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Monday Market Miracle – Everything is Fixed, or it will be, or Something…

NOTHING!

Nothing happened this weekend and I guess that's better than something because most somethings that are likely to happen are bad and the only something that MIGHT happen that would be good is not all that likely to happen – not soon anyway.  So better to have nothing happen so we can hope that something will happen than to have something happen that turns out to be nothing after all, right?  

Welcome to 21st Century Investing.  Please do not make the mistake of discussing the actual BUSINESS PROSPECTS of the companies you buy and sell with an average hold time of 22 seconds – that's so 1900's.  It's rumors, not earnings, that power the modern markets so you'd better have your ears on the ground and keep your nose out of the financial statements – making money is so passe' – especially since money isn't worth the paper it's printed on anyway.  What matters is how much FREE MONEY our Central Banksters will give us to play with today.  Then we can have fun, Fun, FUN 'till Bernanke takes our T-Bills away.

This morning "ECB Officials" said that the Central Bank could intervene and buy the bonds of struggling euro-zone countries without unanimous approval, raising hopes that a bond buying program is still a possibility, and offsetting the disappointment caused by the bank's President Mario Draghi on Thursday.  This is not new information but it's treated as such by Uncle Rupert's WSJ, who need a strong market as they look to split the company so Murdoch and his paper have Billions riding on a positive market environment – not that that would influence their reporting of course – allegedly.

That was enough to get the Asian markets excited – again – and the Asian markets closing higher was enough to give the EU a good open (even though the reason the Asian markets went up was nothing that would have gotten Europeans to buy again but – they don't know that) and the EU markets going higher helps our Futures go higher and that allows Cramer to go on CNBC this morning and tell you to BUYBUYBUY because, as Cramer tells us, the market is going to go higher because it went higher and higher is higher than higher so we need to raise our targets to reflect the higher highs that we can now project based on the higher Futures which are in the past already – clear?

If so, then you are ready to join the beautiful sheeple and BUYBUYBUY and that's fine with us because we are SELLSELLSELLing our shares and we need someone to take them off our hands.  As noted in this week's Stock World Weekly, we're back to Cashy and Cautious as the indexes make another run at the Must Hold Levels (5th time since May) on our Big Chart (see Friday's post for levels), where we certainly expect some overhead resistance anyway.

So the prudent move is to take our bullish profits here, grab some more trades from our Long Put List (Members Only) and then sit back and watch the fun.  Meanwhile, according to the Financial Times, Major Wall Street banks such as BofA (BAC), Citigroup (C), Morgan Stanley (MS) and Goldman Sachs (GS) have generally cut their exposure to the Eurozone as fears of a breakup increase, while they're also making preparations behind the scenes, the FT reports. These include trying to ensure that contracts denominated in euros won't be converted to any revived currency.  One senior Wall Street executive said his bank was approaching derivatives counterparties to say:

“‘We’ve got this contract, it’s in Euros, what I want to know is in the event that Spain were to be redenominated are we going to end up being adversaries on this or can we just agree that this is a euro contact? Let’s just move it to London law so we each agree that we know where we stand. If they don’t … when that contract matures there’s not going to be any roll-over.”

Banks have "Eurozone Crisis Units" and some hedge funds have stopped trading with Greek counterparties as Government debt won't fall under even English or British law that the Funds and Banks are counting on to protect their positions with private entities in the event of a currency collapse.  Keep in mind though, that there's a difference between being prepared and inevitability.  My own wife consulted on American Express' Y2K project for 18 months from mid 1998 until about January 7th of 2000, when they realized nothing was actually going to happen – but it was lots of fun making all the preparations in that Global panic.  

If "may all of your disaster preparations prove unnecessary" is not a Chinese blessing, it certainly should be.  While we can't blame Y2K for taking down the Nasdaq in early 2000 – we can point to the LACK OF a disaster doing it, as there was a lot of money bet on the need for new software and new PC's and new programs, etc., etc. that never materialized and that took the steam out of the 100% Nasdaq rally that began in October of 1999 – at about 2,800, which just so happens to be the level they've finally gotten back to again.  

So up or down 100% from here – if history is any guide – who the Hell knows?  


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  1. Good Morning!


  2. Last week Cramer said to sell and the market shouldn't be going higher.  Glad he's saying to buy now so I can expect it to go down this week.  The anti Cramer indicator is probably the most accurate one in the market.


  3. Phil: S&P makeup
    After reading that Mauldin article about historical trends of the S&P I started to wonder if there is a study that would show how the composition of  the index has changed by industry.  In other words when there was more manufacturing and little technology 50 years ago is it really valid to look at trends from that long ago?  TIA


  4. Good morning from beautiful California! Not fun traveling yesterday with that nasty band of storms crossing the country. I love sitting on runways at the Phila airport!

    Oil lines

    R3 – 97.25
    R2 – 94.50
    R1 – 92.94
    PP – 90.19
    S1 – 88.63
    S2 – 85.88
    S3 – 84.32 


  5. In an Income Portfolio with mostly cash, what kind of cash is best?  Would you recommend  a money market fund, t-bill fund, CDs, corporate bond ETF or CEF for more yield, or something else?


  6. Wow, look BBY.


  7. go BBY!!!



  8. MoMo trade:   Buy to open one Sept strangle on PCLN     …     685 call /  635 put     26.00 / 26.00 




  9. MoMo- How about the straddle on PCLN from Friday?


  10. VXX Trade –  More?
    Friday we put on the VXX Risk Reversal selling the Sept 11P and buying the Sept16C for 0.00.  The mid is now -0.26(credit) with the VIX at 15.88.  
    Seems like a no-brainer to put on a little more.  Thoughts?



  11. Did anyone get filled at $4.70 on the 510 PCLN puts Friday?


  12. Let me know if I missed anything as I am working on 3 hour sleep! I'll be in meetings all day. I'll update the Income and Strangle portfolio tonight.


  13. LFlan – PCLN Strange
    Just so I'm clear, you are LONG both options since you bought the strangle and your price for it was $52.  Is that correct?


  14. Bur- he is shirt both options 


  15. Scary stuff. High freq trading company almost killed itself in an instant. now they have new owners. care to make a guess who the new owners are ?
    What do you guys think about this ?
    Knight Capital group INC. confirmed that the embattled brokerage had agreed to a $400 million rescue plan that would help fill a hole left by errant trading last
    http://online.wsj.com/article/SB10000872396390444246904577572752865497064.html

    Thanks
    David


  16. Good morning!  

    CNBC leading off with Aussie CB may now cut rates so let the games begin.  

    Europe is up about half a point (after a 4% gain on Friday so some loss of momentum for sure) and we're opening up about the same.  All we can do is see if it lasts but, again I will say – I am all for taking advantage to cash out long positions (short-term) and begin picking up puts that get cheap on the Long Put List (see Friday's update).  

    We hate to buy premium so, when we do, we try to buy it when it's cheap.  When is a put cheap?  When the VIX is low (now 15.89) and the stocks are high – not a complicated strategy.  Keep in mind we are firmly fixated on those Must Hold lines on the Big Chart and, should 3 of 5 of them break to the upside – then we can't be bearish until they fail again – what we're expecting here (and both the Nas and NYSE are within a tenth one percent of going over) is a rejection at 800 and 8,000 for the Russell and the NYSE and at 3,000 for the Nasdaq.  If that does not happen – then our premise is blown and we pull back on short positions.  

    Don't forget, they have 3-year, 10-year and 30-year notes to sell this week and Bernanke speaks tomorrow at 2:30 but it has nothing to do with QE (some meeting with educators) yet people are still assuming he will announce QE3 then.  There's not much data this week, which should turn the focus to earnings and, as I noted last week, we're into the small caps now and I'm not sure how good those will be – we'll just have to see if they can pop 800 on the RUT or not.  

    BBY popped this morning but still way under the offer.  Let's sell 10 Jan $18 puts in the $25KPA for $2.50 and 20 in the Income Portfolio.  Why, because if the takeover goes through – the puts instantly become worthless and we pick up 18 months of premium very fast.  This is a good way to take advantage of these things while no one believes you.  Stop should be $3 if, for some reason, it goes back the other way so risking .50 to make $2.50 is a good risk/reward ratio and there's no reason to think BBY would suddenly go BK.

    It's going to be a crazy week – let's enjoy it!  


  17. Nicha – I would *assume* he is short too, but then the term is "sell to open"….which is why I am confirming.  


  18. Income Portfolio – Gotta watch that $15 line but that's going to go hand in hand with our Must Hold levels.  

    $25KPs:

    • SVU – Let's take .80 and run on those.  In $25KPA, we can leave the short puts.  
    • JRCC – That's a long-term play.
    • SQQQ – Let's buy back those $51 calls and offer the $1 we made to roll down to the $41 calls ($3.40).  We only want the roll if it fills at $1.  
    • BTU – Should expire worthless
    • ABX – Should expire worthless
    • VXX – Not worth changing yet. 
    • AMZN – Not worth changing yet. 
    • PCLN – On track but, if we make a quick 20% ($1,000), why risk on earnings?  So, if we get $6, we take it and run.  
    • EDZ ($25KPA only) – Interesting that they are green, isn't it?  

    StJ – I didn't see an Income Portfolio Update – did you post one?  


  19. Phil – BBY
    I'm guessing you are looking at the Jan14 $18P for $2.50 right?  The Jan13's might have been $2.50 right at the open, but they are down 48% on the day.


  20. Phil/ BBY
    Any reason why you wouldn't sell the Dec 13 puts for 2.59 ?  Instead of the Jan 14 puts
    Thanks


  21. Sorry realized I was looking at the 21 strike.


  22. Here's the complete PCLN trade:     Bought to open one of each:   September  685 call  /   635  put   and  Sold to open one of each:   this weekly  635 call  /  635  put.   The overall trade at the prices I got    26/26 for the short straddle  and  25.50/25.80 paid for the long straddle,  has a total cost of $70 and can earn a maximum of  $4,870.   It is profitable if PCLN is between 610 and 740 by the end of this week. 


  23. typo in the above.  the Friday sale was  665/ 665 , not  635/635


  24. stfeanluc has recorded the trade above exactly as it was done on PCLN. 


  25. Phil/Iflan -
    I have a PCLN Jan 690/710 BCS. Is there a bear put spread you would recommend (not able to sell puts in this account) to hedge in the event PCLN misses earnings? Thank you 


  26. lflantheman/ PCLN

    Wouldn't the Aug 2 short call and put have expired last week?


  27. RealJLJ – I got PCLN for $5 on Friday.  Hopefully I won't get yelled at, I went by Phil's previous 5% leeway comments.  Is that right Phil?  


  28. David — PCLN — No, that's Aug 1.  This week is Aug 2.


  29. jrcc???


  30. Phil,   VXX trade you talked about last week… Sept $19 Calls are now almost $0.25 


  31. Income / Phil – I'll update it tonight. Got to go now….


  32. 25KP/Phil – bot back half my ABX short puts at this low vix. taking some of the +50% gain.. just in case. Also have order in to buy back half BTU at the bid for 84% gain.


  33. Phil, BBY may be the fastest stop out ever.


  34. Phil did you see my posting or did it get deleted ?


  35. LFlan – AAPL Trade
    What do you think of the Jan13 550/600 Bull CS for $32?  AAPL is over 600 now, and the IP5 will prob be released in Sept.  It still has $28 to gain and is $20 in the money already?


  36. well that was quick on BBY. i blinked and it was gone.


  37. Morning All – ZH just said there is a rumor McClendon is resigning from CHK.  Let's see if this one is true.


  38. AAPL is $100 over average current P/E


  39. AAPL- I have a Long call Aug12 $610-  its not moving value wise… What gives?


  40. AAPL / Newt,
    I have the Aug 610 long call too.  It just broke over 15.00, and is up 3.80 on the day.  What do you mean by "not moving"?


  41. itrade
    Those VXX calls were rolled to the 16's on Friday.


  42. 2can- i was hoping for a stronger pop and I have been watching the thing as its moves toward exp.  Greed.


  43. AAPL / Newt   I've been holding those 610's since earnings, hoping they would come back to at least breakeven.  I bought them for 18.80.  They are starting to loose premium fast now, and I've been thinking about selling every day for the last week.  I'm glad I didn't so far. 


  44. IWM Failed the SMAs and looking like the top has passed. FWIW


  45. 2can- same here.  I have a habit that i hold on to things too long before acting- rolling etc. It has cost me $ three times this yr. so I am wondering- roll, take a loss,


  46. 2can newt
    My 2 cents are like Phil's recomendation get out of longs, AAPL today, this may be as good as it gets and this week?


  47. crussell….10:30 a.m.   My protective play on that would be to buy some EXPE calls. 
    Burrben…10:50 a.m.  I like it.


  48. Dollar 80.42, Euro still failing at $1.24, Pound $1.5572, 78.26 Yen to the Dollar and EUR/CHF back to $1.2011 after once again spiking to $1.2022 in what is becoming a weekly Free Money trade (betting it goes back to 1.209).  

    Oil not holding $91 but gold is $1,612 playing catch-up.  Nothing exciting in the rest of the commodities, which should be more bullish if we were really rallying.  

    S&P/Lincoln – I see studies sometimes but can't point to any.  I agree it's valuable stuff and I wish someone kept good track.  

    California/StJ – Terrible day to travel, glad you got there OK, what are you doing up so early?  

    What kind of cash/Jet – The kind you can rapidly deploy back into the market once the situation resolves itself either way (so pretty much languishing in the broker account).  See if your broker does sweeps – at least you get something that way while you wait.  

    VXX/$25KP, Burr – If you want to be aggressive, sure but I hate to react to one-day moves.  If you feel it's a very small position, sure, you can press it but, in our $25KPs, it's already $1,200 (half position) with a risky downside so we wouldn't press or adjust unless they are down about 40% – not on the 2nd day of owning them.  What can be done quickly, can be quickly undone!  

    795 on the RUT and 7,993 on the NYSE – so exciting!  Nas 2,990!  

    HFT/Micro – Yep and no SEC interference when they are "saving" a company, even when THEY are picking up 10% more market share to control under one roof.  I'm surprised KCG jumped back to $3 already as they sold 267M shares at $1.50 ($400M) against their existing 90M shares so, even if we go back to the old, pre-disaster $1Bn valuation for 90M shares ($10.10 a share) and divide that by 367M shares, you don't get back to $3 and you can't count the cash (as they just lost the cash so not added to value) and you can't say their business prospects aren't, in the very least, slightly diminished and you certainly can't argue the risk factor for the stock hasn't jumped up considerably on the new evidence.  So, while there is no longer a reason to short them – there's also no reason to be long at $3.  

    BBY/$25KP, Income Portfolio, Burr – That's right it was the 2014 $18 puts at $2.50 – thanks!   If we can't get $2.50 it's a dead trade then.  What a shame – still, very important to know that's the correct play to make when you see something like that.  If you are fairly confident in the deal going through, then you just want to sell as much long put premium as you are comfortable with.  I was not into selling the $20 puts as those are too risky (in case it falls apart) but I see, right now, in TOS that the 2014 $18 puts are still $2.90 so that's a go on those.  

    PCLN $665 puts and calls now $49, by the way, down from $51.20 as Lflan expected so let's hope we've put that discussion to rest!  

    PCLN/Crussell – So you are going to bet against yourself by how much?  The bull spread is $8.50 with a max $11.50 pay-off so if you spend another $8.50 because you have no confidence in your other position then you've spent $17 for a maximum $3 pay-off and you are the sucker who paid the premium to everyone else and if PCLN happens to fall between your strikes – you lose the whole $17.  What kind of betting is that?  That's like playing roulette and covering red and black so you break even – unless, of course, double zero comes up and you're wiped out – at least you have a good chance of being even, right?  If you want to risk $17 to make $3, how about (since you are bullish on PCLN), how about just taking the $480/500 bull put spread for $17 and now you are just betting that PCLN holds $500 and you make $3.  If you don't have that much confidence that PCLN will hold $500 through Jan – why on earth do you have the $690/710 bull call spread?  PS, keep in mind I'm pretty sure they disappoint.  

    5%/Dennis – Yes, as long as you believe in an entry, 5% one way or the other is not a really big deal but, as a rule of thumb, you should try to do 5% BETTER as often as possible and walk away from 5% worse – unless you really love the trade.  In the case of Friday's trade idea on PCLN, with earnings coming up you did need to get in or get off the pot, so I agree with the entry (and $5 is what it was on our original entry anyway).  

    VXX/ITrade – See $25KP, we like the $16 calls now (.50).  

    Thanks StJ.  

    Taking the money/Scott – I agree, especially if you have more than 3.  

    BBY/$25KP, Income Portfolio – Rpme – Oh well, that's what stops are for.  No one is taking Schulze seriously, maybe because he refuses to take responsibility for BBY's troubles.  I think it's great as we can enter a more aggressive position now – that's why it's good to take those small, quick losses and save the firepower.  

    Posting/Micro – Depends which one you are talking about. 

    CHK/Ink – Ah the rumor mill is flying!  

    28M on the Dow at 11:22 – I thought the markets were open today?  

    AAPL finally back to where we shorted it ($622).  5 weekly $605 puts at $1.25 in $25KPA.  


  49. I bought some aug10 66 QQQ puts, now 3,000 more are sold.


  50. Phil – you pretty much summed up what I was thinking which is good. I am learning.  I am just exiting this at breakeven now as I don't have confidence in this play. Thanks


  51. AAPL – By the way, couldn't you just cry that we gave up on those $615 calls in the $25KP!  8(  

    Oil back to test $92.  Europe up about 0.75% coming into the close.  

    Dollar 82.15 is holding us up at the moment.  Euro at $1.2423, Pound zoomed up to $1.5632 but Yen got stronger at 78.18 so really strange.  EUR/CHF stronger too at $1.2013.  Short summary of that kind of currency movement is – SHENANIGANS!  

    Oh dear, STD is an evil bank – who'd have thunk it?  


  52. Shadow- Thanks.


  53. Phil- Thanks


  54. Phil,
    /CL at/above $92…..time to short? your input greatly appreciated….Thank


  55. Bernankster factor, why would someone buy Euros selling dollars? When things don't make sense? What are the chances of an oil draw after last week? AAPL @ $623? What are the chances of a perfect storm by Wednesday? Where is a pos?


  56.  standard chartered bank accused of hiding $250B in transactions for iranian govt.


  57. Phil
    Did you see this  ?
    Service Temporarily Unavailable
    Apache/2.2.3 (CentOS) Server at http://www.optionmonster.com Port 80


  58. stjeanluc/ PCLN

    I have the 685/635 strangle on PCLN but did not do the short call and put.  Help me out what would be the benefit of adding the shorts?
    Thanks


  59. PCLN always around 666…
     
    FU PCLN!!!


  60. At the open: Dow +0.19% to 13121. S&P +0.28% to 1395. Nasdaq +0.34% to 2978.

    Treasurys: 30-year +0.1%. 10-yr +0.07%. 5-yr +0.06%.

    Commodities: Crude -0.53% to $90.92. Gold +0.05% to $1607.95.

    Currencies: Euro -0.08% vs. dollar. Yen -0.22%. Pound +0.47%.

    10:00 AM On the hour: Dow +0.54%. 10-yr +0.08%. Euro +0.07%vs. dollar. Crude -0.49% to $90.95. Gold +0.04% to $1607.75.

    11:00 AM On the hour: Dow +0.61%. 10-yr +0.14%. Euro +0.21%vs. dollar. Crude +0.23% to $91.61. Gold +0.36% to $1612.85.

    11:38 AM European markets close higher, adding to Friday's massive gains. Stoxx 50 +1%, Germany +0.8%, France +0.8%, Italy+1.3%, Spain +3.9%, U.K. +0.4%. The euro +0.3% to $1.2420.

    12:00 PM On the hour: Dow +0.6%. 10-yr +0.19%. Euro +0.26% vs. dollar. Crude +0.56% to $91.91. Gold +0.4% to $1613.45.

    Market preview: Stock futures follow European shares higher as markets continue to dream about the powers of super Mario Draghi, with the S&P Benchmark +0.3%. Back on earth, Knight Capital plunges 32% after confirming its $400M lifeline, but Best Buysurges 23% following Richard Schulze's buyout offer. 

    July Employment Trends Index+5.9% Y/Y to 108.11, vs. 107.68 in June. (revised). The report states slow employment growth is likely to continue in the next few months and July pace of job growth (163,000) is unlikely to be sustained

    "The tensions that have accompanied the eurozone in the past years are already showing signs of a psychological dissolution of Europe," Italian PM Mario Monti told Der Spiegel in an interview published yesterday. Francois Hollande, meanwhile, is reportedly pressing Monti and Spain's Mariano Rajoy to request aid to help ease markets and protect France.

    The dollar value of of daily transactions in ETFs tracking the S&P 500 is set to exceed that of the individual stocks in the index for the first time. Bulls say the demand shows investors still want stocks, they just want cheaper fees. Bears say investors have thrown up their hands picking individual stocks in a world of algo-dominated trading.

    "Mind the gap," as stocks and Treasury yields – moving in lockstep for much of the year - have diverged, the 10-year Treasury yield remaining near its 2012 low as stocks rally since early June. (via tradefast)

    Warren Buffett (and Phil Davis) appears to prefer cash over consumer stocks as the latest 10-Q from Berkshire Hathaway (BRK,BRK.A shows a buildup of the firm's cash position at the possible expense of powerhouse names such as Kraft (KFT +0.5%) and Procter & Gamble (PG +0.5%). Berkshire's cost basis in its consumer portfolio slipped to $9.84B from $12.3B during Q2.

    "A food fight" for new junk bond offerings is the result of investors' quest for yields as high-yield fund managers struggle to put to work $43.1B of inflows thus far this year. The money is pouring in as debt sales slow – off 54% since May. "Demand is intense," says corporate bond vet Marty Fridson. "It's become tough to buy acceptable quality paper."

    China's steel output may post its first annual decline in 31 years, according to an industry report. Overcapacity in China's steel industry is such that even a small cut is not likely to affect the surge in exports to the U.S. and elsewhere. Earlier: No profits for Chinese steel firms.

    FreightCar America (RAIL -10.6%) shares slump after the manufacturer of aluminum-bodied railcars says in its Q2 earningsreport that “coal demand remained under pressure from low natural gas prices, high coal inventories and reduced industrial activity.” Orders for new railcars slowed to 967 from 1,244 in Q1 and from 1,089 in the year-ago quarter.

    Oh, this will "fix" things:  Employee stock options are on their way to China as the CSRC announces a plan to allow workers to receive as much as 30% of their pay in company stock. It's the latest in a series of moves this year to try and funnel some of the country's vast savings into the stock market (as opposed to property). Shanghai +1% overnight. 

    Small bankers are laying into Basel III requirements, saying the new rules could force them to reduce loans to small businesses and households. One lender told a recent conference call with regulators that he'd made nontraditional mortgage loans for 40 years with almost no defaults, so why the change? Basel III, the banks argue, is designed to rein in their bigger brethren, not community institutions.

    After conducting dozens of interviews and analyzing 100K documents, the CFTC looks set to drop a 4-year probe into the possible manipulation of the the silver market, as it doesn't have enough evidence to take to court, the FT reports. JPMorgan (JPM) is likely to be relieved, having been the subject of accusations that it conspired to drive down the price of silver, although it still faces a class-action lawsuit. 

    Oh, it wasn't STD, it was these guys:  The U.K.'s Standard Chartered Bank (SCBFF.PK -10%) is accused by the State of New York of "scheming" with Iran to hide more than 60K transactions totaling at least $250B over a 10-year period. The bank could lose its license to operate in NY.

    Standard Chartered's (SBCFF.PK -16.7%) largest equity holder is Temasek Holdings – Singapore's state-owned investment fund – with an 18% stake (via tradefast). This could get interesting. (earlier)

    The European Commission is set to detail proposals for a EU banking supervisor by September 11, according to officials. The most recent fix-all summit resolution called for such as a precondition to allowing the rescue fund to directly bailout banks. The coming proposal is just a first step, with months before anything would actually be approved

    The CFPB widens its probe of mortgage-insurance practices too include AIG and Genworth (GNW) in addition to PHH Corp. (PHH), according to recent filings. At issue is whether the companies violated the law by paying banks fees to win business.

    Annaly (NLY) is downgraded to Underperform from Market Perform at FBR Capital, thanks to its large exposure to prepayments. On last week's conference call, the company seemed less concerned with prepayments ("nothing compared to 2003 … rather subdued") and more focused on the high level of MBS prices.

    Christie takes care of his buddies:  New Jersey's main public pension agency "gorges" onalternative investments, recently committing up to $1.745B to seven firms, including $600M to Och-Ziff (OZM). The state's public pension system is targeting alternative investments after earning just 2.26% on its money in FY2012. 

    An apparent fake tweet reporting the death of Syrian President Assad looks to be behind a near-$1 spike in the price of crude oil. USO +0.6%.

    TWIL Candidates:  Many energy stocks trade "near liquidation value," and the group is valued at "trough" levels, some analysts say, as the price ratio of energy stocks relative to the S&P 500 is near lows reached at the 2009 market bottom and in 2010-11. Among favorites: CVX,XOMRDS.AAPAAPCHESHALSLB. Avoid gas-oriented issues such as CHKSWNECA.

    Shell has pulled all but the most necessary operational funds out of European banks, reports The Times. "There's been a shift in our willingness to take credit risk in Europe," says CFO Simon Henry, explaining at least part of the bid for 10-year Treasurys yielding 1.50%.

    Chesapeake (CHK) is downgraded to Market Perform by BMO Capital, prompted by "a story still chock-full of operating and financial risk, and one where the turnaround appeal is fading." CHK is scheduled to issue its Q2 report after today's close; adjusted net income is estimated to fall more than 80% to ~$100M from $571M a year earlier. CHK -1% premarket. 

    Suntech (STP -5.3%) bleeds some more after Reuters reports the China Development Bank, which provided the dubious$692M  Global Solar Fund (GSF) loan Suntech guaranteed, was warned repeatedly by P-E firm Mandarin Capital not to lend money to GSF, due to the high risk of fraud in Southern Italian solar ventures. "GSF smacked of a scam," says Mandarin managing partner Alberto Forchielli. (more)

    Rains over the weekend and more forecast for this week are helping send the grains lower. Much of the damaged corn crop is beyond repair, but beans should see a benefit from the water and cooler temperatures. New crop corn -1.4%, New crop beans -2.6%.



  61. Even before a widespread drought hit the U.S. this summer, the nation's cattle herd 
    was shrinking to low levels and pushing prices up. Now prices look set for another run higher as Tyson (TSNwarnson periods of imbalance of fed cattle supply in 2013. While sellers such as SFDHRLSAFM, and PPC may get away with passing on higher prices to consumers, will restaurants chains such as McDonald's (MCD), Wendy's (WEN), and Chipotle (CMG) have to absorb the higher input costs?

    Chipotle (CMG) vs. Taco Bell (YUM): The effect of the new Cantina Bell menu on Chipotle's runaway growth may beoverdramatized, according to Minyanville. The beef behind the argument is that Chipotle still claims superior food offerings and customers will "buy the experience" to keep the chain entrenched as a more likely destination for lunchtime engagements. 

    McDonald's (MCD) increasingly takes on Taco Bell (YUM) and its popular "Fourth Meal" options in the late hours with more restaurants pushing back their closing time or adopting 24-hour service. In Tampa, 135 of the company's 186 locations are open around the clock.

    Ford (F +0.8%) says new plants in Asia will be able to manufacture up to 7 different models as its adds flexibility to its factories in the region. The automaker could see the Asia Pacific Africa region contribute close to a third of all its global sales by the middle of the decade.

    General Motors (GM) says it sold 199,503 vehicles in China during July, up 15% Y/Y. The automaker's joint venture with SAIC Motor and Liuzhou saw strong demand for minivans in the nation despite an increase in competition and a slowing economy.

    A tale of two retailers: Macy's (M) and J.C. Penney (JCP) report earnings this week with an expectation that the revenue gap between the two names will widen again. While execs at J.C. Penney hype free haircuts for kids in an attempt to bring in traffic to see the company's revitalized store-within-a-store concept, the theme at Macy's has been to calmly ride out the economic slump in the U.S. with a focus on Internet sales and merchandise tailored to local tastes.

    Time Warner (TWX) film The Dark knight Rises pulled in$36.4M in its third week in theaters to easily beat back debuting films. Analyst expect box office totals for the hit to stay resilient as filmgoers who opted out of a first weekend showing after the Colorado shooting tragedy make their way to theaters. IMAX sales have accounted for almost $48M of the total box office haul of $354.64M, marking an IMAX record.

    A letter sent by Best Buy founder Richard Schulze to the company's board says Credit Suisse is "confident" it can scrap together the financing needed to help take the company private. NBG's Brian Sozzi warns the unwillingness of board to cooperate signals a buyout is "no slam dunk" as the retailer's steep challenges still remain. BBY +23.1% to $21.86, below the reported buyout rangeof $24-$26. 

    Shares of Best Buy (BBY +15.5%) settle back a bit from earlier highs as the company confirms receiving an offer from Richard Schulze to buy out shareholders at $24-$26 a share. The Best Buy founder will need to raise $1B-$2B from P-E firms and $7B-$8B in debt to make a deal fly, according to BB&T Capital Markets.

    Sirius XM Radio (SIRI +1.5%) gains after monthly subscriber data from Pandora tips off that Sirius may be losing less subscribers to Pandora or even picking some back up. Shares of SIRI have held above the $2 mark for over a month and hit a three-month high of $2.20 in intra-day trading.

    Chip makers such as Qualcomm (QCOM), Intel (INTC) and Taiwan's MediaTek are fighting it out in the emerging battlefield of low-end smartphones that cost less than $200, attracted by high volumes and fast growth. Intel and Qualcom have teamed up with Lenovo, with the latter two last week introducing the first devices that use dual-core chips from Qualcomm which address the cheaper end of the market.

    Sprint (S) will deploy Alcatel-Lucent's (ALUlightRadiobase stations in high-density areas to support its 4G buildout. Alcatel boasts its cube-shaped lightRadio boxes offer superior miniaturization for small-scale base stations, and that their ability to be centrally managed gives them an edge in power consumption and network efficiency. The struggling telecom equipment vendors has already struck lightRadio development deals with China Mobile, America Movil, and others.

    Amazon (AMZN) customers in the U.K. now buy more e-books than print books, hitting the milestone in half the time it took to pull off the trick in the U.S. Of note, the company also says 3 of its top 10 authors are direct publishers from the Kindle Direct Publishing platform.

    Apple (AAPL), a major Sharp customer, is probably closely watching Foxconn's attempts to renegotiate its 9.9% investment in the Japanese company after its shares plunged last week following aprofit warning and fell another 5.7% today. "Apple needs Sharp," says analyst Alberto Moel. "Sharp’s capacity is large enough that if it were taken offline, it could hurt Apple."


  62. STD, short XLF seems obvious..who's next should be asked kinda thing


  63. London isn't looking to good in the last month.


  64. Learning/Crussell – Good move.  You have to step back and take a fresh look at these things once in a while.  That's why talking things out the way we do is very useful. 

    You're welcome Newt!  

    Oil/Jasu- Not with QE fever so hot and heavy and no particular rush for the NYMEX crowd to sell (cycle ends about the 21st).  If you are comfortable with Futures shorts, of course you can play for a rejection at $92 with tight stops and, if not, then $92.50 but you have to be really careful into Wednesday's inventories – especially if the Dollar stays low (now 82.18).  

    Chance/Shadow – It's just shenanigans – best to ignore and see how much power the manipulators have.   I though AAPL was worth a short stab but, as I just said above, oil is super-risky at the moment as is betting against the Euro, which is what the entire G20 is trying to prop up.  

    Option monster/QC – Yes, thanks, we have Matt looking into it.  They either took it down or changed something that we have to fix on our end too.  

    BBY holding $19, only up from $17.50 last week and long-time low of $17 just a few weeks ago.  I think for the Income Portfolio, our play will be 30 artificial buy/writes – selling the 2014 $15 puts for $2.20 and buying the 2014 $15/20 bull call spread for $3.10 for net .90 on the $5 spread with a $12,300 upside potential if called away at $20 and the risk of owning 3,000 shares at net $15.90, which is still a 20% discount to current. 

    In both $25KPs, let's get 20 of the Sept $17/19 bull call spreads for $1.25 ($2,500) and we'll roll out and sell puts if we have to but, if they just hold $19 – it's an easy $1,500.  


  65. PCLN just whipped around!   Jabob must have gotten them angry.  Don't complain you can't get an entry now!  


  66. FU PHIL!!!
    ;-)


  67. Greetings Phil – besides your long put list, what plays do you like this week to protect against a fall in the market before the treasury sales? EDZ? short /YM? By the way, would you or ST Jean please post the weekly calendar (you usually post) showing all potential market moving events for the week? Thank you.


  68. Goal….3000 on Nas…that must be why "they" turned PCLN around…


  69. man this market totally sucks – completely irrational. All the trades I entered in the last week are in red :-(


  70. The Entire $15 Trillion US Economy In One Gigantic Infographic

    Read more: http://www.businessinsider.com/an-infographic-of-the-us-economy-2012-8#ixzz22mqwZhYM


  71. AAPL really getting pumped – over $624 now but as long as we don't break the NYSE and the RUT, it's just another attempt to crack higher.  

    Dow volume ridiculously low at 38M at 1pm – we did more than that Thursday by 10. 

    PCLN/Jabob – What could an article about fundamentals possibly have to do with PCLN's movement?  8) 

    What else/Jrom – I don't like much else because a more aggressive play can easily get toasted.  If we break over 13,200, 1,400, 3,000, 8,000 and 800 – there's not a lot of resistance above the line and we can pop higher – especially if spurred on by some new announcement (but I don't think a rumor would do it).  As I said above, you can short those lines with very tight stops in the Futures or of course EDZ is one I always like but this is a very dangerous inflection point – the prudent thing to do is have cash until we are past it.  As to the events chart – that's in SWW, as usual. 

    Red/Gandhjo – Are you 100% bearish?  That's not a good thing.  

    LVS and WYNN had terrible news this weekend as Chinese police are pushing back against the Triads in Macau and tourists have been caught in the crossfire.  So what's today's reaction – they are up 3%.  Ridiculous!   Of course Cramer's The Street decided today was the day to put out a bullish spin on them with no mention of the crime as a possible negative.  Then PIMCO chips in with a vote of confidence and, what a coincidence, Motley Fool too!   Isn't that the most amazing coincidence???

    WYNN Sept $95 puts at $3 were $6 last week and I like them as a play for WYNN not to get through $100. 

    Great graphic Rain: 

    US economy infographic


  72. Well Phil, I bought AMZN long puts, DIA long puts SQQQ BCS, VXX long puts, PCLN long puts – all in red now with only BAC short puts being green. 
    Should In lighten up some of my bearish trades but I also feel that we are so overbought – so don't know what to do. Please help.
    TIA
    gandhjo


  73. PCLN / David – the short straddle was lflan idea…


  74. TLT up…Vix up…Market up…who is right?


  75. Why is VIX up and VXX down – how does that work?


  76. Guys,

    Can you tell me how you 'roll' a PUT (for example). Presumably you sell the loss making position and re-buy a similar PUT but at a later expiration? But what about the loss on the original sale or do you try and build that into the new position somehow?
    Thanks and take care
     
    Mark


  77. gandhjo/vix/vxx
     
    …because it is the scam of all scams they have no correlation until they do.


  78. 1:00 PM On the hour: Dow +0.65%. 10-yr +0.19%. Euro +0.19% vs. dollar. Crude +0.82% to $92.15. Gold +0.4% to $1613.55.

    2:00 PM On the hour: Dow +0.52%. 10-yr +0.22%. Euro +0.08% vs. dollar. Crude +0.46% to $91.82. Gold +0.34% to $1612.55.

    Key Events In The Coming Week And Month.

    Indicator Update: Assess the Market Evidence.

    Yep, Stock Analysts Are Smoking Happy Weed Again… (graph)

    "Did Somebody Repeal The Laws Of Mathematics?"

    Romney Says Fed Should Hold Off on Buying More BondsFormer Massachusetts Governor Mitt Romney said the Federal Reserve should refrain from a third round of large-scale asset purchases. Romney, the presumptive Republican nominee for president, said that while the first round of bond buying by the U.S. central bank may have had a positive effect, a new round of quantitative easing will not help the economy.

    Fearing an Impasse in Congress, Industry Cuts Spending. A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months.

    Vanishing Pensions. Less Than 30% of Firms Offer. In 1988, about two-thirds of companies offered pensions, according to government records. But by 2010, that number was down to less than one-third.

    Why Washington Accepts Mass Unemployment (NY Mag)

    A new NerdWallet study found the 10 most profitable U.S. companies paid an average of 9% in federal taxes last year. These low rates are particularly shocking given that the official tax rate is 35%. The study also revealed more than half of the 500 largest U.S. companies paid a lower tax ratethan the average American.  To give the public easy access to this information, NerdWallet built a tax rate transparency tool. The tool allows users to select any of the 500 largest corporations in America and instantly see the tax rate that company paid. The tool also provides the name and compensation of the highest paid executive.

    Monti of Italy Warns That Currency Crisis Risks Europe’s FutureDisagreements within the 17-nation euro area are undermining the future of the European Union, said Italy’s Prime Minister Mario Monti as the stand-off on European Central Bank support for Italian and Spanish debt hardened. “The tensions that have accompanied the euro zone in the past years are already showing signs of a psychological dissolution of Europe,” he told Germany’s Spiegel magazine in an interview published yesterday. “I can only welcome the ECB’s statement that there is a ‘severe malfunctioning’ in the market for government bonds in the euro region. It’s also true that some countries have to shoulder ‘extraordinarily high’ costs to finance their debts. That’s exactly what I’ve been saying for a long time.” He urged swift action to lower borrowing rates. Investors and politicians are still grappling with the significance of comments on sovereign debt purchases by European Central Bank President Mario Draghi last week. While markets initially tumbled on Aug. 2 after Draghi said Spain and Italy would have to formally request a resumption of the bank’s bond buying, they rallied the following day as investors concluded that ECB action would occur, albeit on an unknown future date.

    Bank License for ESM Illegal, Germany’s Westerwelle Tells FocusGerman Foreign Minister Guido Westerwelle said it would be illegal in Germany to grant a banking license to the European Stability Mechanism, the future permanent euro-area bailout fund, Focus magazine reported, citing an interview. Shared liability for public debt in Europe would burden Germany with unlimited risks, a prospect that would violate the country’s constitution, Westerwelle said. Europe needs to boost its competitiveness and the entire euro region needs effective economic policy changes, he said.

    Mario Draghi Cannot Save the EuroEuropean Central Bank President Mario Draghi has been making pronouncements that many have interpreted as positive for the future of the euro. I think his words mean things are going to get ugly

    The German Press Responds To Draghi: "Vengeance Will Be Bitter".

    Draghi Echoing Merkel Has Traders Raising Bets Against Euro. When European Central Bank President Mario Draghi vowed July 26 to do “whatever it takes” to defend the euro, he succeeded in stemming a slide that pushed the 17- nation currency down about 6 percent since late March against its major counterparts. Traders in the options market responded by raising bets against the currency of the developed world’s worst-performing economy the most in 11 weeks. Options to protect against further weakness climbed in the past two weeks by the most since May.

    De Guindos Tells ABC No More Cuts as Spain Will Meet Debt GoalsSpain’s Economy Minister Luis de Guindos said the country won’t introduce more spending cuts or tax increases because it’s on target to meet its budget deficit reduction goals, ABC newspaper reported.

    Greece’s New Pledges Will Take Epic Battle to ImplementGreece's latest fiscal and reform pledges may be enough to convince international lenders weary after years of broken promises to keep Athens hooked to a 130 billion euro ($161 billion) lifeline, but the battle to implement it will be epic.

    German Regional Minister Sees Greek Euro Exit By Year's End. Greece should exit the eurozone by year's end and not receive any more aid, a German regional finance minister has said in a Sunday newspaper interview, further stirring debate on the issue.

    Libor Fault-Finding Grows, It Is Now Every Bank for Itself (DealBook)

    Blood in the water (Economist)

    More on Standard Chartered (SCBFF.PK -8%): "In short, SCB operated as a rouge institution," reads the complaint. "You (expletive) Americans. Who are you to tell us … that we're not going to deal with the Iranians," replied a Group Director upon being alerted by U.S. operations of the laundering. Unable to keep pace with Iran's business, the bank created automated systems to help out.

    Cocaine Cowboys Know Best Places to Bank (Bloomberg)

    American Capital Mortgage (MTGE -4%) leads mREITs lower after Friday afternoon's earnings report showed June 30 book value/share of $22.08, making the closing price that day more than a 10% premium. Despite sell-side prepayment worry, the company is the latest to report it hasn't yet shown up in the numbers , CPR (on agency holdings) falling to 4.7% from 5.7% in Q1. (PR)

    Hotel stocks could see a boost as the industry's occupancy rate now exceeds 75% for the first time since 2007 with a 3.3 percentage point increase over the last year to 75.1%. The 4-week average is also closing in on a level not seen since the recession. Another key metric, revenue per available room, increased 8.2% Y/Y to $81.80. Sector watch: HOTMARIHGCGWYNCHHHMIN,RLHH

    Speculators Lift Wagers in Longest Streak on Record: Commodities. Speculators increased wagers on commodities for an eighth consecutive week, the longest streak on record, just before a report on U.S. job growth sparked the biggest price rally in a month. Hedge funds raised their net-long positions across 18 U.S. futures and options by 4.9 percent to 1.22 million contracts in the week to July 31, the highest since Sept. 6, U.S. Commodity Futures Trading Commission data show. Bets more than doubled since reaching this year’s low on June 5, capping the longest increase since the data began in June 2006. Gold holdings climbed by the most since November 2008, and cocoa wagers reached a one-year high.

    Analysts Expect Euro Rally to Be Brief.

    As shares of Wal-Mart (WMT -0.1%) close in on new all-time highs once again, analysts note that it's not just a poor economy that isdrawing interest in the company. A nearly perfect storm of meltdowns of various sorts at competitors such as J.C. Penney, Supervalu, Best Buy, and RadioShack helps bring in traffic to WMT stores and prop up weak same-store sales. That's not to say the name isn't still attractive as a deflation hedge, Stifel Nicolaus analyst David Schick cuts to the chase: "We see Wal-Mart as election and fiscal cliff resistant."

    "Wealth management products" in China – long on promised returns, short on details - are showing cracks, and given the mammoth size of the industry ($3.5T may be issued this year), it could have ramifications for the banking system and the global economy. "This is not fundamentally different from a Ponzi scheme," says BAML's David Cui.

    Special Report – China's answer to subprime bets: the "Golden Elephant""They haven't even built a proper road here," said Li Chun, a car repairman, who said he lives in the project. "The local government is holding onto the flats and only wants to sell them when prices go up." The Chinese investment vehicle known as "Golden Elephant No. 38" promises buyers a 7.2 percent return per year. That's more than double the rate offered on savings accounts nationally. Absent from the product's prospectus is any indication of the asset underpinning Golden Elephant: a near-empty housing project in the rural town of Taihe, at the end of a dirt path amid rice fields in one of China's poorest provinces. Golden Elephant No. 38 is one of thousands of "wealth-management products", instruments aimed at monied investors, which have shown phenomenal growth over the last five years. Sales of them soared 43 percent in the first half of 2012 to 12.14 trillion yuan ($1.90 trillion), according to a report by CN Benefit, a Chinese wealth-management consultancy. They are usually created in China's "shadow banking" system – non-banking institutions that are not subject to the same regulations as banks – which has grown to account for around a fifth of all new financing in China. Like the subprime-debt lending spree in the United States that helped spark the 2008 financial crisis, the products are often opaque, and usually dependent on high-risk underlying assets, such as the Taihe housing project.

    AK Steel (AKS +7.7%) says it will increase current spot market base prices for all carbon flat-rolled steel products by $30/ton, effective immediately with new orders. Other steel names power higher: X +6.9%NUE +2.1%STLD +3.6%MT +3.6%ATI +3.7%.

    Chinese Internet stocks surge in response to pleasing Q2 reports (IIIIII) from Youku (YOKU +7.6%), Sohu (SOHU +17%), and Changyou (CYOU +16.6%). BIDU +4.3%SINA +9.7%RENN+11.4%PWRD +6.7%TUDO +8%. Baidu's gains are coming in spite of the company's disclosure that 3 employees were arrested for taking bribes to delete message board posts.


  79. davidkordack…11:53…..PCLN…The legs of this trade complement each other.  The short straddle will get crushed after earnings and the long strangle will guard against a possible loss from a large move up or down.   I would not hold either without the other through earnings.   



  80. It's not just Sharp (
    SHCAY.PK) that's feeling the pain caused by a weak TV market: Sony (SNE), Samsung (SSNLF.PK), Panasonic (PC), and LG have all significantly lowered their 2012 sales targets. Sony's target has dropped by 4M to 15.5M, and Samsung's by 10M to 40M. The ripple effects are already being felt by everyone from panel makers (AUOLPL) to component suppliers (GLWNXPISTM) to retailers (HGGBBYCONN). 

    Pac Crest's Brent Bracelin is worried Cisco's (CSCO+2.4%) October quarter guidance will miss Street forecasts for flat Q/Q growth due to macro and forex headwinds. Bracelin expects Cisco, which reports next Wednesday, to guide for a 1%-3% Q/Q drop. Last week, RBC's Mark Sue argued Cisco, in spite of its low valuation, is dead money until a major dividend hike arrives, due to strong competition from JuniperHuawei, and others.

    AMD (AMD -3.2%) slumps after announcing a $300M debt offering. The struggling chipmaker says it could use the proceeds to pay down existing debt yielding 5.75% and 6%, to make cash payments to manufacturing partner Globalfoundries, or to make "strategic transactions." S&P has given the debt a BB- rating, and hasrevised its outlook on AMD to negative from stable in response. AMD had $2.02B in debt on its balance sheet as of June 30.

    Samsung (SSNLF.PKplans to introduce an ARM-based (ARMH) server CPU, the Seoul Economic Daily reports. There has already been speculation on this front due to Samsung's poaching of AMD talent. If true, Samsung would enter a budding market featuringMarvellApplied Micro, and H-P partner Calxeda. Software support for ARM server CPUs is limited, but many are intrigued by their potential power and density advantages over Intel/AMD alternatives for Web applications. (Intel Centurion)

    Though Apple (AAPL) made up only 6% of Q2 smartphone and tablet shipments, it accounted for 43% of revenues and 77% of operating profits, estimates Raymond James' Tavis McCourt. This in spite of an earnings miss caused by declining margins and iPhone shipments. Samsung (SSNLF.PK) is believed to have produced 29% of all operating profits, and the rest of the industry (due to being collectively unprofitable) -6%. (RIM comments)

    A Password So Secure, You Don’t Even Know What It Is (Businessweek)

    Luck vs. Skill: Seeking the Secret of Your Success (NYT)

    Three lunchtime reads:

    1) Is this as good as it gets?

    2) Bonds to perform better than usual with QE3

    3) The great U.S. credit conundrum 

    America's Ultra-Rich, the top 0.01% make up 50% of the rest of the World's top 0.00001%.  They keep threatening to leave – if only we could get them to!:

    James Davies, Rodrigo Lluberas and Anthony Shomocks, Credit Suisse Global Wealth Databok, 2011

    Deficit debate driven by the wealthy (LA Times)


  81. I don't know how I got that last comment into Phil's box, but I couldn't be in better company.  :)  


  82. NAS 3000??? http://youtu.be/WHy08s3CCso
     
    Well, OK, I'm still lurking. Trading my own stuff but enjoying the chitchat.


  83. Puts a' Plenty/Gandhjo – If you are 100% bearish, then you either want to lighten up or at least be ready to make some bullish plays (if we pop our levels) that will pay for your rolls.  That's what we've done in the $25KP – we cashed out our winners and we're pressing our bear bets and HOPEFULLY, we'll catch a nice rejection here.  If not, we'll have to take some losses and scramble to get more bullish.  It's a strategy you can afford to follow when you are up 40% in a month – not one you want to bet your retirement money on!  

    Who/Sage – Maybe they are all right and we're heading straight up from no on in a non-volatile rally that will be so strong that people will have nothing left to do with all their profits but put them into treasuries.  

    VXX/Gandhjo – VIX is a measurement and VXX is a bet on what the measurement will be.  

    And what Sage said! 

    Rolls/Markilus – I used to try to teach people to make spreadsheets and roll the cost (loss) from the first position into the basis of the 2nd position so you don't lose track but that only made people more confused so I gave up by I still think it's the best system.  

    Box/Lflan – That's just a glitch when my news runneth over.  All fixed now. 

    Hola Bird!  Doesn't count unless it sticks for a couple of days but very impressive so far.  


  84. Looks like we are close to a technical breakdown or breakout.  While I am in the breakdown camp, I am wondering what bullish hedges people have in place (if any).  After liquidating SVU today, I see BTU and ABX in the portfolios, and the BBY BCS…any other ideas that aren't in the regular portfolios? 


  85. I am a believer.  All the indexes are lining up as if on queue – NAS 3000, NYSE 8,00, & S&P 1,400.
    Now the million dollar question is how are they going to break.  In reading the comments over the last few days, like myself, it appears that several of the members have gotten out of balance on the bearish side.  Thanks Phil for interjecting your words of experience,  Your comments late Friday and over the weekend were very helpful and on target. 


  86. This reminds me of poker. You just know that Bernanke and Draghi don't have squat – but the stakes are awfully high.


  87. $4.09 for a gallon of gas today, should be a BIG HELP to the economy. FU GOLDMAN!


  88. Other ideas/Cdel – Try the Income Portfolio (to be updated later) – plenty of long-term bullish plays there.  I listed a couple of short-term ways to play XLF and FAS bullish last week if you want an upside hedge as well.  

    You're welcome Den, hopefully we don't break over or we'll all be scrambling out of short-term bear bets but this has been a pretty reliable top (although we have had pokes through so we're watching, not panicking, either way).  

    Poker/Bird – Good comparison.  That's why I only bring as many chips to the table as I'm willing to lose – you want to be able to go all in but still have enough for dinner and a show if you lose…

    Dow volume coming into 3pm 47M.  So low you can't count the day.  

    Dollar 82.31 (creeping up), Euro failed $1.24 again, Pound barely holding $1.56.  Yen bounced off 78.15 but weakly (strong Yen) and EUR/CHF bouncing between 1.201 and 1.2011 – so pretty tight…  


  89. Sometimes I notice that the ignore button will be checked for someone and I haven't checked it.  Does anyone else experience this problem.  I have only ignored one person on this site and Phil took the unprecedented step and told them to leave but other than that I have never checked anybody.  Just wonderin'


  90. Schwab has filed suit against the big banks, on their own, over the Libor scandal. I moved my banking to Schwab because they are so much better than Banks, which have become like the Mafia. Libor, drug money, robo-signing, bid rigging, tell me how they are different.
    Ok, had to get that off my chest….


  91. Blue moon this month – and you know what that means!
     
    Actually, I have no idea. Anyone have Art Cashin's email address?


  92. Come out to play mr. Anti stick!!!!!!  


  93. VIX & VXX – Phil, when you say "VIX is a measurement and VXX is a bet on what the measurement will be", does that mean VXX is down because the expectation was for VIX to fall, but it rose instead? 
    Is there a more detailed explanation somewhere?


  94. Phil
    You said lowest volume doesn't count but asside from that isn't this rather toppy?


  95. Tech glitch my a**, Is no one seeing a scary trend here ??  Some hacker is laughing their a** off.  What's next???
    MADRID--Trading in Spanish equities was disrupted for more than four hours Monday as a technical glitch  A spokesman for BME in Madrid said that technicians were studying their systems to get a better picture of what caused the shutdown, but couldn't comment further on the disruption.


  96. bolt I beleive vix is actual put buying whilst the vxx is the futures of the vix, make sense?


  97. Is there anyway to tell the total option volume day vs day?  The CBOE lists it for their exchange, but is there a aggragate number somewhere.  
     
    PS:  Is there any way to turn OFF the cut/copy/paste of FCKEditor that we use?  It blocks all my plugin's, one of which is spell check that I really need….  And cut/copy/paste is in every OS.


  98. From the WSJ – ECB's Hansson says ECB will buy short-term dated securities in line with traditional central banking, long maturity bonds are for govt's to tackle, ECB, EFSF, Govts to act in "combined package".


  99. Phil, I know that you say stimulus trumps all, but stimulation from here seems a little silly.  What would be the point?  The more this pump drags out with so called "easing" around the corner, the more ridicules the idea becomes.  It just seems to make everything that much more unstable.  IF Germany does go for hte bond buying from here, so what? We rally how much higher off of that? Sustained by what?  Thank you sir may I have another.


  100. Also reading that the IMF is discussing options such as interest rate cuts on Greel bailout loans, bond haircuts(again), etc.


  101. VXX / Sage – Thanks for trying to help, but I don't really get it.  If, for example, one were to buy VXX calls, what causes them to increase in value, if not the VIX increasing?  Does VXX going down today mean more people are expecting VIX to go down within some timeframe, just not today?  


  102. CNBC puts some wacko woman on to make a counterpoint to Bill Nye on why the Government shouldn't fund space trips.  She had virtually all of her "facts" wrong and is clearly clueless – I would say CNBC should be ashamed of themselves but clearly they have no shame – that was a truly despicable display.  

    Ignore/Jr – If you accidentally click on them on the right, then you ignore them.  I have noticed that, on the IPad, I've accidentally hit it once or twice when scrolling.  Ignored people show up right under the comment box so just uncheck them and they're back.  With your special powers (people you ignore get kicked off the site) – you should be careful with that thing!  8)  

    Like the Mafia/Rpme – What do you think happened to the Mafia?  We didn't defeat them, they just went "legit."  Banking is loansharking, Casinos are everywhere now so no need to run them in a basement, insurance is protection, the stock market is a numbers racket and PFE and MRK are a lot more profitable to invest in and easier to control than an army of heroine dealers.  Read Taibbi's "The Scam Wall Street Learned from the Mafia."  

    LOL Bird!  I'm sure Art would say "You saw me standing alone, without a prayer in my heart, without a love of my own…"  

    VXX/Bolt – VXX tracks the VIX but only when they (the people who run it) do their daily balance.  The rest of the day it follows the general rules of parimutuel betting, which means, whichever direction people are betting more heavily on is the direction it goes.  So VXX is down because people are betting it will go lower.  Maybe they're right and maybe they're wrong – over time they tend to line up – less the decay of VXX.  

    Toppy/Shadow – It looks toppy but I don't think you can conclude the top is holding when the attempt to break it comes on such low volume.  It's doubtful it can be broken over without high volume but not breaking it with insufficient force proves nothing.  

    Spain/Jacalyn – So I guess we can't trust their reading either today?  

    Option volume/Burr – Maybe Option Monster tracks it.  I very much doubt you can turn off anything from the editor – it's a plug-in that just does what it does.  I use Chrome – it has built-in spell checker all the time. 

    ECB/Ink – So essentially it's the same old, same old…

    What's the point/Joel – It's all extend and pretend because none of the G20 "leaders" want to actually address the problem.  Maybe that's the flaw in term limits – since they all know they will be out of here one day, they all fantasize that they can put off the hard choices until after they retire.  See a King would either have to deal with a problem or pass it on to his children – they never would have allowed this crap to happen….   This article by Simon Johnson says it all very well

    VXX/Bolt – Try this:  How ETFs Work.  


  103. Bolt/
     
    obviously any big bets would move individual call strikes, your example of buying VXX calls but the overall driver of the VXX is the front 2-3 months of Vix futures or short term expectations.


  104. Phil,
    As you know, I've been very judicious in the use of my "special powers".


  105. Dow 55m with 20 to go  zzzzzzzzzzzzzzz


  106. Phil
    Do you think, given the current market environment, that your idea from Thursday's chat still holds (after Draghi failed miserable)…barring a breakthrough of the 5% lines.
    "I think, barring sudden QE/Stimulus, that this should take us back to the 200 dmas – about 2.5% down from here, by next week.  Then we drift or fall another 2.5% into Jackson hole and the next ECB meeting and Germany's decision in Sept so I guess we're targeting 12,400 on the Dow and  1,320 on the S&P – generally between the -5% and -10% lines on the big chart."
    I think you will yet be proven (at least somewhat) right, but was wondering if you still think such a drastic pullback is in the cards for the week.  Thanks


  107. mackey gas
    Try Germany 5.10 $US per gallon so just be happy


  108. AAPL $605 puts back to $1.25 after bottoming at $1.07 – hopefully we score tomorrow because the decay is a bitch on those! 

    Just crossing 60M at 3:54.  

    BAC just offered to refi my Mom's mortgage at 3.5% when she called them to say she was going to pay it off with another mortgage company.  Nice how they CAN do it if they want to but, as long as the suckers pay 6% without complaining – they sure aren't going to drop any hints.  

    Oh no, Dow in danger of not breaking it's streak of 9 red Mondays in a row!  

    Drop/Cdel – I think, ultimately, without actual stimulus, that will happen but seems like it could be longer than I thought before the bulls give up hope.  This is great for fund managers (and us) who jack up the futures and spend all day dumping their bullish positions on the beautiful sheeple and look how cheap all these puts we bought were!  Who can complain?


  109. 80M at the finish, all selling at the end (33% of the day's total volume in 5 minutes).  


  110. MTN making new highs on the same logic as my Vegas Property Project (see BBBW Project for that discussion) – just saying….


  111. Phil/PCLN,
    I don't think your PCLN analysis from this morning is entirely accurate – looking at the actual data, I see that this week's 665C opened at 24.99 (vs. a Friday close of 25) and the 665P opened at 27.96 (vs. a Friday close of 26.20) – so this morning the strangle was actually up 1.75 to 52.95 from 51.20 on Friday.  In other words the increase in IV wiped out any gains from the weekend decay.
    The fact that the strangle was down to 49 at 11:24 am was simply due to the decay during the trading day.  That notwithstanding, Lflan had a little surprise for us with his long strangle – a neat little trick, I'm sure it'll work its magic!


  112. I couldn't stand it any longer. Bought a little bit of TZA AH. (Amateur Hour)


  113. Birdman
    I bought QQQ puts all day at lower and lower prices. TZA is the right way when what good could come of this?


  114. CHK up 5% AH on earnings.


  115. Short/Shadow – Yeah, I couldn't sleep well tonight unless I had a bit of a short position.


  116. Anyone notice the black shooting star on the NYSE.  Right at 8000 level!  Uncanny really.  Go bears. Oh and hello mr anti stick!!


  117. Well Wappler – If we haven't taught you not to be a dumb-ass and pay opening prices – then you're right, this is a trade, you'd lose money on.  If, on the other hand, you wanted to cash out with a small gain – you could have done that very easily and if you wanted to buy back the $665 puts for $21 at 12:30 and buy back the calls for $22 just after the silly open that no one in their right mind would have paid – well then it was a nice little trade.  So, in short, you could have just offered $22.50 (10% profit) on each side and easily gotten out of this one with the quick profit.  If the biggest downside you can find for the day was $1.75 – I'll take those odds whenever there's a good weekend opportunity. 

    At the close: Dow +0.17% to 13118. S&P +0.25% to 1394. Nasdaq +1.05% to 2999.

    Treasurys: 30-year +0.04%. 10-yr +0.1%. 5-yr +0.09%.

    Commodities: Crude +0.78% to $92.11. Gold +0.29% to $1611.75.

    Currencies: Euro +0.04% vs. dollar. Yen -0.32%. Pound +0.22%.

    Market recap: Stocks shook off their recent case of the Monday blahs, as the Dow started the week with a gain for the first time since May and the S&P inched close to 1400. With Draghi talking the talk and falling yields on Spanish and Italian bonds, the feeling grows that Europe's Armageddon scenario may be off the table. NYSE gainers led losers by more than three to two.

    The ECB's sovereign debt purchases are to be substantial and sustainable, newish member Ardo Hansson tells Dow Jones. The central bank, EFSF and governments are set to act together in a "combined package," he says, adding the buys will at the short-end of the curve, with longer-dated paper for government to tackle. That doesn't sound like acting together.  - Hansson is from the World Bank (worked there under GS's Zoellick), has a Harvard PHD in Economics.  Gee, I wonder why he was assigned to the ECB?

    We won't call it another bailout, but the IMF is pushing for easier terms for Greece, reports the WSJ. One proposal is a lower interest rate, another has the ECB accepting a 30% haircut on its Greek holdings, and another has EU governments taking haircuts on their loans to the Greece. We smell summit.

    Thanks Grandpa!  Needing money and loathe to raise tax rates, California school districts turn to capital appreciation bonds - a 40-year loan, for example, where no payments are made for 20 years (no mortgage firm even tried that). Banned in Michigan 20 years ago for its toxicity, the scheme is the ultimate in shifting the burden of today's spending onto future generations.

    Study: Many Americans die with ‘virtually no financial assets’ (MIT News)

    Emails Give Glimpse Into Deals That Fueled Financial Meltdown (Pro Publica)

    U.S. banks eased lending standards across a range of instruments over the last 90 days, according to the Fed's quarterly survey of loan officers. The loosening though, applied only to larger firms, with standards for smaller businesses little-changed. Aggressive competition, not a better economic outlook, seems to be behind the easier standards

    Bank Loans at Post-Recession Peak Support U.S. Growth (Bloomberg)

    With gasoline prices spiking nine cents in the past week, "one might have expected war broke out in the Middle East or a major hurricane shutting down production, neither of which happened," GasBuddy.com's Patrick DeHaan says. The good news is that "the end to the summer driving season and change to winter-spec fuel is in view, which will likely put downward pressure on gasoline prices."

    Chesapeake Energy (CHK): Q2 EPS of $0.06 misses by $0.03. Revenue of $3.39B (+2.1% Y/Y) beats by $7M. Daily production averaged 3.808 bcfe, +25% Y/Y and +4% Q/Q. Shares+3.4% AH. (PR)

    The $2,000/oz. mark for gold is starting to look out of reach, and Morgan Stanley cuts its gold price forecast for Q4 by 13%, citing strength in the U.S. dollar as investors choose dollar-denominated assets as a haven from Europe’s banking crisis… and QE3, which gold bugs have been counting on, hasn’t showed up. Comex gold rose $6.90, or 0.4%, to end today's trade at $1,616/oz. 

    Luxury retail stocks trade higher after Prada rides strong Asian growth to post a solid jump in first-half revenue. Asian demand from high-end spenders is crucial for the sector, often leading to peers swinging up and down together. Gainers: KORS +4.7%RL +3.2%,COH +3.8%.

    Berkshire Cash Hoard Swells as Buffett Pares Consumer Stocks (Bloomberg)

    Interesting timing:  S&P cuts its rating on Best Buy (BBY +15.1%) to BB+ from BBB-, saying a buyout led by founder Richard Schulze would "materially weaken" the company with the substantial amount of debt it would add to the retailer's balance sheet. The ratings agency says depending upon the nature of a finalized buyout, it could lower its ratings by several more notches.

    Amazon (AMZN -0.2%) begins to ramp up its usage of storage lockers with new facilities in northern California. Customers in areas equipped with the lockers can now receive packages at 7-Elevens, grocery stores, or drug store chains – instead of worrying about missing delivery or seeing their products lifted by thieves from their doorsteps. The gradual increase in the usage of lockers also helps Amazon trim its own shipping costs. 

    Thus far, Android is proving much more profitable for Microsoft (MSFT) than Windows Phone: Trefis estimates Microsoft generated $792M in Android royalties from Samsung and HTC alone. It's a rough estimate, but maybe not far off the mark given Android activations have passed 1M/day, and Microsoft is believed to get $10-$15/unit from licensees. Meanwhile, Microsoft's WP payments to Nokia contributed to the $263M loss posted by its Entertainment & Devices unit in the June quarter.

    Apple (AAPLwon't include a YouTube (GOOG) app with iOS 6 – users will have to download an app from the App Store. No details have been given on the reason for the move, which follows Apple's decision to drop Google Maps in favor of a proprietary mapping solution. YouTube and its short-form content have proven extremely popular on mobile devices. 

    Hey America! We’re Ranked #16 in Broadband! (HuffPo)

    Climate change is here — and worse than we thought (Washington Post)


  118. Phil/PCLN,
    Got it – I actually did not trade this at all, I'm just dissecting Lflan's moves to get a better understanding how he does it.  So in your opinion, there is still an edge in playing the weekend decay?  I'm a bit surprised, I would have expected that the decay is priced in during the last hours on Friday.  If there is still an edge, how come nobody has arb'd this yet?  TIA!


  119. 8 hours of meeting on 3 hours sleep and jet lagged is not my idea of a great day! People are just overdoing meetings in my opinion! 

    Did I miss anything? I'll update the Income portfolio now.




  120. Premium is all burned on this one….


  121. Peter – Thinking of selling some September premium as are at the top of our recent range?


  122. That's graphical enough. The algos are taking over… Look at what happens after 2010 starts. Unreal!

    http://blogs.reuters.com/felix-salmon/2012/08/06/chart-of-the-day-hft-edition/



  123. Good morning!  

    Futures up slightly and Europe is about the same (down from open) as we beat some of the very low GDP expectations:

    2:38 AM Asian shares are mostly higher - although China is again the odd one out – as the latest European panic subsides and ahead of Chinese data later in the week, including industrial production, retail sales and inflation. Japan +0.9%. Hong Kong +0.2%. China -0.1%. India +0.7%.

    3:49 AM EU shares open higher and continue their rally, although Standard Chartered plummets 16.6% following accusations that it hid over $250B in illegal Iranian transactions for almost a decade. London+0.2%, Paris +0.9%, Frankfurt +0.5%, Madrid +2.2%, Milan +1.3%.

    Over 40 months of rock-bottom interest rates might finally be starting to work: consumer and business borrowing hit $7.1T in the week ended July 25, coming within 2.9% of a peak the metric reached in October 2008. New lending for cars was $134.3B in the first four months of 2012, up 56% vs. the same period in 2009.  Consumers have become more attractive to lenders by paring debt. A gauge of household indebtedness fell for a record 12 straight quarters to the lowest level since 1994. The ratio of household debt payments to disposable income declined to 10.98 in the first quarter, down from a peak of 13.96 in September 2007, according to Fed data. 

    As expected, the Reserve Bank of Australia keeps its main cash rate unchanged at a 2.5 year low of 3.5% for a second month. Governor Glenn Stevens says that while it's too early to assess the full impact of rate cuts from previous months, dwelling prices "have firmed a little" recently, while "business credit has over the past six months recorded its strongest growth for several years."

    Italian Q2 GDP -0.7% Q/Q vs. -0.8% in Q1 and vs. consensus of -0.6%, with the drop the fourth decline in a row. GDP -2.5% Y/Y in Q2 vs. -1.4% in Q1. The contracting economy will increase concerns about Italy's ability to cut public debt, which stands at 123% of GDP.

    U.K. manufacturing output -2.9% M/M in June vs. consensus of -4.5%, although it was still the sharpest fall since November 2008. One year, output -4.3% vs -5.9%. The broader industrial production measure -2.5% M/M vs. -4.4%, and -4.3% Y/Y vs. -6%. Celebrations for the Queen's jubilee were probably a contributing factor in the decline. (PR)

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    1:00 PM Results of $32B, 2-Year Note Auction

    2:30 PM Bernanke Press Conference

    3:00 PM Consumer Credit

    Notable earnings after Tuesday’s close: ANVAONE,ARRYATLSBIDCODICREEDISDPMENOCESRXETE,

    ETPEXMGPORJAZZJIVEMIPSPCLNPRIRAXSAPE,STECVVUSWFRWRXLZ 


  124. How come/Wappler – It's really specific to Momos – especially ones who are more active than usual coming into earnings.  It's amazing how many things don't get arbed.  For a few years in a row, I would point out a 3am trade where the BOJ would bottom out the Yen right into the Nikkei close and then it would drift up again (pushing the Dollar down) into our open.  3-4 out of 5 days a week that trade was a winner.  I wrote about it publicly with 27 8×10 color glossy pictures with circles and arrows and a paragraph on the back of each one explaining what each one was – yet it still continued.  It just became sort of a joke as it was like a little ATM you could hit every morning.  Look at EUR/CHF now – they hit 1.2077 last night, now back to 1.2014, which is higher than the usual 1.209 but I'm sure anyone who shorted that pop is thrilled that things are already back to "normal."   

    According to an economic barometer called the Money Market Index, the recent rally in the Dow over the past three trading sessions has been "totally irrational," says the index's chief researcher Dan Geller. The rally, mostly due to the release of Friday's monthly jobs report, shows that the enthusiasm has been mispaced due to the simple fact that a large portion of the 163K new jobs reported are only temporary, and likely to vanish soon. The move "has no economic merit," Geller insists. 

    More on the Annaly (NLYdowngrade: The company is "in a pickle," says FBR, far more exposed to prepayments than its mREIT brethren. A continuation of the constant prepayment rate near 20% will cause more rate spread contraction, book value erosion, and a H2 dividend cut. Just to maintain earnings (and the divvie) this Q, Annaly was forced to sell and book gains from its MBS portfolio. Shares-2.6% today.

    German-Italian relations sink to a new low after Mario Monti warns Bundestag control over EU debt policies could cause "disintegration" of the whole project. "Germans will not shut down our democracy to pay Italian debts," says one lawmaker. In Italy, Il Libero publishes a front-page picture of Angela Merkel alongside the headline, "Fourth Reich."

    Standard Chartered (SCBFF.PK) has denied accusationsfrom the State of New York that it hid over 60,000 illegal Iranian transactions totaling at least $250B over a 10-year period. The U.K.-listed bank said the total value of the transactions that breached U.S. regulations was less than $14M. Shares -24.5% in London. (PR)

    Meetings/StJ – I agree, I put an end to them in my old company.  Once a month (at dinner) was plenty.  Worst thing about meetings is people resolve to do all these tiny projects to find something out ahead of the next meeting so they can talk about it in more detail the next time.  Sometimes necessary but often silly.

    Big Chart – Wow, look at all those lines coming into play at once!  These are 7.5% moves off the June bottom for all but the RUT so 800 is still key as they should easily get through that on the way to 820 (and that makes the RUT our best upside play on a breakout, despite my reservations about small-cap earnings).  

    Cool graph StJ!  


  125. Phil, I didn't get a chance to reply to your message yesterday morning.  I appreciate the wide range of material you comment on and aggregate every day.  There are days that I would rather not know these things – ignorance is bliss – but I am more of the mind that Hell is truth seen too late.  I find my challenge, which is working at the grass roots with people to understand how these big issues effect their lives and what they can do in response, is to find the balance between remaining hopeful and optimistic while at the same time being honest about the challenges we face and who is really in charge of our world.  (I think you would like my recent sermon on Herod.  Its not like these challenges are new.)  I'm happy to be in Northampton, and digging in to the new job.  Who knew there was such a thing as an organic dry cleaners!  When I get hacked off at the world, I just hit the bike paths.  


  126. Income Portfolio:

    • RIG – Very strong-looking.  Shame we didn't sell puts.  
    • SVU – Will be very nice if they ultimately pay off.  
    • CSCO – $13?  ROFL!!!  What sucker paid us to sell $13 puts?  Needless to say, I feel good about this position.  
    • GT – Rubber prices picking back up but still a good company long-term.  
    • X – One of the weaker ones in a downturn so let's put a stop on these at $4.50 – roughly $22.50 on X (now $23). 
    • HPQ – With a stop on X, we can afford to sell 10 more of these at $6.45.  
    • F – Long way away and a good target (very nice for a new entry). 
    • JRCC – I'll feel better when they pop $2.50 and hold it for a week. 
    • ABX – Why are they so cheap?  Fantastic long-term inflation hedge.  Let's add 30 2014 $25/40 bull call spreads at $7 and, once we're closer to $40 (now $33.36), we'll sell monthly calls for income.
    • TZA – The $21 caller is dead and, as mentioned above, Russell has the most to gain if we pop.  Still, in case we don't, let's just buy back the $21 caller (.13) and spend $1.25 to roll to the Sept $18 calls ($2.45) and we'll see about selling calls to cover later.  
    • ALU – Vindication yesterday.  I like their product mix for the long-term and, holy cow – our target is only $1 for a $7,300 profit (off net $2,700 cash)!  
    • SQQQ – Why did we not make the same adjustments as $25KPs?    Oh well, roll to Sept $44s ($2.30) is $1.15 so let's do that and buy out the $60s (.38) and we'll cover if our Must Holds get popped (3 of 5 through the close) with the $49s (now $1.30).  So our original net is $2.13 and we spend .38 to buy back the caller and $1.15 on the roll is now net $3.66 and, if we knock $1.30 back off that on a sale of the $49s, we're still in a $5 spread for net $2.36 and right on the money despite the position moving massively against us (which is good for our actual main positions) – that's the way to insure a portfolio!  
    • BTU – Me love them long time.   Like X, they could dip in a big crash but I think China (electrical use) puts a bottom on coal more so than steel.  
    • SBUX – I'm comfortable with $42.50 holding so we could just stick with these but it's only 10 so let's take advantage of the drop and roll to the 2014 $40 puts ($5.50) for $1.05 credit, which raises our base to $4.10 and then we'll sell 10 more for $5.50 to average into 20 2014 $40 puts at $4.80 for a net $35.20 entry.   This is the great thing about scaling in, we're HAPPY they dropped 20%.  We allocated for 1,000 at net $42 and now we are up to 2,000 at net $35.20.  We could have never bought 2,000 anywhere near that price when we entered in the $50s.  Now we would take a drop a lot more seriously since we can't DD again but we can roll to 2015 (maybe $35 puts) so no panic unless the fail $40, without it being a general market sell-off.   As with ABX, if we get a run back near $50, we can go into the call-selling business. 
    • VXX – No point in taking these positions if you're not going to roll.  Let's spend .30 to roll down to the $15s (.52).  
    • BBY – Holding $20 this morning.  I think it's funny how no one seems to be taking the offer seriously from the former CEO and CS.  I can think of several thousand times when an offer like that immediately pinned a stock to the offer price.  There are some very powerful media forces working against BBY.  He submitted a FORMAL offer – this isn't just spouting off in the press.  Notice the pundits try to bamboozle you with discussions of the forward value (there will be debt financing as well) but what do you care?  He's buying your shares for $25 – it's not your problem HOW he does it! 

    All in all, not bad.  No positions we're unhappy with and, if we do break higher – we'll be in great shape.  If we fail to hold Dow 13,000, I think we'll add 100 DIA Oct $126 puts ($2) – because we can sell Aug $129 puts (now .60) as a cover if the Dow breaks back up and that would leave us with a cheap Oct hedge.  


  127. Northampton/Rev – My old stomping grounds (Amherst) – can't wait to come up and visit in the fall! 


  128. Small cap/ Phil
    I think a small cap rally now would be a good indicator of final stages of bull market rally as it is the small caps that rally last.  With that the Momo's will also be on their last stretch for final unloading to bag holders before the big dump.
    This fits in nicely with RUT being the slowest to react so far and if it pops to catch up then it will lend credence to the above theory.


  129. IMGN – Selling some Jan 2013 $10 puts for 60c or more.

    CRIS – I think I did this last week, but is still in play.  Marc 2013 $5 puts for $1 or more.

    RIG – Jan 2013$40 puts are good to go….I see Phil agrees….I have been playing RIG for a very long time, and selling premium way up and a bit out has been very good, esp. calendars.


  130. chech – biotechs should be a part of that, but they are not.  Biotechs have rallied hard this year, so maybe a stall out or rotation, but overall, I like this chart by SHJ.  If it were not for the hot air of the ECB and false QE rumours dejour…..we would be at the bottom of that channel.  Look how perfectly that channel has formed.  1440 or bust on the SPX, otherwise….down, in the ground, to get out of the Purple Rain.
     



  131. ARNA is now less than VVUS on the overall market cap.  1.4B vs. 2.1B.  Both have the same demographic to meet on their weight loss drug, and VVUS as the ED drug that they are trying to sell (good luck).  VVUS's drug is generic mixture of a new formulation, ARNA is considered a NCE (new chemical entity).  I still like selling the Sept 8 P on ARNA for 1.50 or better.  I am in at 45c!


  132. US executives less confident about the economy…where in the hell have they been?  They were just gung ho a few months ago.


  133. Wow, anyone?


  134. Meetings/Phil,stjeanluc,
    My favorite quote on meetings is from Peter Drucker: 'People either work or they meet'.  I think his book 'The Effective Executive' is from the sixties and still applicable today – technology has changed since then, people certainly haven't!