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TGI Friday the 13th!

Well this has certainly been a frightening week.

It's only fitting that we end it on Friday the 13th, the day before we declare our love to our sweethearts on Valentines day in a week that marks the 200th anniversary of Lincoln's birth who was preceded 77 years earlier by George Washington, who died exactly 10 years before Lincoln was born.  The combination of those events gives us a long weekend and a market holiday on Monday.  Today is also the 80th anniversary of the St. Valentines Day massacre, when Al Capone, another guy from Chicago, wiped out the competition and took control of that city until they got him (like many in Obama's cabinet) for income tax evasion.

So George Washington was as fresh to young Abe Lincoln as Roosevelt or Truman were to Obama (b. 1961) except that in 1809, the year Lincoln was born, we were only on our 4th President and Madison stayed in office until Lincoln was 9 years old so you can imagine the degree of concentration in an American school at the time on the writings and actions of Washington, Adams and Jefferson.  We are all products of our environment and that's why this holiday, President's day, is a good time to reflect on how we all came into our own political beliefs and think about how they affect the other decisions in our lives. 

I know I got interested in politics because Doonesbury was in the editorial section of the newspaper and, although I was just 10 years old, the ongoing saga of Watergate drew me to read the more serious articles and then I discovered Hunter S. Thompson (characterized in Doonesbury as Uncle Duke), which pretty much warped me politically for the rest of my life.  So I do recognize where my liberal roots come from, probably not too far from the ones Obama has as we both grew up hearing "Kennedy good, Nixon bad," although Obama spent the 70s in Hawaii, so he probably had more fun than most of us. 

Obama and I both spent the early 80s in New York City, which was an incredible time as Ed Koch did a remarkable job of pulling New York from the brink of bankruptcy.  Koch was a liberal who busted unions, balanced the budget, endorsed Reagan over Carter and ran on a "Law and Order" platform but he stayed in office too long and the administration was rife with corruption by the end of his third term.  By that time, Obama was at Harvard in Boston at the same time I was going to school across the state in Amherst so there wasn't much hope of either one of us becoming young Republicans, no matter how adorable Reagan was.

I mentioned last Friday how I noticed that people let their politics color their investing decisions as the conservatives are more prone to buy into the doom and gloom-fest that's been on the media as they villify the administration for not pretending they have an instant fix for the economy.  As in the above cartoon from over 35 years ago, we are used to our leaders using fear and terror to control the population but we're also used to them telling us that they will save us – the Obama administration hasn't quite gotten there yet.  We need a little more "yes we can" and a little less "we are doomed" if we are going to get those all-important consumers to come out of their shelters. 

Yesterday we saw how scared the investing class was when CNBC tanked the market with a RUMOR that GS had held "secret emergency meetings" after Geithner "blew it."   We stuck with our game plan and picked up a lot of bargains on the way down and, in fact, I said to members at 1:59: "You know I’m thinking Lloyd Blankfien just spent a day at Congress and today he is hanging at the town hall meeting of CNBC, just in the audience.  That’s not what a guy who’s worried the markets will tank would do.  I would have to call that my bullish sign of the day."  At 2:21 we went short on SKF and at 2:47 I called a bottom to GOOG, which we had shorted on the way down (just because we're bullish doesn't mean we can't make money on the way down).  Does my faith in the administration color my investing?  Perhaps it does, as I said last Friday, it's OK to have a political bias but make sure you recognize it for what it is.

What turned the markets up was another rumor, this one we liked, as Reuters reported the Obama administration is working on a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test.  Now there is little doubt that the timing of this release and the immediate buying frenzy that ensued was the work of the fabled Plunge Protection Team but that's just fine with us when we're on their side.  Meanwhile, we're very cautious into the weekend and we're not expecting much follow-through today but, as I said yesterday morning, we're happy just to hold our levels at this point.

 Asian markets chose love over terror this morning with across the board gains led by the Shanghai's 3.3% move and the Hang Seng's 2.5% recovery.  The Nikkei added a point and India gained 2% and Australia was led higher by banks of all things.  As we begin to move past earnings without the world ending, investors seem willing to put their toes in the water.  "February is a month rich with announcements of stimulus plans, and investors are taking advantage of the low visibility on the earnings front to test their luck," said Huatai Securities analyst Chen Huiqin.  In India, anticipation the central bank may cut the interest rates to revive growth boosted the financial sector. ICICI Bank — India's largest private sector bank by assets — rose 3.1%, while State Bank of India closed 3% up and HDFC Bank gained 1.5%.

Europe got off to a great start, up about 2% but fell back to up about half a point ahead of the US open as the naysayers are already poking holes in the rumor of a plan to bail out homeowners.  "It's too big," "It's too complicated," "It's unfair," "It can't be implemented in time…."  All valid points but perhaps we should see the actual plan first before calling the rumor of a plan a disaster?  Again, your long-held beliefs will tend to color whether you buy into what you hear from the MSM or whether you are willing to have a little faith that America can recover – it's a choice that will make or break many investors this year. 

Europe's economy had the worst quarter in 13 years as GDP there fell 1.5%, worse than the -1.3% expected. “The news is dire,” said Kenneth Wattret, senior economist at BNP Paribas SA in London who correctly forecast today’s data. “Compared to the early 1990s recession, which was painful, this is twice as big.”  For the Euro region, “we see at least another three quarters of contraction, and we should brace for a huge rise in unemployment.  The ECB will cut by at least half a point next month and may have to consider something even more radical.”  Banks are leading the decline in Europe as HBOS reports $12Bn in losses, charged now to LYG, who bought them last year.

For us, it's all about the levels as we try to remain unbiased as investors, no matter how voraciously we defend our political views.  Dow 7,800, S&P 820, Nas 1,460, NYSE 5,100, Russell 437 and SOX 203 all better continue to hold today but, even if they do, we're nowhere near where we want to be and we're going to take some bearish covers into the weekend – just in case.  So whether you are a witch celebrating the horrors of the 13th or waiting for a rose from your true love the next day, remember to be careful out there – we are certainly still deep, deep in the woods!

 


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  1. TIMMEH !


  2. The SKF and SRS crowd are coming back for more…. driving the financial / real estate complex down pre market; let’s give’em some more whup ass !


  3. HBOS with some stunning trading losses last Q – legitimate spook for the financials.


  4. Not too bad looking at the open.  RIMM still going down but AAPL doesn’t seem to care.

    ORCL moving, WFR flying (nice pick up yesterday), Qs over 30.50 is good, YRCW testing $4, GOOG back to playing at $360 but I’m not as keen on playing them today with the 3-day weekend ahead as the erosion is too severe to get stuck with overnight if we guess wrong.

    LOL Nigerian threats on oil – what a surprise as we test $35.


  5. Took out DIA putters just in case as we look weak already!


  6. Using 7,900, 830, 1,550, NYSE 5,200 and RUT 450 as my cross lines to cover the DIAs with $80 puts but I’m concerned we’re heding down to 7,850 and possibly a retest of yesterday’s lows if we don’t perk up soon.  I need 4 out of 5 to cover, better safe than sorry.


  7. DOW cuts divi for first time in 97 years…
    b b b b but they promised :(


  8. Ags doing OK, refiners OK, V & MA look good, EDU and APOL going up, FCX flying – mainly it’s the damned financials again dragging down the markets but retailers are weak and healthcare is pulling back and a strong dollar is knocking down gold (and stocks) so the miners may fail too.  Oil can’t get it going despite the Nigerians and that, of course, can always make us suffer.

    Dividends/Anton – Yeah those things are really hard to count on now.  Doesn’t leave too many "safe" investments.

    BWLD still hasn’t run out of gas.

    Oh, I forgot to mention the MSFT retail stores.  Zune-O-Rama I think is Ballmer’s working name…   Gates has GOT to take that company back before that guy breaks him!

    Ouch on GOOG this morning!  Wish I’d gone back short but nopw I’m going to be watching for a long entry, maybe the $370s, now $2.92, if they get to yesterday’s low at $2.75 as they flew back over $5 and a stop at $2 is not a bad risk/reward.  Actually, I guess a stop if they can’t hold $352.50 regardless.

    Seems kind of silly to put so much effort into saving the market yesterday and then having no follow-through today.


  9. Phil: took out means what: close or open ?


  10. Cap, you’ll love this.  Everyone’s being pressured today to vote on the stimulus so Pelosi can keep her scheduled trip to Italy to accept an award.  They don’t even have time to read the 1, 017 pages in it.
     
    I’m so ashamed.


  11. Wow, SBUX offering $1 "instant" coffee.  WTF?  That’s like Fudruckers offering $1 double cheeseburgers – it takes away from the main brand.  So much for SBUX recovering I think. 

    Took out/RMM – I had putters, I closed them out.  Bought them, cancelled their contracts, left my long puts naked….  But we’re crossing back over so now I’m selling the $80 puts


  12. Cap, I don’t watch South Park regularly, so it took me two days to figure out your opening greeting.  LOL!


  13. RMM  I’m guessing "took out" means closed.   I think that is how he normally uses it, but in the context of wanting more protection he’d be moving he DIA puts to naked.


  14. NAT   I know people go on CNBC to tell a good story on their company, but does anyone have any more insight on the company.   Debt free, high yielding, and a full slate of options makes it look like a hedged entry --> covered call/long term hold candidate.


  15. matt; no kidding.  totally outrageous, they are so scared that if what’s in it gets public scrutiny they’ll get torn apart.
    don’t worry, AFTER it gets passed Obama admin sez they’ll post it on internet.  Real helpful and transparent.
    its what you expect in the USSR.
     
    Eph …. I asked Phil to put TIMMEHs picture in his morning post; but haven’t seen that yet.


  16. SBUX:  That really is weird.  That CANNOT help.  Guess they just want people in their stores to buy other things while they are there. 
     
    MicrosoftStore:  Nearly as stupid an idea as bringing Jerry Seinfeld to hawk the product.  I will definately consider shorting them after a runup.   When is MS going to accept that they are a monopoly for PC OS and wordprocessing/spreadsheet software.  Nothing else.  They should thank their lucky stars they have a steady income stream.


  17. Saw a story this morning that certain LOBBYISTs were given copy’s of the Porkulus bill; but not to Congress.
     
    Close your eyes, hold your nose and VOTE.


  18. SKF; I think possibility for a nice selloff today; If I were shorting financials, I don’t know that I would want to be exposed to a 3-day weekend where something could get announced. 
     
    Let’s see what happens; not planning to do much unless they run it up to 145.  I did sell a March 250 for 5.10 to start positioning for March.


  19. G’Day
    Phil ANF – I expected even/bearish response to Earn Rpt. Stock is + 10% and I am fully covered with Feb20C. Please advise should I roll callers to Mar 20C for Cr or Mar22.5C for Db. I am neutral/neg on prospects. b/c only so only much they can do with inventory management. Thx.


  20. Obama coming on TV; I see shorts covering all over right now.
     
    Of course, after Mr. Happy speaks, we’ll probably sell off.  I would rather see us rally; but so far that’s the pattern …. "catastrophe…..etc talk"  not grooving on it.


  21. Buy List review:

    AAPL strong

    AVP perfect

    ANF had really nice earnings and is flying

    BA took off

    BBY flying

    BTU perfect

    CBS back to $5.77, premiums no longer exciting to sell but fine on the leap spread

    CEG with a nice dip so a great entry at $25, selling March $25 puts and calls for $2.65 nets $22.35/23.67

    CI went nuts since our play, we weren’t bullish enough

    CMI back to $25.  March $25 puts and calls bring in $5 for a $20/22.50 entry.

    DE right on target.

    CAT was substituted for DE, perfect here at $31, selling March $30 puts and calls for $4.50 nets $26.50/28.25.  They are a good stimulus play.

    DRYS back to $4.83.  They are coming off the list as they are way too volatile (but fun).  Still, buying in at $4.84 and selling March $5 puts and calls for $2.50 is net $2.34/3.67 – that’s still fun!

    GCI went bad.  We sold March $7.50s for net $5.05/6.28 (not counting money from the prior 2 sales of course) and now $4.38.  Of course take out the $7.50 calls for .05 and the puts can be rolled to 2x the July $5 puts almost even so if they don’t recover soon that’s the play to stick with it.

    GE at $11.61 is a straight buy.  The stimulus is passed there will be more financial bailouts so they win on both ends of the business.  The March $10s, 11s or $12.50s all knock $2 off the price when you’re ready but this is crazy cheap.


  22. NASDAQ in green but GOOG Red? Whatever happened to the tech leader?


  23. Timmy/Cap – I like the picture but so far I don’t think Geithner deserves it.  I know you beg to differ but I don’t think saying "we’re not sure yet" should be a hanging offense.

    SBUX/Matt – Other things?  They’re a coffee shop!  That’s the problem, I don’t think they know what they are anymore.  Why not just change their frequent card to give you a free one down to 5 from 10 – that would work too and keep the "mystique" that these were valuable coffees.  Don’t forget they pay big money to put themselves in all sorts of exclusive places like highway rest stops and bookstores and they have to get 4 people to buy a $1 coffee vs. 1 person buying a fancy one – not a good plan I think, especially with less total consumers milling about…

    GOOG went flying and I didn’t get my target entry, was too busy with Buy List to catch the move.  8-(

    ANF/Bro – It costs $1.20 to roll them to the March $22.50s and if you’re not willing to do that then you may as well let yourself get called away now.  Why tie up a winning trade in something you don’t believe in long-term? 

    Cap is the textbook case of the type of investor who lets his political beliefs color his investing outlook – he refuses to let Obama make him money!

    GOOG/Dilbert – The stock is totally manipulated, they almost never make an up move without jamming down to shake out the weak hands and they hardly ever make an up move without running up first to get all the suckers on board for the ride down.  As long as you recognize that, they are great fun to trade.


  24. No biggie Phil.  It was meant more as humor than anything else.
    Not a hanging offense; but given his tax issues and his busted debut, Timmy is starting out on strike 2 in many folks eyes.


  25. Phil – ANF Thx.


  26. it was friday the 13th others might thinking it was so bad when you are get involved on a accident today.The great accident that was happened for me this day was the great trend of the tarding. I felt i good take a bigger profits as todays chart was so fast approaching.


  27. Did anyone of you see the CNBC report last night "House of Cards"  ???


  28. Obama short cover rally looks like its run its course already.
     
    Phil you got me all wrong.  I of course would love for Obama to make me money; he won’t (President’s dont do that); but I will make money by trading around Obama news, just as I would for Bush or soeone else.  For example, I shorted AMZN on the Obama pre speech rally.  And now I am in the green.  I dont invest based on politics, nor should anyone else.  I just try to assess what’s going on.
     
    Also, if you really want to keep score, Obama has only made shorts money.  Remember, S&P rallied up to 1006 on Election Day.  Here we are at 838.
     
    So let’s go Obama; make us money !
    :grin:


  29. SBUX/Phil, I totally agree.  Dollar coffee definately takes the shine off a 4 dollar one.
     
    Goog/ Phil, I agree as well.  And, it’s been that way pretty much from the beginning.  When I was trading them in the 200 to 400 range the first time I noticed that.  Which struck me as odd since Goog had a dutch auction ‘just’ to be fair during their IPO and had the motto do no evil.  Guess when it comes to market makers, no one has control.


  30. Phil, I enjoyed your writeup this morning, but I didn’t realize you went to Amherst.    Did you mean UMass, or are you one of the defectors of 1821?  What year did you graduate? 


  31. Is it just me or is anyone else less interested in trading today because of yesterday’s bogus save?  I’ve been fully covered since last night and will probably stay that way today.  Too hard to tell what’s real anymore.  I’ve become disenchanted.


  32. Phil’s a UMass guy … very conservative leaning university … lol
    good school.


  33. SBUX   Did I read the blog wrong?  I sounds like it’s a 3-pack for $2.95 that you’d take out of the store.  It’s the same way they sell coffee beans, and it must have huge margins.  I guess you could lose a few people who don’t leave office and go down to the store on a coffee break, but I think most customers are people who are in transit and don’t boiling water them to make a cup of instant.


  34. I don’t follow this stock; but in case any of you do …
     
    Masco Corp.: Post-Call Notes: Lack of Specificity on Cost Savings Disappointing; Lowering FY09E and PT to $7.50
    Overweight

     
    Following MAS’ 4Q08 call, we provide the following key takeaways (as well as pre-call bullets in the body of this note):

    Lack of specificity regarding rationalization benefits disappointing . . . Specifically, despite ongoing efforts by MAS over the last two years to scale back its footprint, which featured 17 plant closures and a 40% headcount reduction, surprisingly, no consistent or detailed quantification of these benefits has been presented. To this point, as one example, on the call today, management did not specify the number of plant closures in its cabinets segment over the past year. We believe this lack of disclosure to properly quantify these benefits in a more detailed fashion and by segment is troubling and raises our concerns regarding the company’s internal controls, specifically with regards to measuring the costs and benefits of the multiple restructuring actions taken over the last 24 months. While we do note that MAS did point out that its actions in 2007 and 2008 totaled $110 mil. of restructuring charges, which in turn should drive a savings of $50-$60 mil. in 2009, we believe this number to still be fairly vague and nondescript as to connecting specific dollars to specific actions and segments.

    . . . as ’08/’09 EPS bridge does not appear to materially benefit from rationalization benefits. As a starting point, we make several adjustments to the reported $0.18 of EPS for 2008 (ex-goodwill charges) that can be viewed as non-core, including $0.15 of restructuring charges, $0.10 of financial investment impairments, $0.06 of currency transaction losses, and an $0.18 tax impact; this yields an adjusted EPS of $0.67. For 2009, if one assumes a 17% drop in sales – MAS guided for a mid to high teens decline – at a 30% contribution margin, 36% tax rate, and 359 mil. shares, this results in a roughly $0.85/shr loss just from the sales drop, and gets to the midpoint of MAS’ 2009 EPS guidance of breakeven to a loss of $0.30. Additionally, we note 2009 guidance also includes $0.08 from restructuring charges, $0.06 from pension expense, and a $0.05 negative tax impact, which MAS viewed as being offset by other items, including raw materials, pricing, and cost savings/productivity. As a result, we believe that as part of the additional $0.19 is offset by lower raw material costs in 2H09, we do not believe cost savings represent a material benefit in 2009.

    Positively, balance sheet and liquidity appears solid, however, amendment likely required for debt-to-cap covenant. Positively, at 4Q-end, MAS had $1.03 bil. of cash, continues to have a zero balance on its revolver, and benefits from having only $300 million of debt maturing through 2011. In addition, MAS remained in compliance with its two debt covenants, including a net worth test and a debt-to-cap threshold. Specifically, MAS’ net worth as of 1/1/09 was $2.98 billion, above the 70% of 2008-end net worth minimum of $1.99 billion. However, its debt-to-cap of 57% (also at 1/1/09) was just below its 60% threshold. As a result, we believe an amendment to its credit facility is likely sometime over the next few quarters, which we believe would result in the overall capacity of its current $2 billion revolver being reduced or the pricing structure to be revised.

    Lowering FY09E, introducing FY10E, lowering Dec. ’09 price target to $7.50; however, maintain relative Overweight rating amid our negative sector stance. We lower our 2009E to ($0.25) from $0.33 (ex-charges), introduce our 2010E of $0.05, and lower our Dec. ’09 price target to $7.50 from $9.50, based on a 10x multiple on our 2010E EBITDA. However, we maintain our relative OW rating on MAS amid our negative sector stance, based on our view that the company is closer to trough results than its peers given its below-average exposure to the U.S. non-residential and international markets, which are only beginning to slow, in our view, relative to the already depressed U.S. residential markets.


  35. Obama market scorecard starts on inauguration day, not election day.  I guess technically, it starts at 12:00 on Jan 20th, but I wonder if statisticians will be that exact.


  36. Cap: look how similar SKF and SRS look,
     
    not enough change so far for a trade.


  37. matt, one of the good things about high volatility is that being fully covered is not worst place to be, you’ll be buring a bunch of premium in the next week even if you don’t do anything.


  38. Buy List Cont:

    GLW – looking good.

    GNW – severe drop in premiums make a new entry no fun but right on target for our purposes.

    GOOG – too crazy to pin down!   Feb $320s are $41 and March $350s – $370s are about the same so no biggie yet.  We sold the $320s for $46 so even a miss yeilds $6+ once the premium grinds down. 

    HAR – Major crash!  I love them as a new entry at $12.40, selling March $12.50 puts and calls for $2.40 for net $10/11.25.

    HOG – right on target.  Good for a new entry at $12.45, selling March $12.50 puts and calls for $2.65 for net $9.80/11.15

    INTC still cheap at $14.20 but you are not getting paid enough for the volatility risk at this point.  I do like the 2011 $10s for $5.53 as that’s about .05 per month premium and you can sell March $15s for .50 but I’d put a stop sell on the $14s at .75 (now .95) and hope to sell the $15s for .75+.

    IR – right on target but what a ride!

    KO – perfect

    M – Amazingly still on track.

    MSFT – I may let them get called away at this point, we have a month though.

    NKE – I would take out the caller on this dip and let it ride a bit.  That means as a new entry I like the stock here at $44.15 and the sale of the naked March $45 put for $3.40 (or just the naked put sale as a cheap possible entry).  No hurry at all to sell the March $45 calls, now $2.30.

    NYX – Same deal, I would take out the caller on this dip.  New entry would be selling the March $20 puts for $2.30 naked and buying the stock here ($19.45) is good too.  Consevative entry of the stock here and selling March $17.50 puts and calls for $4 is $13.50/15.50 is a huge discount and a 10% win if called away.

    PEP – perfect.

    PFE – right back on target after a wild ride.  This is why we take out callers on a nice dip rather than panic.  Too crazy for a new entry as they don’t pay well enough anymore.

    TEX – We’re in for $9.12/10.81 and they’re at $10 so a wait and see.  On the very bright side, the March $10 puts and calls are an insane $2.50 so $7.50/8.75 as a new entry with a 33% payout if called and it really is a great company long-term.

    TIE – perfect and still good at $8, selling March $7.50 puts and calls for $1.60 nets $6.40/6.95 and I love them long term.

    TXN – flew away on us but a crazy stock so just wait and see.


  39. eph, I’m a stock man.  Not contracts.  I can leave my fully hedged position to my children when I get called home!


  40. Matt – Ref DT. Stick save, 3 day weekend, Kudlow on the tube made me get DIA 79 puts @ 1.27 for DT


  41. CNBC report/RMM – I prefer the antique propganda films, more fun to watch.

    I think we can blame Kudlow for this once again – the man is market poison!  8-)

    Amherst/Eph – UMass ’85.  It’s just a very sad place now without the beer….

    SBUX/Eph – I took it that they sell and serve.  You are right, selling SBUX instant for $1 a cup is not a bad thing unless it changes an office run from coming into the store with $50 and a dozen orders to paying $12 for a few foil packs.  I can’t imagine an office that would bother anyway unless it’s the best instant coffee ever.

    Damn, bought back $80 putter again on poor looking chart.  Made a nickel though!


  42. RMM – that’s usually the case, although today SRS is stronger.  They are trying to push both (and succeeding, as most people don’t want to buy anything, so we need a market push to keep them in check).


  43. Day Trade play – Buy puts on Kudlow or take full cover. Go Kudlow, Go … +15%,+20%, +25%. C’mon Kudlow give advice – thanks.


  44. what has happened to AAV. i am down close to $2 per share


  45. Buy List Cont:

    TXT – Woo hoo, back to $7.20!  Looks like a long, hard road to recovery on them but sweet as a new entry here, selling March $7.20 puts and calls for $2.90 for net $4.30/5.90.

    XLF – Down $1 but still way above our net $7.60/8.30 as it pays to have been conservative.  In at $8.95 and selling the March $8s for $2 is $6.95/7.48, this is not bad for a month people!

    UNH – right on track yet again.  Always good as a new entry, now $29.22 with March $28 puts and calls at $3.60 nets $25.62/26.81.

    UYG – right on target and I still like them new at $3.05, selling March $5 puts and calls for $1, netting $2.05/2.53.

    VLO – Right on target and we did them yesterday with a sale of the March $22.50s, now $3.80 for net $20.14/21.32.

    WMT – right on target.  2011 $30s are just $19.10, a nice way to enter and wait for a move up.

    X – on target and always a good play.  Selling March $30s still pay $7 for net $24/27.


  46. There you go; another short cover piece of news !


  47. well so much for that JPM not moving the market.


  48. Phil: am considering buying more of the following stocks and sell march calls and puts, do you think these are good decisions ?
    new position in CAT,
    new position in TIE,
    additional position in UNH,
    additional position in WMT,
    new position in X,
    TXS.


  49. Chart too ugly for JPM to save at the moment.  As I said in the morning, we need a bottom retest of at least 7,850 and maybe they can pull a turn in the afternoon that looks real but a lot of drag from Europe, which ended up closing flat on the DAX and down half point on the FTSE (the banks) and up a point on the CAC (the French).  Of course we’re coming into the G7, which is like hitting a Fed meeting for them so they are going to wait for Monday to see what comes out.

    RMM – read above buy list.  Every one is on there.


  50. Phil, isn’t TM on your list too?


  51. The SKF 170 calls for 3.80 and the 175′s for 3.10 look pretty tempting.


  52. as shorts


  53. C joins JPM in halting foreclosures.


  54. Phil, UYG 5 Mar calls 5cents— puts 2.05  could you clarify  selling a put 2.00 OTM on a $3.00 stock seems counterproductive..tks


  55. TM/Jordan – It was on our first list below $60 but when I did the last one it was at $65 and I was concerned about the rising yen hurting them so they went off.  I would love them back in the $50s but I think they are risky up here.

    UYG/Potter – Oops, that was the March $3s for $1, not the $5s!


  56. Wow, 12:30 already.  I hope they’re not going to wait until 3 to rally the markets today…

    I got bored and went for some GOOG $370s at $3.40 as I think this is the bottom (hit 7,850).


  57. Back to cover DIA puts at $2.25, that’s up .30 from when I bought them back so up about half a roll, which is the whole purpose to selling covers (to roll up the longer puts).

    I’m encouraged by Qs holding 30.50, Rut at 450, NYSE 5,200, S&P just under 830 – which is fantastic compared to yesterday. 


  58. V with a big turn down.  MA following and about to break.  $170 puts for $7.30 are a good mo play, stop at $6.5, look for $9+.


  59. Phil: why do you like TIE, is it titanium ?? with aircraft orders down, how does that affect their business.???


  60. Cap/SLG   I made a hedged entry by buying the stock and then selling 15 P/C.  I plan to keep that trade going and I wonder if I should go a head and sell my Mar 15 put on this dip.   There is ridiculous premium in this stock.


  61. at 11.32 i asked about AAV


  62. NOW GOOG hits my target!  See, never buy out of boredom…

    TIE/RMM – All sorts of use including lightwieght car frames, medical equipement and planes.  There has not been a major plane construction cycle in 30 years and both BA and Airbus WILL be delivering record numbers of planes as, no matter what, airlines want more fuel efficiency.  They have a p/e of 11 and pay a 4% dividend while you wait for the industry to come back and have never come close to losing money and no one thinks they are going to.  Don’t forget the Buy List isn’t so much about stocks that are going up as it is about stocks that are not going down and we can sell contracts against.  As long as we can collect 10% a month, who cares which way it goes?


  63. Phil, you mean buying GOOG 370s @ 3.40


  64. CAP:
    SKF crawling UP, what is bad news??


  65. Like watching paint dry up in here…


  66. Drum, I did an AAV buy-write a few months ago around 5 but it went sour and I got out at 4.  As I recall the div was .10 then and now it’s .04, so I presume that’s what’s killing them.


  67. GOOG/Emo – That was the trade but now I’m looking to mo trade the $340s against them if we head lower.  If they don’t break $358 on the next run up (10 mins) then I’ll probably want to either get out even or short. 

    MA, on the other hand, is not going lower and V seems done going down and we’re waiting on the house vote so I think the puts are kind of dangerous and I’ll take .50 and get out.


  68.  phil, any news on hpq today.  seems to be strong vs. a weak tape?  i think sbux just wanna get people in the door so you’ll buy a 2$ scone that costs 35 cents to make.


  69. Phil: TIE again, of course it could go down close to 0,
    Motley Fool reported ob Feb 10 about stocks which might be endangered, they cite Z-score which includes 5 key business metrics and TIE is on this list,


  70.  Yesterday about this time I posted that SKF was having trouble getting past 144.50.  Now it’s having the same struggle today.  Cap, is this a barricade with some technical element to it?


  71. HPQ/Jo – Nothing I see and they are pushing up against the 50 dma at $35.64 so that’s pretty impressive  but  they still worry me on the currency front.

    TIE/RMM – Well far be it for me to debate the Motley Fool… 

    Well, at least GOOG is predictable.  Now let’s see if they go beolw $355.50.


  72. MrMocha
     
    thanks


  73. This is insane – did people actually think the House was NOT going to approve the stimulus bill?  Are we seriously going to rally off the passage?  It’s a pretty thin excuse to jam up the markets but we’ll take it I guess…


  74. Looks like SIRI would have been a fun Hail Mary at .60 on Wednesday!


  75. That’s .06 on SIRI


  76. Phil, where are you on RIMM ?


  77. EPH … SLG, let me know exactly what you did ….
    Buying stock under $15 is pretty attractive.  The thing is being totally driven by the SRS / IYR unfortunately.  Should be much higher.
     
    SKF …. gravity; just missed selling the 1.70′s for 3.90 right before they sold off; but I did get some 1.75′s for 3.10.
     
    7881 ,,, that’s a rally ?


  78. Also, you can get FAS at 8.10 and sell Mar 7.5 puts&calls for 3.60…


  79. Wed … foreclosures … the man w/ the plan.
    That should toast SKF and SRS for the rest of the day !


  80. SIRI/Mr. M – Those bankruptcy rumors on companies that aren’t out of business are always fun to play up, especially when you get down to pennies but very risky of course. 

    RIMM/BDC – I never liked them at all as a company.  I liked them as a stock when they were in the $30s as there is a value to a recurring revenue stream (see SIRI) but I think it’s bad to play a dominant player in a space like this (see MOT) as it’s a lot easier for them to have bad news than good.  Keep in mind that AAPL is NOT a dominant player in either OS, Computers, Laptops or Phones.  ITunes is kind of a monopoly and if were their only thing I’d be concerned but RIMM has all sorts of dogs like AAPL nipping at their heels and they could get hurt in a number of ways.

    FAS/BDC – Kick-ass play!

    Yawn - these markets are getting predictable…  8-)


  81. Cap/SLG   In my regular account I bought 100 shares and sold Feb 5 P/Cs.  My plan was to roll whichever leg was ITM and sell to open the other leg in Mar.  I don’t mind pre-selling next month on a dip, $14.50 seems to be a short-term floor.   In my IRA I sold Mar 12.5 puts on a dip with intention of taking the stock if it’s put to me.


  82. OK, NOW I’m glad I bought those GOOGs!

    Damn, CNBC brings out Roubini clips trying to stop the rally.  Don’t forget Cramer told the Sheeple to sell last night….


  83. I’m waiting for the big "sell the news" sell off – Wont be long


  84. USO/Oil   Look at the divergence between oil and USO.   I assume it’s because USO is getting punishing from rolling due to contango.  What was the other oil ETF that uses all the future and not just the front month?  Somone posted a SeekingAlpha article about it.  I would be interesting to see if that is tracking oil more closely.


  85. BTW, please root for USO to close between 26 & 27 next Friday, in that case I make gin will all my shorts expiring.


  86. Eph …. What prices did you buy the stock and sell the options.  Assuming you bought stock below $15; just let it ride into Friday and hopefully it will be above $15 and its a win win win.
     
    USO, overdue for a decent move up !


  87. I’m calling it now: Dems lose house seats in 2010, but retain slim control.


  88. UA  I’ve got a 1-lot spread with 17.50 callers.   Would you roll to the Feb 15s for $1.05?   I’m tempted to because there is still .75 in premium in the Feb 15s (and the most I can make is .13 on the 17.5s), but wonder if I’d get caught in a snap-back rally next week.   This is a general question because I have several positions like this.  On multiple lots positions I’m rolling down to 1/2 covers for a credit, but on 1 lots, I’m not sure whether to close, roll, or just wait for it to expire.


  89. Cap: have my grandchild in the house, could not watch and missed therefore the SKF and SRS opportunity, but its moving up again.


  90. I bought SLG right about there (15.17), but that’s kind of irrelevant because I’m planning to hold for dividend and covered call writing.  I guess my question is your guess for a near-term trading range where I could sell the put on a dip and the call on a run up.  But as I said before, the premiums are ridiculous, the ATM Mar 15s are trading right now for about $4.60, or 30% of the stock price.   Sell that a few times and it doesn’t matter what the stock does.


  91. BDC, probably a good bet but not a shocker, the party with the White House usually loses House seats in mid-term elections.  (At least I think that’s right, but I’m not taking the time to check)


  92. FWIW – a little medical device compnay that I own part of is doing very well.  Had its best quarter ever (4Q)…might be just a fluke or overconfidence, but my take away is if you can find medical device companies that sell products that are covered by insurance (not elective), they should hold up well.  DRs are looking for revenue models that are covered.  ABT comes to mind.  JNJ should do OK as well.  MDT, STJ (just announced earnings), etc.  Might have to dig some out for next week.  I will do some research.


  93. Phil: Solar, I have LDK and SPWRA,
    what are the best to have ?


  94. Oil/Eph – Other oil is OIL (no options so I don’t care) and USL, also not good for options.  They are all a joke, I only like USO because they have liquid options to sell to other fools.

    Let’s rermember yesterday we went up 250 from 3:05 to the close, maybe this is just a warm-up…

    UA/Eph – I’d take out the callers and wait as long as you really intend to be in long-term.  We’re getting BTE earnings from a lot of retailers and UA is more of a neccessity than most.

    Pharm – Remind me on the weekend as we need some bios – that sector should do well.


  95. RMM, you could do that right here w/ slg


  96. GOOG $360 and AAPL $100 are the key to the market.  Keeping XLF over $9 is important too but that should go hand in hand with their leadership if we can get it from both of them.  Would be good to see BAC turn green as well as V, which would be a great recovery for them.  Oil looks like it’s closing down 2.5%, that’s a little worrying if XOM and CVX take it poorly but the bill passage should trump low oil.

    Solar/RMM – SPWRA is a much better company.  LDK is a fun one for speculation though.  Those are the two that I do like. You can use the money you make selling SPWRA contracts to buy LDK shares as you upside hedge…


  97. CCJ earnings after the close today. Are they trying to hide behind a 3 day weekend ?


  98. AAPL red.


  99. Oh, I was looking at USO down 2.5%, WTIC closed up almost 10% in the March contract, quite the disparity!  Shows you what a rotten investment USO is… 

    Hopefully that was the big GOOG head-fake before breaking up but that was a disappointing fall from $360.

    CCJ/DB – I hope they miss, it will make a nice entry. 


  100. I think the Goog is already range bound for oe next week.  Then on Thursday afternoon or Friday they’ll lower it down to 340 or so.  I think anything over 360 between now and then is a goog short.  But then, some of you have already figured that out.


  101. The Mr Mocha SKF Predictor is showing a 140 close for SKF today, so a boring finish.  Although we learned yesterday that anything can happen!


  102. Now I WANT Cramer to tell everyone to get out of SKF…


  103. SLV  What do you think of them as a premium selling vehicle, like a poor man’s GLD with the added bonus that silver is an industrial metal.


  104. SKF going up faster than DIA going down, market drop coming?


  105. Right here is probably a good spot to sell SKF $130 calls at $18 into the close – I think this is there last hurra before a big fall.  Stop at $18, looking to buy back at $14 or less.

    SLV/Eph – I like gold better because I see the price all the time.  SLV would force me to watch something else and also, there is a certain logic to gold moves but silver can go off on its own. 

    10 mins to 3, I really hope they don’t let us slide into the close…  3:05 was the rally yesterday but we only need 100 today to get back to 8,000 and 840 and we’re already almost at 1,550 on the Nas. 


  106. Phil – We have 3 days weekend coming, week b4 OpEx. Probability that someone will came on with the cure for depression (pun intended) is rather slim. My guess is that we will close on the minus side.


  107. Is this what trading has come to?  Wishing for manipulation?


  108. Don’t see Steve here today but you other Apple followers may be interested in Round 2 of the iPhone in China story.


  109. AAPL could not close the deal!  Can GOOG hold on without them?  SKF below $140 would be nice too.

    Nuts, we got past 3:05 with not rally and the bears are celebrating.   Based on the article yesterday this is what the PPT wants, they want to see the shorts layered on so they can burn them but a dangerous game coming into the bell of a long weekend so be careful!

    LOL Matt – It’s all manipulation, sometimes it works for you and sometimes it doesn’t.  The whole economy is being manipulated so why not the markets?


  110. Today a stick-it-to-me save instead of a stick-save!


  111. I’m guessing this is the turn up point for UYG.


  112. REITs getting crushed – VNO, BXP.  I’m liking VNO March $40 puts to sell at $3.60


  113. Phil, WMT earnings are Tuesday, Feb 17 before open.  Any idea for a spread?


  114. matt im with you on this one, i think theres nothing to send us up anymore…everything the Government has to offer has been realized and theres no reason to buy unless its a day trade…would love to see a 500 (sub 800 S&P) point selloff just so i can put some real money to work. Too much interference in the markets, and all this talk about never having this type of economic collapse goes against all thats made this country great. Scary if you ask me.

    China also trying to prop their markets, seems like a waste of money to me and China doesn’t have enough wealth (population)  to sustain its agenda.


  115. WMT premiums are not that fat…


  116. Maybe the PPT is pinching pennies after yesterday and can only afford to buy for 30 minutes now!


  117. Anton Shutz w/ some sensible comments; may rally the financials a bit as the shorts were pressing their bets.


  118. watch what happens to the premiums on SKF options last 1/2 hour …die baby die.


  119. Phil, I have a DIA protective put spread as insurance you recommended a week ago.  I am long DIA April $87 put and short Feb $82 put.  it is a nicve spread, but need to think about ajusting it as Feb opex draws near.  What would you consider a good adjustment here?  I am thinking I should sell a March put, but which?  And isn’t the April put getting too close in time, so should I move it out in time some?  Still want to have it as a protective (insurance) trade.


  120. WMT/Jordan – I like them straight up from here with the leap (mentioned in buy list).  The premiums are ridiculously low for earnings coming and you can buy the March $47.50s for $1.61 and hedge with the Feb $45 puts at .52 as you could win both ways if they have a big sell-off and then recover.  Of course you are spotting .52 on the run-up but they are down from $55 after last earnings so a very long way to recovery for them if they hit.

    Now or never I guess, although they have waited until 3:45 before….


  121. Phil: SKF shorts worked again the last 10 minutes, hope Matt is not upset again.


  122. Phil- is there a play to be made on options epiration for USO similar to what happened in December and Jan with crude price getting crushed just before expiry? what levels would you be looking to do a naked put or a hedged entry considering $32/bbl is the low?


  123. That was nice RMM; I had sold a bunch more 175′s btw 2.90 and 3.10.


  124. RMM, don’t worry about me.  I’ve been trading UYG/SKF for a long time.  I wasn’t caught the wrong way yesterday.  I bought SKF at close which went up AH/PM as I expected.


  125. Phil: this was a good week, made $$ every day except Monday.
     
    Have good weekend,
    market is closed Monday according to SingaporeSteve.


  126. DIA/Jordan – Assuming you want to keep protection – Just roll the caller across to the March $81 puts at $4.50 (collect $1) and roll yourself to June $82 puts at $8.10 (collect $1.30).  Think of the $2.30 as 5 roll ups you can do on your June position at .50 each so your spread is net about the same but you gain a month on your putter and put them into $2 more premium.  It is a slightly more bullish play and you can be more bearish by pushing the putter lower to start as the March $78 puts are $3.05 (cost .50) and can be rolled down to Apr $75 puts for a $6 spread. 

    SKF/RMM – Do you see why I stress understanding how the contracts work over just "picking" things?  Because we understand how the premium runs up we can make good plays into the excitement rather than being the sucker who thinks he is getting on the bandwagon.

    USO/SNS – I would certainly say selling the $26 puts for $1 is a good play.   Worst case you can roll them to March $23 puts, which is another 10% away

    Oh that’s it, 3:45 and not push.  Can’t see it happening now…  Took out the DIA putters again – Naked on Apr $81 puts to cover.


  127. MetaData: Steve Ballmer Is Insane… now thats an understatement!!

    http://www.forbes.com/2009/02/13/steve-ballmer-retail-technology-personal-tech_0213_microsoft.html


  128. Really weak volume out there.  Guess everyone’s out buying flowers and baking cherry pies for Prez’s Day.


  129. Yep.  That’s one healthy market.


  130. that sucked !


  131. Funny how the Prez "could" sign the Stimulus bill as soon as Monday…. The day the market happens to be closed.


  132. Have a nice weekend!!!!


  133. Real selling frenzy into the close.  I guess a lot of people wanted to be in cash for the long weekend.   That was a very disappointing finish, especially with the house passing the stimulus.   We did hold 825 on the S&P and that was the most important number of all but a sad market week overall.

    Next week is going to be interesting to say the least.

    Have a good weekend everyone – I’ll be around.


  134. Look at how they jammed SKF and SRS into the close on LOW volume !


  135. There’s your 7850 Phil.


  136. Wow, something happened toward close. Probably the last two traders on the floor playing around..


  137. Thanks Phil, have a good weekend!


  138. I think the continuing division on the House vote (not a single Republican for it) put a damper on the passage, just like last week and that calls into question the Senate vote so who knows, we could explode out of the gate with a signed bill…

    LOL 7,850 on the nose.  Well Matt, either I’m a genius or it’s fixed…  It’s fixed!  8-)


  139. I hear ya.  And I believe ya.
     
    Have a great break.  Don’t forget to be good to the wife!



  140. Very interesting read!  But it was only 496 pages.  Where’s the rest?  I’m on the edge of my seat!
     
    But seriously, this is unprecedented.  The New Deal provided jobs, too.  More.  But these are some pretty specific programs which require some pretty specific expertise.  It’s not just paving, hammering and wiring!  This is alot of environmental stuff.  And a ton of other stuff which require highly trained workers.  I wonder what percentage of the jobs created can actually be filled by qualified people?  I’m not sure we have enough of them to go around.  This thing tosses around hundreds of millions of dollars like they were candy or something.  Truly incredible.  It’s a wet dream for all of the companies who are in the right lines of business.


  141. Which brings up a suggestion.  Can we compile a comprehensive list of the types of industries which will be required by the specific expenditures listed in the bill?  I know its alot of work.  But if we compiled partial lists done by others we could probably cover the majority of it.  Then it should be easy to pick the one or two best companies in each sector.  I think alot of them will be medium cap companies.  And a $200 million dollar contract to one of them would really make an impact on their earnings.  All we’d have to do is get in now and position ourselves ahead of the first contracts being let and we ride the spike all the way up to when they book 200 – 400% increase in quarterly or yearly profits because of this monster.  And from sitting where we are today… with not only negative growth but negative earnings… the share price can’t help but go balistic.  It will be a rising tide for all companies in each of the sectors impacted.  But clearly the ones who actually win contracts, the bigger the better, will benefit the most.


  142. From the Washington Post,
    The package combines tax cuts with new spending, and three-quarters of the money is planned to reach state capitals, businesses and individual taxpayers by the end of September 2010. Its virtues and limitations will remain uncertain until the money is paid out in the form of road projects, unemployment checks and energy-efficient building improvements, but its reach is already clear.
    The New Deal of the 1930s equaled no more than 2 percent of the nation’s gross domestic product. The new legislation represents over 5 percent and is probably no more than an opening bid — Obama and his congressional allies will next turn to the foreclosure crisis, the reform of financial markets and an overhaul of federal budget practices.
     
    There is an awesome graphic in the print edition which shows the amount of money per sector but it’s not available online.  It’s pretty much what I was talking about.  I’ll try and post the data from it later.


  143. Matt, this is 1000+ pages total, there are two parts.  The first part is 496 pages, the second another 577, see my post above.
    What really got me mad is on CNBC this morning an "expert" said "I work on the hill and I haven’t seen this thing" implying the compromise bill was not available to the public, there was no transparency etc.  Nobody told him it has been available publicly since at least around 5 pm Friday, if not earlier.


  144. I meant MSNBC not CNBC.


  145. DRYS
     
    How about EXM instead ??


  146. Hi Phil,
    what about entering a position of DNDN like this:

    buy Jan’11 $5 for $2.35
    sell May’09 $7.5 for $1.35

    You loose $1 if they go BK, but otherwise you have 20 months to sell some more juicy premiums. Any opinion?

    And how about PCX. Aren’t they a nice entry at $4.85 and selling Mar $5 for 0.70?
    Might there be a high likelyhood that they go belly up?

    Have a nice weekend!


  147. Phil,
      I’m a relatively new member though I’ve been following your columns on seekingalpha. Anyway, I had a couple of questions:
    1) is there a place you post the trades you make or are they just the ones you bold in your posts?
    2) when you sell both calls and puts together as you often do, are the calls covered or naked?
    3) where can I learn/understand how to roll calls and puts? is it in the options book on the site (the pdf)?
    4) when will you have the $10k and $25k portfolios up and running?
    Thanks.


  148. List/Matt – I’m still scrubbing around.  It’s not so much making a list as it is figuring out which industries are in the right place to actually benefit from the infusion.  As you say, $200M can go a long way for some companies but it can be a drop in the bottomless bucket for others. 

    EXM/Edro – They could be good if they hold the 50 dma at $7.20, if they take off next week, then the momentum should carry them to $10. 

    DNDN/Ricky – I agree, it’s a very nice play IF they don’t go BK.  Of course we said that last year too so it would have been a good roll already.  PCX I never liked but boy they do seem cheap down here.   They have a lot of debt and no cash thoug so you might want to wait and see how they resolve that first.

    Welcome Japarikh!  We have a tab on top of this page labled "Portfolio" where I keep running plays we are tracking but I don’t do specific portfolios because 500 people have different entry and exit points and different mixes and different interests so they only end up making more people unhappy than happy.  I’m always willing to discuss your portfolio and you can always ask if I feel a play is good for your mix.  Optrader (see his tab) has a portfolio good for smaller traders on a daily basis and you can find out all about rolling issues under the K1 Project Tab. 

    Well nothing big out of the G7 so we’ll have to see what happens tomorrow in the open markets ahead of our Tuesday.  On they whole, I’m sleeping better with the naked put coverage.   


  149. List/Phil, The reason I mentioned the mid caps in the right industries is because of the greater impact of $200M.  Everyone is looking for FlourDaniel and CAT to do well.. but some of the lessor known smaller players will have larger bounces once earnings get reported with all that new mulah that will be put into play soon.  Prudence would suggest watching whatever winds up on the list before jumping in.  But as for CAT and Fluor,   I actually think they’ll get a pop on Tuesday.