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Friday, March 31, 2023


Still Thinking On Thursday – Can’t Get Bullish

I am trying!

I watched Fox news for hours last night and I did learn that Warren Buffett is an evil, criminal mastermind who must be stopped and that Obama is soft on the Taliban so following through on his pledge to end the war is nothing more than an insidious plot to garner votes by…. uh…. doing what he was elected to do – THE FIEND!!! 

Damn, see – it's not working.  I'm hardly any dumber (but I am much less tolerant of poor people and minorities) and I still can't get behind this market rally.  Oh wait, before we get off the Fox topic, I want to point out another "big" news story they featured.  It seems that we're finally cracking down on welfare recipients who spend their money at strip clubs.  The House passed a bill yesterday as bill sponsor Charlie Boustany (R-LA) pointed out that, with all these welfare people spending the Government's money at the strip clubs, he had to wait over a half hour to get a VIP table so he could spend the Government's money at the strip club.  Outraged Congressmen passed the bill 395 to 26 (women) as this was an issue that really hit home for them!  

DejavucreditequityIf we finally hold our chart levels, my mission this weekend is to kill as many brain cells as possible so I can stop understanding the news and just buy the f'ing dips, which will be our game plan until the levels are blown again and it's safe to switch our brains back on.  On the right, we have a Rorschach Test for the day to see if you can be oblivious enough to go bullish at the top of our range.  

If this chart doesn't bother you – you may be ready to rally!  You are also ready to brush off the OWS movement as "squatters" – something else I learned on Fox last night.  That's right, they are not protesting – thousands of people are actually gathering in parks to get "free rent" as they can't possibly have a legitimate complaint against the rampant abuses of Capitalism that are tearing this country apart.  

Well maybe not this country but Japan is sure about to break as Finance Minister Azumi calls out the Fed's "pledge" to keep rates microscopic through 2014 as giving an invitation to traders to sell greenbacks.

 “Speculative moves are increasing in the market and we can’t overlook them,” Azumi told reporters in Tokyo today as the yen heads for its biggest six-day jump since mid-August against the dollar. Against the “backdrop” of the Fed’s plan to keep interest rates exceptionally low until 2014, “short- term speculative buying” has increased, contributing to the yen’s gain, he said in parliament today

Azumi’s comments may indicate Japan is closer to resuming foreign-exchange intervention after a record round of yen sales late last year. The admonition comes a day after Sharp Corp, Japan’s largest maker of LCD panels, forecast its worst annual loss since its founding a century ago, with its president saying exporting is “nearly impossible” with the strong yen.

Yen-selling is still in the cards, but it’s becoming harder for Japan to do it because of external pressure,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. At the same time, “speculative trading could get out of control” and accelerate yen gains if investors think Japan won’t intervene," he said.


So our remaining bearish premise is that the BOJ will finally put their foot down at 76 Yen to the Dollar and that should put a floor under the Dollar at 78.85 and a top on the Euro at $1.32 (TRADDR chart above).  If we're going to pop the top of our range, we can expect those levels to break first.  Once we get over 12.750 on the Dow (assuming the other indexes hold up) – we're officially in orbit and no longer bound by the gravity of fundamental reality.  This is a perfect set-up for a technical rally that can take us up and up and up as sideline money (including ours) rushes to get back into the markets

What can we do to profit from a move higher?  Well, that's pretty easy.  Here's a few examples of bullish plays you can take that will do very well IF this rally continues:  

  • FAS Feb $77/80 bull call spread at $2, selling $75 puts for $1.50 is net .50 on the $3 spread.  Note that you can simply take the bull call spread which makes 50% in 15 days if FAS simply holds $80 (now $83), which is roughly XLF $14.  
  • FAS March $75/80 bull call spread at $3.05, selling $70 puts for $3 is .05 on the $5 spread.  That's about 18% down in FAS before this trade costs you more than a nickel.  That's a 6% drop in XLF to about $13.  If you don't think XLF can hold $13 for 6 weeks – you're not bullish!  Also, don't forget these are trades we pull if our levels don't hold.  

Alternate offsets (bullish) to selling aggressive short FAS puts are:

  • CHK Jan $17.50 puts can be sold for $2.05
  • GE 2014 $17.50 puts can be sold for $2.50
  • GOOG June $450 puts can be sold for $4
  • ISRG Jan $310 puts can be sold for $10
  • KO Jan $62.50 puts can be sold for $3
  • MO 2014 $23 puts can be sold for $2.15
  • PFE 2014 $20 puts can be sold for $2.65
  • XOM Jan $65 puts can be sold for $2.50 

A good short put is a stock you REALLY want to own if the market drops 20%.  These are all solid companies that won't be immune from a major market sell-off but should do fine in a long-term portfolio beginning with these initial entries.  Also keep in mind these things do not have to be all or nothing – The second FAS trade, for example, makes 66% on the bull call spread.  If you sell one $4 GOOG put for each four of the FAS calls, assuming the GOOG puts expire worthless, you lower the basis on the $5 FAS spread to $2 and, rather than netting 66% cash, you net 150% on cash – that's how easy it is to goose your cash returns.  

Outside of the Financials, we can look at a few other plays that can do well in a bullish economy:  

  • CHK ($20.97) is a play on natural gas coming back.  The 2014 $15/20 bull call spread is $2.65 with almost 100% upside if they hold $20 for 2 years.  Again, it is GREED when you think making 100% in two years is not enough but you can knock that net $2.65 down to .30 by selling the 2014 $15 puts for $2.35.  So if, for example, I am willing to own $15,000 worth of CHK, I sell 10 of the puts and buy 10 of the spreads and if CHK holds $20, I'm up $4,700 and between $20 and $15, I'm down $300 and below $15, I end up owning 1,000 shares of CHK at net $15,300 ($15.30 a share).  That's 27% below the current price and TOS says you only need $1,600 of ordinary net margin on the put side.  
  • AA ($10.20) is down from $17 last spring and it's hard to have a Global recovery without tin.  If you're willing to own them for $9.30, you can sell the 2014 $10 puts for $2.10 and buy the July $8/10 bull call spread for $1.40 for a free crack at a $2 spread that's 100% in the money and your worst case is getting a 10% discount on an entry. 
  • AMZN ($179.30) has good puts to sell because of yesterday's sell-off.  You can sell the 2013 $110 puts for $4.15 and if you don't want to own AMZN for $110 – you are more bearish than I am!  AMZN is a pretty reliable rallyer in the Fall and the Jan $170/180 bull call spread is just $5.20 so net $1.20 on the $10 spread that's $9 in the money to start.  

Well, out of time for now but, as I keep saying, it's very easy to get bullish and set up for very nice profits – SO WHAT'S THE HURRY?  Let's just make sure these levels are real and, once we feel good about them holding, we can find trades like this every day because – if the Government is going to insist on making everyone rich by jacking up the markets – who are we to object?  


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Shall we start a AMZN 50K portfolio lflan?

Oxen Group opened new long in $MNST. Believe the stock has near-term upside to 108.50. Breakout there would take the stock to 110. Catalyst is recent weakness providing buying opportunity, upside into earnings and stock split, analyst upgrade.

Grip JRW….

Maya…….I can't help echo Phil's comments about taking $100,000 to $500,000 in a year.   I've seen traders blow up their accounts trying to make money rapidly.   I think the best of traders can shoot for doubling an option account in a year.  I don't think that's unreasonable.  The way it's done is to seek small victories.  Find a high probablilty trade and risk a reasonable amount of money on that trade.  If you do that you soon find that your account is growing rapidly.  Consider a 50k account where you could make 'only' 200 bucks a day.  In a year that would be ……..a double!      Lots of small victories plus don't lose money.  That's the way you do it.  But 5X in a year ?   Not reasonable.  

I still hold my grounds that bonds tell the story of this market.  Risk is on for the market, but 10 yrs are going to 1.5%…..so grip or no grip, I will gripe that until I am blue in the face.  One has go give….and I don't think it is going to be bonds….

stj…….. Sure, why not?   🙂      Reminds me of this fun idea I've had where you pick a stock that I have to trade and I pick a stock that you have to trade, and see what we can do with it.  Anything that's fun and hones our trading skills would have to be a good thing.    Can you pick AAPL for me?    🙂

JRW or SHJ – re the SPY chart with highlighted stochastic valleys.. can you elaborate what this is demonstrating? is it just 11 out of 14 valleys indicate a short term top (only two before really significat drops) or is there something more to say another big drop is coming?

NAS up .29%, AAPL down .29%.   Am I detecting a slight bit of weakness here?

scottmi / Big drop

At least a pull back, assuming "they" will let that happen !!  😎

lflan & stj: Let's rename it Amzn-Aapl port.  Amazing Apple, that is.

With no volume, it is easy to churn.   They need retail….badly.

AS far as indicators go today looks like yesterday and the day before. Triple crossing SMAs in the afternoon. Will we get most of the volume at the close again? Yes = wait. No = What next? JRW's last post looks most likely to me.

If AAPL pulls back, at what price range do you think is a good opportunity to go long?  I can't follow your trades (too fast!).  So, an early heads-up would be nice.

my buddy who trades for institutions said they are as dead as he has seen in 10 years, so the algos are just trading for "credits" not sure how that works, but his statement. If HFT's make up 70% of trading volume what is it in an anemic market like this 95%??

Is TLT a 1x or 2x ETF?  Does it have decay?

Iflan: Would you want to sell some weekly AAPL calls to protect some of the gains?

JRW/ Charts
Good info JRW! I like the fact that you quantified the B.S. Rally with the last chart which appears to show volume at different price points!

Challenge / lflan – You want me to pick trades in AAPL and you'll pick trades in another stock I choose? Sounds like a decent challenge, but we need some more details – for example, amounts at play, types of trades (swing, daytrades, etc..) and timeline. And when we do we switch? Other than that, why not. That could be fun…

Portfolio / Cwan – LoL… 

we know your stance on oil, it would be really interesting to know what do you think about agricultural commodities. Not as a day trade but as a longer perspective play, a year o so. Just general thoughts.

Speaking of trades, on the FAS Strangle, I'll be covering the short puts by EOD. We'll have jobs tomorrow morning and if they need an excuse to pull back, that could be it… 

Phil, Somehow you missed my point completely.    I applaud all charity.   It elevates humanity.  I particularly admire and support hands-on, local, accountable groups that help less fortunate families in our own communities (many great ones here in New Orleans).  But wouldn't you agree that there is a huge difference between these type organizations… and some super-rich person who starts his own foundation and puts himself and his family on the payroll at a lavish salary, writes off lavish travel expenses, and shifts the tax burden down to people barely getting by (many of whom donate too!)?  It seems incongruous to me to oppose corporate loopholes, but not oppose these blatant loopholes.  Both come from the same problem. The influence of the super-rich on our political system.  If Gates and others are as altruistic as you say (and I'm not saying they are not!)… then they will gladly support charity regardless of the tax implications.

cwan….Generally, here's what's in my head for AAPL right now:   Below 430, take some long positions.    Below 420, double down.   Below 410  double down again.   Below 400……well, maybe back up a truck?     These numbers, of course, presume all other things being equal.   By that I mean that the US and World economies aren't going to the hot place  in a handbasket.  I say that because when we aren't near earnings AAPL sort of moves with the market in general. 

JRW/ Charts
The lack of volume in the last chart  also seems consistent with sagemm1's 3:00 comment:
February 2nd, 2012 at 3:00 pm | PermalinkIgnore this user
my buddy who trades for institutions said they are as dead as he has seen in 10 years, so the algos are just trading for "credits" not sure how that works, but his statement. If HFT's make up 70% of trading volume what is it in an anemic market like this 95%??

FAS strangle Since when do we still have puts

Verooom vrooom …. 

Even FAS money we closed the puts?

etrading………You could do that.  I would play AAPL right now using "neutral"  strategies.    Long-term bull call spreads, out-of-the-money calls and puts, and so on.   And of course one of the best ways to protect gains is just to stay in cash and wait for the next opportunity. 

PHil – have a look at silver, AGQ creeping up, time for something bullish here?

stj….No, I meant you give me AAPL to trade and I pick another stock for you.  I was thinking, uh, maybe General Electric or Pepsi?     

Euro ticking up, might trigger slight closing rally.

 t.boone just told someone on bloomy that oil would be DOWN "couple of bucks within the month"….NEVER heard him anything but uber-bullish on oil..wow he must be really worried

Trades / lflan – Well, in this case, no deal… How much of a challenge would that be man! You want to make it interesting…

I think I probably know the answer, but I'll ask anyway. I have 2013 BA 60 puts, sold for $10.65, now $3.125. Hold it longer or sell it now?
Oh, and Hoboken University  : )  : )

FAS / Yodi – I sold some puts this morning at 10:04 as I could not watch it go up and do nothing… I guess I am hoping to pay for the roll!

Maya, After years of being pretty good at picking stocks I still managed to lose almost as much as I made.All the reading Phil asked us to do as a new member (And everything else I can get my hands on lately)  has revealed my Achilles Heal.Good stock picks do not necessarily make money. My problem was swinging for the fences. If an investment was good I would put 30% to 40% of my money in it  and scale up. Example, I correctly called the real estate crash in 2008 and happily traded 300 to 500 shares of SKF almost daily and made a ton of money doing it.
Then in Feb 2008 I thought why not make some real money and started trading $5000 shares a day, in and out. and managed to lose $50K more than I had had already made in SKF..Reading PSW strategy made it clear I had no disciple, no hedging  and no risk management at all.
Since becoming a member Jan 1 this year  and getting into to scaling into small trades I am amazed at the steady profit  growth I have experienced  already while not worrying about getting killed. And  having fun doing it..
Phil, Thanks for the education, the help you give and the chance to learn more and get better. Also thanks to all the members who have  answered the few questions I had when your not around.

lflantheman/AMZN trades, great call at 2:11pm, I would like to get your thinking to sell AMZN weekly 180 put at that moment.

AMZN run up from $177.60 to about $179 in 40mins when you posted the trade.  For me, it's overbought(stochastic was over 90).  I thought sell $180 calls sould be the trade but you did the opposite trade and 100% correct.  Can you share your thought process?  TIA.

StJ – I think Iflan was teasing you, why don't you suggest for him to trade NLY or AGNC?

Tease / jerconn – Thanks, got that. I was actually going to suggest MSFT!

StJ – Hey, MSFT been movin' and hoppin' lately, that might actually be a little exciting!


FAS Strangle – Closed the 81 puts for a 40% win. At this point, we'll take anything! The 81 calls are of course the issue now! Maybe some help with jobs tomorrow!

I just noticed that my $500 [!] of UNG is up over 7% today, CHK over 5%.  What did I miss?

MSFT / Jerconn – It has (and actually they are looking good now), but I doubt that you would want to daytrade their options….

Ah, but more employment means gold goes down…..'cause GLL sucks….and I am going to roll and DD….

          Delcath Systems, Inc. (NASDAQ: DCTH) announced today that the first patients in Europe have been treated with the Delcath Hepatic CHEMOSAT® Delivery System at the European Institute of Oncology (Instituto Europeo di Oncologia – IEO), a premier cancer treatment and research center in Milan. The cases were treated as part of the initial launch and training agreement the Company announced with the IEO in November 2011.
Two patients were treated for inoperable liver-dominant metastases from ocular melanoma and gastric cancer. All CHEMOSAT procedures were successfully completed without procedure-related complications. Delcath and the IEO will host a joint-press conference, on February 15, 2012 at the IEO, at which time an update on patient status will be presented.       

What do U think of BCS on VRTX now

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