rovo's Market Journal -- 2011

[rovo]

What looked like some improvement in the port turned out to be just a tease. Fortunately the damage wasn't nearly as devastating as yesterday but the port was down for another day.

AAPL lost a little but the options lost quite a bit. This is the nature of the beast since it is a derivative.

OPTION

BUY DATE

BUY COST

CURRENT BID

% GAIN

[/b][/tr]
[tr][td] AAPL Aug 20 2011 370.00 Call [/td][td] 15-Jul-11 [/td][td] $8.62 [/td][td] $25.00 [/td][td] 190% [/td][/tr]
[tr][td] AAPL Aug 20 2011 400.00 Call [/td][td] 18-Jul-11 [/td][td] $4.02 [/td][td] $6.35 [/td][td] 58% [/td][/tr]
[tr][td] AAPL Aug 20 2011 410.00 Call [/td][td] 18-Jul-11 [/td][td] $2.47 [/td][td] $3.30 [/td][td] 34% [/td][/tr]
[tr][td] AAPL Aug 20 2011 410.00 Call [/td][td] 27-Jul-11 [/td][td] $4.27 [/td][td] $3.30 [/td][td] -23% [/td][/tr]
[tr][td] Options Totals [/td][td] ---- [/td][td] $19,370 [/td][td] $37,950 [/td][td] 96% [/td][/tr]
[tr][td] AAPL Common Stock [/td][td] Feb & Apr [/td][td] $349.35 [/td][td] $391.82 [/td][td] 12% [/td][/tr][/table]

[rovo]

Jul 28, 2011 23:55:51 GMT -5 @di said:

Personally, if it was me and I had BOUGHT To OPEN on those Calls. I would be Selling to close to protect what gains I could. I wouldn't want to be holding them through Aug 2nd, let alone this weekend - things are getting far too dicy.
Just mho.

I'm thinking pretty much along the same lines but mostly just the single high value, $370 Call, to take the majority of the money off the table. My intent would be to buy back in when the opportunity presents itself.

[rovo]

I sold off some of the options:
AAPL Aug 20 2011 $370.00 Call ..... Net +161% Held 14 days
AAPL Aug 20 2011 $400.00 Call ..... Net +36% Held 11 days

I have placed an order for replacement:
50 Contracts AAPL Aug 20 2011 $400.00 Call at $2.00
I don't think it will fill but if we get a severe downturn later in the day it just may trigger.

[rovo]

The sale of the options at the prices received appears to have been a bad move as AAPL has turned positive. Ah yes, fear and greed, very powerful forces to be dealt with. Well, at least I made some nice profits on both of the trades and I still have 20 Call contracts for Apple at $410. Apple should be reversing and heading back down shortly at least that is what I'm expecting from looking at the charts.

[rovo]

Jul 29, 2011 14:17:26 GMT -5 @di said:

The sale of the options at the prices received appears to have been a bad move

Ok maybe, but would you not agree with this -

A perceived bad Move on the winning side of a Trade is a far better thing than the right move on the losing side of a trade.

No argument from me other than I always try to squeeze as much out of a trade as possible and this morning I let "fear" over ride logic. I'll be looking to get back in on Monday providing we don't fall off that cliff.

[rovo]

I thought HI, Hillenbrand, was going to report this morning but now I see it is scheduled for August 09. This is probably a good thing as the debt junk will be second page news by then (I hope).

It looks like we are going to have a large gap-up on the open but I think we will see a decent dip sometime today. I'll be making an effort to buy some more options on AAPL when the dip occurs but I'm moving the date to Sept. as the August expiration is rapidly approaching.

[yclept]

That darned TBT! Looks like scared money is still running to Treasuries. When will they learn?
Reminds me of the anecdote of the frog in the slowly warming pot of water. Though in reality I think frogs are smarter than the anecdote implies and will get out of the pot before the water gets too hot -- I'm sure new frogs wouldn't be jumping in. But then, a lot of investors probably aren't as smart as frogs.

[rovo]

Late start for me as I was out cutting grass before it gets too hot. So, I see TBT continues to fall. So much for the effects from the supposedly coming S&P downgrade of U.S. debt.

GDP revisions and latest releases indicate, in my opinion, we are about to enter another recession. The old double dip. This is quite easy to comprehend as nothing has been done to correct the underlying problems facing our country. Dumping money into the economy can boost it for a while but as soon as the money stops, the economy stops. Solutions will not be simple to implement but eventually out Congress will get around to doing something constructive instead of destructive.

[rovo]

GM sales up 7.8% in July. YoY
Volkswagon of America sales up 22% in July. YoY

GM predicting 13M to 13.5M units in 2011 for U.S. auto market.

[rovo]

Ford U.S. July sales up 9% YoY.

Chrysler Group U.S. sales up 20% YoY.

[yclept]

"So, I see TBT continues to fall. So much for the effects from the supposedly coming S&P downgrade of U.S. debt."

Yes, I'm beginning to think that TBT (as well as the ZSL that I still own, and I think you do too) were a mistake. As logical as it seemed for bonds and silver to fall on fundamental bases, I think they are still perceived as "safe-haven" places to put money. It's not that they are "good", it's that everything else is "worse". In addition, people often tend to go to the same instruments they used in the past for similar market conditions. Some people go to bonds no matter what and some institutions go to bonds because they know those people go to bonds -- if enough go there, it becomes a bubble with consequence we have all seen many times. It's only the charts on TBT and ZSL that keep me holding them -- they just seem so depressed that they are at least due for a dead-cat bounce.

I'm beginning to think the Treasury could hold an auction for some negative-interest bonds (i.e. you buy the bonds from us and you pay us interest!) and get bids (obviously below the nominal face value). They should do that; it would provide the bond purchase revenue, an ongoing stream of interest revenue, and the bonds would be paid back with inflated dollars.

It kind of reminds me of when a partner and I had a little 22' sloop that we sailed on SF bay www.wdschock.com/boats/santana22/s22.htm. The boat would do about 4 knots. But the tidal flow at the Golden Gate can get up to about 6 knots (though 3 knots is the "normal" peak flow). So you can be sailing along against the tide -- sails trimmed perfectly in a strong wind, bow plowing like crazy through the swells, everybody wet as hell from the spray -- look over at the shore and you're going backwards. Now in a couple of hours the tidal flow would lessen and you could again make way in the direction you want to go. I'd guess that will also be true of TLT and ZSL, but tides are dependable; one knows when, which way, and how fast they are going to flow. The market is altogether more arbitrary.

[rovo]

Ford's July US Sales Climb 8.9% On Strong Car, SUV Sales

Last update: 8/2/2011 12:17:58 PM DOW JONES NEWSWIRES

Ford Motor Co. (F) reported a 8.9% increase in U.S. new-vehicle sales in July as the company reported higher car and sport-utility vehicle sales, including strong increases for the Fiesta, Escape and Explorer.

The auto maker's sales growth built on a 3.3% increase in sales a year ago. Ford, the only member of Detroit's Big Three auto makers that didn't file for bankruptcy protection in 2009, has been outperforming peers for over two years, returning to No. 2 domestically behind General Motors Co. (GM) in the process.

The auto industry has benefited from a broad economic recovery after suffering greatly during the recession. And while some analysts have expressed concern about signs of soft demand, attributed to economic and recent political uncertainty, Ford has said underlying demand is still growing, albeit at a slower pace than what the company hoped for.

Earlier Tuesday, GM reported a 7.6% rise in new-car sales in July, a modest gain that indicated auto sales remained sluggish for the third-straight month.

Ford, meanwhile, reported it sold 180,865 vehicles in July, compared with 166,092 a year earlier but 6.8% lower than in June. The larger Ford brand posted a 13% jump in sales, while Lincoln sales were 40% higher. A year ago, Ford sold 6,903 Mercury vehicles, a brand it has since phased out.

Company-wide, truck sales were 0.5% higher while sport-utility vehicle sales increased 31%. Car sales improved 3.4%.

Fiesta noted an impressive 58% increase in sales, making it one of the stronger performers for the month. Sales were up 66% for the Escape, 62% for the Crown Victoria and more than doubled for the Explorer. Heavy truck sales also soared.

July had 27 selling days, one more than a year ago.

Ford late last month reported its quarterly profit slid 7.7% as it spent more to upgrade its vehicle portfolio, saw commodity prices increase and dealt with weaker results overseas. The results still managed to exceed analysts' expectations.

Shares were down 2.6% to $12.03 in recent trading amid a broad market downturn.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]

(END) Dow Jones Newswires

August 02, 2011 12:17 ET (16:17 GMT)

[rovo]

I picked up a few more option contracts on Apple today. I'm done for the day.

Bought 20 AAPL Jan 21 2012 $450 Call
Bought 20 AAPL Aug 20 2011 $400 Call

Still holding 20 AAPL Aug 20 2011 $410 Call

So now it is just a waiting game to see what happens.

[rovo]

Initial Claims .......... Briefing.com Updated 04-Aug-11 08:52AM ET

The labor sector received more encouraging news as the initial claims level remained below the upper bound (410,000) of our "Recovery Zone" for the second consecutive week. Initial claims fell slightly from 401,000 for the week ending July 23 to 400,000 for the week ending July 30. The Briefing.com consensus expected the initial claims level to increase to 405,000.

The continuing claims level increased from 3.720 mln for the week ending July 16 to 3.730 mln for the week ending July 23. The consensus expected continuing claims to fall to 3.700 mln.

Declines over the last two weeks came at a time when the Labor Department indicated that there were no special factors impacting the claims data. These moves signal the first real improvement in the labor situation since April.

Furthermore, if claims remain at or below their current level, it could be a sign that the economy is finally beginning to rebound following the temporary factors -- high oil prices, Japanese earthquake and tsunami, China slowdown -- that have been blamed for the economic weakness in the U.S. thus far in 2011.

Initial claims level fell below the upper bound (410,000) of our "Recovery Zone." If claims remain at or below this level, we expect payrolls to grow by more than the 100,000 jobs needed per month to support normal labor force growth.

The first sentence of the above release refers to the data as good news. Hmmm. The market sees it as bad news.

I wonder what percentage of the layoffs pertain to public employees? In my state of NJ we have been seeing a steady decline in the public sector employment as budget constraints continually tighten around all levels of public employment. My town has been cutting back for at least 18 months, same at the county level, and from what I read in the paper, the same at the state level. Layoffs of public employees while raising the unemployment levels do offer the potential of lowering the cost of government going forward. Some may see this as a bad thing but I see it as encouraging.

[mtntigger]

I notice you didn't say federal level. A co-worker posted an article on our bulletin board with the heading some thing like...Death is more likely than losing a federal job.

...high oil prices, Japanese earthquake and tsunami, China slowdown -- that have been blamed for the economic weakness in the U.S. thus far in 2011.

[yclept]

Rovo,
For whatever it's worth, I threw in the towel on ZSL and TBT.


Edit:
There were supposedly 70,000 construction workers idled (and most likely laid off) as a result of the lack of funding for airport construction last week, along with about 4000 actual employees of the FAA itself. So maybe the claims would have been even lower if congress chose to do it's job instead of going on vacation.

Now why doesn't something like that happen to the TSA gropers? They ought to fire every one of those ego-maniacal useless idiots, or better yet take them out behind the barn and put a round in the back of their heads. They are proof that there is a Gestapo element in this country/society.

[rovo]

Aug 4, 2011 9:15:58 GMT -5 @mtntigger said:

I notice you didn't say federal level. A co-worker posted an article on our bulletin board with the heading some thing like...Death is more likely than losing a federal job.

...high oil prices, Japanese earthquake and tsunami, China slowdown -- that have been blamed for the economic weakness in the U.S. thus far in 2011.

I was just trying to find data on the Federal level but I wasn't able to locate anything of value.

[rovo]

Yclept, Thanks for the update on ZSL and TBT. TBT is hurting me quite a bit. ZSL is deeply down but is a small play on my part.

[Driftr]

I still want to buy TBT, but I've been 'wanting' to try it for years now. Seeing what it just did to yclept is not making me any more anxious to try.

[mtntigger]

I was just trying to find data on the Federal level but I wasn't able to locate anything of value.

I went to find the article... it's a USA Today article, so it's definitely a media spin. www.usatoday.com/news/washington/2011-07-18-fderal-job-security_n.htm
Originally, I didn't think the source was anything of value since people can make statistics however they want. Considering the lack of rebuttals to that article, there may be more "truth" than spin to it.

... and I'll stop there because I really don't want to get into this.

[rovo]

The DJIA was off the local high of 12,876 with a value of 11,599 for a decline of 9.9%. It is considered to be a correction at 10%. OK. We are now in a correction as compared to a dip. It has been quite a while since we had a "certified" correction.

I was looking at the 3 year chart of the DJIA on a daily basis and surprise, surprise, the current chart looks very similar to last years chart at about the same point in the year.

How far down will this decline take us? I don't know with any certainty but I wouldn't be surprised to find out we are at or near the bottom of this cycle. The scary part is the rate of decline compared to what used to happen. I suspect it is related to on-line trading by many people as compared to when it took a phone call to the broker to get info or to make changes to one's holdings.

[livinincali]

I was looking at the 3 year chart of the DJIA on a daily basis and surprise, surprise, the current chart looks very similar to last years chart at about the same point in the year.

Last year around this time they announced QE2 and kept the liquidity flowing into the market. We're starting to get to that point where more money printing might not be effective and there's not much political will for more stimulus right now. I'd keep an eye on it, but you never want to get too long when the markets are trading below the 200 day moving average. Fundamentally companies like AAPL might be fine but remember the market doesn't really care about that when it comes to stock price.

[yclept]

For what it's worth, I think the relevant part of a 3-year chart to look at is from about June of 2008 to March of 2009, except it's going to be a lot worse this time. The banking crisis was only the popping of a bubble. This downturn will reflect the breakdown of the entire economy.
The good news is that this is just the beginning, so there's still plenty of time to get short.
And yes, no doubt I may have to eat these words along with a big helping of crow. But while my 4/14 ma indicator remains negative, I'm short. If I'm wrong, it will get me out before I turn out to be catastrophically wrong.
I just noticed that JADE almost got down to my buy limit order at 2.6 -- probably better lower the bid price. Just lowered it to 2.35.

Man, my position in EPV is really flying today!

[rovo]

I've been outside crawling around on the roof since my last post. I see a minor rise from that point but the market looks about to really take a .

[Trongersoll]

My portfolio is down about 4.61% today. I threw some money into it yesterday, but it looks like i was early.

I just keep reminding myself that since i'm in it for the long term, these down turns are just buying opportunities. orver all, i'm down about 10% from my port's high point.

*kicks the stock market*

[lovetobike]

boy I got beat up today. My only comfort was DH had $$ in TVIX and was up 30% today. Now I'm paralyzed not sure if I should sell the stocks with the meager profits I have and wait for the downturn or hold on for the ride and buy some more later.

[rovo]

Futures are hanging right around the flat line with the DOW a tad red and the S&P and NASDAQ100 both a tad green. It should be an interesting day tomorrow in the market. Continuing decline, a bounce, or a big bounce? My personal feeling is this decline was over done and we now have a buying opportunity but, then again, I've have a poor record when it comes to calling a reversal of declines.

The port looked like a sea of red ink today but there was a single dab of green floating in the blood. ZSL went up +14% as silver was tarnished a bit today.

AAPL dropped today but has been holding up very good compared to the general markets. Today it dropped 3.9%. My AAPL Call options dropped a lot more, solid double digit percentage losses.

[yclept]

Yep, looks like I blew it with ZSL. I just figured I'd get out so the market gods who obviously hate me would let it go up a bit for you!

Futures are all down a bit as I write 10:30 PM PDT.

Asia is taking a beating:


NIKKEI 225 9,306.02 -353.16 -3.66% 00:59
HANG SENG INDEX 20,844.60 -1,040.15 -4.75% 00:05
S&P/ASX 200 INDEX 4,107.70 -168.80 -3.95% 01:18

I think we might pause tomorrow, but expect relentless downward movement next week. Markets fall a lot faster than they go up. A month of down can take away a whole year of up.

[rovo]

The employment report came in better than expected in all areas. Also, last moth's weak data was revised upward.

I don't see a rally off of the numbers but we most likely will see some basing of the market. Going into the weekend with good economic numbers could forecast a decent Monday.

U.S. economy gained 117,000 jobs in July 8:30a ET August 5, 2011 (MarketWatch)

WASHINGTON (MarketWatch) - The U.S. economy added 117,000 jobs in July and an even larger 154,000 in the private sector while the unemployment rate fell to 9.1% from 9.2%, partly because 193,000 people dropped out of the labor force, according to the latest government data. Job gains in May and June were also revised up by a combined 56,000, the Labor Department reported Friday. Average hourly wages rose 10 cents, or 0.4%, to $23.13. The workweek was unchanged at 34.3 hours. Economists surveyed by MarketWatch had projected a 75,000 increase in jobs in July, with the unemployment rate holding steady at 9.2%. Average hourly wages were expected to rise 0.2%.

[rovo]

The following news item adds quite a bit more detail to the previous flash. I put the data about government jobs declining in bold as we were discussing this the other day.

U.S. economy gains 117,000 jobs in July 8:47a ET August 5, 2011 (MarketWatch)
WASHINGTON (MarketWatch) -- The U.S. added 117,000 jobs in July and the unemployment rate fell slightly to 9.1%, the government reported Friday, in a better-than-expected report that might provide temporary calm to jittery financial markets.

On Wall Street, investors greeted the news with immediately positive results, as stock-index futures erased their early-morning losses.

Yet while employers hired more workers than economists expected, the gain wasn't big enough to put a dent in the overall, negative labor-market trend.

The jobless rate has stayed above 8% for 30 straight months, the longest stretch of high unemployment since the Great Depression in the 1930s.

During times of rapid growth, the U.S. typically adds at least 200,000 jobs a month, and much larger increases would be required for months on end to yank the unemployment rate back down to pre-recession levels.

The rate of hiring in July wasn't even enough to absorb the natural increase in the labor force, which requires about 125,000 new jobs a month.

Economists surveyed by MarketWatch expected the U.S. to add a seasonally adjusted 75,000 jobs in July, with the unemployment holding steady at 9.2%. The payroll data does not include farm workers.

Companies in the private sector hired 154,000 workers, but governments at all levels continued to trim jobs, putting the overall gain down to the all-important headline figure of 117,000 jobs.

The biggest increases occurred in health care (31,000), retail (26,000) and manufacturing (24,000), while government shed 37,000 jobs.

Hourly wages climbed 10 cents, or 0.4%, to $23.13. Although earnings have climbed 2.3% over the past 12 months, inflation as measured by the consumer price index has risen even faster. That means workers are falling behind and have less cash to spend after paying for necessities such as food, clothing and shelter.

The number of jobs created in May and June, meanwhile, were revised up by a combined 56,000. The increase in June was revised to 46,000 from 18,000 and the gain in May was raised to 53,000 from 25,000.

The latest employment data, although better than forecast, is likely to ignite fresh calls in Washington to pass new laws to boost job creation.

Yet a divided Congress -- as was just showcased in the bitter fight over the nation's borrowing limit -- is unlikely to agree on much. Democrats favor more spending on public works such as roads and bridges while Republicans have taken aim at excessive spending and regulation.

Investors, for their part, have shown just how worried they are about the U.S. and global economy. The Dow Jones Industrial Average plunged more than 500 points on Thursday and stock market gains since the beginning of the year were wiped out entirely in the past week.

Market jitters reflect renewed concerns that the U.S. might be headed for a so-called double dip, or back-to-back recessions.

The economy grew just 0.4% in the first quarter and only 1.3% in the second quarter. What's more, a string of economic data over the past month has suggested that growth is fizzling.

Most economists believe the U.S. will avoid another recession and the latest jobs data would appear to support that view. Yet few see the nation's prosperity increasing much anytime soon. Slack hiring, a high jobless rate, lower consumer spending and fresh worries about a debt crisis in Europe are all part of a toxic brew that's poisoned the outlook of investors and consumers.

The economy is now seen growing around 2% or less in 2011, down from prior projections of as much as 3%. Few expect the jobless rate to fall much from its current level of 9.1%, meaning that many of the nation's 13.9 million unemployed are unlikely to find work. Almost 45% have been without a job for at least six months.

Nor does the official unemployment rate tell the whole story since it does not count discouraged workers who have stopped looking for a job. If the jobless rate included those people as well as workers who can only find part-time jobs, the unemployment rate would have been 16.1% in July, down from 16.2% June.