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Thrilling Thursday – Rumors Run the Markets

Before we begin – let's catch up on the Libor scandal:  

"The Global Banking Industry relies on London having virtually no regulatory oversight.  The bulk of the Global financial crimes occur in London.  David Cameron, of course, is keen to protect the franchise of the city of London – it's the big profit center for his country and his Government – essentially peddling in fraud."

That is the key point made by Max Keiser (7:20) in the above video.  As Keiser points out, fraud and manipulation are rampant in the Global Financial Markets and have been for years.  I've been saying so and we have great systems to profit from the manipulation of fraudulent markets but they wouldn't work so well if the markets were not a sham, would they?  

While I'd love to go back to picking value stocks in clean market environment – I'm certainly not holding my breath.  Fining BCS $450M for making Billions of Dollars in a conspiracy to defraud Trillions of Dollars of Global investors over periods of years means you shouldn't hold yours either.  I'm pretty sure we can expect more of the same for a long, long time.  

This morning the Euro and the Dollar have been flying up and down along with our index futures on rumors that China will or won't be easing (100-point swings in the Dow pre-market) or that the ECB will or won't ease and that other countries will or won't kick in stimulus.  You know, the same old crap we've been hearing since early June – giving us roughly 10% gains across the International board – even as the Global Economic Data continues to decay:  

We are still "constructively bullish" which is what led us to stay cashy and cautious short-term, while holding bullish on our long-term bets.  We haven't got any strong downside bets as we have clear lines at those 50 dmas (red) with the 20 dmas (blue) curving up sharply to give us support before we feel compelled to go bearish again.  Of course, this "rally" has been a lot of low-volume BS – hence the "cashy and cautious" stance.  We have had no reason yet to actually go bearish and, since we added most of our long-term longs in early June – we have quite a while before we do become concerned.  

8am Update:  The ECB did cut rates by the expect 25 basis points to 0.75% (still higher than the Fed) but they did take that final step and cut the deposit rate to 0%.  Overall, the effect has been to put the US futures back to flat but that's not too likely to last as the Dollar has jumped to 82.68 while the Euro falls to $1.2425 and even the Pound is being pounded down to $1.555.  If the Euro fails to hold $1.24 – look out below! 

8:30 Update: 374,000 Americans lost their jobs ahead of the Holiday week and, as you can see from the chart on the left – consumer trends are down, down and down.  

With Consumer Spending making up 70% of the US GDP and Corporate Spending anemic and Government Spending on the decline – don't you think it's a little silly to rally into earnings?  Oh yes, silly me – this news is so bad – it's GOOD!  That's the entirety of the bullish premise on the market – not that things are getting better (they are not) – just that things are still bad enough that the G20 has no choice but to give the top 1% MORE FREE MONEY – and maybe even a little for the bottom 99% ahead of the election.  

Oops, I've just talked myself into being more bearish.  This 10% up move is STUPID and we've been with stupid for this nice 10% rally but I think it might be time to add a few bearish bets – no sense in sitting out a nice downturn if we can catch a ride, right?

Our favorite downside play is still our disaster hedge of SQQQ.  We have several iterations but our $25,000 Portfolios (aggressive and not) bought back the callers into Tuesday's rally and left us in the July $47 calls for net $1.75.  They closed Tuesday at just $1.30 (down 25%) and our plan was to double down if the Nas spiked up this morning but, if not – we still like them for the downside hedge and we can, hopefully, resell $53 calls again for $1 or more on a dip and drop our net down to .75 or less.  

Another hedge we liked was the AMZN Oct $165 puts at $2.15 – also from Tuesday.  I think AMZN is eating a lot of up-front costs on those Kindles and the R&D on the new ones must be painful while the Big Box retailers are pushing back hard from all sides so I think they have a good chance of blowing their earnings report and I think if the overall market tanks, they will drop fast anyway.  Keep in mind you don't need AMZN to drop $60 (30%) to make money on the puts.  The Oct $185 puts are $3.80 so we can figure a $20 drop in AMZN (less than 10%) can net us a near double.  THAT's a nice hedge! 

Of course we'll find plenty of lovely things to short in Member Chat – especially oil as we head into the inventory report at 11, hopefully around $88.50.  EDZ is back on our radar at $13.85, around where we began buying it in April before it ran up to $19.50.  The lows on EDZ were $11.41 in early March and we can certainly sell puts below that line but keep in mind that Chinese stimulus can give us new lows – until it wears off – so cautious on that one still…. 

There was no coordination between the ECB, BoE, and PBOC (all easing today) other than the "usual exchange of views," the ECB's Draghi says.  He sees weakening of growth in the whole of the euro area, including countries not previously experiencing such.  Draghi also said the ECB doesn't want to get into the business of hoovering up the unwanted (at a given price) sovereign debt of troubled EU states and that's sending the Euro back below the $1.24 line with the Dollar shooting back to 82.92 and our futures coming near their lows just ahead of the open.


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  1. Oil lines are not significant today as they are influenced by a shortened session yesterday!

  2. Economic Numbers

    Germany Factory Order (YoY) / -5.4% (-6.0% expected)
    Germany Factory Order (MoM) / 0.6% (0.0% expected)
    Bank of England Rate / 0.5% (0.5% expected)
    ECB Rate Decision / 0.75% (0.75% expected)
    ADP Employment Change / 176K (100K expected)
    US Jobless Claim / 374K (385K expected)

    Stronger number than expected!

    At 10:00 AM we have the US ISM Non-Manufacturing. At 11:00 AM we have the oil inventories numbers.

  3. Good Morning!

  4. PHil – SODA looking like at good short at over 42?

  5. @Felipe
    While the greenback's 'value' rises or falls inversely to the American stock markets, but the Euro runs parallel to, say, the DAX.
    Probably a naive question but do you know why?

  6. Phil
    Got to love some passion in the morning!

  7. outside chance the SP could run up to resistance at 1390 this week…. would be an extended move. keep in mind..with no one around, anyone with a little dough can push the futures market higher and get all those algo-computer programs frothed up to buy…and there is always QE3..

  8. phil i bought uso aug 30c with oil at 77  ten days ago.i sold july 6 31.5 c at the same time.should i completely exit the trade or roll the july 6 calls i sold .

  9. F? – seems very unsure of itself.

  10. PP for QQQ are having a bit of trouble from the source.  Here is what there is thus far:

  11. LFLAN, those LULU puts are profiting nicely this morning (great reco!)…are you inclined to cash them out or ride them into expiration tomorrow?

  12. Good morning!  

    Crazy markets today – all kind of pointless until earnings next week and I'm out of here at 1 so that puts me in more of a watch and wait mood.  I'll do my best to be up at 4am in Vegas to get tomorrow's post up but that will be why if it's a bit late. 

    So, we left ourselves with pretty aggressive SQQQ hedges and so far, so good there but China could say something any time and rally us again.  In fact, I see Yum catching bids already on speculation of such..  

    Don't forget how silly the run-up has been so the only question is what sticks.  The ADP report was very good, even if unemployment was not.  

    June ADP Jobs Report: +176K vs. +136K prior (revised from 133K) and expectations of 95K. 

    Dollar over 83 (up 1.4%!) means this little dip this morning is not a bad thing so far – we're holding well against a strong Dollar and that goes for gold and oil as well so – like I said – we watch and we wait.

    At the open: Dow -0.25% to 12911. S&P -0.39% to 1368. Nasdaq -0.27% to 2968.

    Treasurys: 30-year +0.4%. 10-yr +0.6%. 5-yr +1.5%.

    Commodities: Crude -0.5% to $87.22. Gold -1.05% to $1604.70.

    Currencies: Euro -0.89% vs. dollar. Yen -0.2%. Pound -0.2%.

    Market preview: Stock futures are mixed and oscillating above and below zero, with the S&P benchmark +0.2%, while EU shares are lower. It's not the usual reaction to decent jobs figures (III) and three central banks easing on the same day (IIIIII), although none of the actions are much of a surprise, except maybe that the PBOC decided to ease today. Later: Bloomberg Consumer Comfort Index, ISM Non-Manufacturing Index

    As ECB President Draghi wraps up his press conference, Europe is at session lows. Stoxx 50 -1.3%, the euro -1.3% to $1.2370. S&P 500 opens -0.4%. Risk assets have had a whale of a run since last week's summit, and a bit of selling shouldn't be totally unexpected here – even in light of monetary ease circling the globe this morning.

    Markets already in "sell the news" mode following a raft of monetary ease are given another excuse to head lower by comments coming in from Angela Merkel. No doubt speaking to a domestic audience, she plays down last week's EU summit, saying Germany entered no new agreements, took on no new EU commitments, and that no bailout rules were altered. Stoxx 50 -0.5%, S&P 500 back to flat. The euro -1%.

    MBA Mortgage Applications: -6.7% vs. -7.1% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 3.86% from 3.88%.

    ETFs and ETNs drew another $12.84B AUM in June, bringing total H1 inflows to $75.91B, up 31% Y/Y. Fixed income funds led the way in June, bringing in $4.82B, with equity funds just behind at $4.6B. The QQQ was most popular, gaining $1.4B, with investment-grade bonds (LQD) and emerging market equities (VWO) in 2nd and 3rd place. 

    The Bank of England relaunches QE, adding £50B to their asset purchase program (previously standing at £325B). The bank's benchmark lending rate remains at 0.50%.

    More from the BoE: "U.K. output has barely grown for a year and a half and is estimated to have fallen in both of the past two quarters," the bank says in its statement, then going on to double down on the policies that may have contributed to this desultory performance. 

    Ireland returns to the international debt markets, selling €500M of 90-day bills priced to yield 1.8%, with a bid-to-offer ratio of 2.8:1. It's a tiny amount of debt and very short-dated, but the early return is likely ahead of anybody's expectations. 

    The PBOC cuts interest rates, lowering the benchmark lending rate 31 basis points and the benchmark deposit rate 25 basis points.

    More on the PBOC: The bank's official statement (translated by Google). The PBOC also lowered the floor for lending to 70% of the benchmark rate from 80% before. The move is another slight lessening in state control over what banks may lend at. Maybe a welcome opening, but not necessarily great for bank profits in the short run. If you own most Chinese ETFs, you own the banks. 

    Chinese banks all slid last night as regulators reportedly will not only keep the 75% cap on loan-to-deposit ratios, but may even add credit-restraining rules on top of that. "The government won't let it go easily," says an analyst, arguing it's regulators' most effective tool at curtailing loan growth.

    Shares of Target (TGT) slump 2.2% lower premarket after the company reports June sales in the low end of its forecast. The retailer backed its previously issued guidance for Q2, but analysts seem wary that Target may need to shifts its estimates lower fairly shortly.

    Kohl's (KSSreports same-stores sales fell off a sharp 4.2% in June despite the uptick in sales it saw in the last part of the month. As a result of the performance, the company now expects Q2 EPS to fall in the low end of its previously-announced range of $0.96-$1.02. Shares +1.2% premarket.

    Shares of Ross Stores (ROST) trade 2.7% higher premarket after the retailer comes in with one of the most solid June same-store sale reports amongst a worrisome group of numbers piling in for the sector. It's more evidence that the discounters trade may be the best bet in retail for the time being.

    AAII's Charles Rotblut has Nike (NKElined up as his "Sell of the Week" after sizing up the company's declining gross margins. He notes that shares of Nike trade above their historical price-earnings ratio and doesn't see the upcoming Olympics pulling them out of their rut.

    Boeing (BA) heads into the Farnborough Air Show next week hoping to making good progress in achieving its 2012 target of 1,000 bookings for the 737 Max as it seeks to catch up with Airbus' A320 neo. Boeing has already received over 450 orders for the jet. The firm will also be under scrutiny for any plans to replace or upgrade the 777. (See Virgin)

  13. lucky1/LULU….I'll just ride them, but certainly no problem with buying them now for +75% on the trade.

  14. Phil – what is your suggestion on buying gold now? Wife' wedding anniversary (and mine) coming up next week and I know she would love jewellery. I have seen a nice 22 carat necklace set but gold at $1600 is killing me. any ideas?

  15. SODA/Jerconn – What the hell?  Up almost 50% off the May lows.  Motley Fool has been pushing them and probably accounts for the last 10% but they gapped up hard on Feb earnings with a 25% pop so I would just stay away and hope they test $50 again and then go for the short.  

    Euro/Flips – Because the Dollar is strong or weak as a reflection of it's value while the Euro is strong or weak as a reflection of people's fear for the survival of the EU – it's a very different thing.  If the Euro gets stronger, then the Union will survive and commerce will continue (more or less with austerity) so that's good for stocks but if the Euro is weaker – it's because of fear of one or more of the EU Members failing and falling into a severe depression with bank defaults and all kinds of nasty stuff – so the devaluing Euro does not boost the EU markets like the Dollar does in the US and the Yen does in Japan.  

    Passion/Shadow – Glad you're getting some.  ;)  

    1,390/Angel – Not without some serious cash thrown into the mix.  This week is tomorrow, you know?  Even next week I doubt.  

    USO/Srin – I'd get out of a long oil position but, if you have the margin, you can take the Augs off the table with a profit and let the July's twist (with a stop of course) and just roll them higher if you have to.  

    F/Morx – You can't hide from the overall weakness.  Guy on Bloomberg this morning says he can't believe consumer is weak because auto sales are strong and that, in a nutshell, is everything that's wrong with MSM analysts.  Auto sales are strong after 3 years of pent-up demand running into very attractive financing offers from the dealers AND lower prices on cars with significantly higher mileage that will save people money.  It says nothing at all about the consumers.  These so-called analysts don't read – they just watch TV and parrot the headlines – it's pathetic.  

    FAS Money – XLF looks toppy to me.  Gotta roll tomorrow though.  FAS at $90 so caller is worth $3 so why would we give them $4.45 – that's ridiculous!  Assuming they get real in pricing – the next weekly $89 calls are $3.70 so I'd like to collect .40 for that roll at least.  Probably won't trigger until tomorrow afternoon but, if XLF fails $14.50 – we may not need to roll at all as we can drop 3 more points on FAS very quickly.

    $25KPA – I'm fine with that.  

    $25KP – I would like to buy back those July $53 SQQQ calls for .35 or less.  

    MoMo Money – Or we can just all follow that one and retire early!  Nice job Iflan but I'd take that AAPL money and run.  

    Gold/Nicha – Why not buy her some nice ABX stock?  I don't know what your wife is like but if I bought mine an expensive necklace while gold was at $1,600 and it dropped to $800 – then that necklace would be a constant reminder of what a dumb-ass her husband is…  Tina sold all the gold she didn't really love when it hit $1,850 – she keeps the cash and now she gets to go shopping again next time it crashes.  

  16. need some help from the board
    i have a euo (2x inverse euro)  trade.
    20 aug 20-22 bcs. the 20 is 1.85 and the 22 is .60.  the underlying is at 21.82.
    i have difficulty when i have a winning trade like this to give up .75 in premium to cash out. 
    dont want to sound ungrateful or greedy but the next roll is nov.
    is there a possible methodology for preserving value such as rolling selling something etc that you could suggest.

  17. nicha
    HI Gold just buy her 14K it is stronger if you ever need to pull a car with the chain!!!

  18. Phil  Barclays (BCS) Down 30% since the Libor gouge story broke.  Where do you like them?  (Besides the gates of hell…)

  19. MoMo Money….Phil….Run?    Yes, my finger is on the trigger to take some profits, but I'm playing this for a back-and-forth but continuing runup to earnings. 

  20. Hi Phil!
    My Mom in law recently inherited 250k when the last family Grandparent passed away in May, at 98. Some of the advice she has received was to put a large portion of it into an annuity.
    She was told that it would earn 5% annually and that rate would go up as interest rates increase and that the 5% rate would always be her minimum annual return…. Judy is in good health and is 71 years young.
    What's your take on this product? Thanks.

  21. yodi/14k – I will be in the dog house -(

  22. Seven (1/3) of the 20 AAPL July 600 calls in the MoMo sold for 16.00.   We keep 2/3  (13 contracts) for now.

  23. nicha
    Just remember Phil is an unromantic fellow ABX for a neckless how nice!

  24. :)   :)   :)  

  25. yodi – I agree with Phil and you. Practically makes sense to give her ABX or at the least cash so that she could use it when she goes to India next. Romantically a necklace wud be nice. 

  26. I can't believe it! Turning upward on bad ISM news!

  27. Place order to sell 7 more of the MoMo AAPL  July 600 calls for 18.00  (the second 1/3)

  28. FLAN!!!! Thank you!!!

  29.  aapl winning…i really think most investors dont realize the power that one stock has…ive never seen anything like it….the euro is getting torched and naz -7

  30. newt…stay on the horse! 

  31. For any new AAPL players and MoMo players……this is how we do it.  When they gallop, we ride….when they slide, we hide.  

  32. angel – pls increase ur font size. I am on the phone. 

  33. iflan:
    Congrats! I missed your buy on Friday, but had the previous one. It is agonizing watching from the sidelines, but I am happy for you. Great entries and exits.

  34. Flan- Will do.  Thanks.

  35. FTR: Does anyone have an idea of what the crazy looking candles on FTR are all about? Keeps popping up to $4.86. Could we have a whale purchaser who has a max buy price of $4.86?

  36. I think the ECB rate cut announcement overrode the bad ISM data.  They came out minutes apart. 

  37. After nearly 30 years, jewelry for my wife would have to be something pretty unique and once she realized how markets and consortiums influence the values of precious metals and minerals, (diamonds) she'd rather have a vacation or a nice meal out….. :)

  38. Good morning
    Truly amazing Iflan

  39. 1020/gold – its an Indian thing. Can't win an argument over that :)

  40. nicha
    In that case take Phil's advise

  41. MoMo port:   7 more of the AAPL July 600s are gone for 18.00.   I've placed an order to let the final 6 contracts go for 20.00.   If they go, we will likely enter another long trade at EOD.  If they do not go, we will hold the final 6 contracts at least overnight. 

  42. ….and a little advice for the younger guys out there….
    Don't wait for anniversaries or valentines day to show her how much you care. A gift of love anytime, "just because", are the most rewarding moments of all….. :)

  43. Volume on the DOW terrible. angel has a point. AAPL moving markets!

  44. EUO/Mill – So you are ultra-short on the Euro but locked in the bull spread.  There's always the option if cashing your Aug $20s and collecting all but .15 of your max possible and then hoping (very shaky investing strategy) that the $22s expire worthless.  EUO is at $21.80 with the Euro at $1.24 and we see how strongly this level is being defended but, then again, if it breaks – all hell can break loose and you will not be happy with a naked caller.  As you're looking at cashing net $1.25 now, how about roll your Aug $20s ($1.85) to the Nov $22/25 bull call spread at .70 and that gives you $3 of upside coverage to the short Aug $22s and takes .55 off the table?  Other than that, and especially if you're still too bearish on the Euro to risk the naked caller – then you just need to be patient and let it ride since you have net $1.25 and .75 left to gain.  

    BCS/Rexx – Nothing wrong with the bank going forward and the fine was a joke.  I don't like them long-term as much as BAC but BCS has a better chance of popping 20% (from $10.50) as this scandal fizzles out than BAC does in the near term.  

    Earnings/Lflan – Well we rode out that dip but something usually comes up to tank AAPL just ahead of earnings.  That's when I like to get in.  

    $250K/1020 – Congrats to her (sort of).  Annuities are nice if you can live off them.  Are they really guaranteed and FDIC insured is the question you need to ask.  $12,500 a year is a nice $1,000 a month – hopefully tax free but fine if it goes up with the rates (although what rates are they based on?).  Obviously, we think we can do better with our Income Portfolio but then it's risk but, then again, if she only needs $1,000 a month, maybe it's all money she doesn't need and then isn't it more fun to try to do something with it?  Probably not all that helpful but those are the trade-offs as I see them.  Oh, also consider the possibility of paying off her mortgage as she's PAYING 4% on that balance and, if she isn't benefiting from the tax deduction it might make sense to just do that – especially if that 5% isn't tax-free.  Keep in mind that the same environment that would send rates higher would probably inflate the house too and you can always do a reverse mortgage to get cash back out without increasing the monthly payments.  

    ABX/Yodi – Hey, I would put the certificate in a nice, silver frame!  

    AAPL/Angel – Yes, quite the 7" IPad rumor rally we're having now.  

    FTR/Jbur (Dividend still 10%, by the way) – All kinds of rumors.  Some fund just disclosed a position, VZ is supposedly sniffing around, some ETFs added FTR to their mix – take your pick…  

    This is getting annoying for me with WFR, HOV, SVU, TASR and FTR all taking off – now I have to do some work and find some new undervalued stocks to bang the table on….

    Goldman raised forecast for jobs number tomorrow – that's what sparked this rally (and AAPL, of course).  

    Oil down more than expected – 4.3M barrels, gasoline up 200K, distillates down 1.1Mb so bullish for oil – we'll see how they handle $88.50.  

    EIA Petroleum Inventories: Crude -4.3M barrels. Gasoline +0.2M. Distillates -1.1M

  45. Phil/others
    New member here.  Felt perverted being a "voyeur."  BTW an amazing site. 
    I'm a new options trader, did a lot of homework, but now actually trading a bit.  Have followed your tips, but am disappointed that when I go the the chains I find pricing different (always worse) than your quotes.  Tell me, are you moving the prices with the volume you create with your recs, are you getting a better spread, am I too slow…what gives?   Anybody have recs regarding best trading platforms?

  46. How about that JRCC?  
    Yeah yah……

  47. Phil what do you think about this for hedge:
    Buy TZA jan13 bull call spread $14 – $19 for $1.60
    Sell TZA jan13  $15 put for $2.15
    for net .55 for a $5 spread that $2.80 in the money.
    if the market even moves a couple percent down it pays off about $300
    and the beauty of it is that even if the market doesnt go down, it pays you.
    what am i missing ?

  48. Thanks Phil!

  49. The oil was expected, prices down, holiday commitments, and EMPTY TANKS DID IT!

  50. 50% profits (based on a 50K portfolio) in 7 weeks lflan, wow! Have not lost your touch I see!

  51. AAPL MoMo….the last 6 are gone for 20 bucks!   We now have only LULU.   Now I have to admit to my true holdings outside of MoMo portfolio.  In other accounts I'm still holding some of the July 600s, believing they aren't quite done with the run.  But for the MoMo, they have gone to cash.

  52. 1020/Annuity – Is it an Immediate Annuity or just a Fixed Annuity?

  53. 1020
    You have to be careful with the annuities I have sold a lot of annuities as well as other financial products. I don't know of any annuity on the mkt right now that is paying an actual 5% interest rate. Most annuities are advertised as 5% interest but it usually ends up being a 5% roll up rate that is not an actual interest rate. They will give you a payout number based on her age and the roll up rate. I mean think about it with the ten year bond below 2% and the 30 year about 3.5% how could a annuity company offer 5% minimum.

  54. Don't complain about the market movement – this is technically bullish action.  We're up near 5% for the week and not even doing a 1% retrace is a very strong move and we can consolidate up here and then break higher on some good stimulus talk.  

    • Dow 12,450 was last week (and consolidation), 10% up is 13,072.  
    • S&P 1,310 takes us to 1,375
    • Nas 2,825 goes to 2,966 and we're past it at 2,983!  
    • NYSE 7,450 takes us to 7,822 and we're past that at 7,856
    • RUT 760 goes to 798 and 10% is 836, which we're closer to at 820.  

    So pretty much we have no reason to be more bearish until we blow one of those 5% lines and only a 1% pull-back below them would be a bearish indicator.  If the RUT pops 10%, then we can look for the Dow to catch up, which is why they were our bull pick last week too.  

    Keep in mind this is just TECHNICALLY bullish – without actual stimulus dollars pledged – just easing won't take us too far.  

  55. O.K,, so I need to do some other stuff for awhile.  I'll be back online before EOD and we'll figure what to do next with the MoMos and AAPL.   Later! 

  56. Oil (/CL) got a nice rejection at our $88.50 target.  Very tight stops over that line on a short!  

  57. phil,
    thanks and safe travel………..

  58. Welcome Mike2!  Voyeur chat is about an hour behind so you should see a pretty big difference.  Voyeur is certainly not meant for day traders – the idea is just to give people an idea of what does go on in Member Chat if they are not sure about committing to a full Membership.  Anyway, patience is the key along with adopting the philosophy that there are plenty of trades in the sea and you don't need to chase the ones that don't give you a good entry.  Actually, the best way to trade around here is to wait until we do have a trade go against us and then, when we DD or adjust – if you come in fresh you are getting into something we liked, we still like – but for less money than we put into the original trade and often with a better position too.  

    JRCC/1020 – What woke them up?  Oh wait, BTU up 30% in two weeks as well – just the sector bounce we expected with Nat gas shooting higher ($2.91 now).  How about that CHK at $19.76?

    TZA/Micro – You realize though, that the Jan hedge won't pay you much unless/until we get close to Jan at your target.  It's fine if you are protecting long-term positions but it won't do a thing to protect shorter-term bullish bets.   On the whole though – that is how I like to construct insurance plays.  

    Thanks Mill!  

    Yes, I have to get ready to go – watch those levels.  

  59. Annuities – Thanks folks.  She has only had a discussion with an advisior and her brother. (yikes! – she lost a bundle last time she followed his "advice") and 5% does sound opptimistic, at best. We'll get together in the next 10 days, when we take her on an Alaska cruise where she'll have no where to hide during our "reality check"….. ;)

  60. !020 – You porbably already know this but annuities are high commission products(in most cases) and so the interests of the person that sells them and the person that buys them don't necessarily align. 


  62. angel – better :)

  63. Iflan/5K,
    Hi Iflan I remember that when the talks about 5K portfolio were going on you had also opted for running the 5K portfolio. Now since Phil is not going to continue the portfolio (due to margin issues and trade restrictions, which are understandable), can you give it a thought again.
    I understand that it is difficult to get that performance due to size of the account but at least you can give it a try for a few days/months. It will definitely help the 90% :-)

  64. Wasn't it last time that GS said jobs were going to be better…they really were horrible.  What says Cramer?  That gives me the direction I need to travel.

  65. 1020 Annuities: take a good look at the offering documents or "statement of understanding". These can be very complicated products. The 5% is usually for the income account and there usually is a fee for that guarantee/rider. Check the surrender terms and how income can be accessed over her lifetime. There are usually some ” give me’s and gotchas” which affect performance.

  66. XLF/Angel – Good point, not a rally if XLF isn't feeling better.  AAPL up 0.2% is 0.4% boost to Nas and Nas is only up 0.2% so that means, sans AAPL, Nas is red.  

    LOL Pharm – Yes we need Cramer to tell us what to do so we can do the opposite with confidence.  

    OK, I'm not impressed with moves since I last looked.  Good time to take advantage of adding 10 more SQQQ July $47 calls for $1.05 to both $25KPs.  

  67. OK – Later guys.   Should be up and running normally tomorrow.  

  68. Have a safe trip Phil and enjoy Poker!!

  69. Thanks randers1 !

  70. Oh No /  I  had to leave at 9:00 so I cashed my AAPL 600's in for 14.50.  A nice profit anyway, but what are you going to do in a situation like that.   Guess I need to get a smart phone.

  71. ISM Services Index: 52.1 vs. 53.0 expected and 53.7 prior (>50 denotes expansion). Prices index fell to 48.9 from 49.8. Employment rose 52.3 to from 50.8. New orders fell to 53.3 from 55.5.

    Interesting note that the employment rose…so lower paying jobs, most likely part time jobs at that….so that should, maybe, help tomorrow…although I still am a bit suspicious b'c of the GS notes out.  If they want people to buy now, then they are doing the selling.  TRIN remains elevated and has been since Monday…they continue to sell the rally.  TLT does not show any hint of bonds falling apart.

  72. Pharm/Jobs – I would also think that jobs would move a tick higher because of summer part-time hiring.

  73. MoMo trade:   Buy to close the 10 LULU this weekly 57.50 puts for .18 for +80% profit on that trade.  There's no need to get cocky by trying to push the trade for a final 20%.  We spend $180 to guarantee a profit of $800.  So all cash in MoMo port right now. 

  74. pat-swap  5k port……yeah, I think that was closed out.   I never really got active in that portfolio.  And yes, it is very very difficult to grow a 5k.  Your techniques are different than using a 50k, and your execution has to be flawless.   I think that portfolio will have to stay inactive right now, but we can certainly discuss here on Phil's site techniques for growing (safely) amounts of money less than 50k. 


  76. would be reasonable for the market to give back all of tuesdays gains today…that rally was fabricated on low volume and a lack of interest…. decline today under the same circumstances pretty much makes us dormy before tomorrows NFP…really nothing (for me) to do here… favor the short side… but not inclined to do anything before next week.

  77. Not so funny chart

  78. Iflan / LULU – out at .11.  Thanks for that trade!

  79. SQQQ 47 July P…pull the trigger now…..1.00!

  80. rkyroma…yw

  81. NFLX….There has got to be a play here.  I'm tempted to sell into this week's excitement, but my gut tells me it's going up.  Who else is thinking about this MoMo.  ? 

  82. Can anyone recommend a good CPA / Tax person for trader status?  My CPA is not familiar with this.  TIA.

  83. Iflan/NFLX – selling puts makes sense. We can do way OTM Calls but will no get much for it. 

  84. NFLX / lflan – Tempting but all green in my screens so I would not sell any calls. I have them in "hyper"bullish zone now since Tuesday morning. They did mention that people watched 1 billion hours last month so maybe not so bad…

  85. lflan
    Earlier this year I nearly had my face torn off with Netflix. Their earnings report was no big deal and the stock rose $50. My advise be cautious and keep it small. For myself, I'm thinking of a $65 – $100 short strangle that expires in two (2) weeks.

  86. Lflan – I'm thinking about CMG…the avalanche started already, tho today they are up…wouldn't they be a good short?

  87. MoMo port:  I've made what I consider to be a very safe NFLX play:   Sold 10 August 62.50 puts for 1.22…Maintenanc e on this 14k.    I give this a 95% likelihood of coming in favorably.  

  88. That NFLX trade may be the most conservative trade you ever see me make.   :)  

  89. stjeanluc….yes, agree.  I would not sell calls on NFLX right now. 
    jerconn/CMG….I haven't studied this one well lately, so not sure how to play it.  Will look at it this evening. 
    cslanson2/NFLX play.   I suspect that short strangle would work, but with concern about the short call sid of it.

  90. I would like to see a huge pullback in AAPL before close, wouldn't you?   Then we could back up the truck again.

  91. Biderman's group says, "According to our real-time withholding tax based model, the U.S. economy added only 75,000 jobs in June, well below expectations of 100,000 to 125,000 new jobs."

  92. NFLX / lflan – They report on 7/23. I guess we close the trade before that if it's very profitable!

  93. Bought 5  AAPL july 600s back for 18.25

  94. stjeanluc….yes  
    and that AAPL trade is a MoMo trade, btw  thx

  95. Pharm – I don't see the market dropping much with a 75k employment report……

  96. Iflan – so no trade on AAPL if it does not come down?

  97. Iflan – sorry. U see ur post

  98. nicha…see above.  

  99. lflan- chase the aapl prem?

  100. newt… small purchase of premium only to take advantage of a possible stick. 

  101. lflan- thx

  102. Lflan,
    wouldn't you expect AAPL to come down tomorrow due to Max Pain theory (the highest Open Interest is for $600 strike, tomorrow's expiration).

  103. 1020 – I think….I think….we shall see.  no predictions, although I am short…almost everything except biotech (minus VVUS).

  104. I don't see the stick and I don't want to wait for it.  AAPL trade closed for same……18.25

  105. Short/Pharm, dont know bout you but my head is about to explode!

  106. msf65…probably.
    So all AAPL trades closed.  Only open trade is NFLX (see above)   .   We may miss a move in AAPL tomorrow, but who cares.  We killed it today.   I'm gone for the evening.  See you tomorrow!

  107. Kust…TOL is killing me, but I keep rolling, and rolling…waiting for the perfect storm.  Farmland is starting to roll over FWIW.

  108. A very good day thanks to Iflan!

  109. yep, makes sense to me…KSS - Kohl's Corp. – Shares in the department store operator are up better than 7.5% at $47.68 as of 11:35 a.m. in New York despite a larger-than-expected decline in the company’s June same-store sales. Kohl’s reported a 4.8% drop in same-store sales for last month and said it expects second-quarter earnings to come in at the low end of their prior forecast of $0.96 to $1.02 a share. The pop in the price of the underlying shares made KSS one of the best performers in the S&P 500 Index this morning and spurred bullish activity in the retailer’s options as some traders looked to position for the stock to extend gains in the near term. Volume in the front month calls is heaviest at the July $46 strike where approximately 1,000 in-the-money calls were purchased for an average premium of $1.05 apiece. Traders long the calls stand ready to profit should shares in Kohl’s settle above the average breakeven price of $47.05 at expiration. Premium required to buy the July $46 calls has moved up sharply intraday, with the last-traded price on the contracts up at $2.15 for a 105% increase over the $1.05 traders paid on average earlier in the session. Finally, traders that purchased calls ahead of Independence Day returned Thursday to find the value of their positions soaring to the upside. Open interest in the July $46 call suggests around 430 contracts were picked up at a premium of $0.50 apiece on Tuesday. These call options are now worth more than four times as much.

  110. Up a few strings, I noted that Biderman's guru says bad number for tomorrow.  On the other hand, Lee Adler says they will beat….well, well, flip a coin. 

  111. Great work on AAPL Iflan!

  112. Pharm—do you have any input on CYCC ?   Thanks

  113. That LIBOR scandal could actually spread:


    The story will probably now shift to civil courts around the world: that could be a long process. From a public-interest perspective, two tasks lie ahead. The first is to find out exactly what happened and to punish those involved. Where the only motive was greed, the individuals directly involved in fraud should face jail. If the rate was lowered to keep the bank afloat, and regulators were involved, both the bankers and their rule-setters should explain why they took it upon themselves to endanger the City’s reputation in this way. In Britain an independent inquiry makes sense—the speedier the better, which argues for the parliamentary sort the government wants rather than the judicial variety the opposition demands.

    The second task is to change the way finance is run—and the culture of banking. This after all is not the first price-fixing scandal: Wall Street has had several. A witch hunt would be disastrous (see Bagehot), but culture flows from structure. The case for splitting retail and investment banks on “moral” grounds is weak, but individual banks could do more: drawing fines from the bonus pool is one example. And some rules must change. LIBOR is set under the aegis not of the regulator but of a trade body, the British Bankers’ Association. That may have worked in the gentlemanly days when “the governor’s eyebrows” were enough to keep bankers in order. These days the City is the world’s biggest centre of international finance.

  114. Imagine if they move that type of a scandal to – market fixing.  Say it ain't so!

  115. LIBOR/ from Macro Man: "Barclays –  TMM are looking forward to a Gladiatorial conflict today .. "My name is Maximus Possible Profitus, commander of the Armies of 5 North Colonnade, General of the LIBOR Legions, loyal servant to the true emperor, Marcus Agius. Father to a murdered business model,  husband to a murdered derivatives desk. And I will have my vengence, in this life or the next."

  116. Lflan / NFLX – Any news that drove that stick on NFLX today?  That was a pretty big move.

  117. LFlan / NFLX – Jobs report drive NFLX?

  118. NFLX - Bloomberg has an interesting counter-point to today's rally: The Scary $3B Bomb Not on Netflix's Balance Sheet

  119. Phil must be winning.

  120. Good morning!

    Winning on oil but no time to play cards yet.  Kids have never been to Vegas before so couldn't just go to be last night and we didn't get to bed until after 11.  Only 4:30 now but I'll be up same time tomorrow and will get 4-5 hours of poker in before they even wake up. 

    And did I say WHEEEEEEEEEEEEEEE! on oil, by the way? 

    Whee on yesterday's close too. 

    Dollar still at 83, Euro $1.237, Pound $1.55, Yen 79.86, EUR/CHF 1.2009

    Gold took a nice tumble to $1,594, silver $27.38, copper $3.46 (global weakness), Nat gas $2.98 and gasoline $2.72. 

    Asia was down a bit, Europe down about 0.5% but at lows after lunch.  Our Futures are flat but I wouldn't go long over the weekend based last two day's action but I'll have to read the news before forming a less half-assed opinion than that.   Don't forget, I didn't get bearish until halfway through writing yesterday's post, between 8 and 8:30. 

  121. Good morning Phil!
    I had no idea your kids have never made it to Vegas. Great fun for for anyone on their 1st visit.
    Take the kids to the Stratosphere after dark and make your way to the top. The restaurant does the 360 thing and is supposed to be pretty good and the "Big Shot" (bet you can't ;) ) is the ultimate thrill ride…..