting too stupidly cheap to ignore so it’s going to be time for a Buy List this weekend.  TODAY, though, let’s talk about a sell list.  I’ve given it some thought and I think the best short plays are the ones people aren’t thinking about like the "safety stocks" which haven’t really sold off yet. 

    AMZN, for example, was $35 in the crash, down from $90 (60%) and now they are at $180, down from $220 (27%) so, in a real collapse, AMZN has a long way to fall, maybe to $120ish.  The AMZN Jan $100 puts, however, are just $1.90 and if you figure a $60 additional drop in AMZN would send those puts to roughly the price of the $160 puts – those are $12.50 so a nice 500% gain on a straight put if AMZN tumbles.  That’s got no margin and, of course, when it falls to $1 you can just take the loss and pull it as we’ve probably stabilized or you can offset it with something like a 1/2 sale of the Sept $115 puts for .60 while you wait.

    Other stocks that have held their value well but may not in a collapse are:  

    • AXP (was $12, now $44) Jan $30 puts are $1.15. 
    • BIDU we already did (was $11, now $128) Jan $50 puts are $1.10
    • CAT (was $24, now $83) Jan $57.50 puts are $2.10
    • CMG (was $40, now $280) Dec $165 puts are $2.10
    • DECK (was $15, now $76) March $42.50 puts are $2.20
    • FCX (who I like LONG, was $9, now $43) Jan $35.75 puts are $1.56
    • GOOG (was $250, now $508) Jan $300 puts are $3.10

    I have more if you are interested but I got bored and the market is going up so no need at the moment.  I forgot about the gasoline futures (/RB) those are huge movers, just hitting $2.80 now so DO NOT BE GREEDY!   

    We’re still down, of course but well off the futures lows and the Nas is positive, up over 25 points from our Futures entry and the RUT is actually outperforming them with a 15-point move over 650.  The Dollar is way down at 73.87 though so be VERY CAREFUL as that drop is what’s giving us this still-lame rally.  


    Note:  Servers were down, now back up.  Very important to follow me on Seeking Alpha as my last post there is where comments go as soon as we go down.  If you don’t do it now (while we’re up and you have the link) – how are you going to find it when we’re down?  

  17. Good morning,


    IWM  63.38,  63.98,  64.39,  65.09,  65.60,  66.03,  66.65,  66,89,  67.49  and  68.10

    Trouble with the site this morning ?  I was not able to post earlier !!

    I expect a small rebound today as some Bears take thier profits into the weekend. Also stats are 88 % for a green day:

    The bigger picture, however, looks like we will at least test the 50 % line for the rally !! Charts from SHJ

  18. FAS Money Recap (sorry late – business calls got in they way)
    Long Strangle – 1 x Jan 12 12 Puts (3.25 now 3.35) and 1 x Jan 12 10 Puts (2.37 now 2.39) and 2x 15 Calls (2.75 average cost now 2.72). 
    Weekly – Short September 15 Puts (3.12) and 1/2 x September 13 Calls (1.78)

    Monthly – Short September 15 Puts (3.12) and 1/2 x September 13 Calls (1.78) 

  19. And, of course, per above, I’m in TNA !! ( $35.88)

  20. HPQ Sept $26 calls at .60 – 20 in $25KP.  Selling 5 Sept $23 puts at $1.57 as well.  

  21. Phil what do you think of stm at this level? Have you any trading idea about it? Thanks

  22. What’s going on with CMG?  Is it going to gain all of what it lost yesterday.  Upgrade by Morgan Keenan.  Good call biodieselchris. 

  23. I was begining to worry that we might fail at IWM 66.89, but target is still 67.49 or better !!

  24. Hi, All,
    Can someone be kind enough to provide the link to Income Trader’s original article about his insurance strategy?  When to buy, what to buy and most importantly (for me right now) when to sell.
    I entered RUT Sep 620/610 bull put spreads, as he recommended.  In the midst of market drop yesterday, I bought Sep 630 put as insurance.  At the time the 620 put had about .25 delta.  But I was busy in the morning, and logged in pretty late in the day.  Am I doing things according to the original plan?  I’d like to check.  And also, I’d like to know when do I exit the insurance play?
    Someone (kwan??) simulated the strategy for the August play in TOS.  Kwan reported that the insurance strategy would have saved a lot of aggravation.  So, I am playing by the book this month.  I’d like to check the original strategy to see if I am doing it right.

  25.  HPQ – My portfolio would be doing great today if not for HPQ.  Fortunately it is not an enormous loss since I have some covered call income off it, defraying about $1.40 per share.  I see it is now a 25KP candidate.  Do people feel like it is still a good long term value play, with all the acquisition and spin-offs moves?  I deciding whether to hold and maybe sell more puts and calls on 400 shares or to cut my losses and redeploy cash.

  26. HPQ/Amatta – You can roll them out to 2x the Jan $28 puts at $6 or you could own the stock at net $34.90, DD at $23.25 for a $29.08 avg entry and sell the 2013 $25 puts and calls for $9.10 for net $20/22.50 with a 25% gain if called away at $25 – not too terrible.  Or you can roll to 1.5x the 2013 $30 puts at $9.10 for a net $30 entry on 1.5x if they don’t get back there.  

    Faessel/Rustle – So is he bullish or bearish?  I’m confused…  I think I agree, the fundamentals don’t justify the market panic but, just like you can’t fight the Fed, you can’t fight the freak-out either once it gets going – you just have to wait for things to calm down. 

    SODA/StJ – ROFL!  

    Up a little/Lincoln – That’s god but not if you don’t get yourself to cash and do some shopping.  We’ll talk on the weekend but you should be almost uncomfortably loaded up with short puts when the market is bottoming – that just means you played it perfectly. 

    TZA/GS – That was a very bullish bet you know?  I would take the Sept $60s ($6.60) and roll them out to the Oct $57/75 bull call spread at $3 and roll the $50 caller (3.20) to the Sept $63s at $6 so you end up taking the whole $6.60 off the table (less .20) and then you have your spread protecting the short $63 calls up to $75.  I like that spread so much I’m going to make it a new trade idea!  

    I see your update – good lesson on why you shouldn’t overreact!  

    USO/Jrom – Sentiment.  Was a great signal to go long on oil!  

    Miracles/Matt – I believe!  

  27.  Phil- I’m playing GOOG today to the upside based on pain at 545. What would be a reasonable target for the daily pin? It’s unusual to see such a divergence between price and pain (IMHE) on exp day. 

  28. Phil/QQQ:
    I just can’t seem to get this hedging correct.I currently have 12 Sept. $25 SQQQ C at $3.31,now $7.05 paired with the sale of 12 Sept. $28 C at $2.26,now $5.20 and short 6 VLO Jan. $15 P at $1.94,now $2.60
    I want to hedge $300k of buy write/covered calls for insurance against another 15 % drop. Do you still recommend the March $40 QQQ currently at $1.66. If yes, I would buy  approx. 60 options and sell the above.Correct?  Thank you.

  29. All about the Euro, /ES kept running and is ahead of the Euro…If they cant keep the Euro elevated look out below.

  30. I will be bailing at least 1/3 of my TNA at IWM 67.49 as the push is waning, or if the 3 minute reverses again !!

    Out, sorry, that happened too quikly !! ( $ 3.66)

  31. Phil-  I don’t own TZA Sept $60 calls, I own TZA Sept $50 calls and I’ve sold TZA $50 calls against them.  My apologies for not being clear.

  32. If we get back to IWM 66.45ish I will reload TNA !!

  33. *sold TZA Aug $50 calls (the ones expiring today) against them.

  34. Faessel/Phil
    Those were highlights, he was bullish.  Luckily I bought some Sep 111 DIA calls this morning at 2.85.  I agree with you that it’s time to start getting a little bullish.  It was from your sentiment last week that I bought the 111 DIA puts that I held for a day before we collapsed.
    If anyone watched Cramer last night, it was pathetic with Sodastream.  The CEO was on and Cramer was saying "So in Switzerland, you have 30% of the soda market"
    CEO: Yes we do.
    Cramer:  Well how much do you have here?  (eyes big)
    CEO:  Only 1/3 of 1%.
    Cramer:  WOW, so you you will be capturing a lot more of the market still.
    CEO:  We expect to
    Cramer:  Your stock then is very undervalued, it’s a great buy right here
    CEO: We believe it is also.

  35. Phil / Dudley reporting      Not looking too good for QE3 at Jackson?  Maybe they need the political cover of a total meltdown to ‘save the day’.  Gene Sperling reported to be preparing a major fiscal stimulus proposal balanced with long term cuts for Obama’s Sept speech.  $ for all congressmen, schools, infrastructure etc might get some support given current congress unpopularity?

  36. Phil / FCX Puts    
    In the beginning of the week, I bought the SQQQ Sept 25/28 bull call spread for $1.25 and sold the FCX Sept 41 puts for 0.95.
    The FCX puts were down to 0.60, but I failed to capitalize on that price (a 30% gain), and now they are trading at 1.65.
    Would you recommend DD and selling more of the 41′s?  Seems like they are very inflated right now.

  37. dflam
    I did the QQQ March 40 puts on Wednesday and  yesterday I was able to roll them down to 37 and collect over half their costs while maintaining the .12 delta on the hedge. When the time is right I can either roll up, add to, or ride it out, but whatever the case the hedge already did its job and now it has been discounted by over 60% to remain as cheap insurance.

  38. 1/3 TNA at $ 38.55 !!

  39. angelcur / riots -- nice chart. Thanks!

  40. JRW
    Why the 66.45 for a reload?

  41.  CMG / Phil,
    The Jan 2012 CMG 310/250 Bear Put recommendation is nicely in the money. It’s at 20% of potential max profit. I’ve taken the short Aug 320 call off the table. 
    Is this a long term trade that we should continue to stay in, or should we look at closing out because we’ve reached the 20% mark. Taking 50% off, for me, is just taking 1 contract off the table.

  42. shadow / reload

    66.45 looks like a floor for today if my theory is correct !! (But it may be 66.55 !!

    1/3 more at $ 38.52) !!

    Hewlett-Packard sums up worst of Corporate America
    Commentary: Bloated company lacks leadership, innovation, smarts
    A very unfavorable article about HP from Marketwatch this morning.

  44. JRW
    Did you buy on the first or second bounce? I don’t want to spoil a good day so I still in cash, up 4.8%!

  45. And out with a loss of 1 cent !!  Damn

  46. JR
    You keep giving up those pennies and you’re going to be in deep sh*t.

  47. Phil -

    TLT just seems to have no stopping it…starting to become a gold-like play it seems as people are rushing away from equities. Granted the move is stupid, but a lot of them are. Think we’re on the wrong end of this?

  48. shadow / bounce

    1/3 each, but I’m out on an indicator on my main screen that projected a sell program; it hasn’t happened yet and 66.45 is holding, sooooooo…………….we’ll see !!

  49. JRW  adding a chart of Euro and /ES has helped me, I’ve traded TZA off Euro weakness and its working like a charm. Out with 1.20

    If they cant keep a lid on the $ 74.10 and the markets go much lower.

  50.  DXY down market down???

  51. It must be the Europe which is pulling us down.

  52. Did anyone on the board read the GS GDP downgrade report ?  Did they factor in QE 3 ?

  53. 1/3 TNA at $38.00

  54. Nice charts JRW but I hope we don’t go back to 1,000 – that would be very sad.  

    Europe down less than 1% now, much bigger turn-around than we’ve had.  There’s no data, all rumors today and, of course, the Dollar, which dropped to 73.68 before bottoming, now 73.77.  At this point, even 73.80 is going to hurt us and over 74 is now bearish.  

    STM/Smala – They have been slammed, like a lot of the SOX.  I’d be careful as you don’t know who has contracts with who (AAPL suppliers are winners, HPQ and DELL suppliers are losers as well as some phone makers).  Still, you can sell the Jan $7.50 puts for $2 and that’s net $5.50 so not a bad way to establish a position if you think their prospects are good.  

    Riots/Angel – So, do riots cause food prices or do food prices cause riots?  

    CMG/Lol – People just love them.  Too expensive for my taste but who knows – look at PCLN…

    666 does not fail JRW!  

    Income Trader/Cwan – They promised me they would be in for questions.  Please let me know if they don’t respond when you put that under his post.

    HPQ/Rev – I think they recover to $30 over time.  They made a couple of bad moves but nothing they should have lost $40Bn of market cap over (the entire value of DELL and RIMM combined!).  

    GOOG/DrC – I super-doubt they go back to $545 today!  It’s just an unusual expiration day – I wouldn’t expect it to normalize.  

    SQQQ/Dflam – Let’s see, you have $1,260 invested in the bull call spread that pays $3,600 if SQQQ stays this high so that’s a non-issue really.  You have the short VLO down $300, not much to do there either as we still like them.  So the question, against $300,000 of buy/writes, which I assume are getting close to the bone, is how do you mitigate a $30,000 drop (2/3 of 15%)?  15% takes the Qs down to $43.35 so let’s assume that a $8 drop turns the March $40 puts into the Jan $48 puts (allowing for time decay).  There are not Jan $48 puts but the $50 puts are $3.75 so figure about a double so you’d have to put $15K into the short $40s to get a $15K pop.  Seems like a lot.   On the bright side, if there’s a severe drop, 1,000 QQQ puts will give you great protection in a total collapse.   If March is your time-period, I’d suggest the QQQ Jan $54/48 bear put spread at $2.75 as that pays $6 if the Nas even twitches lower and you can add something like the QQQ Jan $51/45 bear put spread (now $2.15) if the Qs fail $49, at which point your original spread is well in the money so that way, you can risk just $5,500 (20) to get $12,000 of protection and another $5,500 to get another $12,000 ONLY IF YOU NEED IT.  Should you need to use the two, then you have $13,000 worth of gains at QQQ $45 to offset a less than 15% drop in the Nas.  

    Dolllar back to 74 – no help to anyone.  Not good if they punch through but Europe closing soon, down over 1% again.  

    TZA/GS – Well that’s much better but same play works, you can cash out and use the spread for protection and roll the Augs to Sept.  Keep in mind that we may have just topped out on TZA if the Dollar is getting rejected at 74! 

  55.  Phil, 
    HPQ Calls I think you meant the Sept 27′s? 
    GLD Puts (Sept 170′s net 3.20) from yesterday’s question, I didn’t get the response in time to sell those 178 puts to finance the roll. What would be the move now?

  56. kustomz,

    I watch dollar strength as well; but I think the market is going lower regardless. QE 3 will not do what 1 and 2 did, as we are too far down the road with no real recovery; no hope of improvement !!

  57.  Greece’s 2011 budget deficit may exceed the 7.6% of GDP target given a higher-than-expected decline in economic growth and rising unemployment. Finance Minister Evangelos Venizelos informed the cabinet yesterday of the possible need to either re-discuss the deficit target with its lenders or consider further fiscal measures worth between 3 billion and 4 billion euros to achieve the original target. more evidence that slash and tax creates an economic death spiral

  58. 1/3 more at $ 38.20

  59. Phil:
    Comments on the following DXD play: Sell Aug $21 Puts for ~$0.50, Buy Sep $21 Puts for ~($1.60). Either keep the fifty cents at the end of the day and ditch the Sep Puts on Monday, or they are put to me at $21 and I sell Sep $21 Calls ~$1.50 netting ~$0.40 on a neutral position and needing little margin. (I’m disallowed selling naked calls).

  60. TLT/David – where is the money going to go?  Not in equities, not in the EU bonds, Japan, not much yield there?  Treasuries.  This is the best market for keeping capital at this point.  I still see the treasuries (10yr moving another 500 bp if not more).  People/countries/banks will put it thre with a negative yield if the new inflation numbers are correct.   30B was pulled out of the market last week….where are they parking it?  QE3 is not going to happen, and then this will implode.  Credit spreads were widening when volatility was falling as of end Q2.  That means something is up.  I said it back in March, but QE2 was still happening.  Now, the time is here.


    The recent significant increase in credit spreads for many financials have been driven by the markets concerned about the ability of the weaker players to access credit at reasonable rates.      -PragCap

  61. Burrben, I rolled and DD’d on the FCX 38 plus a bounce play yesterday on the stock with a combo on the Aug 44 calls (sold this morning) which brought everything back in.  After nearly a 10% drop yesterday in FCX, I feel a lot safer at 38.

  62. Assuming Ben is not fired, and we don’t slip into a depresion,

  63.  Phil – HPQ – OK, I’ll stop freaking out over HPQ, wait it out and sell more calls.  I have my cost down to $31 now, so I can wait for $30 and sell more calls till then (its in my IRA.)  It just pissed me off because I have managed the downturn fairly well except for that unexpected move.  But patience seems the way to go.

  64. All in TNA now !!

  65. OT – but something else to worry about I guess (a green swan??):
    Aliens may destroy humanity to protect other civilisations, say scientists

  66. TNA /JRW..   did you get out when it confirmed under the 8ema on the 3minute chart?..or still in?

  67. Pharm/BPAX – i have the Aug 3.5 puts sold at .45. Should I let the stock get assigned or roll?

  68. This is getting silly now:
    Which one is undervalued or overvalued? Or both? Or neither? 

  69. Phil,

    in your opinion how is oil going to behave in the next 30 days


  70. And more on the Greece bailout:
    Angel posted about the budget deficit there being higher than expected and off course, GDP growth (or actually shrinkage in this case) is not what they expected either and GDP contraction could  rise to -5% following the austerity measures. The death spiral was started a long time ago, we are just making it spin faster at this point!

  71. Phil,
    Need your advice on two trades I have. First, what to do with XRT. Bought 20 Sept. $53 puts @3.11? Second, in the Income Portfolio sold VLO Jan $20 puts @3.05. Thanks.

  72. topher7 / TNA

    All in at $38.10 average !!

  73. nicha – i would roll out to Sept.  I am in those.

  74. Surprised?
    MOODY’S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts, Corruption, And Greed

    Read more:

  75. @rainman
    Good article, thx for posting

  76. On CNBC CEO of Graff Diamonds just states that their "problem" in the diamond industry is that supply is limited by "what mother nature gives us"… that statement goes uncontested re: De Beers stockpiles. 

  77. And today’s history lesson:
    Apparently monetary policy has always been a subject of fiery political debates.

  78. Rain,
    Very damaging article. 
    Is anyone surprise?  How the heck can it not be a conflict of interest to rate something when the person that is asking you to rate something is is paying you.
    I’d love to be a fly on the wall in some of those meetings……." oh yes Herb……we want you to rate this piece of shit ETF that we’re releasing…..BTW……have you noticed that you invoiced us 500k for in rating service charges this month".

  79. Moody’s / Rainman – I had a link about  similar behavior at S&P yesterday. Might be time to put an end to this rating racket!

  80. Moody’s — Maybe we can get them to rate politicians. Then we can vote for the worst rated ones and get this country moving! 8)

  81.  Hi Phil,
    Need your advice on best way to get out even out of CMG. I shorted 50 shares of CMG at $221, now the stock is $285 so I am down $3100.00. What options do you recommend to exit CMG  as soon as possible with  minimum loss or gain ? 

  82.  Rainman – great idea, let Moody’s rate politicians and do the line of Sunday football, horses and other forms of gambling.  That is all they are good for.  Doesn’t Buffett own a big chunk of them?  Any short ideas on Moody’s?

  83.  The real question regarding ratings agencies is why did anyone ever take them seriously? It’s like anything else affecting the market. We pretend that something matters until a tipping point is reached with the BS. I think we can create an analogy with children accepting what’s "cool". There are a few guys/gals who set the trends and decide what sneakers are in, what website, gadget, performers, etc. Everyone else just plays along until the thought leaders change their minds. The question is, who are the "leaders" that make these decisions for the markets, and how do we get into their heads?

  84. And if we can’t save the middle class, this country is done for (well, not just this country, but I live here so might as well start somewhere)
    And what could be done to help…
    While asking some "sacrifices" from the job creators who seem to have done well recently:
    And it’s after taxes…. 

  85. Phil – Thanks for the suggestion below but I don’t have the margins to sell naked $63 Sept puts.  Any other ideas? 


    "TZA/GS – That was a very bullish bet you know?  I would take the Sept $60s ($6.60) and roll them out to the Oct $57/75 bull call spread at $3 and roll the $50 caller (3.20) to the Sept $63s at $6 so you end up taking the whole $6.60 off the table (less .20) and then you have your spread protecting the short $63 calls up to $75.  I like that spread so much I’m going to make it a new trade idea!  
    I see your update – good lesson on why you shouldn’t overreact!  "

  86. Krugman blogging from a socialist hellhole –
    I can attest, Stockholm is just hell on earth!

  87. Phil,
    in ur opinion how will Oil move in the next 30 days

  88. Morning all,
    Just wanted to stop in on Option Expiry day to say hi.  I can answer any questions about Sabrient or the Texas Rangers :) So fire away!

  89. Phil—will you or JRW order a stick close today, please?
    This market is really pissing me off the last two days!

  90. TLT / Pharm..   so where you think it goes from here??

  91. Craig,
    You are correct. 
    Another interesting point is these talking heads on CNBC and the like.  I was watching the other day and I couldn’t help but think that there only purpose is to steer the market.  This week they steer it up… week down……or worst yet, the way they pump or deflate individual stocks. 
    You have to believe that they are the pawns for some big institution who buys or sell things a few days before they give them their marching orders to go out and influence the market with their propaganda.  Just watch…..they’ve been talking down the market the last few days… week they will be talking it up.

  92.  Hi Scott — I have bought some KRO and am thinking of adding to my position……what is a great buy price, in your opinion?  Are you still feeling the it is a strong buy?

  93. Pharm—do you still like ONTY ?--I have sold puts I have to roll

  94.  @ GSsucks – FWIW I can’t trade all of PHil’s ideas in my IRA because all sold puts have to be cash secured.  I started selling credit spreads as a substitute.  Its a little less profit, but it still makes for some nice gains.  In some cases, if I want to take possession of the stock at the strike price, I just sell the long put for a profit near the expiration day and let the stock be put to me.

  95. Phil/QQQ hedge You recommended 20 of Jan $54./$48 bear put spread at $2.75( buy $54 P and sell $48 P) correct? There are no Jan $48 P. Did you mean sell the  $45 P ?

  96. anybody doing any short strangles these days? Is this market too risky right now for those kinds of plays? 

  97. drcraig / ratings — Why did anyone take them seriously? That’s easy. "They" didn’t. "We" did after being force fed their almightyness. Like I said during the debt fiasco, the mere fact that the government was mentioning the S&P downgrade was deeply disturbing for me and quite telling. An unwanted peek behind the curtian of OZ in this nightmare.

  98. Phil, 
    TBT rolling… 
    Have the 2013 20 37/45 BCS with -10 34 puts for net credit of .50. Which don’t have a roll yet so I guess there is nothing to do on them? 
    -10 August 32 Puts net (1.10)…

  99. STJ  Bryan et al  Well posted!!!

  100. Disappointing, out of TNA with 52 cents; this is weaker than I thought !! We still may get a stick, but I’ll wait for it, not plan for it !!

  101. Rain et al/Rating agency – while we are tossing out these corrupt agencies can we also get rid of analyst?

  102. Sentiment/Rustle – Nice on the DIA puts.  I guess the CEO of SODA has been warned by the SEC to stop making statements his company can’t live up to so now Cramer makes them for him – neat trick!  It’s called leading the witness – something a good lawyer or reporter should never do….  

    QE/Tusca – I’m getting worried that Obama’s intention is to propose something the Reps will shoot down so they can make it a major election issue.  Who’s not going to vote for jobs programs other than the "job creators"?

    FCX/Burr – As I said above, I like FCX from here but they are also a candidate for a total meltdown if we break lower.  They are still at $43 so early to panic and I would not DD.  The idea was to get a free spread and you have a free spread that will pay you $3 almost certainly if FCX is below $41 so really your b/e on FCX is $28ish.   The Sept $41 puts, now $1.85, can be rolled to the Nov $34.50 puts (now $1.55) about even and that’s about 20% below here so just make sure that roll doesn’t get away from you and THEN you can worry about rolling to the Jan $29 puts (now $1.33) and, if you don’t think FCX can hold $29 through Jan – maybe you should take the .90 loss now!  

    CMG/Sank – I am not a believer and I would sell calls again if they get back to a good price and stick with the spread.  I see that the $310 puts are $46 and the $250 puts are $18 and that’s net $28 out of $60 possible but not much net premium in it with CMG at $282 anyway so just be careful with it and keep stops.  

    HPQ/Rev – Yes, I remember when IBM had lost it’s way too.  HPQ criticism well founded but $50Bn corporations (down from $100Bn not too long ago) are had to kill.  

    TLT/David – Really?  It’s not even 2 days over $108?  People are giving the US money at -1% interest – how long will that last?  Do you realize if you could get someone to pay you -2.5% you could pay off a home loan in 30 years with the interest they pay you on the money they lend you?  If you believe that will be the new paradigm, then you can go long on TLT but I’ll be going long on REITs instead!  

    GS downgrade/JRW – 50% chance of QE3.  Let’s them be off by a very wide margin and blame the Fed either way.  

    HPQ/Amatta – If the $27s work then sure.  They are moving and the VIX is moving so it all depends on when you look.  GLD got worse of course and I hope you LEARNED what the right move is so you don’t have to ask next time.  At this moment, with the Sept $170 puts, now $1.60, I’d roll up to the Sept $176 puts at $3.35 for $1.75 and sell the next weekly $175 puts for $1 as you are improving your position by $6 for net .75 and you will be thrilled to just get out even but still I’d stop out 1/2 the short puts at $1.50 (a $20 drop in gold or $2 drop in GLD).  

    Death spiral/Angel – Especially when all the taxing is done on the people who can least afford it.  Unfortunately, most of our leaders are in the top 1% and don’t get the concept that you CAN’T squeeze anything more from the bottom 80% – they are past the end of their rope – that’s why they are starting to riot!   It’s like this logic with cutting SS and Medicaid which only appeals to people who don’t understand that maybe you won’t pay 5% more taxes but you will be paying $50,000 for your Mom’s hip replacement and you will need a bigger house for when your parents move in with you because there won’t be enough money for them to take care of themselves.  

    Anyone with parents who votes to cut SS and Medicare should start putting away at least 10% of their own money each year that they think their parents will live past retirement.  Of course if you are rich and your parents are rich then it’s a small amount of money (maybe a Range Rover per year!) to set aside at most but for the average schmuck who votes to knock down these programs – well, the average American has $40,000 set aside for their own retirement – they don’t have any for their parents!  

    My daughter (9) just informed me that Blackberry’s are awesome.  Apparently "everybody has them" and it’s just a simple phone that her classmates seem to like.  Very interesting…

    DXD/Dshear – That’s just crazy enough to work!  If you make .20 today though, I don’t see why you’d risk the puts over the weekend.  

    TLT/Pharm, David – Here is TLT during a complete and prolonged panic in which banks were actually failing and global liquidity had dried up and there were actual runs on British banks with the Stock market having fallen over 50% in less than 3 months AND hedge funds were collapsing AND commodities were collapsing:  

    And here is the next 3 months: 

    These rates are physically NOT sustainable for long periods of time – no matter how much pressure you think there is.  Outside of pure panic – which we have now and may have more of – money seeks a proper rate of return.  The minute stocks or commodities get interesting again, rates will quickly go up again to attract capital unless, of course, the US decides it doesn’t need to borrow anymore…  

    HPQ/Rev – Look at the long-term chart of AAPL or IBM or HPQ for that matter – this too shall pass if you are truly a long-term investor.  

    Aliens/Kramer – If only we could solve our problems that easily!  

    A scene from Mars Attacks!

    Great chart StJ – I think AAPL also has more cash on hand than all the banks in Europe!  

    Apple could buy both SocGen and Credit Agricole (at a 30 per cent premium to their current market value) and still have some change left over from its $76bn cash pile.

    Oil/Rehat – Over the next 30 days it will be pumped up and then it will come down again.  

  103. @ Phil, sorry if i missed it, but whats your current opinion about silver? the charts looks like its ready to break up, are people trying to anticipate QE3?

  104. Fear is back Phil, and I think TLT continues to go up.  I think bond yields continue to go down.  Plain as vanilla.


    ONTY – out and down if you can.  I am starting to lighten up on some of the stocks that we are up or even on, as I am expecting fireworks.  The bonds are holding, Jefferies is moving down, and if the tech and biotech sector start to go down more, Jefferies is going to collapse.  All of the stocks they pushed out the past few months in new shares issued are down at least 20%.  LNKD and others are getting creamed.  Sumpin’ is up, and Willy Wonka is going to fall into the chocolate!

  105. Phil,
    You wrote of a GLL spread for this week.  How does the GLL Oct $15/18 @ around a buck (.53 in the money) sound?

  106.  Pharm, do you have an opinion on Jazz Pahrmaceuticals?

  107. Did anyone see/hear about MS in talks with the Treasury about bailing them out yesterday?  Rumors going though the market, but cannot find a link!

  108. Warren Buffett buying more Wells Fargo, while BAC cuts 3500 more jobs !!

  109.  Phil,
    Got it, thanks.

  110. We should have a move in the next 10 minutes or so !!

  111. A yawner of a market this afternoon – much like Wednesday.

  112. 2/3 TZA at $ 55.06 !!

  113. JRW-  In your above post ["2/3 TZA at $55.06!!], did you sell your TZA position or enter it?  I’m pretty sure you exited it but just wanted to make sure.  Thanks

  114. jcaesar / yawn — probably only until the 2-2:30 bots get turned on. This IS an expiration day after all and we haven’t seen the dogs shake their toys yet :)

  115. Another 1/3 at $ 55.72

  116. $ > 74

  117. Great call JRW!! I took a small position when the /DX broke 73.96 …small because /ES held on well while $ moved higher if we break 74.05 may buy more TZA…. if we fail 74 im out of TZA.

    Love to see the JRW confirmation.

  118. GSsucks

    I sold my TNA at 12:35; I’ve been in cash waiting, now all in TZA !!

  119. Thanks JRW. 

  120. Phil / Greece    The inevitable news that Greece’s GNP is tumbling with austerity is surely going to start a new crisis in Europe as it becomes increasingly apparent that a major debt write off is key to keeping Greece (and Ireland) functioning.  Do you think this bomb explodes next week?  What happens to mkts then?

    Phil: Don’t mean to pester you.but can you respond to this question.Than k you
    Phil/QQQ hedge You recommended 20 of Jan $54./$48 bear put spread at $2.75( buy $54 P and sell $48 P) correct? There are no Jan $48 P. Did you mean sell the  $45 P ?

  122. XRT/Hextra – We have a very complicated approach for dealing with something like that.  Step 1 would involve taking your $10,500 profit off the table while step 2 would involve running.   Let me know if you get confused between steps 1 and 2.  On the VLO Jan $20 puts – you are in for net $16.95 and VLO is at $19.30 – what do you care what price the puts have on them?  

    Moodys/Rain – SHOCKING!  (not)

    Diamonds/DrC – Totally artificial shortages there.  Has been forever though.  The funny thing about diamonds is the current thing where you can manufacture PERFECT diamonds for 1/4th the price and they’ve somehow convinced women that only real diamonds are worth having.  There’s a very interesting war going on where the industry wants all sorts of standards placed on artificial diamonds to make sure no man can every give one to a girl without practically having her sign papers acknowledging that she knows the diamonds are frauds.  

    CMG/Turning – So you shorted 50 shares?  Options are for 100 batches so you may have margin issues and it wouldn’t be balanced, even if you did.  To get $3,100 back I’d take the loss on the short stock and sell 10 Sept $260 puts for $6.30 ($6,300) and buy 7 Jan $200 puts for $7.30 ($5,110) which is a net credit of $1,190 and, if CMG finishes over $260, the Sept puts expire worthless and you keep whatever’s left in the Jans.  You can add these and put a stop on your shorts, using them to insure the downside or just run with those and look at the possible roll of the Sept $260 puts to the Dec $210 puts (now $7) as there are no October/November puts yet but at least you can see an escape route if they drop faster than we think.  

    MCO/Rev – Already beaten up and no movement today, this is already known or just not surprising anyone.  

    How/DrC – Well that’s the same as asking who these Bozos are on TV who seem to have an opinion on everything.  It’s amazing how being on TV means you don’t need a track record or even a reputation as long as the host of a show is willing to convey his audience’s trust to you (like Cramer with the SODA CEO).  We are a scary, brainwashed, unthinking, unquestioning population.  I’m sure Shadow or Pharm know what it is they put in the water to keep people docile..  8-)

    TZA/GS – Well they are not technically naked as they are covered by the spread but I guess in a non-PM account they aren’t going to count that.  You can roll the Aug $50 callers to the Sept $66s even and cover with Jan $65 calls at $12.10 and just play for the time differential.  They should hold their value pretty well but you do have to put more money in that way.   Or just kill the trade at net $1.50 and live to fight another day with a lesson, hopefully, learned.  

    And what RevTodd said! 

    Stockholm/JC – I liked it 30 years ago.  

    Rangers/Scott – How pissed are people about Adams giving up that home run?  

    Stick/Jabob – With JPM and C downgrading the economy this morning, I’d have to say the Gang of 12 has no interest in sticking anything at this time.  

    QQQ/Dflam – That is strange.  I might have been looking at Dec, the Jan spreads are not as good.  

    TBT/Amatta – The spread isn’t the problem but the short puts are (now $8) so maybe cash the spread for .50 and you have a net $1 credit and use that plus another $1 to push the puts down to 15 Sept $28 puts ($4.20) as those can be rolled to the Jan $26 puts (now $3.75) if you don’t let them get away from you.  That way, you need a much smaller move next month to get rid of these things.  

    Silver/Asaenz – The only difference between silver and gold is the silver traders were recently burned so they are not being idiots the way the gold traders are.   Even platinum is cheaper than gold at the moment and, historically, it’s had a nice premium.  Bank stocks will do a hell of a lot better than silver if we get QE3.

    GLL/Tyro – I like it because I think this madness had to end but if we’re not improving by early Sept – I’d bail. 

    MS/Pharm – New one to me.  

    Greece/Tusca – How can people no know Greece will default?  It’s not possible for them to pay their debt and it’s ridiculous that we’ve been pretending they can.  Too bad American Citizens don’t get treated this well when they are heavily in debt and can’t make enough money to pay the bills, right?  Anyway, I am often amazed to see the market react to "news" that we already moved past 3 months ago so the play would be the same as usual which is Euro down, Dollar up, markets down.  EDZ still the way to go.  

  123.  Phil— do you have an opinion on TIE?
    big insider buying i heard

  124.  A boring day at work so I was poking around on the Moody’s website, curious to see if they rate Fitch, S&P and themselves, for example.  (They don’t but a great Onion headline would be "Moody’s downgrades Moody’s from negative to irrelevant.)  Once you register with the website you can look up anything you want, so I look up my own city for fun, and they have given our fair City of Poughkeepsie a negative outlook.  Would love to quote Jabobeast here, but "expletive deleted" you Moody’s.  Come on, we are just built a new railroad walking bridge that is bringing in tourism.  What does Moody’s know about Poughkeepsie?  What does Moody’s really know about all this stuff?  They rate everything.  I had no idea.  Just looking at their website concerned me more about the power they wield than any article I have read so far.  Check out your own city rating and see if you agree.

  125. Hey Dave,
    I do like KRO and after the market spanking from low 30′s I like anywhere in the less than $23 area.  The CEO was buying at $26 and $23 in qood quantity while it was falling.  Good value buy at these levels where you don’t have to worry about picking the exact bottom.  It has been stronger than the market on bounces so believe you will see low 30′s again in 2011 and can start covering with options.

  126. Phil, 
    RE TBT I guess I wasn’t too clear… I have 2 sets of TBT: 1 2013 BCS (20 37/45 with 10 short 34 puts for net .50 credit) AND 10 short August 32 puts for net $1.10…

  127. I also like TEO at these levels with a forward dividend yield of 9.6% and leveraged free cash flow of $465 million.  Stock + Dividend + options makes a nice return.

  128. Greece — any disaster investors looking into NBG stock?
    PS – Howdy all! Long time lurker here, recently a real member and actually posting now and then!

  129. PCLN now red……after being up 5%.  Good bye.

  130. TLT..  If you blinked , you missed it go red for a split second..  :)

  131. Phil / Greece EDZ    So you’re leaning bearish into the weekend and favor picking up more EDZ?  If you think Greece will finally pop, shouldn’t we buy a 3x bear ETF of European banks?

  132. Warning to all that use Java!
    I thought I was out at 10:26 with a great gain for the day. At 11:15 after a break I was not so then I tried to sell again but no go. Again and again the responce was no stock to sell but I still had it going down. Called etrade and of course not their fault, After 2 hours looking at transaction codes I find at 10:25 Jave sent a refresh that made the sell orders false and was out and right back in after I checked and the account said value of securities $00000. Now I up about .5% not 5%. I have all auto updates shut off, previous problems, but I can’t control Java. Anyone know how to control Java?

  133.  Scott — Thank you very much for the reply!!  I just bought some more that 20.30.
    Have a great weekend!

  134. Moody’s / Rev – It is a racket and should be viewed as such! Your local bookie doesn’t know much about sports either, he is being fed lines by guys in Vegas (or other places) and his job is to collect the money and hurt the ones that don’t want to pay. Rating agencies are no different… 

  135. Ouch!

  136.  Thanks @ Scott Brown from me too!  I hold a position in KRO and regularly read "What the Market Wants" and use all the Sabrient tools available to us through PSW.  What’s new at Sabrient with your recent acquisition?

  137. shadowfax - It should prompt you before downloading or installing.  See the following:
    Jump to Update towards the bottom.  Mine always prompts me before downloading.  You should be able to find your Java Control Panel on your computer and see what your settings are.

  138.  oh where oh where has that naughty stick gone???
    it only comes out when i need the market lower ;-(

  139. shadowfax – On a different topic, I was wondering if I could ask you some questions offline (off the board) about how you’ve implemented JRW’s system.  If you’re interested I can give you my email address.  I’d be much obliged.

  140. Target:  IWM 65.60 or better, so be prepared to take profit !!

  141. Squeezed the shorts in the morning….now there is nothing underneith to hold this thing up.

  142. Volatility on the RUT spiked today – the RVX (RUT volatility) is above 50.

  143. How many ways can they take the money away, maybe the same thing happened in December and I took the $40,000 loss in January, I thought I was all cash those weeks I was building my new computer. I hate not being able to control my computer ALL the way! And now I missed the downturn.

  144. Phil,
    On my XRT position. I believe I left out some key information when I wrote you. You should know I rolled to the Sept. $53 puts @3.11 from May 11 51/49 puts @ .55. I show a current loss of $2,900 on the TOS position. What is the best play for this going forward? Thanks.

  145. Moody’s – interesting that the entire document highlights that the analysts were trying to do a good job, but managment did everything in their power to prevent that.  Harrington is not the first to come out with the firms dirty secrets.  It’s a shame the crooked mangers of all these corporations are not sent to Rikers Island general population where they belong.  When there is nothing but a reward for criminal behavoir is it any surprise that it is so prevalent.

  146.  Java / shadowfax,
    Go to Control Panel. If you have "View By" set to Category, change it to "Small/Large Icons". You should see an icon called "Java Control Panel". Open it, and go to the "Update" tab. Check off the box titled "Check for Updates Automatically".
    You should be all set with this change.
    Remember to periodically check for updates manually.

  147. 2/3 out of TZA at $ 57.24 for $1.96

  148.  now the Momos are helping the drop…
    FU MoMos!!!

  149. Too soon on the partial exit; buying back 1/3 TZA at $ 57.32

  150. Back to cash. have a wedding to catch.. shoot looks like its going to get weaker…you guys be careful and have a fantastic weekend!!

    Thanks guy/gals!!


  151. All out of TZA  at $57.32 last 1/3 got $2.04 !!

  152. HOLI getting hammered-below 5 now. 

  153. 2/3 TNA at $ 36.77 !!  Rebound into expiration and the weekend !!

  154. U.S. oil speculative data released by Senator, sparking ire

    (Reuters) – Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.

  155. All in TNA !!

  156. Pharm,
    Both PDLI & ARRY up the past few days, albeit a few cents.  That seems pretty strong into this selloff.  Think they could lead when the selling is finally over?

  157. pharm- could you kindly direct me to a list or posts of your long recommendations in healthcare or other…thanks

  158. button – there are things going on at ARRY, and let’s hope they come out on top.  Their valuation is silly, and they are productive.  I will hold on them.  PDLI is a divdend play and ROCHE is doing the selling.  Again, a nice play for long term (or until bioequivalents catch up and figure things out, hence I like PLX for that). 


    Nice headfake JRW…..they are playing the game, and it is down….down…down….

  159. sns – my tab above has all my posts. My spreadsheet is here.

  160. phil- in anticipation of q3 earnings in a few weeks, what data sources do you use for revenue/earnings suprises (from q2)? i am trying to find an easy way to screen for companies that beat and raised both revenue and earnings guidance in the past quarter  in q2….yahoo shows the beats but was wondering if there was a more detailed screen datasource…thanks

  161. Pharm..   I agree….  NO reason to buy into the bell..  besides, next week we should get a real fire sale…

  162. Out for a 14 cent loss !!

  163.  bloodbath
    no f n stick again!

  164. Thanks Dave and RevTodd,
    The acquisition has been great with Gradient Analytics.  I will be in Phoenix the next week or so working with the analysts and want to see if possible to have one or more available in chat for a day sometime.  Would be really cool.
    Lots of new activities at Sabrient as Direxion Funds registered 2 new Sabrient Indexes for ETF distribution.  I will forward the link shortly.  These indexes start with the SP500 and SP1500 and eliminate aggressive accounting stocks.  Then we take the top 200 stock by Insider Buying and Analyst revisions.  We rank those 200 by VCU (our internal alpha model) to get the 1-200 ranking.  The index holds the top 100 then with a piece meal quant weighting where the top 50 have exponential weighing from 2.6% down to .35% which is then flat weighted on the bottom 50.  The backtests on both are very exciting and should start tracking Monday.
    I will forward link to article on this in just a minute.

  165. thanks Pharm

  166. Banks not so hot….

  167. jcaesar
    I was unable to get to the update part of Java control panel. I may need to use administrative powers but failed to find out how. I can do a lot with computers except windows7. I just don’t have what it takes to learn all the easy to operate (not) features. I should have some time Saturday afternoon. Thanks.

  168. 2/3 TZA looking now at IWM 64.50ish !! $ 57.54)

  169. JRW- Followed you in on TNA at $36.80 and bailed out after losing $500 ($36.3).  Let’s see if I jumped out too soon.

  170. shadowfax – I can help with that.  My email address is  Again, if you have a moment to chat about your experience with JRW’s system I would be very appreciative.

  171. shadowfax – And Saturday is fine.

  172. Last 1/3 TZA at $57.53

  173. TIE/Jabob – Very good company.  What we call a "Boeing Buddy" as they play a big part in the supply chain and BA has filled a lot of orders for the older models that still use metals and not composites so I think TIE is a good deal at $13.71 but, in a major crash, they could drop 50% so keep that in mind.    The problem is BA deals depend on financing and if we have a liquidity crisis, like we did in ’08, then people assume the orders will never get filled.  So, I like selling the 2013 $12.50 puts for $2.60 and buying the 2013 $12.50/17.50 bull call spread for $1.80 which is a net .80 credit on the $5 spread that’s $1 in the money (so you make penny for penny to the upside) and worst case is you own 1x TIE for net $11.70 so, even if they fall to $6, you can DD at $6 and have 2x at net $8.85, which is 35% below the current price. 

    Moody’s/Rev – That’s the scam.  You can’t borrow money in America without their blessing and everyone pays to be blessed (sound familiar?).  It’s like, who appointed them to pass judgment over what’s good and bad – how dare they?!?  8-)

    TBT/Amatta – Well same deal on the Aug $32 puts or the long $34 puts, you can just roll them down to something more realistic with a shorter time-frame if you have the margin for it.  However, I will point out that you could try the TLT Sept $115/110 bear put spread at $3.20, selling the $114 calls for $2 for net $1.20 on the $5 spread.  Obviously, Pharmboy strongly disagrees with me but it would be very surprising to see TLT sustain this level long-term and it’s probably a better bet than short puts on TBT as they are already in the money. 

    NBG/Carter – They are already at $1, not sure I’d want to bet them lower (or higher).  When they get to pennies, then they get to be fun as a no BK trade but it’s just a silly gamble either way.  

    CMG red again too! 

    EDZ/Tusca – That’s my main pick for a hedge (in case you missed the multiple trade ideas on them).  I think the EU banks are way too dangerous to short because the EU does have $2Tn to toss around if they really want to but EDZ can move for so many different reasons INCLUDING a Greek blow-up. 

    Java/Shadow – Don’t allow updates during trading hours.  Also, with Etrade, I find that it’s best to restart is within a half hour of the open because they hold a ton of crap in memory that seems to clog them up at times.  

    Not good, all gains being wiped out and Dollar only at 74.065, still down 0.4% for the day.  

    XRT/Hextra – I’m not bullish on retail at all.  You’re saying you shorted the Sept $53 puts, as in – a very bullish play on retail?  I would take the loss, find a really good retailer or two you REALLY like and sell puts against those specifically – preferably ones that have a higher – end clientele.  Look back at 2008 and see what happened to people who were long on retail when people began to panic….

    Note to all.  Look at the chart for XRT – they are below their 200 DMA so there is no support AND the 50 dma is moving down to make a death cross on the 200 – another bad sign, especially since the chart for the S&P has ALREADY formed a death cross and, as we can see – is still pretty weak.  If you are looking at a stock and it’s below the 200 dma with the S&P acting weak – don’t imagine that what looks like Clark Kent is actually Superman.  As it turns out, 999,999,999 out of 1Bn guys who look like Clark Kent – are actually Clark Kent and NOT Superman in disguise….  So your weak-ass looking stock will not bend downtrends in it’s might hands or leap over descending 200 day moving average in a single bound – they will, most likely, do what every other stock does as they are all traded by the same bots at the same time!  

    If you want to find a Super-Stock, look at MCD, which is bouncing off it’s RISING 50 dma while the rest of the market falls apart.  Bullets bounce right off them as did the March and August Kryponite dips and now they’re not even bothering to go down on the current dip because people are willing to break patterns and run to them for protection with their super IBD ranking, high liquidity and 2.8% dividend (50% better than TBills!).  

    So look at the stock you think is good – then look at MCD.  Your stock, MCD, MCD, your stock.  THEN decide if you think your stock is super or not.  

    HOLI/Seer – It will be a long time before people believe in them again.  

    Data/Kramer – No outrage about the manipulation and the wrist slap the industry got, just about the Senator who wants the public to know what the cover-up is about.

    Back to that 650 line in the RUT futures (/TF) but 2,050 on the Nas (/QM)  so shaky at best.  Dollar over 74 so we don’t like that unless they break lower but as good a spot as any to pick up TNA Sept $35/39 bull call spread for $2, selling Sept $26 puts for $1.60 for net .40 on the $4 spread.  

  174. Pharm..  what is your best bank disaster play?..  SKF calls?

  175. Wow, and there is still an hour left….!!!

  176. Phil,
    We would feel much worse as Rangers fans if we hadn’t won 3 out of 4 from the Angels and stretched the lead out to 6.  That said, I will not be a fan of Adams if he serves one of those up in playoff time :) .

  177. IWM 65.08, then………………………………..

  178. Phil—we havn’t rolled the iyr and dia covers as yet

  179. covers in the income portfolio

  180. Topher – I try not to play ultras nor banks.  Not my cup of coco!  But I do use them for market strenght.  Liquidity is aplenty thanks to the stimulus and QE, but where are the jobs? where is the lending?  The QE propped the crap on the books so they can maybe, maybe write them down, sometime. 

  181.  Phil,
    It seems the FED is vary of doing QE3 bcoz of obvious reasons. Do they have anything else in their arsenal to prep the markets.

  182.  Phil – Moody’s and paying to be blessed.  
    Uh, that would be what got Martin Luther all charged up.  He broke up the monopoly of paying to be blessed and sent everyone to wholesale!

  183. Phil, need your help for my XEC position.
    Bought Jan. 13 $100/125 BCS, sold Jan. 13 $90 to offset when XEC was way over $100, now XEC is $62.xx and my position is way down.  I didn’t pay attention on it because it’s for 2013, should I something about it? if so, how?

  184. Phatom bar on SPY to 113.95….watch the movement…..

  185. The BOTS are testing for an UP move !!

  186. IWM 65.10, be ready,  a big surge UP will have follow through  !!

  187.  sat what JRW??

  188. Remember when  Bill Gross said that US treasury yields would surge at the end of QE2 and PIMCO went short?…..hummm

  189. And 2/3 out of TZA, now all out. $ 58.28 average !!

    Buying TNA on my morning premise !!

  190. sbrown/TEO : Any concerns about Nationalization?

  191. By the way Matt the Programmer said that our site went down this morning on a traffic spike at the open.  We’re going to have to look into yet another upgrade!  

    Earnings/Sns – I think Earningswhispers is about the best site, they have lots of good info.  As a fundamentalist, I don’t look at that stuff too much, I just look for who’s got earnings coming up and if I see someone who is underpriced and I’ve seen good data from their group (but not so good that my guy might be losing market share!) then I look for a way to get bullish or the opposite if I think something is overpriced in a weak sector.  It’s funny because I had very few earnings picks this Q because everyone was going up on earnings and it made no sense so we barely played them.  In the next round, if we’re still low, 

    Wow, Dow down 167, over 250 off the highs and falling fast…  

    Adams/Scott – He’s a great pitcher, I hope they cut him a break.  In NY they would have hung him in effigy after giving up 2 good guys to get him. 

    Income Portfolio (thanks Savi):  

    • DIA short Aug $116 puts, now $8, can be rolled even to Sept $114.75 puts.
    • IYR short Aug $55 puts, now $2, can be rolled to Sept $52 puts for a .05 credit.  
    • WFR Aug $8 calls expiring worthless, as expected.  

  192. $ 36.30 average !!

  193. Now….

  194. Phil / Carnac – Do you think the markets are settling in to a new pre-recession/recession range, or are we going to go back up where we were a month ago sooner than later?

  195. Out of THAT even !!

  196.  every attempted rally is getting punished

  197. $25KP Adjustments are simple, any short Aug put, simply roll over to an even Sept position, we will adjust positions after next weekend, when we get the word (or no word) from Jackson Hole.  

    Fed/Rehat – They can play with the terms of the POMO in many ways and the Discount Rate is zero so hard to go lower but the Reserve Requirements can be changed to do a massive money dump almost immediately.  The Fed has the power to buy all sorts of things – they can "decide" to buy $1Tn worth of Commercial Real Estate or anything else the banks are stuck with.  POMO is subtle compared to the other tools. 

    Wholesale/Rev – In temples you still have to pay more (donate) to get better seats! Especially in Europe, it’s like going to a ball game where every box near the front has a nameplate on it…

    XEC/Bob – Oh I’m not a fan of those guys.  They are, however, just down with the sector so I wouldn’t worry about it as long as you REALLY want to own them long-term. If you had sold Aug $90 puts, those are $28.50 and you could roll them to 2 2013 $65 puts for better than even so that’s about what you have to look forward to.  You could roll the $100 calls down to the $85 calls for $3 and roll the $90 puts ($32) to the Jan $80 puts ($20) which costs a bit but takes advantage of a rebound if it ever comes and, if not, those can roll back to the 2013 $75 puts (now $21) so you are buying $15 for $11 and you still have the option to roll lower and DD.

    Jackson Hole/Rev – Not good if people are counting down in anticipation..

    Range/JC – Without QE3, this is the right range.  With QE3, back over the Must Hold line until it runs out. 

    Someone is getting out ahead of the weekend.  EDZ surprisingly calm.  

    ROFL – SODA wipes out the Cramericans once again!  

  198. CNBC ….running out of "names" to roll out and pump this bad boy up..???  Abbey Joseph Cohen…  Really??
    Where is Kudlow to reassure everyone this is NOT a double dip and keep buying???
    Phil/ Blackberry..  my 16 yr old daughter also says ALL her friends have them…whatever that means?

  199. Girls/Blackberry
    Women are not the best indicator of technology.

  200. SODA / Phil – I am sure that GS was shorting them above 40 for a quick "Cramer" trade! Seems to work every time… 

  201. Too late for me to trade, so 15 % on the day is not bad while I was playing the 88 % GREEN theory, oh well !!

    Have a great weekend all !!  Download beach smileys for free at

  202. Phil
    I have all updates shut off except Java, jcaesar has offered to help tomorrow. I really knew XP but showing my 60 years I am sick of JUST changes to learn and every safety feature is like privacy rights at the doc’s office, we will protect you from the truth! Love the government and all their great ideas how to protect us from everyone but them!

  203. JR
    I think Monday may resemble your train wreck.

  204.  AAPL traders:   I’m back from vacation.  Was all week in cash.  Didn’t make or lose a cent.  But now, back in the fray.   Bought some October 360/375 bull call spreads for 7.20.   Maybe some TNA too before the close.   

  205. Crap – no bounce back today. Goo greif I was WAY to long last night. Also, 78 TBT contracts expired worthless today as I tried to play an a ‘bounce’ there but look at pharmboy’s chart above, I mean wow, if you have money I guess the idea is let the gov’t pay you 2% yield while they devalue the currency 10% a year AN THAT’S STILL BETTER THAN BEING IN THE STOCK MARKET.
    That doesn’t make any sense to me, but since I can’t wrap my mind around it I don’t get to be rich (paying TBT call sellers off is no f*cking fun). Maybe now I ran out of funds and can’t play interest rate gambling games anymore the rates will turn on a dime and blast off like they should. Who knows…. At least I held gold all these years. A "Silver lining" to my portfolio mistakes….  

  206. jRW Thanks again for all the imput, help,  Have a geat weekend

  207. Phil,Put Question
    I have some Ford puts that I sold that are in the red and expiring today.  Will the broker just put the shares of Ford in my account?

  208. Please note my put theory from the Morning Alert is working well – very good way for people who can’t do naked offsets or don’t want to be stuck in spreads can get into high-levered protection.   AXP is UP 1% today.. 

    Bberry/Tophe – Very interesting.  My daughter was vague, see if you can find out why they are popular.  Jackie actually thought the Bberry was something that was somehow out of her range and she’d have to "settle" for an IPhone when here contract was up because that’s what Tina said she was getting.  She’s thrilled that there’s a choice.  I am dumfounded and now I have to go to the store this weekend and see what’s up.   Madeline (11) says Bberry’s get better reception and it’s 50/50 in her grade (6th).  She wants an IPhone because it had more free Apps and she likes the screen better but she’s also an artist so she has special needs that Apple appeals to.  

    Women/Rustle – True but that’s my house sample and Tina is a Bberry person to so my home is split 50/50.  Let’s hear what others have to say. 

    SODA/StJ – I just wasn’t cynical enough this morning.  Lesson learned!  

    Nice job JRW – have a good weekend.  

    Java/Shadow – That’s why AAPL won’t let them on the Iphone.  

    LOL – Have you guys been watching gasoline?  $2.86 now, up .12 for the day (4.3%).   That trade is an amazingly high percentage each Friday.   

    What a wasted day, right back where we started 12 hours ago in morning chat.  Was a fun ride though…

    Have a great weekend everybody!

  209.  Great job JRW! Keep up the great posts!

  210. F/Exec – I don’t know the brokers rules but that’s what should happen.  You will get X shares of F and that much cash will be removed from your account (at the strike).  $10 is a nice price – if the market wasn’t so AWFUL, I’d like them as an entry here.  

  211. Damn JRW….we need to open a hedge fund with that ‘program’…..

  212. iflan – what was your thought process on AAPL for the above trade? What will your stop be for the above? Thanks,

  213. Phil / Java — Didn’t know that Java wasn’t available on the iPhone. If it doesn’t, I’m sure it has more to do with keeping their mote deep and wet and less to do with anything else. Java enables another application environment that they can’t skim profits from.
    That David Darst should have tried out to be the Aflac goose! :)
    Have a good weekend all!

  214. Apparently, online games will also need financial regulations soon:
    The pig market crashed in my FarmVille game and I can’t get a loan to build a new barn!  

  215. There are a couple rules to be learned in there:
    For example:

    9.  Suspend disbelief.  "Bank of America could NEVER be a $5 stock!"  "How could Bear Stearns possibly go out of business, its a hundred-year-old firm!"  "No way this stock should trade at 5 times earnings, it’s a Dow component!"  "How could the market go down 5% four days in a row?"  Guys, anything can happen in a crash, there are machines making the trades and they have no respect for the prestige or standing of a particular company.  This is both gut-wrenching to behold and great for the level-headed who eventually got to buy Wells Fargo in the teens or Apple in the $100s once the bottom was in. 

  216. Phil
    Can’t thank you enough for all you have done, I love how pro etrade runs in genral but will also start loading it late, I have been doing it at @ 8 AM to see where IWM is at but it isn’t worth much. My system can eat data so fast that shit doesn’t seem to matter but less shit is always better. Then again auto updates are the worst. Have a great weekend!

  217. Today’s levels.

  218. H Dflam,
    Nationalization is always a risk with a company in Argentina but I think a small one.  The Presidential candidate that was anti-business had an "accident" earlier this year and is no longer with us.  At that time TEO spiked up to $27 and was a reason I wrote about taking a break for a while in being long.  It is an issue I would keep an eye on and such but I believe it is about as likely as the US defaulting on the debt a few weeks ago :) .  The 9.6% forward yield plus a call option makes for a nice "yield" in this non-interest rate environment.

  219. At the close: Dow -0.99% to 10881. S&P -0.98% to 1129. Nasdaq -1.22% to 2351.
    Treasurys: 30-year -1.17%. 10-yr -0.96%. 5-yr -1.10%.
    Commodities: Crude +0.18% to $82.53. Gold +1.54% to $1850.10
    Currencies: Euro +0.46% vs. dollar. Yen -0.12%. Pound -0.19%.

    Market recap: Stocks finished near session lows as investors shed shares through the afternoon rather than stay long through an uncertain weekend. H-P was by far the Dow’s biggest decliner, tumbling 20% to a six-year low. Gold topped $1,880 to cap its biggest weekly rally since 2007. Treasurys were little changed, but yields hit record lows this week. NYSE losers led winners three to one. 

    Twenty-eight states and D.C. posted unemployment rate increases in July, nine states recorded decreases, and 13 states were unchanged, the Bureau of Labor Statistics reports. Nevada again has the highest rate at 12.9%, with California next at 12%. Three states hit new recession highs: Arkansas (8.2%), Texas (8.4%) and Montana (7.7%). 

    According to Bespoke, the S&P 500′s trailing P/E has fallen over 3 points since 4/29, to 12.44. While the financial sector has the lowest P/E (10.62), multiples for the healthcare (11.23) and tech (12.79) sectors are also near 18-year lows. The telecom sector (17.50) stands alone in having a trailing P/E above 15. 

    Solar stocks fall hard yet again after a guidance cut from LDK Solar (LDK -23%), and a DigiTimes report about rising inventory backlogsSTP -8.8%HSOL -8.6%JASO -4.7%FSLR  -6.4%TSL-4.3%SPWRA -6%CSIQ -5.9%. Yingli Green Energy (YGE -6.6%), whose Q2 results beat forecasts, also fell.

    Gold mining stocks were lifted today on the back of record prices for the yellow metal: Newmont Mining (NEM +2.8%), Royal Gold (RGLD +2.6%), Jaguar Mining (JAG +6.7%), Great Basin Gold (GBG +8%).

    Didn’t think of that one (bad for XLF):  Moody’s does a stress test on life insurers, concluding a long period of low interest rates "would subject (them) to substantial losses and could result in rating downgrades." Portfolios currently yielding an adequate 5-6% could drop below that figure, threatening policy benefits and profit margins.

    Very Good Advice!  Make 2 lists, writes Josh Brown in his "10 Rules for Surviving a Crash." Everybody knows the first – stocks to buy if they get cheap enough. But don’t forget about the other – a list of things you will sell on the next bounce. "Even the worst markets have short-term bounces in the midst of the chaos." 

    Collapsing Treasury yields signal "not only a potential for a recession but the almost high probability of recession and the result of lowering of inflation – that is key," Pimco’s Bill Gross says. "It is increasingly apparent to us that policy options are limited and that economic growth is slowing down."

    With the 10 year Treasury yield back to its December 2009 record low, a look back at the chart is helpful. It shows yields turning higher that winter even as stocks continued to plummet for another 2+ months. For those who think falling shares will automatically translate into even lower yields … not necessarily.

    Investors looking for the Fed to pull a rabbit out of the hat at next week’s Jackson Hole summit may be disappointed, say a number of economists. One major reason is the 3 dissenting members of the FOMC (IIIIII) make it much harder to drop a big policy hint like Bernanke did last year when he tipped off QE2. 

    "Still delusional," laments fund manager Robert Rodriguez of the U.S. government and efforts so far to address the budget gap. "We have approximately 15 months to really start demonstrating fiscal rectitude in this country," he says, believing Congress needs to return from recess now to get started. The 10 year yields 2.08%.

    "You have nothing to worry about," V-P Joe Biden reassures China Premier Wen Jiabao concerning the country’s vast holdings of U.S. Treasurys. But away from on-camera pleasantries, China’s state-run media vents a more unvarnished view, repeatedly accusing the U.S. of reckless fiscal policies that erode the purchasing power of China’s holdings. 

    Fitch Ratings delivers a blow to New Jersey with a ratings downgrade to AA-minus, following similar moves by S&P and Moody’s earlier. Legislators and governors share the blame by allowing pensions to sit underfunded and missing payments, says a sharply-worded local editorial.

    Belgium gives its support to the creation of eurobonds as well as an expansion of bailout efforts. However, Germany remains opposed to both proposals, and French PM Fillon pens an editorial warning that issuing eurobonds without more fiscal tightening could threaten France’s AAA rating.

    A poll finds only 22% of Germans support Angela Merkel’s handling of the debt crisis, about the same percentage as those who claim to understand all that is happening. If Germans are upset with bailouts, where will they turn? The out-of-power parties in Germany are more pro-Europe than Merkel’s coalition.

    A new low of 26% of Americans approve of Pres. Obama’s handling of the economy, according to the latest Gallup poll, down 11 points since May and well below his previous low of 35% in Nov. 2010. Obama earns similarly low approval for his handling of the federal budget deficit (24%) and creating jobs (29%). 

    EDZ looking better:  Goldman cuts its GDP growth forecast for Brazil to 3.7% from 4.5% on a deteriorating global outlook, saying local economic data has softened "more and faster" than anticipated. 

    And better:  S&P is cutting Venezuela’s sovereign debt to B+, believing the government’s interventionist policies risk weakening the country’s economy. A further downgrade is deemed possible if oil prices fall or the political situation further deteriorates. This week, Venezuela has announced plans to repatriate billions in gold and cash reserves.

    The big back-to-school fashion is higher prices, but retailers are trying hard to keep customers from noticing - from using less fabric and saying it’s the new look, to adding cheap stitching and calling it a redesign. Stores are raising prices an average of 10% across the board to offset rising costs for materials and labor, which are expected to jump as much as 20% in H2. - This is inflation too – getting crappy stuff for more or the same money! 

    And then there’s regular inflation:  More than half of retailers and restaurants with annual sales of $10M-$500M have raised prices during the past year, up from 32% a year ago, according to a Barlow Research survey. Most say they haven’t received much pushback from customers, so price hikes likely will continue: 61% say they plan more increases during the next 12 months, vs. 41% a year ago.

    Nomura thinks Hewlett-Packard’s (HPQ) decision to spin off its PC division means Intel (INTC -2.7%will miss its forecast for the current quarter. The decision "reflects commoditization in the computing space, as consumers change the use of the PC," resulting in added pressure on processor prices, which accounted for 64% of sales last quarter. [

    It’s now a two-day steep selloff for MGM Resorts (MGM) after Kirk Kerkorian decided to unload 20M shares. Shares weredown 13% yesterday and trade 6.2% lower today, stinging Kerkorian’s remaining 23% stake in the casino operator along with the rest of investors.


    Eat that GMCR, PCLN, NFLX, LULU & CMG:  Apple (AAPL) sales in greater China (incl. HK and Taiwan)overtake Lenovo for the first time ever. Lenovo still dominates PC sales, but demand for iPhones, iPads, and Macs sextupled Apple’s revenue to $3.8B. Lenovo had $2.8B in business in mainland China, and it’s fairly certain tossing in Hong Kong and Taiwan would not make up the difference. - When do you ever see the word "sextupled" applied to revenues of an established company?  

  221.  nicha   ….    AAPL trade reasoning…….    AAPL undervalued at 356..     Will be pushed well above 375 during October (or before)  as earnings approaches.    Above 375 doubles the investment.   With further pullback I would buy back the calls if they earned 50% or more for me, then let the long calls ride, and perhaps sell some puts as well.    If the stock just goes up, I leave the trade alone completely.      I’ll post if I alter the trade.  If you didn’t get in today, Monday is fine.    I believe it will be a pretty easy double.  

  222. As to the Big Chart - In the 8/15 Morning Alert I said:  

    Today, we’re simply completing the 2.5% move up we expected on Friday so a 1.5% gain for the day will not be very impressive – as we’re just trying to complete this 50% retrace of our recent drop.  Keep in mind that a Fibonacci Retracement of 38% of the drop is still just on the edge of becoming a strong bounce but we can’t ignore the drop unless we push back over the line as fast as we fell below it and that was 3 days down, 2 days as the bottom and now we are in day 2 of moving back up.  Failure is not an option at this point!  

    To a large extent, we are bouncing as dip buyers anticipate something coming from tomorrow’s Merkel-Sarkozy meeting or something like QE3 coming out of the Fed – if those events do not come out as hoped – then all hope may be lost and that is NOT going to be pretty.  

    Then on the 18th I said:  

    W Pattern/SNS – Not today, we should take a few days to bottom back out.  I forgot what I said last week but we had 3 days at the bottom, 3 up days, 2 consolidation days and so 3 down days is likely and that would be 5%, 2.5% and 1.25% – then consolidation and then it’s time for Jackson Hole and we can take off so pretty much we’re right on schedule today.  

    So nothing to fear as long as all we are doing is completing our "W" pattern ahead of Friday’s meeting.  One more day down (a blow-off spike down would be nice if we recover from it the same day like the 9th), 3 days of bottom bouncing and then it’s Friday and the fate of the market rests on whatever Bernanke says that day.   FUN! 

  223. Gonna be a fun weekend as Japan seems to be leaning toward yentervention again. They thought it was so much fun last time!

  224. lflan—would you adjust an oct 390/400 bull call spread net $5.10 now 2.80  or leave it based on your target for apple by next earnings report

  225.  Savi,,,,  Lots of possibilities here.  Right now your trade goes belly up if AAPL is below 393 or so at expiration.   So a trade repair is a good idea.    Say you have no margin and just want to recoup losses.   You are down 2.30 on the trade , so sell the  Oct 390/400 for 2.80 and buy the Oct 365/370 for 2.55.  This earns 2.45 if AAPL is over 370 at expiration, so you have actually made 40 cents on the trade.  (2.80-2.55 = .25 plus 2.45 – 2.30 = .15).  If you have margin and want to make more on the new trade, while lowering risk, you can sell the 390/400 for the 2.80, and buy the Oct 360/375 for 7.35.  This can be financed by selling some October puts.  The 285s are going for 6 bucks, the 300s for over 8 bucks.   If you sold the 300s AAPL would have to drop below 300 for you to lose any money on the entire trade.  Not likely to happen.  And if AAPL is over 375 then you’ve made 8 dollars on the put sale and another 7.65 or so on the bull call spread.  Hey, I’m liking that a lot!  There are lots of other scenarios, but that’s how I’d do it.   

  226.  Hey Phil,
    Do do have any targets for the US Dollar and the Euro if/when we get/don’t get QE3, and also the effect of Euro bonds?  If not targets, then just your thoughts?
    The Euro sure is looking bullet-proof here. So much bad news, so little damage. Can it really be?  

  227.  stjeanluc, where did you read about Yental-vention?  Is there a link?

  228. Found on ZH
     Atonement Dinner
    "Winston, come into the dining room, it’s time to eat," Julia yelled to her husband.
     "In a minute, honey, it’s a tie score," he answered.
    Actually Winston wasn’t very interested in the traditional holiday football game between Detroit and Washington. Ever since the government passed the Civility in Sports Statute of 2017, outlawing tackle football for its "unseemly violence" and the "bad example it sets for the rest of the world", Winston was far less of a football fan than he used to be.
     Two-hand touch wasn’t nearly as exciting. Yet it wasn’t the game that Winston was uninterested in. It was more the thought of eating another Tofu Turkey . Even though it was the best type of Veggie Meat available after the government revised the American Anti-Obesity Act of 2018, adding fowl to the list of federally-forbidden foods, (which already included potatoes, cranberry sauce, and mincemeat pie), it wasn’t anything like real turkey.
     And ever since the government officially changed the name of "Thanksgiving Day" to "A National Day of Atonement" in 2020, to officially acknowledge the Pilgrims’ historically brutal treatment of Native Americans, the holiday had lost a lot of its luster.
     Eating in the dining room was also a bit daunting.
    The unearthly gleam of government-mandated fluorescent light bulbs made the Tofu Turkey look even weirder than it actually was, and the room was always cold.
     Ever since Congress passed the Power Conservation Act of 2016, mandating all thermostats – which were monitored and controlled by the electric company – be kept at 68 degrees, every room on the north side of the house was barely tolerable throughout the entire winter.
     Still, it was good getting together with family. Or at least most of the family.
     Winston missed his mother, who passed on in October, when she had used up her legal allotment of life-saving medical treatment.
     He had had many heated conversations with the Regional Health Consortium, spawned when the private insurance market finally went bankrupt, and everyone was forced into the government health care program. And though he demanded she be kept on her treatment, it was a futile effort.
     "The RHC’s resources are limited", explained the government  bureaucrat Winston spoke with on the phone. "Your mother received all the benefits to which she was entitled. I’m sorry for your loss."
     Ed couldn’t make it either. He had forgotten to plug in his electric car last night, the only kind available after the Anti-Fossil Fuel Bill of 2021 outlawed the use of the combustion engines – for everyone but government officials.
     The fifty mile round trip was about ten miles too far, and Ed didn’t want to spend a frosty night on the road somewhere between here and there.
     Thankfully, Winston’s brother, John, and his wife were flying in.
     Winston made sure that the dining room chairs had extra cushions for the occasion.
     No one complained more than John about the pain of sitting down so soon after the government-mandated cavity searches at airports, which severely aggravated his hemorrhoids.
     Ever since a terrorist successfully smuggled a cavity bomb onto a jetliner, the TSA told Americans the added "inconvenience" was an "absolute necessity" in order to stay "one step ahead of the terrorists."
     Winston’s own body had grown accustomed to such probing ever since the government expanded their scope to just about anywhere a crowd gathered, via Anti-Profiling Act of 2017. That law made it a crime to single out any group or individual for "unequal scrutiny," even when probable cause was involved. Thus, cavity searches at malls, train stations, bus depots, etc., etc., had become almost routine.
     The Supreme Court is reviewing the statute, but most Americans expect a Court composed of six progressives and three conservatives to leave the law intact.
     "A living Constitution is extremely flexible", said the Court’s eldest member, Elena Kagan. " Europe has had laws like this one for years. We should learn from their example", she added.
     Winston’s thoughts turned to his own children.
    He got along fairly well with his 12-year-old daughter, Brittany, mostly because she ignored him.
    Winston had long ago surrendered to the idea that she could text anyone at any time, even during Atonement Dinner.
     Their only real confrontation had occurred when he limited her to 50,000 texts a month, explaining that was all he could afford.
    She whined for a week, but got over it.
    His 16-year-old son, Jason, was another matter altogether. Perhaps it was the constant bombarding he got in public school that global warming, the bird flu, terrorism, or any of a number of other calamities were "just around the corner", but Jason had developed a kind of nihilistic attitude that ranged between simmering surliness and outright hostility.
     It didn’t help that Jason had reported his father to the police for smoking a cigarette in the house, an act made criminal by the Smoking Control Statute of 2018, which outlawed smoking anywhere within 500 feet of another human being.
     Winston paid the $5,000 fine, which might have been considered excessive before the American dollar became virtually worthless as a result of QE13.
     The latest round of quantitative easing the federal government initiated was, once again, to "spur economic growth."
     This time, they promised to push unemployment below its years-long rate of 18%, but Winston was not particularly hopeful.
     Yet the family had a lot for which to be thankful, Winston thought, before remembering it was a Day of Atonement.
     At least, he had his memories.
     He felt a twinge of sadness when he realized his children would never know what life was like in the Good Old Days, long before government promises to make life "fair for everyone" realized their full potential.
     Winston, like so many of his fellow Americans, never realized how much things could change when they didn’t happen all at once, but little by little, so people could get used to them.
     He wondered what might have happened if the public had stood up while there was still time, maybe back around 2011, when all the real nonsense began.
     "Maybe we wouldn’t be where we are today if we’d just said ‘enough is enough’ when we had the chance," he thought.
     Maybe so, Winston. Maybe so. . . .

  229. Yentervention / Peedle – That came up as news on last evening! 

  230. AFL- Phil, what is your opinion on a B/W – Jan 13- 35′s for $14.07- pays 70% on a call away plus the dividend; or below 35; net shares at $28.77.
    This is for an IRA.

  231. Good morning!  

    Here’s Barry’s succinct summation of week’s events:


    1) Gasoline prices fall another few pennies to 6 week low, relief for consumer
    2) IP rises greater than expected .9% but not sustainable as auto snapped back after Japan and hot weather boosted utility output
    3) Multi family housing starts bounce, helping to partially offset drop off in single family construction
    4) Refi’s rise 8% to most since Nov
    5) Fitch says US AAA ok for now
    6) Thanks again to the ECB, Spanish and Italian debt trade well. What happens though when they stop? They do fully sterilize the purchases and the euro continues to trade great vs the Fed money printed backed US$
    7) Japan’s Q2 GDP contracts only 1.3% instead of expectations of 2.5%


    1) European markets get hammered again, bank funding sources in question
    2) Merkel/Sarkozy break bread with no further bailout as no change in the size of the EFSF, no Eurobond and they throw down the hammer of a transaction tax just as the region is capital starved, brilliant!
    3) Initial Claims at 408k, 8k higher than expected but 4 week avg falls to lowest since April
    4) Existing home sales 230k below forecasts, Purchase apps fall 9% to one yr low
    5) Philly mfr’g plunges to -30.7 from +3.2 and NY falls 4 pts to -7.7
    6) Inflation figures all run hot, import prices, PPI and CPI. While all may back off with economic slowdown, stickiness will be theme and the rest of us will continue to be force fed REAL negative interest rates
    7) Greek yields spike, everyone wants Finland’s deal of collateral in return for funds

    8) Gold continues its amazing move up, paper currencies turning into paper towels 

    Also very interesting is Ron Paul’s portfolio:

    Pot of Gold: Ron Paul’s Top 10 Holdings

      Return* Return* Size of
    Company/Ticker 1-Yr 3-Yr Holding
    Goldcorp / GG 19.13% 17.00% $500,001 – $1,000,000
    Barrick Gold / ABX 12.24 15.49 $250,001 – $500,000
    Newmont Mining C Stock / NEM 1.12 12.02 $250,001 – $500,000
    Agnico Eagle Mines / AEM 1.13 5.88 $100,001 – $250,000
    AngloGold Ashanti / AU 2.02 19.33 $100,001 – $250,000
    IAM Gold / IAG 3.69 52.07 $100,001 – $250,000
    Mag Silver / MVG 39.97 9.75 $50,001 – $100,000
    Pan American Silver / PAAS 22.72 4.71 $50,001 – $100,000
    Silver Wheaton / SLW 74.51 49.54 $50,001 – $100,000
    Virginia Mines / VGMNF.OTC 28.05 31.11 $15,001 – $50,000
    Gold 48.34 31.61  
    S&P 500 6.04 -1.25  
    *All returns are as of 8/18/11; three-year returns are annualized.

    That dude is NOT diversified!  

  232.  What is it about these four Bloomberg headlines that are imparting some sort of a lesson?

    • May 23, 2011Biggs Buying as S&P 500 Profit Forecasts Rise Most in a Year

    • May 24, 2011:  Biggs Says Stock Bears Wrong Even as Economy Slows

    • Aug 3, 2011Birinyi, Biggs Advise Holding Stocks After S&P 500’s Decline

    • Aug 18, 2011Biggs Says S&P May Be Bottoming, Priced for 15% Profit Drop

    Which of these buy calls should you follow? Might some of these calls be suffering from bias? And if you are always telling people to buy-buy-buy, can anyone really follow your advice?

  233. I’m still reading but likely to stick to my original plan for this week’s post on the 2nd biggest problem in America (after Republicans), which is taxes – we don’t pay enough of them to run a proper country:  

    Graphic by Paul Kiel and Krista Kjellman Schmidt, ProPublica 

  234.  Phil
    Looks like you’ve got another mega rich expert that agrees with you – from today’s FT:
    Henry Bloch knows a lot about taxes and a lot about wealth. He is the retired honorary chairman of H&R Block, a Kansas City-based tax services company, which he founded with his brother in 1955. Having amassed a fortune by helping Americans process their tax returns, the philanthropist – and registered Republican – believes the time has come for higher taxes on his richest fellow countrymen. “It’s not going to hurt the wealthy to part with a little money,” Mr Bloch, 89, a navigator on B-17 bomber missions during the second world war, told the Financial Times this week. “This is a wonderful country and that’s the least they could do.”


  235. A 100% must read – well written and well-balanced:  Economic Myths: We Separate Fact From Fiction (Pro Publica)

    Also don’t miss:  Volatile Stocks Seen Leaving Lasting Scars on U.S. Fund Investors’ Psyche (Bloomberg)

    Other good stuff: 

    Stocks Fall Anew on Debt Worries and the Economy (NYT

    ‘R’ is for recession, not recovery (Market Watch)

    US Can Recover, ‘Extreme Action’ Needed in Europe: Economist

    In Crisis, Reminders of Disputes in Euro’s Founding (NYT)

    Fisher going off:  Connecting the Dots: Texas Employment Growth; a Dissenting Vote; and the Ugly Truth (With Reference to P.G. Wodehouse) (Fed Dallas)

    I think I have made it pretty clear today that I believe what is restraining our economy is not monetary policy but fiscal misfeasance in Washington. We elect our national leaders to safeguard our country. An integral part of that consists of safeguarding the nation’s fiscal probity. Pointing fingers at the Fed only diminishes credibility?the ugly truth is that the problem lies not with monetary policy but in the need to construct a modern, appropriate set of fiscal and regulatory levers and pulleys to better incentivize the private sector to channel money into productive use in expanding our economy and enriching our people. Only Congress, working together with the president, has the power to write the rules and provide the incentives to correct the course of the great ship we know and love as America. I hope you, as the voters who put them in office, will demand no less of them.

    Who Is Behind The ‘US Day Of Rage’ Against Wall Street? What, exactly, is a “US Day of Rage?” Well, on September 17th we may find out for certain, but until then, The Blaze is revealing what information does exist about this very nefarious-sounding campaign.

    S&P’s Rating Services’ German Unit head Torsten Hinrichs is "skeptical" about a possible issuance of common euro-area bonds, citing an interview. "The main condition for joint euro bonds to work in the long term would be a strong political and economic integration in Europe. We are still far away from that," he said.

    Jean-Claude Juncker, who leads the group of euro-area finance ministers, said the countries sharing the currency must give up sovereign powers for a common "economic government" to make sense, according to an interview. "An economic government without relinquishing national competencies would be dead on arrival," Juncker was quoted as saying.

    Greece’s 2011 budget deficit may exceed the 7.6% of GDP target given a higher-than-expected decline in economic growth and rising unemployment. Finance Minister Evangelos Venizelos informed the cabinet yesterday of the possible need to either re-discuss the deficit target with its lenders or consider further fiscal measures worth between 3 billion and 4 billion euros to achieve the original target.

    No country is likely to get collateral for their loan guarantees to Greece and thus Finland probably won’t participate in the Greek bailout, OP-Pohjola Group CEO Reijo Karhinen said. "For the first time I’m concerned the euro system may fail," Karhinen, who heads Finland’s second-biggest banking and insurance group, said.


    Monday Aug 22



    8:55 AM ET

    New Home Sales
    10:00 AM ET



    Weekly Bill Settlement

    Jobless Claims
    8:30 AM ET

    Money Supply
    4:30 PM ET


    8:30 AM ET

    Ben Bernanke Speaks
    10:00 AM ET

  237. Funny how, once again, the markets are tanked right at the time we’re auctioning off a ton of T-Bills.  This has happened every time since QE2 ended and then, on Friday – BERNANKE SPEAKS AT 10!  Imagine what kind of epic market crash we will have if he throws an air-ball on Friday!  

  238. I am planning a trip to the Grand Canyon during the Vegas meetup. I am flying in to Flagstaff, AZ and take a bus to Grand Canyon (south rim). Any scenic suggestions from Flagstaff to Grand Canyon? 
    This is my first trip to Grand Canyon and any suggestions on what to see and how long to stay is appreciated. I also want to visit the Hoover Dam. 
    Thank you.

  239. Nicha- Grand Canyon- I did a motorcycle trip through northern AZ a couple of years ago – north and south rim; Monument Valley; Flagstaff; Jerome; Red Rock area/Sedona; Phoenix.  All spectacular. You can hike down in to the Canyon but it can be very challenging physically and you need some time – need to plan ahead if you want to go all the way down and stay over night. There are mule train guided trips but those also have some restrictions. Also, need to plan ahead.
    Bring a good camera. You will want one.

  240. RIMM- Notable Calls ( had some interesting comments.
    Phil, did you have a chance to follow up on the Blackberry story from your daughter earlier this week? May be far fetched but could the Blackberry become the anti- Iphone, i.e., a new fad?

  241.  Well, I have just an anecdotal comment, but I quite agree with Henry Bloch, not only in respect of wealthier people paying more taxes, but also what a wonderful country it is.  I am in the process of my longest continuous stay in the U.S. for more than three years — two weeks, so far — having not having spent more than a month in the U.S. for about a decade.  Not only am I struck by the fundamental friendliness and decency of Americans — not characteristics confined to them, to be sure — but with what an advanced country it is in many ways, a great number of them quite invisible to GDP calculations..  
    Much of my last few decades have been spent in Europe, which is a lovely place, but the tribal loyalty to "race" is just crippling to their economic advancement, as they become prey to all the depredations of demography — lower birth rate, aging population, and a very arteriosclerotic, "pull up the drawbridge" social reaction to the inevitable changes associated with a world which population has doubled in a generation.  I now live in the Caribbean, and there, wealth differentials and a total lack of honest law enforcement requires a "foreign enclave" approach to daily life, including an armed driver.  As I spent much of my misspent youth in South American countries of similiar character, I am largely inured to it, but it sure it relaxing to be home — and I do have a home — in the good old U.S..
    Viewed from abroad, one gets the impression that the U.S. is vying for the "most retrograde advanced country" award.  The problem is measurement:  one can only measure quantities, and much of the "advancement" of the U.S. lies in its social mores, racial tolerance, relative lack of corruption.  Yes, we have it, too, in our current incarnation of money politics, but you should try the real thing, where it is the predominant driver of daily life — and that includes most of Europe, where the upper classes have stranglehold on politics and privilege that would have Phil rolling over in his grave, if he were so unlucky as to be in one.
     Such things may not pay the rent in the U.S. today — but they will tomorrow.  I conclude that, while the U.S. is in for some hard economic times, it is also the country that  is likely to prove the most creative and fair in ultimately sorting out its economic problems, largely because it is leagues ahead of most other countries in having advanced beyond race, tribe or origin as the criteria for truly being at home.  There is no other country in the world where being a citizen is more important than family origin, and, in a world of 7 billion people — which includes an awful lot of talent — the U.S., with its low population density and ample natural resources, will attract the best of them, and over time that will make all the difference.  It’s great to be here..

  242. Phil/taxes - be careful what you wish…a trader tax would wipe out your current career instantly.  And when you say it can’t happen, remember it has happened here in the past!  THat said, I’ back a tax of 50% above $1m, 90% above $100M… but it still doesn’t fix things by any means long term…plus highly unlikely, even though 90% was a prior top tax rate when the rich had a more difficult time ruling the political class…
    Phil/Bernanke Speech -  remember the $500B plus August bond list I kept posting in July…most of it ended on Aug 16th, mission accomplished!  I’m starting to think either Ben is the luckiest guy alive, or extremely clever!  I’m hoping he is extremely clever, and that QE3 isn’t direct bond purchases with more printing, but instead he uses the funds for all the maturing short term debt he has sold over the last two years, and buys 10 and 30 year at historically low levels.  I’ll order a "I Love Ben Bernanke" t-shirt if he is that clever, as it will both boost the markets short term, and yet keep inflation moderated.  Win Win…well at least until somebody uncovers the fact that the fed has been, and continues to buy most of our treauries incongito…perhaps 6-18 months from now.  Not looking forward to that day…

  243. Normal


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    Here’s a riff on the "First they came for" statement which Fox New pundits love to quote. 
    First the original statement:
    First they came for the communists,
    and I didn’t speak out because I wasn’t a communist.
    Then they came for the trade unionists,
    and I didn’t speak out because I wasn’t a trade unionist.
    Then they came for the Jews,
    and I didn’t speak out because I wasn’t a Jew.
    Then they came for me
    and there was no one left to speak out for me.
    Now modified for current American politics:
    First they came for the corporate jet owners,
    and I didn’t speak out because I wasn’t a corporate jet owner.
    Then they came for the Fox News viewers,
    and I didn’t speak out because I wasn’t a Fox News viewer.
    Then they came for the job creators,
    and I didn’t speak out because I wasn’t a job creator.
    Then they came for me
    and there was no one left to speak out for me. 
    PS – Plus I had no job, so I was doubly screwed. :-(

  244. It is both in our national interests, and our millitary interests, to artificially manipulate our interest rates:
    We are sitting at the historic all time low interest rates in America…financially engineered, a national security priority IMHO…
    What if we had a historical average 5.8% interest rate instead of our manipulated current rate…the consequences are obvious!

  245. Nicha- Grand Canyon. I grew up in AZ and lived for five years in Flagstaff and the Verde valley before moving to N. Ca many years ago.FWIW, here’s my take. If you can set aside the time, rent a car in Flagstaff and take a driving tour. You can take one day or five depending on how much time you have. The south rim of the GC is a zoo! Everybody, and I mean everybody in the world who comes to see the sight goes there. There’s a highway loop out of Flagstaff that goes north to GC Village (S. rim) then east to Cameron( Navajo reservation). All kinds of spots along the way to pull over and walk to the edge of the canyon. In Cameron, there’s a huge trading post. Mainly a tourist trap but, tell some one you want to see the vault. The vault is actually a small building filled with the finest southwestern native arts you will ever see. Even if that thing is not your cup of tea, you will be blown away. Another great way to experience the canyon is to rent a car in Vegas, drive to St. George, Utah, and from there drive down through Zion National Park to the North rim. The lodge on the North rim, although rebuilt after a fire, is a classic  National Park lodge. Also, be prepared for driving time. There is a ton of open space, and it takes some time to get from one place to another. Give your self a day to do either of those drives.

  246. * If the UN has budget cuts, whose going to tells us we can invade chavez ….
    * Manhattan Vacancies Scarce -- wonder if Bernake this is ’Transitory’ to

  247.  Phil
    I am up 50% on WFR SEP 7 1/2 calls sold weds., pull these off the table and sell the 6′s? Or pull them off and go uncovered awaiting the bounce? Looking of course for not only this example, but the principle behind it. Thanks!

    Mauldin predicts recession in 2011- we may be in one already. My business has never recovered and may be slowing more.
    If we get a relief rally in the coming weeks, it will be tempting to trim some long term postitions to raise more cash.

  249. Phil,
    Short 20 USO 35P (2.16 now at 3.50) which is tying up too much margin. Thinking about converting to 40 USO Nov 29/34 BCS @ 2.8. Is this good or do you have any other suggestions? Thanks.

  250. iflan—Thanks very much

  251. Savi – sent you the deposit for Vegas.

  252. nicha—received deposit—thanks

  253. dogtown – thank you.  I want to combine a one day white water rafting trip if possible and the Hoover Dam. The other option is i do all from Vegas. 
    Where are the spots? On the way to GC village or on the way to Cameron?
    There’s a highway loop out of Flagstaff that goes north to GC Village (S. rim) then east to Cameron( Navajo reservation). All kinds of spots along the way to pull over and walk to the edge of the canyon.

  254. I had a great time doing a helicopter ride to the Grand Canyon from Vegas.  We took a very scary trip down into the canyon (our Pilot treated it like an amusement park ride but it was fun once we lived) and we had a gourmet picnic down by the river.  I’m sure there are purists who would say we missed something but I did it the slow way once when I was younger and I’m not going back to that! 

  255. Nicha- The viewing spots are all east of Grand Canyon village on highway 64, maybe 15 to 45 minutes of drive time.
    Hoover dam is only 45 minutes or so from Vegas.
    Don’t think you’ll find any one day whitewater trips but  I could be wrong. When I was in the area, you couldn’t get on the Colorado without a commitment of at least a week. It’s just too damn big and very little road access.

  256. Phil/AGNC:
    I’ve been thinking about  a buy write with th stock at $28.80 and selling 2013  $25 P&C for $9.55 for net $19.26/$22.13. The problem ids the theC only has $.49 time premium and with the dividend at $1.38, I believe i would definitely be called away and not get the dividend.Do you agree and if so,would I be better off just selling the P at $5.45 for a nice downside cushion and a 14 % /yr return?

  257. Phil,
    in prep for tomorrow and beyond, I wanted to get your current thgts on the best protective hedges (OCT – Jan expir range) and felt pre-market might  be a better time to ask a multi-part ques.
    bear put spreads on : IWM (hi vol/easiest exec) vs TNA ( to take advan of decay) w 20-30% stops, as opposed to :
    bull call spreads on EDZ (up .83% Fri) vs TZA (up 2.65%)
    What strikes offer the best return now (Fri close)? I haven’t grasped the nuances of relative value of ITM vsOTM spreads. I do have some SDS Oct 26/32 and DXD oct 23/27 bcs per your earlier rec for which I am grateful.
    Thanks in advance

  258. LFlan/AAPL
    First, how are you?
    Your thesis on AAPL at $375 in Oct is probably correct.
    However, if we face a repeat of Oct 2008-Mar2009, then AAPL could easily be at $250, come Oct 2011.
    My question to you then is, what would you recommend one do with sold Oct $350 puts, $375′s?
    Wait? Roll them now, before s hits fan?
    Good to have you backon the site again.

  259. 06:39AM
    Indian Stocks Rebound From 15-Month Low; Reliance, ONGC Rally

    Stocks poised for a bounce

    Europe stocks rise in hope of Fed move

    European Shares Rebound From Two-Year Low; U.S. Stock-Index Futures Rise

    Qaddafi Sons Taken as Rebels Sweep Into Tripoli

    Europe Stocks, U.S. Futures Gain as Brent Falls

    Lowe’s to buy back up to $5 billion of its shares

    ENI leads Libya oil race as Gaddafi nears end

    Manchester United Said to Sign Sponsor Deal With Malaysia’s Mister Potato

    Stocks Gain; Randgold, Fresnillo Climb on Metals Prices, Petrofac Rises

    Manchester United Said to Sign Mister Potato Deal Before IPO in