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What the Market Wants: A Flight to Risk . . .

Posted on the 28 June 2011 by Phil's Stock World @philstockworld
Technical Tuesday – Greece in Crisis – Yawwwwn! | Phil’s Stock World ⪙ Guest View User: Pass: | become a member Phil's Stock World, Stock Options Trading & Information Looking over your main themes last week, the "China may fall first" and "if you missed it previously, Thurs am gives you a second chance to short" were absolutely on target. I had to rely on stop-losses because of my schedule but just those two calls could have been worth a small fortune. Keep it up and I look forward to your new portfolio. - Ocelli Phil/Everyone here/Thank you - What everyone here with their insightful comments (including yourself) has helped me with is that I'm greatly increasing my ability to trade more psychologically neutral, although I've got a ways to go. Two years ago I'd wake up early and my heart would race if futures weren't pointing exactly how I wanted… I've noticed an exponential leap in my discipline skills especially over this past two weeks. The old me would have ran with that trade for profits without even asking. Now I know that there are ALWAYS more trades and that I have PLENTY of options to turn a bad trade even. Also, it's more logical and less emotionally draining which lets me focus my faculties on my wife, college, my job, and studying for the ol' Series 7. Would it be safe to say that one of the most important skills to develop is the ability to adjust? I'd love to get to the point where I can look at a bracket and know, for example, what I need to sell for cover in what month in order to get my desired results. Both COF and my past DMM venture have been excellent learning experiences. Thanks, everyone. I look forward to further lessons. - Skasiah That was a quick double on the DIA calls. trailing stop in place. - Kwan Sold out my AAPL mar95 calls. Up over 100% today on them! - Singapore Steve Newer member here, but just wanted to say thank you too. I've learned so much and I hope you'll be around for a long time helping us learn along the way. - Where Phil - Another excellent teaching article - when you write like that it blows me away. Thank you! I had the ideas from earlier articles but what I didn't have was enough understanding. The familiarity of ideas through repetition, re-working, revision - over time - the variation, the pulling out of implications - it all contributes to understanding and mostly thats on the student - but a good teacher (worth their weight in gold) makes understanding a pleasure. I wanted to learn about trading options because it makes my brain feel better - fitter, healthier. Actually mostly it makes me happy to think about the trade and trading options. You are a good teacher and I know that or I wouldn't value the subscription the way I do. It pays for itself through the pleasure of understanding alone. - Redfern1 You guys gotta give it to phil–the voice of reason yesterday, last nite and this morning. - Corleone I read with great interest your statement the other day that the DX is unlikely to break 76 or there will be great hell to pay, torrential amounts of tears shed, and gnashing of dentures all over the world. Well. I have had several short DX contracts in the $78ish range during the last month and upon your two statements 1) don't be greedy, and 2) 76 could be a bottom, I yesterday put a buy GTC order to close my positions at 76 and for some inexplicable reason the DX spiked down after the close and now I can safely say that once again you have confirmed for me that you have been one of the best investment services I have yet to come across. Almost to the point that I'm beginning to think that maybe I'm completely wrong about my political stance as well. Almost. In any event, I wanted you to know that this has been my third execution based on your comments and recommendations that I have followed and this one has also worked to my advantage. My subscription fee has been more than justified for the next year and there's some left over to pay for my stay in Toronto this week, dinner at Joso's in the Yorkville section of town. If I smoked I'd have a Montecristo to salute you. Be well, stay well. - Flipspiceland Phil: That NFLX call was awesome. The speed at which NFLX options decayed was precipitous. The blow out spike that allowed me to double and roll my callers to 190(!) and the ridiculous 170 weeklies @3.50 a day away from Op-Ex. The gains I realized in that trade floored me when I took a long at my portfolio value on Friday. What a great way to start the 3rd Quarter. - Kinkistyle Phil — gotta thank you for your advice this week, and especially today. I took many aspects of your advice this morning, with all of my shorts -- being prepared on the short side, selling into intial excitement, taking the money and running, not being greedy. I also made money on the your /QM and /YM calls. It used to be I would be terrified of weeks like this one. Now, it feels somewhat comfortable, for want of a better word. - Escohen5 hil, I hit my targets for the year in my 401K (thanks in no small part to your site), so I cashed out of all positions a couple of weeks ago. Feels good... I'm conservative with this money –looking for 2% per month, which i've been able to do… thx. - Lunar WOW!!!!!!!!!!!! How will I ever do anything else in my life that will compare to the wild ride you get trading an ultra etf in the most volatile sector in the stock market the day before option expiration? - Matt1966 A truly great website with a lot of information for investors. Whether you are a novice, seasoned, or a professional there is a lot to be gained about stock options and options trading from this very informative website. - ZKatkin Thanks, Phil. I really appreciate your sentiment and commitment! Just want to thank you for what you do for all of us. - JBaker Phil - Wow…wow. The vision and inate grasp of the options world you posess is rather staggering. It's this type of experience that I really hope to develop. I'm afraid I still can't see the moves, but I WILL learn. I cannot thank you enough for the patience, knowledge and effort you put into this place. Please keep it going! - Where Phil, I've got to give you props on the ICE spread play. Tremendous call! I jumped in on Friday when you made the recommendation and closed out today. Nice 57% return ($2,300) over a mere 3 trading days! This is why I dig your site! - Samlawyer Phil fantastic call on the markets… I owe you BIG…thanks and have a great weekend! - Kustomz Gel1…..I've been here 6 months, mostly watching and learning. Lots of smart people on the site and I've learned a lot from Phil and many others. //// Inflan - I have to trump your sentiments regarding the wisdom of the board. I have to thank Phil and the many contruibutors for a 80% profit for 2009. I have learned a lot and am still learning ( even occasionally about political issues - ha! ) - Iflantheman & Gel1 Phil, I was so impressed with the personal note in the comments that I went ahead and paid for a months trial of premium that I have been on the fence for awhile about. Just reading the comments makes me already glad for the purchase. - Smasher Thanks for the oil tip Phil: Bot & sold the USO May 29 calls for net $125. Not bad for few minutes work. - JWick1981 Opt, I think the hardest thing is being disciplined enough to trade with you. Atleast now when I see something go in the red I know how much I'm going to loose and that I will profit somewhere else and have enough money left at the end of the day to trade again. Thanks for all your hard work! My stress levels are down 75% and I have even made a small profit in the short time I've been here - Mopar Phil, have to thank you for saving me today. I think the discipline I have learned from this site has helped me as much if not more than the actual picks. - Rustle123 Phil & Ephmen85: I hadn't thought about selling the covered calls. That should be the easiest strategy for me since I'm a beginner. Thanks a bunch! - JWick1981 Phil, I have the SRS 2011 $7.50 short puts you recommended awhile back. I sold them for $2.20 and now $1.51 (up 31%) although SRS has been down since inception. This was a nice mellow way to play it like you said, thanks. - Jomptien Market manipulation…. One of the things I've gained from this site is the concept of market manipulation. I never thought it was so prevalent, but now I know it is. I actually consider its effect when I make trades. Several days ago, when AAPL was moving toward 220 I sold 210 calls. My reasoning was that they will probably pin this month at 210. They came in big time as the stock moved ever closer to 210. I agree with Phil's comment that one of the things we need to do is find out what they are manipulating, and how, and hitch a ride. They are doing this with several equities. I've actually seen one article describing several equities that were being manipulated to pin at expiration each month, and describing how it was done, and of course Phil has described it well. In some ways it's easier to figure this out than it is a ‘normal' market behavior, and thus easier to make money in certain equities. - Iflantheman Brilliant covering of the arcane, the profane , but never the mundane! Easy to understand the reason for your huge following, Phil, and why you have become a must read on my daily agenda. Please accept my complete appreciation. - Seeking Truth Phil, I don't know if I told you lately but you da man! I'm doing so much better following your guidelines. It's like you actually know what you are talking about. 8-) I've tried a lot of services and none of them are as comprehensive or honest AND successful. I appreciate all youz other guys/gals input as well…learning tons as a relative newbie to this game. - Aclend Thanks Phil, I have adjusted my position by getting rid of the IYF puts, and selling the FAZ puts. You have so many of these awesome little tricks in your playbook that it really amazes me. I toally love your analogy by the way: Do you want insurance that you have to pay for, or do you want insurance that pays you? - Craigzooka Phil - DIA 107 Calls. As suggested I am taking the money and running to home depot for some shelter supplies! This is the grand finale of several successful trades from you through this roller-coster and as you have further suggested it is time for me to sit back and relax in cash. May even be able to talk my wife into the premium membership after these intelligent trades in a stupid market. - DOStrade I am a Registered Nurse, so is my wife. We work hard to take care of seven kids that are the joy of our lives. The cost for a basic membership is ALOT from our our monthly budget of spending and saving…but well worth it! Phil has allowed me to really ramp up the savings we put away for our children's college funds and our retirement. - David Beginner's Guide to Options Trading. Free PDF Guide. Where & when to trade, how to prevent stock or option loss and how to make money! Profit from our experience! Subscribe Today! Learn more about all of the benefits of membership. We'll teach you all of the sophisticated stock and power options trading techniques and secrets! Daily Stock and Options Tips & Updates; Get Our Daily Newsletter Here home about us portfolio stock & options education contact us Phil Phil's Favorites OpTrader Sabrient Andrew Wilkinson Chart School IncomeTrader InsiderScoop All AboutTrends Pharmboy Zero Hedge Today’s Economic Data Highlights – Case Shiller, Conference Board And 3rd To Last POMO ‘Defensive’ is not always defensive Technical Tuesday – Greece in Crisis – Yawwwwn! What silliness in the Global markets this morning.   The Hang Seng opened up nicely at 22,206 and fell 250 points to 21,952 just after lunch and came back to 22,062 – essentially flat for the day.  The Shanghai Composite opened flat at 2,760, also fell 1% by lunch to 2,736 and then rallied back to flat for the day.  The Nikkei, on the other hand – gapped so far up at the open (100 points) that even the all-day sell off left them up 70 points for the day at 9,648.  India, on the other other hand (and they have Gods with many hands so it’s OK), was pretty flat but they are up 5% for the week so all seems well over there.   Europe is mixed (up) as well with the CAC and FTSE up about half a point but down from being up a full point in early trading, while the DAX opened at 7,167 and now failed to hold 7,100 and are down 0.2% at 7,093 (7:30 am).  What is Germany’s problem?  German consumer confidence is still high and the economic expectations index is up to 50.3, up from 46.1 in May – maybe too much as there’s simply no reason for Germany to maintain an easy-money policy and, of course, it’s their bailout money the rest of the EU is counting on "The pace of activity is set to moderate in the coming quarters but today’s survey shows some resilience for consumer spending," the GfK said.  The income-expectations index leapt to 44.6 from 25.9, GfK said, adding that this "very positive development" is further boosted by the fact that price pressure on consumers hasn’t intensified any further of late. The propensity to buy index increased to 35.1 from 31.5.  "Positive economic results and extremely pleasing labor-market figures are improving consumers’ planning security, which plays an important role, particularly where larger purchases are concerned."  I already sent out an Email Alert to Members this morning pointing out that, last Tuesday, we had the same Greek uncertainty with the same protesters outside of Parliament with the same critical vote looming that was too close to call – and we had a huge rally.  We’ve been bullish since last Friday and we obviously had no reason to change our minds yesterday as we moved nicely over our 2.5% line on the Nasdaq and ran the NYSE right up for it’s test of 8,073 this morning – which will probably be our most critical pass/fail test of the week.   At the time (6am) we were at the lows of the pre-market trading as an EU official said "There is no plan B," which sent the Dollar flying to it’s highs of the session and knocked down everything else.  Nonetheless, we maintained our faith in the manipulators to turn things around and we looked for a bullish play off the Russell 800 line in the futures (/TF) along with our standing play on Gold (/YG), which took us back down to $1,500 but bounced back nicely as the Dollar calmed down.   Gasoline futures should be the most exciting play of the day as the new August contracts became the front-month this morning (/RBQ1) and I simply don’t see gasoline staying down at $2.764 so we were loving that for an upside play since last night’s Member Chat.  Our expectations are simple – the Dollar topped out at 75.90 in overnight trading and we don’t expect it to get back over there (other than a brief spike) and, probably shortly before we open for trading – we expect some kind of announcement that will take the Dollar down and goose the markets – JUST LIKE LAST WEEK!  Why change the play when it worked so well before?   What will it be?  What will they say?  Who will say it?  It’s very exciting waiting to see who puts the knife in the Dollar’s back.  CNBC has Meredith Whitney scheduled for 8am and you know she’s going to go all doom and gloom on the Municipal Bond situation – that’s going to hurt Dollar confidence.  At 9 am we have what is widely expected to be another terrible Case-Shiller Report, followed at 10 by Consumer Confidence (or lack thereof), the Richmond Fed and the State Street Investors Confidence Report.  At 1pm, Fed Governor Fisher gives us "A Report on the Economy" at the same time as Treasury is selling $35Bn worth of 5-year notes so it’s going to be fun, Fun, FUN ’till Bernanke takes our T-Bills away!   The goal for the day is to take the Dollar below the 75.50 line (now 75.85) and that should give the markets at least a half-point lift, which puts us in striking distance of our goal lines at the "must hold" levels we expected to hit this week (at least).  We’re not expecting last Tuesday’s 150-point pop in the Dow (12,200 was the top, which we shorted then) but a more subdued move that lasts through Friday and takes us, very likely, over that line.  Failure to break over that line by Friday will make us MORE bearish over the weekend (we already plan to be bearish, no matter what).   Speaking of bears – I know someone who will not be happy that oil is moving back up as SOMEONE (not us, we’re long this week) made a MASSIVE short bet on XOP (Oil and Gas Exploration ETF) on September $54 puts (now $3.25) yesterday, purchasing about 20,000 in a ratio spread where 10,000 $59 puts (now $6.30) were sold to cover it.  This trade is very bearish as it takes quite a while for the gains on 2x the $54 puts to outpace the loss on the $59 puts that were sold (about $48 is break-even) so this guy needs a 12% sell-off just to get even.  Perhaps this bet was based on the poor report on the viability of shale drilling but we found it easier to go long on oil and natural gas ($4.20 yesterday) than mess around with an annoying bet like this one is likely to be.  On the bright side – if the player is SO WRONG that XOP ends up OVER $59 – at least he gets out even.   I doubt the seller was Harry Hamm, who claims there are 24 BILLION barrels of oil in the Bakken Fields of North Dakota and Montana – that would be enough oil to supply the entire US for 1,200 days or about 6.5 years of imports or, even more important, about 21 years of what we import from countries besides Canada and Mexico (who’s asses we could kick any time and take all their oil!).  Hamm’s CLR is the largest owner of that land so perhaps his statement is a bit self-serving but, then again, he is the CEO of CLR and not likely to purposely make blatantly false statements either.  Extraction costs at Bakken are high – $50, so exploitation depends on either drilling costs coming down or oil prices going up but, long-term, CLR does make for an interesting play (now $60.50).   You can sell the CLR Dec $55 puts for $4 for a net $51 entry – that’s a nice way to establish a foothold in Bakken and makes a nice hedge against long-term energy inflation.  If, for example, you spend $3,000 a year on gas for your family, you can sell 3 contracts for $1,200 to cut 40% off your fuel bill and if oil goes up, you have a nice upside buffer as the puts are very likely to expire worthless.   If oil were to go down far enough to knock CLR under $51 (last time it was that low was last October, when oil was $75 and gasoline was $2.10) – then you would be saving (most likely) about $1,000 of your fuel bill and obligated to buy 300 shares for net $51 ($15,300) and then you could sell 2013 $50 puts and calls for (about) $8 and you put another $2,400 in your pocket and now you’re paying for (at $2.10 a gallon) your ENTIRE annual fuel bill with the proceeds from your CLR option sales.   Isn’t this a nice idea?  Keep in mind your collection of $2,400 would be pretty much simultaneous with your assignment (if you don’t just roll the short puts) and you already had $1,200 in your pocket that you didn’t need because gas prices came down, not up – so your net on 300 shares of CLR at $55 – $12 collected is just $12,900 ($43 per share) and you short 2013 $50 puts could land you with 600 shares at an average of $46.50.  As I often say to Members – if you don’t REALLY WANT to own 600 shares of CLR at $46.50 (23% off the current price) then DON’T sell 3 $55 puts for $1,200 but, if the "downside" sounds appealing to you as a long-term investment – then this is an easy decision, isn’t it?   Anyway, it’s time to work now:  Greece, Greece, Greece and maybe Housing will drive the day but then back to Greece this evening so we’re just going to watch our levels and have some fun while we wait for things to sort themselves out.  It’s all about the 75.50 line on the Dollar – over is bad for the markets, under is good!     This entry was posted on Tuesday, June 28th, 2011 at 8:10 am and is filed under Uncategorized. You can leave a response, or trackback from your own site. Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend! Today’s Economic Data Highlights – Case Shiller, Conference Board And 3rd To Last POMO ‘Defensive’ is not always defensive Comments You must be logged in to make a comment. Sign up for a membership or log in Dashboard  Sector Performances (Today)  Thermal Imaging Retail-Wholesale2.10 %   Auto-Tires-Trucks2.06 %   Consumer Discretionary1.89 %   Construction1.69 %   Computer and Technology1.59 %   Business Services1.55 %   Industrial Products1.43 %   Basic Materials1.36 %   Oils-Energy1.35 %   Transportation1.16 %   Multi-Sector Conglomerate1.09 %   Aerospace1.00 %   Medical0.98 %   Finance0.93 %   Consumer Staples0.53 %   Utilities0.44 %    s numbers on consumer confidence, initial jobless claims, and business conditions in the Chicago area (via the Chicago PMI) will bring more rationality to the markets. 4 Stock Ideas for this Market This week, I started with the Undervalued Large Cap Growth preset search in MyStockFinder ( I then included Buys (in addition to Strong Buys) as well as Small and Mid Caps, and slightly upweighted Long-Term Technicals, Analyst Upgrades, and Insider Buying. Here are four stock ideas worth considering: Walter Energy (WLT) – Energy SciClone Pharmaceuticals (SCLN) – Healthcare Amtech Systems (ASYS) – Technology DIRECTV (DTV) – Consumer Services Until next week, David Brown Full disclosure: The author does not hold any of the stocks mentioned in this week’s “Stock Ideas.” Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results. This entry was posted on Tuesday, June 28th, 2011 at 12:47 am and is filed under Immediately available to public. You can leave a response, or trackback from your own site. Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend! From   From home newsletters about us portfolio options & stock education contact us archives sitemap privacy Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. 0.34 seconds, 19 queries.

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