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Monday Market Movement – Next Stop, Italy!

Spain is "fixed"!

Isn't that just great?  $125Bn thrown at the banks is bigger (proportionate to GDP) than the US's $760Bn TARP program but, then again, Spain doesn't have the luxury that the US Banksters have of getting an additional multi-Trillion Dollar stealth bailout from the Federal Reserve as they devalue the currency (effectively robbing every man, woman and child in America) in order to give 0% loans to their friends.  

Borrow a few Trillion Dollars at 0% and lend it out at 4% for a few years and you too can declare record profits and pay yourself record bonuses for being smart enough to have formed the Federal Reserve to fool the American people into thinking this private banker club was somehow concerned with their interests (see "The Creature from Jekyll Island").  


As Monty Python sort of said "scam, scam, scam, scam…" but that's our financial system so no point in complaining about it unless you get paid to – like I do.   So $125Bn buys us 12.5 points on the S&P but, unfortunately, that was sort of baked in in Friday as we already popped 10 points so the rally last night seemed overdone, and we were forced to go short on the Futures in Member Chat at 10:18 pm, when I said to Members

…Anyway, back to the Futures:  The RUT should have a rough time at 780 (/TF) and a short there (now 777.20) is realistic as is shorting the S&P (/ES) below 1,340 (now 1,336.75) and the Dow (/YM) does not seem to like 12,650, now 12,644 so – if you want to be bearish off this pop (which does seem a bit overdone), that's the way to go as well as, of course, oil (/CL) if it breaks back below $86 (now $86.03). 

Although we went into the weekend bullish (see Stock World Weekly for nice summary of the action), the nice thing about the Futures is you can lock in silly overnight gains with a contrary bet.  Oil is already below $85 at 7 am for a nice $1,000 per contract gain and the indexes have given back about 1/3 of their gains too.  At the same time as we flipped short on the Futures, our Nikkei (/NKD) long play from Friday morning was up 200 points – good for another $1,000 per contract going the other way and again – the nice thing about playing the Futures is you don't have to wait for the markets to open to take your profits, so you can actually benefit from the BS pre-market shenanigans once in a while.  

As you can see from the nice Morgan Stanley chart above, Europe is still very much in flux and we are still very much in cash but, as I noted in Friday morning's post – we are happy to be bullish in our very aggressive $25,000 Portfolio which is an aggressive carve-out to a more conservative portfolio, like our virtual $500,000 Income Portfolio – the latest version of which we initiated last week with 10, count 'em, bullish trades last Monday and Tuesday – tagging the bottom (we hope) on the nose.   

Providing our levels hold, we have no reason not to be bullish.  Clearly the stimulus fairy is alive and well in Europe – Spain was not even given conditions for accepting the latest bail-out and they CLAIM that the only need $44Bn more in bond auctions to keep the lights on through the end of December – isn't that just great???  

I am just bursting with sarcastic confidence for Spain and the rest of the EU because now the Spanish banks can buy the Spanish debt with EU money and we can pretend everything is good until next year – when the $125Bn runs out and we suddenly realize Spain is another 10% of their GDP in debt while the money that was lent to Spanish Banksters is all gone – leaving Spanish debt as collateral.  

All we need is Jennifer Aniston and Jim Carry cast in the leads and we have the makings of the next great romantic comedy movie!  

Just like Jim Carry movies, people never get tired of celebrating these endless EU "fixes" but, just like Jim Carry movies – once they are over, you have a Hell of a time trying to explain to someone else why it was funny.  Jim Carry and the EU have that certain "je ne sais quoi," which makes you smile for a second and forget your troubles but, at $15 a ticket and another $10 for a popcorn and soda – you still walk out feeling kind of screwed and just a little bit broker – wishing you had just stayed home and waited for it to come on cable instead…

    If Spain is Jim Carry then Italy is Steve Carrell and, if that name makes you say "who", then congratulations – you have a life!  The difference between Jim Carry and Steve Carrell is that you also regret watching Steve Carrell on cable, but at least you weren't dumb enough to pay to see him in the movies.  So far, we haven't been dumb enough to give Italy any money either but it's coming – I have no doubt.

    Why bail out Spain if you're not going to bail out Italy and why Italy if not Portugal and why Portugal if not Ireland (again) and why do all those and then ignore France who, along with Germany, will be on the hook for all these bailouts when they start falling apart (which will happen as soon as we stop giving them more money)? 

    George Soros pointed out last week that EU authorities did not understand the nature of the euro crisis; they thought it is a fiscal problem while it is more of a banking problem and a problem of competitiveness. And they applied the wrong remedy: you cannot reduce the debt burden by shrinking the economy, only by growing your way out of it. The crisis is still growing because of a failure to understand the dynamics of social change; policy measures that could have worked at one point in time were no longer sufficient by the time they were applied.  As this morning's market action indicates – we continue to put band-aids on bullet holes the Global economy has suffered major trauma and our "leaders" are still worried about saving the blood transfusion for a rainy day…

    In retrospect it is now clear that the main source of trouble is that the member states of the euro have surrendered to the European Central Bank their rights to create fiat money. They did not realize what that entails – and neither did the European authorities. When the euro was introduced the regulators allowed banks to buy unlimited amounts of government bonds without setting aside any equity capital; and the central bank accepted all government bonds at its discount window on equal terms. Commercial banks found it advantageous to accumulate the bonds of the weaker euro members in order to earn a few extra basis points.

    Then came the crash of 2008 which created conditions that were far removed from those prescribed by the Maastricht Treaty. Many governments had to shift bank liabilities on to their own balance sheets and engage in massive deficit spending. These countries found themselves in the position of a third world country that had become heavily indebted in a currency that it did not control. Due to the divergence in economic performance Europe became divided between creditor and debtor countries.

    It took some time for the financial markets to discover that government bonds which had been considered riskless are subject to speculative attack and may actually default; but when they did, risk premiums rose dramatically. This rendered commercial banks whose balance sheets were loaded with those bonds potentially insolvent. And that constituted the two main components of the problem confronting us today: a sovereign debt crisis and a banking crisis which are closely interlinked.

    According to Soros:  The authorities did not even understand the nature of the problem, let alone see a solution. So they tried to buy time.  Usually that works. Financial panics subside and the authorities realize a profit on their intervention. But not this time because the financial problems were reinforced by a process of political disintegration. While the European Union was being created, the leadership was in the forefront of further integration; but after the outbreak of the financial crisis the authorities became wedded to preserving the status quo. This has forced all those who consider the status quo unsustainable or intolerable into an anti-European posture. That is the political dynamic that makes the disintegration of the European Union just as self-reinforcing as its creation has been.  

    Financial institutions are increasingly reordering their European exposure along national lines just in case the region splits apart. Banks give preference to shedding assets outside their national borders and risk managers try to match assets and liabilities within national borders rather than within the eurozone as a whole. The indirect effect of this asset-liability matching is to reinforce the deleveraging process and to reduce the availability of credit, particularly to the small and medium enterprises which are the main source of employment.

    So the crisis is getting ever deeper.  The real economy of the eurozone is declining while Germany is still booming. This means that the divergence is getting wider. The political and social dynamics are also working toward disintegration. Public opinion as expressed in recent election results is increasingly opposed to austerity and this trend is likely to grow until the policy is reversed. So something has to give.

    Soros gives the EU 3 months to either take DRASTIC action or it will fall apart through sheer inertia.  Voting to keep it together won't help – that's like all the passengers on a plane voting to keep flying after all the engines have blown out – it might make them all feel better but they're still going to crash.  The sole consolation for the EU is – at least they're not China:  

    On Friday morning, I said to Members: "China's data is now expected to be bad so I'm less worried about that (also since it will say whatever they want it to say) than I am about Europe spinning out of control."  As we expected, China's data came in better than expected this weekend and that will pretty up the chart above but only within the bounds of that horrific downtrend.   The Hang Seng (Hong Kong) popped 2.5% this morning on that "good" news out of China but the Shanghai only rose 1%, to 288 on the Dow Index, which is still down 100 points (25%) since April 2011 but UP 13% from 252 this year.  

    Of course, PSW Members will do the math and see that 388-252 = 136 and 40% of 136 is 54 plus 252 = 306 so that's our strong bounce and just so happens to be EXACTLY where the Shanghai was rejected last month – what a coincidence!  

    Our weak bounce line is 278 and that too was just about right on the money (274) on the retrace so we'll be watching China with great interest as it's stuck in the range between the strong and weak bounce but that rapidly falling 200 dma and weakly converging 50 dma is going to make 295 a very tough nut to crack. 

    Well, that's enough TA for the day – I'm already bored by it.  Tomorrow is Technical Tuesday and we'll do some charts then but, for now – it's $10Bn per point on the S&P so, if you want more points, someone needs to come up with more money.  G20 meeting is this weekend and then we have a Fed Meeting.  China already kicked in a few hundred Billion but we need action in Europe, Japan and the US now or it's going to be a very short-lived rally.  

    Spain's 10-year is 6.45% this morning – AFTER the bailout and Italy just broke 6% at 6.01% and both Spanish and Italian markets have given back almost all lf their early gains as people who know how to do math wake up and comment on the latest "fix" – and I use that in the most useless and temporary, junkie-applicable form of the word.

    We had a nice pop – we were lucky to be bullish – CASH REMAINS KING!  

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    1. Economic numbers:

      China Exports (YoY) / 15.3% (7.1% expected)
      China Imports (YoY) / 12.7% (5.5% expected)
      China Trade Balance / $18.70B ($16.25B expected)
      Japan Consumer Confidence / 40.7 (39.8 expected)
      Japan Machine Tool Orders (YoY) / -2.9%
      France Industrial Production (YoY) / 0.9% (-0.3% expected)
      French Manufacturing Production (YoY) / -1.4% (-0.9% expected)
      Italy GDP (YoY) / -1.4% (-1.3% expected)

      At 12:00 PM we have 2 Fed speeches – Lockhart and Williams.

    2. DMND misses 10-Q deadline and expects to receive delisting letter.  Shares getting pounded:
      Diamond Foods, Inc.  today announced that it will not meet the previously disclosed June 11, 2012 Nasdaq deadline to file its quarterly reports on Form 10-Q for the periods ended October 31, 2011, and January 31, 2012 as well as April 30, 2012. As a result, Diamond expects to receive a delisting determination letter from the Nasdaq Listing Qualifications Department for failure to comply with Nasdaq Rule 5250(c)(1). Upon receipt of the determination letter, Diamond intends to request a Nasdaq hearing to appeal any delisting determination and to report on its plan for compliance with Nasdaq's listing rules.

    3. AAPL/Phil,lflan
      I missed Iflan sell call yesterday on July 575 calls so still long with nice profit of 3.80 and looks to open up from here. Would you: 1)sell int initial excitement, or 2) Sell calls against it?
      Thanks – any other opinins welcomed

    4. jomptien…..glad you missed the sale call.   AAPL will open higher today and I will probably reopen a small bullish position.   You might reduce your position size by taking a bit of profit, or put covers on (sell some calls).  

    5. spamspamspam!…yes mitts a liar…but they are ALL liars these days..where is diogenes (phils patron saint) when you need him? we choose out leaders trying to cipher which lie the least..sad..even spam isn't what it used to be!

    6. i thought this ams post was one of the best ever btw..that photo of the irish footballers was precious!
      big gap on stocks but way back from highs and we are getting negative divergences..maybe we see that crazy 1370 print phil..i do feel we see a retest of 1260 in the next couple of month's however..just like LAST SUMMER another coincidence..phil connors is in here somewhere!

    7. lol – I would say the same for San Diego, if it is a good house, things are moving.  1020 my have a better sense, but it seems to me that things are selling quickly due to the low rates – and one is qualified. 

    8. Thanks lfan, What calls would you sell – I only bought 1 call.

    9. jomptien……I'll tell you after I see the opening prices. 

    10. jomptien…BTW, I've learned that to have some flexibility in your positions it's advantageous to have at least 2 calls or puts when you establish the position.  That allows you to take partial profits or do partial covers. 

    11. Phi;: DMND still having problems gathering their restated financials. Stock will open $1 down. How do you feel about writing $19 July puts at $2.00?

    12. Good point Iflan

    13. Over $10K again!

    14. I'm in only 2 stocks in most portfolios right now.  Long AAPL, short AMZN.  

    15. Another chance to cash out there as well…

    16. jomp….I'd probably sell that  AAPL July 575 for $30, then re-enter later with 2 of some other strike. 

    17. MoMo portfolio is in cash with a $2055 P&L!

    18. stjeanluc….what was the start date on that MoMo port? 

    19. Good morning! 

      Spain went from up 4.5% to up 1% and now back to up 2% so maybe we're finding a comfort zone.  We'll see how the EU finishes but up about a point while we're only up half a point so I think, to some extent – it's our futures that are spooking them and not vs. vs.  

      Dollar tapped 82.30 but back at 82.23 now with Euro holding a test of $1.255 and Pound holding $1.555.  79.5 Yen to the Dollar and EUR/CHF were it's supposed to be so nothing to see in the currency markets. 

      Oil $84.63 and congrats to the shorts on that one!  Gold is $1,595 as our Fed didn't say anything about easing so that's keeping a lid on gold via the Dollar but Europeans are still scrambling into it – keeping it up near $1,600.  Gold is actually up 8% priced in Euros since mid-May – despite being flat priced in Dollars (but with a big range from $1,525 to $1,625.

      Silver $28.63, copper sad at $3.35, nat gas even sadder at $2.25 and gasoline back down from $2.75 (nicely played on Friday) to $2.6975 but I have no interest in playing commodities at the moment.  GS made a call over the weekend that commodities will rise 29% now but I think they left out the end of that sentence, which was "or else we're totally screwed on our bullish bets."  So if commodities rise today – its really just the sheeple being herded into the slaughter by GS – very risky to bet against or with…

      As I mentioned above – this was a nice pop and shame on you for not taking bullish profits and running back to cash and we can wait patiently for the next obvious entry on whichever side we end up on.  As long as we hold our last crosses on the Big Chart – we're still technically bullish and that's 12,400, 1,320, 2,850, 7,600 and 760 with only the NYSE questionable at the moment so let's watch 7,600 VERY closely.  

      AAPL is over our expected $580 target off our $555 entry so GREED not to take that and run at $586.  They have their conference today and great expectations are always a good time to get out – see my note on AAPL at the end of Friday's chat. 

      Cash, cash, cash, cash is the way to play this mess.  If they Dollar doesn't stay below 82.25 then there's nothing to be bullish about this morning as it means the Euro is going weak again just hours after a huge bailout – which makes perfect sense from a macro standpoint because $125Bn does nothing at all for Italy, Greece or anyone else or, as I said above – band-aids on bullet holes is all we have and the blood keeps flowing….

      From Friday AM:  Sell-off/Deano – Total crap shoot but I like TZA at $21.26 and today's pop lets you sell July $19 puts for $1.10 and buy the $21/26 bull call spread for $1.35 for net .25 on the $5 spread and, of course, you can roll the short puts along so a nice way to take a bearish poke.  - Now $20.70 and July $19 puts can be sold for $1.25 with the $20/25 bull call spread at $1.30 for net .05 on the lower $5 spread.  

      At the open: Dow +0.82% to 12658. S&P +0.81% to 1336. Nasdaq +0.78% to 2881.

      Treasurys: 30-year -0.09%. 10-yr -0.1%. 5-yr -0.06%.

      Commodities: Crude +0.39% to $84.42. Gold -0.03% to $1590.85.

      Currencies: Euro +0.28% vs. dollar. Yen +0.07%. Pound -0.6%.

      Market preview: While U.S. futures and EU shares pare some of the gains that followed the €100B rescue of Spain's banks, the real action is taking place in the peripheral bond markets, where Spanish 10-year bond yields are +20 bps and those of Italy +16 bps. S&P futures +0.9%. In corporate news, Energy Solutions -19% and Forest Labs -4% after profit warnings (III). Later: Apple WorldwideDeveloper Conference, Fed Speak 

      Good news for equity investors, Citi's Panic/Euphoria model sinks into panic territory, indicating, says Tobias Levkovich, a 96% chance of the S&P being higher 12 months from now.

      A timeline (via Scotty Barber) of the rolling eurozone bailouts mapped against the broad European equity index. About the only time it paid to buy right after was following the Irish bailout – which had the happy coincidence of occurring as QE2 was underway.

      The devil's in the details and they haven't been worked outyet, says the European Commission of the Spanish bank bailout. Two things are pretty certain: The Spanish government will be subject toTroika monitoring, and the bailout loan will subordinate ordinary holders of Spanish debt (confirmed by a EU spokesperson). 

      "Whoever gives money never gives it away for free," says EU Competition Commissioner Joaquin Alumina, joining German finmin Schaeuble in contradicting Spanish insistence this weekend's bailout agreement comes with no strings. "There will of course be (Troika) supervision," says Schaeuble.

      Policymakers have learned nothing, writes John Hussman of the Spanish bailout. The right thing to do: Take receivership of insolvent banks, wipe out the stock and subordinated debt, and use bailout funds to protect depositors or for fiscal stimulus. Instead, once again, a country citizen's have taken on more debt to "needlessly protect" bank bondholders.

      Not only does troubled Italy guarantee and provide the capital for a nice chunk of European bailout funds, but so does Spain - meaning the country is backstopping (and paying some of) its own rescue. Cool. 

      India may be the first of the BRICs to lose its investment grade rating, warns S&P, citing the usual suspects: Slowing growth, rising deficits (trade and government), and shaky leadership. The higher borrowing costs implied in a ratings downgrade is just what its struggling economy does not need

      AK Steel (AKS-2.1% premarket after Goldman cuts shares to Sell, seeing "continuing weak flat steel prices, a highly leveraged balance sheet, high pension funding requirements, high capex to fund its raw material strategy, and no sign of a turnaround in its lucrative electrical steel end market." Dahlman Rose also downgrades AKS to Hold and reduces 2012 estimates. 

      Diamond Foods (DMND-4.5% premarket after the company says it won't meet Nasdaq's quarterly report filing deadline. (PR)

      Facebook's (FB) member and usage growth is slowing sharply in the U.S., data from commScore shows, although that's partly because it's the most dominant site: Facebook has 71% of Internet users and draws them in for six hours a month. The main areas of expansion are mobile and overseas, although neither has yet proved as lucrative as Facebook's main business.

      There are now over 900K Android (GOOG) devices being activated daily, tweets Google (GOOG) mobile chief Andy Rubin, while shooting down rumors he's planning to leave. The activation figure is up significantly from last June's 500K/day, but only up a little from February's 850K/day, and could be a sign Android's growth is slowing amidst difficult industry conditions. comScore's May datasuggested Android lost a bit of a share M/M in the U.S. (previous)

      As Apple's (AAPL) Worldwide Developer Conference gets underway, 9to5 Mac posts what it claims are the specs for the latest MacBook Pro and Mac Pro models. The site has no new details about the inclusion of retina displays in Apple's next-gen MacBooks, but still expects them to be there. Also: Topeka's Brian White believes Apple's TV set  will feature "a special type of motion detection technology," as well as a remote with a "touch panel form factor."

    20. First trade was on 5/21 lflan…

    21. Thanks.    So we have completed 3 weeks and starting the fourth.  My stated goal for the MoMo was to make one grand a week on the 50k;  we're only slightly behind.  

    22. It has not been easy weeks to trade lflan… 

    23. ouch! GMCR

    24. FU X!!!!

    25. No, but my trading methodology could have been more on target for this account.   Incidentally,  my other accounts are faring better; I'm generally selling premium on the weeklies in various ways on AAPL, AMZN, and others to take advantage of things like time decay, volatility changes and short-term price changes.  I have most of the next 2 weeks off from other assignments so I may discuss a bit of what I'm doing during this time.  I've just closed an AMZN short I placed on Friday.  Now long AAPL, no shorts. 

    26. pharm/real estate   You're right!  Many of the "nice" homes are catching a bid here in San Diego, but in Vegas, There seems to be a bid on anything under 300k.
      I guess rates under 4% was the "bell" everyone was waiting for…… 

    27. Lflan,
      yes please tell us about your technics (with examples).

    28. Busy morning, I don't remember scrambling to sell as many bullish position the second the market opened in awhile and then go bearish into some TNA calls for this week.  Fun times.

    29. Keep in mind it is expiration week – that's a major wild-card. 

      GMCR getting hammered worse than DMND.  Let's see how DMND does at 5% off, might be good for a $5KP play again.  These delisting things are very alarmist – all they have to do is submit the financials and suddenly they are in compliance again.  

      Oil/Diamond – OPEC meets this week, I think.  Should keep things interesting.  

      CA Real Estate/Lol – Nice improvement:  

      Thanks Angel!  Based on last expiration coming at a forced low – I'd say the powers that be have no interest in a low close this week.  The assumption is they sold puts on May 18th and now those will expire worthless and they'll want to sell calls for lots of money and, with a lower VIX, that means they will be motivated to stick us back to 1,360ish – BUT – still hard to do in this environment.  

      DMND/Den – I like it but I'd want to see them hold -5% ($19) first.  I don't think there's anyone left to downgrade them but, officially, there's still 1 buy, 11 holds and no sells yet but, then again, no one has changed their outlook since Jan, when they were $35 so more like stunned analysts at this point is most likely.  Funny thing about analysts – when they are shockingly wrong about a stock – they don't like to change their pick because it makes it go across the wires and calls attention to their bad pick so the 12 guys who ALL thought they were fine to hold at $35, didn't want to stand up and shout when they fell to $25 overnight and now they've drifted down to $19 so it's just like anyone when they have a bad stock and they just hope it will turn around before they finally have to capitulate…

      FAS Money – I love that portfolio!  2 June $80s can be sold for $2.65 so why not drop $530 in pocket for 5 day's work?  

      IWM Money – Missed chance to cover there – oh well, anyone who didn't cash at $4,000+ is very, very greedy. 

      $5KP – That one really should have been cashed as we don't have the flexibility to play this.  TLT really needs to go as that can shoot up again.  CHK is too close to expiration not to take 20% off the table and TNA is hopeless and TQQQ may still do well so that portfolio becomes bearish with all cash and just TQQQ really in play.  

      $25KP – No point in buying out DMND caller, BBY I still believe in.  FAS Oct $68 calls should have cashed at 50% profit – can always get back in.  CHK all good with longer time-frame, TNA not hopeless at $48 with 5 days left unless RUT fails 760 but I like our July spread and same deal with TLT – no point leaving it with such a mess.   

    30. That was an easy short on the ES this morning….. :)

    31. Monday – 6-11-2012
      Dr. John L. Faessel
      Commentary and Insights
      Quote of the Day
      [Building a European Union superstate] “will seem in future years to be perhaps the greatest folly of the modern era.”
      Margaret Thatcher
      British Prime Minister
      In 2002
           Short Covering Rally Balloons Market\
      The Euro gave up the bulk of last night's gains following the Spanish bailout. Gapping higher to $1.2669, it's now only up +0.3% to $1.254. S&P 500 futures are also retreating off their highs and have given up about 60% of today’s early pop – currently up 4.9 pts. One of the troubling aspects of these rolling bailouts is the reflexive surge in the Euro – not what struggling continental economies need.
      The McClellan Oscillator (my favorite measure of overboughtness or oversoldness) is in ‘high’ neutral at plus 138. Bullish sentiment is at lows of the cycle. (See below)
      Conventional interpretation of Stochastic is that the Fast is in overbought territory (SlowK is at 86.39); this indicates a possible market drop is coming. The “tilt” of the highs and lows channel in the Stochastics is decidedly bearish creating a bearish divergence. The long term trend is DOWN. SlowK is showing the market is overbought. Look for a top soon.
      Last week the stock market took off on a hot short covering rally and was up about 3.6% for the week. Once it became evident that Spain would be bailed out the shorts ran for cover. It appears once again that the can has been kicked farther down the road. Now, presumably the market will focus on Italy and its woes. Economic overview of metrics in Euroland is ghastly with the graphs showing hellish trends. If you can stand the pain ? check John Mauldin / Weldon's Money Monitor Macro-EU: The Solution Illusion – link at:
      I think we go lower again.
      The S&P 500 (SPX) closed Friday at 1325.66. One-week ago it was 1278.04
      Short term price support is at 1307
      Stronger ‘Price’ support (the lows last Monday) in the (SPX) is at 1266 and will be the battleground zone as the market tests its lows.
      The 200-day moving average resistance is at (SPX) 1288
      50-day moving average resistance is at 1356.
      Short term ‘price’ resistance is at (SPX) 1283 / 1288 / 1293.
      Stiffer resistance is at the recently posted cycle highs of 1335 established on 5/29/2012.
      EuroLand Bond Yields have cooled with the Spain Bailout
      Greek 10-year yields 27.32%
      Italy 10-year (gross) bond yield – 5.86% – off from highs of 7.29% on 11-24.
      Spanish 10-year (generic) bond yield – 6.26% – off from highs of 6.7% on 11/24.
      Friday’s key indicators and metrics:
      Cycle highs or lows are in red
      ·     McClellan Oscillator is in ‘high’ neutral at plus 138
      ·     Euro – 1.2507

    32. What happened to the bull run this morning looks like a North Korea rocket

    33. MoMo / lflan – Last week when you mentioned going short on LNKD I was thinking that we should sell premium in the portfolio as long as we limit ourselves to the $50K and stick to Reg-T margin to be fair to everybody. It makes a lot more sense in this market.

    34. 4%/1020 – I don't know what people think they are holding out for.  3% is not likely and 2% is ridiculous so you can lock in a $500,000 loan at 4% and pay $2,387 a month – too bad people don't have equity in their homes or they could just play the market.  Even our conservative Income Portfolio does much better than that!

      This is why I want to buy rental properties – I'll be updating the BBBW project this week – there may not be a better time to utilize leverage than right now (of course I'm sure someone in Japan said that 20 years ago too!).   

      Scrambling/Rustle – Very nicely done, great discipline!  

      Bull run/Yodi – It's the rocket physics we talked about the other day – you can fire the boosters but, without enough fuel to reach escape velocity – it's a very short ride and there's always the danger of the whole thing blowing up in your face….

    35. Phil/FAS Money
      2 June $80s for $2.65. Puts? Right?

    36. iflan — how do you pick the strike on weely selling premium, do you look at the vol and open interest and choose the stike or using delta if so what delta .01-0.2 thx advance

    37. THIS is the kind of leadership that will get Greece out of the mud!

    38. stjeanluc…you are correct.   I'll start looking at possible trades.  What I like to do in with selling premium in the MoMos is to do so on Fridays, taking advantage of weekend time decay, then again on Thursdays and Fridays, when time decay and volatility changes are most pronounced.   I also look for what I call "crossing trades", MoMos that seem prone to cross back and forth over ATM strikes. These can be done any time.   I nailed this one on AAPL last week and mentioned it on the board. 

      CHK/Phil- I have some short July $16 calls covering some July $13's. Is now (I know Im late) a good time to buy those back with the small pullback in CHK. Thanks.

    40. Phil, any plans for the 20 TNA 52 calls in the 25KP. I tried to close at the opening spike but never got filled.  Thx

    41. credit stress gauges in italy surging..the vultures have moved on

    42. My volatility spreadsheet is up to date with this week's numbers:

    43. Eyeballing the AAPL June 16 / 585 Puts. The stock has moved downward every year, for the last 7, during this WWDC conference.

    44. Selling / Lflan – I would say that holding over the weekend would make sense in normal times, but it's a bit scary right now… You do get time decay, but you also get news! 

    45. Phil -  The only acting I've seen from Steve Caroll was his role in Little Miss Daisy…A favorite of mine  :)
      Dylan Ratigan's last day on MSNBC was Friday…..
      O.K. Phil…You're up!…. :)  

    46. How funny, a BS move up so the big banks can sell on the retail bagholders.
      And what is the scarecrow this time: Greece! Oh really :)
      Euro banks have done a U turn from up 5% to down 2 to 5% in less than 6 hours….Get real!
      I do believe that everything is fixed and it is a buying opportunity before Monday 18th.
      We are small and nimble so we can wait for Friday to start buying low, big banks needs few days in this no volume market. They have just created a new opportunity for themselves

    47. Thats Steve Carell…
      and little miss SUNSHINE…. Can't walk and chew gum… :)

    48. Wow, very weak action this morning.  

      Europe barely holding even now as the Dollar pops back over 82.50 and Euro falls back to the $1.25 line with $1.55 (of course) on the Pound and this is despite EUR/CHF holding 1.2009 so that means it's hard work just holding $1.25 on the Euro at the moment.  

      Commodities down despite huge Goldman call for 29% gain is a very discouraging sign too.  You can fool some of the people all of the time, in theory and if GS isn't fooling anybody – then only fools are still holding commodities.  

      China's weekend data dump shows a slowing economy, but it's not as disastrous as many had expected. What is does suggest is – contrary to expectations – the PBOC rate cut may not be the beginning of massive easing, but instead the momentary end to easing that's already taken place.

      The PBOC rate cut last week as well as local governments successfully pushing back against national controls suggest China iswaving the white flag in its war against property developers, writes Tom Orlik. Sales in May have already started to rise, as have prices, which never fell that far to begin with. TAO +17.8% YTD.

      We'll see if 12,500 holds up but don't forget we were testing 12,000 last Monday so still making bullish progress as long as we hang on.  1,310 has been a good support on S&P but 1,320 needs to hold now.  2,850 we know is critical on the Nas and the NYSE needs to take back 7,600 but holding 7,500 is still bullish consolidation and the RUT, of course, has the 760 line.  

      There's nothing NEW to be bearish about so this is just the stimulus not being big enough or unconditional enough to keep everyone in the market and that's no surprise as we're up 14 S&P points from Friday morning (1,308) and call it 1,310 and we're up exactly the 12 points we would expect for $125Bn so, if we want more – we need to pay more to get it so we're just waiting for the next infusion now.  

    49.  breaking headline just said UK PM leaves his 8yr old daughter at a pub…haha..good thing cameron isnt running this country he would be impeached
      italian 10 year 6.5
      aapl keynote in 2hrs…aapl crutch propping naz…could be a sell the news later.

    50. stjeanluc….holding over the weekend/safety.   Depends on several factors……You have to consider the equity and be alert to world events which might move the markets, etc., but that's just a part of the trade.  We'll work with some trades this week and next. 

    51. holy cow would an S&P futures short from last night look good now- I was asleep :(

    52. Krugman is not optimistic:

      Most notably, last week the European Central Bank declined to cut interest rates. This decision was widely expected, but that shouldn’t blind us to the fact that it was deeply bizarre. Unemployment in the euro area has soared, and all indications are that the Continent is entering a new recession. Meanwhile, inflation is slowing, and market expectations of future inflation have plunged. By any of the usual rules of monetary policy, the situation calls for aggressive rate cuts. But the central bank won’t move. [...]

      Whatever the deep roots of this paralysis, it’s becoming increasingly clear that it will take utter catastrophe to get any real policy action that goes beyond bank bailouts. But don’t despair: at the rate things are going, especially in Europe, utter catastrophe may be just around the corner.

    53. I'm hearing rumblings from Europe that the other bailout countries are asking why their bailout terms don't match Spain's — no real conditions — and that they should.  Oh, yeah.

    54. FAS Money/Zip – No, that's selling the $80 calls, we already have short puts.  The key is to always look to sell premium on both sides.  We were worried about a huge pop blowing us out so we didn't sell over the weekend but now we see a lame reaction and we aren't as worried about having to adjust day to day as we are on a Monday gap (and we have gains to lock in on the put side and we're covered on the long side).  Some idiot wants to pay us .50 per day for an option to buy FAS from us at $80 – I say let him!  

      Greece/Yshen – I don't know that show but it's kind of like broadcasting Jerry Springer in Greece and telling them this is an example of how bad things are in America.  That guy was just an ass.  Here's the full English translation:  

    55. HELOCs and Loan Rates/Phil – PD, we just happen to be rolling a construction loan over to a 4% 5-1 right now – we may just lock in the 4%.  But the more immediate and interesting question is: what might or should we do with the equity?  We're going to go ahead and get a HELOC – don't need it for anything – but I think best time to get one set up is when you don't need it and all the bank paperwork is fresh.  We'll probably make the line around $350K.  Normally, I'd just let it sit.  But you caught my eye re investing some of it.  
      I've been quiet here mostly since moving to Basic Membership.  Just reading when I can – occasional question.  But I've mainly been working my "cash-at-the-end-of every-week" program in my margin account.  Other then the very rare bull call spread, I sell premium on 1-2 stocks I have a "weekly feel" for – and I'm tracking better then ever.  My goal from January 1 has been to average 1.5% per week.  Compounded, that's massive.  I'm at about 1.9% a week now.  And I rarely sweat. (Txn costs are a little rough, but margin allows volume sales of conservative premium – and the net is what it is…)
      Do I dare put some of the HELOC to use?   Frankly, I might use the gains to pay down the underlying mortgage.

    56. Just loaded up the truck with FXE Sept. 118s.  The Spanish bailout seems to be having the reverse effect of concentrating minds on the extent of the pan-Euro problem.  I don't see even a hint of a sustainable solution on the horizon, and the bond spread movements seem to suggest that I'm hardly the only one who thinks that.

    57. UK FTSE 100 -0.1%
      German DAX +0.1%
      French CAC -0.3%
      Spain IBEX -0.8%
      Italy MIB -2.8%

    58. Zeroxzero/ I wouldnt bet against the Euro at such a low level
      The markets have reacted very positively to Europe decision +5% IBEX this morning.
      But Europe has yielded to the market crying.
      So expect more crying.
      What we see today is big banks wanting more money
      And they want to it before the Greek vote.
      Hopefully Mother Merkel will tell them to piss off….

    59. CHK/Ksone – With Nat gas in decline it's a dangerous game and those $16s haven't been over $3 for more than a couple of spikes and you want to buy them out for $2.70, leaving the $13s unprotected?  Not my kind of play.  Keep in mind, your $13s have almost no premium at $5.20 (.20) and the $16 caller has .50 of premium so, if you buy them out – then not only does that make you the sucker paying the premium, but you are paying over 15% of your max possible price on the spread in premium – that's a lot, isn't it?  What percentage of your potential gains, that are almost a lock at $16+ are you throwing away to buy out calls and turn this into a risk trade?   If you want to be more long on CHK – why not pick up the Oct $17/22 bull call spread at $2.15 and set a stop on your July $13 caller at $5 as that's $2 more than your max gain on the spread which makes the long spread net .15 covering whatever you owe on the short calls up to $6 (less the $1 deficit).  If CHK pulls back or if you are able to roll your caller or cash the spread for less than a $1 loss, you come out nicely ahead.  

      TNA/$25KP, Jrod – $48 on TNA is not even 10% out of the money to the $52s and that's a 3.3% gain on the RUT to 785 so the real question is – do we think there's no way the RUT makes 785 by Friday and, since the 50 dma is 788 and since we were at 780 this morning – I'm inclined to hold on a bit longer. 

      Dylan/1020 – That sucks.  Is he going somewhere else?  

      11:37 AM The close can't come quickly enough in Europe, which leaked oil throughout the day after a euphoric gap higher at the open. Stoxx 50 -0.3%, Germany +0.2%, Italy -2.8%, Spain -0.7% (a 5% reversal from the open), U.K.flat. The latest bailout may or may not be a failure, but Spain (EWP) – up more than 10% in the previous 5 sessions – may had already priced it in.

      Since Facebook's bungled IPO, small investors have pulled out a net $4.9B from U.S. stock funds – including $3B in the week afterwards – adding to ~$370B of withdrawals following the "flash crash" of May 2010. "Everybody asks: When are the retail investors going to come back?" says consultant Sang Lee. "If we keep doing this, they'll never come back."

      Whereas financial markets until recently knew nothing about EU politics, now they know too much, writes Wolfgang Munchau (might the same be said of the Fed). The Spanish "rescue" – piling more debt onto the country – again fails to recognize the need for actual debt relief. Unless a real solution comes – bank resolution, deposit insurance, banking union – it's time to prepare for the end of EMU.

      The €249bn hole (FT Alphaville)

      In Europe, Banks Borrowing to Stay Ahead of the Tide (NYT)

      Playing Until the Germans Lose Their Nerve (

      Bundesarchiv Bild 183-J16362, Erwin Rommel.jpg

      Europe Needs a German Marshall Plan (NYT) - LOL, they didn't like the Rommel plan when Germany had that…

      Banco Santander (STD) and BBVA are downgraded to BBB+ from A by Fitch, a technical move necessary from Spain's sovereign downgrade last week. Both maintain ratings slightly higher than the Kingdom, thanks to their "geographical diversification, strong financial performance, and a proven capacity to absorb credit shocks."

      Subordination 101: A Walk Thru For Sovereign Bond Markets In A Post-Greek Default World (Zero Hedge)

      Is Global Finance a Ponzi Scheme? Ask a Russian Expert (Bloomberg)

      Verizon Wireless' (VZVODefforts to promote 4G devices have led Motorola's (GOOG) Droid RAZR MAXX to surpass the iPhone (AAPL) as its top-selling model, claims William Blair's Anil Doradio after conducting checks. However, he believes the iPhone remains AT&T and Sprint's best-selling device, and expects the arrival of a 4G model to act as "an important catalyst" for Apple. (also)

    60. lionel spain massive stock reversal…-6% from intraday high..not too chipper there

    61. Lionel:  It hedges some longs that, sans dollar spike, should do pretty well.  The big banks want more money, and will get it, but the "Euro austerity" program hasn't yet been recognized for the stupidity it represents — shrinking rather than growing [or inflating] out of debt — so Euro holders will not react positively to more bank bailouts, I would reckon.  But nothing is sure or pure in this world, as Billy Idol so eloquently put it.

    62. Yshenhar,
        It's the kind of leadership we used to have, circa 1850, when, on Apr 17, Sen, Henry Foote pointed a gun at Sen. Thomas Hart Benton on the floor of the Senate during the debate on the Compromise of 1850. 

    63. zero….I am in the July 120s, and will roll to those.  Just did not want to pay the huge premium yet.  And this USD chart from SHJ gets my mouth watering, as the Euro is going to 110 or so later this year.  Just needs time.

    64. NF**X
      Might I ask what stocks you use?  I'm trying the same thing on ECA and SVU and it's working, but I've only committed small capital.  I need "income" each month, along with a grander macro strategy.  

    65. zero,
      would appreciate your thoughts re fxe rather than the 2x inverse etf euo that i am long as i feel the same way..

    66. Phil
      Is the 2014 WFR   3/5 spread the current trade ?

    67. Cameron/Angel – That happened months ago (unless he just did it again), why would it come up as news today – are things that slow?  It was (assuming the old incident) a pub near their country home and pub sounds like "bar" to Americans but it's where Brits eat lunch with their family and he was there with wife and 3 kids and they got into two cars and drove off but the kid was in the bathroom and not in the "other" car.  I think the whole "incident" was 15 mins – as in they realized in 5 mins she was missing – phoned the pub, found her and turned around and went back to get her.  I heard this was originally a non-story but was blown up as a gotcha piece by Murdoch's papers to dig back at the PM for prosecuting him.  Where did you read this – the Journal?  

      Conditions/ZZ – That was bound to happen.  You can't push the big countries around like the smaller ones and now the little PIIGS are pissed that they're getting shafted while Spain gets a pass.  I have always said the Irish were suckers – they should have told the EU to shove it.  What's that expression?  "When you owe the bank $100,000 and you can't pay – you are in trouble but when you owe the bank $100M and you can't pay – the bank is in trouble."  

      HELOC/NF – Well you can always figure out a way to deposit it and milk the margin without changing your overall risk profile on what you're already doing but I'm making a 2nd and 3rd trip to Vegas this year to look at picking up some rentable real estate or maybe a block or two for time-share conversions.  Next stop after that will be Aspen and Vail – lots of good bargains to be had if you have cash to put down (still a rare commodity at the moment).  I don't have great faith in Commercial coming back too quickly and residential may still slide further but I can pick up 1Br units at the Marriott in Tahoe for $120K each and I'm not worried that Marriott will let the commons fall apart or blow the tax payments and those units were $300K 5 years ago so worth tossing $24,000 down on and paying taxes for 5 years against rentals for hopefully break-even when a 20% pop in price during that time will double the cash outlay and a return to anything even resembling "normal" could be a grand slam and, if not – then slice it up into 52 $5,000 weekly units and dump them.  Do that with 30 or 40 units and you can charge fees to manage the units for a nice revenue stream as well…  See, that was one of my topics for the BBBW post!  

      WFR/QC – I'm not sure what "current" you mean but I do like that spread for .20 as a fun way to play.  You can sell 1 $3 put for $1.65 ($165) and buy 8 of the spreads for .20 ($160) and that puts you in 100 shares of WFR at $295 ($2.95, now $1.70) but your upside at $5 is $1,605 so risking $295 to make $1,605 and starting with a $125 loss at $1.70 – it's a nice risk/reward profile for a long-term bullish play.  

    68. Zero/ If you start quoting the master I must kneel down…
      More seriously, most US economists (Krugman being at the forefront) seem to not compute a very simple fact
      Europe population growth rate is 0.25% (Euroarea) and going down rapidily
      US population growth rate is 1% and steady
      So if the US manages to "assimilate" its new entrants to its existing citizens level, GDP should increase 1% a year.
      With an inflation target of 2% and a productivity of 1%, USA GDP should increase by 4% a year just to standstill.
      USA has decided to print money to pay for its deficit. The climate of fear is essential to keep US holdings in the country.
      And on a short term basis it is a got trade.
      USA are on a race for growth and Europe isn't.
      Europe was build to bring small countries up to speed with its major economies. Low interest rate was the first benefit. Now most of the "recent" entrants have a hangover of too much debt. Who could have predicted that!
      Now they just need to learn how to foster their growth without debt. Call it austerity but it I dont think it is.
      Europe will find a way, it will take time. In the meantime any idiot on marketwatch  is an expert…

    69. Millcreek:  EUO just doesn't give me enough bang for the buck, given the [option] positions I'm trying to cover [JPM & AAPL, for what it's worth].  The options are always trickier, but I've already covered the bid/ask spread by moving quickly today so I'm good.  Phil is really the one to address this, but my sense is that it depends on the magnitude of the move you're expecting.  "FXE falling off the fricking table" is the movement I'm concerned about, hence the options.  

    70. SVU – Very close to hitting $4.  
      Yodi, I should have listened to you, it's just a "food store"….  But still selling calls against it..

    71. PHIL a friend sent that story to me but as a synopsis so undated and point was we have become so touchy about people who leave their kids in the car while they run into the store that a politician leaving a child in a pub would here would have been pilloried..the brits laugh it off..many of those pubs are very local and the patrons are a tight knit bunch..rupert should have let his boys spend more time in the pubs!..i don't read the journal..i avoid most 'financia'l publicatons they all have a dog in the hunt

    72. MoMo trade:   PCLN….I  have sold a this weekly strangle  665 call /  640  put for $1,200.00      This trade has maintenance reequirement of $13,500   at TDA.    Reasoning:  Recent trading range 630 to 660, no upcoming 'events' to push it around, and it's a weekly, so time value should erode quickly.  I will watch the trade and adjust as necessary.   Adjustment would entail rolling the put or the call up/out as needed.    My expectation is that the stock will move upward toward and settle below 665 and above 640 at Friday close.  

    73. Lionel:  It will take time, surely — the time it takes for the Euro to reach a level that reflects Europe's aggregate level of competitiveness.  At it's current level — much less the 1.45-1.50 we've seen earlier — it's going to be a rough road.  I think the essential point is that the EU, and it's common currency, was never envisioned as a "growth" or even "economic" project — it was, and is, a political project intended to head off the centuries of internecine warfare which Europe has suffered.  But by ignoring or misunderstanding the economics of their project, they have risked causing what they sought to prevent.  They need a mechanism to keep the political part and rationalize the obvious differences in productivity and economic potential.  But that is very hard to do while in crisis, so there is a lot of risk piling up right now, since unemployment levels were the main cause of the last European war.  Not that I predict war, but a breakup is perfectly possible.

    74. SWI- Can anyone see a good way to short this via options. Trading at 44.36 and playing for filling the gap down at 37.87. Bear put spread? Front month? Thx.

    75. PHil – I was in the SDOW Jul 21/25 spread. This morning i bought back the short side then hoped for a bigger sell off. Now i am feeling kind of vulnerable with only the 21s. Would it be best to sell to cover again using the July 24's for $1 instead?
      It's an unnerving experience when some of my longs MCD, GMCR go opposite of the market and my insurance play isn't working either.
      Thanks for your advice.

    76. Phil,
      Went back and read through the history of FAS/IWM/AA Money portfolios. I was thinking about putting aside a part of my portfolio to employ that same type of strategy. XLF is a bit higher than it was last time around (I think it was about 13.5 when the current portfolio started). If you were to start today, would you feel any qualms about the 2014 12/15 BCS and then for a quick start and selling 1×80? I considered also selling 2×73 puts but we look to be headed in that direction! Thanks for input.

    77. QCMike – In addition to a decent amount of stock I bought Jan 13 WFR calls last month and have been selling 1/2 the $2 front month calls against the position. I almost  paid off the premium I paid on the $1 calls by selling the June $2 calls. July and October will lower my cost basis much further. And if if it goes over $2 Ill have made 30%+.

    78. Phil, to clarify I meant sell the 80 call that expires this week. The fill for bcs is about 1.70 right now

    79. Wow, closed BBVA on the open with a profit and escaped the subsequent tank — "BBVA/STD downgraded by Fitch."  If PSW has taught me one thing — and it's been many more than that — it is speed over the ground.  Trading really is about the quick and the dead.  Scary stuff, but damned interesting.

    80. Zero/ I agree with what you say.
      Just a couple of remarks on what you wrote:
      "They need a mechanism to keep the political part and rationalize the obvious differences in productivity and economic potential" – It does exist but it has been dwarfed by the ability by PIGS governments and Euro regions to have access to the same debt market as German Lander! That was the play of the early 2000s "Euro conversion". Dumb banks have lent bilions to any Euro entity with a pulse to get some extra yield. Now most of these entities have no more access to new debt. They will have to learn to invest and to  spend within their means.
      "But that is very hard to do while in crisis" – Europe will only move if there is a crisis. I am still astounded by the sudden volte face move this weekend to bail out Spain banks. Why the rush? Because we were about to break technical levels on the S&P? European leaders have been ill advised.

    81. stjeanluc,
      Thank you very much for the the short strangle portfolio update.  Wow, that's right on track, with 40% of the target in the pocket just in a few days.  Now, greed would take over as some of us want to sell more premium, but we'll need to wait for Greece.  Greed vs Greece is the key consideration this week.

    82. DMND/Phil — as my slightly too-greedy limit order didn't fill when you posted the new income Portfolio ideas, I am wondering if today's news changes your premise, and if I should view this as a second chance.  Would you still sell July puts at the $19 strike?

    83. aapl block sales

    84. StJeanLuc — speaking of the Income Portfolio, I've seen Burr's occasional snapshots, but do you plan to track it?

    85. Lionel:  You're right, it's only a crisis that will drive change in Europe.  That changes how I should view this  -- that stupified paralysis can give way at any moment to radical adjustment.  Interesting.

    86. jromeha 
      That is a good idea
      Would you buy the 2013   2.50 or 1.00?  Then sell the July 2.00

    87. Phil--you think we see a stick or no stick today?  ;-0

    88. Portfolio / Bolt – I guess I could if there is enough interest and it's OK with Phil. It's supposed to be slow moving so it might not be that fascinating. I guess we could do a weekly recap!

    89. Burn market burn!

    90. Portfolio / Peter – You are welcome. Actually, I was thinking on Friday when the RUT 860 Calls were up almost 50% after one day that it would have been OK to close that position and not be greedy. I guess it's always the dilemma with these setups, you think that in 40 days you'll have a 100% (in the bush) but in the meantime you catch mini-waves when you can close with 50% in your hands. 

    91. everyone booking trips to Spain Jabo- PCLN must be rocking today! :)

    92. Pubs/Angel – Oh I agree, it's a non-story.  I was mostly surprised to see it resurface after all this time – makes me more interested in who's pulling the levers than the story itself. 

      SWI/Aaron – How about selling 3 July $45 puts for $3.30 ($990) against 4 Sept $55 puts at $12 ($4,800) so you're in the spread at net $3,810 ($9.53) with the stock at $44, which is a $11 spread on 3 of them and one open spread that's $11 in the money.  That way, your premium is paid for and you have a 20% cushion on the Sept puts if the stock moves against you and, of course, if things go your way, you can roll the short July's to lower short Aug puts and improve the spread.  

      SDOW/Morx – We decided they weren't very liquid so I'd take advantage of the move down and try to either get out or, as you say, tighten the spread to lower the risk.  These insurance plays "don't work" unless the market stays down over time.  If the market doesn't stay down – then your longs come back and you didn't need the insurance but don't buy a 2-month vertical and expect to cover the immediate loss on stocks or, MUCH WORSE, calls where you paid premium – it doesn't work that way.  A hedge lets you ride out a dip because you KNOW that if the Dow stays down, that you will be XX in the money on your spread and will collect the full amount when the premiums expire.  If you don't KNOW how they work – then the insurance is useless (much like many health insurance policies).  

      XLF/Crussell – I don't know where it was when we started but one of the things you do with a FAS Money-type trade is to roll down those long calls when there is a dip so it's not all that important where you start, as long as you cover properly.   Also, don't forget the lesson we learned last year, when people were crying because FAS went up so fast, is to keep a 3-5:1 ratio of longs to short calls so it's generally an overall bullish bet on the Financials, long-term – just taking advantage of the ridiculous premium paid on FAS from month to month along with the crazy fluctuations.  The bottom line on that spread is to SELLSELLSELL premium on a regular basis.  

      With FAS at $80, you can go for 10 of the XLF 2014 $13/16 bull call spreads for $1.35 ($1,350) and sell one FAS July $89 call for $3 ($300) and one FAS June $75 put for $1.60 ($160) and then you have 10 of the spreads for net $890 and you've already collected 34% in your first month out of 18 and do you really care which way it goes with just one short on each side?  See how relaxing that is when you play it conservative?  Sometimes you will be lucky and sometimes you will not but keep cool and keep selling 30% a month for 18 months and you'll collect 540% of your initial outlay in premium ($7,290) which would pay for 1 FAS put to go to zero or 1 FAS call to go to about $160 (as which point your 10 long spreads would be worth $3,000) and anything in between there should be a nice profit for you!   Why be greedy when safe pays so well? 

      On our current FAS Money we already dropped $10,000 in profits to the bottom line on a similar start in just 5  months because we were a bit more aggressive – that may happen for you too but generally we just go with the flow and, when XLF is silly high – we sell more calls and when it's silly low, we sell more puts but, generally, we just want to collect about $500 a month and we're happy.  

      What a terrible market.  Dow volume just 60M at 2 and still heading lower.  TLT ($126.17) and VIX (22.20) not showing anything like the panics we had a couple of weeks ago at $130 and 27 and that's even worse because it means there is no panic selling – just an orderly rush to the exits so far.  

    93. QCMike – 1st Id say Im no Phil, and any plays he puts in quotes and italicizes usually kick ass a lot more than any play I can come up with. I bought the Jan 13 $1 calls though. Right now they are around .90. You can sell the July $2 calls for .15 cents which lowers your cost basis to .75 which is about the price of WFR right now (WFR)… And continue to do that for July & Oct and you should get your cost basis down to 1.3 by Oct (if you arent called away first).

    94. Contingency plans are set in the event Greece bails on the Euro after it's election next week. A Greek breach in the Euro dike brought about by this weekend's elections ought to keep the lid on equities, and the Euro, this week.

    95. would love to see oil take out $82 this trip down- $80 sounds much better!

    96. Hi Phil – Do you have any play for GLW?  TIA

    97. Phil/SWI – Thank you so much Phil, I'm going to have to digest that while getting my learn on.

    98. unmanned drone crashes in maryland! would be funny if it wasn't so funny!!

    99. BBVA/ZZ – Nice job with the quick exit.  There's a reason we have that one rule…

      DMND/Bolt – Now they've fallen 9% and I'd wait and see where it stops but I do still like them as these accounting issues are just a normal part of the whole thing that's already been working the stock over for months.  Now some guy on SA is accusing them of fraud and saying they will go BK and that's now chasing more people out of the stock.  It makes the Sept $17.50/20 bull call spread at $1 very interesting with the stock at $18.39 and you can just hold that for the potential 150% gain since it's already 139% in the money and, if it drops to .50 (down 50%) THEN you can sell the Sept $12 puts for maybe $1 (now .40) and it's a free ride on the spread with a net entry on the short puts at $12, which is 1/3 off the current price.  Or you can go for it now and sell the $14 puts for $1 and have a free look at $2.50 if they bounce.   As to would I still sell the July $19 puts, now $2.25 – sure because they can be rolled to the Sept $17 puts (now $2) and those to the Jan $15 puts ($1.85) and we're back to net $12.75 and the same 1/3 off (but with a bit more work). 

      Income Portfolio/Bolt – I will do a write-up on it but haven't had a chance yet.  StJ – If it's easy to track – I wouldn't mind a spreadsheet on Friday night that I can write up on a weekend but only need it once a month – usually the weekend before expirations.  

      Crisis/ZZ – You mean this isn't one?  

      Stick/Jabob – I think the low VIX, low TLT and high Dollar ($82.50) are a good recipe for another move up.  Oil at $82.50 also a big drag today.  Maybe we break down tomorrow but I think it's a fun bet to say we don't still.  

      GLW/Ink – You just missed a nice dip to $12 but $13.07 not so bad.  They pay a .30 dividend so may as well capture it and buy the stock and sell the 2014 $12 calls for $2.80 and the $12 puts for $2.05 which nets you in at $8.22/10.11 and that makes that little .30 dividend 2.9% while you wait to see if you get called away with a 50% gain at $12, which is $1 less than it sells for now! 

      Fun fact about GLW – They are sitting on $7Bn in cash with another $6Bn in receivables and long-term investments against about $8.5Bn in total liabilities (including payables) so +$4.5Bn on the books is 1/4th of their $20Bn valuation and they have developed not one but TWO state of the art glass systems for touchable electronics – one of which seems certain to be in the new IPhone (Gorilla Glass 2) and the other (Willow) is so cool and new they don't really know what people will do with it yet but here's their concept video "A Day Made of Glass."

      Drone/Angel – When will a drone kill a US civilian?   Oh, I'm sorry, make that "When will a drone FIRST kill a US civilian?"

    100. Burr, SUV good memory, but do not worry still holding a shit Jan 13 10p sold for 3.25 now against me 6.06 I possible have to roll this one to 2020. 

    101.  US exempts 7 countries from iran oil sanctions…hahahaha… india!!! south korea
      that's really putting the screws to them huh?

    102. Phil AND Pharm- any thoughts on selling LYB sept 33 put and buying sept 41 calls for risk reversal? Would u structure it dIfferently? Thanks

    103. drone…this is another barack bush production..i just never believed it could happen in this administration..wait until one crashes with 400 ponds of massively destructive ordinance…"a car loaded with illegal explosives likely belonging to a terrorist detonated on i 95 outside of washington today…"

    104. PHIL
      DOW volume
      what are the Dow volume numbers you report every day? the nyse volume is typically something around a billion shares a day, isn't it? so what do those volume numbers refer to?

    105. This from Option Review:
      "Options traders expecting shares in GMCR to extend losses snapped up puts on the Waterbury, Vermont-based coffee company. Short-term bearish bets are building in the June $21 strike put where some 2,500 lots were purchased for an average premium of $0.53 apiece. Strategists positioning for a more severe pullback in the price of the underlying picked up roughly 2,000 puts at the July $17 strike for an average premium of $0.66 each. Traders long the $17 strike put stand prepared to profit at expiration next month should shares in Green Mountain tumble 22.4% from today’s low of $22.06 to breach the average breakeven price of $16.34. Not all of the action in GMCR options is bearish today; some strategists appear to be buying out-of-the-money calls that could pay off if shares in GMCR stage a near-term rebound."
      Do you have some insights, Phil? I have the 2013 $25 so way off but this may be a good time to add something to lower the basis. Thanks

    106. Phil,
      Thanks a bunch. I've opened the BCS and will now go ahead and sell that premium. I'm a bit nervous about the 74 put, as it expires this week and isn't very far down. I suppose that the play would be to roll it out and down on Friday if we're getting a close below 74? Promise I won't be looking for hand-holding, just a few pointers here and there!

    107. Angelcur — perhaps it's a better discussion for after hours, but what is it about this drone crash that is getting you so politically riled up?  Am I missing something, or is there evidence of something dirty going on?  These birds get flown in the US all the time.  It's called testing and training.  Not sure where else they should do it…

    108. wheeeeeeeeeee on oil below $82!

    109. AAPL is a big drag on things now, back at $578 – great example of why you take profits ahead of these things, not "after".  

      XLF holding $14 is good sign, oil holding $82 so far.  

      X way down to $18, WYNN testing $100.  ANF making new lows but YRCW not going down anymore.  BA looking good, GE holding $19, MA and V refuse to go down and WFR, of all things, is up 4% today.  VLO also liking low oil and still-high gas prices.  

      LYB/SNS – I like them as a nice, boring business but that's a pretty big call buying premium against a 10% move up just to get to the money.  Why not pick up the Sept $35/40 bull call spread at $3 and sell the $33 puts for $2 and then you are in for net $1 and make $4 at just $40 and break-even way down at $36?  If you are a little more patient (and I would be in this market), you can pick up the Jan $30.50/$37.50 bull call spread for $4.20 and sell the  $28.50 puts for $2.20 and that's net $2 but your break-even drops to $32.50, which is 15% of built-in protection and all LYB has to do is flatline and you make $5 (250% on cash).   

      FB/Jabob – Man that thing is pathetic.  

      Dow volume/Newbie – I get it off Etrade Pro and I have no idea what they are measuring but they are nice and consistent and it's much easier to look for changes when you only have to deal in millions instead of billions so I like it for a handy take on how much volume is pumping through at any given time.  

      GMCR/Morx – You have what, short puts?  I thought they'd hold $23 (around where Optrader stopped shorting them) and they didn't and I'm not a big enough fan to want to ride them out frankly.  As you note, 2014 is a long way off and I wouldn't rush to add money to that position – just see if they hold their low of $21.77 from the beginning of the month and, if not – you have to consider whether or not you want to make a stand on this one.  

      Rolling/Crussell – You WILL LOSE MONEY on the short sales.  The idea is to make more than you lose OVER TIME but, if you are going into this thinking you won't take losses – STOP NOW!!!  

    110. Pharm- Any CRM puts still?

    111. Phil,
      I'm good to go. Thanks for talking straight this should be fun.

    112. not really riled up but hadn't considered the training aspect at all so that's a huge relief if they were not employed  spying on our citizenry..thank you for that insight

    113. Angel, could be wrong but I dont think the drones spy on us *yet*.

    114. Thanks Phil!

    115. jromeha- I wish I felt the same- I think they spy on us all the time much more effective than J Edgars files were but they do not like to dress in drag.

    116. Phil, nice call on not getting greedy with AAPL. Taking profits and running at 586 was perfection. Rode that down from 586 to 573. Opened and closed 3 separate put contracts – one after the other today. HUGE gains.

    117. Phil Possible a bit late of the day Holding TZA Jul bull call 15/20 entered 5.59/3.00 now 6.92/3.15 with a short putter Jul 17p sold for 2.96 now .29 How would you roll TIA

    118. Phil: Just want to thank you for the help a few months ago on TZA hedges, and for continuous TZA hedge ideas. This has been one of the profitable highlights in my portfolios. They have been profitable 4 months in a row now, and going for the 5th. Also, I am finding that it's getting easier for me to set them up and adjust them.

    119. Income Portfolio / Phil – I'll setup another spreadsheet but like you said, I'll only update it on Fridays AH so you have the latest for the weekend. 

    120. Phil, any thoughts as to how you would play UA to the downside?

    121. Would you call SDOW "thinly traded"? The option price hasn't changed all day! Are there any secrets to encourage it to move?

    122. GS must be gaining much of their credibility back with their call on commodities increasing.

    123. Futures selling off faster than the indexes – not good!  

      Dollar 82.61, oil $81.64 – if 1,310 goes on S&P (and Futures already 1,303) then very bad technical signal.  

    124. TZA BCS:  Still a good play? ND is .91/ 1.02….. It was from this AMs post.

    125. Call me old fashioned but…No blood.. no glory

    126. first time i can remember in long time that low volume sell-off finished at lows

    127. Phil, we always have been aligned in the past on the dollar but your quotes have not matched what I am seeing all day. Forexpro has the dollar at 83.05, should I be using something else?

    128. 81m volume on DOW – Were we opened today?
      And we stop at 12400….it is not even charting anymore it is called drawing!!!
      Oil at 81.5 is a screaming buy … for tomorrow morning :)
      Bought some BCS 45/52 july for $3 at the close

    129. Angel / drones  I prefer Reynolds Wrap.  Remember to use a sombrero-style configuration with the tin foil so they can't photograph your face and use facial recognition software to track you on Google Maps.

    130. That's good Crussell – once we get going, your moves will be very similar to our established ones.  

      You're welcome SNS.  

      Good job Amalfi!  Nothing wrong with taking a profit, is there?  

      TZA/Yodi – Well no reason to risk the puts coming back with a 90% gain and, at $22, you just have to wait for the whole $5 but if you can cash out for $4 it's a very nice gain and you can just set up a new spread to cover a bigger move.  If you want to be super-aggressive, you can add the Oct $19/26 bull call spread for $2.10 and then you can put a stop on the July $15s, now $7.40, at maybe $7 as that's a bonus $2 so you have the longer spread for free covering the short calls but, of course, if TZA pops $25, you're going to want to add another layer of coverage.  

      You are very welcome Jbur!  

      Thanks StJ!  

      UA/Jrod – They are a good company and don't go down easy.  I guess I'd sell 5 July $105 calls at $4.50 ($2,250) and buy 5 Oct $105/115 bull call spreads at $4 ($2,000) for the $250 credit and, if they don't make $105 by July expiration, you keep the $250 plus whatever value remains on the spread.  If they pop $105, you'll have to cover more, but at least you have $5.50 coming to you on the bull spreads.  

      SDOW/Morx – Too thin to play but it doesn't matter if your spread doesn't move in PRICE – it's VALUE is $2.29 as it's that much in the money if we hold this level on SDOW – that's all that matters.  

      GS/Rustle – LOL!  I think they are in big trouble.  

      TZA/Newt – If you can still get it for about the same net, it's still good protection.  As we've been saying during the day – they don't move much in the early stages but the point is to get paid if the RUT doesn't recover.  

      Nasty, nasty close – will be interesting to see what they can pull out of their asses tomorrow.  

      Overall, we're just back to Thursday's close – as if nothing that happened Friday or today mattered.  That was also Wednesday's highs until the late stick.  

      Dollar/Rpme – I'm using /DX on TOS.  Always do.  Maybe one contract rolled and another didn't yet.  Currently 82.63.  

      Dow finished at 121M – 50% of the volume in last 5 mins and all of it down.  

      Oil/Lionel – I agree, $81.50 is worth a small bullish risk but $81 would be better so tight stops.  

    131. lionel / Dow — Voume is 121M.  Pretty average.

    132. ZERO: actually i picked up on this (drone issue) by crafting a wire coat hanger to enable wearing it on my head..i pick up alot of stuff that way although it was originally intended to divine my wife's thoughts and meaning…

    133. How does GS put out a call for a 29% rise in commodities on the same day they downgrade the steel sector?  That doesn't even make any sense….

    134. Rainman/
      You are correct. The final push down accounted for the difference – 1/3 of the daily volume just to bring us to "panic levels"
      Someone wants more more more! In the midnight hour….(this one is for Zeroxzero)
      Phil/oil – I agree with you . I havent done anything yet but tomorrow morning I will and hopefully Oil will be at 81 or even better at 80
      Jthoma, can you let me know what you would like to see tomorrow so I can bet on it :)

    135. GS / Phil – I guess they are short steel….

    136. Phil/Lionel – Question from a newbie. What are you guys using to track the price of oil? 

    137. @Felipe
      I have had great fun and have earned the cost of a new Porsche (down payment) by shorting the DAX, several times. 
      Do you trade that index or confine to domestic indices?

    138. Phil- I bet it would make sense if you could see GS books and positions :)

    139. I usually enjoy modern world but not this one. I actually started prelim work to be a drone pilot out stationed in Nevada a couple years ago… ONly scored average on certain areas where theyd only accept an excellent so I didnt cut it. Anyways, the most recent wedding party fiasco had 6 members of Taliban who ran in. THey wouldnt let anyone out of the house and were firing on coalition. It's sad women and children died but Taliban are just as much to blame..

    140. jrom/Taliban – what do you mean the Taliban are "just as much to blame"?  If they ran in and prevented women and children from leaving, aren't they entirely to blame?  If they had let them leave, the only dead would be the Taliban…substitute Hamas and Hezbullah and you've got the same situation in the Middle East…

    141. I suppose this is what you call "irony" – A man hitchhiking across the country and writing a memoir called "The Kindness of America" was shot in a random drive-by shooting along a rural highway near northeastern Montana's booming Bakken oil patch, authorities said Monday.  YahooNews

    142. Staying cashy and conservative while going through big changes – I've been quiet lately, in part because I have chosen to stay in cash and a few conservative naked puts and covered calls.  I've also been in job search mode and finally can announce that I am moving to Northampton, Massachusetts and going back to full-time pastoral ministry in a church downtown.  ( for those who know me).  It will be hectic for a few weeks since I am moving and starting on July 15, but I hope to be engaged again on the board as the dust settles.  I read through the comments most days and appreciate the work many of you put into this group.  Phil, your writing is a source of wisdom and inspiration to me.  I'm moving to a church that has supported OWS, and it is a good place to play a role in bringing the religious community into more engagement with economic justice issues.   Keep up the good work!

    143. Congratulations Rev. Todd  (Go where the Spirit leads you.)

    144. Two steps back…

    145. I consider it exciting what is happening in France. We will finally get a modern example of what runaway Socialism can produce in a First World country. It is an experiment I have long wanted to see without having to live through it. Let our leftists begin considering their excuses for the inevitable outcome!

    146. Jrom:  Drones were designed for military work, and work very well, as we've seen.  But flying them on U.S. soil raises legitimate questions about freedom and civil rights.  We already know that, equipped with high-tech photo equipment, they are capable of astonishing resolution at great distances — leaving aside their weapons capability.  The same can be said of satellites, internet surveillance and a host of other technologies that have the potential to be abused in a manner not envisaged in the U.S. Constitution nor contemplated by the civilian populace.  
      Drones also have tremendous potential for doing useful work — spotting forest fires, accidents, and the like.  It is nonetheless true that the price of freedom is eternal vigilance [possibly said by T. Jefferson].  As B. Franklin most definitely said, "he who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety. [@ February 17, 1775 as part of his notes for a proposition at the Pennsylvania Assembly]

    147. Hi Phil and all:
      How to play a Calender spread (hedge) on SQQQ, long Jul 51C, bought for about $4.7 and short Jun 53C, currently about $1.75.  ( Acquired yesterday. Spent $3 to roll from Jun 51C to Jul 51C.)  I am fully covered in case Jun 53C run up on market drop, but not sure how to complete the calender roll to a regular spread, so that hedge protection is extended to July for minimized cost.  Suggestions appreciated.
      I have a similar situation on TZA, where I rolled to Jul 20C (boght it for $2.7, selling Jun 20C for $1.45, net $1.25 for the roll) and I am short Jun 22C.  

    148. Phil—saw this on PSW and I was wondering what you thought about David Rosenberg's ideas?

    149. Well, they didn’t force us to follow through with an air strike, we could’ve tried alternative methods… This is one I definitely don’t feel too bad about though.

    150. Group/Phil:
      I don't know if anyone had a chance to see that GLW concept video that Phil posted earlier
       A Day Made of Glass . It's well worth the view. I am now a little more at ease that I have them (year and one half) as one of my long term holdings (GLW, CSCO, FTR, HOV, HCBK, CHK, & CASH). Not showing a fantastic performance yet, but I do think they will pan out down the road and my entry prices are low, low, low. Thanks to Phil and all the other contributors to this site.

    151. 3 Peaks Domed House Not Finished – Stock Trader's Almanac

    152. Good morning!

      Little pop in the Futures fading out – we can't really afford any down action today.  

      Asia recovered from a bad open to be down a point and Europe's up half a point with our Futures despite Dollar 82.88, which is holding us down.   Dollar drop and AAPL pop could give us a big boost today so we'll watch for that.  

      Oil back to $82.50, Gold $1,592, silver $28.47, copper $3.33, nat gas hit $2.18 and is now $2.21 and is a good bullish play over $2.20 (/NG) and gasoline (/RB) also playable if they cross over $2.65 (now $2.6488) for a bull run but watch the Dollar – it can't go higher to be bullish!  

      Euro $1.2505, Pound $1.5533, 79.57 Yen to the Dollar and Nikkei back to 8,550, which is it's mid point.  

      Oil tracking/Amalfi – I use /CL futures on Think or Swim.  You can download a paper trading account on TOS and get some very nice charts for futures – even if you don't use them.  

      Porsche/Flips – Congrats!  I don't trade DAX because TOS doesn't have it and I'm not going to go out of my way to trade it.  I do wish they had the EU indices, for some reason they only have NKD.  

      Drones/Jrom – I don't generally expect a cartoon to handle nuanced issues in any great depth.  The issue in the states is over domestic drone use and I know what you're saying, there are good men piloting those things and making the best decisions they can but I hope we never get to the point within our own boarders where we have to begin debating how much collateral damage is acceptable when using police drones.  Drones aren't going to arrest anyone, drones don't take prisoners – the decision to use a drone in the first place tips the scale towards solving problems with violence since the only tools you have are a camera and a gun.   I look forward to Taser-drones and other non-lethal solutions but we're not there yet.  I don't really care if drones are watching me – I'm not up to anything but I certainly understand people who don't want their privacy violated at will by the Government.  You are both young and in the Army – I imagine you have no illusions of privacy and most kids don't – we're (40+) probably the last generation that will complain about privacy violations anyway…

      Irony/Ink – That's pretty strange!  

      Northampton/Rev – That's great, my old stomping grounds!  I love it up there, will have to come visit now…  Hey that link took me to another link for God on Facebook.  Sad to see He only has 14,221 followers but maybe part of the problem is He doesn't have any new material.  He's been sitting back recycling quotes out of that one book for what, 2000 years?  And the one before that was about 3,500 years ago?  Time for a new book and then a tour – hit the late-night circuit, go on The View, etc. – that's how you build an audience these days…

      Big Chart – Gotta hold those lines but will be constructive if we do.  

      Runaway Socialism/Barf – Well I'm not sure you can call it a valid experiment when you begin with Trillions in debt, massive unemployment and a broken banking system courtesy of Capitalism.  That's as silly as saying Obama has "failed" after failing to reverse 8 years of economic destruction rained down on this country by Bush in a single term.   It even took Clinton 6 years to balance the budget (undoing the 12-year disaster of Reagan/Bush I).  

      SQQQ/DrM – So you spent net $3 for the spread?  It's only a $2 spread so not very efficient but just keep your eye on the roll you want for the June $53 caller ($1.75) and that's roughly the July $70s ($1.75) so not much danger there.  More realistically, you'll want to roll down to something like the July $56 calls ($4.20) and use that extra $2.50 to roll your $51s ($6) down to the $46s ($9) so for .50 out of pocket you have the July $46/56 bull call spread for net about $3.50 that's $7.50 in the money and now you can't lose UNLESS the Qs go higher.  Similar for TZA – just keep your eye on the roll and don't let the price get away from you – ideally it should get cheaper as we get closer to expiration.  

      Rosenberg/Jabob – Austerity is not the answer when you are already $16Tn in debt and refuse to raise taxes or reduce a Trillion Dollar military.  Sure, any rational person could balance the budget in 5 minutes in this country but it takes a coordinated effort that involves sensible tax increases and cuts with nothing off the table but that's a fantasy-land solution with this Congress so the only way to avoid default is to inflate our way out of debt.  They've done studies of 100 countries that tried austerity and 99 failed and the one that didn't failed after the study – it's complete nonsense to believe you can cut your way out of debt.  It works for companies because, when you firs someone they are no longer your problem, when you abandon a plant or an office – you don't give a crap that it sits empty but it is ridiculous to think that a COUNTRY can act the same way.  We need those people and those factories to be productive – this is why nations "dispose" of excess labor and utilize idle capacity through war – kill off 10% of the population while spending Billions on weapons and your employment problem goes away.  We had  good ones in 1863 and 1915 and 1941 and we cut down the excess youth again in the late 60s – our problem is we either need a big war or we have to stop thinking like our people are disposable…

      You're welcome DC – nice selection but watch CHK with nat gas diving again.  

      Oh no, 8:15 – I'm way late on my post! 

      Taxes Etrade
      Nasty gram from the IRS for me.  Etrade reported to the IRS that stocks bought in tax year 2010 but sold in tax year 2011 as simply sales 100% profit in 2011.  For example bough 20k worth of XYZ in 2010 sold XYZ for 21k in 2011.  I report the transaction as such, etrade reports it as 21k profit in 2011.  Anyone else dealt with this?  Suggestions?  Always done my taxes myself with Turbotax.  Guess I will be hiring an accountant!