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Whipin’ It Wednesday – 3 Trade Ideas that Make 300% if the Market Falls

INDU WEEKLYIf the market falls? 

How can we be negative at a time like this?  The markets are back to record high territory and Cramer says to BUYBUYBUY and keep buying because the Fed is going to print free money forever and gold is no longer worth anything and oil worth $105 a barrel and TSLA is a $125 company, etc, etc….  What's not to love?  

Nothing based on the technicals and THAT is why we're going to have to get more bullish (even if we have to hold our noses while we buy to fight of the stink of the BS) but, step on in our buying process is taking some downside hedges so – at these "breakout" levels, we like to hedge first and THEN buy the breakout.  

If this seems crazy to you, I will point out that you have a very short memory because we last did a "Hedging for Disaster" post on June 3rd, when the S&P was at 1,650 and we caught that ride down to 1,560 for HUGE profits on our hedges.  Now the S&P is back at 1,650 so, guess what, it's time to do it again!  This is not complicated stuff folks – we buy at the bottoms (see "5 Trade Ideas that Made 1,816% in 21 Days") and sell at the top.  

USO WEEKLYBy the way, before we get started, I sent out an alert to short oil this morning at $105 (USO $37 on Dave Fry chart) and they're currently (7:47)  over the line at $105.29 but we're going to keep on that line as a shorting spot (with very tight stops over $105) unless we get a big pop to $106 or $105.50 at the 9am NYMEX open – then we'll probably move up to the higher lines.  We are CERTAINLY going to follow through with our plan to roll up and double down our August shorts on oil in our Short-Term Portfolio.  

Now, on to the hedges!  

TZA is our favorite hedge and you can pick up the Oct $28/35 bull call spread for $1.25 and you can sell the Oct $23 puts for .95 for net .30 on the $7 spread, giving you 2,233% of upside potential and, best of all, with TZA at $27.81, you are starting out just  .19 out of the money!  TZA drops $4.81 (17%), to $23 if the Russell goes up 5.7% plus these ultra-ETFs tend to decay over time but owning TZA for net $23.30 is not a bad portfolio hedge and the Russell would have to be net up 5.7% to 1,072 in October for this to happen and, if so, your longs should be doing well.  


DXD Aug $33 calls at $1.20, selling Aug $35 calls for .60.  This is a net .60 entry on a $2 spread so your upside is 233% at $35 (DXD is now $33.46).  If the Dow ends up holding 15,300 and moves back up, there’s a good chance you can kill this cover with a small loss as a $2 move on DXD is about 6% and that would be about a 3% move up in the Dow to new highs at 16,218 before the spread, with a net .26 delta loses its value.  

You need $33.60 (+.1%) to get your money back and that's any drop below 15,300 in the Dow, which makes this fantastic protection for any longs you may enter here.   Using a short put to make an entry in a stock you REALLY want to buy at the net strike is a great way to offset this trade so let's say, for example, you are willing to own AA (just had OK earnings) for net $7 (now $7.91) in January.  You can sell the Jan $7 puts for .28 and that drops the net of the DIA spread to .32 and now your upside, at $35 is $1.68 for a 525% gain.  Or, perhaps you REALLY want to own 100 shares of AAPL for $350 (now $422) in January.  You can sell those Jan $350 puts for $9 (which can be rolled to the 2015 $270 puts, now $10) and that pays for 15 of the long spreads with a $3,000 upside potential.  That's all it takes.  

SDS is the S&P's utlra-short ETF and you can see how we were willing to cover on June 6th when it was still above it's May lows.  Now we're right back to the May lows so we're going to have a BETTER entry at $38.50 and we can pick up the Aug $37 calls are only $2.05, which is just .50 in premium.  Selling the $40 calls for .85 knocks the net down to $1.20 with a $1.80 upside but, in our virtual Income Portfolio, I want to sell 5 ISRG Aug $400 puts for $9 ($4,500) and buy 50 of the SDS spreads for $6,000 so we net $1,500 (.30 per spread) and we have a break-even at $37.50 on SDS ($1 lower than it is now) and we have, at $40, $13.500 worth of downside protection.

We're committing to buying 500 shares of ISRG for $400 but, as with AAPL, the Jan $300 puts are $5.50 and the 2015 $250 puts (they don't go lower) are $9 so that's our real commitment, to buy 500 shares of ISRG in 2015 for $250 or less – that's something we'll almost be disappointed if we DON'T get assigned to us!  

Now, on to what I DON'T like about the markets.  This will be the last time if the NYSE holds 9,300 today as we have to switch off our brains and get technically bullish but, if you'll indulge me, we can summarize GaveKal's commentary from Louis and Charles Gave (a fantastic read) as:

  • A first bad omen: fewer markets rising
  • Another bad omen: collapsing silver prices
  • Falling inflation expectations
  • China, the single biggest contributor to global growth over the past decade, slowing markedly.
  • World trade now flirting with recession.
  • OECD industrial production in negative territory YoY.
  • Southern Europe showing renewed signs of political tensions (i.e.: Portugal, Greece, Italy…) as unemployment continues its relentless march higher and tax receipts continue to collapse.
  • Short-term interest rates almost everywhere around the world that are unable to go any lower.
  • Valuations on most equity markets that are nowhere near distressed (except perhaps for the BRICS?).
  • A World MSCI that has now just dipped below its six month moving average.
  • A diffusion index of global equity markets that is flashing dark amber.
  • Margins in the US at record highs and likely to come under pressure, if only because of the rising dollar (most of the US margin expansion of the past decade has occurred thanks to foreign earnings—earnings that may now be challenging to sustain in the face of a weaker global trade growth and a stronger dollar).

The Gave brothers note that  the world has experienced a series of deflationary shocks, each of which has been met by more activism from the Fed and other central banks: i.e.: lower rates and higher monetary base growth. And each time, the excess money allowed for the rise in a few asset classes (TMT in the late 1990s, housing and financial intermediaries in the mid 2000s, commodities, fixed income instruments and emerging markets in the late 2000s…).

Each time, the asset price rise was followed by an equity market bust; begging the question of whether the bust that seems to be unfolding in emerging markets is now the third iteration of a movie every investor has seen before (and which few have enjoyed)? Or whether the recent correlation between bonds and equities indicates that the repeated deflationary shocks are a thing of the past and nominal GDP growth will accelerate from now on?

They also note that more markets have fallen then risen in the previous six months. The red line on the above chart  is the performance of the S&P 500. Since 1992, we have had 14 occurrences in which more stock markets were falling than rising. In 10 of these 14 occurrences, the S&P500 fell by at least –10%. In the other 4, the S&P 500’s performance hovered between 0% and –10%. As things stand, the S&P 500 has recorded a double digit rise in the past six months, a major divergence.

We have Fed minutes at 2pm and Bernanke speaks at 2:30 and either of those events can violently move the markets up or down and, this morning, we'll prepare for down but we'll also be lookng for upside plays – should we finally break up and over our May highs.  

So, for the last day before switch of our brains and join the herd:  Let's be careful out there!


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  1. Oil Lines

    R3 – 107.77
    R2 – 106.28
    R1 – 105.29
    PP – 103.8
    S1 – 102.81
    S2 – 101.32
    S3 – 100.33

    Yesterday's high and low – 104.79 / 102.31

  2. Pharm,

    I didn't get a chance to thank you for the INO call.  I am 1/2 out with a profit and letting the remainder ride for what could be a long time.  Thanks Again.

  3. Good Morning!

  4. STP / Phil – We closed the GLD August calls yesterday but we had only 20 of them while we have 40 of the July ones so we made up only 1/2 our loss so far. 

  5. anyone else not able to see the graphs in Phil's post?

  6. Fascinating presentation from Robert Reich:

    Easy to understand…

    In the three decades after World War II American incomes grew quickly and equally, but starting in the late 1970s things began to change.

    Today, 1% of Americans are taking home nearly 20 percent of the country’s total income, and own more than 35% of America’s wealth.

    And it didn’t happen by accident. It’s the result of policy decisions on taxes, education, trade, labor, macroeconomics, and financial regulation — all of which shifted economic power away from low and moderate-income American families.

    Economic inequality is real, it’s personal, it’s expensive. And it was created.

  7. Look good to me Jabo…

  8. Good morning! 

    Oil at $105.59 and yes, I like shorting below $105.50 but it's going to be very tricky until inventories and, if they do get a big draw on inventories – they could run it up to $106 before it stops dropping.  For USO and SCO, we don't mind a bumpy ride and we'll DD and roll at the open but, for Futures trades – it could move up or down $2.50 and it's a pretty random event which way it goes!   Note StJ's $107.77 R3 line with R1 already crossed ($105.29).  As you know, I care more about the .50 lines but, at $105 – what's .25 one way or the other?  

    See early morning chat for lots of commentary on oil and China (TERRIBLE trade numbers last night) and Economorons and AAPL and TSLA.  Damn, that's a lot of stuff – I should take the rest of the day off…

    My attorney pulled that crap on me yesterday.  He just spent 4 days in the hospital for "exhaustion".  He really did knock himself out working but this is why I mean it when I say to all of you – TAKE A FRIGGIN' VACATION ONCE IN A WHILE!!!  It's not good to work all the time and, even if you have a go-go job like I do – you can find a way to do some of it from a nicer place.  

    For me, I'm perfectly happy just to relocate to a nice hotel somewhere where I get room service while I write my morning post and I have a nice lunch in a hotel restuarant and then, when I'm done with work – I'm in Las Vegas or AC or whatever city I decide to be in (next trip is Niagra Falls/Toronto with the kids).  When I take my boat trips, I usaully take a 7-day trip and work 3 of the 5 week-days.  Vacations don't have to be all on or all off and you can take a lot more of them if you learn to work while you're on one.  

    With modern video phones and such – there's almost no one at our level (not manual laborers) who can not figure out how to touch base from the road.  As I had said at the end of May and now we're at the top again – this is a great time to cash out your bullish positions and take some time off!  Even a long weekend or two does wonders for your mental and physical health.  We promise to keep the World spinning while you are gone….

    INO/Button, Pharm – Great call on them!  

    GLD/STP, StJ – Damn, I didn't realize it was 20/40 but still, good time to take money and run and now we cross our fingers that we get back to 50% of remaining (not likely).  Realistically, we'll just hope to catch the next channel move with a new bet.  

    Graphs/Jabob – Which ones do you mean – they are just images.  

    Reich/StJ – I love the work he's doing on that stuff.  

    Dollar still 84.53 so not really helping or hurting but was 84.50 yesterday so I hope I don't have to explain that Dollar down 1% while markets are "flat" means the Big Boys are covering their run for the exits and this kind of action often comes right before a break-down.  

  9. Button – ur welcome.  Glad things are doing well in biotech land.

  10. the images aren't pulling up for me--oh well.


    not as annoying as seeing ABX and GDX , of course ;-)

  11. INO – Didn't check it until just now.  I was going on the premise from yesterday…another 40%. 

  12. Bye Bye BBYyyyyy……

  13. We are in need of a couple down days!

  14. Jabo, try clicking on tools and compatibility option. Sometimes corrects problems for me.

  15. STP oil moves:  

    We already rolled our USO puts to the Aug $36 puts, now .64 and our net is .93 + .35 (for the roll) on 20 for $1.28 so we can DD at .62 and drop that to .95 for 40 and, of course, our primary goal is to get 1/2 out even!  

    SCO we were able to wait on because it's a spread and now the Aug $32s we sold for $1.95 are $1.25 so let's take a quick .70 win and buy those back and use that .70 to roll our Aug $30 calls, now $2.05 to the $28 calls, now $3.30 for $1.25 so we end up with a net of $1.05 (original spread) + $1.25 (buying back the caller) + $1.25 (the cost of the roll) = $3.55 for the Aug $28 calls, which are now $3.30 so we lost just .25 so far, despite the trade going $5 the wrong way and now we have a much more aggressive naked Aug $28 call.    We may re-cover but, if we do, it would likely be with a roll to longer (in time) long calls as we sell Aug calls to cover.  

  16. Um, PCYC….um….

  17. Go PCYC, GO! :)

  18. Sheeple being sucked in, sell programs off for the first few.

  19. PLX looks like it is starting to move as well.  Need 5.30 to break to the up side.

  20. INO/Pharm – Almost wants me to play more penny stocks:

    IRS/StJ – Not idiots, just evil.  Less IRS equal greater ability to cheat – it's a gangsta's paradise!  

    Sheeple/Shadow – Bahhhhhhhhh humbug…

  21. Wheeeee – $105.12.  Thanks Phil!

  22. Phil – I have noted for your fund that you need to go into biotechs…..AAPL schmapple…..

  23. Phil/idiots - It was not the IRS I was refering to…… :)

  24. AAPL bucking like a bronco! 

    Don't be greedy on oil futures, .35 is great money – espeically if you took a couple of dings on the way up.  If you want to play inventories, USO is much safer than /CL as you have time to recover. 

  25. Idiots/StJ – Me either, I meant the GOP! 

  26. Um, ZLCS…. um……I luv being a buzzkill…. ;)

  27. Phil-- what is your opinion on what Stifel said in the post you had from this morning?


    Do you think it is priced in here or is it wishful thinking by me?


  28.  China Securities Journal:    China Can't Rule Out Inflation Risks. China can't rule out inflation risks in the coming half-year period or longer because increasing home prices may push up consumer prices, according to a front-page commentary written by reporters Wang Donglin and Ni Mingya. Actual inflation level is higher than reported CPI data because property prices are not included when calculating CPI, the commentary said. Prices for furniture, building materials, home appliances and rent will rise as a result of increasing property prices, according to the commentary. China should regulate shadow banking and take differentiated policies to curb some overheated industries and overcapacity, the commentary says. 

    they are freaked out…with those disastrous trade numbers….i can't believe they are still talking like this…market is ignoring something that is very big deal  Securities Daily:    China Cash Crunch Hitting Auto Loan Approvals. Banks have become more stringent in approving car loans after the cash crunch, citing interviews with auto dealers. Loan approvals are now taking twice as long, citing dealers. Mid-priced car sales hit the hardest, according to the report.

  29. FU NEM!!!!

  30. I want to make sure that people know that 1020 and I are different people even if Phil has us confused!

  31. makes me want to short GM..oh short Weiner long Boehner (jk just had to say it once)

  32.  At the open: Dow +0.01% to 15302. S&P 0% to 1652. Nasdaq -0.02% to 3503.
    Treasurys: 30-year +0.09%. 10-yr +0.05%. 5-yr +0.03%.
    Commodities: Crude +1.77% to $105.36. Gold +0.55% to $1252.75.
    Currencies: Euro +0.32% vs. dollar. Yen -0.83%. Pound -0.25%.

    10:00 AM On the hour: Dow +0.13%. 10-yr -0.04%. Euro +0.43%vs. dollar. Crude +1.6% to $105.19. Gold +0.64% to $1253.85.

    Market preview: U.S. stock futures are little changed as investors shrug off some shockingly bad Chinese trade data and await the latest FOMC minutes and a speech from Ben Bernanke. The S&P Mini is flat. H-P rises 2.9% after an upgrade from Citigroup, while Family Dollar Stores gains 3% following earnings. Later: Wholesale Trade, EIA Petroleum Status

    May Wholesale Trade: Inventories -0.5% vs. consensus of +0.3%, +0.2% in Apr.

    The "fear gauge" is flawed, says Citi's Mike Pringle, and investors risk harm by using the VIX (VXX) as an indicator of market risk. "It's an asset class and it's more traded for yield than protection," he says, noting the growth of structured products based on the VIX as dampening reported volatility. "It's still relevant in extremes, but not in a normal functioning market."

    Bargain-hunters turn to South Korea as the relative valuation of the MSCI Korea Index (EWY) drops to levels not seen since 2009 – it's trading at a 28% discount to the broader emerging markets index (EEM), which has been struggling itself. The country is famously export-dependent, making it vulnerable to "external shock" says one money manager, but others say stocks are already priced for that, and note the weakening won and a yen which has stopped falling. [

    Indonesian shares (EIDOIDX) rebound 1.7%, recouping some of the losses suffered early in the week — the country's central bank will meet tomorrow. Elsewhere in the region, Thai shares (THD) slip 0.73% as the Bank of Thailand keeps its one-day repo rate on hold at 2.5% after a reversal in the baht's strength removes rate cut pressure, the Straits Times (EWSEWSS) rises 0.3% as Singapore's finance minister says the country's property market "is seeing some stabilization," Malaysian shares (EWM) trade flat, and equities in the Philippines (EPHE) and Vietnam (VNM) are off fractionally.

    More details emerge on the safety pact 17 U.S. retailers signed to improved factory conditions in Bangladesh. A total of $42M has already been kicked in to the pool by companies which include Wal-Mart (WMT -0.2%), Target (TGT -0.1%), and Gap (GPS +0.5%) with $100M in loans pledged in the future. An agreement signed by a large number of European retailers is viewed as leaving the group more exposed to liability.

    Now that Fannie Mae (FNMA.OB) and Feddie Mac (FMCC.OB) are profitable, everybody wants a piece. First it was hedge fund Perry Capital - which has built up a large position in the preferred shares - suing to strike down a bailout amendment which requires the companies send all their profits to the Treasury. Now Fairholme has sued over a similar challenge, and yesterday two nonprofits filed against the FHFA over a decision to suspend payments to two affordable-housing trust funds.

    Wells Fargo (WFC) suffers its 2nd downgrade in two days, with Sandler O'Neill cutting to Hold from Buy (yesterday). The moves come ahead of Friday's earnings report which is expected - among other things - to at least partly reflect the backup in interest rates and halt to the refinance boom. Shares -0.8% premarket

    Forced selling by mREITs leading to an ugly cycle in mortgage prices is just what had many concerned about systemic risks posed by the industry. MReits (REM) sold about $30B in MBS last week to keep leverage ratios steady in the face of diving book values, says JPMorgan, exacerbating already weak security prices (MBB). Annaly's (NLY) CEO has characterized systemic worry as equivalent to misguided frenzies about shark attacks, and Hatteras' (HTS) CFO and Dynex's (DX) CIO have seen no changes in the repo market (which the companies rely on for funding).

    "Traffic remains healthy in the face of rising mortgage rates, continuing to push prices higher," leads off a Credit Suisse survey on residential real estate. Buyers now fear "missing out" if they wait and continue to express frustration with low inventory levels. CS' index of buyer traffic edged down to 60.5 in June from 63.4 in May - exceeding expectations for this time of year. The home listings index fell to 61.8 from 67.1. Time needed to sell fell to 75.9 from 81.1. XHB +12.9%YTD.

    Hallelujah!!!  Cliffs Natural Resources (CLF+6.3% premarket following news of the CEO's planned retirement. BB&T upgrades CLF to Buy from Hold with a $22 price target, believing all options are now available; the firm also expects iron ore volumes to result in a Q2 beat and sees additional room to cut capex. But Cowen says succession plans "remain cloudy," and the next CEO faces a challenging undertaking (

    More union busting:  Chrysler (FIATY.PK) CEO Sergio Marchionne threatens topull production out of Italy unless the automaker can score more flexible employment rules in the nation. Factories in Serbia and the U.S. could pick up the productions, according to sources.

    The Senate Agriculture Committee will meet next week to discuss the proposed takeover of Smithfield Foods (SFD) by Shuanghui International. Reps from other federal agencies will be able to participate at the hearing in order to probe any potential impact of the deal on national security.

    Analyst reaction to the Kroger (KR +0.9%) - Harris Teeter (HTSI +0.1%merger continues to pour in with the general consensus take seeing the combination as a positive. The increased exposure in the Mid-Atlantic and Southeast should help Kroger meet or exceed its guidance on synergies while keeping the brands distinct should alleviate concerns from consumers that Harris Teeter stores - perceived as cleaner and more modern - will suffer.

    Pay what you can - as long as it's full price:  Panera Bread (PNRA) says it will pull its national pay-what-you-can program for Turkey Chili orders and will re-evaluate the idea for a new launch next winter. The company has been at the forefront of social responsibility on food issues since its inception - including a store in Clayton, Missouri which is 100% under the pay-what-you-can format - and notes the optional payment on turkey chili brought in on average 75% of retail value.

    Morgan Stanley resumes coverage of Pfizer (PFE +0.1% to $28.37) at Overweight and gives the company a price target of $31.00. The rating comes as the EU authorizes the expanded use of Pfizer's blockbuster anti-bacterial vaccine Prevenar 13. Thirteen analysts rate Pfizer a Buy, six a Hold and two a Sell.

    Pfizer (PFE +0.35%) receives European approval to widen the use of its blockbuster anti-bacterial vaccine Prevenar 13 to adults aged 18-49. Until now, the drug was authorized for ages 6 weeks to 17 years and for the over 50s. It is designed to prevent infections from 13 strains of the Streptococcus pneumoniae bacterium, which can cause pneumonia, ear infections and fatal diseases such as pneumococcal meningitis. Sales were $846M in Q1. (PR)

    Allscripts (MDRX +5%) expects Q2 bookings to have grown to over $200M from $194M a year ago, and for its backlog to have climbed 13% Q/Q to $3.1B. "We are seeing a healthy mix of new agreements with existing clients as well as new client wins, growing our recurring revenue backlog as well as bookings," says Allscripts CEO Paul Black. (PR)

    UnitedHealthcare (UNH) expects to more than doublereimbursements via its "accountable care contracts" to $50B by 2017 from $20B currently. The contracts "link a portion of the reimbursement to quality and cost-efficiency measures," and enable UnitedHealthcare to slash "the use of exclusively fee-for-service contracts." The company has accountable care contracts with over 575 hospitals, 1,100 medical groups and 75,000 physicians.

    Shares of Best Buy (BBY -5.1%) wilt in early trading. Technical traders are saying the stock hit technical resistance at $30 while the fundamental side points to cautious comments from analysts on the retailer.

    Rackspace (RAX -3.3%) dives after Amazon Web Services (AMZN +0.2%cuts EC2 cloud computing prices for dedicated instances (i.e. hardware dedicated to a single client) by up to 80%. Though AWS is known for cutting prices early and often, the size of this cut makes it noteworthy. Moreover, the fact it covers dedicated hardware suggests Amazon is taking aim not only at the cloud infrastructure services provided by the likes of Rackspace, Microsoft, and Google, but also the traditional hosting services offered  by Rackspace and others.

    two-notch upgrade to Buy from Sell at Citi has shares of Hewlett-Packard (HPQ) up 3% premarket. The Street may be "underestimating the financial benefits" of H2-loaded cost savings, the bank says, adding that EPS revisions are "now likely to start increasing in 2014 for the first time in nine quarters." Brean Capital's Ananda Baruah was out with an upgrade Tuesday, saying HPQ "can continue to move higher [on] strengthened cash flow, cost savings, and product mix."

    China's box office soared 36% to 10.99B yuan ($1.79B) during the first half of the year as the nation remains on track to pass the U.S. as the world's largest market for films before the end of the decade. While Hollywood studios continue to fine-tune their approach to adapting films for Chinese audiences (Iron Man 3 was a major success in H1 while Djiango Unchained (SNE) was an unmitigated disaster) – IMAX (IMAX) is the major film industry company that is the purest play on China. - Of coruse, Chinese movie tickets are generally $6 - there's just more of them!  

  33. /CL – Seems to me that someone knows something about the upcoming report.  down under 105.

  34. Shares of Zynga (ZNGA) will be in focus today as the company unveils its new real-money gambling apps destined for the U.K. at an event in Spain. The games will be the first to be launched under a new strategic partnership with Facebook and should give a sneak peek at what online gambling apps from Las Vegas casinos (CZRWYNNMGM) could look like if Internet gambling in the U.S. is approved under a national framework. ZNGA +2.1% premarket.

    Yeah, it's this poor schmuck's fault nobody wants the phones:  Blackberry (BBRYfired U.S. VP of Sales Richard Piasentin last month following the poor take-up of the company's new devices in the country. As part of its restructuring, Blackberry reportedly intends to axe more middle management in sales and support, adding to 5,000 layoffs in the last FY.

    Speaking of Gangsters:  U.S. district judge Denise Cole declares Apple (AAPLguilty of conspiring to fix e-book prices, in violation of antitrust lawand says a damages trial will take place. Apple's publisher partners have already settled with the DOJ. The ruling arguably represents a win for e-book rival Amazon (AMZN), which wants to maintain the right to set its own e-book prices (regained last year following publisher settlements with the DOJ and EU).

    Three breakfast reads: 

    1) When cracks appeared in the China interbank market 

    2) A Label for Activist Investors That No Longer Fits 

    3) Supercomputers: Battle of the speed machines

  35. angelcur

    China inflation, ya think they lie also? Auto loans shaky, they love American cars.

  36. stjeanluc – We're just Brothers from different Mothers (and dads)!…. :)

  37. PHil – FAS on a leg down, may be a good time to short?

  38. Biotechs/Pharm – They sure are exciting. 

    Gold/Jabob – I don't think EVERONE sitting on gold miners is prepared for the whack job their earnings will take this Q. Gold was about $1.600 in Q1 and Q2 fall to $1,400 and maybe people holding the miners are thinking 20% drop in gold is 20% drop in earnings but it's going to be 50%, more likely and ABX, for example, forecast .97 earnings for Q2 last report when gold was still near $1,600 and estimates have only come down to .62 with gold now at $1,250 (but average of Q2 was $1,400) so ABX is absolutely going to blow .97 and not only miss .62 but they're doing a kitchen-sink write-down (since they're going to have a bad Q anyway) and take a huge loss and then they are going to project a totally crap Q3 based on starting at $1,250 gold.  Do you really think the average shareholder has taken all that crap into account?  Whatever ABX drops to (and other golds), we'll be going to our final DD in the Income Portfolio and we'll be buying in the STP as well as the last of the retailers abandon ship.  BUT, if these earnings do turn out to be priced in – it's going to be time to BUYBUYBUY anyway because we MUST be at a major bottom if this holds.  

    Oil with a draw that's matching the API – back to $105.50 and a good short still with tight stops (/CL) as we may still make $106 before these guys switch to profit-taking mode.

    EIA Petroleum Inventories: Crude -9.9M barrels. Gasoline -2.6M barrels. Distillates +3.0M barrels.

  39. LOL 1020!

  40. Oil imports down again.

    Selling returned at 10:15.

  41. 1020/IRS – Wasting time and money with no hope for this to pass, simply to verbally admonish a government run agency?  Seriously?

    Wait a minute, there it is:

    “The bill would place additional restrictions on spending at the IRS and prohibit employees from implementing the individual mandate in the Affordable Care Act – commonly referred to as ObamaCare.

    Using an IRS bill to further their opposition to the ACA.  Incredible.  How are people not outraged by this???

  42. ZLCS/1020 – yeah, you said that about CRIS as well when it was 1.10.  :)   Time and patience as you well know….

  43. Phil I hope your BUT is right and you don't get a chance to do your final DD.


    Gold up 13 again. Did you say 1260 was a big number?

  44. alright, which one of you just sold 3,500 Jan ABX $14 puts?

  45. CRIS – I don't remember….. ;)

  46. 27M on the Dow in the first hour – that's a good volume. 

    China/Angel – The thing about China is the top 1% (14M people) can afford whatevr price is charged for housing – no matter what.  They are the ones trading apartments around like monopoly pieces and it's a lot of people making A LOT of money flipping properties but, like Florida in 2007, they end up pricing out the actual buyers and end up in a circle jerk, selling condos to each other over and over again until the music stops.  

    Note how long it took for our Fed to pop the housing bubble – China has only just begun and faces a real uphill battle to reign in speculation as their market or bonds are not an attractive alternative for hot money:

    1020/StJ – So, which one are you?  8) 

    LOL Angel – you're right, it did have to be said. 

    Something/Jfaw – There's no logical way to sustain this level.  I'm sure, once again, that imports were choked off to create this drop in inventory.  Now comes the good part – where they actually have to find 200,000 buyers for 1,000 barrel contracts at $105 over the next 9 sessions.  

    China cars/Angel – I wonder how many young Chinese people are driving cars they can't really afford – especially if gas goes back to $4 a gallon for people who only make $100 a week?  

    FAS/Jercon – Aug $70s are $3.35 and they can be covered by Jan $70/78.33 bull call spread at $3 for a net credit of .35 and that's a good trade to make 5 of in the STP.  

    Not outraged/Rperi – It's like having a kid who always throws temper tantrums, after a while you just tune them out but, unfortunately, it's dangerous to leave these idiots unwatched for any length of time as they are CONSTANTLY trying to tear down whatever Obama tries to build.  

    BUT/Jabob – You know I like those big BUTS

    $1.260/Jabob – Yep, good place to cover if you're worried or maybe add a momentum put, in case they fail again.  July $124/122 bear put spread is $1.10 and 100% in the money at GLD $121.64 so you get paid 100% UNLESS GLD goes up $2.30 more (2%) to $1,285 and, if we hit that, you shouldn't mind taking your loss on the bear spread. 

  47. Oil topped at $105.99 – I hope someone caught that short!  

  48. /CL – 105.99. Do you advocate advanced orders to possibly get that fill. Only there for a short moment. 

  49. SCO – In hindsight, means the need to get to be second nature, that dip before inventories I should have covered my long position.

  50. I caught $105.95 and almost stopped out but the line held up.  I am loving these futures lessons.  

  51. It looks like Reuters bought and buried, can anyone recommend a good simple replacement site where you can get earnings dates and estimates quickly?

  52. Very nice BruceE.  Hope you are out already.

  53. MrM – here is one….

  54. Set a stop at $105.75.  

  55. Pharm, good site, thanks!

  56. phil,

    morning,  yesterday you shared the nflx roll from 3 sht jul 225's to a possible roll to 5 sht aug 270 or so. 

    waited to today and see that the 225 have only 1.65 in premium ….question should i roll cuz of the lack of premium into something w/ more premium as i would think between now and next week what little prem will disappear…tks

  57.  im looking at the oil import data and oil imports to Gulf Coast PADD 3 have fallen off a cliff since 2008….how can the govt not look into that..manufacturing a shortage here look at DOEICRP3 Index on bloomy…do a gpc w chart
    the imports there are back to 1992 levels!
    the 20-week moving average is back there!!

    the timing doesn't seem right yet, but i still want to build a long-term put position in USO….it feels like its going to move up to a point that breaks global economy once again
    the fact that china is possibly hard-landing and its at 105 is soooooo insane
    i really believe looking at all the data…supply/demand globally, trends in increasing supply, dollar strength, etc….that oil is in a bigger bubble than when it was 150
    it will shock people how much it will fall and stay there for years this time
    unless of course a nuke is detonated in saudi/iran/iraq etc…then maybe it can make its way back to 50 after falling to 30 bbl
      (eia graph)

  58. USO is 'going' for $40…u heard it here 1st.  Which means 120/br oil.  Booyah!

  59. UK FTSE -0.3%

    German DAX -0.1%

    French CAC -0.2%

    Spain IBEX -0.3%

    Italy MIB -0.7%


  60. Oil/Jfaw – It's tough if you're buying one contract and easy if you're buying 5.  Hard to explain (which is why I like to do live futures in AC and Vegas – in fact, Savi made money in the demonstration in April!) but let's say I just have the 1 to trade – then, at about $105.95 I'll ask for $106 and if I don't get a nibble, I'll drop to $105.99, 97 and maybe even $105.95 but, to do that, I have to be prepared to take my .06+ loss if they get over $106.  If I'm scaling 5 though, then I just short 1 at $105.95 and offer to short another at $106 ($105.975 average) and then 2 more at $106.05 ($106.0125 average on 4) but, of course ONLY if I REALLY feel $106 should be failing and then my stop is a matter of risk tolerance but usually it's going to be $106.10 and I'd restart the cycle at $106.45 and $107.95 – at which point I'd be down 2 sets of 4x .08 or about $320 x 2 = $640 and that means I'd probably look to JUST do 2 units at $106.95 with a stop at $107.05 for another $200 loss – at which point I'd probably decide it's just not my day to short oil.  

    Yes, it does need to be second nature and it's all about practice, practice and practice and then discipline and more practice.  Playing the Future should be no different than playing very tight poker – you only put your money in on very rare occasions when you are fairly positive you have good cards (or, in this case, good resistance points) and you are very quick to fold if a bad card comes up.  You lose lots of small pots that way but one big pot win can make it all up very fast.  

    Stops/Bruce – That's perfect and I hope you have now dropped the stop to $105.55 (.20 trail at this point)  and we're THRILLED to make a quick .50 ($500 per contract).  

    Earnings/MrM – I like Earningswhisper

    Good stop Bruce.  Don't be greedy.  

    NFLX/Mill – As earnings are AFTER July expirations, it is good to go for the premium, BUT, the dange to that is, if you roll the $225 short calls for premium (now $17.80 for net $242.80 so $1.40 premium) to, for example, the July $240 calls at $7.20, the danger is NFLX collapses and you never get that other $10.  So, you can roll to a 2x position or, possibly, roll to 1x the July $240s  and add 1x the Aug $275s ($9.70) to get back to $17 and then you can have a stop on the July calls at $9.70 and that would leave you with just the 2 short Aug $270s at net -(whatever you sold the originals for) + $17.80 – $7.20 – $9.70 + $9.70 (if you have to stop out) which equals $8.60 minus whatever you sold the originals for in the short $270 calls – not a terrible outcome for something that went so badly against you, right?  

    This is a great example of HOW and WHY we roll.  We're talking about saving Mill from a 10% move against him with little damage.  If you establish your plays in positions where you can AFFORD to make the proper rolls – it gives you tremendous flexibility.  If you don't have margins for this kind of rolling – DON'T TAKE POSITIONS IN EXPENSIVE STOCKS!   That's not a complicated rule to follow…

    Oh, and that is not aimed AT Mill, he's doing the right thing – I just hear from so many people who play $200+ stocks in 100 unit contracts ($20,000) with $100,000 (or less) accounts and that's just nuts!  

    Imports/Angel – It's sick, isn't it.  They lobby to produce more US oil and then cut off the imports so we end up paying MORE money for local oil than we did for foreign oil.  That's because the US Energy cartel is much more powerful and much better at manipulating prices than OPEC ever was.  Oil is in a huge bubble – inventories weren't full in 2008 and Bush was buying oil at top Dollar to fill the SPR and China was building an SPR (now full) and we were burning 1Mbd of oil in Iraq and Afghanistan as well.  

    Thanks for import chart, very ueseful (and depressing).  That's just Padd 3 too – down 15% or more from last year is about a 10Mb/week shortfall.  

    Europe – Not a terrible close but all up to Bernanke now and I can't imagine what could be in the minutes that will be spun bullish.  Certainly not "breakout to new highs" bullish..

  61. Thanks Phil, For Welcome, A little lost tho, You pump out a lot of data. Yes 5k total right now. Q: Do alerts go to Email, I did not get any yet. Hope not to become much of a distraction, I feel like comic relief! craigzooka:Yes I see, a little tough- couldn’t make DRYS work vertical, I’ll try the CME next! booya Altho I tried to set my virtual portfolio @ infinity, they said I lacked a high end printer, very special coded paper and the Ben namesake, oh well zeroxzero; Thanks for the suggestion, might need to up to $100 as Am a catatonic schizophrenic trader shadowfax; I have sold, I will not use margin tho

  62. Out at $105.50 Phil, thanks for the lessons.  

  63. /CL / Phil – And… Thanks for that lesson.  One day, I will learn to execute.

  64. SNGX – small position initiated. 

  65. Oil (/CL) trying to give us a re-entry at $106 (ish). 

    11:00 AM On the hour: Dow -0.13%. 10-yr 0%. Euro +0.6% vs. dollar. Crude +2.06% to $105.66. Gold +1.01% to $1258.45.

    12:00 PM On the hour: Dow -0.18%. 10-yr -0.11%. Euro +0.51% vs. dollar. Crude +2.02% to $105.62. Gold +0.73% to $1255.05.


    Here's what economists will be looking for in the FOMC minutes

    Is it time to get ready for another Fed Minutes freakout?

    S&P 500 sector trading range charts: $$

    The number of temps has jumped more than 50% during so-called recovery

    Bank stocks (KBE) – beating the S&P by nearly 1000 bps over the last quarter – have gotten ahead of themselves says FBR (Paul Miller), noting mid-cap lenders (KRE) trade at 1.8x book and 14.8x 2014 earnings despite lame loan growth and margin compression. This doesn't mean the team doesn't have picks: PNC, Signature Bank (SBNY), and Customers Bancorp (CUBI) are dealing with macro pressures by stealing market share, and Flagstar (FBC) is a credit recovery play (see also).

    Bonuses Given to Bank of America Employees for Home Foreclosures

    In Rush to Sue Delinquent Borrowers, JPMorgan Racked Up Errors

    Execs with Home Depot (HD -1.2%) presented at the Canada Investor Road Show today with a detailed look at the home improvement market in the U.S. A key point from the talk is how the company sees the financing/credit atmosphere going from "tight" to loosening quickly between now and 2015. FY13 targets of sales growth of ~2.8% and comparable store sales growth of ~4% are also reaffirmed. (slides)

    Nobel laureate Joseph Stiglitz takes a look at the ongoing global trade negotiations:

    Europe's banks are too large, have too little capital,& contain too many players that lack a long-term business model

    The New Normal Is To Forget Economic History: Mohamed El-Erian in the Financial Times today puts forward again…

    The yen (FXY +0.7%) is nicely higher vs. the dollar asinvestors pare bets the BOJ will ease further amid the beginning of a 2-day policy meeting last night. A majority of economist surveyed by Bloomberg expect no additional action from the BOJ, a reversal of what was believed 2 months ago. "The economy is proving (BOJ Gov.) Kuroda right," says one economist. "This is the first time in awhile that the BOJ doesn't have to boost stimulus." Japanse stocks:EWJ -0.3%DXJ -0.8%.

    Russia is uninvestable country for me. This makes Tony Soprano look like an angel.

    China's strong yuan can't be justified

    Economist: 'ALL the main drivers of Chinese growth are sharply diminished'

    Auto sales in China are soaring, but there are some dark clouds gathering as pollution concerns cause more major cities to implement sales limits which could slow growth in the industry. The buzz: A new report out of China dramatically links pollution to reduced life expectancy. Even though burning coal is the major culprit of the dire pollution situation in China – auto emissions are also a factor.

    The number of persons missing after this weekend's Quebec runaway train derailment climbs to 60, as a criminal probe continues. The train operator recorded an accident rate far higher than the U.S. average over the past 10 years, and questions are raised about the integrity of rail cars being used to haul crude across North America in the tragedy which could become oil-by-rail's Exxon Valdez.

    Goldman Sachs removes Nabors Industries (NBR -5.2%) from its Conviction Buy list and drops its price target to $19.50 from $22, disappointed by NBR's downside guidance as it had felt confident in its forecast of $119M in EBIT. Goldman cuts its estimates for 2013 and 2014 EPS to $0.82 and $1.37 from $1.04 and $1.85, respectively; 2013-14 EBITDA was cut 5% and 9%.

    WTI Hits $105.99, Brent Spread Disappearing

    Has Goldman issued a $200PT on Crude yet?

    Walmart threatens to halt construction of stores in DC if city passes a living wage bill

    Fatburger franchises are sharing employees to skirt Obamacare

    Shares of Green Mountain Coffee Roasters (GMCR -3.2%) drop to a two-month low on heavy volume as chatter picks up that a "famous" investor took a short position in the stock. Though short interest has fallen dramatically on GMCR since peaking last fall, the battle between bears and bulls is still creating a lot of volatility (and opportunities) for traders.

    More on Lululemon's (LULU +0.8%) see-through pants issue: Macquarie Capital's Liz Dunn is convinced the retailer is still having issues with its yoga pants after conducting checks with consumer channels as she lowers her 12-month price target on LULU to $62. Her take that the Lululemon brand is tarnished is not shared across the Street with many analysts seeing positive catalysts outweighing the flap over the too-sheer pants. Also: Lululemon's "Back in Black" marketing campaign is performing well, according to retail trend watchers.

    BlackBerry (BBRY -3.8%) slumps following the WSJ's report about additional layoffs, and another bearish note from Pac Crest's James Faucette (previous). Faucette says checks indicate first-week U.K. sales of the mid-range Q5 may have only amounted to 10K-15K, well below the ~50K estimated for the Z10. U.K. carriers Orange and T-Mobile began taking Q5 pre-orders four weeks ago.

    Google Maps' (GOOG -0.1%) Android apps receive a big overhaul that borrows more than a few design cues from Google Now and the much-praised iPhone app (a cleaner, more streamlined layout that includes information cards and only shows a search box in the default map view). The refresh, parts of which Google previewed at I/O, also includes more Zagat content, improved navigation, and (in a move that GRPN won't like, and which could be a sign Google wants to better monetize Maps) Google Offers integration. But some users are unhappy with the removal of offline maps support. Also: Google has added voice calling to its Hangouts service.

    Almost 30K CA. inmates enter day two of hunger strike

    Corrections Corporation of America (CXW +3.2%) rallies after winning renewal of its contract with the CA Dept. of Corrections for another 3 years. The stock remains right around the level it was at a month ago when SA Pro's Jeffrey Dow Jones recommended it. Of course, there's the 5.8% yield as well.

    Climate: Something wicked is already here /v

    Mothers working in restaurants spend more than a third of their income on child care: study

    Elisabeth Hasselback, FOX News' newest co-host, has a theory that older lesbian women just couldn’t get a man

    5 schools facing allegations of ignoring rape — and punishing victims Via

    Woman's powerful testimony against Texas' sweeping abortion ban gets her ejected from the state Capitol

  66. Realistically, barring some unexpected event at what point does the pump job stop? 110? Higher?

    I'm learning the hard way about shorting oil without tight stops

  67. Futures / Phil – When you mentioned above to take your .06 loss when you entered at .95, is that a hard stop or just using the "Flatten" button on TOS active trader?

  68. Hi Phil.  Some help please.  I have had LINE in my portfolio for a while and done welI, with an average price of about $32.  Got greedy some weeks ago and sold 20 7/20 $34 puts @ 1.50, now 6.60. I still like LINE and think it is oversold.  Nice comeback in the past few days, which should continue as the SEC issues are resolved.  Advice?  I wouldn't mind paring my long position along the way.

    Also, I have a large AAPL position with an average price below $410. As you do, I believe in AAPL long-term, in the meantime collecting a good divvy.  With the workout of AAPL in your portfolios, I am confused about what to do with my simple long position going forward.  Some basic help here please.


  69. PCYC move most likely due to this….

  70. Sundevils – I am with you.  Paimful week that I will learn from.

  71. Phil--we need you to break out of your slump or we might have to start calling you Mark Reynolds!!!  ;-)

  72. Phil The NFLX of mill expl. you are talking about rolling puts should this not be calls?

  73. Phil / TSLA etc
    Thought long and hard and I'm getting out. SOld the straddle for a loss, but keeping the normal Bull Call spread with short puts but not sure what to do the $135 short calls except be patient and roll them down the road.
    Like the Jabob GLD spread but arent we still in GLL Jul13 $10spread $107/114 ?
    Speaking of hedges – TZA – we had the weekly $28 's ?

    On the ABX miners comments – advisable to but some OTM Puts are roll any short puts down ?

  74. SPY Jun 19 167 calls for upside move.  46c   10 for me.

  75. Ebay ?
    Can't find it on the Wiki, nor in my notes – whats the thought behind the trade  // Jan15 $45 short puts

  76. FU GDX!!!
    FU ABX!!!

  77. Lost/Zeik – We do a lot of different things, it's a little like the ocean – best to just go with the flow until you decide which way you want to swim.  So, can you trade options or only stocks?  Either way, just remind me once in the while to look for small "hit and run" kind of plays and we'll see what we can do.  

    Nicely done Bruce and now we have another hit at $106.95 – it's the gift that keeps on giving! 

    You're welcome Jfaw.  Hey, I love to talk about how much I win playing poker these days, but I'm reminded that it took me a few years and thousands of dollars in losses to get to this point.  There is, unfortunately, no substitute for real experience and the first half of those 10,000 hours can be a royal bitch!  

    Pump job/Sundev – I think they break the market at $110 so that should be the toppy top but this is already ridiculous with WTIC passing Brent.  There's no logic on Earth that can justify this move.  

    Flatten/Jfaw – Oh no.  I never put in hard stops.  The reason we like to play off the .00 or .50 lines is that they tend to be good resistance and, when those lines get broken, there tends to be consolidation at the lone for a little while at least.  It takes getting used to but, essentially, when you see the bid/asks hugging the line (pretty easy to see in the active trader tab) and you see the line moving against you and the number of orders piling up on the wrong side – you learn what a quitting signal looks like.  Again, this is one of those things you really should come to the conference to see as you can talk about it all week and never get the whole picture of a three-hour demo.  

    LINE/Taihu – The real mistake there (aside from the greed) is that you didn't stop out at $29 or $28 on day one of the drop (which is fine if you have faith long-term) but then you DIDN'T double down or roll at $20.  What's the point of refusing to stop out if you have no intention of pressing the bet?  That makes no sense.  

    Position Sizing:  Try to never be in any position you don't fully intend to double down on if it moves 30%-40% against you. 

    So, now that it's bounced from $20 back to $27, NOW you want to do something?  Now you are chasing the bounce, which is very typical from an over-reaction, which is normal when news comes out that surprises people.  Essentially, they fell from $34 to $22 (non-spike low), which is about 35% and we expect a 20% bounce of the $12 drop ($2.40) to $24.20 and a strong bounce (40%) to $26.60 and line is at $26.84 and the 5% Rule is by no means that exact of a science so now we look for a 50% retrace ($28) before we start believing they're actually recovering.  

    The short July $34 puts are $7.30 and the Jan $25 puts are $3.60 so that's about even on a 2x roll and you sold 20 for $1.50 so this would be 40 sold for net .75 for an entry, on 4,000 of net $24.25 ($97,000). The current position is for 2,000 at net $30.50 ($61,000) so, the question is, are you willing to buy 2,000 more shares for $36,000 or $18 per share?  If you're not – then get the Hell out of this stock!  

    You could also buy the stock ($26.84) and sell the 2015 $25 calls for $5 and roll the short puts ($7.30) to the 2015 $25 puts at $6 and that wipes out $1.30 of the $1.50 you collected on them but you still have .20 plus $5 from the short calls to deduct from the $26.84 entry and then you're in a net $21.64/23.32 buy/write and you get a 13% dividend (if it holds up) while you wait to get called away with a $3.36 profit at $25 (12.5%) which is not at all bad for a stock that dropped 35% on you.  

    AAPL/Taihu – Well, I'd help you but I have no idea what the position is, or is it the stock that you have and, if so, how much?  

    Reynolds/Jabob – He's batting .221 and has a career average of .234 – I don't know what people expect of the guy – he already holds the MLB record for strikeouts in a single season!  Are you an Indians fan?  Do the Indians actually have fans??? 

    NFLX/Yodi – Oops, yes calls then.  Usually we're rolling puts so my brain got stuck. 

    TSLA/Wombat – Wise move.  I'd give them a bit of time but not if they plow over $125 again and, of course, if you have a chance to get out even – then great!  I have no idea what GLL spread that is.  Or TZA – you have some idea that I remember every single trade idea I ever mention – that is not the case.  If it's not in the STP and, even if it's in the LTP or Income Portfolio  - I'm not likely to remember it until I look it up for review.  We literally discuss over 100 trades every week so PLEASE, try to give me a better clue than "aren't we still in GLL July $10 spread" if you want to discuss something.  

    EBAY/Wombat – Same thing.  What on Earth are you talking about?  Do you mean the trade for the Income Portfolio from June 18th?  That's about the last time I remember talking about Ebay. Do you realize how ridiculous it is for you to jump in and act like we're having a current discussion on it?  Back on June 18th, I said:

    Speaking of the Income Portfolio – I like that EBay in China thing.   PayPal is much more important in a country where 1Bn people don't have credit cards.  10 2015 $45 puts can be sold for $5.20 for a net $39.80 entry (now $52.64) and that's a nice way to collect $5,200.

    So, without going back to June 18th and looking up the news I was referring to, I imagine there was some news about EBay or PayPal doing something in China that I felt had not been adequately priced into the stock price, which was $52.64 at the time and I thought getting paid $5,200 to promise to make a net $39.80 entry was a pretty good idea.  

    FU/Jabob – So now that GLD put spread is looking really good, right?  That's the way you play it – lock in the incrimental gains so you don't have to freak out every time it doesn't plow over the upside resistance.

  78. Matt Davies

  79. FDX running again, ZXZ if you got in 2 weeks ago congrats.

  80. good call on the gld spread.

    No--I am not an Indians fan.

    I was just busting your chops.

    I am happy you have a good sense of humor.

    I hate the gold miners and gold.

    FU me!!!

  81. Hi all,

    I have a somewhat general question – I have a TSLA 110/115 bear call spread I sold a few weeks ago that got away from me.  Both calls ended in the money, but I was able to roll it to the next week for a credit.  It wasn't a straight roll though as the same strikes weren't available so while I did roll up in strikes, I took on some more risk by widening the strikes.  This was possibly dumb.  TSLA hasn't come back down, so the spread is obviously still in the money.  I'm trying to decide what to do with it.  This morning at one point I might have been able to roll it to next week for even or a slight credit, but now it's back to being a debit.  My question is in general, would you expect to be able to keep rolling a credit spread that's in the money for additional credits?  I would think you couldn't (as time runs out the cost to buy back the credit spread moves to the width of the strikes ($5) while the next week's spread should only be able to be sold for less than the width of the strikes due to the higher premium in the higher strike call which is closer to the money, meaning I can't do the roll for a credit) and I should take my loss and move on, but I am happy to be told I'm wrong…

  82. Oil inventories don't looks manipulated at all…

    Ahead of this week's report, traders were expecting a decline of 3.2 million barrels, while the actual decline was more than three times that at 9.847 million barrels.  It is typical for crude oil inventories to fall at this time of year, but not by this much.  Ironically, even after the record decline of the last two weeks, US crude oil stockpiles are still well above their historical average for this time of year.

  83. Fed minutes have been met by an average 0.5% loss so far this year. Coming up in about 10 minutes now. Have you hedges ready:

    On January 3rd, the S&P 500 erased a modest gain for the day and declined 0.38% in the last two hours of trading.  On February 2nd, the S&P 500 was already down for the day, but it fell an additional 0.72% in the last two hours of trading.  Then, on April 10th, the S&P 500 was up more than 1% when the minutes were released, and while the S&P 500 didn't decline, the rally was stopped dead in its tracks.  Finally, the last release of the Fed minutes on 5/22 was a doozy.  After hitting a bull market high during Fed Chairman Ben Bernanke's prepared Congressional remarks, the S&P 500 sold off on investor fears of a taper to the latest round of QE.  Then at 2PM, the market tried to rebound ahead of the Minutes.  That bounce was short-lived, though, and the S&P 500 continued to sell off with an additional decline of 0.82% from 2PM through the close.

  84. Phil / EBAY
    Yep, that was the one, just couldn't find it in my notes. I keep a log of every postion and WHY I'm in it. When something's in Blue I pay attention.
    The only thing I could find on the GLL was hedging our GLD from a drop, just general discussion
    Same with TZA – I just roll the weekliy $28's

    July 3rd, 2013 at 11:38 am | Permalink | Tweet thisIgnore this user

    tza calls weekly 29.5 at 1.08
    sorry for makin extra work for ya'

  85. Almost Fed time!  

    Like pulling teeth waiting for it to download but here it is.  

    Doesn't seem too surprising and markets are loving it so far but could be a head fake.  I'll go over them in detail next and, of course, Bernanke is next at 2:30. 

  86. Jabo: right now I am hating everything.

    "I felt like putting a bullet between the eyes of every Panda that wouldn't screw to save its species. I wanted to open the dump valves on oil tankers and smother all those French beaches I'd never see. I wanted to breathe smoke"- Jack

  87. Dollar dropping fast, 84.14 so 0.5% and that's pushing the markets up 0.5% – smells a bit fishy to me. 

  88. Phil I am getting sell signals.

  89. how can you rally on this - 

    here we go down

  90. Gold rallying!

  91. samz

    Those minutes sure didn't send us up much, to green where we were this AM. Next Ben will send us down by telling mostly truth about policy which is ????? truth.

  92. How many barrels does it take to fill the new lines? Or is the issue taking stocks down instead of imports because we can deliver to the gulf coast? The next issue is will domestic oil reestablish a new equilibrium? Wasn't that the reason to build new oil lines? Stop the bottleneck?

  93. Pharm / IRWD – I noticed in early JUN that you added to your position; I didn't follow but have been watching it. Much better entry point now, do you still like it or have you soured?

  94. Isn'tBen speaking now?? CNBC?? WTF?

  95. IRWD/MrM – still good by me.  I like them for a small position.

  96. oil/jfaw,    Its a  learning lesson all right……on paper its horrific!  The question is,  do you hang on and roll to the next contract if oil hasn't dropped? being short at $99 and watching this go towards 110 is almost unbearable…. I guess I have no business trading oil unless I can watch it 24/7…

  97. For new Members – Red = Bad for makets (not nec. for bottom 99%), Green = Good, Bold = Important but neutral and Purple = Fed BS (used more for Beige book) My Commentary = Blue and I do delete paragraphs that seem pointless:  

    Discussion of Guidelines for Policy Normalization
    In light of the changes in the System Open Market Account (SOMA) portfolio over the past two years, the Committee again discussed its strategy for the eventual normalization of the stance of monetary policy and the size and composition of the Federal Reserve's balance sheet that was released in the minutes of the Committee's June 2011 meeting. Although most participants saw this review as prudent longer-range planning, some felt that the discussion was premature. Meeting participants, in general, continued to view the broad principles set out in 2011 as still applicable. Nonetheless, they agreed that many of the details of the eventual normalization process would likely differ from those specified two years ago, that the appropriate details would depend in part on economic and financial developments between now and the time when it becomes appropriate to begin normalizing monetary policy, and that the Committee would need to provide additional information about its intentions as that time approaches. Participants continued to think that the Federal Reserve should, in the long run, hold predominantly Treasury securities. Most, however, now anticipated that the Committee would not sell agency mortgage-backed securities (MBS) as part of the normalization process, although some indicated that limited sales might be warranted in the longer run to reduce or eliminate residual holdings. A couple of participants stated that they preferred that the Committee make no decision about sales of MBS until closer to the start of the normalization process. Participants agreed that the Committee's focus continued to be on providing appropriate monetary accommodation to promote a stronger recovery in the context of price stability and so judged that additional discussion regarding policy normalization should be deferred.

    While CLEARLY they are not anywhere near tightening time, just the hint of it is enough to spook the markets because, as I often say, we're about 20% above where we'd be without a constant supply of free money.  So, unless I think the market will go UP 20% from here BEFORE the Fed pulls the plug – then I (as an asset manager) need to start planning my own exit from equites as there's no long-term upside to holding stocks between now and then (post the correction that's likely to follow the end of QE).  

    Staff Review of the Economic Situation
    The information reviewed for the June 18-19 meeting suggested that economic activity continued to increase at a moderate rate in the second quarter. Private-sector employment expanded further in recent months, and the unemployment rate in April and May was below its first-quarter average, although it continued to be elevated. Consumer price inflation was subdued, partly reflecting transitory influences. However, measures of longer-run inflation expectations remained stable.

    Private nonfarm employment rose moderately in April and May, while total government employment continued to decline somewhat. The unemployment rate was 7.6 percent in May, little changed from its level in April. The labor force participation rate edged up in May, but was still slightly below its first-quarter average, and the employment-to-population ratio increased a bit in recent months. The rate of long-duration unemployment declined slightly, while the share of workers employed part time for economic reasons was little changed; both of these measures remained well above their pre-recession levels. Forward-looking indicators of near-term labor market activity were mixed but generally pointed to some further improvement in labor market conditions in the coming months: Household expectations of the labor market situation improved; initial claims for unemployment insurance were little changed, on net, over the intermeeting period; and firms' hiring plans edged up. However, measures of job openings and the rate of gross private-sector hiring were about flat, on balance, in recent months and remained near their levels of a year ago.

    What's important here is what DID the Fed EXPECT to happen on June 18th and what ACTUALLY happened since then.  In this case, they have a pretty blah outlook for employment and they are 60/40 (estimate) split in favor of keeping easing in place but employment has had upside surprises since then so maybe one or two of them are thinking their job may be done?  But we also know that much of the job growth is that BS Part-Time labor and, as noted above, the Fed has their eye on that and doesn't consider those to be the kind of jobs they are aiming for.  That's good for the bulls – as it means the Fed is going to error on the side of wanting to see much bigger job increases than they're seeing now.  

    Remember, this is all about trying to get a handle on what the Fed is thinking in order to better predict their future actions down the road.  It's a tricky business – as you can see from the violent gyrations in our indexs.  Right now, fund managers are gathered around conference tables doing what we're doing here (and we're still all waiting for Bernanke to hopefully clarify things further).  

    Manufacturing production increased slightly in May after declining in the previous two months, and the rate of manufacturing capacity utilization in May was lower than in the first quarter. Automakers' schedules indicated that the pace of motor vehicle assemblies would hold roughly steady in the coming months, and broader indicators of manufacturing production, such as the readings on new orders from national and regional manufacturing surveys, were generally at subdued levels that pointed to only modest increases in factory output in the near term.

    Real personal consumption expenditures (PCE) rose in April. In May, nominal retail sales, excluding those at motor vehicle and parts outlets, increased briskly, while light motor vehicle sales moved up solidly. Some key factors that tend to support growth in household spending were positive in recent months. After decreasing in the first quarter when payroll and income taxes increased, households' real disposable income rose in April, in part reflecting a small decline in consumer prices. Households' net worth likely increased in recent months, as equity values and home prices rose further. Moreover, consumer sentiment in the Thomson Reuters/University of Michigan Surveys of Consumers improved notably, on balance, in May and early June and was at its most upbeat level since the onset of the recession.

    Conditions in the housing sector generally improved further, but construction activity was still at a relatively low level, and demand continued to be restrained by tight credit standards for mortgage loans. Starts of new single-family homes declined, on net, in April and May, but permits rose, suggesting gains in construction in the coming months. Starts of new multifamily units decreased in April but increased in May. Home prices continued to rise rapidly through April, while sales of both new and existing homes advanced.

    Real business expenditures on equipment and software appeared to slow somewhat going into the second quarter after expanding modestly earlier in the year. Nominal shipments of nondefense capital goods excluding aircraft decreased in April, but nominal new orders for these capital goods increased and were slightly above the level of shipments, pointing to modest gains in shipments in the near term. Other forward-looking indicators, such as surveys of business conditions and capital spending plans, also suggested that outlays for business equipment would continue to rise at only a modest pace in the coming months. Nominal business spending for nonresidential construction increased in April after it had declined in the first quarter. Business inventories in most industries appeared to be broadly aligned with sales in recent months.

    Real federal government purchases appeared to be declining less rapidly going into the second quarter than they had during the first quarter, as decreases in defense spending slowed, on balance, in April and May. The ongoing declines in real state and local government purchases appeared to moderate over recent months; the payrolls of these governments expanded in April and May, but state and local construction expenditures continued to decline noticeably.

    Mixed signals much?  Again, this is the Fed's outlook so the data SINCE this meeting is very important and, as we know, the data got worse in general.  Now we have to think about whether bad news is good news (more Free Money) or just bad news as earnings are too close to pretend it doesn't matter. 

    The U.S. international trade deficit narrowed in March but widened in April, leaving the level of the trade deficit in April similar to its average in the first quarter. Both imports and exports fell in March but largely recovered in April, although oil imports remained below their first-quarter average. Exports of consumer goods and automotive products reached new highs in April, but exports of agricultural products declined.

    Overall U.S. consumer prices, as measured by the PCE price index, edged down in April, while the consumer price index (CPI) rose somewhat in May. Both the CPI and the PCE price index increased at a subdued rate over the most recent 12-month period for each series. After declining in the previous two months, consumer energy prices rose a little in May, and retail gasoline prices, measured on a seasonally adjusted basis, were up further in the first couple of weeks in June. Consumer food prices edged down in May after rising modestly in April. Partly reflecting some transitory factors, such as a one-time reduction in Medicare prices associated with the federal government spending sequestration, consumer prices excluding food and energy only edged up in April but rose slightly more in May. Near-term inflation expectations from the Michigan survey were little changed in May and early June; longer-term inflation expectations in the survey also were essentially flat and remained within the narrow range that they have occupied for a number of years.

    Now, THIS is a very big deal.  Especially when we're now sitting with oil at $106 – up 15% from $94 at the last meeting.  DBA (other consumable commodities) is pretty flat to last meeting at $25 so we're seeing MORE inflation (price INstability) than the Fed anticipated when the Doves won the day back in June.  

    Measures of labor compensation indicated that gains in nominal wages remained modest. Compensation per hour in the nonfarm business sector increased moderately over the year ending in the first quarter, and, with a small rise in productivity, unit labor costs advanced only a little. Gains in average hourly earnings for all employees were muted, on balance, in April and May.

    Great news for our Corporate Masters!  

    Foreign economic growth remained sluggish so far this year. A slower pace of expansion in many emerging market economies (EMEs), including China, since the beginning of the year offset an increase in the average rate of economic growth in the advanced foreign economies. In Japan, where recent policy measures appeared to have boosted household confidence, economic growth picked up noticeably early in the year. Recent indicators of Canadian economic activity also strengthened. However, indicators for the euro-area economies remained weak. A decline in commodity prices and continued lackluster economic growth contributed to a decline in foreign inflation.

    Now we know this has all unwound in the past month.  Europe has gone negative, Emerging Markets are in the toilet, Japan stalled out and CHINA!!! is turning into China, at best.  Of course, this is no reason for the Fed to STOP easing but, then again, they can't carry the whole World on their shoulders.  Expect that discussion to come up by the next meeting. 

    Staff Review of the Financial Situation
    Financial markets were volatile during the intermeeting period as investors reacted to incoming economic data and Federal Reserve communications. Information about the U.S. economy was somewhat better, on balance, than investors had anticipated, apparently giving them greater confidence in the economic outlook. Federal Reserve communications over the period reportedly were interpreted by market participants as pointing to a less accommodative stance of future monetary policy than they previously had expected.

    See how strange this is – they are interpreting our interpretation of their vauge statements!  

    Market-based indicators suggested that investors revised up their expectations about the path of the federal funds rate in coming years. Forward rates two to three years ahead derived from overnight index swaps shifted up 25 to 40 basis points over the intermeeting period, likely reflecting both an increase in the expected path for the federal funds rate and an increase in term premiums. In contrast to the readings from financial market quotes, which suggested that investors had come to expect the FOMC to increase its target for the federal funds rate sooner than they previously had anticipated, the results from the Desk's survey of primary dealers conducted prior to the June meeting showed little material change, on balance, in the dealers' expectations of the most likely timing of the first increase in the federal funds rate target.

    Nominal yields on Treasury securities rose sharply over the intermeeting period amid some better-than-expected U.S. economic data and Federal Reserve communications that were interpreted by market participants as signaling a possible earlier-than-expected reduction in the pace of purchases under the FOMC's flow-based asset purchase program. Nominal yields on 5- to 30-year Treasury securities increased about 35 to 55 basis points. Yields on agency MBS rose more than those on comparable-maturity Treasury securities, leaving option-adjusted spreads to Treasury securities notably wider. The rise in longer-term Treasury yields appeared to reflect both an increase in term premiums and a rise in expected future short-term rates. The rise in term premiums, in turn, likely reflected in part a reassessment of the pace and ultimate size of the Federal Reserve's asset purchase program, as well as increased uncertainty about the future path of monetary policy.

    Measures of inflation compensation derived from yields on nominal and inflation-protected Treasury securities fell notably but ended the intermeeting period within their ranges over the past few years. Investor perceptions of a somewhat less accommodative tone of Federal Reserve communications, as well as the softer-than-expected reading for the April CPI, likely contributed to the decline in inflation compensation.

    Conditions in domestic and offshore dollar funding markets were generally little changed, on balance, over the intermeeting period. In secured funding markets, rates on Treasury general collateral repurchase agreements decreased, on net, in large part because of the seasonal decline in the supply of Treasury securities.

    Apparently, the Fed thinks that we think that they think that they should be tapering and the Fed thinks that our lack of freaking out means they are doing a fantastic job of keeping us just confused enough to not know what to do until they hint at it.  Since that meeting – TLT has dropped 6% – but that's less than the drop from 123.68 to 113.50 (8%) in the month heading into the meeting so I think they would say the "concerns" are moderating nicely.  

    Market sentiment toward large domestic banking organizations appeared to improve somewhat over the intermeeting period, likely related in part to further reductions in nonperforming loans and growing confidence in the economic outlook. Equity prices for large domestic banks outperformed broad equity indexes over the intermeeting period, as did the equity prices for most other types of financial institutions. In contrast, equity prices for agency mortgage real estate investment trusts declined, reflecting the rise in longer-term interest rates, the underperformance of agency MBS, and weaker-than-expected earnings reports.

    This is, of course, what the Fed really cares about as they are really just an organization (ie cartel) of Bankers that have taken control of the Government (see "The Creature from Jekyll Island").  

    I'll pause to answer some questions as I see we're selling back off and finish this later. 



  98. SCO – Rolled down and out to August

  99. What time does the Bernanke talk?

  100. Phil – can we get a repost of that comic explanation of QE from a couple of years ago – made me laugh my you know what off - 

  101. Phil // Follow-up
    ""or 15 AAPL 2015 $360/400 bull call spreads for $20 and no margin?  You can sell AAPL $300 puts for $16.20 to pay for most of that position if you want to throw some margin around but the simple spread pays 100% at AAPL $400."

    I'm getting a TOS Margin of 13K on these spreads ( with -10 of the $300 short puts add +20K )

    Am i not seeing something ?



  102. Phil, thanks for the input (and lesson) on LINE.  Slowwwwly learning.  On AAPL, 2000 shares.

  103. Phil

    Excellent commentary on FED. Thank you!

  104. TSLA/Archer – It's not dumb, you rolled for time and sacrificed some upside (or took more risk as it was an inverted play).  I don't know what your entry was or if you are dealing with weekly or monthlies so fill me in and we can talk about how to deconsruct and roll those positions when they go against you.  You can keep rolling but not weeklies when they go against you and that's why we don't play those generally – ESPECIALLY bear calls or bull puts, where your risk outweighs the potential reward.  Those trades are OK for stocks where you have very low expectations of 5% moves but, with a stock that moves 5% PER DAY – it's like playing Russian Roulette with your portfolio – at some point, it's going to blow up in your face….

    Inventories/StJ – Not really manipulated – it's a function of a massive boycott of imports causing an artificial draw in oil (I will post on this tomorrow).  Incredibly, they dropped imports by ANOTHER 250,000 barrels per day below last week and RAISED exports by 200,000 barrels per day so a 3M barrel swing on those two items alone from last week, when we already had a 9Mb draw due to the 7Mb shortfall in imports vs last year.  

    Log/Wombat – Very good thing to do but please try to update it WHEN you make the trade – not a month later!  Now that I know what you are talking about – it turns out GLL was a trade that StJ killed because it wasn't liquid enough, so we decided against using it and then gold bottomed out and turned, so we'd be out by now anyway as we doubled down on our GLD last week.  TZA weekly calls were something Lionel posted, not me!  Please do not tell me you now want me to track every single trade idea that any person even passingly mentions on the site????  

    Signals/Shadow – I'm seeing every possible signal at the same time at the moment.  Traders are all over the place – as is the Fed, so appropriate.  

    Meanwhile, what the Hell happened to Bernanke?  

    Gold/Arivera – Another opportunity to grab the bear put spread at $1,260.  

    Pipelines/Shadow – The pipes aren't very fat but thousands of miles means figure a barrel is 4 feet tall so figure 1/2 the diameter of a barrel and maybe 20 gallons per 4 feet or 20,000 per mile is 5,000 barrels x 1,000 is 500,000 barrels per 1,000 miles of pipe so not the biggest deal but then the fact that we're sending US oil to the coast so we can EXPORT it – that's where we run into a very big problem…

    Oil/Sun – It's not a thing you should really be doing more than intra-day momentume trades on and, in reality, it's not even a good idea to go to the bathroom and leave oil contracts open!  

    Bernanke seems to be MIA.  

    QE/Samz – I don't have any idea where that was from, sorry. 

    AAPL/Wombat – TOS tells me, in a non-margin account, that they want $3,000 to short 1 2015 $300 put at $16.50.  $13,000 seems a bit high as the whole obligation is $13,000 and it's 30% out of the money.   In any case, if you have an ordinary margin account (under $100K) and you are selling AAPL puts – you are playing with way too much fire in the first place.  AAPL does have minis if you MUST play it but are you REALLY ready, willing AND ABLE to buy $30,000 worth of AAPL for $300?  If not – why on earth would you be selling puts?  

    AAPL/Taihu – You're welcome.  Those are great examples to share with people.  Now, with AAPL, you own 2,000 shares and that's $840,000 and, for one thing, I very much hope that not more than 20% of your portfolio.  Now, let's look at your expectations between now and 2015:  You expect to get 1.5 x the $12 dividend so $18 x 2,000 is $36,000 and you HOPE AAPL goes to what?  Let's give it 15% annual growth and call it about $520, say $550 in 2015 and you're in for avg $420 so you make $130 x 2,000 is $260,000 + $36,000 is $300,000 is 35% in 18 months.  

    OR, you could forget about the dividend and just buy 20 of the 2015 $350/500 bull call spreads for $63 and sell 20 of the 2015 $375 puts for $42.50 and that puts you in the spread for net $21 x 20 ($42,000) with an upside pay-off at just $500 (10% lower than you need with the stock) of $300,000 less the $42,000 cash invested is $258,000.  Assuming you have normal margin, you should get hit for about $75,000 in margin on the put side (net) and the calls cost $126,000 for $201,000 and that leaves you $639,000 free to play with (but conservatively, as you are still obligated to buy AAPL if it goes lower).

    On the downside, your net entry back into 2,000 shares of AAPL is $396 in the worst possible case but, because you also own the $350 calls, the break-even is $373 so this set-up gives you FREE protection down to $373 (20%) and almost the same upside as owning the stock (but at a 10% lower target) AND frees up $601,000 that you currently have tied up on the trade.   Even if you do a 5% collar with that $601K, that's still more than the AAPL dividend you're sacrificing.  

    Dollar at 84.19, was 84.96 yesterday so down 1% and masking a big retreat out of equities.  

    Bernanke seems to be delayed until after the close – that's going to be wild.  Dow volume 72M at 3:40. 

  105. Shadowfax – Oil

    Now we have the railroads storing oil also:

    U.S. oil inventories have tumbled over the past two weeks, sending Nymex crude to fresh 14-month highs. One big reason: railroad shipments of crude have soared, allowing surging domestic production to get from storage tanks to refineries that need it. U.S. Energy Department, citing American Association of Railroads data, says that rail shipments of oil and fuel products in the first six months of 2013 were up 48% from 2012, which translates to about 1.4-million- barrels a day of crude moving by rail around the U.S.

  106. Bathroom, Phil – LOL! I learned that the hard way.  

    Back to $106 now, still shorting the line or forget it?

  107. PSW //
    In the recent newsletter there was talkk of infrastructure plays – specifically FLR ( Fluor Corp )
    Any follow up thoughts ?

  108. The Last Time This Happened, $SPX Fell 50% "@KimbleCharting$IYR

    Bernanke now at 4:10.  

    Again CNBC says there is an upside bias to the close – let's see if they are lying again.  Dow 15,292, S&P 1,652, Nas 3,520, NYSE 9,338 and RUT 1,020.  

  109. edro00

    Thanks again, forgot how oil gets out of Wyoming. Those tank cars are like oil tankers at sea only smaller but stoage either way. What we need is the government to expose the rape.

  110. That $5K portfolio…a perfect play is ISCO.  for 1000 shares, $240.  and wait.  get out at 12c.  Hold and sell 1/2 at 48c for a free ride.  Very simple.

  111. Railroads/Edro – Good point, another million off the books.  

    Oil/Bruce – An Ipad with TOS Mobile will fix that!  8)   Yes to playing $106 but keep in mind they usually hold things up until the nat gas inventory tomorrow.  

    Infrastructure/Wombat – Not a big hurry there as I don't see Congress approving any kind of spending that might create jobs and make Obama look good.  FLR is a good long-terrm company and I wouldn't kick them out of bed at $59.27 but they're not terribly cheap either so I'd just put them on a watch list for 8/1 earnings and hope they miss – then it would be a good time to get in.  

    $5K Play/Pharm – That could be fun to do.  I'll look for one too.  

  112. Phil

    Not only the buck dropped but this is 12 days up, not often past 10 and way less 15 days. This week should end it or the very rare 20 day run! Monday or Monday?

  113. Phil // AAPL
    On PM it shows 2K per contract on the $300 short puts. My question was more around your comments on 'no margin' on the 360/400 Bull Call spread //
    I've been in and out of AAPL short puts all year – the premium just isnt there anymore.

  114. Here it is folks – the long awaited report on manipulation in the oil and gas industries titled







  115. Pharm/ 5K play~ that sounds quite fun. I like most of yr picks as they don’t cost too much (of course position size control is the key) with limited risk. The charts make sense. I assume they have good fundamentals as I don’t quite understand the medical jargons. Keep it up!

  116. And here is what the FTC did to prevent manipulation


    Petroleum Market Manipulation Rule

    As mentioned in previous reports, the Commission established a process in November
    2009 to monitor compliance with the Petroleum Market Manipulation Rule,10 which prohibits fraud or deception aimed at manipulating wholesale markets for crude oil, gasoline, or petroleum
    distillates.  Since January 1, 2013, the FTC’s Bureau of Competition has received two communications from members of the public under the Rule.  Neither of those communications
    contained information suggesting a violation of the Rule.  In addition, the Commission’s close cooperation with other agencies included review of information received from another agency that pertained to the Rule. The Commission remains ready to examine closely any complaints or other communications that it receives regarding the Rule, and to take action as appropriate.

  117. The Petroleum Market Manipulation Rule

    Specifically, the Final Rule prohibits any person, directly or indirectly, in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale, from a) knowingly engaging in any act, practice, or course of business – including making any untrue statement of material fact – that operates or would operate as a fraud or deceit upon any person; or b) intentionally failing to state a material fact that under the circumstances renders a statement made by such person misleading, provided that such omission distorts or is likely to distort market conditions for any such product.

  118. Phil…agreed….like you mentioned about poker…in the process of learning you take your lumps….expensive lumps to be sure….having said that…in your opinion, would it be best to capitulate and fight another day or hang on for a bit(including rolling the contract) to see what happens between now and the next few weeks…I figure I could wait out another few dollars before coming completely unglued! I am short at $99..

  119. Pharm:  Great AGN call, I became overexcited and cashed out the calls  – Phil has trained me to take 20%+ off the table if earned in 24 hours, but they closed a bit lower and if they dip along with the rest of the market I'll reestablish.  Fortunately, I bought a fistful, also the source of my overexcitement.

  120. Bernanke used the word luck while answering a question about the economy and inflation, hmmm luck ryhmes with? Bernanke highly dovish this evening.

  121. And the markets like his dovish calls.  UP 1% in AH.  Rubbish.

  122. Phil / TSLA – Thanks Phil.  I sold (rolled to) the Jul12 (weekly) TSLA 110/115 bear call spread for a $0.93 credit.  I originally had two different positions that I bought back for an average $2.65 debit (including the credit from whatever I originally sold them for) and then sold the 110/115 for $3.58.

  123. ABX, SLV and GLD up after hours, $ – not so much! Bernank is such a @$$$

  124. Seminars / Phil – If you recall, the Vegas seminar last year where futures were concerned was on the holiday, Veteran day.  So, notmuch happening so we went over the DOW components instead.  Maybe this year TOS can be fired up and replay a Futures session in the simulation tab for discussion purposes since futures discussions will be on Veterans Day again.  Just a thought.

  125. Does anyone but me think that there is something wrong when the price of trillions of $ worth of equities are moved up and down by the chatter surrounding governments giving or failing to give more free money? How is an INVESTOR supposed to value any company in this environment? Obviously the fed sent up a trial ballon recently and did not at all like what happened to interest rates. It appears that everyone is being told that the only safe haven is in Stocks. I have so much faith in this safe haven that I will sit all alone on the sideline with my 90% cash waiting on the correction that most think will never come.

    It is interesting to me that much of the run up in prices over the last couple of years was due to our savior China. China may be falling apart, Emerging markets are a mess and we know most of Europe is in recession, but somehow the all important Global Economy no longer matters. I guess time will tell, but small hit and runs or one of Phil's upside hedges with the possibility of large returns on small amounts of capital seem the way to go for anyone wanting to be a Bull.

  126. Another possiblity for the 5K portfolio is NNVC.  I would be interested in Pharm's opinion on this one.  I have been playing a couple of trips on the recent range.

  127. Phil, I contacted our 3 local representatives in Florida, referencing your Thursday article.  I did at least get a response (not the most encouraging one, but still):

    Please do not reply to this e-mail.  If you need to send another message to Senator Nelson, please use the form on his Web site:


    Dear Mr. Braze:


         Thank you for contacting me about the price of gasoline.  The price run-ups we have seen lately are inexcusable.  


         To stabilize gas prices, we must rein in unbridled and unregulated speculators.  Gas prices fluctuate wildly because speculators, who behave like condo-flippers, are allowed to buy and resell oil contracts.  Until we stop that, we'll continue to be gouged at the pump.


         Most importantly, we need to break our addiction to foreign oil and switch to alternative fuels.  Thirty years ago, in the wake of gas shortages and long lines at the pump, the President declared the need for the U.S. to become energy independent.  Unfortunately, little has been done since.  And having only three percent of the world's oil reserves while we consume 33% of the world's oil production means America cannot drill its way out of this crisis.  


         We must develop alternative fuels--like biofuel--and make them from things we don't eat.  In the meantime, we need to conserve as much oil as possible by raising fuel-efficiency standards for all vehicles and further increasing the production of hybrid cars.


         I appreciate your thoughts on this issue.  And I will continue to support measures that provide our nation with real alternatives to our reliance on oil.



                                       Bill Nelson


    P.S. From time to time, I compile electronic news briefs highlighting key issues and hot topics of particular importance to Floridians.  If you'd like to receive these e-briefs, visit my Web site and sign up for them at 

  128. rj
    it stopped making sense quite a while ago. i think with all the new cash floating around we don't suck as much as everyone else. they're calling folks out of bonds all over the world.
    if i could have my way – one more 1.5% drop and then bulls away.
    when i make my marker back – i'm leavin the casino for the night.

  129. scotbraze – Thanks for actually taking the time to contact your reps, it is absolutely stunning/sad how few people ever voice their opinion to elected officials.  As someone that used to read and respond to constituent letters, I encourage you to push them on this generic form response and also try to get other friends from your district/state forwarding on the article as well.  I suppose its true with many things in life, but the people who are persistent or have an overwhelming voice (ie the office suddenly gets flooded with articles from some Phil Davis guy) will get more traction.  It's the staff writers job to pump out as many responses as possible, but its also their job to find issues that are credible/interesting and gaining popularity amongst constituents and bring that information to the boss.  They also probably contribute to speeches or other materials, and are probably looking for some new material; its only a few small steps from one of Phil's articles turning into talking points coming out of a rep's mouth (if that hasn't happened already).

    So thats my advice if you genuinely care about this issue and are willing to put a few more hours into it, a letter isn't going to bring down the oil cabal, but pushing back and spreading the information is at least an attempt to do something positive.

  130. Thanks mb22, I'll give it a shot, I had an email at work ready to forward on to friends (similar to the one I sent referencing Phil's article), just need to coerce those folks to get involved, and see what else I can do, I'll certainly try and be more of a squeeky wheel!

  131. S&P -> 1700 tomorrow!

  132. scottbraze: Thanks for posting the reply from Sen. Nelson – a breath of (semi) fresh air in a political world where fresh air is hard to find. Inspiration to write our elected officials on this subject again, and again. Would be very interesting to have replies posted (after hours of course). Thanks to Phil et al for keeping this ball in the air.

  133. Futures gone wild….

  134. Good morning!

    The futures are so bright, we gotta wear shades this morning.

    Actually, only up 1% with the Dollar down 1.29% is not actually that strong.  Bernanke said "we need to be MORE accomodative" and, despite the fact that it's BECAUSE the economy sucks – the markets love it.  

    At least gold ($1,284) is recovering but oil's back to $107 (still a short on /CL).  

    BOJ also pledged to keep easy money, despite saying the economy there is recovering but it wasn't really enough to give the Nikkei a good push.

    The Hang Seng poppled 2.5% and the Shanghai zoomed up 3.2% with India up 2% and Singaport up 1.8% but poor Japan only made 0.4% but that was up 200 from a bad open into the close on the doveish comments.  

    Europe is up 1% – not too excited really.  I think they have Central Banker envy…

    I know this may not be a popular stance but, please, read the news below – there's nothing here to be bullish about other than MORE FREE MONEY and we priced in QE Forever long ago – it's just not enough to sustain a rally by simply continuing the program.  

    Also, the Dollar is down 1.2% and the indexes are up less than 1% – that's not a real move up at all.  I know I said I'd get bullish if we hit our technicals but you have to adjust the technicals if the Dollar drops too! 

    Thursday's economic calendar:

    Chain Store Sales

    8:30 Initial Jobless Claims

    8:30 Import/Export Prices

    9:45 Bloomberg Consumer Comfort Index

    10:30 EIA Natural Gas Inventory

    1:00 PM Results of $13B, 30-Year Note Auction

    2:00 PM Treasury Budget

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    11:19 PM Bank of Japan: No change in policy. The Japanese economy is "starting to recover moderately," median inflation forecast is cut to 0.6% (from 0.7%), and real economic growth forecast falls to 2.8% from 2.9%. The yen strengthens on the news, rising 0.83%against the dollar to ¥98.81 at last check.

    4:04 AM Asian shares climb sharply after Ben Bernanke yesterday signaled that the Fed will keep the money printing presses ramped up, saying that "that highly accommodative monetary policy for the foreseeable future is what's needed for the U.S. economy." Chinese stocks (FXIlead the charge on speculation the government will carry out what one money manager says will be a "small-scale stimulus plan…to prevent economic growth from slumping too much." Japan+0.4%, Hong Kong +2.5%, China +3.2%, India +1.9%

    4:10 AM European shares (FEZ) follow their Asia brethren higher, also because of Ben Bernanke laying to rest any fears of an early end to QE. "The market had got ahead of itself in terms of pricing in how soon tapering was going to occur," says KCG Europe's Ioan Smith. EU Stoxx 50 +1.1%, London +1.1%, Paris +1%, Frankfurt +1.3%, Madrid +0.6%, Milan +0.7%.

    4:19 AM The dollar (UDNtakes a tumble against a swathe of currencies in the wake of Ben Bernanke's comments that the U.S. economy needs a "highly accommodative monetary policy for the foreseeable future." Meanwhile, commodities rip higher. Dollar index-1.15%, EUR-USD +0.4%, GBP-USD +0.45%, USD-JPY -0.45%, AUD-USD +0.6%, USD-CAD -0.8%. Oil (OIL+0.6%, Gold (GLD)+2.9%, Silver (SLV+4.4%, Copper +2.9%.

    From the Bernanke NBER speech Q&A session: In response to a question regarding the volatility in markets occasioned by the Fed's "contingent plan for reducing asset purchases" hinted at last month, Bernanke says he is "a big believer in transparency and communication" and asks listeners to consider the counterfactual – "if we hadn't said anything [and] market perceptions had drifted away from the Fed's thinking … more highly levered risk-taking positions" might have cropped up. 

    More from the Bernanke NBER speech Q&A: The Chairman says very low inflation is "not good for the economy [and] deflation raises the real cost of investment." Excessive downward pressure on prices must be "pushed back" against. Bernanke also says there are good reasons for financial regulation to fall primarily on the shoulders of central banks. After all, central banks have expertise in the area and are a lender of last resort.

    Speaking of our economy sucking:  Economists Dial Down Estimates for GrowthThe nation's economic growth pace may have fallen below 1% in the second quarter, several economists said, after wholesalers' inventories declined in May.

    The Astonishing Collapse of Work In America. (graphs)

    And the rest of the World:  Don't Rely on Business Investment to Spur RecoveryCapital expenditure across the world is expected to decline this year and next, according to a new report by rating agency Standard & Poor's (S&P), which warned that hopes of it driving an economic recovery were unfounded.

    What Bernanke Really Said, Or How The Chairman Just Lost Control Over Policy Again.

    Diverging Debate at Fed on When to End Stimulus. The Federal Reserve Chairman, Ben S. Bernanke, said on Wednesday that the Fed was likely to extend the centerpiece of its campaign to bolster the economy — keeping short-term interest rates close to zero — even as it prepares to wind down another key stimulus program that faces mounting internal opposition.

    Currencies Go Berserk As Bernanke Kills King Dollar. (graphs)

    P/Es high as earnings season begins.

    Luxembourg PM and former Eurogroup head Jean-Claude Juncker reverses an earlier pledge and will resign tomorrow in wake of a security service spying scandal. Amid the height of the EU debt crisis (assuming it's been hit), Juncker famously said the nature of financial markets forces policymakers to lie.

    WSJ analysis of 11,000 insider trades at 550 publicly traded companies has found that those trades veer heavily towardsthe sale of stock in the year before a firm files for bankruptcy protection. At A123 Systems (AONEQ.PK), for example, six employees sold a combined 9.1M shares in the 12 months before the battery maker filed for Chapter 11. Other companies mentioned include Patriot Coal (PCXCQ.OB).

    SEC Clears Way for Entrepreneurs to Tweet, Blog About Unregistered SharesBusiness Owners Are Planning Marketing Blitzes After SEC Action on Unregistered Shares.

    Germany's wholesale price index -0.4% in June on month, as in May, and vs -0.3% consensus. On year, WPI +0.7% vs -0.1% previously. (PR)

    French CPI +0.2% on month in June, as expected, vs +0.1% in May. On year, inflation +1% vs +0.9% previously and consensus of +0.9%. The largest contributions to inflation came from increases, partly seasonal, in prices for food and certain services. The cost of energy and manufactured goods remained broadly unchanged. (PR)

    The wheels are coming off the whole of southern EuropeEurope’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.

    BOJ Refrains From Adding to Stimulus as Recovery Signs Seen

    Brazil Raises Rate to 8.5% as Inflation Undermines Growth

    Morgan Stanley says China's GDP growth could decelerate to a 5% handle in 2014 if the proper policy response isn't crafted to deal with banking sector deleveraging, a prediction which pairs nicely with Capital Economics' discussion of who loses from a Chinese "rebalancing." Commodity producing emerging markets in Latin America, the Middle East, and Africa are flagged and Barron's has a list of ETFs which may or may not have priced in a China slowdown:EWZEPUECHEWTEWM, and, more generally, EEM.

    China's big four state-owned banks have once again risked the wrath of the People's Bank of China (PBOC) by reportedly providing an unusually high 170B yuan ($27.7B) of new loans in the first week of July. That compares with 270B yuan for the whole of June. It was lending of 217B yuan in the first 10 days of last month that prompted the PBOC to engineer the credit squeeze that caused a bit of a panic in global markets. One reason for the jump in loans in July is because cash returned to the system after the end of the H1 reporting period.

    Shopping malls glut in China might create real estate bubble"Compared with the residential market, the commercial real-estate market is more likely to face bubbles," a vice chairman of a Hong Kong-listed real-estate firm told the China Business News. According to real-estate services company DTZ, the total floor area for new shopping malls slated to open in Shanghai during the second half of this year will reach 2.49 million square meters. In comparison, the total floor area of retail property transactions from the year 2000 to June 2013 was pegged at 10.9 million square meters. As of 2011, there were 2,812 shopping malls in China. By 2015, the number will grow to 4,000, according to the China Chain Store and Franchise Association.

    Australia's unemployment rate rose to the highest in almost four years in June, increasing to 5.7% from 5.6% in May, although the number of people employed climbed by 10,300 on month. Full-time jobs -4,400, part-time employment +14,800. The "shallow uptrend in unemployment that's been in place for a while is continuing, consistent with an economy that's running below trend," says economist Michael Blythe. Shares (EWA+1.2%, Australian dollar (FXA+1.3% to $0.9295. (PR) 

    New home contract cancellations (XHB) could jump 19% for sales made in H1 of homes not yet built, says mortgage analyst Mark Hanson, as buyers had yet to lock in rates. Hanson refers back to the ending of the homebuyer credit in 2010 when new home sales cratered 38% in a single month. "It's having a chilling effet on the market," says one realtor of higher rates. Someone previously qualified at $600K might now just be able to afford $550K, he says.

    Foreclosure activity dropped in June to the lowest level since December of 2006, falling 35% on year to 127,790 properties, says RealtyTrac. Foreclosure starts sank 21% on month to the lowest level since the end of 2005, while repossessions dropped 9%, although rates in some states increased as judges ploughed through backlog, including in Arkansas, Oklahoma and Maryland. (PR)

  135. It was another rough day for the big refinery stocks, whose margins are getting squeezed in the collapse in WTI-Brent spreads. Alon USA Energy (ALJ -9.1%) is hit especially hard after Barclayswarns of a possible downside surprise in its upcoming earnings. Also:ALDW -5.9%CVI -5.4%CVRR -5%TSO -4.5%HFC -3.6%PSX-3.3%WNR -2.6%MPC -2.6%NTI -2.5%DK -2.5%VLO -2%.

    Sharp Jump in US Gasoline Seen Within DaysGasoline is expected to jump 10 to 20 cents per gallon in the next several days, as rising oil prices and peak driving season create a perfect storm for higher prices.

    Nabors Industries' (NBR -5.8%downbeat Q2 forecast could spell trouble for other oilfield services firms (OIH), Tudor Pickering warns; while some NBR-specific factors likely are at play, the U.S. horizontal rig count continues flat even with more than half the year over. NBR's biggest peers - SLBHALBHI - are little changed, but smaller ones are mostly lower: HP -1.4%PTEN -1.2%PDS -1.5%,SPN -1.6%.

    Stephens analysts predict mostly in-line Q2 earnings for oilfield service companies (OIH) with potential upside to margins thanks to stable pricing in onshore markets, but looking ahead to H2, the industry needs to add rigs in order to meet current estimates. Onshore, Q2 margins could surprise positively at BASPTENRESand SPN. Offshore, the firm likes HEROHLXHOSOII.

    Newmont Mining (NEMreports preliminary Q2 attributable gold and copper production of 1.167M oz. and 34M lbs., respectively. Gold production was in line with expectations; average gold price was $1,415/oz. NEM maintains respective estimates for FY 2013 gold and copper production of 4.8M-5.1M oz. and 150M-170M lbs. NEM +1.5% AH.

    Gold Is Surging Tonight, And One Analyst Says It's Now In The Sweet Spot.

    Molycorp (MCP+1.8% AH after surging 16% during regular trading, as other rare earth (REMX) names also rose today: REE+11.7%AVL +15.2%. A Euro Pacific analyst ties the move to reports from China that say the price increase in rare earth relates to a government campaign to shut down unlicensed mines in China's Ganzhau; funds may be buying a basket of related companies. (earlier)

    Rebar Rises to Highest in Eight Weeks as China’s Stocks Rally.

    Ford (F -0.7%) will reportedly drop the price on the 2014 Focus EV to $35,200 from $39,200 – presumably in response to price cuts from Nissan, Honda, and Toyota on their own EV models. According to, the 2014 Focus EV is a "top choice" in the crowded segment.

    Senator raises US food security fears in Smithfield(SFD) dealThe largest-ever Chinese takeover of a US company came under scrutiny in Washington after a group of bipartisan lawmakers said Shuanghui’s proposed $4.7bn purchase of Smithfield, the pork producer, raised unsettling questions about American food security and economic fairness. “Smithfield might be the first acquisition of a major food and agricultural company, but I doubt it will be the last,” Debbie Stabenow, the Democratic senator from Michigan who heads the powerful agriculture committee, said before the hearing.

    YUM! Brands (YUM): FQ2 EPS of $0.56 beats by $0.02. Revenue of $2.9B misses by $0.03B. Shares +2.72% AH. (PR)   Yum(YUM) Earnings Slide as China Sales Take a HitYum Brands, parent company of KFC, reported a 16-percent decline in quarterly earnings on Wednesday as sales in China fell sharply.

    More on Yum Brands' (YUMQ2: China division sales and profits "significantly impacted by adverse publicity surrounding Avian flu" (operating profits in China fall 63%). Same-store sales in China fall 20% for the period but show some improvement in June, falling 10% compared to 19% in May — same-store sales rise 1% in the U.S. Restaurant margins fall 270 basis points on a worldwide basis and slide 500 basis points in China. Outlook is unchanged (mid-single-digit FY EPS decline) and China same-store sales should be back in positive territory by Q4.

    Shares of Caesars Entertainment (CZR +9.5%) pop after the company files an S-1 for its new investment vehicle which current shareholders will hold the rights to purchase.

    Costco's (COST) net sales +8% to $9.92B in June. Comparable sales +6% vs consensus of +5.4%, U.S. +6%, international +6%. Excluding gasoline and forex impact, comparable sales +6%, U.S. +6%, international +8%. (PR)

    China's Ministry of Public Security said it has found evidencethat GlaxoSmithKline's (GSK) sales staff in the country bribed doctors, hospitals, government officials and foundations with money and perks for prescribing medications. The corruption involved many workers and a substantial amount of cash. The ministry's remarks follow GSK saying it had found no proof of wrongdoing after investigating allegations from an anonymous tipster.

    GSK (GSK) has continued to maintain that it has "found no evidence of bribery or corruption of doctors or government officials" in China. GSK was responding to accusations from China's Ministry of Public Security that sales staff in the country handed out bribes for prescribing medications, with company executives apparently admitting to the corruption. Shares +0.1% in London.

    EMC/VMware (EMCVMW) roundup: 1) EMC has refreshedits Data Domain and Avamar deduplication products. New mid-range Data Domain systems are said to offer major performance/capacity improvements over existing hardware, and Avamar has been updated to better support Data Domain and virtualization environments. RBC recently reported Amazon's S3 service is pressuring Data Domain. 2) FBN (Outperform) says its end-of-Q2 storage channel checks werebetter than expected. EMC's Q2 results are due on July 24. 3) Craig-Hallum has cut its VMware estimates. Echoing others on the Street, CH thinks license growth is pressured by market saturation and competition from Amazon, Microsoft's Hyper-V, Cisco's Intelligent Automation and Cloupia, and OpenStack. 

    Micron (MU -4.5%) is down 11% over the last two days in the absence of major news. Concerns about PC weakness and slowing smartphone growth could be worrying investors, leading some to take profits following a 126% YTD gain (going into Tuesday). SA contributor Russ Fischer is defending Micron today: he notes pricing for 2Gb and 4Gb DRAM chips remains at parity on a $/Gb basis. This type of event only happens at times of supply constraints, given higher-density chips are more cost-efficient to produce. 

  136. Global PC shipments fell 10.9% Y/Y in Q2 to 76M, estimates Gartner. That's nearly even with the 11.2% drop the firm estimated for Q1, and backs up recent analyst commentary (III). Gartner: "In emerging markets, inexpensive tablets have become the first computing device for many people." One bright spot: U.S. shipments fell only 1.4% Y/Y, and rose 8.5% Q/Q; Gartner thinks this was due to enterprise strength. EMEA shipments -16.8%, Asia-Pac -11.5%. Affected companies: MSFTINTCDELLHPQSTXWDCMU,AMDNVDA. (IDC's Q1 data) (tablet forecastUpdate: IDC estimates global Q2 shipments fell 11.4%, and U.S. shipments 1.9%.

    More on Gartner: Shipments fell 4% Q/Q. Gartner thinks #1 Lenovo's (LNVGY.PK) PC share rose 180 bps Y/Y to 16.7%. #2 H-P (HPQ) is given a 16.3% share, +100 bps Y/Y; that's a turnaround from the 240 bps decline estimated for Q1. #3 Dell (DELL) comes in at 11.8% (+80 bps), #4 Acer at 8.3% (-310 bps), and #5 Asus at 6% (-80 bps). All other OEMs are at 40.8% (+20 bps). Apple (AAPL), which refreshed the MacBook Air in June, is given an 11.6% U.S. share -40 bps Y/Y. Lenovo saw weakness in China, offset by Americas/EMEA strength. H-P saw an Asia-Pac rebound. Gartner: "While Windows 8 (MSFT) has been blamed … for the PC market’s decline … it does not explain the sustained decline in PC shipments, nor does it explain Apple’s market performance."

    Canaccord's Mike Walkley cuts his 2013 smartphone sales forecast by 20M to 959M, and his 2014 forecast by 40M to 1.25B, citing surveys pointing to softer high-end sales, especially in Europe. While the surveys indicate iPhone 4 (AAPL -0.1%) and Galaxy S III (SSNLF.PK) sales were above expectations, they suggest the opposite for the iPhone 5 and Galaxy S4. Also, low-end/mid-range Android sales from Chinese OEMs are said to be "very strong" (good for SPRD), and high-end Lumia (NOK -2.4%) sales soft. Sales of the cheaper Lumia 520 and 620 are deemed "solid," but Walkley expects sell-in to slow as inventories rise. His report comes shortly afterSamsung forecast light Q2 profits, and Wedge Partners reported of iPhone build order cuts. (also)

    T-Mobile USA (TMUS -0.1%announces its rumored Jump upgrade plan. For $10/month, customers can trade in their phones twice a year, for the same price paid by new customers (in tandem with installment plans) or less. The #4 U.S. carrier is also launching a family plan for the ~1/3 of U.S. customers whose credit isn't strong enough for a regular postpaid plan, and (as expected) announcing it's selling Sony's (SNE) Xperia Z and Nokia's (NOK) Lumia 925. Also: CEO John Legere tries to counter the view the iPhone is solely responsible for T-Mobile's recent postpaid strengthHe claims the iPhone (AAPL) made up 39% of April smartphone sales, but only 29% of May sales, and that May was the stronger month for the carrier. (live blog)

    A couple more BlackBerry (BBRY) executive departures arereported by the WSJ. Sources tell the paper social networking head T.A. McCann and calendar/contacts app chief Marc Gingras (said to be "the driving force" behind BlackBerry Hub) recently left. Unlike firedU.S. sales chief Richard Piasentin, BlackBerry reportedly "tried to convince both men to stay."

    Facebook (FB) roundup: 1) Home has finally received two Android staples: folder support and an app dock. Facebook says it's also working on widget support, a major complaint of users who have given it an average rating of 2.4/5 (up slightly from a prior 2.2/5).Benedict Evans argues Facebook overestimated its centrality in the lives of users when launching Home. 2) Instagram now supports the embedding of pictures and videos on Web pages. Mike Isaac: "This isn’t just a distribution play … Instagram wants to own 'real time,' a space long ago staked out by Twitter." 3) Another executive departure: EMEA director Christian Hernandez is leaving to join a VC firm.

    Pandora (P -7.1%) slumps for the second day in a row after releasing disappointing June audience metrics. A column from The Verge's Greg Sandoval discussing the PR struggles the Internet radio giant is facing in its efforts to lower royalties might also be contributing to the drop. Among other things, Sandoval observes the Internet Radio Fairness Act failed to draw much Congressional support, and that a Pandora petition asking artists to support its legislative efforts triggered a backlash. Shares -11% since Monday's close, but still+99% YTD.

    Netflix (NFLX -2%) gives back some of yesterday's big gains after Citi starts coverage at Neutral: analyst Mark May thinks shares will be range-bound until a price hike (not expected for at least 12 months) is announced. He estimates every 5% gain in domestic streaming ARPU will yield $65M in incremental contribution profit. Meanwhile, Netflix's decision to host a moderated live video talk following its Q2 report is fueling speculation strong numbers will be delivered. Janney's Tony Wilbe: "It’s an unprecedented format, and not one you’d do if you had bad news."

    Google (GOOG) roundup: 1) Motorola plans to spend up to $500M to market the Moto X, the WSJ reports. The paper adds all four top U.S. carriers are expected to sell the phone, custom hardware and all, and that Motorola has managed to limit the amount of bloatware carriers will pre-install. IDC estimates Motorola had just a 1% global smartphone share in Q1. 2) NPD estimates the Chromebook has nabbed 20%-25% of the sub-$300 U.S. laptop market. Interest from early adopters and education buyers have fueled the share gains. Gartner thinks Chromebooks still only have 4%-5% of the broader U.S. notebook market. 3) Location-sharing service Google Latitude is set to be the latest Google offering to be shuttered. (Maps update)

    Nokia (NOK) is today due to unveil the latest phone that will supposedly turn around its fortunes and make the company great again - the Lumia 1020. The device's most notable feature is a 41 mega pixel camera using the company's PureView technology, which will give it a high-resolution 3x zoom. If the camera is the element Nokia is banking on for success, it might be problematic that Samsung (SSNLF.PK) has launched the Galaxy S4 Zoom, a camera-phone with a 10x optical zoom.

    Apple (AAPL) roundup: 1) Brian White's Apple Monitor (tracks Apple-dependent Taiwanese suppliers) posted a 24% Y/Y sales drop for June, and an 11% Q/Q drop for Q2 (worse than historical seasonality). White blames high-end smartphone weakness, pending iPhone/iPad refreshes, and macro issues. 2) Apple plans to use Sharp's high-res/low-power IGZO displays in upcoming iPads and MacBooks, reports Korea's IT News. Digitimes and Jefferies have previously reported of Apple's interest in IGZO. 3) T-Mobile USA claims the iPhone made up 29% of its Q2 smartphone sales; BTIG's Walter Piecyk thinks this implies 750K-900K sales. (Canaccord)

  137. Wheee on oil already – $106 baby!   Stil a good short if they fail that line (/CL). 

    Futures backing off to 0.8%.  Dollar 83.23. 

    Gold $1,279.  

  138. Damn, I overslept.  Missed that $107 entry but got $106.  

  139. Spain went red! 

    Buck/Shadow – Bernanke popped that balloon. 

    AAPL/Wombat – There's no margin in a bull call spread (or bear put), just the cash you put into it.  

    FTC/Edro – The only thing worse than no regulation is a regulator that doesn't do anything because it gives the illusion that a thing is being governed, when it isn't.   As to "deceit" – isn't buying 200,000 contracts for the delivery of crude at the begginning of the month and only accepting 15,000 at the end of the month "deciet"?  They focus on statements made but actions speak far louder than words.  

    I think what really needs to be done is for the American people to bring a class-action suit against the industry for consumer fraud.  Maybe a Trillion Dollar settlement would wake them up. 

    Capitulation/Sun – On oil?  As I said to someone else yesterday, if you want to capitulate on oil (and you're not margin-constrained), then buy a Dec 2015 contract for $86, not the Aug 2013 contract back for $106.  Think about it, you shorted oil at $99 and now it's $106 so – $7 (x 1,000 per contract!) so you can lose $7 or buy oil for $86, where you MAKE $13 on the spread and all you have to do is roll your caller along for 30 months.  Figure .25 per month is $7.50 but, if at some point the rolled contract ever drops below $99 – you cash out with a profit and then you have your long barrels at $86+.  Each month oil stays over $99 SHOULD improve the price of the 2015s.  Here's the Chart of the Dec contract – notice it's nowhere near as wild as the front-months:

    20%/ZZ – On the whole, it's an excellent rule.  

    Luck/Kustomz – We're all going to need it the way they are steering things.  

    TSLA/Archer – Well, first of all, I cannot stress enough how much I HATE collecting a .93 credit against a $4.07 risk.  Think about it, you are essentially betting that, in the course of 4 periods, you will NEVER be wrong because a single incident that moves against you, wipes out 4 positive outcomes.  So, the only way you should make a bet like that is if you think the chances of TSLA moving up $5 on you is less than 20% and, even then, it's a tight bet because, if that 1/5 chance comes up during your first 3 or 4 attempts, you are a net loser and then playing catch up and two negative outcomes in a row would mean you need 10 positive outcomes just to get back to even.  Thise are not good odds!  

    $2.65 is more reasonable as it's about 50/50 but, the problem is, without the stop, you end up in that .93 position, right?  Anyway, here's the deal.  TSLA is now at $123ish and you own the weekly $115 calls ($7.50) but, unfortunately, you sold the weekly $110 calls, now $12.50 which is net $5 and you only got paid net .93.  As I've already said, stop playing with weeklies – especially when you are the sucker buying all the premium (stop doing that too) as you simply max out the rate of decay on the premium you buy!

    TSLA has earnings on July 22nd, after expirations so you DO want to sell July premium to your caller.  July $120 calls are $5.50 so you can roll the caller there (net $7) and cash your calls ($7.50) and now you have .50 in your pocket and a short July $120 caller you sold for .93 (net) so call it $1.43 in your pocket.  

    Now, either TSLA will go down or flat and the calls expire worthless (or, in the very least: worth less) or TSLA will go up and you'll be forced to roll the short calls.  The short calls are $5.50 and the Aug $140 calls are $5.40 so figure that's an even roll and that means you can cover with the Aug $145s ($4.30) and then, for this moment, you spend $2.87 plus the $1.30 you collected to move to the Aug $145 calls and now you've paid net $2.87 for the spread.   If you have to roll the caller (TSLA back over $125), you end up in an Aug $145/140 bear call spread and now, at $145 after earnings, you could lose another $5 ($7.87 total).  On the other hand, if TSLA is below $140, you only lose the $2.87.

    In a better case scenario, TSLA finishes below $125 and hopefully below $120 and the caller expires worthless and THEN you either cash your Aug $145 calls (anything over $2.87 gets you even) or you sell the $140 puts for fresh money (hopefully more than $2.87) and then back to hoping they don't get over that into August.  

    Had you initiated this rolling sequence before you got buried, it would have worked much better but, even so, you have an excellent chance of cutting your losses in half.  If, of course, you don't feel confident about TSLA staying below $140 into Aug expirations, then you should be glad you only lost $4.07 at $123 and walk away. 

    A good rule of thumb it to look to roll or break up a vertical spread before it loses half it's value and certainly before the value of the call or put you own falls below the net of the original spread.  That way, you always have enough to work with on the roll.  And don't forget – negative spreads suck – unless it's a short strangle, where you can't lose on both ends so the odds shift very slightly to your favor.  

    Seminar/Jfaw – I can't figure out that time machine thing but, if you can – I'd be happy to do it.  Futures were cerainly going on Monday and we made good time in AC on them so I'll be sure to do the same in Vegas this year as it's a tool not enough people are comfortable using.  

    Something wrong/RJ – Oh it's very, very wrong!  Cash is a wise position to ride out the madness.  I don't think China will fall apart.  I think they are artificially depressing their economy at the moment and they can take their foot off the brake pretty easily but, I think inflation is a major danger and oil is going to – as it did in 2008 – cause a catastrophic global economic failure if it keeps going.  You would think our leaders wouldn't be so stupid as to let it happen again to which I ask you – have you seen our "leaders"?  

    Oddly TLT is not moving up on Bernanke's comments.  That makes no sense at all.  So, someone is lying – either bonds or equities….

    Nelson/Scott – Thanks for doing that.  I wonder why they try to get you off the contact web site?  Maybe they get tracked and don't like it?  Anyway, tell Nelson that we appreciate the fact that he seems to have a clue regarding speculation but he is dead wrong on how significant the influence is.  That's probably because he is the target of heavy-duty brain-washing by lobbyists who want to drill offshore in Florida.

    We ARE breaking our addiction to foreign oil, we're importing 7Mbd vs 11Mbd in 2008, that's down 36% in 5 years.  We are also consuming 10% less oil than we did in 2008 and, if Obama's CAFE mileage standards remain in place, over the next decade we'll drop that another 20%.

    Of those 7Mbd imports, Canada gives us 2.2Mbd and Mexico/Latin America 3Mbd.  That leaves us collecting just 1.8Mbd from OPEC, Africa and Europe.  Our Strategic Petroleum Reserve has 700Mb of oil in it and commercial reserves have another 1.1Bnb of oil for 1.7Bnb of oil in storage or 944 days of all non-North American Imports.  So, unless he feels that we'll be at war with Canada or Mexico – the import of oil is really a non-issue and a smoke screen thrown up by the energy industry as well as criminal traders who seek to create panic and false shortages, where there are none.  

    The US produces 11Mbd of oil and uses 18Mbd, which is 20% of the Worlds 89Mbd consumption, not 33% – that figure is from 1960 and the Senator needs to stop quoting it or people may think he has no idea what he's talking about (I'd blame the staffer but – 33% used by less than 5% of the global population - REALLY???  What ever happended to critical thinking?).  

    Again, this is the impression the energy trading cartel wants him to have because, if it became clear to Americans that we were just a 20% consumption cut (or production increase) away from cutting our ties to mid-east and African oil – they might actually get behind a push to finish the job and then the energy trades wouldn't be able to jack the price of US oil up $5 every time 4 teenagers in a motorboat threaten an oil tanker in Somalia.  

    And, of course, I'm sure the Senator doesn't know that we EXPORT almost 1Mb of petroleum products per day and, if we stop doing that, then they US can immediately cut it's OPEC consumption in half.  Why does the US import 5.8% more oil than it needs and then refine it and send finished product to other countries?  Well, the US doesn't do it, refiners do but, by doing so, they artificially INCREASE the US demand for crude, raising the prices while their export of product, DECREASES the supply available to US consumers and also raises the prices.  So refiners have every reason in the world to do this since there is no regulation or tax that makes it unappealing but the tax on the American people, through 5.8% higher prices on 17M barrels of $100 oil per day is 1.7Bn x 365 x 5.8% or $36Bn a year that the US consumers are being gouged for (on just this one of many items).  

    While he's right about the US having just 3% of the World's reserves, his logic is flawed as we obviously CAN'T drill our way to energy independence then, can we?  All we can do by drilling more is bringing closer the day when we'll have zero reserves.  Of course, that doesn't count shale.  If you include shale, we have another 200 years to go but, if you go by conventional oil, we have about 21Bn barrels in the ground and we're taking 4Bn barrels out a year so we will run out of oil around the day Obama leaves office.  

    Obviously, that number is total BS and it's sad that a US Senator would swallow it.  The fact of the matter is that we have 20 times that (80 years) of recoverable oil + another 160 years of shale that is KNOWN and, in theory, about twice that much yet to be discovered (based on the average rate of new finds in our region).  

    So yes, we need to develop alternate fuels.  We should be doing Moon Shot projects on renewables so American can lead the World in this vital technology and we should be conserving, not just to preserve the oil we have but for the good of the planet because – if we turn all that oil into greenhouse gasses – this planet will be dead long before we run out of oil!

    So please tell the Senator to wake up, get his facts straight and start doing something about this problem.  The guy used to be an astronaut, he should be able to get a good grip on this stuff.  He's got his seat until 2018 and he won with 60% of the vote anyway so why not take on these bastards and make a mark while he's there?  

  140. Dollar now down 1.3% and Dow up 0.8% – not encouraging.  

    Talking points/MB – Good point.  I wish I could find a guy who wants to make this a national issue.  Energy policy (what energy policy?) and bank lending are my pet peeves.  It's also disgusting how we have set up this convoluted industry of middle-men between the Government and the home-buyers so that a 0.25% loan from the government against a fully secured asset with a 20% deposit ends up costing the home-buyer 4%.  That's an insane mark-up.  It robs the economy of cash-flow and it robs people of their retirement and, because the money is funnelled through the banks – it means they don't need to borrow money from the citizens, so they then offer us 0.25% for our own savings and again – rob us of our retirement.  If the Government simply stopped funneling it's cash production through the banks – this whole thing would turn around.  

    Oh, and lack of Corporate tax collection – that's 3 issues I need to run on!  

    Letters to Senators – Actually, I learned a lot reading Sen. Nelson's reply and it would be fantastic insight if we could get replys from other Senators in other states.  So PLEASE, if you can, contact your Senators and post up their responses.  Perhaps Scott would be so kind as to post his original note to the Senator, so others have a template to work from.  

    Great idea Okno!  

    Oversleeping/Bruce – I try not to force myself to get up.  Worst thing you can do is trade when you're tired as you end up making expensive mistakes.  

  141. But isn't the best time to trade futures early in the morning?

  142. I don't get it. According to Saturday's WSJ "A separate survey of households released Friday showed the number of people with jobs is up by 753,000 since the beginning of the year. Most of them – 589,000- were part-timers."  How is this an indication of a strength ing economy. Add to this the fact that 51,000 jobs in June were added in the Labor Department's food services sand drinking places category. Payroll at restaurants and bars typically show solid growth as an economic recovery progresses. But the down side is that average weekly earnings for the leisure and hospitality industry are about $351, less than half the figure for private industries.

  143. The post was a little short and sweet, mostly 'efficient' reuse of your words Phil.  It really was all your effort Phil (thanks for constantly banging the drum).  I just referenced your link and gave my friends the link you had with a FL ZIP code pre-populated (adjust accordingly for your zip or just hit the website).  I will defineitely follow up with all your suggestions, thanks! 

    This was sent:


    Please help stop this theft! -

    Thursday Theft – This $1.2Bn Crime Affects YOU!

    “That's how much was stolen from US consumers this week by the crooks who run their usual scam at the New York Mercantile Exchange (NYMEX) – the traders who set the price of our nation's oil and gasoline.”