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Monday Market Movement – Mother and Child Reunion

I just can't believe it's so
though it seems strange to say
I never been laid so low
in such a mysterious way
and the course of a lifetime runs
over and over again.

No I would not give you false hope
on this strange and mournful day
but the mother and child reunion
is only a motion away

There's an image to inspire confidence, right?  

First of all, Vlad the Impaler did not even bother to come, an historic snubbing of the G8.  While I'm sure the other leaders slept better knowing that they didn't have to share a bathroom with a trained assassin, Putin did send his puppet, Medvedev to join such awe-inspiring global figures as Barroso, Van Rompuy, Harper, Hollande, Noda… stop me if I get to someone you've heard of….

Remember when there was a sort of stability to World Leadership?  This Democracy stuff is making a real mess of things, I think.  Even Cameron is a new guy and Obama is putting in his 4th year in the chair which makes Merkel the real constant of the group after 7 years in office.  And what does everyone do?  They gang up on her!  Poor Merkel seems to be the only fan of austerity left in the G8, the other leaders want to put their foot back on the gas or the Global economy will never make it to the other side of the canyon.  

Unfortunately, Ms. Merkel is not easily persuaded and the G8 came up empty which means we're back to being bearish as it's about $1Tn short of what they needed to come up with to get the economy back in gear and more kind words and empty promises are NOT going to pull us out of the downward spiral that our Global Economy is clearly in at this point.  In fact, even the current firewall for the EU is coming up short of projections with not even enough money available for the PIIGS to stumble through:

imageI mean, seriously, these jokers all sat together this weekend, looked at a chart like this, looked at the global markets (which are dropping like stones) and looked at global unemployment figures and came to the conclusion that all they needed to do was say some BS and everything would be better again?  SERIOUSLY? And do they seriously not invite China to this thing – what's up with that?    

China and India are the top Global markets, maybe it's time to stop pretending they shouldn't have a seat at the big boy's table because they also happen to represent 1/3 of the World's population, which is about double what the G8 represents combined.  Tradition is the reason cited for keeping Black people and women out of country clubs and that's bad enough – here we have a bunch of rich nations dictating the global economy without inviting 85% of the World to attend – this is just elitist BS!  

Imagine how China feels to see Canada at the G8 while they have to read about it in the papers.  Forget Canada – at least they can pay the rent – Italy is there for goodness sake!  China is bailing out Italy and the rest of the EU through the IMF and on their own – that's like telling the Women they can't play at the club but don't forget the mandatory contribution to the charity golf outing…

So, back to the chart – are the FTSE and CAC overly pessimistic or just prescient?  You're not going to stop a slide like the one we're seeing here on the big chart by talking to it but that seems to be the solution coming out of the G8 so far.  As Bruce Kasting points out:  

Forget the happy talk.  The USA is months (220 days) away from initiating fiscal policies that will trigger a recession in the US that will be at least as severe as that experienced in 2008. With the rest of the world already teetering on recession, America is set to push the global economy right into the tank. The non-US members of the G8 are well aware of these facts. They must be crapping in their pants at the prospects.

Any foreign leader who is banking on the hopes that America will end its political stalemate and put forward a credible economic plan that puts the US and global economies on a better footing is a fool. If you want proof of just how far away viable compromises are, consider some legislation put forward by Republican leaders this week.

chartKasting is referring to HR 4310, which seeks to authorize $637Bn for the DOD – yet another massive military increase, bringing us almost to a clean double since 2001.  Forget the fact that the amount of money we spend on the Military (and the DOD allowance is only 2/3 of the total) is already beyond ridiculous – it's also a violation of the Budget Control Act of 2011 that was meant to control spending (but only really the Democrats' spending, obviously).  As Kasting notes:  

When it comes to military spending, the Republicans want to bust the law that led to the increase in the debt limit. They propose legislation that would renege on the deal that they fought for last summer. The fight over the debt limit brought the economy and the markets to its knees. It cost the USA its AAA. And now the Republicans propose to kiss it away.

new york post facebookWe are miles away from "fixed" folks – let's not be sucked into anything until we see some real commitments coming from the G8 + 2 that aren't invited.  We're hitting 10% drops from the top so it will take a 2% recovery just to qualify as a WEAK BOUNCE and that's about all we can hope for this week in absence of real bailouts or stimulus being announced.  

All eyes remain on Facebook, which will struggle to hold it's IPO price ($38) this week.  As you can see from Uncle Rupert's headline in the NY Post, even the common man is catching on to the scam Wall Street is running and they have been voting with their feet and staying away from the markets in droves but I'll leave the closing to the great Robert Reich, who gave us an outline that can be followed by commencement speakers around the country this month:  

Members of the Class of 2012,

As a former secretary of labor and current professor, I feel I owe it to you to tell you the truth about the pieces of parchment you’re picking up today.

You’re f*cked.

That sums things up quite nicely I think!  


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  1. The volatility spreadsheet is up to date with this week's numbers and a new sheet for the June OpEx period.


  2. FB has blown the IPO price and going down, lets hope the Mr M says suckers, you own a problem!!!!


  3. Phil, very good comments this morning I see you did not loose YOUR sense of humor. Specially the Putin one you should send him a copy.


  4. BNN / Phil – I don't have BNN on the TV very often but turned it on this morning and see that they are heavily rotating your scheduled appearance on the show tomorrow at 3:10.  They are obviously big fans.  I'm sure you'll have some good stuff for them again this time.  


  5. FB??  Say What???
     
    No more greenshoe??


  6. Question for the board:   Do you want me to continue the AAPL portfoio, or rather, to concentrate on tading something else, perhaps even chaning the AAPL portfolio to a MoMo portfolio and starting back with maybe 50k again.   To me, the AAPL portfolio is somewhat boring at this time, but Ill go with whatever.


  7. Phil
    That 20% bounce or 2% of market is what I was relating to Friday, I expectic it this week. Do you think it will be in 1 day to blow sideliners minds, those who didn't buy the dip?


  8. lflantheman
    I would very much appreciate if you would continue the AAPL portfolio, I've learned a lot and made some money.  Your comments and insights are particularly instructive during earning cycles & product introductions.
    Thanks Again


  9. PP for today:


  10. Iflan/ Great idea to restart with a smaller portfolio – Momo, AAPL or FB or CASH…. I leave that up to the expert!


  11. lflantheman – Momo's sound fun!  AAPL could be included …


  12. lflantheman
    I would prefer a MoMo portfolio – very interested in learning about the Strangle strategy around earnings.
    Thanks,
    Gandhjo


  13. lflantheman
    I would very much appreciate if you would continue the AAPL portfolio
          me 2 i also learned  from your posts
    thanks


  14. Lflantheman / Momo
     
    I'd rather a MoMo or a big mover type of portfolio that could trade AAPL when the opportunity is ripe.  In other words, take 50K and trade it whereever you find the most opportunity to make money.  You might be looking in places where we don't look on this board.


  15. OK, so going back and reading last nights comments on SWW….and the big cahuna didn't even know I was a writer…..sheesh…. ;)


  16. Morning Pharm.   Enjoy that E.S.T.!     ;)


  17. lfan – Sounds good…how about calling it the MOP – market opportunity portfolio :)  


  18. Phil:
    I got assigned some WFR shares. My net on them is $3.70. I want to sell calls to begin to reduce my net, but need some help picking the right month and strike. Any help would be appreciated.



  19. Lflan – my two cents…a MOMO portfolio that includes AAPL would be both educational and hopefully profitable.  Doesn't matter the size but not so small that you don't have margin…but wasn't that what you and StJ were going to do anyway?



  20. lflan- I agree with Burrben



  21. Phil, on SWW, I have really preferred the most recent before this hiatus. The larger commentary about the market and different indicators were more thought provoking, Lee Adler, Allan Trends, Doug Short, with a view of the days and weeks ahead. The coverage of the past week is valuable but should not be the main focus, IMO.


  22. FB is Down 12%—- Whoa!


  23. Amazing action on FB, 62M shares, -12%, and all of this with ZERO shorts in the story….
    It's like a slow motion car crash but you just can't look away!


  24. IS FB a buy now???


  25. rpme Phil
    I think the week review needs to be there. We read it every day, I agree with the likeing perspective and hope that returns next week.


  26. Phil,
    I’m short the CHKR Aug. $25 Ps, how would you play it from here?


  27. FB/Phil
     
    Might get to your 25 tops target today.


  28. SWW Phil – I too find the week in review useful, but would keep it focused on trade calls, as the ones which go against are usually very good plays over the next several weeks/months, and the ones going well should be assessed on when to close. I also think the big chart and the economic calendar for the coming week are essential elements. As you are a primarily a value investor, I think a focus review of a companies fundamentals would be worthwhile – we spend so much time on the site on trades but relatively little (at least from a discussion standpoint) looking at companies which is an important thing and art in itself  (I'd be happy to contribute in this area BTW). I think the last few issues guest author/ad sections have cheapened the newsletter, and if they're going to continue should be included as guest authors for a month – make them less overt pleas for subscriptions. Pharm is a must. Thanks as always for your fine service.


  29. OK…..MoMo it is.   50K to start.  AAPL will be included.  No marging will be used.   Right now 50k is cash.  Goal is to make an average of $1,000 per week, which would be a yearly double.  


  30. HOV
     
    Can anyone explain to me why "we" like HOV so much?  I can't find much compelling info on the internet, but I see Phil recommending them all the time.  I do have a 2014 position in them already that's obviously down.  Just wondering what I'm missing???  


  31. 1020….it sucks.  I like getting up early, knowing that i have the rest of the day to play.


  32. Same story, FAS and BBY…. The wait is almost over for BBY's fate though!


  33. I'll start a new spreadsheet for the MoMo Money portfolio lflan… Can you make sure to start your trade comments by MoMo Money…  so that I can search for the trades!


  34. The conservative folks at Zacks were telling all to short on Friday but brokerages were struggling filling the orders from what I read, FB that is, Zuckers!


  35. Good morning!

    We had a big discussion about scaling in and out of positions, position sizing and value investing over the weekend at the end of Friday's chat – worth a look if you are interested in such things.

    Facebook opening at $35.25 – Getting close to a wipeout!  

    So we have to shake that off and then we have to keep the Dollar under 81.50 and that means the Euro needs to get back over $1.275 and the Pound needs to hold $1.58 but that's possible as the EU has had no positive guidance from their leaders for two weeks now so even kind words should hold them up for a day or so.  79.33 Yen to the Dollar, by the way.  

    Oil under $92 is bearish, gold under $1,600 means US easing not really expected, silver $28.10 means gold should be much lower, copper $3.47 means the global economy is extremely weak, nat gas $2.666 means Lloyd is at the NYMEX and gasoline $2.91 means the holiday weekend starts Friday so let's stick it to the US consumers!  

    I'm bouncingly bullish as falling 10% in a couple of weeks is a lot but that's a long way from being a believer…

    Hopefully, I'll get a chance to measure it later but we're going to be looking for peak to trough (for the month) retraces of 20% as a weak bounce and 40% as a strong bounce and, don't forget – not getting suckered in by weak bounces kept us from mistakingly going bullish about 5% ago.  At the moment, just keep an eye on those -5% lines on the Big Chart – if we can't take 3 of 5 back or if we lose our 5th (S&P 1,280) there's certainly nothing to be bullish about!  

    FB $34.15!    $33.50.  The way they are selling off is they hold a support and then dive hard when it breaks – this is a very poor indication that the stock is in serious trouble and attempts to bail it out are failing.  

    China talking stimulus or we'd be going way down already….

    Premier Wen Jiabao's pledge on Chinese growth "will be a support for the market when we see clear signs of it," says portfolio manager Shintaro Takeuchi. In the meantime, speculation about increased stimulus is providing only a modest boost to stocks as eurozone concerns continue. Japan +0.4%. Hong Kong -0.2%. China+0.3%. India +0.5%.

    China may announce stimulus actions in the near future, reports the China Securities Journal, which is published by the official Xinhua News Agency. The report follows weekend comments by Premier Wen Jiabao in which he called for "putting stabilizing growth in a more important position," with no mention of inflation. 

    At the open: Dow +0.24% to 12400. S&P +0.25% to 1298. Nasdaq +0.21% to 2785.

    Treasurys: 30-year -0.08%. 10-yr 0%. 5-yr +0.03%.

    Commodities: Crude +0.26% to $92.03. Gold -0.36% to $1586.15.

    Currencies: Euro -0.33% vs. dollar. Yen +0.36%. Pound +0.18%.

    9:08 AM Another meek rally attempt gives way in Europe, the Stoxx 50 -0.5% after being up around 0.75% 2 hours ago. Leading the way are Madrid and Milan, each off 1.6%. Frankfurt +0.5%. S&P 500 futures are well off their highs, +0.4%

    10:00 AM On the hour: Dow +0.32%. 10-yr -0.02%. Euro -0.29% vs. dollar. Crude +0.42% to $92.19. Gold -0.21% to $1588.55.

    Market preview: U.S. stock futures are higher along with much of Europe, although not France and Spain, with the S&P benchmark +0.6%. Platitudes from the G8 that they want Greece tostay in the euro and polls showing increasing support for pro-austerity parties seem to be doing the trick. Yahoo is +4.4% on its Alibaba deal, but Facebook is -3.8% and below its IPO price, while Lowe's is-5.5% after a profit warning.

    Apr. Chicago Fed National Activity Index: +0.11 vs. -0.44 prior (revised). The index's 3-month moving average decreased to -0.06%, from a level of +0.02% in Mar (revised).

    The DJIA completed its 3rd consecutive week of losses last week – something that's only happened 9 other times in the history of the index, says Jason Goepfert. The subsequent performance in those other instances "wasn't particularly consistent or inspiring."

    So bearish on Treasury bonds just a few weeks ago at yields70 basis points higher, growing numbers of bond managers now posit the 10-year could fall to 1.5% (currently 1.74%). "Fundamentals are out the window at this point," says Matthew Tuttle, who last week jettisoned a lot of stocks and high-yield paper from his portfolio to buy Treasurys. Cycles, gotta love cycles.

    "The question isn't will the UK be downgraded, but when?," says Richard Hodges, one of London's most respected bond fund managers. "The ratings agencies haven't moved partly because they have bigger fish to fry. But as this crisis plays out it is inevitable that they will downgrade the U.K., with its huge current account deficit, by 2013 at the latest."

    The Court of the Bank of England commissions three independent reviews into its "performance and current capabilities," covering the provision of emergency liquidity during the financial crisis in 2008/9, the Bank’s framework for providing liquidity to the banking system as a whole, and the MPC's forecasting capability. (PR)

    "If the Chancellor rules out something today, the probability increases that she will agree to it tomorrow," writes a German newspaper over the debate about issuing euro bonds. Merkel has consistently held against such paper, but French President Hollandehas promised to make the issue part of his package of crisis responses. 

    Spain's Q2 GDP is likely to print as poorly as Q1 – down 0.3% – tips finmin de Guindos, who's had a look at the data. Madrid (along with Milan) is again the outlier in Europe, -0.9% amidst mostly green markets on the continent. Recession notwithstanding, Spanish bond yields continue their rise, +3 bps to 6.30%

    The Bank of Greece "adamantly" denies a published Sunday report alleging plans to restrict deposit withdrawals and impose capital controls. Curious. The date of the BoG press release is the 19th, Sunday was the 20th.

    Ambrose Evans-Pritchard again takes on the shibboleths that a Greek withdrawal from EMU would force its expulsion from the EU, and that it would be a disaster for the country. Once the boil is "lanced," capital will return, not just from Greeks, but Chinese, Russian, and especially German. The danger is the rest Club Med looking on in envy and deciding to do the same.

    Chinese buyers for iron ore and coking coal are attempting to defer orders and defaulting on contracts, according to reports from traders, as the country is filled to the brim with the stuff and the nation's steel mills are cutting output amidst heavy overcapacity

    Samsung (SSNLF.PK) is concerned the "worrying" weakness in Chinese consumer spending is hurting tech spending, and expects the market for tech goods in China to grow by only 7% this year, down from 10% last year

    India's rupee falls more than 1% to an all-time low, now requiring 55 of them to buy one greenback. The central bank is in a tough spot as inflation remains high while the economy slows. The slide in the rupee – at least some of which has to do with the "risk off" tone of markets – won't help the inflation picture.

    JMP Securities cuts the TBTF banks due to the European crisis, with analyst David Trone's base case scenario (60% chance) seeing a Greek exit, but no contagion. He sees just a 10% chance Greece stays in the EMU. That leaves 30% for exit, but withcontagion.

    "Hopefully by the end of the year we will make this something we don't need to talk about," says Jamie Dimon (JPM), speaking at a conference (talking about the CIO losses, not the bank's role in the FB IPO). He says the bank has no plans on regularly updating the progress of the unit's losses. Shares -2.2%.

    More from Dimon: He says the bank is suspending its share repurchases, but intends to continue the dividend. The cancellation of the buyback is interesting given the bank's announcement of a $15B program in March and previous Dimon comments about buying low. Shares are off about 28% in 2 months and now red for the year.

    JPMorgan (JPM) is the biggest buyer of European home-loan bonds, and investors are worried the bank is planning to pull backfrom the market following its CIO disaster. The European mortgage-bond market could see significant volatility, as JPM's investments are nearly 9% of the size of the Dutch and U.K. mortgage-bond markets it’s been focusing on.

    Morgan Stanley, -1.8% premarket, is the outlier amongst the big banks this morning. Usually a proxy for European troubles, MSmay be taking a hit due to its lead underwriting position for Facebook. Those underwriting fees and more may be gone due to the money it spent propping the IPO above $38 Friday (now $36.80).


  36. Burrden HOV  There are many comments on that stock. They are rich in land purchases and if if if the building market gets going again they are in a very good position. my two cents



  37. Oil production in Saudi Arabia rose to 9.923M bbl/day in March, from 9.853M bbl/day in February, overtaking Russia (9.920M) as the 
    world's largest producer for the first time in six years. The U.S., at 5.889M, ranks third. (database since 2002)

    A Bloomberg review of Chesapeake's (CHK) filings paints a picture of cronyism and nepotism that calls into question the objectivity of its board. Since 2009, Chesapeake has paid $343M to a drilling equipment manufacturer headed by Chesapeake lead director Pete Miller. The company has also employed another director’s relatives and donated millions to a university overseen by a third.

    Finally a bottom call!  Alpha Natural Resources (ANR) is raised to Buy from Hold with a $15 price target at Brean Murray, citing valuation: "The fundamentals and the outlook of the company and the met coal market did not materially change over recent weeks. What did change is the stock price." Shares, -46% YTD, +2% premarket.

    Shares of Lowe's (LOWslip 3.1% in premarket trading after the company's tepid guidance overrides its Q1 earnings beat. CEO Robery Niblock says that although mild weather drove sales higher, demand for seasonal products trended slower near the end of the quarter

    Shares of Sturm Ruger (RGR) jump 2.2% premarket after peer Smith & Wesson (SWHC) reports strong sales in its most recent quarter along with a growing backlog of orders. SWHC +13.2% premarket.

    Guns are selling like hotcakes: Smith & Wesson (SWHC)announces preliminary results for FQ4, saying sales were up 28% Y/Y to $129M – higher than the firm's guidance calling for $113M-$118M. Preliminary firearm order backlog increased 135% Y/Y and 121% Q/Q to approximately $439M. 

    Boeing (BA+1.3% premarket after Argus upgrades shares to Buy from Hold with an $85 target price. The firm cites favorable trends helping BA: commercial flight demand continues to recover, airlines are eager to replace aging aircraft with more fuel-efficient planes, and BA's strong international and commercial market sales help insulate it from cuts in U.S. defense spending. 

    Analysts at Stephens upgrade Sonic (SONC) to Overweight from Equal Weight on a valuation call tied to sales momentum building up at the restaurant operator. Shares +0.9% premarket.

    Facebook (FB -13.2%) tumbles in early trading to $33.20; even after the selloff, the company still trades at nearly 23x sales and 75x trailing EPS. Not helping is BTIG's decision to launch coverage at Neutral; in-line with earlier comments, the firm is worried about Facebook's valuation, decelerating growth, and ad monetizationissues. Also lower: RENN -8.3%ZNGA -7.1%YELP -6.8%LNKD-6.1%GRPN -4.8%SVVC -7.4%GSVC -10%.

    Death by Amazon: Historic book publisher Houghton Mifflin Harcourt files for bankruptcy in order to try to eliminate a whopping $3B in debt. The company made a late bid to jump into the electronic books market with an Amazon (AMZN) publishing deal, but couldn't make headway with the debt it piled up while hardcover book sales plummeted due in large part to the influence of its newfound partner.

    Don't expect Apple's (AAPL) patent negotiations with Samsung (SSNLF.PK) to result in a complete settlement, says Phillip Elmer-Dewitt. While Apple has indicated a willingness to cross-license some IP, both Steve Jobs and Tim Cook have suggested Apple will maintain a hard-line stance on patents deemed critical to its inventions. The comments come as some HTC phones held up by customs due to its ITC dispute with Apple are released.


  38. St jean – re EDZ, i was assigned the may 16s. Bought to cover this morning. Still holding the June 13's waiting to see which way we move. Probably will exit today, but not sure yet. Did this happen to anyone else or is it just me?


  39. Jamie Dimon just announced that he is canceling the JPM share buyback program and its NOT loss related.  Uhhh if its not related to the loss, then wouldn't now be the BEST time to buyback with the stock down like 25% since the buyback was announced??  


  40. Facebook Lines FWIW….

    R3 – 49.82
    R2 – 47.41
    R1 – 42.82
    PP – 40.41
    S1 – 35.82
    S2 – 33.41
    S3 – 28.82


  41. Monday – 5-21-2012
     
    Dr. John L. Faessel
    ON THE MARKET
    Commentary and Insights
     
    Quote of the Day
    “If the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1%. If the percentage was where it was when George W. Bush took office, the unemployment rate would be 13.1%.”
    ~ Washington Post ~
    ~
    Time to Buy!
     
    The McClellan is hugely OVERSOLD at minus 339
     
    Bullish sentiment is at Cycle lows.*
     
    My last ON THE MARKET report said that; “Likely we sell off.” & “[That] would bring the McClellan Oscillator down into the Oversold to the minus 200 or 300 region where a decent push higher will occur.”
     
    The Outlook:
    Friday’s McClellan Oscillator (favorite overbought / oversold’ness indicator) was at cycle lows of minus 339. Investor sentiment is overwhelming Bearish. I think we are ripe for a bounce as mega oversoldness and horrid sentiment have set the stage for at least a decent “trading” bounce. This places the McClellan in the top ten worst readings ever, all of which came at major lows. This suggests we may be at hours / days away from a low that lasts a few weeks.
     
    Granted it awful out there in Euroland and the USA is likewise vulnerable to contagion but I think we are close to a snap back rally. It would be best if we trade lower then rebound off a nigh negative TICK in the minus 1400’s to totally flush out the “few” remaining bulls…
     
    Of note: on 8/8/2011 the McClellan had its lowest read ever at a minus 438.
     
    * The American Association of Individual Investors [AAII] Investor Sentiment Survey of BULLISHNESS fell deeper again to lows of the cycle at 23.6% from 25.4% the prior week. It was 42.4% just eight-weeks ago. For perspective January 2011 it ticked its highs in Bullishness at 63.3%. It had posted prior lows of the cycle at 25.3% in September 2011. More sentiment overview below…
     
    Bearish patterns rule as Europe teeters. To date, little has been accomplished as far as implementing Euroland "austerity" measures, yet the blather goes on and on and on. Every day the kerfuffle of the Euro currency increases in intensity awaiting convulsion and electric shock therapy. All eyes remain focused on Germany to save what certainly looks like an unsustainable situation. Germany/Andrea Merkel wants the rest of Europe to clean up their debt messes and grow up. It galls the Germans to bail out those southern Euro countries that have spent and spent and spent themselves into effective bankruptcy.
    —————————————
    The S&P 500 (SPX) closed Friday at 1295.22.
     
    Short term ‘price’ support in the (SPX) is at 1292
    Channel low support is at (SPX) 1288
    The 200-day moving average support is at (SPX) 1278
     
    Declining tops resistance is at 1301
    50-day moving average resistance is at 1381.
    Short term ‘price’ resistance is at (SPX) 1336.
    Stiffer resistance is at 1415then the recently posted cycle highs of 1422 established on 4/2/2012.
          ________
     
    EuroLand Bond Yields have rocketed higher as the Euro crisis escalates.
    Greek 10-year yields 27.46%
    Italy 10-year (gross) bond yield – 5.76% – off from highs of 7.26% on 11-24.
    Spanish 10-year (generic) bond yield – 6.24% – off from highs of 6.7% on 11/24.
    _____________________________
     
    Friday’s key indicators and metrics:
         
    ·     McClellan Oscillator is deeply oversold at minus 339
    ·     Euro – 1.2739


  42. Interesting Morx… We closed these position on Thursday!


  43. AAPL up 2% – to move the indexes?


  44. oops. somehow i missed that entry. oh well.


  45. Pharm – Hang in there!
     
    Today will be your typical Carlsbad day – morning clouds, giving way sunshine by market close… at 1pm.
     
    All that and 72 for the high….sigh….  :)


  46. WTF took them so long?

    a growing numbers of bond managers now posit the 10-year could fall to 1.5% (currently 1.74%). "Fundamentals are out the window at this point," says Matthew Tuttle, who last week jettisoned a lot of stocks and high-yield paper from his portfolio to buy Treasurys.


  47. Morx,
    It probley happened because the spread wasn't a vertical.  You where long the june and short the may so they left the june open and assigned the mays.  It happened to me befor with TD ameritrade on an sds spread and when I called them to find out why they didn't just give me the credit thats what they told me.


  48. Phil,
    How high do you think we can bounce today?


  49. MoMo portfolio:  Bought 2 October 550 AAPL calls at 47.65


  50. Thanks Yodi but I'm really hoping Putin has a sense of humor…

    Rotating/Stu – Ouch, that's pressure I don't need!  I haven't got a clue what I want to talk about but, then again, I never do – just depends on the day.  

    $33 found some FB buyers. 

    AAPL/Lflan – I thing you're right, don't be forced to trade AAPL when the run is done.  Believe me, it gets very tedious tracking things you're not interested in!   Of course I do like our AAPL long play at this level but I don't think we're going to get any more rocket moves until IPhone 5 is firmed up (assuming the competition continues to mis-fire).  

    Bounce/Shadow – I think 2% in a day would require a major announcement but, if we get a major announcement, then we should get more than 2% out of it, right?   If nothing is announced – I think we probably don't make 2% all week and then leg down after or into the holiday weekend.  

    Writing/Pharm – Don't blame me, I was just working with what was there.  The real point of the exercise was to see if we could use Word to produce an issue instead of pages.  At the moment, I'm looking for a good PC-based newsletter-writing program – it just should not be this hard to format a few pages.  

    WFR/DC – You're down $2 then and I'd just sell the Jan $2.50 puts ($1.05) for now and you can always buy the stock at $2 and sell 2014 $3 calls for .75 (now .38) and that would put you back in for net 0.20/1.10 with a call-away at $3 but no major commitment until you see real progress and, even then – net .20/1.10!  

    SWW/Rpme – Interesting how people are lining up 50/50 on that.  If we go with that style, we're going to need an editor who can format it nicely.  It can't just look like a bunch of articles were pasted together as they came in – that might be interesting reading but it's not really a product.

    FB/Jabob – I hope that was a joke.  

    CHKR/Rms – Wow, I wonder if people think they are CHK?  They missed and lowered the dividend and it's a rough environment for anyone in nat gas.  I guess if you don't mind being a PATIENT long-term investor, you can roll the Aug $25 puts ($8.10) to 2x the Nov $20 puts ($4.30) and then plan on rolling those even to Jan $17.50s if you have to and then you're at least down to the current price.  

    FB/Rustle – Would be tragic if it comes today. 

    Thanks Deano, good suggestions but we're not writing original content for SWW (well, Pharm does but I don't) and don't expect me to start fundy reviews.  My attitude on those is there's 100 on every stock anyway, I just like to cut through the BS and focus on the one thing I care about in a company.  

    Oh, speaking of one thing.  GS refined a chart of which economic indicators really matter:  

     

    Here is a chart ranking the most important macro indicators by their impact on total returns in different investment grade and mortgage products (measured in percentage points on the x-axis):

     

    Chart

    Goldman Sachs

     

    The above chart shows that surprises in labor market data releases are the most important driver of returns, followed by ISM and retail sales numbers.

    The findings in Treasury markets are similar: govies react most strongly to surprises in payrolls numbers, followed by ISM and retail sales numbers. This chart ranks the reaction of different maturities of Treasuries to economic data surprises (x-axis measured in percentage points):

     

    Chart

    Goldman Sachs

     

    Goldman notes here that mortgage yields "respond to macro surprises in a quasi-identical way" as the Treasuries shown above do. They also note that to their surprise, "the impact of housing data on mortgage yields is not statistically significant."


  51. OK folks, GLTA.  I am off.  I don't see anything to make me want to go out and BUY…so off to the dump….to bury my money!  Phil, I will work on something this week and send it to you & Ilene.

     

    SGEN..if it gets bought, send me an email!


  52. QQQ puts? DD or abandon? or what?


  53. Over our very bad futures breakdowns of Dow 12,400, S&P 1,300, Nas 2,500, RUT 750 – good if we can hold it.  

    HOV/Burr – Northeast mostly builder, solid family management with 100 years in the business, the next $1Bn or so they earn will be tax-free, only lost $18M last Q with $220M in the bank and $1Bn in property on the books against $1.6Bn in debt….  They are not going to magically come back without the housing market but this is a company that's earned around $300M in good years and is currently trading at $172M.  

    EDZ/Morx – We're moving up, I wouldn't be too attached to the $13s.  Chinese stimulus, you know…

    JPM/Kinkin – That's bothering me too but I can see where they want to make sure there is plenty of cash for the moment. 

    McClellan/Rustle – Yep: 

    NYMO

    NYSI

    But let's keep in mind it's just a technical bounce then – doesn't mean a lot but lots of fun when you bet it.  

    How high/Danny – 2% would be very impressive.  Not likely to get past that in one day without major news and I'm surprised we're getting there at all but, as you can see from above charts – we were pretty oversold, short-term.  

    Thanks Pharm! 

    QQQ/Morx – Depends on the time-frame.  We went uber-bullish on the small portfolios Friday afternoon, playing for this bounce –  but, if you are talking about the protection in the $25KP, I'm certainly not so confident that I now want to go without it.  As I said Friday, it's a bouncy annoying market now and it's much easier to be in cash than running in and out of positions every time the wind changes.  


  54. By the way, the trick with these McClellan charts is how fast they pop off the bottom on the move up in the market.  If a small move up quickly relieves the oversold condition – that's a bad thing.  


  55. Phil--I was only half joking about FB.. In the low 33s I thought it was due for a possible pop before the end of the day. I find it hard to believe that MS and the other crooks will not try to support it better? Could the greenshoe be done already? I doubt it.


  56. Phil,

    What do you think about ANR at these prices? I’m thinking possible consolidation in the sector may make it an aquisition target


  57. poor quality rally so far…very few high volume big gainers….sector leadership gold/silver and coal
     smacks of hedgies left early for beach, which is allowing temporary lift


  58. Wheew, my portfolio is long delta and short vega.  So today is a very good day for the portfolio overall, but I think I need to balance it better.  Having so much short vega when the VIX has been so low, doesn't work well in a sell off market.


  59. FB/Jabob – Why bother with it?  It's another stupid Momo stock now – the kind that causes you endless pain but, like a suicidal moth – you seem endlessly drawn to them.  CHK popped 4% today – how easy would that have been for you to play?  FAS too – at least there's some rationale behind those stocks….

    ANR/Japar – I think it's a good entry point if you are LONG-TERM but they're not making any money and could go lower in this environment.  It really upsets me when a company that isn't even making money wastes $200M buying back their own stock – as ANR did last year at 3x the current price.  Sadly, this does not show up as a "loss" and get the CEO and the board fired but it's $140M (3 year's profits) flushed down the drain by morons so it kind of puts ANR off my list of companies I'd be excited to own since they are prone to idiocy. 

    Quality/Angel – Now you're getting greedy.  I think the lack of down is an improvement at the moment.  Volume not too impressive with 40M on the Dow at the EU close and they're up about a point in the big boys and the PIIGS are off the bottoms (but still red) so I think we can form a bit of a bottom here if our index levels hold those lines at 12,400 etc.

    VIX/Burr – Speaking of the VIX, down 10% today but TLT back to $124.25 so mixed signals at the moment.  


  60. Eurobonds:  The nuclear option?  I've been skeptical of Europe for a long time, which has included some periods in the last two years of being too bearish, and now reaping the benefits of being bearish. But it seems that the biggest risk to being bearish, and possibly the most bullish possibility in the whole global market, is if Europe agreed to issuing Eurobonds, as new French president Hollande is suggesting. Literally overnight it would provide a total solution.
     
    It of course flies in the face of "justice" as the spend thrifts would bail out the spenders in the European periphery. Merkel and the Germans are obviously against it. But do they really think this European fiasco is going to work itself out?  If Europe goes into a death spiral (has it begun already?), everyone goes down the toilet. I think Merkel is out of a job no matter what she does.  Why not go for it, and never have to hear about the European crisis again?  Sure, she might be called a traitor by the Germans, but the rest of Europe will love her. Maybe she'll even be given retirement homes on the Med… in Italy, Greece, France, and Spain.  Better than spending her post-election "retirement" in Bavaria still being hated by her countrymen. 
     
    Or maybe the other way of thinking about this is:  If not Eurobonds, what else happens, other than the slow unraveling of the Eurozone?


  61. Phil/BAC
     
     
    I bought the 7.5/10 jan13 BCS for 1.05 and sold the jan 13 7.5 puts for 1.09…in light of JPM's issues along with Europe would you bail on this or how would you adjust it, I really don't mind owning some BAC and this was a first entry.
    Thanks for your comments yesterday, I will make sure to construct the spread sheet as that is a great idea to knowing at any moment if I am "on track"


  62. Phil,

    Good point, forgot about the idiotic buy back last year. Also good point about companies prone yo idiocy likely shouldn’t be trusted unless the replace their leaders. Thanks


  63.  A suicidal moth? Ouch! Actually, I am short CHK puts and even have a B/C spread.. but selling CHK,BBY,WFR,FCX, or GLW puts this past yr/month seems to be causing some endless pain too! But I agree that they are "value" plays that are not as dependant on greenshoes or the now wimpy banks to keep them from dropping even more.


  64. So far this is nothing, bounced off Friday's high. WOW!



  65. Gee, look at all the stuff I didn't get a chance to discuss this weekend:  

    Earnings games wiped out:  

     

    Good Friday observation:  The correlation between Euro and SPX has been strong. And yet, something funny happened today. Around noon, Euro surged and SPX dropped. You can see the divergence in the following chart.
     
    One of these two is lying. I guess it is SPX. For one, it is more difficult to manipulate the forex market which is many times bigger than the US equities market.
     
    The Market Is Starting To Recognize Reality (Comstock Partners, Inc)
     
     
     
     
     
    The Fatal Flaw In Europe's Second "Bazooka" Bailout: 82 Million Soon To Be Very Angry Germans, Or How Euro Bailout #2 Could Cost Up To 56% Of German GDP
     


  66. Phil,
    I am short JPM 30 puts (Jans, '13 – $2.48 now 3.40 & '14, – $4.15 now 5.85) sold when JPM 'appeared' to be holding @ 35.50 ish and in light of new revelations about add'l losses wanted to consider options available. Covering with puts, taking loss, etc. What are your thgts?
    Thanks in advance


  67. Eurobonds/Never – You may be right, it's not like they have many options and austerity is the path to madness at this point.  

    BAC/Sage – I'd roll the $7.50 calls (.87) to the 2014 $7s ($1.72) for .85 and roll the $10 calls (.25) down to the $7.50 calls (.87) for .52 to pay for most of it and then you've increases your spread by .50 and  put a year between you and the caller for net .33 and hopefully the Jan puts will still expire worthless and you're in for net $1.42 on the $3 spread.  If they go lower, the Jan $7.50 puts ($1.42) can be rolled to 1.5x the 2014 $5 puts (.85 * 1.5 = $1.27) and there's little harm in that.

    Moth/Jabob – It's just that you always seem to be chasing these Momos and then stressing about them.  Glad to see you have some long-term investments (along with the long-term pain!) as well. 

    NDAQ/Jordan – That was one massive F up!  

    JPM/8800 – Well, they're not at $30 yet and I heard rumors of $5Bn in losses this morning and they are only down 2% more so, hopefully, this is it.  Still, you can roll the 2014 $30 puts ($5.80) to the Jan $34 puts ($5.30) and roll the Jan $30 puts ($3.40) up to the same for another .90 back and you end up with .40 in your pocket and just the one position to worry about that is expiring sooner and IF JPM fails to hold $32.50, you can sell the 2014 $35 calls (now $4.75) and that would pay for you to roll those Jan $34 puts all the way to 2014 $18 puts (now $1.60) if you felt the need.  If you don't REALLY want to own JPM at net $15ish – get the hell out now!  


  68. jabobeast……tell me your 5 most hated MoMos…..seriously.


  69. iflan—
     
    pcln,cmg,amzn,lnkd, lulu
     
    FB (6th) ;-)


  70. jabo…thanks.   


  71. FB / Cmon Jabo seriously? You bought FB? Cmoon.. :-)


  72. aapl=hahahaha market is stupid…lets sell the hell out of aapl for fb….oh no!!! ipo was a dud…sell the hell out of fb back into aapl…its literally like children run big money in this country…frightening


  73. dpast… i did for a trade this morning..
     
    FU Fakebook!!!


  74. FB / Fidelity — Fidelity just alerted that they are still having order flow problems with FB. (i.e. the market makers can't keep it up :)


  75. Phil/ BAC BCS
     
    OK Phil time for the real dumb question
    if I roll a jan 2013 7.5/10 bcs to a 2014 7/ 2013 7.50 BCS, how is that increaing my spread by .5? isn't it reducing it by 2.00 to .5?…obviously I am confused, thanks again


  76. lfantheman- please add CRM- they are a joke management wise and accounting wise.


  77. Everyone could say I am a dumb moth but I still think the greenshoe matters and the Ibanks need this POS higher..
     
    it was worth a stab.. unless it isn't ..
     
    but I asked when it was ~~~ 33 not when it started trading on Friday..


  78. Phil / Twice in a lifetime list
    If you would be so kind as to keep it in the back of your head to signal when you think it would be a good time to take the first stab at the list.  My timing is always so off.


  79. be careful Jabo- Jamie may be calling and asking that you take the whale's place- you would bring a refreshing change to the world of banking!!!!


  80. No, Phil, it was a NDAQ f-up, but that's not why FB is going down… that's all I meant.  Pity it didn't go to $75 by 5/29…


  81. What's your opinion on THC?


  82. is anyone else having problems refreshing the website?
     
    jthom--never again ;-0


  83. Jabo- That is what I said when I walked out the door- 18 months and I do not miss it at all. It turned into a pretty crappy world during my 35 years.


  84. lol / THC — It's fine for a small position but larger positions can make you paranoid and give you the munchies. 8)


  85. Iflan: momo's
    i too play momo's but primarily selling calls to start and find it often is a slow business as they need time to get pumped to the really overvalued level so will be curious to see how you approach it.  selling calls get's margin intensive but thanks to Phil I've learned patience always wins out.  April was the prime season for most of those Jabo mentioned but LULU has earnings and like other retailers still has potential to disappoint big time.  fwiw


  86. Phil All
    I always do the math and the RUT did the 20% rebound plus the first day. 40% would be 77.60 and it is a confuence line reinforced last week to last year, a 20 day fib 38.2% and it follows your 5% rule. I am starting to think this is the rebound and the slide will continue.  What do you think now?


  87. Lincoln…when does LULU report next? 


  88. Phil/AAPL,
    I have the 2013 550/650 BCS at 49.04. Would you roll the 650 caller to the 600 caller? Or just let it play out? Thanks


  89. Nas and SOX up 2%, very impressive but I still can't see us popping it in one day.  VIX down 10% -what, us worry?  

    Children'Angel – My children are not that fickle.  

    BAC/Sage – Sorry, my bad!  I was expecting that the Jan $7.50s (.82) can be rolled even to the 2014 $10s again (.73) once a little premium burns off but I kind of skipped that step in my logic.   

    FB/Jabob – No one NEEDS it to be higher.  That's kind of the problem – they screwed the IBanks on fees and spread themselves out too thin so no one has a major vested interest in holding them up (and the big boys took 50% dumps on the retailers on day one so they are all green with 1/2 for free).  If anything, I would think many of the Banksters want the message to be sent that, no matter how popular your stock is, you better pay the Vig or they'll drop you like a stone.  Keep in mind this is costing Zuckerberg about $2.5Bn today!  

    Twice in a lifetime/Burr – I think if we can hold those Futures levels for a couple of days it's worth taking a stab at a couple.  It's kind of the opposite of the long put list, where you want to start with a few that went the other way and then, when those begin to work out, you can see if there are laggers to make fresh horses out of.  

    FB/Jordan – Oh, well it's not the Nasdaq's fault the stock didn't fly but it is there fault that some people were trapped in it all day.  I can't imagine anyone is suing them because they couldn't BUY FB on Friday.  CNBC says the NDAQ STILL hasn't filled all of Friday's orders – that's just nuts!

    THC/Lol – I wouldn't take it straight but I'm all for legalizing it.   As to the Health Care Company that strangely picked that symbol – I just saw The Rainmaker on TV the other night and remembered what a disgusting, sleazball healthcare system we have in this country and I don't know that you can predict what happens with THC one way or the other as Obamacare is up in the air.  I don't think they are a compelling long or short and it's a very news-driven investment so, if you don't have time to stay on top of the legislation – why bother?

    LOL – and what Rain said.  

    77.60/Shadow – After a big move like this, it's very likely we at least follow-through to there.  I try not to "think" past that as the whole point of TA is not to think and just watch the squiggly lines so they can determine your actions.  


  90. LULU June 11th I think


  91. Time is a great healer: why do positions that looked so bad last week look so good today? AAPL: wow. there's life in the old dog yet; PCLN pulls away from my short put price (June 640); MON – short Jun 67.5 puts, short 75 calls – a position left from January; CHK – boatload of short puts, XOM – 80/87.5 short strangles. I'm even happy that the EDZ and TZA hedges are bleeding. All is right in the world for today at least.


  92. TNA – well dang. though TNA is bouncing nicely, my june TNA calls are going nowhere today due to the fall in VIX (i presume).


  93. Phil: first quarters warm winter portfolio
    just as I suspected those who benefited had to pay the piper this month, ie. LOW, HOG.  I'm learning to be "rangeish" with  a handful of stocks and developing a feel for when they get too high or low.  Thx


  94. Thanks Phil
    I actually play the game to close like today. I made 10 times my goal today and got out at my target. I made breakfast, fed the cats, washed cloths, and when I returned found it could have been 19 much more. Today just seems too fast and maybe won't hold, starting to look like a short to close again, when if????


  95. Phil
     
    did we add GLW to the Twice in a lifetime  ?
    what price  ?
    thanks


  96. 10x Goal/Shadow – Bravo! I LOVE that kind of report!


  97.  fed says qe1 lowered 10y yld by 100 bps…hahahaha…if they believe that it is disturbing


  98. Every month, they have shoved the market up in the last week.  In April we a little sell off in the mid 1st  to 3rd week then they goosed the market up 400pts.  Wonder if they will try to do the same this month.


  99. AAPL/Jomp – Well, I would have rolled down while it was cheap first.  The spread is now $38 and you could have spent $20 to roll the $550s to the $500s and, if you're not willing to spend $20 for $50 in position, then why do you want to be in the stock in the first place?  Let's think about your mindset…  AAPL was $30 cheaper on Friday and you were unwilling/unable to improve the position then so, if they go back down to $520 or less, what is your plan?  If you only were willing to risk $11, you should have entered an $11 position or a $22 position that would have had to move 50% against you before you stopped out – not a $50 position where 20% freaked you out and left you unable to act.  If you drop the $650 caller ($30.50) to the $600 caller ($46.50) you collect $16 and then you are in the $50 spread for $33 – is that what your original intention was?  Better to sell the $550 calls ($68, net $37.50) to some other sucker and then spend $27 to roll down to the $500 calls ($95) and then you are in a $50 spread for net $38.50 that at least is in the money and gives you an excellent chance of getting even – rather than pushing into a $33 spread where you need a 10% move up in AAPL just to get to $50.  

    Either way, it begs the question – what is your strategy if AAPL drops $50?  $100?  $200?   You should ALWAYS know what you are going to do with a trade when it goes against you by 10%, 20% and 40% BEFORE you buy your first share/contract.  Unless you are COMFORTABLE with what you will do when a trade goes 40% against you – you shouldn't be entering it in the first place! 

    Nice job on balance Winston!  

    TNA/Scott – Yes, VIX to blame at the moment.  That's why you have to be very selective buying call premium on the way down…

    Range/Lincoln – Good job.  This goes back to the idea of taking those profits when they come early.  When you are off track in your favor – it's just as much reason to cut a position as when you are off track against you.

    Today/Shadow – This is a strong move from oversold with a little confidence back in the Euro and the NATO summit now being held.  We have note auctions through Weds' 5-year but not too much data so no reason we can't keep drifting up as long as nothing blows up in Europe.  Oil at $92 and copper at $3.50 are warnings not to take rally too seriously, though.  

    GLW/QC – I know I mentioned GLW, CSCO and GNW last Wednesday as good additions to the list but I don't think I picked specific entries on GLW or GNW on Thursday – only because I forgot to.  GNW is easy at $5.02 – the 2014 $5 puts can be sold for $1.75 for a net $3.25 entry.  GLW was at $12.70, now $13.06 and you can sell the 2014 15 puts for $3.90 as I really like GLW into the next Smartphone cycle.  

    Goose/Rustle – I hope so, our small portfolios need it but, on the other hand, I'd like to get good June entries for the new Income Portfolio so I'm torn…


  100. iflan: lulu
    jabo is right 6/11 earnings.  early this month they hit 81 and were a "no brainer". now i think if they get pumped back up prior to the 11th could be fun otherwise I'm not so sure.  might depend on whether the yoga fashionistas were affected by the warm winter and early spring around most of the country  ;)


  101. Goose/Phil
     
    After getting out of bearish positions last week and on Friday going slightly bullish, this will be the first time this year I want the banksters to do their paint job on the market and allow me to look to go bearish again for June.


  102. volume so terrible msb should prevent big swoon, but odds increasing for some weakness into close..if jpm doesn't stop falling


  103. 11:00 AM On the hour: Dow +0.82%. 10-yr -0.04%. Euro -0.08% vs. dollar. Crude +0.71% to $92.45. Gold -0.11% to $1590.15.

    11:41 AM Europe closes mixed, with the periphery well off their lows of the session, but continuing to yield ground. Stoxx 50 +0.3%, Germany +1%, France +0.5%, Italy -0.4%, Spain -0.6%, U.K. +0.7%. Euro -0.1% to $1.2765.

    12:00 PM On the hour: Dow +0.63%. 10-yr +0.04%. Euro -0.07%vs. dollar. Crude +0.7% to $92.44. Gold -0.05% to $1591.05.

    1:00 PM On the hour: Dow +0.76%. 10-yr +0.02%. Euro +0.03% vs. dollar. Crude +1.09% to $92.81. Gold -0.07% to $1590.85.

    2:00 PM On the hour: Dow +0.79%. 10-yr +0.04%. Euro flat vs. dollar. Crude +1% to $92.72. Gold -0.19% to $1588.85. 

    Fed purchases of MBS had less impact than hoped, reads a SF Fed study, as the lack of competition in the mortgage market kept pressure off originators to pass on lower rates to homeowners. Spreads have come down from crisis highs, but remain well above their pre-crisis peaks, more so for jumbo mortgages than conventional.

    The NY Fed will carry out the auction of $1.67B of CDO's from Maiden Lane III on Thursday after delaying the sale last week because of additional information that hadn't "been made available to the bidders." The auction is one of two planned sales from Maiden Lane III. 

    It begins: The ECB should announce its intention to buy unlimited amounts of sovereign debt in the event of a Greek exit from EMU, argues Polish finmin Rostowski. It is a moot point, he says, whether this is against EU or ECB statutes. As Trichet said last year, when normal policy instruments fail, the ECB has the right to remedy the situation.

    Hedge funds and P-E firms have accumulated almost €60Bto acquire loans from European banks that are looking to consolidate their ops, a PWC survey shows. Investors, most of whom are from the U.S., are particularly interested in loans backed by commercial real estate. 

    Asset managers unloaded euros at the fastest pace since November, says UBS, noting its clients were especially keen to sell the euro/Swiss franc cross. The CHF 1.20 level held, but the bank expects a Greek exit to "provide a stern test" for the SNB.

    7.8% more jobs shipped overseas?  BRILLIANT!!!  The global IT outsourcing market grew 7.8% in 2011, Gartner estimates, with market leader IBM's share holding steady at 10.9%. H-P (HPQ) only grew its sales 2%, and that resulted in its share falling to 6.1%. Troubled Computer Sciences (CSC) saw its share fall to 4.2%, while Accenture's (ACN) grew to 2.6%. Gartner continues to see (previous) the adoption of cloud services as a threat to the outsourcing market's future growth. (also)

    JPMorgan's CIO losses can't be described "in any way as a hedge," says hedge fund giant Michael Platt, whose BlueCrest capital was on the other side of the trade. "It's a trading loss. They deliberately put the positions on." "They're not out of those positions," he says and will face further losses if Europe continues to deteriorate.

    The chairman of the CFTC confirms speculation that the agency is investigating JPMorgan's (JPM -2.6%) $2B+ trading losses, which are tied to credit derivatives. With several other government agencies probing the blunder, the words "broth," "cooks," "spoil" and "too many" spring to mind.

    Amidst slow sales and mass overcapacity, no European automaker wants to be the first to shut a plant. Unlike in the U.S., EU automakers were under no pressure to restructure in exchange for bailout money. Four years later, all but the luxury brands are under pressure, with 30% rebates in Germany and Italy an all-time high. GM has lost money in Europe for 12 consecutive years.

    ArcelorMittal (MT) suspends a $1.5B expansion plan (in the middle of construction) in Brazil, citing a lack of demand not just in that country, but across the globe. An earlier report has Chinese buyers refusing shipments of iron ore and coking coal as overcapacity there has steel mills cutting output. 

    J.J. Abodeely is "jumping into the abyss" in pursuit of downtrodden gold mining stocks. If shares are being weighed by a negative view of the gold price and concern over input costs, he thinks they should rally if either conditions is resolved favorably; he also believes evidence of further economic weakness would be met with a policy response that will benefit gold.

    Newmont Mining (NEM +3.4%) shares could rise 50%,Barron's Robin Blumenthal believes, ahead of a potential rise in gold prices. Gold has historically outperformed gold mining stocks, but the ratio between the two is at an all-time high – an opportunity for investors, given Europe's troubles and the Fed's willingness to keep printing money to stoke the weak U.S. economy. 

    SA author Kevin Quon highlights 5 firms that are prospering from low natural gas prices, including those that benefit from the of use of gas as a fuel source and those that make it readily available. The five are Clean Energy Fuels (CLNE +7.55%), Fuel Systems (FSYS+2.9%), Golar LNG (GLNG +3.6%), Chart Industries (GTLS +5.3%) and Westport (WPRT +11.3%)

    A federal proposal to ban the construction of coal-fired power plants that release their CO2 into the atmosphere would seem to smooth the way for carbon capture technology. But natural gas is so cheap and plentiful that utilities have little incentive to build coal-fired plants with the technology, NYT reports, and the proposed rule exempts existing coal- and gas-fired plants.


  104. Toronto could be the next gambling mecca after officials in Ontario started the process of clearing a path for the development of a hotel-casino complex. MGM Resorts (MGM +2.1%) and Caesars Entertainment (CZR +0.1%) are already meeting with city officials, while Las Vegas Sands (LVS +2.1%) reportedly sent execs to the city on a scouting mission.

    A group of soft drink sellers including Coca-Cola (KO+0.5%) and PepsiCo (PEP -0.5%step up efforts to stem a rising tide of concerns over the health effects of drinking soda drinks including diet versions. An industry-sponsored ad ran in the NYT last week to promote calorie-cutting measures. In order to avoid the possibility of being required to put health warnings on cans, Coca-Cola has even modified its recipe – although the company claims consumers won't taste any difference.

    Good for SVU:  Safeway (SWY +2.3%) moves up on an upgraded to Buyon valuation at Citigroup. The firm cites growth potential from the companys recent promotions and improved cost discipline. The firm raised ups its price target to $26 from $22.

    Even better for SVU:  Supervalu (SVU +5.7%) gets a lift from an upgrade by Longbow Research to Buy from Neutral. Analysts with the firm also boost their price target on shares to $8 – repping 64% upside potential.

    Just one month after the reporting of the Mexican bribery story, Wal-Mart (WMT +0.7%) hits its highest price since the final days of 1999. (last week's earnings)

    Shares of Regal Entertainment (RGC +2.9%) and Cinemark Holdings (CNK +2.2%) trade higher in the wake of a mega-deal by China's Wanda Group to buy AMC Entertainment.

    Best Buy (BBY -0.6%hires global search firm Spencer Stuart to help the company find its next CEO. The search is expected to take six to nine months.

    Shares of Diamond Foods (DMND +1.5%) spike higher before settling back a bit after chatter kicks up that Oaktree Capital may make an investment.

    Sirius XM (SIRI +2.4%announces a deal with Audi (VLKAY.PK) that gives customers who purchase a 2013 model year vehicle a 4-year subscription to SiriusXM Traffic. The promotion is in addition to an existing perk where Audi buyers in North America receive a 3-month subscription to SiriusXM's basic service.

    Google Chrome (GOOG) has passed Internet Explorer (MSFT) to become the world's most popular browser, according to StatCounter's latest data. Chrome's 32.76% share for the week of May 14-20 puts it above IE's 31.94% and Firefox's 25.47%, and compares with a mere 19.37% in the year-ago period. NetMarketShare's data suggests IE still has a major lead. (previous)

    YouTube (GOOG) users are now uploading 72 hours of video every minute, the site boasts. That's up from 48 hours a year ago, and 24 hours in March 2010. YouTube's average monthly usage is also soaring, thanks to its efforts to promote channel subscriptions and professional content.

    Piper's Gene Munster declares there's an 80% chance Apple (AAPL +3.4%) will hit his sales forecasts for the next-gen iPhone, in spite of Qualcomm's (QCOM) 28nm chip supply issues. In typical form, Munster adds the next iPhone will trigger the biggest "upgrade cycle in smartphone history." Meanwhile, Jefferies' Peter Misek predicts Apple will lower the unsubsidized price of the iPhone 3GS to $250-$300, to help it better compete with Android in emerging markets. (previous)

    Morgan Stanley's Adam Parker provides some Chuck Norris-like facts about Apple's (AAPL +4.4%) stock, up sharply as investors declare it a value relative to Facebook. Among Parker's facts: Apple will soon likely have the S&P's largest market weight since 1986; it accounts for 9% of the S&P's trading volume (highest of any company since '82); and it accounts for over 1% of the portfolios of 26% of large hedge funds, as well as over 10% or more of the portfolios of 4% of hedge funds. (earlier)

    Three lunchtime reads:

    1) Is insider trading part of the fabric on Wall Street?

    2) Natural gas gains may evaporate in the summer heat

    3) The good news in the bad news


  105. Man, these Nat Gas ETN are like deathtraps….

    http://kiddynamitesworld.com/gaz-shareholders-youve-been-warned-again/

    Due to likely continued fluctuations in this premium, Barclays believes that the ETNs are currently not suitable for most investors and will not track the price of the underlying natural gas futures index in a consistent manner.

    Really… Let's go to the chart!

    Well, I agree, not suitable for investment…


  106. Metals and miners — Sure are doing well today in the face of the bad news out of China, BHP and MT.  Might be at a bottom.


  107. IRA Portfolio update!

    The MT MAY 18 CALL's expired worthless so now we are going to sell the JUL 16 CALL's for $0.82 or better.


  108. MoMo ……..Sold to open 10  May 25 weekly 67.50 puts for  1.11


  109. Hi Phil – Is it worth adding to the TLT play from last week?


  110. Good Afternoon
    Phil —I was assigned 1000 sh of SVU at 6.00—-how would I handle this?
    Thx


  111. LFlantheman –  What's the underlying?


  112. We're right on 760 on the RUT (our 2nd -5% line) and 100 points to go to hit it on the NYSE (7,600) but just 17 points on the Nasdaq to 2,850 so those two are our immediate bullish goals at the moment.   That's for tomorrow – for today, just not getting an anti-stick into the close will be a big improvement.  

    Banksters/Rustle – I hope they can get it together, we really can't take much more downturn before it isn't funny anymore.  

    Miners/Rain – I have to feel that we panicked plenty in 2009 and if we're at those levels – it's very hard to get lower. Even I was surprised I picked OIH along with GDX – but it was just so damned cheap!  

    TLT/Ink – I still like it but it's a bit early to chase.  As I said at the outset, they could get to $130 in a real good panic and September is a long way off.  

    SVU/Savi – So your short putter assigned them to you?  Depends what the net is but you can just cash them and sell 2014 $5 puts for $2 and even if you sold the $6 puts for $0, you still drop your basis to $4 and make $2 if they expire worthless at $5 – I like that as a new sale, of course. 


  113. burrben- probably LULU


  114. Hi Craigz, is there a link to your IRA portfolio?


  115. morxlntwayIRA portfolio link.


  116. LULU


  117. SVU/save – i love SVU..! i'm not phil, but i would sell 5 of the Jan14 $5 straddles at 3.10, and 5 of the jan 14 5/7 strangles and 2.67, or if it is ultimately more than you really want or want to be closer in time, sell the Jan 13 $5 straddles for $2.70 and expect to let it go in Jan for $5 share. These premiums, along with what you already received, should be having this looking pretty damn good for a nice dividend payer!


  118. Thanks Phil!


  119. SVU – Savi that is.. oops!


  120. FAS Money – Let's buy back those Jan $15 XLF calls for .72. 

    IWM Money – Pretty bullish! 

    $5KP – $64 seems a long way up for TNA (now $47).  We need $27 in 25 days so any day TNA is not up $1 (up $2.40 today), we are drifting off target.  Too bad we couldn't get .05 though as, for $100, we may as well have doubled down.  

    $25KP – So bullish.  Too early to flip the hedges so we just have to wait.  BBY earnings finally here!  


  121. Thanks to whoever made the TQQQ recommendation on Friday. It paid off pretty well today.


  122. Phil – AAPL up 5% today – so – expect another follow thru tomorrow? Looking at selling some weeklies, 555 or 560 thanks! 


  123. MoMo/ AAPL    3 more of the Oct 550s for the port…….53.50


  124. deano…sell the 560 AAPL weeklies at your own HUGE risk!  Maybe buy them?   


  125. lflan – thanks – up nicely and the premium seem huge for 4 days – glad I held off earlier though!


  126. Buy write on SVU @ 4.93 selling the Jan 5c/5p for $1.91 for a a net $3.02/4.01


  127. VIX and rolls/Phil – Phil, i have a TZA diagonal (showing a profit), long Oct $11 calls and short June $23 calls. Could roll the June to Oct for $2.75 and am wondering if I should capture this premium while TZA is higher, or let it wear down more and see what next oppty for rolling may be between now and October. With the lower VIX is it good to roll? or better when VIX is higher? any general rule here or really secondary to where i think TZA will go between now and expirations?


  128. Phil,
    I have Jun $57 puts at $0.49 which has tanked to $0.29.  I started with 200 at $0.51 and bought another 100 at $0.45.  Stay or DD somemore?


  129. Anybody come across problems in TOS mobile after upgrading to the new version? I have iPhone 3G and the app seems to be taking a lot of memory and time to do anything?


  130. Phil,
      Does MT still qualify for the TIAL list in light of the news item you posted a little earlier? I was thinking of buying back 8 sold RIG Jan 13 $40 Puts (arrived at with your help from original $65s) and selling 8 MT Jan 14 $15 puts from the list as a, more or less, equal exchange. Mindful of CASH IS KING, I'm concerned that RIG is susceptible to the type of downturn that has you pounding the table for cash. What do you think? 


  131. well – so much for the 555's!


  132. The TNA calls finally moved. The delta is up to .05 from .02 this moring.


  133. Kwan – what are you seeing so good about the TQQQ call?  I'm in the June 55's and they're not budging despite the Nasdaq up 2.3%!  At what price did you sell?  I've been wondering about them all day long…


  134. Anybody use the Android version of TOS on their phone?


  135. Phil – the AMZN hedge should be good for an entry today, do you recommend the same hedge as last time around?


  136. Oops, it is the QQQs I am referring to…."I have Jun $57 puts at $0.49 which has tanked to $0.29.  I started with 200 at $0.51 and bought another 100 at $0.45.  Stay or DD some more?"


  137. TQQQ/Kwan – I believe that was Canuck's idea – and a good one! 

    AAPL/Deano – When a stock gets to 5% in one move and stays over 4% it is most likely consolidating to break through and test the next 2.5% line.  Same goes for 2.5% not failing 2X meaning you can expect 1.25% more and 1.25% that doesn't fail 1% should go 0.67% more….

    SVU/Rain – Since you can do the 2014 $3/5 bull call spread for $1 and sell the $3 puts for .75, I kind of like that for a 1x entry too (net $3.25 if put to you, up 7x on cash ($1.75) if called at $5).

    TZA/Scott – I'd take it off the table or at least lighten up as you're very exposed with the Oct $11s and no reason to be so bearish at what we think is a bottom.  That thing can decay on you very quickly.  

    Mystery stock/Cjji – I'm guessing the QQQ puts and, if it's a hedge, that's a lot of puts and, if it's a bet – that's a lot of puts.  What I really don't understand is that they finished Friday at .65 so if you got in at .51 and made 27%, why didn't you take any off the table or, more to the point, if you doubled down at .45 (who doubles down with a 10% loss?) and lowered your basis to .49, again why would you not get at least half out with a .16 gain (32%) when you're supposed to get 1/2 back out even?  Then today, they opened at .55 (still a profit), then fell to .45 by 10 (down 10%) then to .35 at noon (down 28%).  So you don't take 32% profits nor do you stop out as they fail from -10% to -28% and now down about 40% but you do DD again?  What's the point if you're never going to take a profit?  Now we're bullish until we get a turn so I don't really have any good advice for "saving" this.  I suppose you could sell the $58 puts for .40 or the $59 puts for .55 but then you're bullish and probably would be very nervous about it so it could be a rough ride but, other than that – I'd either wait to see what happens tomorrow or get out now because it's kind of silly to throw more money at a put play after such bullish action today. 

    TOS/Nicha – My IPad just asked me to do an upgrade so maybe they are fixing.  

    MT/Kevin – I think long-term yes but neither they or X are going to be on any sort of fast comeback trail.  Do I think we'll be using steel to build things in 2022 and that MT is likely to be one of the producers?  Sure.  Both are economically subjective choices and the US may be improving a bit but the rest of the World is a hell-hole.  Overall, I think OIH is a better play to move RIG money to.  

    AMZN/Jerconn – I still like AMZN for a hedge, yes.  Good market or bad, they are overpriced. 


  138. Whoohoo, an oversold bounce and one of the best days for my portfolios, up huge on the volatility crush.  /DX continues its dive from Friday, an easy signal for the bots to push it up, making the shorts keep on covering today. 


  139. SOX and Transports both up exactly 2.5% at the same exact moment.  Yeah, humans are trading this….


  140. XLF still DOA.  

    While the VIX is still kind you can sell the Jan $12 puts for .75 and buy the $13/14 bull call spread for .59 for a .16 credit on the $1 spread that's .87 in the money to start and worst case is you own XLF at net $11.84.  

     


  141. TQQQ    ; >)
     
     
    FB -  how dare they let this drop before we can buy puts on FB!


  142. USO- i am long Jun 40 calls and want to roll but I need help – advice?


  143. Phil – I'm in the Jun 55 TQQQ calls and they're not budging despite the Nas being up 2.4%  What gives?  Did I get the call wrong?


  144. Is it a good idea to break a BCS up-- ie… if one's long position has value and the short doesn't – should or can  (I know you can sell it but is it a good idea) you sell the long and then what do you do with the caller that is left?
    Thanks.


  145. SGEN, so nice.


  146. WFR – even this is up today. will wonders never cease!


  147. PeterD – I'd love to read more about your SPX short strangle's.  Is there a good overview, or day of posts that I could read through on the strategy? 


  148. @morxintway its online as part of St Jean's PSW Portfolios spreadsheet.  I will throw up a post this weekend detailing everything we have done so far, so that people can catch up.  I will also figure out if there is a way to make it public with just a link that you can look at.


  149. USO/Newt – Long on oil?!?  Those calls are down to .07, what kind of roll do you expect out of that?  You need a 15% bump in oil just to get your .07 back and that's back around $110 – very doubtful and a "roll" to spend more money to make another bullish bet on oil is very, very dangerous because, here we are, 4 days from the Holiday Weekend that kicks off the Summer driving season and oil is still at $92 and struggling to hold it.  If you want to be bullish on oil, you can buy the June $35 calls for $1.05 and at least you only need a 3% move (back over $100) to get your $105 back but, if you don't get it by Friday afternoon – I'd get out of that too.  

    TQQQ/Jerconn – TQQQ is up 8% and the VIX is down 10%. Simple equation.  This is why we roll to follow when we want to stick with a position – when you let yourself get out of position, even a move in your favor may not actually help when you are the sucker who bought the premium.  Had you instead sold the TQQQ June $40 puts for $2.25 on Friday – those are down to $1.15 and you'd be up a quick 50% because you sold some other sucker the premium and it died on him – just like yours did!  

    Good idea/Newt – That very much depends on the spread and the situation. 

    WFR/Scott – AMAZING! 


  150. Wow, what a way to start the week!  


  151. Phil / SVU — Nice!  My mind doesn't see the spread trades like that. I need to work on that. Thanks.


  152. Burrben,
    The Wiki guys did a good job in summarizing the posts.  Click on Wiki at the top of the page and you'll see it at the bottom of the first screen.  Good luck!


  153. Nasdaq up 68pts and FB down over 4 points below IPO price.  Who would've believed that a week ago.


  154. Something interesting from Andy Zaky on his AAPL Buy call from a few days ago…
     
    Alright. Apple closed up $30.00. Bullish Cross put out a Buy Rating at $530 a share. Here’s why Seeking Alpha decided they didn’t want to publish my piece on the topic:

    “The technical part of your reason for the buy rating seems to go counter to a bunch of very good momentum studies that have been done in recent years. You state: “On a technical basis, Apple is the second most oversold it has been since the lows of the financial crisis.” This would seem to indicate a greater chance the stock will continue falling in the near future…The fundamental case you state for Apple has been stated many times over at Seeking Alpha and across the web. Please flesh it out further – the market clearly knows Apple’s P/E and has decided to continue selling anyway.”

    That’s why financial editors shouldn’t try and edit for content. How many readers at Seeking Alpha were well served by this editor?


  155. Burrben- short strangles- Peter's write ups are great. Be sure to study thoroughly. You can make 1% to 2% per month with relatively low risk but take it from one who learned a very hard lesson- as others have- DO NOT get over extended and keep plenty of dry powder and then some. PM is "required" for this strategy. Even so, a big move up and especially down can wipe you out if not careful.


  156. Really, no one is using the TOS app on iPhone? Am I on everyone’ ignore list?


  157. Jerconn – the June 47.50s were up over 50% today from where I bought them Friday so mission accomplished for me. (Thanks Canuck!)
    Nicha – I think that app is slowing my entire phone down after it's been running for a while. When in doubt, turn it on and turn it back off again.
    Peter D – thanks! :) It needs an update because it occasionally doesn't pick up content in some posts, but I'm glad someone is finding it useful.


  158. Nicha, the TOS iPad and iPhone app is not working for me either. Does not update the p/l for the day.. I have emailed them. Let’s see


  159. Nicha – i see you, i just don't have a smart phone of any kind, nor ipad so sorry, can't help. i know, such a knuckledragger. I learned to stop breathing through my mouth though since joining PSW!  someday i may even relearn to capitalize the beginning of sentences. ;-)


  160. Phil, I would appreciate your advice on a SKX spread: Oct $10/$14 bullcs + short Oct $12 puts, net cost 75c. One option is obviously to leave it and hopefully (not a strategy, I know!) take a very nice $3.25 profit in October if it holds $14. Is rolling out the calls to Jan (and perhaps leaving the put alone for the moment) an option, given that SKX pulled back from $18.74 after the shape-up issue. I just can't decide what the right move is here. As always, many thanks in advance – your suggestions and explanations are always enlightning!


  161. Nichia,
    I use the Android TOS app.  Can I help you?


  162. Does anyone know how if there is a way to graph the change in open interest of specific options?  Is there any way to tell when the open interest increased or decreased?  TIA. 


  163. Pstas, how much do you margin do you budget for your open short strangles?  Peter D, what do you think is conservative?  I try to stay around 30k-40k a margin per short strangle. 


  164. Robertthjrfl- strangles- my guideline "budget" is $20M per set. I will not exceed that amount but often don't sell a full allocation of strangles in a given period depending on the VIX and general market outlook.
    Also, keep in mind other margin intensive commitments such as short puts and/or calls. I just today exited a long running short call position in AZO from Jan. The other was PCLN. Both started as a single short call which grew to 4X and threatened to go 8X. I had the margin but it cramped my SPX strangle ability. Lesson learned that there is a significant opportunity cost to rolling naked positions in addition to the margin issue.


  165. TNA – Bought July 44 Call at the close on FB Friday.  RUT was at the 200dma, bought it for that reason.  I was playing the bounce.  Up 18% today.  Since I work during market hours, I will move the stop to protect the profits.  I do expect $773 (61.8 Fib) which will be my exit.


  166. Nicha / Androis TOS – Yes on my Droid Bionic.  Works very well.


  167. roberthjrfl / Open Interest – Have an Ipad/Iphone?  iOptionVol Application.  Not bad for the cost. (1.99 I think).


  168. Hi Phil,
    SQQQ x15 Jun 49/53 debit spread at (net $4.23 – $2.53 = $1.4) – acquired as a hedge last week. Looking to extend to Jul (closing out today pays back $1.5!!), buying Jul 53C for about 0.1 credit.  Do you think this is a good roll or would you recommend a better, another adjustment or wait?
    Thanks in advance.


  169. Kwan/Phil/TQQQ – the only reason I saw that trade Friday was because Phil mentioned the 55's on wednesday (or so), so it caught my eye on Friday, especially given David Fry's charts showing greatly oversold conditions. 
    Glad it is working out for all that got in the trade. 


  170. AAPL alert:   AAPL could easily run to 600+ very quickly.   I mean days, not months.  Today's move was very strong.  Do you suppose many of the FB pile-ons from Friday saw that as so much bs today and rotated  back to AAPL?  


  171. Lflantheman / AAPL
    The 3 extra contracts you added didn't get filled for me and are now above your entry price.  Would you recommend that I get into those 3 tomorrow, even though they are a few $$ more?  
     
    I do think people are running back to AAPL.  I think it was the flush before the new Iphone and Macbook launches.  I've been selling Jan14 370puts now the whole way down.  


  172. Best Stock Market Indicator Ever: OEXA200R
     
    Has anybody been using this indicator?  I first became aware of it with Doug Shorts email reports, such as last weekend when the indicator indicated a sell, indicating the risk of a big move down. 
    Also, has anyone read John Carlucci's report below – for the $5 or so it cost, I thought it was worthwhile, for both the discussion of the indicator and for trading ranges in a bear market.
     
     


    Note: Stockcharts.com offers free access to the $OEXA200R indicator on a daily and weekly basis. The monthly view requires a subscription.
     
    (c) John F. Carlucci
    John F. Carlucci is a regular contributor to Advisor Perspectives and the author of “Ashes to Riches: How to Profit Spectacularly during the Economic Collapse of 2012 to 2022″, published by Endeavour Press Ltd., and also available on Amazon.com


  173. JFawett,
    Thanks for the tip. 
     
     


  174. 3:22 PM "Spain is the battleground," says Michael Platt, pretty much writing off Greece. "A euro in a Spanish bank is not worth as much as a euro in a German bank," he points out, explaining why the slow-motion bank run will continue. The range of outcomes – from utter disaster to the EU printing it all away – is so wide, he suggests owning still-cheap volatility, whether it be in rates, currencies, or stocks. (complete video a must watch) [Global & FX] 4 Comments
     
    Very interesting, and I agree, a must watch.


  175. Hey Nicha -
    I had issues with TOS last week.  Somewhere during their conversions to TD Ameritrade they lost my signed docs regarding the exchanges, so I needed to resign them to get things working correctly again. (It impacted both my desktop and mobile applications.)  Maybe you are caught in the same issue?  Make sure all your docs in the my account page are up to date.
    Also, their customer service is pretty good, you can open a chat window with them if you don't want to be put on hold!


  176. Burrben….I think it's time to make AAPL longs a significant part of holdings.  I'm using October calls  to give time for the excitement of new product development.   


  177. Iflan:  I've been buying Jan 13 calls every day for the last week, cashed in 1/2 today for a nice profit, sounds like I ought to buy them back!


  178. robert,
    Thanks, pstas for the tips.  Everyone risk tolerant is different, so here is a general answer.  Say SPX is at 1,315, one contract is $131,500 with no leveraging (100% margin), i.e. if your short puts are 10% OTM, you would not lose until the index drops 10%, then you'd loose 1-to-1 as if you own the underlying.  We would never get a margin call if we set aside $131,500 for each SPX short strangle contract.  Next, what if we leverage 2X (50% margin), reserving $66k for each contract?  We'd only get a margin call if the index drops roughly 55% in a month (if we are selling June).  So that's too conservative.
     
    Reg-T margin is 20% for SPX short strangle, i.e. 5 times leveraging, $27k per SPX short strangle contract, so we'd get a margin call for a 25%-30% drop (10% OTM cushion, plus 15% x 5, plus some increase in put value).  That's a full position for shorts, so if you want to be able to roll 2X, then $54k per contract reserve, and only loose if the market drops 25% to 30% a month, which is possible such as in October 1987.
     
    PM margin is varying of course and can get to about 12%, i.e. 8 times leveraging, about 18k per contract, and we'd get the margin call at a 18%-22% drop in the index within a month.  If you believe that the index wouldn't drop that far, you can have less reserve, or the same reserve will give you the option to roll 2X to 4X.
     
    Some smart folks on this board would "lock the margin" by buying a lower put.  For example, if you sell the SPX June 1200 for $4.25, and are afraid of being "naked" (really?), you can buy the June 1100 put for $0.925.  It would reduce the potential return, but cap the margin at $10k (100 SPX points x 100 shares per contract).  The 20k reserves would allow a 2X roll.
     
    Overall, it takes practice, plus managing greed and fear.  When VIX goes up, the margin can go exponentially, especially without the long put cover, so a miscalculation can be costly.


  179. Strong move today back to some of the lines…


  180. USO/ Phil: I know!!!! Long on oil. Ouch! So CMG profit has been used to pay for being long oil…I take it there isn’t a way to save this. Dang!

    Good idea: it’s a SQQQ BCS. I’ll have to get details in the AM.
    Thanks.


  181. Etrade

    Anyone know if you can beta test positions with Etrade pro? Honestly I hate the platform and find myself using the normal retail website.

    I am getting the feeling that at some point I will need to switch to TOS, but am not excited about moving all my positions. Anyone been here before and made the switch? I wish I would have been nicer to Joe Moglia when I met him! Pretty sure he will NEVER forget that landing.


  182. rpme,
    Thanks for the link to the video. Interesting, but what I got from that video is that what it would take to fix Europe, at least in the short term is (only) 2.25T. Considering the resources involved it still seems a lack of resolve more than a lack of resources is the problem. Granted, the pressure it may take to generate that resolve may create a generational buying opportunity, or not. The policy response may come before anyone reading (or listening to) main stream press might expect. Again thanks for the link.



  183. Whew, thanks guys for not ignoring me. I think I have a solution to my problem. I need to update the phone because TOS say their new version is not tested on the iPhone 3G but is tested on the 4 and 4S. Now I am bidding a lot on ebay and hopefully will have one in a couple of days. 
     
    I missed out on Iflan's trades from this morning because the app wouldn't load!


  184. USD/JPY broke 79.5 resistance
    Something different is happening this time…


  185. Good morning! 

    Asia up a point, Europe up half a point but our futures are flat so far.  

    Dollar had tested 81 but back to 81.33.  Oil just tapped $93 and it's tempting but we don't short into the holiday – just too dangerous.  Gold back to $1,578 as no QE announcement starting to bother the gold bugs.  Euro failed $1.28, back to $1.2772 and the Pound fell almost a point off $1.585 and back to $1.577, dropping like a rock to that level and blowing all of Friday and yesterday's gains and looking weak still.  79.73 Yen to the Dollar and 1.2009.   Here's why: 

    The OECD cuts its 2012 eurozone GDP forecast to -0.1% from +0.2%; U.S. forecast raised to +2.4% from +2%; China to come in at +8.2% this year, +9.3% next year; Greece -5.3% this year, -1.3% next year; Japan +2% this year, +1.5% next year. Joins calls for eurozone bonds. (OECD economic outlook report)

    Coming from the OECD's live twitter stream, "we need decisive policy action now" but "we're aware of the political economy of some of these problems. The scope for macro-economic policy is virtually exhausted." The OECD released its revised economic outlook just moments ago, warning the recovery is both fragile and uneven

    U.K. April CPI comes in at 0.6% M/M, in-line with consensus. Prices +3% Y/Y vs. 3.1% expected. Core CPI of 2.1%, down from 2.5% in March.

    The IMF says the U.K. should consider cutting interest rates and more quantitative easing. The country should prepare a Plan B for deficit reduction if those measures don't work.

    Now they are just being silly:  Not so much a Grexit as a Geuro, Deutsche Bank head of research Thomas Mayer says Greece's best chance of survival may be to stay in the eurozone but opt for its own parallel currency. The Geuro would help Greece balance its budget without Troika help, which means Greece could jettison the strict austerity conditions attached to the aid money.

    Fitch downgrades Japan to A+, outlook negative. "The country's fiscal consolidation plan looks leisurely relative even to other fiscally-challenged high-income countries, and implementation is subject to political risk."

    China plans to fast-track approvals for infrastructure projects to combat an economic slowdown, according to the state-backed China Securities Journal. The government is reportedly asking for project proposals by June 30, even for projects initially earmarked for year-end, and hasn't ruled out bringing forward next year's projects. (previously)

    Silver took a big dive back to $28, copper still weak at $3.49, gasoline failed $2.96 and back to $2.93 and nat gas pulled back from $2.76 Friday to $2.63 now.  

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    10:00 Existing Home Sales

    10:00 Richmond Fed Mfg. 

    Trying to keep its biggest client happy, Treasury has allowed the PBOC a direct link to the U.S. bond auction system, reports Reuters, making the Chinese central bank the only one on the planet that can bypass primary dealers and buy U.S. paper directly. The move should allow China to keep its bidding habits quite a bit more secretive.

    The mortgage delinquency rate rose for the first time in 9 months in April, up 0.4% to 7.12%., reports LPS. The level is lower by 10.6% on a Y/Y basis. The foreclosure pre-sale inventory rate was at 4.14%, unchanged from last month or one year ago.

    France and Germany fail to move the ball forward on the prospect of eurobond issuance at a meeting of their respective finmins today ahead of a EU leader summit on Wednesday. The Germans remain adamant against such a move, and it remains to be seen if Hollande, along with Monti and Rajoy, can shift the center of EU power out of Berlin.

    The language is couched in diplomat-speak, but the "clear aim" of Hollande, Monti, and Rajoy "is to wrest control of the EU's governing machinery from Germany," writes Ambrose Evans-Pritchard. Giles Merritt speaks of an "ugly mood" in the EU corridors of power. "(Merkel and the Germans) are beginning to understand how deeply unpopular they have become and how little time they have to act."

    Spain's banks are likely to have property-related losses in the €216-€260B range, says the IIF, which used the experience of Ireland's banks as a benchmark. The lenders have thus far reserved about €110Bm, and will generate more this year, but could need €50-60B in assistance from the government.

    "Spain is the battleground," says Michael Platt, pretty much writing off Greece. "A euro in a Spanish bank is not worth as much as a euro in a German bank," he points out, explaining why the slow-motion bank run will continue. The range of outcomes – from utter disaster to the EU printing it all away – is so wide, he suggests owning still-cheap volatility, whether it be in rates, currencies, or stocks. (complete video a must watch)

    Even a eurozone-wide deposit guarantee scheme may not stem the Club Med bank run, Matt king, as depositor fear is less bank failure risk and more redenomination risk. Slow-motion up until now, "the risks are skewed towards larger outflows occurring considerably more rapidly." 

    Japan reports holding a net $3.19T in foreign assets at the end of 2011, hanging on to its position as the world's top creditor nation. The position marks a rise from 2010, which may also dampen expectations on China overtaking the Japanese as the number one creditor anytime soon.

    Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours.

    CFR's Michael Levi casts a skeptical eye on arguments that cheap natural gas from shale will really lead to a dramatic revival of U.S. manufacturing, but he may have overlooked two factors: many petrochemical plants have been reopening in places like Louisiana and Texas, and the need for pipelines and hydraulic fracturing equipment could cause a mini-boom on its own.

    Russia objects to findings that show the country's oil production fell sharply from 10.37M bbl/day in December to 9.92M in March, sending it below Saudi Arabia in world rankings. Russia has been pumping hundreds of thousands of bbl/day more than Saudi Arabia and believes it can increase output Y/Y, Russia's Energy Ministry claims its own data show.

    The Iran premium in the price of a barrel of oil may have dropped to as low as $5 in the spot market, as worries about global demand trump concerns about supply disruption, Capital Economics says. There’s a “good chance” this week’s meeting between Iran and Western officials will raise the possibility that EU sanctions could be withdrawn, it says, a prospect the markets haven't considered.

    Shares of a number of shoe-sellling companies jump higher after Friday's double-dose of positive earnings reports from Foot Locker and Brown Shoe shine a brighter spotlight on the sector. Could troubles at Sears Holdings and J.C. Penney's be partially behind the sudden resurgence of mall-based shoe outlets? Advancers: CROX+5.5%DECK +4.1%SHOO +2.6%SKX +3%KSWS +5.2%.

     Much-maligned Best Buy (BBY +0.5%) may have hit on awinning recipe in China with a plan to expand using a store-within-a-store model that avoids the untenable overhead inherent in its U.S. operations. The company will also push its technology services to small businesses – beefed up considerably with the purchase of mindSHIFT last year – as its plan to evolve out of standing chiefly as Amazon's showroom marches forward.

    Henry Blodget sets a target range of $16-$24 for Facebook (FB -11%), based on a valuation of 20x-30x a 2013 EPS estimate of $0.80. Blodget's retort to those bullish due to Facebook's growth potential: Facebook has already been working on monetization for years; Mark Zuckerberg cares more about Facebook's "social mission" than its business; and the company's next billion users, weighted towards emerging markets, will be much less valuable than its first billion. (previous)

    Sony (SNE) recently began mass production of "in-cell" touch panels that will be used in Apple's (AAPL) next iPhone, theTaipei Times reports. It's added Sharp (SHCAY.PK), Toshiba (TOSBF.PK), and LG Display (LPL) will also supply Apple with in-cell panels, which can reduce a device's thickness and weight relative to conventional touch panel tech.



  186. Leveraging the patents the companies 
    acquired last year from Nortel, AAPLMSFTRIMMSNE, and ERIC have officially entered the patent-trolling business via the Rockstar Consortium. Funded by the aforementioned companies and owning 4,000 ex-Nortel patents, Rockstar examines tech products for evidence of infringement, and demands licensing fees when it's found. Since Rockstar, unlike its owners, doesn't make anything, it can't be countersued. 


  187. SA/Jerconn – Those guys are out of control.  Of course you can publish whatever you want as an instablog – unless they changed that rule…

    SKX/Ceegee – Because of the shape-up thing, I'd take $7.50 off the table on the $10s and that leaves you with the naked $14 caller ($4.10) and the short 12 puts (.50) and that's $1.40 of premium between the two.  If you have to cover, you can pick up the Jan $16/21 bull call spread at $2 and you still have $4.50 in your pocket, which is more than you get on the full spread, and your worst case (under $21) is you'd owe the caller $2 and end up with $2.50 but, if you are worried about that, you can pick up another $1.50 by rolling your short putter to the Jan $16 puts ($2.10) but then you're back to bullish(ish).  

    Open interest/Robert – That would be useful.

    SQQQ/DrM – Looks like about $2 at the moment and you can get $5.50 for the $49s.  I agree with the credit roll, it's a good way to extend the insurance. If you don't want to take your 42% profit and run.  

    TQQQ/Canuck – That's what it's all about – always a group effort.

    Best indicator/Canuck – Bespoke runs this chart (usually the 50 dmas) once in a while and it is useful at the extremes to indicate probable tops and bottoms.  Always feel free to link it as it's one that's not in my normal rotation but certainly useful.

    Spain/Rpme – Still scary.  

    Big Chart with a perfect illustration of a weak bounce (if it stops here).  All about the Nas which stopped dead at the -5% line and the S&P is right behind so we'll watch those today very closely.  It's not drawn but the NYSE bounced right off that -7.5% line and the Dow did too with a bit of an overshoot and those are good signs – especially if they keep going and hit 7,600 and 12,600 today – erasing Friday's loss.  Less than that will be very disappointing.  

    Saves/Newt – Once you lose 50% of a position, you need a double to get even.  How many doubles do you get?  This is why it's foolish to let yourself lose 50%.  

    Testing/Knight – Why not open up a paper money account on TOS and play with that?  It will help you decide on the switch.  You can transfer your positions to another broker but it can take 7-10 days so you'd better be super well-balanced to do it.  We had a cash call a few weeks ago and that would have been a great time to just cash out and start fresh – those are the kind of opportunities I look for if I have to switch and account. 

    LOL Jabob – So true! 


  188. I don't really understand the juxtaposition between Japan's ratings downgrade and the fact that its still the top creditor nation in the world. 


  189. PHil, this AM, Zaky published a sequel to yesterday's SA comment, FWIW…
     
     The Editor-in-Chief of Seeking Alpha apologized for his junior editor’s stupidity, and came down on the editor. I was happy to hear that because that editor would not listen to me no matter what I told him. The Editor-in-Chief of Seeking Alpha is actually a pretty smart guy and pretty nice. So it sucks he had to apologize for some his juniors.


  190. KMI worth a look – for those looking for alternative nat. gas plays  - 
    KMI is the general partner for KMP – and it trades as a stock not an MLP so no K1.
    I love KMP – good management and had a great yield until the crazy run up of last year – MLPs and sector can get sold off hard in panics so would look to pick up shares should we go down another 5 – 10%.
    The general partner runs the MLP and receives an incentive distribution – they also own 11% of KMP -
    IT's the opposite of CHK – well run, stable, toll road business – essentially collect fees for use of their natural gas and oil pipelines -


  191. jerconn – japan – that was an odd aside -
    what they did not mention is that Japan has to roll over a massive amount of debt this year


  192. sam3700 – If you're onto Kinder Morgan, check out KMR – it is equivalent to KMP but grants stock rather than dividends and so avoids the K1…may be a better long term holding than KMI…(I said nothing about Japan…)


  193. bby???


  194. And BBY beats…. going back to $19.50 on pre-market! That's going to help a little bit.


  195. With Cory Booker yapping and Donald Trump blabing a blue streak on CNBS, I guess there will be no ocean breeze at my house today…..


  196. stfeanluc……The new 50k MoMo I started yesterday.   Do you want to keep the spreadsheet or shall I?