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Thursday Morning

Wow, I think I need a rest after yesterday…

We made 21 trades in comments after starting the day with none – once upon a time 21 trades was a busy WEEK!  Still, we grab our opportunities when we can and we have a lot of open positions (albeit small ones as we went to cash 2 weeks ago) to manage in what looks to be a tricky market.

Let’s try to keep some perspective today as you can’t even call this a correction yet, we had a 200 point drop the day after Thanksgiving and THAT wasn’t even a real correction since it was the first real pullback in a 3 month run of 1,200 points.  We are still up 1,500 points from mid-July and if we are rotating out of commodities there is bound to be some pain in the process.

China had a bit of a pullback this morning with a 387 point drop but, like us, it’s a drop in the bucket as they have gained 1,200 points since 12/22.  We just had that discussion yesterday morning when I said:

 "I’m looking for a top to short. If the markets are going to collapse they will go first and they could drop $7 in a day easy. I’m thinking I’d rather take FXI $120 puts when it tests that level than DIA puts as I think FXI has a LOT more room to fall."  Too bad we were so busy with other plays as the index made a nice top out at $118 and I’m sure it will go way down this morning

There may be a chance to grab FXI $114 puts early if we put a bid in for $4 so let’s give that a shot pre-market.  This is just a market trick you can sometimes get away with – putting in an early high bid on something that hasn’t opened yet but is gapping.  With luck, you can scoop up sell orders from yesterday that haven’t cancelled.

Not to worry about the Hang Seng, they managed to hang onto the 20,000 mark where they sit a comfortable 40% ahead of the Dow on the 20-year chart.  Of course that’s nothing compared to the Nikkei, which gained another 127 today, bringing them to 17,353 outpacing the dow by 150% over the past 2 years (notice the very nasty 50% correction they had early this year!).

Europe is pulling back a little more than half a point this morning, still reacting to our Fed minutes which came out after they closed.  The FTSE, for example, gapped down 40 points, lost another 20 but seems to be stabilizing (7am).

Our futures are down in pre-market so, sadly, it’s time to turn our attention to bottoms to look out for.  Yesterday’s action wasn’t bad and all we need to do is break those ranges by next week and we are back on the way to the moon but running out of fuel at this stage may cause the entire mission to be aborted!

Oil is just way too much fun this week!  We are now watching my lowest low target for the week, $58.71 as UPSIDE resistance with $57.50 being the line in the Arabian sand that they dare not cross.  As I said last week, it’s all right there on the chart once you realize that manipulation has thrown up a lot of false data points.

Let’s not forget that those manipulators are still out there but the Democrats are coming and this may not be the best time to leave their greasy fingerprints on some very obvious bogus trading.

We’ll see if the dollar can break over 84 today, let’s keep an eye on gold $630 to see where the sentiment takes us. 

PD’s incredible drop yesterday indicates things are going very bad in the copper world, something I’ve been looking for since  November 15th, when I said:

"You won’t hear this from US pumpers but Australians are very concerned about Chinese demand dropping rapidly!  LME Copper stocks are up 38% since mid-October, at the highest level since May 2004, when copper was at $112 (now $312). 

"Can copper pricing be sillier than oil pricing based on the same myth of infinite Chinese demand?  Stay tuned!"

I was a tad early with that one as the PD purchase gave copper a BS boost but it didn’t last and the way PD is trading, I’m not sure that deal can last if copper breaks below 225 (theoretical support).

===================================================

I’m sorry I don’t have too many market picks but I’m a lot more concerned with keeping us out of bad trades than entering a bunch of new ones until we set a direction.

Last January we had a great first week followed by a huge sell-off and, as were are mainly cash now, I’d rather sit out another week until our stars come back in alignment.  It is very tempting to jump on things (like Apple) that are finally pulling back a bit after running so far away from us but we haven’t even really pulled back yet and it’s important to keep perspective.

If I had to pick a perfect market move for this year I’d say that we consolidate between 12,000 and 12,500 for a couple of months and then break 13,000 in April, moving on to our next pullback at 14,000 to set us up for a year-end run to 15,000 (which we won’t make).  So if my perfect market is a 500 point drop you can see why I’m very concerned about the possibility of an imperfect market!

COST same-store sales were up 9% for December (try the shrimp – it was a big hit a New Year’s) but total sales were up 14%.  This stock has barely budged all year and falling gas prices will help them tremendously as it’s a loss leader for them.  Feb $55s are just .85 but will likely be higher at the open, we can always sell Jans against so I’ll pay a bit more.

CVX Mar $70 puts are $2.45 and there’s a good chance you can sell the Feb $70 puts for more than that in the near future.  Let’s not go crazy with oil as it would be too easy if it all just falls apart right now but we don’t want to miss out on some good plays either.

GSF is being unfairly trashed for being in the oil sector – if natural gas doesn’t collapse, they should bounce back and we will add them to the Valero group as a watch for now.

PLCE had a "disappointing" 5% rise in same-store sales.  They had a tough year absorbing the Disney stores but I think they have it under control and the low increase is a warm weather thing that has killed everyone’s fall season.  There will be a lot of great bargains in clothing this year so let’s see how these guys handle the 200 dma at $61 for a possible entry on the Feb $65s for $1.95.

Cramer just made RIG one of his 3 best stocks for ’07.  HAL too so let’s keep an eye on them for a short entry today if his minions are actually that stupid!

How low can XOM go?  Well, they were at $66 in September when oil was at $64 and I’m pretty sure XOM still sells oil and not IPods so I like the Feb $72.50 puts at $1.80 as a pre-roll for our $75 puts, which are already a double at $3.  I’m hoping they bounce so we can take a leap put as an income producer but I’m going to start with the Jan ’08 $72.50 puts for $3.90 as they could work out great if this thing tanks.  The ridiculously low price shows you how bullish most people still are on this stock, the Jan ’08 $75 calls are $7.10 for comparison.

YRCW will let us know what’s up on 2/1 but let’s assume it can’t be as bad as people think and try the Feb $40s for .50 knowing this is risky.  Only play this with positive transports!

=====================================================

Holy smokes with these builders!  Can LEN have said things could possibly be any worse?  This is everything Prof predicted in 2005 finally coming to pass – weak markets, cost overruns, orders drying up and land write-offs of hundreds of millions of dollars… 

Earnings for LEN are 1/17 and this year should be $5.50 vs. $8.32 last year while next year looks like $3 if they’re lucky.  Meanwhile the stock is trading at last year’s lows.  $3 per $50 share of a builder is a p/e of 17, a little high (double) what a top-notch builder fetches.

LEN was at $45(ish) for most of the summer and I think that was generous, the Aug $45 puts are $2.15 and can turn into a nice little income producer if we get a good dip and won’t get hurt too badly if we’re wrong (which would be quite shocking!).

DHI has a 200 dma about to enter a death cross below the 50 and the Feb $25 puts are .95 and you can sell the Jan $25 puts for .45 against them as their earnings aren’t until the 23rd and the cross is at $25 and $25 is a nice psychological barrier so it should hold for 2 weeks.

KBH is challenging its own death cross at $49 and it’s a long way down to the summer lows at $40 so we can watch them to give us a sense of direction but we can also play the Feb $45 puts for .90.

WCI made $2 per share this year and made $4 per share last year and they’ve dropped from $35 to $19 so you might think they’ve been punished enough but Florida luxury condos are a deader than dead market and the company says new orders are down 83% and I don’t even think they will earn $1 next year as they missed this year’s projections by 40%.  Feb $17.50 puts are .65 and worth a look.

NCS, on the other hand, is being unfairly grouped in with the builders but they are a commercial construction company with a booming business.  Earnings are up 30% over last year and look to go up another 20% next year (more if steel prices come down) so I’m going to SLOWLY start a position on the June $55s at $4 or less.

Also, I don’t know if you can really do this but Yahoo shows VNO Jan ’09 $80s at $43.90 and the Jan ’08 $80s at $45.90 so they will pay you $2 per contract to hold a 1-year spread!  I think VNO has gotten way too cheap and I also like the Jan ’08 $120s for $7.90 as an eventual income producer, getting out if it slips below the 50 dma at $120.


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Comments (reverse order)


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  1. size123

    Thanks for a great start to the year Phil. Now, the lesson to be learned is to stay disciplined and look for the right trade.

  2. kustomz

    BA how many more planes can they make? I think they are pretty much maxed out. Wouldn’t be surprised if Airbus gets a bigger portion of the order. Guess it depends what the mix of planes would be, long range vs. short.
    http://www.amtddj.inlumen.com/bin/djstory?StoryId=CrzYj0aebqLqWmdiXoti

  3. kustomz

    Labor markets still tight
    http://www.amtddj.inlumen.com/bin/djstory?StoryId=CrzYj0aebqLqWmdmYndG

  4. kustomz

    CSCO buying anti spam company….
    http://www.amtddj.inlumen.com/bin/djstory?StoryId=CrzYj0aebqLqWmdm1mJe

  5. Michael

    On Phil’s comments about FXI, are those FXI $114 puts Jan or Febs?

  6. kustomz

    Speculation :GLW http://www.digitimes.com/telecom/a20070104PR205.html

  7. pantarei

    Another bearish item for oil.

    In Germany the price at the pump has gone up 5% due to a VAT increase from 16% to 19% on Jan 1. Consumers will try to minimize their use even more than they already do.

  8. walter

    Phil, do you have an entry point for XLE or anything else in the oil space?

  9. kustomz

    HP growing where it counts, in Asia, HP management hell bent on beating IBM globally. http://www.taipeitimes.com/News/biz/archives/2007/01/04/2003343368

  10. kustomz

    Where will IT spend its money? http://www.pcworld.com/article/id,128360-c,researchreports/article.html

  11. seth

    Phil,

    I’ve been reading your blog for about two months now, but haven’t played yet… When you mention for ex. this morning the FXI $114 puts for a $4 bid, are you talking about the current month?

    Thanks very much.
    Tisha

  12. daya

    Phil,

    WCI: I think you meant Feb 17.50 puts!!

  13. Phil

    FXI – Jans!

    Oil puts – see above. XLE $56 puts for $1 should make a good mo play today but we do have inventory at 10:30 so be careful!

  14. Phil

    WCI – oh yes puts, thanks!

  15. BillBigD

    CNBC following your lead on the PD deal.

  16. kustomz

    Just spoke to a friend here in NY and the story is there is a glut of home heating oil they have no where to put the stuff!

  17. Phil

    Oil down $1 pre-market – better get those puts in early!

  18. pantarei

    Crude sells off in panic mode, down 1.30 at 57 bucks now.

    This should give a boost to the general market.

  19. albo

    ERTS to open strong. Ready for a tradeable bounce?

  20. Phil

    It will be hard for the general market to post gains when commodities, which are 20% of the market are dropping 6% in 2 days, take that into account when watching the indexes, they are giving up a point on this sector.

  21. juliet

    Phil, were you able to get FXI jan puts?

  22. BillBigD

    XOM Jan ‘08 $72.50 puts for $3.90
    Jumped big time $5.40

  23. Phil

    I’m not chasing that far pre-inventory

  24. Phil

    FXIs, no I was too busy messing around with VNO – still just a .80 spread!

  25. BillBigD

    Agreed I will sit and wait

  26. pantarei

    SOX up 3 points, our most watched index!! Dead or alive, is the question. Market is poised to go green, imo.

    FDX still down couple of cents, should do well if oil stays down, as all the transports should be happy with that.

  27. BillBigD

    PTR puts looking Sweet

  28. Edgar

    Phil:

    Whenever I click on the comments link at the end of your daily postings,
    internet explorer crashes. I am using FireFox to access the comments section. I got the “error at line # 39(? or 49)” several times this morning as well.

    Could you ask Jared to take a look? I can forward the error data generated by internet explorer to Jared if needed.

    Thx, Edgar

  29. Phil

    PLCE Feb $60s now $2.75 – I like those a lot but just a small entry in case it falls further (it’s at the 5% rule).

  30. zmann

    Energy showing more signs of cracking. You’ve got NBR warning yesterday over slowing drilling activity in Canada and US

    Today you get COP warning R&M margins will be “well below” 3Q levels and Chemicals will be off as well (where XOM has been doing very well the last 2 quarters). Not good for the refiners, majors, MUR, MRO.

    If BTU can’t break abouve $38 I’m adding more puts. If it does I’m out for the bounce.

  31. Phil

    Don’t be greedy with oil puts – we may get a nasty reaction to inventories if we get another (+3M) draw but I doubt it….

    =================================

    Error – yes Jared uses Firefox, please send to admin@philstockworld.com

  32. zmann

    Cris,

    Nice pick VTS yesterday. There she goes.

  33. zmann

    Hear ya not greedy. My thinking on oil puts is that I’m getting out of anything near month by tomorrow pre inventory and waiting for a dead cat bounce to reenter Feb / Mar positions. I think we’ve got quite a bit further to fall for gassy stocks, somewhat less so for oil unless the commodity really dives which I don’t expect for now and much lower for service and drilling.

  34. Phil

    XOM at 5% rule from yesterday

    COP with a 10% drop

    CVX below 5%

    VLO below 5%

    SLB past 10%

    BTU slipping past 10% right here

    CHK 20% for the month and losing that!

    GSF sitting on 5% mark

    This could get catastrophic!

  35. Phil

    LOL – silly LVS, gave me another round of cheap puts yesterday!

  36. BillBigD

    Holding PTR puts through inventories? Stock down 5!

  37. Phil

    I still can’t get over Cramer picking RIG and HAL as 2 of his 3 stocks of the year yesterday – did he stop reading this column?

  38. juliet

    Phil, why is RIMM up…is it good time to consider puts?

  39. Pitch78

    You dont seriously think Cramer would put up any $$$$ – LOL

  40. kustomz

    Did BA really drop to 87?

  41. dilemma25

    Which LVS puts did you get phil?

  42. zmann

    MUR – up on day althought its a mini COP / XOM. They don’t have a big enough buy back in place to play the same game XOM doesn’t look like company buying anyway. Too erratic. Looks like another buyout rumor (CNBC had a guest mention them as gone in 2007 yesterday). I doubt it happens this week or next with oil prices teetering but I’m quiting the position for now. Better safe than sorry. Willl think about Feb puts in a couple of days.

  43. MJ

    U.S. Nov. pending home sales index down 0.5%
    U.S. Nov. factory orders rise 0.9% vs. 1.2% expected
    U.S. pending home sales index down 11.4% year-on-year

    U.S. Nov. factory orders ex-transport fall 0.5%
    U.S. Nov. durable goods orders rise 1.6%
    U.S. Nov. nondurable goods orders flat
    U.S. Nov. factory shipments rise 0.1%
    U.S. Nov. factory inventory-shipments ratio 1.24
    U.S. Oct. factory orders revised to fall 4.5%
    U.S. Dec. ISM services index 57.1% vs. 57.0% expected

  44. Phil

    PTR, you need to set tight stops on half of any double, once you have that off the table you have room to mess around.

    If you are up 100% on half and you take it off the table – the other half you leave on can drop all the way back to even and you are still up 50%.

    If it goes up another 50% you will end up with a 150% gain, rather than a 200% gain if you had let it all ride, not a tragedy compared to what happens if you leave the 100% gain on the table and drop to a 50% gain.

  45. zmann

    Nice headfake rally on BTU…15 minutes and gone. After $37 it looks like the stock will want to test the Sept $35 low.

  46. zmann

    Noticed Wachovia took a bunch of the truckers off sell to neutral this morning. Not a bad hedge on the energy puts. Anybody got any favorite truckers?

  47. Phil

    RIMM – this is not a good time, $140 last week was a good time. They’ve got a red hot product but the Q outsells them and look at poor MOT, that whole sector is out of favor…

    ================================

    BA spiked down for a second, people are on serious drugs to think this stock isn’t worth $90

    ================================

    LVS was more of the Mar $85 puts that we already had. Came in at $2.90 yesterday.

    ===============================

    Gee I was hoping for an oil rally into inventory but that stuff is even more worthless than I thought!

    ===============================

    MJ – as always, thanks for posting data!

    Durable goods is encouraging but seems out of whack with the rest.

  48. ci69fc

    Zmann I am in the truckin, and I still dont like the industry now, very slow and the rates are coming down like crazy.

    http://www.truckloadrate.com/truckload_rate_history_charts.htm

    larry

  49. Phil

    BTU needs to retest $37.50 before going down.

    The Democrats convene Congress today and the clock starts on their first 100 hours tomorrow. It’s 100 work hours so they’re really talking about a January plan but there will be a lot of anti-oil rhetoric this weekend I bet.

    They already told Bush to shove his tax cuts, that may make the markets nervous if they think low dividend taxes are in jeopardy.

    Pharma might get hit and also people like DNA who expect to be able to charge $5,000 a dose for drugs. They are rallying now but I’m watching them for a downturn if someone says something scary.

  50. BillBigD

    XTO now Green

  51. Phil

    I picked YRCW this morning, they are the best company, perhaps not the best stock but I feel safe(ish) in them.

    Larry has kept me out of truckers from previous discussions we’ve had but I think money is going to rotate in here for a little while at least so I went with my favorite.

  52. zmann

    Thanks Larry

    Are the rates coming down on everything including the LTL carriers? Why are they coming down? Thought we had a booming economy with lots of stuff needing to be moved around.

  53. soccer_f1

    Phil, do we watch VLO at 10:30?

    Or is that no longer a good indicator?

  54. albo

    Phil,

    I like your profit taking strategy. One of my biggest weaknesses
    (other than not taking losses quickly enough) is trying to stretch
    for the extra few cents.

  55. Phil

    VLO Rule buy signal building up but, obviously, that’s contrary to logic based on another $1.50 drop in crude – I think they are pumping pre-inventory but I’m still ready to take some off the table just in case!

  56. Phil

    VLO down already

  57. kustomz

    Russia keeping Europe under its thumb and making sure they are taken seriously. They want Euro’s.
    http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2007-01-04T143643Z_01_L0496064_RTRIDST_0_BELARUS-RUSSIA-UPDATE-3.XML&rpc=66&type=qcna.

  58. MJ

    U.S. gasoline supply up 5.6 mln brls: Energy Dept.
    U.S. distillate supply up 2 mln brls: Energy Dept.
    U.S. crude supply down 1.3 mln brls last week: Energy Dept.

  59. zmann

    Oil looks a little oversold to me here. SU, APA, even MUR could catch a nice % bounce on the afternoon pump. What’s happened to the afternoon pump anyway? Oh hear it comes.

  60. Phil

    Down 1.3Mb

    Gas build of 5.6M

    Distillates up 2Mb

    91% refinery utilization

    Wow! People with oil contracts should just shoot themselves at this point!

    This is insane – they are trying to spin this on CNBC and the oil stocks are rallying on what amounts to a 5M barrel build in the middle of the winter. I’m not selling anyting on this news – I’ll double down anything they want to give me a bargain on!

  61. ci69fc

    Zmann, they are coming down cause too many trucks w/ out loads. So everyone just wants to get something to keep trucks busy and pay the bills.

    Yrcw I think the stock is cheap, but their equipment is the oldest out of all the truckers. Changing equipment is very expensive. Trucks used to cost 80-85k just 3 years ago, The last order of 8 trucks that I bought of 2007 Freightliner Century’s I paid $105,000 each.

    Larry

  62. zmann

    Holy cow…those are terrible numbers for products. Distillate is moving back above the middle of the average inventory range and Gasoline is back well within the range after having gotten really low 3 weeks ago.

  63. Phil

    Don’t forget these are all 5% rule bounces and have nothing to do with a postitive read on the oil report, until they retrace more than 1% the move is meaningless.

  64. zmann

    Awesome Larry, Thanks! Do scream at us to listen when you change your mind.

  65. kustomz

    MET approaching 52 week high

  66. zmann

    Holy cow CNBC! I just rolled my DVR back to watch that interview with the french guy from Fimat spinning the inventories as positive. Why don’t they ask him why his firm has missed the boat consistently on its estimates by as much as 800% over the last several months? Crook. And where is Sharon Epperson? Did our griping get her fired finally? Jeeeeeezzzz…

  67. Slackin

    Phil ~

    How long is the arbitage(sp) games going to play out with NYX-due to the merger with the european exchange? Sure like to time this stocks bounce, but so far it’s bleeding down for another day.

  68. zmann

    Check out TSO falling after the halo effect of Citi’s upgrade from yesterday wore off. Down 3% today. Fundamentals are bad for VLO SUN TSO but worse for expensive little guys HOC and WNR.

  69. soccer_f1

    Bad day(s) for Goldman — they expected oil prices to go above $70 in Q1 07

  70. pantarei

    Nasdaq leading. I like it.

  71. soccer_f1

    Phil, any non-oil plays?

  72. Phil

    Oil resistance levels are $57.65, $56.20 and $54.76 but if the dollar holds 84 we are likely looking at .75% less so the key numbers here are $57.21, $55.66 and $54.34.

    We haven’t been below $56, even on a spike, since June of ’05, when XOM was $57 but their costs are way up since then and it takes a lot less enthusiasm to support a stock at $56 than it does at $73!

    Essentially, every day they need 50% more money to come into the stock every day than did when oil was rising and they were considered a huge bargain play.

  73. pantarei

    SOX hitting upper band at 470. This could turn out to be the fuel the market needs, a selloff in oil, and reshuffling towards underperforming techs. May be my wishful thinking, since I mostly sit in these underperforming techs like MOT ORCL SNDK…

  74. reinharden

    In a previous thread, Phil mentioned the “Month of Apple Bugs” whose purpose is ostensibly to reveal one new Apple bug a day.

    I was amused to see that the second bug was in VLC (http://www.videolan.org/vlc) which is an open-source cross-platform solution available on just about every platform imaginable. Hopefully, they’ll do better at sticking to Apple bugs going forward. ;-)

    I was further amused to see that the third bug was a previously known “bug” (arguably a feature unless you happen to be on MySpace that has it’s own security problems that make this “feature” problematic for MySpace) for which a path is available (although they claim that the patch didn’t work for them). Hopefully, they’ll do better at sticking to “new” bugs going forward. ;-)

    Frankly, I (and everybody else who has worked on even partially open-source projects) mostly enjoy this kinds of things because after a bit of potential consternation, you get bugs fixed. Although, as yet, this particular guy ain’t doing so well at finding *new* *Apple* bugs.

    reinharden

  75. Slackin

    Today’s In Play

    11:01 TECHX Oil Service HOLDRs -OIH- holds near support zone (132.30 -1.05) -Update- -Technical-

    The OIH has been hammered over the last four day (-8.2% high to low) and has plunged as more than 13% off of its Mid-Dec peak. From a positive standpoint it has, however, been able to stabilize near a solid support zone thus far today which could provided a floor for a short term bounce. This zone is in the 131/130 area and is marked by the 62% retrace of the Oct/Dec surge, July low, late Sep high and Nov low (click for chart). Initial resistance that needs to be clear to begin to improve the tone is at 130.60/132.70 with a secondary zone at 133.85/134.00. BJS (27.72 -1.3%) is vacillating near its 52-wk low from Oct at 27.43;

  76. arnie

    Phil
    I remember the fall oil plays where VLO was below $50 and everyone convincing each other oil will go down…made good money on first round
    Then we got gready (I did) loaded more on puts and loaded more and oil went up and up…for no good reason I might add (somalia whatever)
    I would use Tom2OC strategy here -day trade / short term plays…

  77. pantarei

    Oil bounced, now up 1 buck from the low, now is better entry then this am, for those who still believe in a continued selloff from here. Tricky, imo. Selloff was very quick and steep, so this could be a seen as a shakeout. Certainly those who bought future contracts this am are a lot safer in their seat than those who bought them at 64 last week.

  78. juliet

    Phil, when I looked at your long position last night I noticed you have SHLD jan 09 190 C…is it still okay for me to get in?

  79. soccer_f1

    CC moving up nicely

  80. Phil

    NMX – I think they came in too high. ICE had a nice pop and CME continues to looks strong but they were priced before the exchanges became everybody’s darlings.

    ================================

    Meanwhile, has anyone noticed we are actually getting Nasdaq leadership? Oh yes, Pantarei noticed!

    ==================================

    TSO – I said yesterday they couldn’t possibly stray that far from VLO but I did sell the $65 puts as I think they will turn a bit if the spreads hold.

    ==================================

    GS – I looked at them on the inventory but they went up! I think if they are right they make amazing amounts of money and if they are wrong they only make incredible amounts of money according to investors….

    ==================================

    Non-oil plays – I have some above but how about MRVL Feb $18.75 for $1.65

  81. BillBigD

    Anyone looking at NMX?

  82. Ravi

    Phil,

    Is XOM Jan 08 72.5 Put still a good play? At 5.5 now. How about COST and LEN?

  83. Phil

    Can XOM break $74? That is almost the exact 5% line from $77.50 that they’ve been around since Dec 1. More likely they will work their way down to $72 next week (barring global shenanigans) so the $72.50 puts s are a good deal at .85 if you can be happy getting out at $1.15.

  84. Ravi

    Phil,

    How about the XOM leap put?

  85. reinharden

    DELL – That Dell is up 2+% today somehow disturbs me. Granted, it’s got the Cramer effect going for it. But one would hope that Dell’s headline from yesterday would give the average individual investor pause.

    I don’t think it was *actually* nefarious, but it’s certainly the kind of transactions that should remind people of past companies. Companies shouldn’t throw that short of an explanation out for that complex of a transaction. Or they should write a better description to make it clear that it wasn’t really complex!

    That having been said…I went long DELL stock when they climbed back above $20 and I remain long. I don’t have any reason to believe that there’s anything particularly weird there…but, on the other hand, I can’t say that the people that Michael Dell has surrounded himself with inspire me with confidence.

    reinharden

    PS: I’m not trading much this week…thus unless something leaps out and bites me, I’m not going to have much in the way of particular trades to suggest. Although I might remind Phil to continue to keep his eye on IGW and SMH as conventional wisdom is starting to realize that maybe they’ve overstated the semiconductor collapse of 2007…

  86. pantarei

    Took XOM Feb 75P at 3.20.

  87. Phil

    Wow! Does anyone remember my business plan from about a month ago where I proposed we set up an HMO that treats people in foreing countries?

    CNBC is doing a piece on a company that’s going to start doing that with Mexican doctors – where’s my check?

    ================================

    ALK had a 2% rise in traffic and should be trading higher, they are a takeover candidate too so I like the July $45s for $3.50

    ================================

    Wow, bad day for Cramer fans – STZ down 10% with a quarter that missed by 25%! Even their lowered outlook ($1.65-$1.72) for next year is up 10% from ’06 and they tend to trade around $27.50 this year so let’s grab the Apri $27.50s for .60 – down $1.90 for the day!

  88. Edro

    Phil,

    You (and I) are still hanging on to the April XOM 80C. What is your current thought on this position??

    Thanks

    Edro

  89. kustomz

    SNDK hitting a wall, 42.16 needs to break

  90. reinharden

    DELL – Of course, it’s a fine accounting line between “increasing…tax efficiencies” and “dodging US taxes”.

    I so don’t want to go read DELL’s annual reports to try and figure out what they’re really doing…but I’d be guessing that the price that DELL US and DELL International pay to DELL “in charge of manufacturing” is going to go up to better move profits off-shore.

    According to the Singapore government:
    “A company is resident in Singapore if the control and management of its business is exercised in Singapore.”
    One wonders how a “co-headquarters” counts. But there doesn’t seem to be much reason to make a company resident in Singapore unless the tax rate is lower…

    reinharden

  91. Phil

    XOM – absolutely, the Jan ’08 $72.50 puts shot up to $5 but are still a good deal since you can sell the Feb $72.50 puts already at $2 – I’m not advocating selling unless XOM breaks over $74 though.

    ====================================

    DELL – I’m getting nowhere with the May $27.50s, same price as 12/20 but I think it’s a good buy.

    ==================================

    Oops, there goes oil again!

    =================================

  92. Michael

    Did anyone get into the FXI Jan 114 Puts for $4.00?

  93. Phil

    XOM Apr $80s – that’s my disaster protection against the oil put positons, I’m actually about to do a DD on it once I add enough puts to balance it out.

    ================================

    I hate to tell you but the wall SNDK hit was at $41, which is 5% down from the $43.15 it has been steady at since mid December. This spot ($42.08) is the exact 50% retracement and it will not be good if it heads back down from here but it should follow the SOX if they stay strong.

    =================================

  94. juliet

    I was able to grab few FXI at $4 this morning.

  95. reinharden

    DELL – FYI Dell’s 5 year Effective Tax Rate is 27.84%; Singapore’s tax rate for resident companies is 20%. Singapore and the US have a double taxation agreement.

    Also, the United States-Singapore Free Trade Agreement went into affect in 2004 with some pieces phased in. Apparently some relevant milestone has been reached.

    It’s *possible” that DELL might be able to squeeze their margins even more through this technique which might result in some subsequent upside surprises if they reduce their tax rate accordingly.

    But while I sometimes play a forensic accountant on the Internet, I’m not one…

    reinharden

  96. Phil

    FXI, they’re only $4.25 now, seem a little cheap but I guess everyone’s expecting a bounce tomorrow. I wouldn’t risk it either way at this point. If the US can close positiive, we might get that bounce but I still think China valuations have a very .com feel to me – lots of potential but not “showing me the money” yet.

  97. kustomz

    Understand Phil but i am looking for a day trade. And i believe i got it

  98. zmann

    British forecasters say 2007 may be warmest in history. Gas just can’t catch a break. While this could be a boon for summer demand for electricity it would also likely mean back to back warmer than normal winters. Ouch.

    http://news.yahoo.com/s/ap/20070104/ap_on_sc/britain_global_warming

  99. BillBigD

    STZ CEO on CNBC as we speak

  100. Phil

    DELL – Seems like a lot of bother to save $100M in taxes – there must be more to it than that…

    Constellation CEO says: Business is good except UK. This guy is dull as toast but the numbers sound very solid and he’s not doing damage control, this interview seems like it was scheduled pre earnings.

    I’m more confident with those calls.

  101. Phil

    Dollar coming on strong for the week – Euro $1.30, was $1.33

    ====================================

    If they NYSE crosses positive (9,130) then the DIA $125s for .85 are a good play but I”m going to pick some up now and just take a dime loss if we the NYSE, SOX and S&P turn down.

  102. Jacox Boy

    Juliet,
    Re. SHLD, Briefing is looking at the question of whether it is go to hold its 3 month 167 support. Just barly at the moment. Next level is 157.
    JB

  103. Jon

    If it’s going to be warm in the UK, STZ should sell more beer there, that should fix the problem, eh?

  104. juliet

    Thank you JB for your comment on SHLD.

  105. reinharden

    DELL – One last random DELL tidbit. According to their last filed annual report, DELL has about *180* subsidiaries.

    Wow! Bet they’d never get through an IRS audit without some kind of sleight of hand being found. You can’t have that many on-shore and off-shore subsidiaries without running afoul of some, um, gray areas of the law.

    Live and learn…

    #####

    Since that made me curious, I looked at AAPL’s annual report as well. They’ve got *four*. FileMaker and three others of less clear utility. Hmm…

    Shutting up and going to my lunch appointment now…see if you guys can get MSFT back above $30 while I’m gone.

    reinharden

  106. Phil

    AAPL Feb $85s for $6, selling the Jan $85s for $4.60 or better when the Jan $90s cost $2.50 seems like a fun play!

  107. pantarei

    Germany: almost spring like temperatures.

  108. Phil

    FD is on my short list for income producers and they look like they’re firming up here. I like the Jan ’08 $37.50s for $5.40 – please note with the early stage of these that we buy some to get started and don’t really care if it goes down 25% as we just buy another round but this seems like a good entry spot for round 1.

  109. zmann

    Check out the daily on UPL. I day up, three or four days down for all of December. Today is the up day and its a 60% retracement of yesterday’s losses.

    This is one seriously expensive E&P company. 23 forward and that’s suspect with prices falling vs 8-12 for most of the bigger gas names and 18 to 20 (which is too high as well) for the mid caps.

    It’s oil off the coast of China – pretty predicatble growth there from offshore platforms – no real surprises likely until mayber early 2008. In natural gas they are primarily in Wyoming which isn’t worth all that much right now with some other small exploratory efforts in the Rockies (Pinedale Anticline) and in Pennsyvania (which could be big but again it’s gas and not until later this year)

  110. reinharden

    Um, not so fast on my exit.

    Back in 2005, DELL paid a touch more than $1B in taxes. Adding an extra $100M in tax relief would have upped their bottom line by 10%.

    And, if they managed to actually drop their ETR from 27% to 20%, they’d save $300M (although they shouldn’t be able to do that!) which would have bounced the bottom line up by 30%!.

    DELL thrives on cutting .1% from their production costs. So adding even 10% to the bottom line would be worth a lot to them.

    Now I’m really leaving… ;-)

    reinharden

  111. Jon

    Phil,
    On the AAPL spread, when do you plan to take out the caller, assuming the stock goes up or stays above $85?
    Jon

  112. soccer_f1

    go CC go!

  113. Cris

    Anyone notice Ebay has a pulse? :) Getting pretty close to resistance at 31.50.

  114. Phil

    HOTT down 20%, ironically blaming the heat!

    MW raised guidance – I don’t remember when but I called this as I said men don’t care what the weather is like, we just buy suits!

    Feb $40s seem cheap for them at $1.35

    I also like JOSB Apr $35s for $1.35, up .20 so far on a strong day

  115. Ilene

    Phil, re the DIA jan 125 @ 0.85; if NYSE moves up to 9130, no way those calls will be available at 0.85…pay up?

  116. Phil

    Dell’s bottom line is $3.5Bn, “only” 3%, respectable but not worth risking jail is all I’m saying so I think is legit (within the framework of screwing the government through loopholes being legit). Oh, 10% is my non-accountants guess of what they will be able to redistribute – now way $300M but possibly $200M if they are brilliant.

    =================================

    AAPL – it hurts not to take him out but I bought those naked Feb $85s instead. The premium on the Jans is so outrageous I simply refuse to pay it, including in the guise of buying out my caller. We only went into this to pick up the spread as the premium expires and we haven’t had enough reason to change our plan.

    ================================

    LOL XOM – selling me more puts before – I love the pump crew!

    CVX $70 puts just $1.05 with the dollar holding firm and oil at $56.63 – last time oil was $56, CVX was $55! Also, check out the very low volume – 2.6M shares vs 8.5M average day (compared to XOM who has traded 16M out of 22M avg so far). That’s a whole lot of roaches huddled together in a trap hoping for a miracle!

  117. Phil

    DIA – yes pay up but that’s why I took them already. My logic is that, rather than chase and pay a dime more, I’ll buy hoping I’m right and be willing to lose that same dime if I’m wrong and it breaks the wrong way – so far I’m wrong but as long as it’s commodities holding things back I’m ok with it.

    At some point, these guys will bounce a bit which will rally the markets and get all that cash that came out of commodities into some real stocks.

  118. Mary

    Coming in here a little late, I know, but could you just summarize your AAPL strategy and positions for us?
    Thanks,
    Mary

  119. BillBigD

    Analysts getting on the retail bandwagon again. Anf, Aeos, Ges,

  120. MJ

    CSCO finally breaks 28

  121. Phil

    Dec 2012 Oil contracts down to $61.35 – 306 contracts snapped up at that price for a total of 12,332 on order!

    Apr contracts down $1.54 to $58.80 but, very very strangely, Feb open contracts have increased to 305K (up 6K) on 248K traded – this seems like some real artificial support to me, these guys are buying and selling to each other trying to keep it from falling apart.

    The March open orders are up to 159K with a whopping 114K traded today. Don’t forget that trading ends Jan 20th and we have MLK day so thats just 10 sessions to go!

    Then there’s only 28 days until you have to take delivery on another load of oil so that’s 460Mb that are open for delivery by Feb 21st (the close of March contract trading).

  122. zmann

    Phil,

    How do you determine how tightly you set your stocks? Is it an IV thing or gut or both? I know you’ve answered this before but I can’t find it.

  123. Phil

    AAPL I have:

    AAPL Feb $85.00 C 12/26/06
    Bought for $4, sold $85s for $2.70 against, reducing basis to $1.30 – waiting for my caller to lose his premium. Spread now stands at $1.50

    AAPL Feb $80.00 C 12/27/06
    Bought for $4.85, sold $80s for $4.75, reducing basis to .10 – same deal, current spread is $1.40

    AAPL Feb $85.00 C 12/29/06 – open calls

  124. Phil

    I take it you meant stops… I have those general guidlines from trading policies but modified with a lot of just going with gut – like right now I’m giving many stocks a pass as I see commodities dragging down the indexes a point.

    Yesterday was a very obvious programmed sell-off that spared no one so I pretty much ignored it (but only because I think the market will ultimately hold the bottoms I set today).

    I’m a lot tighter with my stops once I’m up 30% than when I’m just getting started and I am very, very tight with time – like this will be the last day any of my January calls get a break as I would much rather not have any open ones next week.

  125. juliet

    Phil, I am just so happy that I found you! I also only like to play options and really find you very helpful. Thanks.

    j

  126. Phil

    Thanks Juliet – and welcome!

  127. Phil

    Has anyone noticed INTC is up 4%?

  128. Cris

    AIG bottom of channel here? (I hope)

  129. Phil

    $56.66! I’m telling you guys – why would COP be warning and CVX not have the same issues?

  130. gamma

    Phil,

    Re: DHI. Your logic about builders made sense, so I can see how you’d be bearish on DHI, but… That chart pattern (the 50dma crossing over the 200dma) is actually a “golden cross” not a “death cross,” and is supposed to be a bullish sign, is it not?

    Really interesting arbitrage play on VNO, btw – how on earth did you ever spot that? And were you able to take advantage of it?

    The additional explanations you’ve added about some of the trades have been very helpful, so thanks.

  131. chris

    DO YOU THINK BUYING LEAPS IN NYX WILL PAY

  132. albo

    Phil,

    FXI- open interest on Jan 144s only 147 contracts. Doesn’t that
    concern you?

  133. albo

    OOPS – should be 114s

  134. Cris

    RE VTS: Z, you’re welcome!
    Looks like 82.5 has a bit of support here. Not sure what to do, and the options mm is pissing me off.
    80 or 77.5 would be nice, but it looks like crude is finding a bottom for today at least.

  135. Phil

    AIG doing their best to shake out the retailers, as long as earnings are early Feb, we should be fine – if not, happy to DD on March.

    ===================================

    Not to harp on it but COP’s forward p/e is 7 and CVX’s is 9 I’m going to write a piece on how XOM can’t afford to keep buying their own stock and CVX is up there too with about $5Bn in stock buybacks out of $14Bn in sales – nothing like XOM’s 10% but still 5% of all shares traded are bought by the company.

  136. Cris

    Crude just craked the lows, but I think that could be the preamble for the 1pm pump?

  137. ci69fc

    RIMM on steroids today, I wanna start building put position now.

  138. zmann

    Thanks re stops.

    Coal continues to get whacked. ACI, BTU, CNX, MEE
    All the charts pretty much look the same.
    .

  139. zmann

    Any thoughts on that UPL? First EOG and now it are starting to lose today’s gains.

  140. daveo

    Should we be getting out of the INTC calls today?

  141. zmann

    APC – Looks like the street has decided that Hackett paid to much for Kerr and Western Gas. This pig is cracking all support.

  142. Slackin

    Sometimes I really hate this bastage. Bought FEB puts @2.20 at 1:05 and at….

    01:14 ‘Mad Money’ Recap: Lightning Round – TheStreet.com *****

    Cramer was bullish on Chevron (CVX), Melco PBL Entertainment (MPEL), NYSE Group (NYX), eBay (EBAY), Simon Property Group (SPG), Northgate Minerals (NXG), Yamana Gold (AUY), Crystallex (KRY), Dell (DELL) and Wells Fargo (WFC).

  143. Slackin

    CVX of course

  144. soccer_f1

    Sales of hybrids in the US rose 24% in December 2006 compared to the prior year, with 22,625 units sold. That was sufficient to push the total number of hybrids sold in the US in 2006 past the quarter million mark to more than 251,000 units—an increase of 22% compared to 2005.

    ———————

    The UK’s Met Office, in conjunction with the University of East Anglia, has forecast that 2007 is likely to be the warmest year on record globally, beating the current record set in 1998

    ———————
    Toyota will introduce its FT-HS hybrid sports car concept at the 2007 North American International Auto Show in Detroit next week.

    &

    Ford will introduce a Mustang-based E85 concept muscle car

    ———————-

    :) LOL & good luck to Byron Wien of Pequot Capital who predicts oil to go to $80
    http://blogs.wsj.com/marketbeat/2007/01/03/lord-byron-goes-a-roving/

  145. Jon

    Oil 55.99!

  146. hari

    ewz jan 45 puts looks enticing. The etf has approx 55% of holdings in energy and industrial materials.

  147. Slackin

    CVX support just…disappeared. Volume selling would make me feel a whole lot better…

  148. Mary

    RIMM may be up partly because the Toronto Stock exchange is down 354 pts in the past l.5 days and Canadians are moving their money out of oil/commodities to one of the few big high tech stocks they have.

  149. Ravi

    Phil,

    Is AIG leap (Jan 09 70) still a good play? And should we sell Jan 70 against it?

  150. hari

    Phil,

    are you still holding goog march 470 puts from yesterday?? did you get to sell feb 470 puts against it or ist it naked??

  151. BillBigD

    OIl at $55.95

  152. Phil

    DHI – oops! You’re right, my brain was backwards with the 50 and the 200 but the fundamentals are still right so we’ll know we’re in good shape if the 50 bounces off the 200 and heads down – that means we need to see DHI down around $25 by Wednesday the latest.

    ================================

    VNO – I couldn’t get it for that price – there’s a .80 spread on the two asks and that’s pretty tempting so I may take them but it’s the kind of trade you just put in a box for a year and see what’s left once the ’08s expire (should certainly be more than .80!).

    I do, of course have my $43 bid in on the ’09s but no takers….

    ================================

    FXI – it’s a very low traded option in general but it’s up .25 from the last time we talked about it – it was just a day trade though as I wouldn’t want to bet on China not bouncing overnight unless our own market tanks into the close – like I said yesterday – I just liked them better than DIA puts for a cover.

    ==============================

    VTS – yes, props to Cris!

    I must must must teach you guys the 5% rule!!! A stock that goes from $84.28 (draw a median line over the past 2 weeks, since it hit this plateau) to $82.17 and bounces is only following a 2.5% pause. Unless it retraces more than 1/3 of that drop, it is far more likely to head down to $80.66 than bounce back up.

    The previous plateau was at $77.50 which is, NOT AT ALL COINCIDENTALLY, a number which, when multiplied by 110%, gives you $85.25.

    So we have a 10% gain off plateau A and, so far, a retracement of 37% of the gain, since that’s more than 33% I’ll be looking to see if it breaks back over $82.66, which may indicate a comeback but a failure there means we are on our way down again.

    I usually do this stuff in my head but once in a while I think it’s good to show you guys I don’t just make these numbers up!

    ;-)

    ===================================

    CVX finally getting a slap in the face as oil tests $56!

  153. Slackin

    Pump is coming. CVX went down .60 in Cramer’s face. If it holds off the pumpers in 20 mins may do some good here.

    In-Play:
    13:31 Crude oil makes new session low of 55.91… currently -2.32 at 56.00

  154. soccer_f1

    Somebody tell me oil is not manipulated.

    It drops 10% in the first 2 days of the new year. What a coincindence, LOL

    ———-

    Oil moving in a logical direction – sracy thought :)

  155. soccer_f1

    oops again, meant to say “scary”

  156. Scott Trigg

    Phil,

    These oil plays are a wonderful thing. Thank you. I did close some positions yesterday fearing some overnight happenings. Is it a good idea to do lighten up into the close again, just in case?

  157. Phil

    UPL already beaten down so I don’t like them as much as the guys I picked in the morning.

    EOG – still playable as the other shoe hasn’t dropped on gas yet.

    What were the heating days for this week?

    ==================================

    INTC – happy to get my money back (especially with the Dow continuing weak) I’m going to pick up some Feb $22.50s to replace the Jan $22.50s but all that’s now a free ride with profits from the $20s!

    ================================

    KMI – I’m starting to think I should take out my putter in case this thing drops like PD…

    =================================

    Cramer has officially gone off the deep end with these energy picks – I’ve actually stopped paying any attention to him as he’s gone so far off any fundamental picture of stocks he picks…

    I think he’s just doing it to see if he can move the market on things, not necessarily for his buddies but for bragging rights where he can put a million people into a dog – it’s the only logical explanation for some of his selections lately.

    =================================

    EWZ – nice selection but I’d rather go out to Feb $45s for $1.20 or less but where were you with this yesterday?

    =================================

    AIG – the leap is up just .70 from where we bought it. I sold the Jan $70s against it as this is a very slow premium work-off which means I expect to return a good bit of the money to my caller each month. This just requires good cash discipline (remember the money isn’t yours).

    It’s not worth it to sell the Jan $70s now as the premium is just .30 but the Feb $70s give you the same $2.60 we went for originally – you are only losing out on the .70 that the leap has gained.

    Just remember that you expect to stay in the money so you will be giving your caller back money at the Feb expiration (you could also roll it, which I am likely to do) but if we gain just .50 a month this is an excellent play.

    ===============================

    GOOG – no I made too much yesterday and cashed it out (glad I did now).

    I took $32 for a $8 profit but, had I sold the Feb $470 puts for $24 they are now worth $18.20 while my puts would have dropped to $22 this would have been much better on a percentage basis as I would have had no basis but 8 bucks is 8 bucks and I took that money and ran!

  158. calch

    Phil,

    I keep getting an error when trying to access the “trading rules” to the right of the homepage. I wanted to read more about the 5% rule. A question I have is if the stock is down 5% would you purchase some in anticipation of a bounce back for a quick profit or not?? What do you look at to see if the stock is going to keep heading down versus bouncing off the 5% drop?

    Thanks

  159. Phil

    Oil – I hate to go short on oil into the weekend without a cover but I’m going to DD on my XOM Apr $80s at $1.20, which allows me to keep my other puts open without worry.

    But that’s why I cash out regularly, I’m so far ahead I could really care less, this is just all fun at this point (but those of you who went through our absolutely hellish October and November know how hard we worked for this money!).

  160. juliet

    Wish I found you sooner!

    j

  161. wolf

    GOOG watch: looks like it may test that 50dma of 479.32 today. Looks like it is about to break out. Anyone have any thoughts on an apple partnership announced at macworld. I keep thinking about schmidt being on the board…

  162. BillBigD

    Any thoughts on MA?

  163. zmann

    heating degree days:

    165 for the last week of dec vs 156 in the prior week. The distribution looks a little better for gas consumption. Haven’t worked up a number yet but I’ve been way to conservative of late – Think something else is a bit broken (industrial gas demand).

    We’d have to have a withdrawal of 132 Bcf (which is NOT going to happen, not even close) to save you from the headline.
    “Storage ends year at record level”. We’ll probably get something between 60-100 which doesn’t even get you below 3 TCF. Gas has been coasting for a few days now but should angle to the downside next week.

    This week’s HDD number for next week’s withdrawal falls back to 157. Simply not supportive of gas in January.

  164. Phil

    Error – me too, I need to fix that link – try the strategy tab above. I haven’t figured out how to write up the 5% rule in a simple manner as there’s a ton of if/thens involved but the gist of it is – identify a plateau, take the median (ignore spikes) then calculate 5% and 2.5% moves off it.

    The 5% rule means that a stock that falls 5% and bounces less than 20% back is only resting for the next move down. The reason this works is because analysts, especailly TA guys are generally a bunch of lazy bastards and fixate on nice round numbers. Then the programmers – who set the alerts, know nothing about stocks at all and tend to use easy numbers in their programs.

    The gist of this is that things tend to stop at 5% or 2.5% levels as various programs and charts cause traders to take action. Of course there’s the huge psychological component of how a retail trader feels when he’s down 5% or 10%…

    If I were doing a proper computer model I’d probably account for the 8% level that many pro traders set stops at and I kind of do in my head – in fact, there are about 100 other factors that go into my calculations but this one is the easiest to explain!

    ================================

    Damn SOX are failing on us again – they need to step back up over 470!

    ================================

    My though on MA is how the hell do they keep going up without AMEX (a totally superior company) going up?

    AXPs p/e is 17, MA’s is 25 – there is no way I buy MA and AXP is on my list for a leap once they stop falling.

  165. lars

    The Wall Street Journal has a new Markets Data Center at
    http://online.wsj.com/mdc/public/page/marketsdata.html?mod=topnav_0_0012
    that’s worth checking out.

  166. Phil

    See, this is why I should have just waited on those DIA calls – waste of a dime!

  167. chetg

    zmann, add to that Dominion’s US energy use forecast (home heating/cooling), which shows demand at 50% of normal through 1/9

  168. Phil

    WSJ – too much data! I’ve been using it on weekends but it’s too distracting too me during the week as I end up clicking around for hours…

  169. zmann

    forgot about that one a long time ago chetg, thanks.

  170. zmann

    hey chetg, got a link for that dominion data?

  171. Phil

    LOL – did someone really just predict $80 oil today?

    It’s getting hammered into the close – I’m telling you, they CAN’T take delivery of those barrels and there’s only 10 days left.

    Somebody lost $1.5Bn on those Feb contracts in just 2 days and they’ve still got $16Bn tied up in barrels they can’t even afford to have delivered.

    This is what happens when you maniupulate something for so long, it just builds up to a critical mass and becomes a huge crisis. Had they let it pull back naturally in the fall this wouldn’t have happened but they pushed, and pushed and pushed and brought this on themselves.

    By the way, speaking of the 5% rule – my 10:30 level prediciton was $55.66, looks like it will be right on the button for the close!

  172. chetg

    sure, i have Gas Daily if you ever need anything

  173. Phil

    Go Nasdaq! Lead us out of this mess!

  174. chetg

    from today:

    http://img163.imageshack.us/img163/1364/dom1wf7.jpg

  175. juliet

    Wow GOOG hit $480!

  176. zmann

    Chetg,

    Man I used to get that fax on my desk every morning back when I did gas and the stocks for a living. I’m envious. Thanks for the link.

  177. bmb

    EOG feb 60/Jan 60 calender spread for 1.1?

  178. bmb

    puts of course

  179. Phil

    I think Dominion is being conservative – I was just outside in my shorts and T-shirt before and not the least bit cold….

    GLW really woke up today. TXN probably not far behind.

    Our Q calls are in the money!

    Is YHOO actually going up?

  180. soccer_f1

    Phil, any chance XOM will bounce back here?

  181. Phil

    EOG – the problem is if you end up $5 out of the money you’ll only get .50 back.

    I wouldn’t do it ahead of inventories tomorrow, these guys might fall off a cliff.

  182. reinharden

    And after a quick lunch focused on frequency agile mobile ad hoc networks using genetic algorithms and emergent behaviors in conjunction with machine actionable spectrum policies, we now return to our normally scheduled stock picking activities.

    NPD reports that AAPL’s share of MP3 players grew from 42% to 57.3% in the pre-Christmas shopping season. Quick aside: NPD does not include quite a few things including (I believe) Amazon.com, Apple.com, Walmart.com, nor the physical Apple stores. So they under-measure quite drastically.

    That having been said, if we assume that the market unit sales stayed more or less constant from 2005 to 2006, if 42% in 2005 netted Apple 14 million units, in theory, 57.3% in 2006 would net them 19 million units.

    But, I’d argue that that number is also too low because of the aforementioned under-measuring and because the MP3 units were forecast to grow at least 25%. Which would put the potential number at nearly 24 million.

    I think Apple’s iPod numbers are somewhere in between those two. Which, when last I checked, was above consensus analysis estimates.

    I don’t have similar math for unit sales in computers; however, I think AAPL will likely come in with *at least* 2 million units. This is *way* more SWAG than the iPod number, but the estimates start by looking at http://marketshare.hitslink.com/report.aspx?qprid=5&qpcustom=MacIntel which is the browser market share attributable to Intel-based Macs.

    Since September that number has almost doubled (0.84% to 1.52%) whereas the Mac-not-on-Intel numbers have been essentially flat. Anyway, with a bit of mathematical hand-waving I can support numbers at least as high as 2.25 million units in the Christmas quarter.

    I could be wrong. But Apple could be reporting a substantial beat on iPod units and computer units which should mean a big beat on both revenues and profits.

    Now…if only MacWorld doesn’t screw us up. By the by, Jobs in the past has mentioned units of both iPods and computers during the MacWorld keynote (9 AM Tuesday morning Pacific time), so if you want to play on this speculation, plan accordingly.

    But there’s a big risk of a MacWorld keynote disappointment drop. You never know which way MacWorld is going to drive the stock…

    Anyhow, those are my thoughts on AAPL’s quarter. Don’t forget that I could be wrong.

    reinharden

  183. soccer_f1

    Picked up some Jan XOM 72.50 calls in case of short-term bounce. This is a risky and very speculative short-term trade.

  184. juliet

    Phil what is your opinion on GS? Thanks.

  185. Jon

    Phil, a question about the AIG spread.

    What about buying the Jan 08 $65? It is about the same price as the ’09 $70s, but with half the premium and half the time to work it off. But the LEAP is further in the money and you can still sell 70s against it and if AIG goes down you can sell the 65s instead.

  186. MJ

    GOOG, CSCO, INTC, YHOO all up huge!!!

  187. Phil

    XOM – hey I’m buying the April $80s but… no!

    I am seriously writing a post no later than this weekend explaining how XOM will lose over $100Bn of market cap in the next few months.

    It could bounce, people are cukoo for XOM but I think you need a volume sell-off and we haven’t had that yet.

    Oil is down 35% from its July peak and XOM is trading 5% higher than July.

    They sell oil!
    They refine oil and sell gasoline!
    They sell natural gas (which is down 50% from last year)!
    Their principal asset is oil reserves which, to their credit, they never wrote up – but investors sure did when they plowed money into it sayiing “and look how undervalued their reserves are!”

    And remember that XOM proudly doesn’t look for oil, they have no plan to increase production in the future so they are wholly dependent on rising prices to make money.

    Oh yes, and they’ve sqanedered $35Bn this year buying their own stock at an average price of $70 – if it goes down to $60 do they book an investment loss of $4Bn?

  188. _fab

    Gee, looks like the markets are shaking their earlier funk off… Everyone’s up and in the green!

    Makes me wonder what to do with my Feb $32.5 Ebay’s picked up yesterday at $1, now $1.35 after Ebay went up 4.2% so far today. Take off the table or expect some more? Take half off?

    Don’t want to be greedy, but by not being greedy I’ve left a lot on the table in the past.

  189. reinharden

    DELL – Oops, my bad Phil, in my rush to get out the door, I did a percentage of taxes paid instead of profits earned. That’ll teach me to hurry (and hopefully make sure that people check my magic math with regards to AAPL. ;-)

    For the record on AAPL units.

    06/2006 market-share for Intel Macs: 0.36%
    09/2006 market-share for Intel Macs: 0.84%
    09/2006 quarterly Mac unit sales: 1.6 million
    12/2006 market-share for Intel Macs: 1.52%

    December units =~ (September units / (September share – June share)) * (December share – September share) => 2.26 million

    Way SWAG’d. But interesting.

    Potentially underestimates everything as it treats everything in the June-September quarter as Intel sales and in truth the PowerMac desktop line (now Mac Pro line) was still on the G5 (this might add as much as another 10% or so). Also, it doesn’t take into account that there should be some sequential quarter-over-quarter growth in the overall market-size (which might add another 3% to 5% or so).

    reinharden

  190. wolf

    reinharden, the new must have this fall was the macbook for college kids. Ask some of them if you get a chance. Every kid who does not have one will want one, and the parents will pay up. That will be a huge seller for the holidays and I think everyone will be surprised by the sales. This Q will be big.

  191. Mary

    So SOX is looking decent and so is the rest of tech…what to buy now? besides AAPL which I have lots of

  192. zmann

    Just looking through ECA’s 6K yesterday on their oil sand deal with COP.

    Given their estimated range of expected net cash flow from the partnership I calculate the would have to have after cost crude realizations of $49 to $58 per barrel. I’ll look into their past lifting costs but I’ve got think they spend at least $20/barrel getting out of the ground. So they expect oil to average $70-80 this year? Hmmmm

  193. zmann

    Before you say ECA is down to much let me say that I agree but on a pop towards $47 I’ll be in. They’re dreaming if they think oil is going to average $75 this year .

  194. Phil

    Finally the DIAs come in!

    ==================================

    XOM $72.50s are a very sensible weekend cover since you get almost a 1:1 move up and not so bad when it goes against you.

    ==================================

    AIG – my issue with deep in the moneys is that I’m tying up a lot of money and I don’t have time to work it off. As I said before, I have 24 months to make .50 per month and end up with a free contract (of course I will sometimes do better) and I am also able to ride out a pretty substantial dip if I have to.

    The closer leaps would lose $4 if the stock drops $5 and it would be very difficult for me to get back even within 10 months.

    Also, I firmly believe AIG is going up and I will get better appreciation from the ’09 $70s than the ’08 $65s.

    Case in point is today’s action – the ’08 $65s dropped .70 while the ’08 $70s dropped .40 and the ’09 $70s gained .40 (probably only because someone here bought some a little too high). I want to be insulated from the volatility so I can sit tight while my caller gets whacked.

  195. Richard Bruce

    Phil are you expecting a DIA rally?

  196. navi

    I have some COST Jan55s. Should I roll out to the Feb 55s? I’m taking a loss, so I’m trying to decide whether to give it a chance to pick up, or take the loss on Jan and try to recover in Feb. What are the chances of it picking up to $1 or even getting into the money.

  197. pantarei

    This is an awesome general market performance, given the 20% weight of the oil sector, to turn green in the face of the selloff in oil futures.

    I am thinking this was too much too fast, oil futures will bounce back, probably tomorrow, before the weekend. Todays close at the low might be a perfect buying opp. I will hold off on trading this thing at least until tomorrow morning am in Europe.

    Sold my XOM Feb P75 (throwing up), was just a daytrade, since I don t feel safe holding that stuff after a tremendous 2 day selloff, with no cover to the upside. I d rather be without cover on the long side, at this stage. But no, don t want to play at catching knifes here.

  198. zmann

    Hey Phil,

    On XOM don’t forget that PV10s come out soon and they have a lot of gas reserves. Those’ll be 25% reduced in value at minimum (maybe as much as 40% but I doubt it sense global gas prices were’nt as bad as US but it’ll still be a whipping). That’ll take a bit out of the oil’s so cheap crowd as NAVs will look very expensive relative to last year.

  199. reinharden

    Mary, if we’re not looking at tech, I’m not very useful right now. ;-)

    Although I note that BRK.A and BRK.B are off some 5+% over the last little bit for no clear reasons. I can’t find any evidence that Mr. Buffet completely liquidated his foreign currency plays, so I’d expect them to be reporting pretty good numbers against that. Alas, it’s hard to “play” BRK. ;-)

    I’ll reiterate IGW and SMH provide reasonable “I don’t know which semi company is going to win, but some of them will” plays. SMH is likely better for options since it’s way more liquid.

    I’ve not done the math, but RHT (formerly RHAT) is starting to look back up.

    So Mary, are you looking for “buy this and don’t think about it” recommendations or “think about buying this recommendations”? ;-)

    reinharden

  200. Slackin

    RIG took a beating today, tracking right along with oil. May want to keep in mind that RIG has ALL of their equipment leased out under contract for the next few years and they won’t be going back and re-doing those contracts just because oil is cheaper.

    I doubled up for my long-term port, but the stock may be playable with a LEAP if so inclined. Just my 2 cents.

  201. Phil

    GS – I was very bearish on GS at one point as I can’t believe they can be so wrong for so long on commodities without suffering but they appear to be bullet-proof.

    They actually hired the Amaranth guys to run a huge fund, they are just daring investors to bail!

    I won’t buy them but I won’t short them either.

    ================================

    EBAY – tough call with Nadaq up 30 – if the NYSE goes green, I think we’re good to go for tomorrow, they are the only naysayer right now.

    ================================

    Apple – solid logic. My logic is based on the fact that I’ve never seen such an effort made to get people to sell a stock so someone must want in very very badly! There has been nothing but rumor and innuendo but it has been relentless and done with a very obvious PR spin timed to take down Apple stock any way they can.

    It all just makes me think that you may never get another chance to own Apple for under $100 again (other than the next split).

    Just look at the Mac advertising – it’s a lifestyle ad, they don’t even feel they have to discuss features – that’s the campaign of someone who expects to get a greater than 10% market share…

    ================================

    Tech – I still think MRVL is just sitting there. TXN is up .20 since I mentioned before. GE is laying around, not tech but should hit $40 one of these days. MOT MOT and MOT. DELL also pullig out of the station on you. HPQ having a weak day – probably held around here through expiration. Did I mention MOT?. MC (Panasonic) just starting to get some legs….

    =================================

    ECA – very good point!

  202. Cris

    Mary, Phil mentioned MRVL Feb 18.75′s as a SOX related buy. Got mine for 1.65.
    I would suggest to both you and Chris that you ask more specific questions during trading hours. If you have a specific stock/strike put or call, I am sure Phil will try to find the time to answer, but if it is a general question, I would not expect too much of a discussion until after the close.

    EBAY hit my 31.5, if it holds 31 we’re in good shape to try for 32+ tomorrow. If not, I will be selling Jan 32.5 against my Febs.

  203. pantarei

    Why is AXP getting sold, bad retail numbers?

  204. zmann

    Re GS – CNBC did a piece earlier talking about how a lot of their talent pool is walking after bonuses.

  205. pantarei

    Wonder if I should pick up some AXP calls at current levels, Jan 60s are at .85 cents…

  206. dilemma25

    Hey Phil, whats the play on TXN….??

  207. _fab

    Something just struck me, hasn’t all this end of day global upswing been a little light in volume?

    Or is it just me misreading?

  208. Cris

    AXP has some support at 60, with 5% being at the next support of 59.25.
    Looks like its taking a break around 60, might be a bit premature though. I will wait until monday unless it does something dramatic.

  209. pantarei

    Bot MOT Apr07 22.50s at .70

  210. kustomz

    Low volume for AAPL today for such a big move

  211. Jeanne

    Jarod-
    I keep getting this message “out of memory @ line 39″-don’t know what to do? any suggestions?

  212. Phil

    DIA – I just picked up those calls before as I expected something today but now I’m getting enthusiastic!

    I think oil will not go down tomorrow so that’s .75% of drag off the markets tomorrow. As they’ve gained .2% for the past 2 days despite the drag from commodities and as all this commoditiy selling went into cash that is now on the sidelines – we are positioned where a little boost in the morning can launch a buying frenzy.

    There is no news that is likely to derail us and many factors that can ignight a huge rally, including an XOM bounce that rallies the Dow. People (us included) look at Google today and worry we’re missing out – Mary just said she thinks she’s missing the tech rallly – GS just told their clients to up stock exposure from 50% to 70% (a 40% increase) and oil is posting $55.59.

    I’m going to pre-roll into the $126s for .50 in case we break out tomorrow. I already have the Qs that are in the money.

    Just watch your oils – take some off the table today as we are more likely than not to get a bounce – I’m half out on all Jan plays – we made enough for one day!

    ======================================

    COST – numbers were great, no reason to dump them but taking a pre-roll on Feb and setting a tight Jan stop is a good idea as you certainly don’t want to give up anything with 10 sessions left.

    ====================================

    RIG – great idea to play into earnings or if they really bottom out as you are right, people are idiots who invest in a company and don’t even understand how they make their money….

    Sub $55 oil and people will be selling off everything that even touches the process, that will be a great time for us to jump in and buy the smarter plays!

  213. Richard Bruce

    Seems to be little worry about the jobs number tomorrow.

  214. albo

    Biotechs making a big move. AMGN and DNA up strong.
    ERTS is also up big !

  215. BillBigD

    Phil,
    Great cover on GOOG and Rimm yesterday

  216. Mary

    Thanks for the recommendations. Got some DELL, MOT and MRVL and orders in for TXN and SMH all feb calls.

  217. ci69fc

    Rimm what changed, yesterday trading at 126 today at 138. Taking another put position into the close.

  218. reinharden

    Amazon nicely lets us know that MacOS 10.5 is still scheduled for “Spring” (http://www.amazon.com/gp/product/B000FK88JK/002-3773653-7837665)

    As well as Apple iLife ’07 (http://www.amazon.com/Apple-Computer-iLife-07-Mac/dp/B000B8UOU2/ref=pd_rhf_p_1/002-3773653-7837665)

    and Apple iWork ’07
    (http://www.amazon.com/Apple-Computer-iWork-07-Mac/dp/B000BKE87U/ref=pd_rhf_p_1/002-3773653-7837665)

    iLife and iWork previously had available dates listed of January 9, 2007 (aka next Tuesday, MacWorld Keynote); however, they no longer list an availability date.

    Also, this (http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=150077109850) is not the Apple iPod iPhone that you’re looking for. Nor is this (http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=160068848845).

    The second one is a great fake…the Chinese forger beat Apple to market!

    #####

    My apologies for my AAPL fixation. January and October options in AAPL and MOT pretty much pay the bills around here nowadays. There’s not a thing published (and accessible online) from December 1 through January options expiration about AAPL that I don’t at least skim.

    reinharden

    PS: As yet, there’s no joy in MOT this January…but I’m still liking Jan ’08 at various strike prices.

  219. pantarei

    RIMM bounced of MA STRONG, will go higher I think, might get better PUT price later. (just my 2 cents)

  220. zmann

    How does REP continue to coast along without getting popped with the rest here? They’ve got more trouble than most and are just as commodity price sensitive. It boggles the mind.

  221. Phil

    AXP – a victim of gift cards! $25Bn worth of gift cards that won’t become AMEX charges (but the add-on sales will and I am anxious to get back in). All of retail is being punished for the 3rd year in a row because analysts haven’t changed their old models of measuring retail success.

    Why is men’s warehouse and JOSB doing well? Because we just go and buy suits – we don’t buy gifts there, you don’t give a shirt to a guy – so their model is not disrupted.

    JWN? Rich people don’t really do gift cards yet – still seems tacky. But the mid-level retailers are getting hammered. An ANF or Victoria Secret gift card is cool – HOTT is lame! Branding is now worth double what it used to be becuase of this.

    ================================

    GS – I bet they’re running before their commodity trades go south on them! How many of their clients do they have trapped in this Roach Motel? How much of Goldman’s own money is in this? I will just be amazed if we don’t have at least one massive blow-up in the financial sector with this commodity sell-off.

    Amaranth collapsed when oil dropped $10 in August and we know that Goldman and others rushed in to buy up the “bargains.” Now oil has gone from $65 to $55 in less time than it took in August – not only is it faster but it’s a bigger percentage drop with no significant profits to offset the loss.

    Tick tick tick….

    ==================================

    I like AXP here but they don’t look like I’m going to miss anything by waiting a bit.

    ==================================

    TXN – take the Feb $30s

    ==================================

    Woo hoo! Another MOT club member!

    =====================================

    Apple – 28M is low volume? I think they are just out of sellers.

    ===================================

    ====================================

  222. zmann

    Stopped out of BTU for a 10 day 7 bagger. Building cash going into the morning. Oil has a better than 50/50 shot at a run up and Jan puts would get bashed.

  223. pantarei

    Phil, could you coment on AXP, what is your view on EXPRESS. Me thinks this is just a retest of the 60 dollar line in the sand. But I dont like them closing near the days low.

  224. Phil

    Out of memory thing, I think you need to reboot to clear your buffers.

    ===============================

    RIMM – don’t do it! Even MOT is perking up, RIMM is not going to buck the Nasdaq and with GOOG and APPL positing big numbers RIMM will look like a bargain. Let it test $142 again.

    ==================================

    REP – just an unindexed low-volume play – they are a good catch!

    Maybe a good one for next week.

  225. reinharden

    AAPL is low volume versus the 10 day average of 34,276,488 but high volume versus the 3 month average of 25,872,600.

    Mary, ask Phil about BA. It’s well-positioned for the next 3 to 5 years with its current order backlog and it’s shown recent weakness.

    CY is showing renewed vigor after it’s Dec 29 bounce. I still like LVLT long-term (although for that I just bought the stock). C’s moved $5+ since I mentioned it last month, but I’m keeping most of my Jan 08 options on that as I think it’ll be $60+ by then (way easier to say that now that it’s moved half-way there).

    reinharden

  226. Phil

    AXP – love the company but their chart is death right now so I’d rather wait. 5% rule is $59ish so no reason to buy at $60 BUT they have not actually hit the 50 dma since 9/11 so if it flatlines into expiration at $60, I’d be inclined to take a chance on a post expiration pop.

  227. _fab

    Phil, I was not talking about the absolute volume for the day but rather how the later day volume is relatively much lower than the earlier volume.

    And it’s in the later part of the day that the trend starting firming up. But it’s too late now, hopefully there won’t a sizeable sell off in AH/tomorrow.

    There were nice volume spikes at the last minute on both EBAY and AAPL…

  228. zmann

    That was me asking about MW last week or the week before and you kept me out of the puts. Thanks

  229. albo

    zmann,

    Congratulations on BTU trade. That’s awsome! ! !

  230. pantarei

    Just saw that transports posted the second day of big gains, not surprising, but still nice to see!

  231. Phil

    CY – damn, I forgot to buy them!

  232. Jon

    Gift cards – I don’t know about the rest of the country, but here in Seattle, JWN gift cards have been popular for years. The “gift” is shopping at the best store in town.

  233. karmcon

    Any thoughts on the LVS Mar 85 P’s? Have been adding incrementally and have an overall basis of 3.78 but now at 3.1?

  234. pantarei

    Darn AXP, I hate to lose on a trade, but there is still a slight chance that the DOW rallys big time tomorrow, and those will be lifted by the tide as well, still a few days to expiration… but I will cut them down if we don t rally tomorrow.

  235. Cris

    OK, I’m joining the MOT bandwagon!
    http://www.motorola.com/mediacenter/news/detail.jsp?globalObjectId=5484_5474_23

  236. Phil

    LVS – they make good market plunge protection and also (as a travel destination) good 9/11 catastrophe insurance.

    I will be shocked if they make it through earnings with a p/e of 72 but people are nuts about Macau.

    Revenues increased 32% to $598M and are projected higher for December but it’s the projections that get me – they expect “$13-$16B by 2010″

    Seriously, they expect a 3,000% increase in revenues in 3 years. On this basis they are spending stunning amounts of money to cover every square inch of the island with casino floors which will only end up canabilizing the Vegas revenues (as “whales” constitute close to 1/3 of their net and those people come from all over the world).

    There were similar growth projections for Atlantic City in the 80s – needless to say, it never happened.

  237. Jon

    AXP – Why would AXP or MA suffer because of gift cards? The giver needs to buy them with something. I used my AmEx to buy everything for Christmas, including some gift cards. The only thing that I see that hurts AXP is that some businesses still do not accept AmEx cards but they do accept MasterCard/Visa.

  238. Phil

    MOT – I’m telling you, go demo a Q Phone… I still think, deep down inside, that Apple and MOT are in the IPhone together. While I do think Apple could do it on their own, I don’t see why they would bother.

    MOT and Apple are long-time partners, experimented with ITunes phones already and why should Apple build up the massive infrastructure required to support an international cell phone sales and support network when they can collect 75% of the revenues by slapping their name and design on something MOT produces.

    We’ll see…

  239. Slackin

    I shoulda mentioned CY around two when I scooped up a DD.

    It got down to .40 early morning but I was too busy looking for an oil angle (as I’m sure we all were).

  240. juliet

    What does DD stand for?

  241. Slackin

    Double down.

  242. Phil

    I don’t think AXP will be hurt by gift cards, they are being hurt by bad retail numbers as the assumption is that causes bad AXP numbers. I absolutely want to be in before earnings!

  243. kustomz

    Trying to use technicals more than emotion when it comes to AAPL. When AAPL filled the gap yest to 82 that was my signal to get back in. Today’s action just wasn’t convincing enough to keep me in. Still confident AAPL has plenty up its sleeve. VIX may be heading back to AUG. levels.

    TXN DLP… TXN pushing DLP tech big at CES..
    http://www.theinquirer.net/default.aspx?article=36712

    SNDK…Computers will be moving away from HD to use these
    http://business.newsfactor.com/story.xhtml?story_id=0100010VZ5YY

    Phil keep an eye on CHKP…Check Point Software to Announce Fourth Quarter and Fiscal Year 2006 Financial Results on January 24, 2007

    MOT hard to call this one, i would wait for it to turn before jumping on board. Why tie up money when there are better plays out there?

    Pelosi says sky’s the limit, is this a reference to the Presidency? Is she pointing out that Bush is somewhere in outer space? Or was it geared more toward Hillary’s bid?

  244. trestles

    FYI from briefing.com

    MOT Motorola: Hearing downgraded to Hold Deutche Bank (20.55 -0.02)

  245. juliet

    Can someone kindly explain to me on AAPL trade. Did Phil say to buy Feb 85 calls for $6, and sell Jan 85 calls for $4.60? Did I get that right? Thank you.

    j

  246. Slackin

    I’ll repost this link in the update if Phil doesn’t comment this evening. But, please, can anyone comment as to why…after looking at this chart…one would not just short the #$%!! out of the XLE? Or please tell me what is fundamentally WRONG with the USO?

    http://finance.yahoo.com/charts#chart1:symbol=xle;range=1y;compare=uso;indicator=volume;charttype=line;crosshair=on;logscale=on;source=undefined

  247. sakiko

    Juliet,

    AAPL. That’s right : http://www.philstockworld.com/members/?p=165#comment-6789

    Notice the short side is 4.60 or better. This calendar spread takes advantage of the near month value eroding quicker than the far month.

  248. Cris

    Slacki, I also noticed that USO is way out of line. Either it bounces tomorrow or XLE et al go down hard and test 2006 lows at least.

  249. reinharden

    AAPL & MOT – First major hindrance to cooperating, they’ve some institutional history that makes them not work very well together.

    MOT (from AAPL’s perspective) screwed AAPL on the PowerPC thing but not holding up their end of driving the technology…eventually forcing AAPL to move more and more business to IBM (and thereby screwing MOT from MOT’s perspective).

    AAPL (from MOT’s perspective) screwed MOT on the Mac clones things by shutting down the clones and causing MOT to half to write off a few hundred million in finished inventory.

    More recently, they tried to let MOT design and add some AAPL touches to it. That was the ROKR which was widely panned.

    #####

    Then there’s some institutional differences. MOT wants a checkbox besides lots of things. Which means that stuff works to the minimum level required to get that checkbox. And each feature just get shoved in somewhere that seems to make sense.

    As a result, my girlfriend hates her MOT (and previously NOK) phone because the UI is all so modal and she can never remember which buttons she pushes when to set the alarm or change anything else. And entering phone numbers is a hassle…and they’re always out of date…etc…etc.

    Anyway, were AAPL to design a phone, they’d want to try and reinvent it a bit.

    Starting with the simplest things.

    Ideally, I’d be able to sync some portion of my address book and calendar to my phone. AAPL already does that pretty well via Bluetooth (and third party software does it on Windows when last I checked). One would like to do that as well via USB so that the phone could charge via USB when convenient.

    And hey, I’ll have to sync my music (and videos?) anyway…so why not sync more data types. Maybe also Email accounts data so that I can use IMAP to check my mail and Bookmarks so I can browse the web directly from my phone?

    Next simple thing. Make it at least a 2.5G phone and preferably 3G. Now, allow me to share that connection with my laptop via either Bluetooth or USB. But make it work out of the box instead of making me figure out how to configure it. Doable already (in fact, I spent 6 weeks in New Zealand back in 2003 with one 3G phone that Bluetooth shared it’s network connection to a Mac laptop that shared that network connection via 802.11 to two or three other computers most of the trip…ran up a hell of a phone bill…but we all managed to get our web browsing in throughout the trip).

    Oh yeah…it needs to work as a phone as well. ;-) And a no holds barred iPod.

    Phones are actually pretty easy nowadays. MOT/NOK/PALM et al run to Broadcom/Freescale/Qualcomm/et al and get a reference design that’s a nice collection of parts that have been made to run the reference software packages from MOT/MSFT/Symbian et al. MOT/NOK/PALM then spend several months playing around with the form and trying to tweak performance to make it acceptable and ship it.

    Back in the day, MOT was a lot more serious. I have an acquaintance who worked on a phone design team when he was first out of college. His weekly goal for nearly a year was to tweak .5 more microwatts out of the power consumption (always start with the RF Power Amplifier…that’s used to be about 40% to 60% of a phone’s power draw).

    Anyway, the point is that there’s not often that level of integration in the design anymore…it’s a lot more about selecting and assembling near commodity components.

    Of course, this doesn’t mean that AAPL won’t cooperate with MOT. But I’d be mildly surprised if AAPL took this long to try and tweak and polish a MOT sow’s ear into a silk purse. Assuming that they even have a phone. ;-)

    reinharden

  250. Cris

    Makes sense Reinharden. I am sure Steve would totally want to control every aspect of this kind of project, and the only way to do it is to build it in-house.
    They can always sell and support the it usual way, through wireless providers, I don’t think that’s such a big issue.
    Your features would go into an iPhone Pro though, it would make sense to have a cheaper model too.

  251. mano

    test..

  252. chetg

    For you EBAY-ers out there…my last few experiences have been horrid in regard to lack of cust service and fees, and rates just got jacked again today.

    Here is a sampling of the response:
    http://digg.com/tech_news/eBay_Jacks_Up_Prices

    After this pop I think this is a good longer term short.

  253. juliet

    Sakiko thank you for your help.

    j

  254. reinharden

    Fake AAPL phone on eBay –

    In case you didn’t check out http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=160068848845
    earlier today, why don’t you do so now?

    It’ll reinforce my argument that phones are mostly composed of commodity parts assembled to fit a particular form.

    reinharden

  255. mano

    Phil,

    I am trying to understand regarding the spreads as i am new to options.
    I am taking an example of AAPL options which you have mentioned this morning.
    1. Assume that I have bought 10 contracts of Feb 85 calls for $6.00/contract = $6000.00 ( debit from account).
    Next you said to Sell Jan calls
    2. Assume that I have sold 10 contracts of Jan 85 calls for $4.60/contract = $4600.00 ( Will this amount comes into my account as credit from my broker, which I was not sure – please correct me if i am wrong).

    So here I am thinking the spread is $1.40 or $1400.00 of my investment correct. so for worst case senerio I will be loosing $1400.00 by end of Feb expiration, am I correct??

    3. In the step 2 above, Am I obligated to BUY the Jan 85 calls before Jan expiration, since I have sold Jan 85 calls today?

    4. What will happen if Jan 85 calls becomes $6.00 or $6000.00/10contracts on Jan expiration day??

    5. So when will I get the profit taking.. meaning I have to wait for Feb 85 calls to go above $6.00 to make profit right??

    Sorry for asking dumb questions.. I am learning..

  256. arnie

    mano
    am learning spreads too
    what I think is once you sell calls at an earlier expiration your worst case scenario coubd be bigger than the original spread. what if the stocks jumps up and your jan calls increase much more than feb??? In that scenario you’ll also have to come up with the cash to pay your caller-if you wait to the 20th- as you will be sitting on a feb calls that are not cash or best pay your caller before expiration
    in other words you will need to watch closely or really pick your candidate carefully -hence I have been staying away as I have another activity during the day
    be interested in getting phil’s take

  257. Cap

    MOT PR at 8:01 pm …. earnings and revenue shortfall due to weaker cellphone pricing. MOT and NOK likely to get slammed tomorrow.

    MOT conveniently released news as soon as After Hours trading closed.

    Crap.

  258. Phil

    CHKP – thanks! I forgot that we actually took the April puts as the first half a spread into earnings but it looked so weak we never took the calls!

    Smart waiting on MOT Kustomz – at least now we understand the persistant weakness. The Jans are toast and we’ll see how it handles the 2006 low of $18.58.

    ================================

    J – yes that was the right trade, I have a long explanation in the wrap-up comments.

    ================================

    XLE – we have 2 open puts and closed 2 puts, that’s about as short as we get on anything but you still can’t count oil out of a bounce so we just carefully ladder our trades on the way down – today we probably switch to some Febs to avoid the weekend.

    ================================

    USO has it’s own problems. It’s a terrible thing to own as they are constantly adjusting their holdings and you end up paying massive trading fees so the fund just gets further and further away from the price of oil as time goes by (it used to be within a dollar!). The only thing stupider than being long on oil is being long on USO!

    Plus, the same way USO added to demand as investors came in and they bought millions of barrels – they now add to the destruction as as investors flee the fund and they are forced to dump millions of barrels on the open market. Live by the ETF – die by the ETF!

    ==================================

    EBAY raising prices – Yay!!! Where else are you gonna go to get 100,000 people to buy your junk?

    ==================================

    Rein – anyone can make a phone but (as PALM can tell you) not everyone can make a good one! Bottom line on MOT is they sold 48% more phones than last year – it’s not that people don’t want the phones, it’s just that the product mix moved way towards the lower end prices.

    It will be interesting as they are being fairly vague and I still have a fantasy that there will be a favorable Mac World announcement as Jobs is smart enough not to put Apple on the same phone treadmill that NOK and MOT are on. It’s one thing to make a $99 MP3 player with no screen but making $49 phones is a margin killer Apple is sure to have no taste for.

    Could MOT’s .10/share miss be caused by a massive secret retooling to produce the new IPhone? Probably not but I can still dream…

    =====================================

    AAPL – answered in wrap-up comments

    Arnie, good response and you’re right about having to watch something like Apple but let’s work on the long-term trades. I hope to be able to get you comfortable with them as something you can set and forget.

    That’s why the old long-term portfolio was called forgotten trades – we never talked about them and it was a joke from August when someone asked me what ever happend to all the leaps and I said I never look at them except at expiration when I flip my callers.

    As you know, that led to an average triple digit return and is much more important to your portfolio than all of this short-term nonsense!

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