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Friday Fake Out – The Bear Trap is Sprung!

Oh you people are such suckers!

You panic out of positions at rock bottom prices and you'll sit there like a deer in the headlights when we bounce back until we're already too high again and then you'll chase the top – only becoming fully invested after we've already exited.  Don't blame me – I try to warn you, but no one listens to me.  

This morning the markets are in full panic more and that's fine with us as not only are we still "Cashy and Cautious" but what did we tell you Wednesday morning?  "TZA July $19/25 bull call spread at $1.50, selling $18 puts for $1.05 for net .45" along with EDZ at $17.23 and SQQQ at $51.80.  SQQQ is at $53.79 (up 3.8%) and EDZ is $17.90 (up 3.9% and the TZA hedge is already at net .80, which is up 77% in just two days (so far) – now that's a hedge!   When you have your hedges in place, THEN you can bottom fish with impunity and boy is the fishing good out there!  

Today we get our Non-Farm Payroll numbers and there's a rumor out there that it's a big miss at 120,000 or lower.  CNBC has been pretty much reporting it as a fact all morning and Europe is freaking out for that and many other reasons so I had occasion to look back at last month's NFP report, where we predicted it would be a miss with the the title:  "The Blow Jobs Deal to the Market Could be Huge."  That was 10% ago on our indexes are back to testing last week's lows, where we began to get bullish with our Twice in a Lifetime List of stocks that are back at their 2009 panic lows which we still like enough to sell puts in (giving us an additional 15-20% discount on initial entry).  

That post capped off a week of bearish picks as we followed through with our plan to cash out into the April rally – it's those bearish profits we're now GAMBLING with as we bottom fish but, as noted above – we're hedging our bullish bets because there's no limit to how badly investors can freak out in the stock market – CASH remains KING!

A quick review of the week leading up to the last NFP report is a nice view of how we played the Euphoria at S&P 1,415 (trade ideas pulled from Member Chat):

(4/30) April 30th and All is Well – ROFL!

  • PCLN July $620 puts at $11.45, now $33.50 – up 192%
  • EDZ June $14 calls for $1.22, now $4.58 – up 275%

(5/1) Technical Tuesday – Holding the Line on Light Volume

  • 3 CHK 2014 $25/35 bull call spreads at $1.85, selling 1 $18 put for $4 for net $1.55, now -$1.20 – down 177% (I like it better for a net $1.20 credit!)
  • SQQQ June $11 calls at .75, now $2.25 – up 200%
  • SCO June $30 calls at $4, now $19.50 – up 387%
  • DIA July $122 puts at $1.14, now $1.35 – up 18%
  • USO June $39 puts at .85, now $6.40 – up 652%
  • SCO June $30/33 bull call spread at $1.80, selling May $34 puts for $1.65 (expired worthless) for net .15, now $2.95 – up 1,866%
  • SCO June $33/36 bull call spread at $1, now $2.85 – up 185%
  • VXX June $15/18 bull call spread at $1, selling June $18 puts for $3.20 for net $2.20 credit, now $2.20 – up 200%

(5/2) Will We Hold It Wednesday – NOW It's May

  • CHK Jan $12.50/17.50 bull call spread at $3, selling $17.50 puts for $3.20 for net .20 credit, now $1.20 credit – down 500% (I still like it!)
  • CHK June $15 calls at $2.75, now 2.35 – down 15%

(5/3) Thursday Follies – Europe "Fixed" Again

  • LNKD June $90 puts at $3.30, now $2.45 – down 26%
  • 4 LNKD July $120 calls at $6.30 ($2,520), selling 5 May $110 calls for $6.20 ($3,100) for a net $580 credit, now $560 – up 196%
  • LNKD June $110/100 bear put spread at $5.60, now $7.70 – up 37%
  • LNKD July $120/95 bear put spread at $12.50, now $17.10 – up 37%
  • GMCR 2014 $25/35 bull call spread at $2.70, now $3.05 – up 13%
  • GMCR 2014 $25 puts sold for $8, now $9 – down 13%
  • ABX 2014 $30/45 bull call spread at $6.60, selling 2014 $30 puts for $3.40 for net $3.20, now $3.40 – up 6% (still a nice play) 
  • USO June $39 puts at $1.40, now $6.40 – up 357%

(5/4) Friday – The Blow Jobs Deal to the Market Could be Huge

  • EDZ June $12/15 bull call spread at $1.10, selling $13 puts for $1 for net .10, now $3.10 – up 3,000%
  • EDZ July $13/17 bull call spread at $1, selling $12 puts for $1.10 for net .10 credit, now $2.30 – up 2,400%

Of course we took a few bullish pokes along the way but that's what you are SUPPOSED to do with bearish profits.  Mostly, as we are doing again this week, they were LONG-TERM entries by selling puts that are far out of the money.  Our biggest mistake so far was not staying bearish through the bounce, but this very poor NFP report (+69,000 AND last report revised down to 79,000) bookends the month quite nicely.  

Clearly if we have no stimulus over the weekend, we'll be shifting much more bearish but we have our hedges and we have our cash and this is HOPEFULLY the bottom of that emotional chart where we have Capitulation, Despondency and Depression or, what we at PSW like to call – "a fantastic entry opportunity" in exactly the same way that Excitement, Thrills and Euphoria were our signal to head for the exits and flip short.  

Again, I can only warn you about what's going to happen and suggest some trade ideas that might benefit.  This is the blow-off bottom we've been waiting for and we'll see how much damage is done on this "terrible" news, which is exactly the kind of news that DOES put the Fed back in play.  I don't like that our bullish investing premise is based on anticipation of Government interference but we have to play the cards we're dealt and, if this NFP report doesn't put the Fed and the other Central Banksters into action – then we'll be shorting this market down another 10% next week but, for now – it's time to fish!  

I went over some bullish Dow components that I liked in Member Chat earlier this morning and I'm sure we'll have plenty of nice trade ideas once the market opens.   Oil touched our long-term target of $82.50 (/CL) after the NFP report and of course that's a bouncy spot to go long and XLF may hit our $13.50 bottom target and, best of all, TLT could be up in the $130s, where it makes an excellent short – yes, it's going to be a fun day today and, if we head lower and Monday sucks – please note those two EDZ hedges from the 4th were our best gainers and that was AFTER the Dow already dropped 200 for the week – we know how to layer our hedges – that's not a problem (see yesterday's morning Alert to Members for our 2 recent aggressive short plays) – I just don't think we're going to need to.

Have a great weekend,

- Phil

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  1. Good Morning.

  2. Good Morning!

  3. Well it looks like no bounce today…. or that will have to come fast and furious!

  4. There's a nice red candle.
    HELLO QE3………

  5. Sucks! More QE perhaps?

  6. I will be doing a little "shopping" today…..

  7. FYI, the S1, S2, S3, PP, R1, R2 and R3 lines for the EUR/CHF are all at 1.2009!

  8. Eh, I'm going surfing today.  Let the hedges work and hopefully do their magic!

  9. News Flash!
    GS just said buy bonds, sell equities…….
    Just Kidding.  :)

  10. China PMI Manufacturing (MAY) / 50.4 (52.0 expected)
    China HSBC Manufacturing PMI (MAY) / 48.4
    Switzerlan SVME-PMI (MAY) / 45.4 (47.4 expected)
    Italy PMI Manufacturing (MAY) / 45.4 (43.5 expected)
    France PMI Manufacturing (MAY F) / 44.7 (44.4 expected)
    Germany PMI Manufacturing (MAY F) / 45.2 (45.0 expected)
    Euro-Zone PMI Manufacturing (MAY F) / 45.1 (45.0 expected)
    Italy Unemployment Rate (APR P) / 10.2% (9.9% expected)
    Great Britain PMI Manufacturing (MAY) / 45.9 (49.7 expected)
    Euro-Zone Unemployment Rate (APR) / 11.0% (11.0% expected)
    Canada GDP (YoY) / 1.6% (1.9% expected)
    US Non-Farm Payroll / 69K (150K expected)
    US Unemployment Rate / 8.2% (8.1% expected)

    And keep in mind, some numbers are in green because the beat expectations, but all of them still indicate a contraction. So it's not a mixed bag this morning, it's a lump of coal!

    At 10:00 AM EST we also have the US ISM Manufacturing – 53.8 is expected. That could be the coup de grace!

  11. The European indices didn't like these numbers either… DAX is now below S3 for the day, down 3.6%. That's panic… The CAC40 is down only 2.7% in France!

  12. Looks like TLT will open over $130… Just unreal!

    FAS is quoted to open 5 points down at $73.50. It's going to be an interesting day all around.

  13. Pharm/10yr.
    You know if you were playing on the Price is Right, you would go home with….a basket of fruit….. ;)

  14. Oil is now sitting right at S3 at 82.87… And to think that 3 months ago we had all these guys on CNBC telling us that we would never see oil at 85 again! 

  15. Down goes FB!…..again

  16. I'm sure this is nothing more than coincident

  17. Lionel, did you play the bounce of S3 again today? You have been right just about every day there.

  18. Oh so happy today I never sold those FAS 75 puts.  Finally I made a correct decision on FAS.

  19. Phil- I can only hope you are correct- that this is a bear trap- I fear what will happen if it is not!

  20. Phil,
    Are you now ready to go into the Income portfolio and should we now take entry positions on the TWIL list; or do you still see more blood on the floor.

  21. Phil/Nobody Listens

    That's not true…..I listen big guy.

  22. We need to find some Panic plays for Germany

  23. /CL and /DX crossing?


  25. Well, gold thinks things are heating up for more QE…..I still say, not.  We don't need no QE, we need jobs.  Fix the roads, bridges, damns, put solar on houses (Phil's idea is great on that one), and let people stay in their homes with a loan (Phil's gov't assistance on that one is good as well).  Otherwise, split the banks into investing and banking… frickin' hard is it?

  26. Look at the dollar…. down 0.50 in no time.

  27. Panic play for Germany?

  28. Where's my beer?…..

  29. Good morning!….Gold is off to the races!

  30. Now they are pounding the dollar.  I am going to short FXE once again, what BS.

  31. This market absolutely confuses me.  I feel like I should be short, but then I thought that way back in October as well and the market went straight up for 4 months.

  32. Cash, Cash, Cash

  33. Pharm, I agree, no more QE. A good read is David Einhorns Jelly Donut article in the Huffington Post.

  34. Phil any thoughts on the DIA jul 124/129 bcs for 1.86?

  35. what just sparked the turn around in – currencies just went nuts – with risk rallying - 

  36. spain posts balanced budget – you are joking right? 
    Market watch

  37. Gonna have to take a stab at a bounce if DJI drops another 20 (12,200)

  38. Morning All – Is anyone going long oil here?

  39. TLT – the roll to the Sept. 115 is 0.60 (!!!) – is today the day to take it?

  40. Good morning! 

    Jasu asks whether we are ready to go into the Income Portfolio and take entry positions on the TWIL list.  That's a good question in that I bet a lot of people feel this way but if you rephrase that as "Should I take the money my mother needs to live on for the rest of her life and gamble that this is the bottom and not the beginning of a global market collaspe?" – I think the answer is obvious.  

    We cashed our the Income Portfolio BECAUSE it was a difficult market to play and BECAUSE we were worried there would be a crash.  Once we got to cash – we became HOPEFUL there would be a crash so we could get very cheap entries on the new batch but there's little harm in waiting.  If the Fed steps in – then we have 3-6 months of bullish markets to play with.  If the market collapses – Cash remains King for a very long time.  

    Slow and steady wins the long-term investing race and MAYBE we'll see a couple of irresistible deals next week like SVU and GNW and XLF and AA but MAYBE Europe will be in flames and we can do 50% better – even on those gems.  So let's not rush off the sidelines – this is why Football teams put all the big, dumb guys on the line where they can bash their heads in while the smart guy with the ball fades back, glances over the field and looks for a high-percentage play to make.  Sure, half the time that play doesn't work out anyway but, when it does – it can be a big score.  

    The Dollar already fell back from 83.67 , all the way back to 83 because QE Fever is back baby!  Gold is at $1,600 (go ABX!) and silver is $28.22 and copper is still pathetic at $3.34 with nat gas at $2.36 and gasoline at $2.67.  Oil is back to $84 from $82.50 and our markets are opening down about 1.5% except the RUT, which is down 2.2% in the Futures (/TF) and a nice long there.  

    Germany is down 3.3%, France down 2.5%, UK down 1.5% – all terrible, terrible stuff but it is a good time to hit the TWIL list if you are SPECULATING – just don't confuse it for investing!  

    I wish we had opened lower but we've already retraced 50% of the drop in the Futures so let's just watch our lines and see what sticks.  1,284 is the 200 dma on the S&P and we don't want to lose that or Dow 12,200, Nas 2,775, RUT 740 or NYSE 7,300.  XLF $13.50 is very important too and be aware that the Dollar dropping (on QE rumor) is masking additional weakness (now 82.85) and that can turn fast if the EU gets more bad news. 

    Let's be very careful out there – it's times like this that we learn to appreciate a cashy position!  

  41. or how about rolling DMND jun 20c to jul 21 calls for .15 credit?

  42. VLO $20.50 starting to get back into range.

  43. NASA just release the Friday "Galaxy Collision Report" and it's not good!  Estimates revised down to 1 Billion years! More bad news to take us down :)

  44. Looks like we could DD the entire portfolio for about $5 and a Snickers bar!

  45. Galaxy / Burr – I saw that and I was already thinking how we could hedge that? TZA, EDZ? Are you thinking flight to safety maybe and go long TLT?

  46. Hmmm, FCX positive.

  47. I wish we'd have a capitulation day already.

  48. The 2 FAS positions are sinking like one rock attached to a bigger rock now…

  49. CHK announces a new discovery

  50. Burrben / NASA — Would love to have a front row seat!

  51. Looks like AAPL is holding out better than the rest of the market. Although there was some good money on the table yesterday as I mentioned.

  52. burrben – go surfing already! ;)
    (where so you go?)

  53. Here ya go Phil

  54. shoulda been "where do you go?"

  55. Good Morning--is it panic time yet!!!!!

  56. 1.2009/StJ – ROFL, that's funny!  

    Surfing/Burr – Great plan.   I'm just hanging out and cranking up The Clash myself….

    Drachma test/Yshen – That's not a coincidence, that's positioning for an announcement, more likely.  

    Hope/Jthom – Not a valid investing strategy.  We learned in 2008 that there is no bottom in a panic so we mostly have to let this play out but hopefully this gives us a bottom with 20M shares traded on the Dow in the first 20 mins.  

    Thanks Exec but I didn't mean you guys – the posts are for the broader audience.  

    Dollar bouncing off 82.75.  

    How hard/Pharm – You would think they could have a 5-minute meeting and get this done.  I was so frustrated when I went down to the Fed and presented the home loan idea to them and the staff liked it but Geithner dismissed it with "they'll never go for it" and that was that.  It's not enough to solve a problem, you have to solve a problem in a way that lines the pockets of Congresspeople or they'll have no interest in helping anyone – that's the road to ruin this country is on. 

    AAPL trying hard to hold $570.

    DIA/Sage – I like it as a gamble but we could be down 500 more next week so I'd go small on entries but easy stop if 12,200 doesn't hold if you want to be more aggressive.  

    Spain/Samz – It's a Festivus miracle!  

    Oil/Ink – At $82.50 yes, over $85 yes – in between is just too scary. 

    TLT/$25KP, $5KP, Yshen – Yes to roll the TLT Sept $110 puts to the $115 puts for .60 – that's what we've been waiting for!  

  57. Another test of the 1290 level which is the confluence level of the 10 and 20 month MA:
    Like Phil says: the market tends to want to form M patterns, so we could spend some time under that 1290 level.

  58. DMND/$25KP, Sage – Yes, we need to roll before the weekend dries up our premium (or a lower VIX!).  The $20 calls are now $1.70 and the July $19s are $2.70 so I'd rather spend $1 to make that roll and sell the June $22.50 calls for .60 to pay for most of it.  

  59. GLW positive!

  60. Did I miss something? Didn't ISM miss? 

  61. Kinki / chart — Thanks!

  62. CHK/Yshen – They better have discovered $3Bn!  8) 

    Gold $1,610!  

    LOL Exec!  You can tell it's a Conservative joke because it's homophobic…

    Dow volume 26M at 10:08, slowing fast.  

    Panic/Savi – I wonder what would happen if we got everyone to run into the streets and scream at the same time?  This is why they don't give me a TV show – I'd do that in a heartbeat…

    M pattern/Kinki – That's what I'm afraid of, that leg could go back to 1,000 to complete the big M:

    Notice the kind of volume that formed the last bottom?  We are MILES away from that – even if you just want to see a relative move up.


    ISM/Ink – Sure but it wasn't a big miss…  

    May ISM Manufacturing Index: 53.5 vs. 54.0 consensus and 54.8 prior. Prices index 47.5 vs. 61.0 prior. Employment 56.9 vs. 57.3. Inventories 46.0 vs. 48.5. New orders 60.1 vs. 58.2.

  63. ISM 53.5 (53.8 expected)

    Not a huge miss… And we look great next to the rest of the world as we are still showing expansion and they are contracting.

  64. TLT – Just to confirm, we are getting rid of the $110s at about $0.66 and buying the $115s at about $1.30?

  65. Baird timing on their FB bull call reminds me of ALL of those analysts upgrading PCLN last month…

  66. Anyone else having trouble with RSS/Atom feeds? Mine stopped working yesterday. 

  67. Phil/Homophobic   Aren't they all?….The jokes that is….. ;)

  68. GS approaching multi year lows…..

  69. Phil FAS should we not buy back the Jun12 89c sold for 2.22 now .44 or just let it die peacefully ?

  70. FAS / Yodi – I would be of the opinion to kill it by end of day in case they kick the can further this weekend. I guess we can always sell more on Monday!

  71. Friday anecdote for everyone (real life is always so much funnier than what you can make up!):
    Our company just scheduled a project for a new building to be called "QE Academy"…(insert your punchline here).

  72.  most important "take away" from action thus far imho is the significant outperformance of the commodity sector….miners are super-stong… copper stocks also looking good (billy ray [FCX and VALE])…. the coal sector is festering hard off the lows.
    of course this has something to do with QEIII speculation…. also a good sign this sector may have flushed out… now ready to move higher…so phil that gold play of yours plast week looking v good

  73. Thanks StJean but I unfortunately I was having dinner.
    So no futures trading during dinner…it is a sin!
    BoJ intervened – EUR was too weak.
    As of this morning Yen is now directly calculated to its yuan value without crossing via USD.
    I would say we could see a lot of EUR positive intervention.
    North Asia block (China-Japan-SKorea) have very good reasons to keep EUR strong and devalue their currency to compete against USD economies.
    I am long Euro/USD and short JPY/USD (better price on vol than the EUR/JPY cross)
    Hopefully it will work out for me

  74. angel / flush — On the flipside  MT, X and AA down.

  75. Looks like you'll have another shot at S3 lionel!

    Good reasoning about the currencies – at this point everybody is trying to devaluate their currencies. It's going to come down to who has the most paper it seems!

  76. Phil can you please go over the TLT roll and implications one more time please?  I am in 2x the Sep $110 puts for a net cost of $.97 after yesterdays DD at $0.67.  With a roll to the $115s I am investing $600 more, bringing my net to $1.57, correct?  With the $115s at $1.30, I am now down only $.27 as opposed to $.30 but with more cash deployed and a higher strike?

  77. Can I say Barrack Obama's chance for re-election is toast?
    Not to ruffle anyones feathers, but….
    Romney has many negatives to discuss about the past 3.5 years
    Romney has shown he'll say anything as fact, even when comments by others are taken out of context
    Todays Unemployment report
    and lastly, this….
    I'm willing to offer up Joe Bidens seat to anyone that can fire up the Democratic base…..
    Even Hillary.   :)

  78. stjeanluc
    FAS let's see what gives will be a very trying day. 

  79. Non Sequitur by Wiley Miller :-)

  80.  diamond   :)

  81. TLT/Ink – Yes, it's a roll from one to the other, hopefully for .60 and not .64. 

    RSS/Kurt – We were having trouble with RSS slowing down the site so the Network guys are setting up a special RSS mirror server which will handle those requests in the future.  

    FAS/Yodi – Kind of a waste of .44, don't you think?  From $72, not too much danger of triggering the $89 short calls.  If they go down to .30, I'll probably change my tune.  

    QE Academy/Chuck – Could be a sign.  

    Bottoms/Angel – You would hope so at this point!  

    TLT/Rperi – That's right, net $1.57 on the Sept $115 puts, which are $1.29 so no major loss yet they were at $5 a month ago and we have almost 4 months to expiration – plenty of time to scratch out a profit.  

    Romney/1020 – He will grace us with his presence on CNBC at 11.  

    SOX are collapsing but WFR is up a penny! 

    What time does Obama come on to celebrate the jobs numbers?  

  82. Phil – What did you think of Clinton's comments on PE?  Brutal huh?……

  83. "The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell."
    -- Sir John Templeton

    I think we're getting close.

  84. From Doug Kass:
    "In the end everything will be all right. If it is not all right then it is not the end."

  85. 1020 – Im going to have more faith in the intelligence of the American people than that. Of course someone on this board posted a pretty funny quote a year or so ago… I believe it went something to the extent of, "no one ever went broke underestimating the intelligence of Americans. "
    I for one hope that people realize we are suffering from 8 years of W…Further, they can only really blame him for the first 2 years of his administration b/c the last two his hands have been tied by a congress who wont pass ANYTHING.

  86. diamond/quote – sounds like a line I heard last night in a Hindi movie.

  87. I hear u nicha

  88. TNX at 14.55

  89. Oil – $82.50 is a 78.6% retracement between the October low and the February highs… 

  90. So anybody think there will be a stick today?

  91. Jrom – I think that you are overestimating the attention span of the American people….

  92. jromeha – Hope you're doing well!
    The right has done a great job focusing – unfairly – on the past 3.5 yrs and most americans are unaware or don't care that we have an uncooperative Congress. It's all on the President.
    We all (most) know and understand the facts. That's why the Dems have to press the "what will happen" discussion and do something radical to fire up the base.
    I am, punching my ticket for OBAMA

  93. rustle
    close to which?

  94. I'm issuing a punchline challenge for the QE Academy (let's add a little light to a dreary data day), my first offerings are below:
    QE Academy to open in US…
    - Payment terms for tuition are Net 30 years.
    - Printers are issued to all students upon enrollment.
    - Celebrating 20 years of success in Japan with international expansion!

  95. The job of the President is to instill trust and confidence and faith in his leadership. In turn, consensus towards a plan will be achieved and progress made. The fact that this president has not and can not produce consensus on any plans is a failure of his leadership. You can defend him all you want, but the fact is he has been ineffective. Leadership extends beyond party lines and great leaders are able to overcome stubborn resistance. Regardless of who holds the office next they will have to exhibit leadership skills. Otherwise, they will fail just as this President is failing.

  96. Phil,
    What do you think about ALU? The business they are doing is LA and Asia, but Europe is going to have to upgrade communications at some point or risk becoming the new 3rd world.

  97. Romney is willing to wrestle with the pigs in the mud…..

  98. newbie/close
    Thinking temporarily we are close to bottom.  Lot of things are starting to get very oversold and now with oil coming down as quick as it has, that usually helps the economy and corporate earnings.  Though I've never seen gas pumps slower to react with prices.  Gas has not gone down that much at all, usually it's a 3 week lag but this is incredibly ridiculous.

  99. QE Academy: leave your scruples at the door!

  100. At the open: Dow -1.29% to 12234. S&P -1.51% to 1291. Nasdaq -1.78% to 2777.

    Treasurys: 30-year +0.68%. 10-yr +0.39%. 5-yr +0.12%.

    Commodities: Crude -2.96% to $83.97. Gold +2.58% to $1604.55.

    Currencies: Euro +0.36% vs. dollar. Yen -0.18%. Pound +0.13%.

    Market preview: U.S. stock futures, already following European bourses lower on more evidence of a deteriorating global economy (III), sink further (S&P -1.7%) after May jobs data fell far short of expectations. Treasury yields and crude oil futures plunge to new lows, while gold and the dollar rise. Still ahead: ISM manufacturing, construction spending, U.S. auto sales.

    10:00 AM On the hour: Dow -1.55%. 10-yr +0.5%. Euro +0.28% vs. dollar. Crude -3.21% to $83.75. Gold +2.49% to $1603.15. 

    11:00 AM On the hour: Dow -1.76%. 10-yr +0.53%. Euro -0.03% vs. dollar. Crude -3.81% to $83.23. Gold +3.07% to $1612.25

    Boston Fed President Rosengren suggests a continuation of Operation Twist beyond June would be appropriate given his opinion the central bank needs to provide more stimulus. "That would have the impact of helping to reduce longer-term interest rates without expanding our balance sheet," he says. The 10-year is at 1.5% – what does he want? Japan?

    QE3 on the way? Think again. Just a month ago, before stocks tanked 6% in May, a bad jobs report would have been seen as a signal for Bernanke to jump back on his white horse and save the economy. But as Treasury yields plummet, the markets have already done what Bernanke would have attempted to accomplish.

    The "Peeps" hated bonds 30 years ago and they love them today, writes Kevin Ferry (with annotated chart) in maybe the only Treasury market analysis you need. The "Peeps" are as wrong "as they were when I walked on the floor in 1984. Wrong today, this minute, next week? Who knows."

    "The message to politicians – you're losing control of the situation," Mohamed El-Erian tells Bloomberg TV following the NFP miss and continued deterioration in Europe. Markets are taking the prices of safe assets to "ridiculous" valuations. That would seem to make them not so safe, one would think.

    The New Fear Gauge: Treasury Yield (WSJ)

    U.S. Manufacturing PMI: 54.0 (above 50 = growth) vs. April's final read of 56.0. New Orders 54.6 Vs. 56.9. Backlogs of Work 51.6 vs. 52.2. Input prices 55.8 vs. 63.1. Output prices 52.7 vs. 53.9.

    May ISM Manufacturing Index: 53.5 vs. 54.0 consensus and 54.8 prior. Prices index 47.5 vs. 61.0 prior. Employment 56.9 vs. 57.3. Inventories 46.0 vs. 48.5. New orders 60.1 vs. 58.2.

    The ISM report may have missed expectations, but the "internals" (defined as New Orders minus Inventory) continue to improve rather smartly. It's likely a good part of the decline in the headline number came from a big drop in prices paid (from 61 to 47.5).

    May Nonfarm Payrolls: +69K vs. consensus of +150K, prior 79K (revised). Unemployment 8.2% vs 8.1% expected, 8.1% previous.

    More on NFP: Civilian labor force participation rate posts a rare increase, +0.2% to 63.8% (there's your bump in the headline UE rate). Average hourly earnings up 2 cents, +1.7% Y/Y. Total negative revisions for March and April to the household number of 49K jobs.

    May Monster Employment Index: +1 to 147, up 3% Y/Y. 13 of the 20 industries showed positive annual growth trends.

    U.S. job growth is coming entirely from workers getting part-time jobs. The number of Americans working full-time fell by 266K in May, erasing all the gains of the past three months; total employment rose only because 618K more people got part-time jobs. People classified as “part time for economic reasons" – i.e., they can’t find a full-time job – jumped 245K to 8.1M.

    Apr. Personal Income and Outlays: Income +0.2% vs. +0.3% expected, +0.4% prior. Personal spending +0.3% vs. +0.3% expected, +0.3% prior. PCE core price index +0.1% m/m vs. +0.2% expected, +0.2% prior. 

    The ECRI Weekly Leading Index falls to 122.4 in the week ended May 25 from 123.0 previously (revised down from 123.1). It's the lowest level since early January and the annualized growth rate declines to -0.6% from 0.1% previously. The ECRI director has been the subject of a bit of ridicule for his insistence the U.S. was headed for a slowdown.

    Germany budges, supporting a European Commission proposal to give Spain more time to reduce its budget deficit. "We recognize that because of negative economic developments, it will be difficult for Spain to reach its goals," says a finmin spokesman. Who knows, maybe this accounts for Madrid's outperformance today.

    "Let's start printing euros ourselves," former Italian PM Berlusconi tells party members. "Germany should leave the euro if it doesn't agree with the ECB serving as a lender of last resort."

    Irish bonds make a big move lower in yield (higher in price) on back of the Irish referendum result, the country's 2-year notedropping 81 bps to 6.6%. The yield was north of 20% last summer. An interesting case study will be why the Troika medicine seems to be working well in Ireland, but not elsewhere. IRL +8.4% YTD.

    The bankruptcy of Stockton, CA is "inevitable" according to a lawyer for the City Employees Association, who says the numbers demand it. If so, it would be the largest city (pop. 292K) to seek protection in U.S. history. City Manager Bob Deis still holds out hope this can be avoided – "The city needs to tighten the belt."

    Macau gambling revenue grew at its slowest rate in close to three years after higher rollers slowed down their pace a bit. Gambling revenue for May was up 7.3% Y/Y, after April saw a 22% gain. Premarket: MPEL -6.5%WYNN -2.9%MGM -3.5%.

    Gold mining names show early strength, as gold futures gain nearly $40/oz. following weak jobs data: ABX +4.8%AUY +5%IAG+6.2%NEM +5.3%GFI +3.4%GOLD +5.1%. For today at least, gold resumes its safe-haven status.

    If things continue as is, we may find out this summer if oil  sub-$75/barrel is better for the U.S. economy than DJIA 12K. WTI crude falls another 2.5%, now at $84.42, down $22/barrel in a month and a day and the lowest price since mid-October. One wonders how much longer the Fed will allow the experiment to run. 

    Like a cat playing with a still-breathing mouse, Liberty Media (LMCA -1.6%) CEO Greg Maffei tells CNBC that the companyisn't in a rush to make a final decision on how big its stake in Sirius XM Radio (SIRI -1.0%) will ultimately grow to and that he would like to see Mel Karmazin stay on as CEO of Sirius.

    Lawyers for News Corp. (NWSA -1.6%tip off that the company has already been slapped with 110 lawsuits tied to phone hacking and could ultimately see more than 500 before all is said and done. Last month, the company reported spending $167M in legal fees and settlements tied to the ill-fated policies of the shuttered News of the World - a mark that seems destined to go much higher.

    And the tights are SENSATIONAL!  Superheroes are stepping out of the closet at DC Comics (TWX) and Disney (DIS), as recent versions of the Green Lantern and X-Men comic book series touch on the sexual preferences of major characters. Despite some organized protests over the decision, both companies expect the plot twist to help the franchises appeal to a broader audience.

    Chrysler (FIATY.PK) May U.S. sales: +30% to 150,041 vehicles, recording its best May sales gain in five years. Total cars up 45% to 46,928; trucks up 24% to 103,113. Town & Country up 56% to 10,323. Jeep Wrangler up 44% to 14,454. Grand Cherokee up 40% to 13,724. (PR)

    Ford (F) May U.S. sales: +13.2% to 208,993 vehicles. Cars +6% to 79,888: Fusion +8.9% to 26,857, Focus +11.1% to 24,769, Mustang +57.8% to 10,427. Utilities +12% to 61,271: Escape -0.3% to 23,077, Explorer +10.1% to 14,662, Edge +23.9% to 11,749. Trucks +21.1% to 75,108: F-Series +29.3% to 54,836, E-Series +31.4% to 14,160. (PR)

    GM (GM) May U.S. sales: +10.9% Y/Y to 245,256 vehicles. Chevrolet +10.2% to 177,943; GMC +19.3% to 38,877; Buick +19.2% to 18,565; Cadillac -15.1% to 9,871. Highest overall monthly total since August 2009. (PR)

    Toyota (TM) May U.S. sales: +87.3% to 202,973 vehicles, coming off of a 2011 comparable influenced by the earthquake in Japan. (PR

    Volkswagen (VLKAY.PK) May U.S. sales: +28.4% to 38,657 vehicles. Jetta -9% to 15,175, Passat 10,178. Best overall YTD sales since 1973. (PR)

    Jefferies' Peter Misek has downgraded H-P (HPQ) to Hold, arguing its restructuring efforts won't be enough to offset Euro weakness and declining PC and printer sales. Moreover, Misek thinks Windows 8 will actually be a negative for PC sales, as its emphasis on touch accelerates tablet cannibalization (ed: is this really a problem for H-P if it sells a lot of Windows 8 tablets?). HPQ -2.7%, joining the market's post-NFP selloff. 

    Though RBC recently expressed optimism that NAND flash prices are bottoming, DRAMeXchange estimates contract prices fell another 6%-9% in the second half of May. Moreover, the firm believes buyers are cautious about placing orders due to macro concerns and price drops, and doesn't expect new smartphonestablets, andultrabooks to provide a major lift to demand until Q3. NAND vendors SanDisk (SNDK -2.9%) and Micron (MU -3.7%) are following the market lower today.

  101. Facebook (
    FB -5.9%) has given back all of the gains seen in late trading yesterday. While Baird has issued a bullish report, theNYT has a less-than-glowing column about Facebook's Sponsored Stories product, noting its spotty ad-matching capabilities and privacy issues. Meanwhile, the L.A. Times reports on how some U.S. teens are souring on Facebook relative to Twitter and Tumblr, due to privacy concerns. (previous)

    Groupon (GRPN -8.9%) is diving to new post-IPO lows on share lockup expiration day. The decline adds to the sizable losses Groupon saw yesterday ahead of the expiration, which allows ~600M shares held by insiders to be sold for the first time. It was less than 3 weeks ago that Groupon staged a massive pre- and post-earnings rally.

     Pluto-Killing Astronomer Wins Kavli Prize for Astrophysics (Wired)


  103. dclark41 – Kinda hard to lead when…..
    Those comments where actually made just after the election in '08.

  104. stj – can you please post "Josh Brown Rule of Trading". Thanks.

  105. Oil S3 again!
    I am in

  106. dclark41 – should be: Those same comments were actually made just after the election in '08….

  107. From Barry:  

    “Here’s the thing to keep in mind, and investors forget about this: There are keys to long-term performance, three major issues that you always have to recognize. One, you can’t have giant losses. Two, you have to keep the fee structure as modest as possible. Three, very often the less you do, the better off you are. The last one is really hard, because everybody comes into the office everyday and there’s a temptation to do something constantly. The expression, “Don’t just do something. Sit there,” really is true.”

    From me ("Don't Just Do Something, Stand There"):  

    "I will not fear

    Fear is the mindkiller,

    Fear is the little death

    That brings total Oblivion

    I will permit my fear to pass

    Over me and through me

    And where it has gone

    I will turn the inner eye

    Nothing will be there


    Only I will remain." - Dune


    Sage said (just below this post!): "Trade the stock market cognizant of the sentiment shifts that will inevitably occur yet with the conviction to trust your own judgment. If you get pulled from pillar to post by the media injecting fear on the down days and complacency on the up days, you will be trading on emotion with little certainty as to what action to take, when to take it or why to take it.  So, take charge of your decisions and remain alert and flexible to the shifts in sentiment. And, when sentiment shifts occur, whatever you do, don’t just stand there!"

    My only addition to that is to emphasize that you FIRST let your fear pass over you and through you, THEN take measured action.  As I’m on the Disney cruise, I have had occasion to watch all 3 Pirates of the Caribbean movies this week and you see many Captains acting in a time of crisis.  While you are unlikely to be attacked by zombies, skeletons or sea monsters in your average trading day, from the actions of the investors around you, you might think that’s the case.

    One thing you’ll notice about the Captains in this movie is that they DO NOT immediately give orders.  When a storm hits (or monster, or whatever) the crew tends to scurry about madly ATTEMPTING TO STAY THE COURSE (ie. stick with your investment plan) and, in short order, the first officer will come up to the captain, apprise him of the situation and then says "Orders Captain?" at which point he WAITS FOR ORDERS!  Why does he calmly stand next to his captain while the deck is burning and the crew is in chaos?  Because he trusts the decision making ability of the man in charge (this should be YOU!) to assess the situation and come up with the PROPER course (not a random course) of action.

    Once the captain gives an order (you decide to rebalance your portfolio) there is a flurry of activity as the first officer puts 100% into making sure the captain’s orders are met.  When you think about all the effort (and cost) that is involved in changing course, it is no wonder that we should be willing to sacrifice, to take a few blows, to let the FEAR pass over us, before we commit to a new action.

    A ship that does nothing more than react to each wave that hammers its sides will simply turn and turn and turn, taking blows until it is torn apart.  A decision must be made, a course laid in and a plan must be followed or your crew (your individual positions) one by one will be washed away with the sea.

  108. Nicha, there are 2 sets of rules. The first one deals with crashes and it's appropriate this week:


    1.  Acknowledge that its a crash.  Once we're past down 10% in the Dow Jones Industrial Average from wherever the peak was (yes, the Dow is a way better crash gauge than the S&P 500), you can stop saying correction and start saying crash.  Better to be wrong in hindsight on the nomenclature.

    2.  Pencils Down!  Whatever trendlines or individual stock research you were working on needs to be shelved for the moment.  Your drawings and calculations will not work here.  If you happen to buy a stock and it rips higher, it will not be because of your research, it will be because the market went up.  Correlations always get jiggy in crashes, stocks become commoditized like bushels of wheat that must be liquidated regardless of the underlying businesses.

    3.  Don't listen to "stockpickers" or sell-side equity analysts.  They are only looking out from within their own little bubble and they cannot comprehend the other little bubbles around them let alone the whole bathtub.  Anyone covering specific stocks needs to know when the macro gyrations trump whatever earnings they've estimated or the conference calls they've listened to.  There'll be a time to "know your stocks" but this ain't it.

    4.  Ignore the asset-gatherers and the brokerage firm strategists, their job is to calm markets and soothe investors.  Let's say Morgan Stanley runs $1 trillion in stock market wealth for investors.  And then let's say they felt there was serious trouble ahead.  Do you really think they would ever make the sell call?  Can Morgan Stanley really say "Sell 20% of your equities"?  No.  Because that would be $200 billion in supply hitting the stock market at once – they would crash it all by themselves!  Too Big To Keep It Real has always been the problem with the wirehouse advice model.

    5.  Make sacrifices by reducing stock exposure by beta and volatility.  This is my iron-clad rule.  The moment you recognize the crash, kick the small caps, biotechs, emerging markets etc.  You must separate your feelings for a particular asset class, sector or individual stock and recognize that the higher the volatility, the worse they're gonna act in the short-term.  I have a prenuptial agreement with every position I put on and we get divorced cleanly in a crash situation if need be.

    5a.  Also, margin balances must get cleaned up immediately, take the losses, I don't care.  Because broker-dealers and clearing firms can and will raise equity requirements right at the moment of maximum pain and force you to sell out later – and lower.  I could tell you war stories you would not believe, kids.

    6.  Make two lists.  The first list everyone knows about and talks about – the "if they get cheap enough I'll buy it at that price" shopping list.  Fine, but don't forget the "things I will sell on the next bounce list".  Even the worst markets have short-term bounces in the midst of the chaos, use these bounces to get rid of the things that make you ill on the red days, even if you're taking a loss.  The stocks you bought on a flyer one day or the companies that have been disappointing or where the story has changed – sell 'em on the rips.

    7.  Watch sentiment more closely than technicals or fundamentals.  Pay attention to the squishier things in a crash moreso than you would normally.  Are people screaming in pain?  Or are they still looking for a bottom?  Or have they given up entirely?  There is no math to this, a lot of it is "feel".

    8.  Abandon any hope or intention of catching the bottom.  You won't and it is unnecessary.  No one will carry you out on their shoulders if you manage to do it but you will definitely get carried out on a stretcher if you get it really wrong with your own capital.  Keep in mind that time becomes more important than price…not where will it end but when?

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

    10.  Stop being a know-it-all and shut up.  If you are telling people a price or a support line where the selling will end, you are only kidding yourself.  Have a guess based on your discipline and research, but don't act like you're talking facts.  Fair Value is fine, but call it a guideline.  Support is also fine, but call it a historical estimate of where buyers have come in before.  The deal with crashes is that extremes are the norm, not the exception.  Things tend to overshoot through reversion to the mean trendlines or fair value estimates on their way back to stasis.

  109. The second set of rules Nicha is for every day trading:


    1.  Buy mid-sized and large stocks that are growing earnings and revenue

    2. Buy large and mega-sized stocks that are paying consistent dividends and have low debt-to-equity ratios

    3. Read the news on your stocks once a week maximum, once a month minimum

    4. The moment a stock disappoints you or makes you wish you hadn't bought it, sell it.  Immediately and regardless of price.  Life is too short to hope a bad decision reverses itself

    5. Don't get In or Out of the market, but modulate your exposure up and down as a function of what you think is happening.  Your guess based on all the available news and indicators is as good as anyone else's – and it is more important than anyone else's for sure because it is your money on the line

    6. You should be willing to take a 20% drawdown on every dollar you have in the stock market.  Obviously being down 20% is not the goal, but it's the reality – it can happen at any time.  It's not a permanent loss but you need to invest as though it could be

    7. Don't buy stocks trading over 30 times earnings or under 7 times earnings – something is wrong in both cases.  Stay away from anything not trading on a US exchange.  Avoid the 52-week low list – a loser is a loser

    8. Don't buy stocks with market caps under $500 million unless you are playing and can afford to lose 100% of that money

    9. Sell any stock with a controversial development or red flag no matter what.  Let someone else be the hero that swoops in on a mispriced, misunderstood security.  You can cheer them on from the safety of the sidelines.  Earnings restatements, auditor resignations, massive unexpected earnings misses, filing delays, fraud allegations etc are all automatic sells.  Let's not act like there aren't 8000 other stocks to choose from in the market

    10. Use ETFs to own sectors that are in favor as opposed to individual stocks, when a huge positive trend becomes apparent – you'll get the upside without the single-stock risk.  The aging population and increasing demand for energy are big, fat pitches – it's hard to swing and miss if you own big swathes of these industries via an ETF, make your life easier

    11. Avoid all mutual funds except for asset allocators (balanced funds or go-anywhere can be very useful for investors).  Anything based on a discipline (value, growth) or a sector (tech, financial) or a cap size (large, small) is going to underperform its benchmark over the  long-term, mean revert versus its peers and cost you more than you need to spend in internal expenses.  This is fact not opinion

    12. Don't try to be a trader unless that's going to be your full-time gig.  Trading as a hobby is not the same as being a trader – and it's less fun than you might think.  If you've decided to become a trader, find a method and stick with it until you can do it regularly

    13. Pay no attention to people who are always pessimistic.  The dirty secret is that even when things are terrible, they aren't that bad.  2008 was the worst sell-off and economic conundrum in 70 years and it only took 18 months for the market  to come all the way back.  If you fell asleep in 2007 and woke up now five years later, your diversified portfolio including dividend  income and unrealized gains/losses looks like nothing ever happened at all

    14. Pay no attention to people who are always optimistic.  They are selling something.  if someone can't admit that things suck every once in a while, their cheerfulness has an ulterior motive.  Or they belong in an insane asylum

    15. The financial media wants you to think you are missing out on something and that you need to tune in or click to get up to speed.  Pay attention only if you are generally interested and get some entertainment value out of it, most of the time the headlines and segments are dreamed up by editors and producers who need something interesting to talk about each day.  And that's fine, everybody has to earn a living – but don't think anyone is keeping you informed as a public service

    16. Don't follow gurus. Don't buy software.  Don't buy DVDs. Don't listen to "Gut Traders". Read books by and about people who've been successful in the market – but only if you're interested. They won't help you become a better investor if you don't care that much to begin with

    17. Remind yourself about the difference between investors and traders: Investors make trades when necessary, traders make trades in the course of doing business – that is what they do for a living and your goals are different than theirs.  You don't get paid out on closed positions or a daily p&l statement.

    18. Don't trade for excitement even though trading can be exciting at times

    19. Don't trade angry or for revenge (this motherf*cking stock owes me!)

    20. When you finally do become wealthy, hire other people to do this for you and watch them.  Go about enjoying the short time we all have left on earth away from the screen. Kiss your kids and play tennis and read books and  get drunk during the day just because and go to Australia for a month and buy that car you drove in high school – fix it up and take your sweetheart for a ride. Don't spend that time reading about inverse correlations between German bund yields and the gold/oil ratio.  Because that's all masturbation and really, who gives a sh*t?


  110. QE – ain't gonna happen.  Treasuries are at an all time low…what else can they do?  Pray, hope and love.  It is all up to the EU…like it or not.  I am getting close to shorting gold. 

    Oh, and those MS and GE shorts, well, those are working fine, thank you.

    They are jacking up gold, but treasuries still say something different, no?  Short squeeze.  Gotta make money somewhere.

  111. Looks like we are going to need a bigger stick!

  112. RIG – 2014 $30 puts are a good deal.  Selling a few.

  113. "Business is engaged in "just in time" labor, leading to more part-time hiring"….
    *commentator on cnbc

  114. Phil/ what do you want to do with TNA 52 calls?
    Drop their strike to 49 (3% move up on IWM)?

  115. from Cobra

    from Cobra...just a comment on the lflan spreads to beware of the trend that may come

  116. If there is any stimulus, it will have to come from Europe.  There bonds with the exception of Germany are getting to fantasy numbers.  Wonder if they mention Euro bonds again over the weekend what that will do to the markets.

  117. Romney on @12:40 EST……

  118. I thought Charles Biderman had a good quote the other day regarding the 'premise' that the stock market was going up…it was because companies were buying back their shares, thereby driving the market up – supply and demand….anyway, here is his take…

    It is all about supply and demand: More shares chasing less money.

     The financial media has more obvious reasons for the declines. This year’s drop is due to Europe and the Facebook debacle. Last years plunge reportedly was also due to Europe and May 2010 was obviously due to the flash crash.

     To repeat the real reason is simply supply and demand. Investors are fleeing US stocks. Up until May companies had been buying back almost $2 billion of their own shares, more then were sold each and every trading day since the beginning of last summer. That ended in May where companies sold over $25 billion more shares than they bought.

     To repeat everybody is now a seller of US stocks. US equity mutual funds, hedge funds and pension funds are all selling US stocks and now companies are also. As I see it, stock prices are likely to keep dropping until the Federal Reserve announces the next round of stimulus. That announcement should create a very sharp and loud rally in stock prices. Unfortunately whatever the Fed does will not work, but it will create a stock market rally.

  119. stjean—who is that advice from?

  120. Clinton/1020 – He's always been pro business.  That's the problem with Democrats, they are allowed to think for themselves and sometimes they disagree with each other on certain issues and that diversity of opinion is perceived by the Conservative Uni-Mind as "weakness".  

    Best investment opportunity if the markets turn lower.  

    Stick/Rustle  - Has not been a good week for it.  Better to have a gap up Monday on some kind of announcement and really freak out the bears.  

    That's some interesting logic DC.  So that means if one party – let's call it the GOP, is willing to destroy the country to gain a political advantage, then they can fail to form a consensus with a Democratic leader and that will "prove" he's unfit to lead.  When the GOP gets their guy in, they can cooperate with him, "proving" he's a great leader.  That leaves the Democratic party with the choice of acting just as juvenile as the GOP and working to destroy the country when a GOP member sits in the White House or "proving" the GOP has better leaders by cooperating in the best interest of the country.   It's true, the GOP has stumbled across a winning formula – by not caring whether or not their actions damage this country – they get to take control of it from the people who do care – BRILLIANT!  

    ALU/Sparky – I picked them a week or so ago on news of their new router looking good.  They popped from $1.45 to $1.70 and now back to $1.50, where you can buy the 2014 $1/2 bull call spread for .35 and I wouldn't even sell puts unless they fail $1 and then you can sell $1 puts for .50 and you're in for net .85 even if the spread wipes out.  

    Romney/1020 – I think this sums it up quite nicely:

    "I'm not quite sure what paranoid world Mitt Romney is living in, but that is just absurd to me for someone who wants to be president of the United States," Stephanie Cutter said in an interview to air on CNN's "The Situation Room."

    Also this is a good read:  


    Hecklers And Hysteria: Media Ignores How Mitt Romney Has Apparently Lost His Mind


    On top  of that, though, as he was bragging about sending staffers and supporters to disrupt the Obama campaign’s press conference, Gov. Romney launched a paranoid, completely false accusation at the President. Most outlets, even liberal ones, are playing this quote: ”At some point you say, you know what, sauce for the goose is sauce for the gander. If they’re going to be heckling us, why we’re not going to sit back and play by very different rules.”

    That’s weird nonsense on its own, since no one has remotely accused the President of sending hecklers to Romney events, that’s insane.

    Yet I'll bet there are Fox viewers here who actually believe that it's a fact that Obama sent hecklers to Romney's events.  It's completely untrue – there's not a single news item to substantiate it but Romney's people have made it up to justify their own disgusting behavior – taking Presidential politics to Nixon-like lows.  

    TNA/Lionel – I want to see how we finish but buying time is more important than position at this stage.  

    Romney very late – must be Obama's fault…

  121. WFR up 2 cents…..

  122. Advice / jabo – That's from Josh Brown (

  123. Ok thanks Phil

  124. Lionel, I want a percentage of the profits you make bouncing of my S3 lines every day!

  125. GDX going nutz….

  126. stjeanluc, cool rules!

  127. I grew up with mormon boys in San Jose, worked with mormon boys in Vegas and my wife helped start a bank, that later went public (failed in '09) run by a mormon president and board. All good people.
    But, when it came to winning, they were ruthless and at times, childish…..

  128. Muad'Dib NICE!!!!  my license plates read Fremen

  129. thanks stjean!

  130. SDS July $17/21 bull call spread at $1, selling Jan $15 puts for $1.15 is a bet that SDS doesn't fall 16%, which is an 8% drop on the S&P to 1,182 – otherwise it's a free look at a potential net $4.15 gain (if the S&P goes 8% the other way back to 1,387 by July) against $1.50 in margin.  

    TQQQ July $43/47 bull call spread at $2, selling BA Jan $50 puts at $1.90 is also nice for net .10 on the $4 spread.  

    XLF Jan $12/14 bull call spread at $1.20, selling $11 puts for .55 for net .65 on the $2 spread that's $1.65 in the money.  


  131. and I've always told my kids- Take the varmint's path….

  132. UCO 27 puts and even 26 puts expiring in Jun are paying nice premiums right now.

  133. StJeanluc/
    Thanks again to you and to Phil for the guidance and the knowledge you share with us everyday.
    It is a real pleasure to be on this site.
    So if I understand clearly if don't post my trades I won't owe you anything right? :)

  134. stj – did Bespoke stop publishing that list of overbought/oversold stocks? I haven't seen one from them in a while.

  135. 1020, hows the weather right now?

  136. YMI…zero….that is one strong little sucker….

  137. CRM…rolling down to July 125 puts….

  138. 53787 – partly cloudy, about 68 degrees   :)

  139. 1020…ah, but 1/2 mile inland….sunny and 72…..

  140. Pharm/sgen
    Do you feel that the ASCO meeting will spark any movement in SGEN over the next 4 days?

  141. Oh man! …you guys got it made

  142. Phil — are the option above for additional to the 25K portfolio or just a suggestion if we want to add these position at this point — thx

  143. Well, It will be sunny by lunch and I can be at the waters edge in 3 minutes….
    What do you say to that Pharm?


  144. Pharm, guessing you hang around scripps…

  145. No, he's now become an eastsider……

  146. I hear the crime rate is always higher on the east side of the 5…… ;)

  147. StJean/ Hollande
    Hollande government has just proposed to put a cap on CEOs remuneration for all French public companies at a maximum of 20 times the lowest paid employee salary.
    I know a lot of people who will get a pay rise …. Very clever!

  148. Not posting trades / Lionel – No, I will just assume that you made money!

  149. Bespoke / Kwan – They have not published their usual charts this week. Not sure why.

  150. Romney – Every opportunity.  Every. Single. Opportunity.
    Maybe we'll hear some new ideas……

  151. SVU down .17 to $4.35, but the bid on July $5 puts is only up .05.  Would love to sell some, but that sucks.  You guys like other dates?

  152. that's blue collar crime, of course

  153. lol

  154. Hollande / Lionel – I am sure you don't mean the CEOs. I saw an article that these guys are taking 50-70% pay cuts. Ouch!

    But you are right, the smart play would be to give all the lower paid guys raises! I doubt that it will happen though… On the other hand, I believe something has to be done in the US in regard to CEO pay. At least have some correlation between pay and performance. I run my own business – in good years I do well, in bad years I don't. And it's my business – most CEO are just operators, no creators. They get huge bonuses on hiring, big bonuses when they get fired and in between they get raises no matter what the shareholders do. A good gig if you can get it.

  155. Phil/TLT – as it seem you are often a proponent of selling premium, are there any TBT put sales you would consider in lieu of your long TLT Sept $115 puts?

  156. TBT / Bolt – Never mention TBT put sales on this board again…. last warning!   :-)

  157. If I peddle fast, I can make it in 5…. 8) or just hang out in my Spool…..

  158. StJeanluc/
    Here is the article. He was you favorite before the election now he mat become your hero!

  159. Romney -
    From the view of John Q Public, what's not to like?
    btw, don't bother me with the details…..

  160. Pharm – LoL!  I just figured out "spool"….. :)

  161. Obama on CNBC @ 1pm EST

  162. Hey guys,
    Could the experts in trading /CL on this board help with the following questions:
    - What happens when it gets close to the expiration of this month (June) futures?  If you hold future contracts, do you need to get to Cushing to get thousands of barrels?  I read the /CL description and physical delivery is what it says.  Is it simple to roll over to next month contract?
    - /CL has options too.  So if you sold a /CL put option and it's expired in the money, do you get delivered the futures contracts, which lead to physical delivery of oil?
    - If you sold a /CL call options and it's ITM at expiration, do you have to drill in your backyard to get oil to sell?  Funny, huh?
    Sorry for seemingly simple questions, but these information is not easy to find.

  163. 1020 / Q Public — Obama better come up with something fast! Although he did get half of "hope and change" right.

  164. An in-depth analysis of the ISM numbers:

    A mixed bag as inventories are going down but so are backlogs! New orders are up though… 

  165. Wow Peter, you must be a brave soul to want to hold /CL contracts to expiration! All kinds of shenanigans at the end as they try to unload as much as they can before they roll. I have never been there so I can't describe the experience, but I would not do it either… And I would not hold a contract overnight either!

  166. anyone know what Clinton said about Romney either yesterday or today that is making the R crowd very happy?

    Phil/DIA Puts: I have been in some DIA puts  (in and out ) over the last few weeks and cashed out about 2/3 today at highs with great gains. My general feeling is that there is no good news to turn this around. Will it make sense to go back in some puts again if we close at the lows or is that too risky over the weekend.  

  168.  that biden gay marriage announcement, forcing O announcement, really pissed off 75% of the black community in atlanta…even the local stations that are 110% pro-O were bashing it.

  169. rainman – My wife got so mad with me when one day, just for spite (and a reaction) changed the "h" in hope to an "n" on the t-shirt I bought in '08.
    I have another not I would not mark up – It was a very important event in our Country's history…..

  170. StJeanLuc/TBT – um, hmmm….I confess to being relatively inexperienced, so, perhaps you could clarify; am I mistaken to think selling TBT puts is directionally the same as buying TLT puts?  If so, what are the pros vs cons?

  171. Phil AAPL holding the Jul12 525c cost 47.25 now 53.85 x4 against 3x Jul 565c sold for 28.06 now 28.70 and 1x Jul 12 600c sold for 30.18 now 14.10 Thinking of rolling the 4 longs to Jan13 525c for a debit of 35.65 and roll the 3 callers to Jan13 590c credit 28.65 and the Jul 12 600 caller to Jan13 610c for a credit of 35.10 total roll would cost me 2213.00 What do you think?

  172. not – shirt
    Time to call it a day….. :)

  173. Interest rates on 10-year bonds around the world:

  174. savi go to that link i put up

  175. angel – I thought Biden's comments were made to help Obama reverse his previous views….
    And, I could not understand why so many Blacks were outraged. I though the only anti-gay-marriage bigots were out here in California…… ;)

  176. PeterD/
    1-Physical so yes you roll on the last trading day
    2-Options are exercised into futures ie July expiry options have August fut as an underlying if you need further info

  177. TBT / Bolt – TBT brings back a lot bad memories for long term members. The problem with these 3x ETF like TBT is that they suffer from decay and you have to factor that when you sell puts. Go back and look at  the TBT and TLT charts and you will see what I am talking about. At similar levels of TLT, you will have different levels of TBT over time. That makes it hard to plan trades!

  178. I live by very simple rules:
    1. Live and let Live…..

  179. OMG — Think about HOW MUCH 'they' made on those bonds.  Trumps the market by a galaxy far, far away…and where have the wealthy been putting their money…not in the market…..

    Mutual funds are selling b'c we are negative on the year….just sayin'

  180. StJeanLuc/TBT – ah, my bad.  I didn't notice TBT was an ultra.  What I am looking for is simply an 1x inverse of TLT, something I can sell puts in, rather than buying puts in TLT (unless you guys think that would be dumb).   Is there such an animal, and if so, what are your thoughts on my proposal?

  181. PeterD / CL:  Most retail brokers that most people on this board are using will automatically close you out of a front month position that you do not roll on time, so that you will never be assigned physical. The timing of that automatic liquidation depends and is usually around 2 days before it finishes trading. If you want physical delivery you need a more sophisticated commodities broker that commericals and large speculators would use.

  182. Angel:  Blacks, as a group, tend towards homophobia.  They are killed with frequency in Haiti.  You would think that people suffering discrimination would tend towards tolerance, but it just ain't so.

  183. Angel—Thx

  184. Clarify that 1020…Southern California….

  185. Romney is terrifying.  His plan is to wipe out health care reform, roll back labor laws and end minimum wage, tax breaks for employers (not employees) and "free trade" so they can send more jobs overseas.   Oh yes, and "drill baby, drill" because, until we use up all of the remaining US oil reserves – how can we be held hostage by OPEC?  

    Could be a big mistake shifting his rhetoric to jobs, jobs, jobs because, if those numbers turn up over the next few months then Obama, by Romney's definition, is doing a great job.  

    Bullish spreads/Gucci – No, the $25KP is too bullish already, those are just fun ways to take a poke at a weekend recovery with the expectation of taking a loss if the situation gets worse.  

    SVU/Bolt – I like selling the Jan $5 puts for $2.10 – net $2.90 entry is reasonable.   We had a buy/write on them yesterday too.  

    TBT/Bolt – TBT is SO bad that we just gave up on it.  Look at the dive it just took – down 10% in a week.  I like selling TLT June $131 calls for $1.60 but there is a risk you get stuck rolling them for a while.  

    Oil/Peter – Yes, if you don't roll your contracts, you must take physical delivery at Cushing but it's very easy to roll (just pay the spread) and that's what most do.  I don't mess around with the options and I make damned sure to get out of the Futures well ahead of contract closings – you do NOT want to have to take physical delivery of thousands of barrels of oil.  If you are the one delivering – you MUST make arrangements to have X amount of oil physically delivered to Cushing – also something you don't want happening.   It won't be very funny when they send legal notices to you enforcing the contracts – do not mess around with those things!  

    DIA/Ksone – I think either direction is very risky.  Just keep in mind it's a bet, not an investment.  

    TBT/Bolt – They suffer from severe decay over time – makes them a poor bullish investment.  

    AAPL/Yodi – Really?  Still in that?  I'll bet you wish you listened to me last time, when I told you to roll out the calls you own to a safer spread and let the short $565s and $600 hang.  Now you gave up a ton of ground on your calls, which were over $100 in the money back in April, when I suggested rolling to the Jan $650/730 bull call spreads at $30, now $18 so you could have saved yourself about $40-50 per contract.   Now you've got the now risky-looking July $525/565 bull call spread at net $19.50ish and it's really the same thing except you screwed yourself out of putting $80 in your pocket but you can still go to the Jan $650/730 bull call spreads at $18 and pocket $35 and let the callers expire and roll them if you have to.   You'll be in the spreads for a net $15ish credit and your callers are covered for a $70 move up in AAPL and, if they make $70 up, you can spend $15 more for another set of calls to cover the next $70.  But this is pretty much what I said last time – we'll chat again about it next month I'm sure!  

  186. Bolt….cash….cash…cash.  IF we are becoming Japan, the 10 yr has a ways to run….I would rather short the 2 or 5 yr, but even that is dangerous.  TLT is used as a hedge for WS, and I still think the 10 and 30 yr go lower.  I noted a while ago, 1% was not out of the question….and that is when I said that 1.5% was going to happen. Where are we now?

  187. being from maine i didn't know what a gay person was or a black til i was 10…i have a group of friends in atlanta some of whom are black and they really were incensed..i was they have always treated my son who is gay very warmly..i do think th president is going to do 'poorly' with minorities this time around..i thought hillary would run with o if things got truly effed up..well we are there and hill will not be running with anyone she see's as potentially losing..

  188. Pharmboy/
    You were right.

  189. spool…lol

  190. Angel:  The oddity of hating a group but liking someone you know from said group is almost universal.  I'm no sociologist, but, having spent most of my life outside of my native country, I can't count how many times I've been told that Americans are awful, "but you're different", which, of course, I'm not.  The devil that you know, the devil you don't know…..

  191. Hollande / Lionel – Not my hero… It's a matter of fact, I would be hard pressed to pick someone in France now! Good thing I didn't vote.

  192. is it just me or is it confusing to use SDS as a bullish play?

  193. Phil/Pharm/StJean/anyone? – Is there such a thing as a simple 1x inverse to TLT?  If so, would selling puts in it not be directionally and proportionally the same as buying TLT puts, but with decay working in our favor?
    I asked StJeanLuc, but I think my mistaken proposal to sell TBT puts has shocked him into silence! :)

  194. LOL 1020… I said….So. Cal….

  195. SDOW is 3x Ultra-Short on Dow.  July $23/28 bull call spread is $1.30 with SDOW at $23.95 so a nice way to play a further move down in the Dow with a $3.70 upside potential (284%) with no margin requirement so, even in an IRA, you could put $2,600 into 20 of the spreads, put a stop at $1,600 (.80) and risk $1,000 to make $7,400 on a further downturn. 

  196. Bolt…no.  TBF is like TBT

  197. Phil

    Do you have a prediction for the close and Monday?
    I'm thinking down 280 at the close and 500 point capitulation on Monday?

  198. Phil – You and I know, it's too late for jobs. Just based on recent discussions on PSW, not many of us are hopeful.
    I wanted the Lakers to win one more for Koby, but with that old crew, it was not going to happen….
    Now the L.A. Kings….Sweep! Sweep! Sweep!….. ;)

  199. Pharm -  Yeah, I have a few of those in my hood…..

  200. Obama: Joe…..we've got to talk….

  201. Phil APPL thanks I hear you, rolled the longs and hold for the callers to sell for a better day.

  202. Phil/SVU and longer-dated versus shorter dated put sales-
    If one's general strategy is to generate income by selling puts in TWIL-type stocks (such as SVU), is there a minimum or average time to expiration that you almost always target, or is it situational? If the latter, when would you look at shorter-dated entries?
    It seems you've been recommending Jan13 or 14 for TWIL entries.  Will the income portfolio also play with those expirations?

  203. Phil,
    What is your opinion on selling jan 14 80 puts on vmw?

  204. TBF / Bolt, Pharm – Actually, I believe TBF is an exact inverse of TLT, not an ultra. Look at relative performance over the last 12 months:

  205. ZERO V prescient!

    one down that leaves the P,I,  S,

  206. In that same period, TBT has lost 60%!

  207. TBF- yes, thanks.  That's was what I was looking for.  So, that begs the second part of my question; since it is not leveraged, why not sell puts in TBF instead of buying puts in TLT?  Sorry if I am being thick, but it seems the decay would work in our favor, no?  What would the downside be?

  208. st jean luc what about catherine deneuve or charles aznavour?

  209. OOPS – From 12:15 I did not mean SDS, which is an ultra-short on the S&P (although it is working!) – I meant the SSO ultra-long, which is $48.95 and is not as good to sell puts against due to much higher margin requirements so just the other two on the bull side and the SDS does make a good bear trade.  (good catch Morx).   

    Obama not helping at all!   CNBC cutting away from new initiatives to put verterans back to work by the President after carrying every single word Romney said about what he might do if he were President next year – what BS!  

    Gold $1,623.  Oil $83.17, Dollar 83.08, gasoline $2.65.  

    Inverse TLT/Bolt – Sure, it's called TLT puts or selling calls.  Why would you need a 1x inverse when you can play either side of the ETF?  

    Close/Exec – I think we're down enough that there's a little speculative buying into the close.  Over the weekend, I think it's time somebody says something and if we're not gapping up 1.5-2% on Monday morning – I'll be looking for more bear plays.  

    Jobs/1020 – Without stimulus, it's too late for the planet.  This is getting as stupid as 2008 was when they didn't bail out BSC and LEH.  

    Income Portfolio/Bolt – We would go with some shorter dates to generate short-term incomes and longer ones where appropriate.  You should go back to April of last year in the Portfolio section and see how we began last year's Income Portfolio – plenty of actual examples there.

    VMW/Harip – They are at $90 now and were at $25 in 2009 but their income is up 125% so $60 is fair in a crash but $60 is still less than $90 so I wouldn't be too interested in that particular falling knife.  

    TBF/StJ – Yet not exact enough to give the same result.  I think it's terribly inefficient to play a 1x ultra – it's going to have lower volume and wider spreads and less active contracts.  Better off learning what a put is…

  210. Well, all other things being equal, volume is one strike against TBF; today it is about 1/8 that of TLT.  
    In any case, would be interested in knowing, PHIL, if I gave you the choice of either donating to John Boehner's re-election campaign, or selling TBF puts, which strike/expiration would you sell??

  211. Sorry Angel, I was talking about politicians… I love both Deneuve and Aznavour (Brassens is better), but in France now I would vote for her:

    Not as much talent though….

  212. Thank you guys (Stj, never & Phil) on /CL comments.  Don't worry, I don't have any /CL contracts nor options yet.  Just exploring the possibility and the physical delivery deserves some caution for sure.

  213. Phil have you any idea about IBM July? thanks

  214. Phil – do you really think I don't know that selling calls is directionally the same as buying puts?  
    In general, I am more comfortable selling premium, and, when selling premium, selling puts, not calls.  Hence, my interest in something like TBF.  But I confess, I'm still a relative options-dumbass, so your condescension is probably warranted.
    Thanks for the suggestion to look up the old income portfolio.  I'll do that.

  215. TBF / Bolt, Phil – The issue of TBF as Phil mentions is the liquidity. Not as much OI as in TLT so wider spreads and possible trouble getting out of a jam. On the other hand, lower margin if you sell premium. But performance over the last 2.5 years (TBF is recent) correlates almost exactly – TLT is up 41.25% and TBF is down 42.28%. Can't as much more from an inverse ETF!

  216. ST JEAN:  je ne voudrais pas son coup de pied hors du lit pour manger du maïs soufflé!! 

  217. I know we are supposed to listen to opposing views but turn off CNBC and FOX.
    Find it somewhere else.

  218. AMEN shadow

  219. Wow check out YUM. Down 8%!
    Live by the Chinese sword, die by the Chinese sword.

  220. St Jean / Angelcur
    Ne pas la faire sortir de son lit jusqu'à ce que vous avez terminé!

  221. Dollar down, market down, unusual.  U.S. cavalry on the way?
     "The Federal Reserve is more likely provide added stimulus when its current effort winds down after a report showed the economy added fewer jobs in May than forecast, according to Morgan Stanley.  The probability of more central bank policy action is 80 percent, up from 50 percent, after the Labor Department reported that U.S. employers added 69,000 jobs in May after an increase of 77,000 the previous month. [Bloomberg]

  222. French / Angel – Je ne coucherais pas dans la baignoire!

  223. Is this a flush day???

  224. zero – that MS quote is Bull….MS is on the ropes….

  225. Maybe JRW was bidding for this and since he did not win, he should be back soon.

  226. FOR REAL:Je ne vais pas la faire sortir til i ont beurré ses keernels

  227. Are we there yet?  Panic, I mean.

  228. well the last 30 points might be the extent of a stick today.

  229. No son, we are not there yet. 1000 points every month for the next several. Thats one down, 6 more to go.

  230. Looks like some dip buying in industrial metals and commodities - 
    BHP down less than .75%

  231. Kind of crazy, dollar down and market down at the same time…

  232. "….This is getting as stupid as 2008 was when they didn't bail out BSC and LEH.."
    What was stupid back then was emphatically NOT bailing them out, that was just fine, but Paulson giving Bailouts to AIG, Goldman Sucks, and all the other financial institutions as well as General Motors AND NOT sepcifying that not one cent would be forthcoming if the Executives and all the others repsonsible for CDSs and other bizarro Derivatives in the Mortgage Finance debacle worldwide, and made them give back every cent they took in Bonuses the 5 previous years, as well as not one cent of TARP to be used for anything remotely looking like Compensation, Loans, and other checks written directly or indirectliy to them.
    Under those kind of "Bailout" rules, they might have worked a lot better than they have and BS and LEH could have been included in that scene as well.
    The pure arrogance of the Paulson demanding unfettered use of that money had to be a total setup.

  233. Anyone here have any thoughts about SNDK? That is assuming the overall market finds its bottom.

  234. Maybe JRW is Craig McCaw……

  235. Well, looks like FTR's run has come to an What'd it last 2 days?

  236. 1020/JRW = Craig McCaw – cool!

  237. High gang. Newbie here, first time post. Been lurking for a few weeks and am stoked to be in such great company. Would someone mind steering me towards a good downside hedge. I feel a little skewed to the long side primarily in energy and short puts from the TWIL. Much obliged and thanks for the great community.

  238. We'd be a high gang if we were fooled into thinking you were really Newbie.  Welcome aboard, anyway.!

  239. Phil, will ContagionEx work in the 25kp? That's funny!

  240. Boltdude: TLT
    my $.02 is if you have plenty of margin and are disciplined selling calls on TLT should work out, eventually, with rolls out to jan 14 available now and in the fall there will be jan 15's so unless you think rates will be this low in 2.5 years there is a path to keeping all your premium at some point, or you should be able to keep some of the premium while you roll along.  I think it is perfect for Phil's "Rawhide" plan.

  241. Zero – LoL!

  242. Pharm – Is there a way to calculate where TLT would be if rates on the 10 year went Japanese to 0.80%. Not saying that it will happen, but would be nice to have a rolling target!

  243. Phil/Weekend Pump

    You're probably right.  Question is what are they going to say.  They pretty much ran out of bullets months ago and have been stuffing cotton balls in there gun ever since.
    Then again…..does it really matter…..the market loves to go up.  Perhaps they'll just go with the old reliable QE 3 rumor…..that's usually good for a few hundred DOW points.

  244. exec / pump — How about the fed adding funds to the IMF?

  245. Pharm- Hope you are enjoying your CRM today! :)

  246. Back early from my island adventure.  Looks to me like a buying opportunity for AAPL.    October 600 calls AAPL :   One more for the MoMo portfolio at 35.00.   

  247. Lincoln/ makes sense, but selling naked calls still makes me a bit squeamish.  I'll get over it at some point.  Regarding the so-called "rawhide plan", is that PSW's version of CIA's rendition program for problem posters?

  248. Here are my 3 biggest position going into this weekend:

    1. cash
    2. Cash
    3. CASH

    Can't bother looking at the news and the data anymore as this markets now only trades on rumor of "free money" or lack of thereof. There is bad news that is good, bad news that is bad, good news that is good and good news that is bad… Can you have an investment plan based on that logic? There is not even pretense of order – just machines gaping 1% one way or the others. What's the point of stops when they jerk you 100 points overnight in the futures!

    I only have a couple of the TWIL positions, but I am worried that soon we'll have a BTLTT (Better Than the Last Two Times) list! So day trades and cash are good now!

  249. jthom….it is a beautiful thing.


    TLT – 160-170, no? If it is another 500 bps, then that baby should run.

  250. CHK – down 7%; is there a reason it's getting killed relative to its peers?  The only related news I see appears good.

  251. duh Bolt don't you know bad news = good and good =bad:)

  252. Short MS stock…buying June 2 $13 MS calls as an upside hedge.  They are going down.

  253. Sorry Iflan…shorting AAPL…..

  254. Great day to not play! Cash is the way!

  255. Sage, I'm not sure what to think.  Perhaps I need to stop thinking, just stay balanced, and drink more.

  256. Rain

    Good point.  They can start the printing presses on three shifts.  Then they can even claim to have created jobs while fixing Europe. 

  257. …or just sell some CHK puts and go play soccer.  There's a good pickup game that starts at 12:35 here in Lake Oswego. :)

  258. F indicator not looking so good.

  259. stjeanluc,
    Don't despair yet.  We can sell RUT Jun 640 puts for $1.  That's 13% down.  Even at the swift pace of decline today, it could take 5 straight 2.5% down days to get there.  There is only 9 trading days until June RUT expiration, so the odds are good.
    Same for SPX, June 1120 puts can be sold for $1, a nice pocket change for 9 trading days.  If the market is down another 10% next week, I guess we can sell June 1,000 put for $1 or more.

  260. boltdue
    1) CHK is now a high beta trading stock – it's going to move more than the market in either direction
    2) If the economy slows and nat gas prices stay depressed they are going to have a harder time
    3) They have to sell assets to pay down debt – not a great environment for that -
    CHK is one big leveraged play on nat gas and oil – how is oil doing today – I have not bothered to look?

  261. TBF/Bolt – I think I'd make sure I at least get the VIP table so I can hob-nob with the Koch brothers!  I don't see the point in selling TBF puts.  The dropped 10% in 2 weeks so clearly 10% lower so we're down to $25 and the June $25 puts are .10 and the July $25 puts are .20 – don't you have better ways to make money than scrimping pennies on an extremely volatile ETF that EVERYONE is telling you is bad to play?  If you must throw away your money, why not pay .60 for the Sept $30 calls, which were $1.20 last week and $2.50 a month ago?   They are so thinly traded with such wide spreads you'll probably lose even if you win but, at least that way you are limiting your losses but then, if you are going to play those – why not just play the TBT Sept $115 puts that we do like instead of bending over backwards to take a crap position in TBF?  You say you know buying puts is the same as selling calls and vs. vs. but then why are we having this conversation?  An illiquid position with wide bid/ask spreads is worse than a liquid position with tight spreads THEREFORE you play the more liquid position from whichever side you want to bet.

    LOL StJ – that's a great video!  

    Setup/Flips – Oh absolutely.  It was a huge con.  As soon as Paulson took the job I said something fishy was going on because no one walks out of GS for a Government job unless there are Billions to be made.  

    SNDK/Sage – That sector is dead, dead, dead for now.  

    FTR/Jrom – Was still good progress off $3.06.

    Welcome Aaron!  I just posted that SDOW bull call spread above and you can pair that with the sale of puts from the TWIL list to make it more neutral but, if you already do have longs that make you nervous – rule of thumb it to hedge about 1/2 your anticipated losses.  So, if you think a 10% drop (you will be able to add more hedges between here and 10%) will set you back $10,000, then about $2,000 of that hedge with a stop at $1,000 risks $1,000 to make $5,500 on a drop.  

    The Dow is 2% above the NYSE for the month and 1% above the Nasdaq and, over 3 months, the Dow is 4.5% over the NYSE and a point over the RUT so they have a bit of catching up to do to the downside, which is why I like them for a primary short if things get worse.  

    Rumor/Exec – I think we need an actual promise of action, rumors won't cut it with the momentum going like it is.  This is what I said would happen if they waited too long but I can't believe they actually waited too long – the World is seriously run by idiots.

    Good positions StJ – Don't forget to keep some cash on the side with that, just in case…

    CHK/Bolt – Just the usual bashing.  Nat gas at $2.32 not helping.  

  262. Thanks Peter, I am actually not despairing yet… It's actually quite fascinating to watch unfold! 

  263. aaronc – did you see phil's trade at 1:36? it won't fill but it's there anyway?

  264. I don't even want to ask what the "F" indicator is, but I've got the drift!

  265. Actually it's a bit disturbing that the VIX is not even indicating panic at 26.70.  Last summer, the VIX was in the 40s before we turned back up.  

  266. and what phil said.. (still won't fill. :)

  267. OK, selling TLT calls, June 137 and 138.  Those can be rolled 2X to 139 and 140 if VIX is still high next week.

  268. Phil/Run by Idiots

    Yes it is, however, given run number 1 of the politicians handbook…..which reads…."thou shall always strive to be reelected….no matter what"….it typically takes a complete meltdown before any action will be taken.  So in the case of Europe where there's really no option other than austerity……they must first prove to the populous that don't want to give anything up, that not giving anything up could be worst than giving something up. 
    So what better way than to let the entire system go to hell in a hand basket.

  269. Phil / Rumor — Don't you think these guys are hedged to the downside? Now they need time to flop bullish before "fixing" things. Wash, rinse, repeat.

  270. JPM – puts – are looking so juicy
    Jan 30s are $3.20 – which could put you in the Jan 2014 bull call spread – 30 to 40 for .50 cents 
    Bank is trading at less than book value

  271. zero / f indicator — The F indicator is when Jabo is being quiet 8)

  272. Phil – I just want to say that you made a heck of a call last month with the July DIA $122 Ps.  Were I a smarter man, I would've held onto those but that was a ridiculously great call. 

  273. /CL options

    They expire several days before the futures.
    So even if you are assigned – you can close or roll futures position.

  274. KO Aug $65 puts at .50 are a nice hedge – kind of like a long put as KO is still very high but depends on China and other emerging markets for a lot of sales.  Also, NY Big Gulp ban is silly but can impact sales.  Idea of long put is that shouldn't lose too much if market pops back.  $62.50 puts are .35 so .15 on an unlikely $2.50 pop in KO is not a bad penalty against a good triple if KO drops 10%.  

    T is s a flight to safety at the moment but there is no safety if we crash and the Oct $28 puts are .45 while the Oct $31 puts are .91 so a double on a 10% drop there.  

    V also getting interesting with the Sept $90 puts at $2.15.  The $100 puts are $4.10 so another one that can double on a 10% drop.  



  275. phil/morx Thank you so much. I have some working, not getting filled but it's a great comfort to know I can ask you guys questions, I love this place.

  276. Money flow has reversed, bottom?

  277. did the TLT roll for .60c happen for anyone?

  278. Pharm,
    Adding to IBIO? Or have you dumped it?

  279. Morx – Yes, but earlier.

  280. enni – dumped them a while back for a small profit on the PLX trade.

  281. Shadow/Flow
    Where do you get that data?

  282. Morx – The roll cost me $0.62c

  283. And of all days for Jabo to be quiet- I would think there would be a plethora of FU's that would drown out everyone else- he was more socialble when his trades were not working- FU Jabo- :)

  284. MoMo Portfolio trade:    10 AMZN  July 210 puts   @  7.30.   Helps balance the long AAPL trades.

  285. VIX / Phil – If you go back to Jul/Aug 2011, you can see a similar pattern to what we have. We ramped to 25, went back below 20, got back to 25 and then it was off to the races – in 3 days we were at over 45! Could be a repeat of that if there is no "can kicking" exercise over the weekend. Did I mention cash?

  286. exec
    I watch the tick and order bench ask was heavy until a few mins. ago. I sure hope 73.77 holds where the buying is coming in.

  287. Iflan – I think you meant the June puts on AMZN?

  288. no $.60 roll yet on TLT.  still working…

  289. jabo – the above pic is 2X me.

  290. Ditto, Jabo, thanks, I needed that!!

  291. thats the Jabo we know and love!- If he was only eating a burrito- LOL!

  292. And booking a trip on PCLN

  293. Jabo that picture was perfect for today!

  294. So……  What do we do with TNA ??

  295. TLT roll just filled at $0.60 with TOS

  296. At least 1 BOT has drawn the line in the sand!

  297. 11:45 AM Europe closes ugly, with the core taking the brunt of today's sell-off. Stoxx 50 -2.2%, Germany -3.5%, France -2.2%, Italy -1.1%, Spain -0.2%. U.K. -1.1%. For the week, the Stoxx 50 (FEZ-4.6%, Spain -7.1%. The euro rebounds from a $1.22 handle, buying $1.2396.

    12:00 PM On the hour: Dow -1.63%. 10-yr +0.48%. Euro +0.43%vs. dollar. Crude -3.43% to $83.56. Gold +3.28% to $1615.45.

    1:00 PM On the hour: Dow -1.78%. 10-yr +0.5%. Euro +0.16% vs. dollar. Crude -3.55% to $83.45. Gold +3.46% to $1618.25.

    2:00 PM On the hour: Dow -2.05%. 10-yr +0.57%. Euro +0.27% vs. dollar. Crude -4.05% to $83.03. Gold +4.06% to $1627.65.

    3:00 PM On the hour: Dow -2.15%. 10-yr +0.5%. Euro +0.38% vs. dollar. Crude -3.63% to $83.39. Gold +3.63% to $1621.05

    The probability of more Fed stimulus when Operation Twist ends in June has gone up to 80% from 50%, says Morgan Stanley's David Greenlaw. Winter month optimism has faded away, he tells clients, "The Fed is likely to do what it can to provide some support."

    "(QE3 won't) have any more impact than QE2 did," Mitt Romney tells CNBC, adding the Fed should focus on keeping prices stable. Romney is previously on record as saying he would replace the Fed Chairman when his term expires in January 2014.

    Canada's May PMI rises to 54.7 vs. expectations of 54.3 and 53.3 previously. It's the biggest jump for the series since September. RBC (the report's author) notes particularly strong gains in employment and new export orders (which rose at the fastest pace since March 2011). The loonie remains sharply lower vs. the dollar as risk markets sell off worldwide. 

    The JPMorgan Global PMI for May falls to 50.6 from 51.4 in previously. It's the lowest read in 5 months for the index. "Growth of total order books remained lackluster and international trade volumes posted a marginal decline," says JPM's David Hensley.

    Not a good time for Yentervention!  Japanese finmin Azumi ups the intervention rhetoric, saying speculators are taking advantage of financial uncertainty in Europe to "conspicuously" drive up the yen. "We'll respond decisively," says Vice finmin Nakao. The dollar made a sharp move higher vs. the yen just after the payroll report, with some speculating Tokyo had a hand.

    The delinquency rate for CMBS rises to an all-time high of 10.04% in May, according to Trepp, likely the result of 5-year loans made during the high-cotton times of 2007 coming due today. The loan window slammed shut later in 2007, meaning there should be far fewer loans to go delinquent going forward.

    The market is on pace for its 3rd "all or nothing" day this week, writes Bespoke, defining the phrase as the net advance/decline read for the S&P 500 exceeding plus/minus 400. 2012 is set for the lowest amount of such days since 2007, but the level this year will likely tower over anything in the nearly 2 decades before that.

    "Fear isn't here," writes Brendan Conway of the VIX, which isup a "scant" 5% amidst a 2% sell-off in equities. Not only is the index not moving much (it rose 50% on August 8, for instance), but traders say volume today, while brisk, is not particularly strong. VXX +5.9%.

    Wow, what timing – right into the close:  Egan-Jones downgrades Italy to B+ from BB, reports Dow Jones. Earlier this week, the firm caused a stir with a downgrade of Spain, but given the carnage this session, today's move is going unnoticed. 

    Ignore the Greek vote, writes Vince Cignarella, French parliamentary elections on June 10 and 17 will be of more import. If the vote doesn't put parliament into the hands of Hollande and his allies, the result will be political gridlock, maybe making it impossible to push through whatever reforms the EU has in mind to save EMU.

    As Brent crude oil dips below $100/bbl – as low as $97.70 intraday – analysts and brokers say the price could fall up to another $25/bbl in the next few weeks if the sour sentiment in broader markets continues. The oil futures market is already oversold, but speculators actively withdrawing bets on higher prices are adding momentum to the fall, Saxo Bank's Ole Hansen says.

    Chevron's (CVX -1.7%) profitability for its E&P segment, measured by the efficiency at which the company invests capital,surpassed Exxon's (XOM -0.7%) in 2011 for the first time ever. CVS says its return on capital employed for its upstream segment was 29%, vs. XOM's 26.5%; also, the amount CVX earns per barrel of oil and gas produced is much higher than XOM's.

    If coal stocks (KOL -1.2%) have finally hit bottom, Paul Ausick seems to like Peabody's (BTU -0.8%) prospects best, citing its Australian mines that provide a key Asian outlet. Separately, Patriot Coal (PCX +2.9%) is far outperforming peers on chatter the company paid its coupon on convertible debt. Also: CNX +1.3%ANR+0.4%ACI -1.7%JRCC -3.2%.

    Gold continues to soar, nearly erasing on June 1 all of its losses from May (the worst May in 30 years). The yellow metal is up 4.2% to $1,630/oz. Oil can't catch a bid, its drastic May fallaccelerating as June begins. WTI crude -4.3% to $82.80.

    Homebuilder stocks (XHB -4.8%) are crushed in the wake of today's jobs report: PHM -10.4%LEN -7.4%DHI -8.5%TOL-6.1%KBH -5.5%. Fannie Mae's Doug Duncan recalls the spring-to-summer slowdown pattern of each of the last two years: "If this pattern recurs, we expect that hopes for a meaningful housing recovery will be delayed once again."

    Shares of Hertz Global (HTZ -7.5%) and Avis Budget (CAR-8.4%) both fall harder than Dollar Thrifty (DTG -2.2%) as the dancebetween the three car rental companies continues. The prevailing thought is that if Hertz doesn't snap up Dollar Thrifty fairly quickly, it risks Avis coming back in to bid. But tricky part for the company is that it has to divest assets, appease DTG shareholders, and deal with the FTC to get a buyout done.

    Could it stick? Though a majority of New Yorkers seem to vociferously oppose Mayor Michael Bloomberg's proposed ban on large-sized sugary drinks, Bernstein Research analyst Ali Dibadj can't help but wonder if other cities will follow the Big Apple's lead on taking on obesity and leave beverage companies jumping around from one locale to another defending consumers' right of choice. Possibly in line to play Whack-A-Mole: KOPEPDPS, COTT, MNST

    Wow, only in NYC: The Bloomberg administration has officially declared today "National Donut Day" in the metropolis in a seeming glaring contradiction to its assault (III) on the beverage industry for its contribution to obesity issues. The Mayor tried to explain it all away on the Today Show this morning. (video)

    Berkshire Hathaway (BRK.B -0.3%) is the outlier among large financial firms today, falling just a hair as Warren Buffett's bid for the shares likely sits right underneath. "(The) moral of the story continues to be that if companies are public about supporting stocks with buybacks, they won't fall," tweets Conor Sen.

    Seagate (STX -6.4%) and Western Digital (WDC -3.9%) have had a very rough week, as concerns about weakening PC demand and the end of a favorable supply/pricing climate for hard drives (the result of Thai manufacturing disruptions) take their toll. Also, yesterday, Barclays aired concerns about the impact of solid-state drives (boosted by upcoming MacBook releases) and tablet cannibalization on hard drive demand.

    Baird is slashing its estimates for Intel (INTC -1.9%) due to concerns about weak Euro and Chinese demand. The firm says its checks indicate PC CPU/chipset shipments to Asia are down in the mid-single digits Q/Q in Q2, compared with expectations for a single-digit increase, and that channel inventories for Intel chips have grown. In-line with a recent Digitimes report, Baird also believes PC OEMs are lowering their Q3 shipment forecasts. (Barclays) (Dell)

    While maintaining an Outperform on SanDisk (SNDK -4.8%) due to its exposure to high-growth markets, RBC's Doug Freedman thinks investors should wait for NAND flash prices to stabilize before buying in. Though management told Freedman spot pricing for some low-density NAND parts has firmed, retail pricing continues to be weak. On Tuesday, Freedman suggested Samsung's efforts to limit NAND supply are bolstering prices. 

    More bad news for Chinese solar firms who have just been hit with major U.S. tariffs. European banks, many of whom have troubles of their own, have reportedly started blacklisting Asian solar module vendors seeking funds from lending facilities, as have systems integrators. Weak Euro solar demand, macro troubles, and concerns about product quality are all said to be influencing the moves. 

  298. Have a good weekend everyone!
    * sorry for all the political commentary….. :)

  299. Google (
    GOOG) has until July 2 to change its search results and ad rules or else face court action, says EU antitrust chief Joaquin Almunia. However, Almunia has indicated he's open to a settlement related to the EU's "concerns," the largest of which appears to be the preferential placement given to Google sites within search results. No settlement appears on the horizon for Google's dispute with the FTC.

    The poor reception to Facebook's (FB -5.6%) IPO, not to mention the broad selloff that's happened in highly-valued Internet names as a result, continues to send shockwaves through Silicon Valley. VCs are extending more scrutiny to the rich valuations soughtby Square and other hot startups, even if they're still optimistic about their long-term prospects. Meanwhile, local companies think the time is ripe to raid Facebook for top talent. (also)

    Prior to his death, Steve Jobs sought to transform three more industries: textbooks, TVs, and photography. Apple (AAPL) is already making its presence felt in the first, and its plans for the second are the subject of constant rumors. Now a source tells iLoungeApple is working on a high-end point-and-shoot iSight camera. However, the site, which also notes Jobs' interest in photography startup Lytro, labels its comments as speculation. 

    Three lunchtime reads:

    1) China and the impending global slowdown

    2) Gary Shilling's advice on austerity investing

    3) Will markets wake up to the folly of monetary intervention? 

  300. Over powering or not seems everyone wants out this week, What does that mean?

  301. Shadow/Order Bench

    Are you talking about level 2

  302. TLT ending on the day's high and the market on the day's low. Not very bullish!

  303. Not enough volume for a blow off bottom.

  304. Great day!…. have a good one everyone…Thx Phil, for the insight…

  305. Have a good weekend everybody!

  306. exec
    What is level 2?

  307. VIX/StJ – I certainly hope not!  

    TNA/$25KP, Edro – Damn, forgot about that.  The $52 calls are just .35 now and 20% out of the money so they need a 7% RUT recovery to pay off – not likely.  The roll would be spending $1 to roll to the July $55 calls at $1.35 but that's not too attractive as now we're looking for an 8-9% move up in the RUT.  TNA dropped $4 today – it would be nice if they dropped another $4 and gave us the same $1.35 entry on the $51 calls and who cares if we lose a little more in June if we're saving $1 in July so no harm in not doing anything at the moment.  

    Am I getting the right volume number on the Dow – 554M?  That would be amazing.   I assume something is wrong with ETrade as I don't see it in the bars.  

    Oh well, that was a total crap week in the markets.  Hopefully the World will not end this weekend – as is projected by Gold and TLT buyers…

    Have a great weekend, 

    - Phil

  308. WOW!  That's what I call a good week.  Now I need about 20 more of those….

  309. Dow volume 128M or 30% more than yesterday!

  310. Have a good weekend all!

  311. Volume on the DOW/Phil – TOS shows 162 million.

  312. Im seeing 162mm in Dow vloume

  313. I have 162M (Fidelity) on the .DJI for volume.

  314. 162M – Thanks all, that makes a hell of a lot more sense!  

    Of course that's still super-weak – maybe just a total absence of buyers as opposed to panic selling explains the low(ish) VIX. 

  315. Hi Phil,
    Need a refresher on how to figure out roll target strike (and time) for a position that is failed in the context of following scenario:
    I am short ABX Jan 40P, a position which I am willing to hold (sold for $3.45, currently at $4.45, so down $1).  I sold today's June 1 (weekly) 40C for $0.35 in morning (Bad luck / Bad timing), which I ended up rolling to June 16 40C for $0.57 credit, at the end of the day.  So, I am short June 40C for net $0.92 (and those are about $2.55 at close, for $1.65 loss). It is very likely that June 40C will need to be rolled, and I will have to take loss on this trade.  I want to use this setup to "learn" rolling.  Assuming I only have this 1x position and did not want to DD on short calls, selling short term premium while waiting for VIX to calm down is a good strategy? I am ok with short Jan 40P position on high VIX, just do not want to sell long term premium on ABX (even with high VIX) and want to get out of short calls with minimal damage.  I would also appreciate pointers on how to manage position sizing with rolls, in general, too. 
    Thanks in advance.

  316. Anyone have a good FX research source.
    I am looking for summaries of New Zealand and Australia -
    I read WesPac research – it's free online but looking for other sources.

  317. These volume numbers are all over the place – but on TOS they do have 162 M (128 M is from Google). They had over 200M yesterday and that has happened only on expiration Friday this year! The average for this year is below 150 M. On Monday we had less than 100 M so big increase during the week. But no blow off volume yet – we had days over 400 M last July.

  318. Hi Phil;
    Yesterday,I bought one of your recent hedges:
    Buy 1500 EDZ July $18 C at $2.40,Sell EDZ July $22 c at $1.30 and sell EDZ July $15 P for net $.35 on $4 spread.Today the market goes down big time and my position goes up $.20 for a total gain of $300. I thought this hedge was to produce large profits as a hedge if the market dropped big time.What happened? Do i need  togive it more time? thanks.

  319. These are not bullish charts… It's the 10% Down line that you can see across the numbers in the Dow and NYSE charts. On a technical level, all the indices have closed below their 200 DMA. That's going to raise all kinds of red flags everywhere. 

  320. Back from surfing… crappy waves although a big swell coming in on Sat/Sun.  What happened?  Phil, you crashing the markets again to increase subscriptions?

  321. Hedge / Dflam – I am sure that Phil will have a better answer, but one of the headwind that you are facing is volatility. A rising VIX meant that the put you sold didn't lose as much value as in declining volatility environment. That's one of the factors.

  322. TZA
    I sold all of my TZA Thursday. Today it went up 8.72%.
    More evidence of newbie's astounding trading skills.
    Plan for weekend:
    Smash keyboard.  Jump off tall building.

  323. WFR
    I've been watching this the last few days. I have about 12 symbols on my ticker. Today every one is heavy red. WFR is green. Has been for a least a couple days.
    Sign of resilient strength?  If I had the exccess money, I would buy a couple hundred shares just for fun.

  324. TNA / Phil
    Phil said Friday:  "TNA dropped $4 today – it would be nice if they dropped another $4 "
    Oh gee, Thanks for that, bud.  It's the only thing I own now, purchased at $48.xx.
    Is trading always this much fun?
    My new mailing addrress will be a cardboard box under a bridge…………..

  325. zeroxzero
    aaronc = "generic" Newbie
    newbie = "pronoun" newbie
    i.e.  aaronc not = "newbie"

  326. AUD /Samz3700  
    I like Michael Blythe over at CBA… They have a good economics team.. rgds

  327. newbie—--glad you are taking over for Jabo who has been quiet lately counting his profits —was getting a little boring without all the exclamations  :-)

  328. Newbie – stick with it – its not about a single trade or two, but an education which can only be achieved thru time. If you're frustrated, I would suggest spending more time paper trading until you thoroughly understand Phil's strategy, and then starting very small. Be sure to read the Education of Amatta on the wiki – its funny as well as educational.
    Hang in there!

  329. savi and deano,
    i just had a beautiful and eloquent comment that I typed and then did some kind of fat finger thing and the whole thing dissappeared, and I'm not sure if I'll feel like re-writing it.
    I've been trading on and off for three years, and I'm only down 50%, so I figure that's not too bad!   ;)

  330. NOW the NYT is getting to it…..come to Papa….

  331. Morgan Stanley….um, this is why I shorted the common….screw options….

  332. The problem with the top 1%:

    Chrystia Freeland has found a classic example of Silicon Valley hubris in TJ Rodgers, the CEO of Cypress Semiconductor. Rodgers reckons his taxes shouldn’t go up; his reasons are pretty simple. If that happened, he explains, he’d have less money to invest in Silicon Valley. And since “taking money from the investments, my investments, out of Silicon Valley, where they have been very, very good for the economy” is self-evidently a really bad idea, then raising his taxes can’t possibly make any sense. [...]

    “It’s the role of governments to create public goods which are platforms for innovation. If you look at the U.S., the Internet was a government defense program on which today you have this huge innovation ecosystem. GPS is another example.” That system “was designed for military applications. But today it’s used for maps or car navigating systems or whatever. So the ideal is to create these global public goods or these national public goods that are platforms. And then make them open so that people can innovate.” [...]

    Nick Hanauer, another Silicon Valley multi-millionaire, uses the gardening metaphor: we need to maintain our garden if we’re going to reap abundant crops. So long as people like Rodgers think that the government is good for nothing but misguided cash-for-clunkers schemes, and that the best thing it can do is just get out of their way, they’re going to be the worst kind of free-rider: the kind who doesn’t even know they’re free-riding. Maybe we should tell him to try to build a great technology company in, I dunno, Greece, and see how that works. Only then might he appreciate just how much of his net worth he owes to his country.

  333. Poor Amatta are you guys making fun of him? He will come back to horned you all!
    Hi I could not fail noticing on Friday that you will enter the week end 
    1. cash
    2. cash 
    and 3. cash.
    I ask myself the question do you trade the market at all? Looking at my portfolios it would be practically impossible to liquidate all my positions especially last Friday where every one is running for the exit. I am sure the majority of members do have all positions long or short term, and I just remember some of Phil's words all suckers sell at the bottom if there ever is a bottom.
    Yes sure looking at for instance JPM I hold the stock at 37 at 35 at 33.50 and even scaled in at 32. In deed it is a paper loss and even a good amount of TZA plays will not make up the difference. But just because there is a week end I should dump all my shares at the lowest price instead of just be patient and at the moment look at a paper loss. One guy will fall in love with me and that would be the broker.
    Looking at my last ten month of trading I conservatively, even with Phil kicking my ass on various occasions , I took cash out some 750K not like JRW in two days, but yesterday after closing taking stock I saw my portfolios drop by 250K over the last weeks. 
    I look at it positive, 500K for a small trader like myself is nothing to laugh at. But only if I dump everything I have a loss. But well JPM trading today at 32 I can always start to sell the 33 or even 34 July caller again and at the same time waiting for may be and that is may be, better days. 
    I put some cash away in the store room it turned out to become musty and I had to dry it out in the microwave. However the gold I keep at the same place was shining as good as ever.
    Just some week end remarks.

  334. Can someone post a link to the wiki page? Thanks.

  335. Good morning! 

    Off to my niece's wedding this weekend so you won't hear from me again until Sun night – I'll try to catch up then but running late.  

    Have a good weekend. 

  336. japar – top of page above the bar….Wiki…..

  337. Thanks pharm. I feel like an idiot for not seeing that

  338. Cash / Yodi – This was a bit of a comedic point… Obviously I didn't advocate you closing all your positions ahead of the weekend! But this market does scare me a lot as I pointed out in the comments.

    Like I said, what makes sense to me is some investment in the TWIL list (but even that, I am careful in sizing) that don't really need hedging and day trades.

  339. Pharm – Around? Thinking about adding to my ARNA position – with some 2014 4 leaps & Oct 12 6 calls. The trade should have great cover, and give plenty of time to roll if it spikes – what do you think?

  340. Here is a shopping list of buy/writes I am considering:
    $77.92; Jan 14 77.50's P/C for $ 22.05; Net 57.87/67.68
    Return- 33% plus 2.9% div. ; Annualized return – 25%
    $25.14; Jan 14 25's P/C for $ $7.67; Net 17.47/21.23
    Return 44% plus div 3.3%; Annualized return – 34.5%
    $86.71; Jan 14 85's P/C for $ 20.00; Net $66.71/75
    Return 27% plus div 3.2%; Annualized return 21.2%
    $82.79 Jan 14 80's P/C for $ $20.88; Net $61.91/71.00
    Retrun 29% plust div 3.7%; Annualized return 23%
    $38.65; Jan 14 P/C for $ 15.25; Net $23.40/30.70
    Return- 67% plus div 3.4%; Annualized return 45%
    $61.78; Jan 14 60 P/C for $12.35; Net $49.43/55
    Return 21% plus 4%div; Annualized return 18%
    $ $61.55; Jan 14 60's P/C for $ 12.40; Net $49.15/54.57
    Retrun; 22% Plus 3.6% div; Annualized return 18.3%
    $ 3.03; Jan 14 3's P/C for $ 1.56; Net $1.56/2.25
    Return 92%; No div; Annualized return 61%
    Note: These are nominal returns as additional margin requirements were not included. Actual would be lower depending on the type of account.

  341. Correction on HERO- that is Jan 13 P/C; so 6 mos. play returns 92%; annualized 184%.

  342. All of these could go a lot lower. I think the "safest" at this point are JNJ and PG; riskiest is HERE and AFL a bit less so.

  343. stjeanluc/Bespoke,
    Regarding Bespoke, do you use their paid service as well and if so, can you recommend it?

  344. ARNA/deano – depends upon risk tolerance.  I think they get approval, although I thought that last time.  I am not as confident on this, so I would rather play a short term pop than a longer term play.  That's just me.  I am not in them any more, as I have enough of a risk playing PLX, SGEN, YMI and CRIS.  I have many others, but these are my largest positions. 

  345. Pharm,
    I have 1000 shares of PLX at $5 and change, and have been following your suggestions on selling puts and calls, which has worked out really well, so again a big "thank you". Of SGEN, YMI or CHRIS which would you add next?  

  346. Phaarm,
    I don't know who CHRIS is, but he must have been on my mind. CRIS, of course.

  347. sparky – YMI.  Cheap, and can be averaged into.  SGEN is high, but I love them for a takeout, so they are #2 – how about the Sept $22.5/25 BCS selling the Sept $17.5 Ps for $1.25 CREDIT.  This is buying some premium on the call side, but still gives an attractive entry at $16.25……SGEN is my largest holding as I have been in them a while. 

  348. Thanks, Pharm, I'll look at both of those.

  349. Bespoke / Wappler – No, I just browse their blog. It does look interesting, but the good stuff (database) is really expensive!

  350. Pharm – List of stocks?
    Do you happen to have, or could just list the top 5 biotech's/pharma stocks you'd put on your watchlist to sell puts against?  I have no exposure to the space and I'd like to put 5 on my research list?  
    Thank you very much!

  351. Hi all!  

    Had a great time at the wedding.  Brought home a few relatives so busy tonight but time for the moment to check the news: 

    By the way, you can go home again but it makes you feel old!  Went back to my house of 30 years ago and saw trees I planted with my dad now a forest – an amazing thing which, of course, reminds me of the truth of "The Man Who Planted Trees" but more depressing than seeing how big the trees got was the fact that they had the same old wooden mailbox we built – which was very nice 40 years ago but now looks like it belongs at an antique fair – and the same old wooden fence we built around the pool I was actually glad I can't see. 

    The trees are a lesson for us all though – I would strongly encourage you to do this with your kids if you can because it does make you realize you can change the World – just nurture a sapling with a bit of water until it's big enough to stand on it's own and in just a couple of decades you need lumberjacks to bring it down.  This is how you should construct your portfolios as well!  If you build them with care and patience, you will soon (relatively) grow your positions into ones that will last a lifetime and weather any storm and they can yield dividend and options returns the rest of your life.  

    By the way – I have also become concerned that I may have inadvertently caused the crash as there were over 200 people at that wedding who are "Cashy and Cautious" because of my nagging some of them aren't going back in and are investing in other things as they feel they caught a nice top and they're done for a while.  It's going to be very hard for the market to compete for sidelined dollars if real estate stabilizes as there are many bargains to be had with properties you can rent out and even the prospect of a 20% drop in real estate isn't as scary as another massive leg down in the markets to non option players.

    Friday's gloomy reports show the world economic outlook to be in dire straits. As U.S. employment growth slows sharply, Chinese factory output barely growing and European manufacturing falling deeper into malaise, the calls are going to grow for another round of stimulus from the Fed. Whether or not it wants to step in to catch that falling knife, however, is anyone's guess. 

    George Soros' remarkable speech on the "political bubble" of the EU: "The (current) political dynamic makes the disintegration of the EU just as self-reinforcing as its creation has been … (however) the likelihood is that the euro will survive because a breakup would be devastating not only for the periphery, but also for Germany." He gives the Germans 90 days to come around. Worth the full read.

    London printing firm De La Rue, whose order book has increased smartly, is neither confirming nor denying it has been awarded a contract to print drachmas should Greece exit EMU. The firm's CEO does say printing a new currency with just a few weeks lead time is "impossible."

    The summer of 2012 is looking like an "eerie" echo of 2008, with eurozone sovereign debt replacing mortgages as the risky asset class that could blow up, the World Bank's Robert Zoellick writes inFT. Europe's leaders need an emergency plan – fast – since time is running out, and they "may be nearing a 'break the glass' moment: when one smashes the pane protecting the emergency fire alarm."

    Top officials from the EU and ECB are secretly at work on a "master plan" to create an entirely new Europe, reports Welt am Sonntag. The proposals won't be unfamiliar to anyone following the debate – banking union, fiscal union, political union. "We have to deliver after two years of crisis, finally an answer," says a senior EU official. 

    The EU is hoping for a July 9 start date for its permanent €500B rescue fund (the ESM), according to an official. Key will be German parliament, where lawmakers may not vote on approval until early July. Opposition lawmakers – whose support is necessary – have made noises about withholding votes unless Merkel eases up on austerity demands.

    Spanish PM Rajoy tells an audience he has "strong reasons" to believe EMU's issues will be resolved soon. "We need to give upmore sovereignty," he says calling for EU fiscal union and member states to cede some control of fiscal policy. "We may have lived a littleabove our means … those who criticize us lent the cheap money."

    After a crushing month (and a day) for the market and with a weakening U.S. economy, the calls come for more Fed ease. Trouble is, how much more can the central bank do? Even dovish members have signaled they are not ready for more QE, but – with inflation fear morphing into deflation fear – it may seem a little more palatable. 

    Ugly chart of the day: The widening gap between earnings yields and Treasury yields represents "a massive failure of our economic institutions" – we have low bond yields because the Fed has failed to do its job, and we have high stock yields because the market has failed to do its job.

    Beware a barrage of sell orders Monday as the S&P 500 broke beneath its 200-day moving average late Friday. While not always portending a further sell-off, the last time the S&P broke through what many consider this key technical barrier – August 2 – the index lost 12% over the next 5 trading sessions.

    Long-time bond bull Robert Kessler takes a victory lap and says there's plenty of room for yields to fall further. That's bad news for stocks, he says, as low yields are forecasting lower profits. How to make money with these yields? Banks can conservatively lever 20-to-1, borrowing for nothing to make 15% returns. It's a casino, but the House (the Fed) is paying everybody to play and win.

    Spain has chosen the "Big Four" accounting firms – KPMG, PWC, Deloitte and E&Y – to audit its troubled banks, Reuters reported yesterday. The assessments are in addition to stress tests of the entire sector by consultants Oliver Wyman and Roland Berger, which are due to report their initial findings in mid-June.

    Chinese housing prices fell 0.3% in May, hitting a 16-month low, according to SouFun Holdings. Prices in the 10 largest cities declined 0.5% and are down 3.2% Y/Y. Another report shows new home sales in Shanghai jumping to their highest level in a year as developers cut prices.

    With Iraqi oil exports almost +20% this year to 2.5M bpd, the country, along with Libya and Saudi Arabia, should help prevent price spikes from the sanctions-induced drop in supply from Iran. Iraq wants to raise output to 10M bpd by 2017, but experts are skeptical, especially given problems that include corruption, bureaucracy, neglect and tensions with Kurdistan. founder Rob Reid compares the success of the publishing industry to adapt to the digital world and the total failure of the music industry. While the first MP3 player was greeted with a lawsuit, "the Kindle launched with licenses rather than lawsuits…and offered more than 90% of the day's best sellers when it shipped."

    The big tech selloff that's occurred over the last few weeks has resulted in valuations for many large-cap names once more falling to historically low levels. Here are some trailing P/Es for prominent large-caps, none of which take into account net cash and investments: Intel (INTC): 10.6. Microsoft (MSFT): 10.3. Apple (AAPL): 13.7. Google (GOOG): 15. Cisco (CSCO): 9. IBM: 13.6. EMC: 14.7. Dell (DELL): 6. H-P (HPQ): 5.1. On the other hand, Facebook (FB) still has a trailing P/E of 64.5. 

    While RIM (RIMM) CEO Thorston Heins believes the firm has "a great future" despite its huge problems, Nomura's Richard Windsor is unconvinced. Windsor predicts declines in competitiveness and units, and "persistent losses from the device business long-term." He adds that RIM's strategy is "overly ambitious and unlikely to succeed."

    The European Telecommunications Standards Institute (ETSI) has chosen Apple's (AAPL) "nano" sim card design as the new standard for the next generation of such cards over a rival proposal from Nokia (NOK), RIM (RIMM) and Motorola (GOOG). The new sim is 40% smaller than the micro-Sim used in some devices today.

    Thanks to the iPad's dominant share of tablet browsing, iOS (AAPLgrew its share of total mobile browsing to 62% in May, NetMarketShare estimates. That's more than 3x the 19.7% share estimated for Android (GOOG), in spite of its solid lead in smartphone shipments. Even if one assumes NetMarketShare's methodology is imperfect, the figures drive home Google's need to improve its tablet position, given its huge iOS search revenue-sharing payments to Apple.

  352. Barry's succinct summation of week’s events:


    1) Gasoline prices fall another .04 on the week to $3.61, according to AAA, the cheapest since Feb.
    2) The Fed’s now preferred inflation figure, the PCE price deflator (instead of CPI), rises 1.8% in April, the lowest since Feb ’11.
    3) A bright spot within payrolls was the 422k job gain in the Household Employment survey.
    4) Ireland votes to hold hands (I’m sure with their eyes closed) with the rest of Europe by passing the fiscal treaty.
    5) Another drop in interest rates in the US, UK, Germany and in some others, never a better time to borrow money if you can get it.


    1) May Payrolls grow only 69k after just 77k in April, well below expectations of 150k. Likely again some weather give back but US economy clearly slowing.
    2) ISM mfr’g at 53.5, slightly below expectations of 53.8 but not as bad as feared and ISM puts positive spin on mfr’g.
    3) Initial Jobless Claims total 383k, 13k above estimates and follows 4 weeks around 370k.
    4) April Pending Home Sales fall 5.5% vs the est of flat and comes after cumulative 16.3% in unusual Oct thru Mar fall/winter.
    5) Refi and purchase apps fall even with another new drop in mortgage rates.
    6) Conference Bd Consumer Confidence falls to 4 month low.
    7) Number of German unemployed remains flat vs est of down 7k.
    8) Spanish and Italian yields again higher, IBEX closes at fresh 9 yr low and MIB just 100+ pts from Mar ’09 low.
    9) Euro zone unemployment at 11% in April, unchanged with Mar.
    10) China mfr’g PMI falls to 50.4 from 53.3 and PMI’s in India, South Korea and Taiwan fall slightly.
    11) India’s Q1 GDP grows only 5.3%, the slowest in 10 yrs.
    12) Fallout from China’s slowdown, Hong Kong’s April retail sales rise less than expected.
    13) Historically low rates in the US, Germany, UK, etc… are scary to watch especially a negative 2 yr note yield in Germany.

  353. S&P futures are lower by another 9 points compared to Friday's close.

  354. Makes sense since Asia didn’t have a chance to react to our Friday.

  355. What do you think about shorting some /ES and /NQ here, just in case we get a huge leg down tomorrow?  I'm feeling a little too bullish, and the only way to play the leg down is short futures with tight stops.

  356. Pharm – thanks for the TA book! From time to time I go back to refresh myself and I always learn something new.

  357. CNBS is trying to scare the [bleep] out of everyone!
    Are Stocks About to Repeat Their Summer Horror Show?
    Tune in to CNBC TV at 9pm ET Sunday for a special report, "Markets in Turmoil."

  358. Shorting/Burr – Of course if you feel exposed, it’s good to hedge a little.m just make sure you have a goal with stops etc. I’d rather play the 12,000 line on The Dow in either direction but, of course, I’m more inclined to play for a bounce off this line (/YM) but playing below the line with a tight stop above is just as valid.

  359. The Art of Euphemism" — "American International Group Inc. (AIG) Chief Executive Officer Robert Benmosche said Europe’s debt crisis shows governments worldwide must accept that people will have to work more years as life expectancies increase. “Retirement ages will have to move to 70, 80 years old,” Benmosche, who turned 68 last week, said during a weekend interview at his seaside villa in Dubrovnik, Croatia."  H'm.  Since U.S. life expectancy is 78.5  at present, that's one way of putting it!!

  360. I'm watching this CNBC program here on the west coast, and now that they've trotted Prechter out, I'm starting to feel pretty sure there's going to be a big flush followed by a big pop this week!  They weren't doing these specials back in 08.

  361. I'm getting a New "New Deal" vibe.    Lowering rates further appears to have zero marginal value.  It's an election year. Yeah, I know the Right want to cut taxes, and the Dems seem to want to "hold the course", which ain't working, hence the Obama fade.   But a ramped-up national infrastructure replacement program would cut unemployment directly, give jobs to returning soldiers and possible draw a line under declining American GDP.
     Here's the argument, from FT:  "the US government is essentially being offered free money to invest in America’s future productive capacity. Indeed, as Brad DeLong and Lawrence Summers have recently argued, whatever is invested at these rates is likely to pay for itself in higher growth and revenues. The size and nature of the market for US sovereign debt means that bond buyers are no flight risk, unlike in many smaller economies. The US can and should, therefore, choose a more expansive fiscal policy. Budgets should ideally balance over the cycle. But they should also be counter-cyclical."

  362. Syriza just came out with its new plan for Greece. They propose to raise the minimum wage, freeze wage and pension cuts, increase unemployment benefits, and reduce taxes. They left out the part about all of it being paid in Drachmas.

  363. Phil:

    The job of the President is to instill trust and confidence and faith in his leadership. In turn, consensus towards a plan will be achieved and progress made. The fact that this president has not and can not produce consensus on any plans is a failure of his leadership. You can defend him all you want, but the fact is he has been ineffective. Leadership extends beyond party lines and great leaders are able to overcome stubborn resistance. Regardless of who holds the office next they will have to exhibit leadership skills. Otherwise, they will fail just as this President is failing.
    PHIL: That's some interesting logic DC.  So that means if one party – let's call it the GOP, is willing to destroy the country to gain a political advantage, then they can fail to form a consensus with a Democratic leader and that will "prove" he's unfit to lead.  When the GOP gets their guy in, they can cooperate with him, "proving" he's a great leader.  That leaves the Democratic party with the choice of acting just as juvenile as the GOP and working to destroy the country when a GOP member sits in the White House or "proving" the GOP has better leaders by cooperating in the best interest of the country.   It's true, the GOP has stumbled across a winning formula – by not caring whether or not their actions damage this country – they get to take control of it from the people who do care – BRILLIANT!  
    I wanted to respond, but not during Friday’s market. Then I got caught up with other things. Anyway my response:
    Please stop defending your ideology. My comment was not aimed at one party or the other rather it was criticizing President Obama’s leadership skills.  What do you see in this President (again not his ideas!) that gives you confidence the next four years will be any different than his first?  If he can’t find a way to get the other side to cooperate than he’s just a guy with great ideas.  The President is supposed to provide leadership and confidence not wait for it to come from some outside force. 
    If you were President would you do anything different in a similar environment or would you too whine and complain because your partners would not cooperate with you?  Knowing the little I do about you, I bet, in fact I know, you would come up with various strategies to attack the problem and move the ball forward regardless of the environment.
    Every candidate for President knows the rules coming in.  It should be no surprise when the other party tries to challenge and resist.  They think their plans are better!  So, we have two forces and a third (Senate) that all have great opposing or similar ideas. Who will bring them all together and sort which ideas get implemented?   That task falls on the President, and if he provides a semblance of leadership and confidence he gets re-elected.  If he doesn’t or resorts to whining and complaining without results he doesn’t deserve a second chance.  Bring on the next LOSER!

    Every once and a while we get great leaders.  Two Presidents that faced similar circumstances as Obama were Bill Clinton, and Ronald Reagan.  According to your answer a President is basically useless unless the Congress decides to cooperate with him. Really!  I think each of the Presidents mentioned above faced equally as difficult environments as Obama. And they had big ideas coming in. Whether you like their policies or not, it would be really hard to convince anyone that they weren’t great leaders who exhibited great leadership skills regardless of the circumstances.  And they got the job done.  I would take either one of them over someone who attempts to blame others because they can’t get any cooperation.

  364. Burr – biotechs or pharma?

    YMI – Oct $2.5
    SGEN – Sept $17.5s
    IMGN – Oct 12 or 13s
    PLX – Nov $6s
    CRIS – Dec $5s
    MRK – Jan 2013 $32s
    BMY – Jan $28s
    GSK – Jan $38s

  365. dclark41 – I would agree that Obama has not been much of a leader. I would have preferred a challenge to his re-election from within his own party because of his performance. That's not going to happen.
    I am a Democrat, and I what the best person for the job to represent us in the general. The greatest concern I have, is what a far right majority of Republicans could do with an obviously confused and confusing Mitt Romney.  :)
    This is about so much more, than one persons ability to lead……
    So, I am not sure how you think any one person, in today's political theatre, can accomplish anything with so many others having no desire to cooperate for common good.

  366. I want – I what(?)
    Good Night…..

  367. I'm all for planting trees, real and figurative, but it's a comfort to know that down the road it won't make much difference who did and who didn't; takes some the pressure off my nominal trading skills.

  368. ZZ only 4 billion years left? That used to seem like a big number, but now I'm not so sure.

  369. 1020
    Yes, a change even within his own party would be better than what we have now; maybe even better than Romney (I am not sold on him either). I want a strong leader who will transcend above all this left/right nonsense and who is capable of convincing others to do so as well. The problems we face are enormous and have moved beyond all the party rhetoric. If not the President than who? Let's buckle down and solve the real problems first. We can put the philosophical crap on the back burner until later.
    If you are hopeful for "so much more" (ie., philosophical crap) that will be very difficult without having all three houses under one party control. It simply isn't going to happen (my strong opinion). Hence, the best we can hope for is enough cooperation to implement some practical solutions for the very real problems we face. And hopefully this can happen before we self-destruct with the rest of the world.
    But I do appreciate your comments.

  370. pstas -
    So to be clear, those are
    BUY the stock
    Write the put
    Write the call

  371. Haschade- yes, buy/writes are buy the stock; sell both puts & calls (i.e., straddle)

  372. Good morning!

    Wow, 385 comments on this post, no wonder I'm having trouble getting caught up…

    Asia was the disaster we expected but the message is mixed out of Europe with the CAC up 0.4% and the DAX down 1.25% as Merkel continues to be the only person in the EU who says no to more stimulus.

    7:29 PM "Optimism evaporates" is the title of the BIS Quarterly Review, reflecting on the short-lived boost to financial conditions from the ECB's LTRO. Add clear signs of slowing growth in the U.S. and China to the situation in Europe and the result is just what happened in markets in May (and June 1).

    9:04 PM Yen bulls feel their oats, pressing bets despite official threats to take measures to weaken the currency. Focusing on the nominal value of the yen is misleading, say strategists. Persistent deflation means dollar/yen would have to fall to ¥55 (from ¥78 today) for the yen to equal its strength of the mid-90s. Meanwhile, the Topix is off 2.2%tonight – if it holds, it will be the lowest close in 3 decades

    3:01 AM The yen's strength, the eurozone debt crisis and slowing auto demand in the U.S. are among the concerns facing the Japanese auto industry, says Toyota (TM) president Akio Toyoda. Japan's three biggest carmakers have surrendered most of their Q1 stock gains in light of these concerns.

    3:06 AM Japanese PM Yoshihiko Noda reshuffles his cabinet in an effort to win opposition backing for his bill to double the sales tax. With less than 20 days to go until the end of the parliamentary session, the move looks like a make-or-break push for the bill on which Noda has staked his career. Investors, and ratings agencies, are watching closely.

    3:18 AM Asian markets get walloped, with weak China datacompounding Friday's U.S. sell-off. Hong Kong -2.3% to 18130. China-2.7% to 2309. India -0.8% to 15835. In Tokyo, the Nikkei -1.7% to 8296, while the broader Topix fell as much as 2.2% earlier, hitting lows not seen since at least 1985.

    3:10 AM China's non-manufacturing PMI fell to 55.2 in May from 56.1 in April, showing the services sector is still expanding but is doing so at the slowest pace in more than a year. Service industries now account for 43% of the Chinese economy; officials want to raise this to 47% by 2015.

    3:25 AM Breaking: Portuguese state to inject more than €6.6B in banks. (via)

    More on Portugal/banks: The government is injecting €1.65B into state-controlled Caixa Geral de Depositos, up to €3.5B into Banco Comercial Portugues SA, and €1.5B into Banco BPI (BBSPY.PK). The state will receive convertible bonds from BCP and BPI in return. The money is coming from a bank bailout fund created as part of Portugal's €78B rescue.

    5:31 AM EU stocks are mixed, with a small drop in Spanish unemployment and Portugal's €6.65B injection into three banks competing for investor attention with the miserable data from last week. EU STOXX 50 +0.3%, London closed, Paris +0.3%, Frankfurt-1.1%, Madrid +2.2%, Milan +0.8%, Lisbon +0.2%.

    6:00 AM Overseas: Japan -1.7%. Hong Kong -2.0%. China -2.7%. India +0.2%. London Closed. Paris +0.3%. Frankfurt -1.3%.

    Monday's economic calendar:

    9:45 ISM New York Business Index

    10:00 Employment Trends Index

    10:00 Factory Orders 

    All in all, not so bad and in-line with out thesis that Friday was a bear trap and not the beginning of the end.  The Dow has recovered off that 12,000 line to 12,063 for a nice $315 per contract gain on the bull side without crossing that line (the easiest way to play the Futures) and the Nas is very close to green at the moment (6:22) and, of course, that will be up to AAPL, who are back to our $555 entry line in pre-market trading which some may think is bad but I see as a coiled spring ready to pop and shoot the Nas up 2-3% as AAPL pops back to 580 (4.5%). 

    It's all very easy to follow if you assume the markets are manipulated and that AAPL is taken down and brought back up (but within it's own trading range) to play the Nasdaq like a yo-yo.  8)

    So it looks like it might be a fun day for the bulls after all.  We get to catch Asia and London (who are closed for the Queen's Jubilee) napping and that means a nice rally in the US can lead to a huge snap-back in Asia and that can give rally fuel to Europe – especially if someone over there says something soothing in the next 24 hours. 

    Dollar at $82.87, oil a good bull play at $82 (/CL), gold at $1,625 is reflecting more certainty of stimulus, silver $28.47, copper $3.28, nat gas $2.37, gasoline $2.61.

    Euro $1.243, Pound $1.538, 78.12 Yen to the Dollar and EUR/CHF at $1.20087 (but will be fixed shortly).

    Rumor of the moment is Germany will agree to Euro Bond-type of arrangement if the other nations submit to their fiscal authority – finally winning WWII and taking over Europe after all these years!  

    As that doesn't seem very realistic – I'd take the quick money and run on the Dow Futures (now 12,075) and use oil futures (/CL) as a fresh horse if they can hold the $82 line.  It will take more than rumors to sustain a rally but Spain is now up 2.6% on rumors alone – MADNESS

  373. Rolling/DrM – You have to keep in mind that ABX is at $42 and your "loss" on the short puts is just an illusion of premium and we are NOT the suckers who pay premium, are we?  So you sold .35 of calls to protect a loss that wasn't real – that's the mistake there because clearly you didn't REALLY want to be short ABX, did you?  You need to try very hard not to take positions you don't believe in – betting against yourself based on short-term market moves is why you have "bad luck/bad timing".  All these things you are telling me you are NOT willing to do – you should have told yourself before you sold your soul for 35 cents!  You took a position you were not willing to roll far out in time nor are you willing to DD to a higher strike, where you have more comfort and EVEN WITH ALL THOSE MISTAKES – had you realized this about your trading plan in the first place, then setting a reasonable stop on the caller (since that was your only ultimate exit) would have saved you a World of pain.  I'd buy 1x of the Jan $44/50 bull call spread at $2.25 and roll the June $40 caller ($2.50) to 2x the June $42 calls at $1.27 ($2.54) and just make sure you roll them to the July $44s (now $1.47) before that roll goes negative on you (if necessary).  If ABX flies up, you can add more long spreads, which is still cheaper than buying back the callers and, meanwhile, your short puts begin working and then you have that buffer as well.  

    EDZ/Dflam – Wow, talk about unrealistic expectations!  Your net .35 trade went up .20 in a day (57%) and you don't like the performance?  This is similar to what I was just saying to DrM about premium – you need to separate what's real and what's imaginary in those numbers.  You OWN the EDZ July $18 calls.  EDZ went from $17.90 to $19.27, putting you 127 pennies into the money on your .35 trade.  Why do you give a f*uck what the $22 caller THINKS he's worth?  You're NEVER going to pay him a penny UNLESS you are $4 in the money – are you?  

    This is a very important point for all – it's not enough to just trade options – you need to UNDERSTAND how they function, how they are priced, how they move over time – otherwise you will be panicked in and out of positions by PRICES that are based on premiums that we are supposed to be learning not to pay and you will miss the true VALUE of your positions.  

    That Big Chart is so ugly it can't be real – I really do think it's a blow-off spike down but I HOPE that's not just wishful thinking.  One of my brothers is all cash and said to me he hopes the market drops another 20% so he can get in at new lows and I said to him "no you don't – you have to think of the macros here and, if we fail to hold 1,200 in the S&P, we are very screwed Globally, possibly looking at a financial crisis that will not be fixable for many years."  We need rational action (ie stimulus) from our leaders NOW and, if we don't get it, we are in for a World of pain.  So I HOPE the drop last week is a smack in the face that wakes up the G8 but hope doesn't make for any big betting – it's still Cashy and Cautious until we get some ACTUAL action but a little bottom-fishing here is certainly good sport as we test those 200 dmas on the Nas (2,757) and S&P (1,284) from below.

    TNA/Newbie – All eggs in one basket is never a good idea.  That's why they have an expression everyone on Earth knows.  When your one basket is a 3x ETF – those eggs are going to take quite a pounding on a regular basis and the longer you hold TNA, the more it decays (we've had this conversation before) meaning it's very silly to hedge it (betting against yourself) in order to hold it longer so you can pay the ETF more fees (you take a constant loss to these ETFs through management expenses that come out of the net) and experience more decay.  

    Times/Pharm – Very nice.  

    Indicators/StJ – So bad they're GOOD!  

    MS/Pharm – That's why we need more QE here.  We can't let MS fail – not to mention the other 4, who are not much better off.  

    Great point by Hanauer StJ but I don't know why people think cash for clunkers was a failure when the auto industry has been driving our growth for the past year.  

    Liquidating/Yodi – It's just as good to move to a neutral stance on positions you hold as to liquidate.  Rather than cashing out millions in positions, you can just put on hedges that get you to neutral and then all you have to do is manage the hedges to ride out the storm – that's what we did last summer with the Income Portfolio when we had a much worse drop than the one we're having now.  You are right about only the broker loving that kind of action – one reason brokers hate to talk to people about options is because people who hedge with options trade less and no broker wants you to trade less.  

    Rough data week with EU GDP and BBook.  Tons of Fed speak though, great time for the QE train to leave the station.  

    List/Pstas – Good stocks but not all at 2009 lows – I'd cast a wider net, especially with MCD and JNJ, where you're getting little reward for not even buying at the bottom. 

    CNBS/Diamond – That is a nice contrary indicator, like the cover of Time magazine.  

    70-80 years old/ZZ – In other words "work until you die".  Wow, at what point to people finally realize they are slaves?  

    '08/RDN – You're right, in 2008 they kept telling us how great things were as they fell apart.  

    Infrastructure/ZZ – It's the only rational move.  

    Leadership/DC – Please stop defending my ideology?  OK, I guess. No point in arguing that kind of logic…

    Collision/ZZ – What happened to that whole expanding universe theory?  That should make it impossible for two galaxies to collide since we're all supposed to be moving away from each other (away from the center).  So, unless I'm missing something – these guys are claiming that the Big Bang Theory is invalid?  

    4 Billion/Sparky – Don't be fooled, when we were kids, $4Bn seemed like an unimaginable amount of money, now it's AAPL's monthly earnings.  A little bit of galactic space-time inflation and it will seem like the universe is ending tomorrow!  

  374.  benmosche has a seaside villa in croatia…how are there tax laws!!??

  375. Pharm –  Thanks.  Either is fine, just looking for the top few stocks you like so I can put them on my watchlist to buy when/if we hit a bottom.  I have 0 exposure to that space. Thanks for the list!

  376. well its been over a year the site has been expecting QE after disagreeing (when do they ever do it when its truly going to impact?!) i now think its getting close..but the gop will never let it happen if they have a voice in the feds meddling..the president has little chance of re election without a massive save but of course.. romney is the christopher lee of candidates so stay tuned..they both are truly a dreadful manager the other a dreadful campaigner

  377.  @Felipe
    "…we're all supposed to be moving away from each other (away from the center). So, unless I'm missing something – these guys are claiming that the Big Bang Theory is invalid?"
    Think of all the traffic moving out of Manhattan at 6 pm.  While they are all moving away from the center, the number of collisions between the vehicles is likely in the hundreds—some of them fatal— for the drivers and passengers.

  378. Oh come on Flips – they can't have burned all the science books in your neck of the woods?  ;)    Try this.



  379. Or, less informative but more catchy: