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Weekend Wrap-Up, Still Trying to Get Bullish

Writer's BlockI’m having writer’s block this weekend

Usually when I can’t think of what to write it helps me to go over our virtual portfolios so I started this morning reviewing the Buy List but I didn’t get far because it was silly.  Of 43 plays on the buy list, 39 are doing well – too well in fact to the point where it’s hard for me, in good conscience, not to say let’s kill the whole thing and get back to cash as we’re up about 20% in 2 months and that’s just ridiculous – most people would call that a good year and go on vacation

The Buy List was 100% bullish and we did catch a good bottom on our early February entries.  I was gung ho bullish then because I felt comfortable that the 10,000 line on the Dow would prevail and that we were good for a run back to the top (10,700), following, more or less, the pattern we had in 2004 (see original post for charts).  Well that’s pretty much what’s happened since then but that’s not making me happy because I see no reason we won’t complete that pattern and begin falling off a cliff shortly.

As you all know, I’m not a big fan of TA, or patterns for that matter but the reason I started looking for patterns was to try to get a handle on how long  market could really keep going up before falling victim to exhaustion.  To me it seemed we weren’t at that point on Feb 6th but now that we’ve put in that big push back up – if we can’t punch up to new highs on all our indexes then I do think it’s time for the markets to take a break.

 

Clearly I’ve been too bearish for the past couple of weeks and we are now 224 points over 10,400 on the Dow which is where I turned bearish as the January data made me lose faith in our ability to get back to 10,700.  I should have stuck to the TA because we’re a lot closer to 10,700 than we are to 10,400.  With the Russell and Nasdaq exploding to their own new highs.  You can see though, from the above chart, why I do want to wait to see the NYSE, Dow and S&P confirm this move up – it’s not far now!

We’re finally getting the hang of the Wonderland Market though it’s actually quite simple because, as Alice once said: "If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?"  We’ve done considerably better just going with the flow – riding along on the crest of this market wave and taking plays in both directions.

Nonetheless, Friday’s extreme nonsense looked like as good a time as any to cash out our long, unhedged positions (directional plays) and I called for a cash out in my 9:38 Alert to Members.  Alice also said: "I’ve often seen a cat without a grin; but a grin without a cat! It’s the most curious thing I ever saw in my life!"  That describes this rally very welll – it’s a grin without a cat and an illusion without substance can only go on so long before the house of cards comes crashing down.

Monday Market Movement

I was still cynical about the market movement of the previous week and I thought it was very suspicious that the Hang Seng rocketed up 2% to kick off the week, especially in light of new that China moved to nullify all guarantees local governments have provided for loans taken by their financing vehicles – something that would ordinarily send investors flying out of a market.  The Hang Seng had gapped open 300 points and added another 100 during the session and that did turn out to be it for the week as China completely flatlined for days.  To see how unusual this is, click on the 3-month of 6-month view of the chart.

Not to be cynical (of course) but the Chinese market is up 100% off the bottom and down just 15% from the all-time highs, which seems perhaps a little much.  Who benefits from flatlining the market in China?  Well, flatlining the market lowers the VIX and lowers the price of puts and it just so happens to have been been about 6 weeks since China opened up their markets for short-selling and margin trading BUT – they have only allowed it for securities firms with at least 5 Billion Yuan in net assets and very high net-worth traders

So what would happen if the top 0.1% of China loaded up on short positions that no one else could take and then they crashed the market?  Why they would get super amazingly rich while putting everyone else in the poor house.  It’s the same play that worked just 18 months ago and all those guys seem to have gotten off scott free – is it really such a stretch to imagine one or two of the 1,011 Billionaires who walk among us might want to move up the list a little?  Still, as I said on Monday: "If "THEY" are "faking it" then they are very good at it and we may as well go with the flow."  I also said: "I am trying very hard NOT to have an opinion on the markets as we’re already above where I though we should be" and we shifted to a more opportunistic series of trades to reflect our more neutral attitude:

  • USO March $41/42 bull call spread sold at .20, now .07 – up 65%
  • DBA artificial buy/write – on target
  • T July $25 puts sold for $1.45, out at $1.20 – up 17%
  • T Oct $24/25 bull call spread at .55, now .57 – up 3.6%
  • EDZ complex spread – on target
  • FAZ complex spread – down enough for 2nd round entry
  • EWP July $45 calls sold for $2.20, still $2.20 – even
  • BA Apr $62.50 puts sold for .78, out at .40 – up 48%
  • BA Jan $55/65 bull call spread at $6.50, now $7.15 – up 10%
  • BA Jan $55 puts sold for $3.20, now $2.70 – up 16% (pair trade)

Toppy Tuesday – Happy Anniversary Bull Market!

I drew a very nice S&P chart that neatly pointed to the uptrending channel we were in with our expected top at 1,150.  That means next week we’ll be looking to either break out and establish a floor at 1,150 or we’ll be watching a breakdown of the channel in the low 1,130s.  I raised my major concerns about how the Mainstream Media is once again cheerleading a rally back to levels that were, at the time, based on profits that never existed as they themselves were based on a great Fraud and actually led to Trillions of dollars in losses.

We are not only attempting to regain our past market glory but we are doing so while making the same mistakes – shipping barrels full of dollars out of the country to pay for both commodities and cheap labor while emptying the pockets of the bottom 90% of the American working public.  While (as I said in "A Tale of Two Economies") this is a recipe for success for the top 10% and the companies that serve them, this is a recipe for disaster for the people of the United States of America, which is why we at PSW are island shopping – adios suckers!  I wish I was kidding but, really, it’s time to look for the exits…

  • Oil futures, short at $82, out at $81 – up $10 per penny per contract!
  • GLL at $9.55, now $9.92 – up 3.8%
  • TXN Apr $24 puts sold for .70, now .77 – down 10%
  • CSCO March $25 puts at .12, out at .15 - up 33%
  • SPWRA Apr $19 puts sold for $1.05, now .70 – up 33%
  • TZA complex spread – on target
  • AAPL July $240/Apr $230 diagonal spread at $3.75, now $4.60 - up 23%
  • USO March $40 calls sold for .65, now .35 – up 46%
  • USO Apr/March ratio backspread – on target
  • USO Apr $38 puts at .82, still .82 – even
  • VNO Apr $75/70 bear put spread at $2.60, now $2.20 – down 15%

My closing comment to Members for the day was: "Well yet another fun day where it looks like they are going to break out but we end up going nowhere.  Bottom line is we are still down for the week and this is a hell of a lot of top churning, albeit on low volume."  That summed up the day very nicely.  Notice we are shorting commodities and emerging markets and the commodities are working and, if they keep working – emerging markets will follow.

Which Way Wednesday – World of Worries Weighs on Wall Street

My opening comment to Members on Wednesday came in our after-hours discussion at the end of Tuesday’s post at 6:23 am before I got to work on Wednesday’s article.  I said at the time: "We’re still in the kind of market where you may wake up one day and find your stocks are cut down 20% and they could be 1/2 in a jiffy.  It is not a good idea to make big commitments on stocks you don’t mind putting under your pillow for a year or so while another wave of crisis sorts itself out."

Yes, I am aware of the fact that if I want to stop being viewed as a stock market Cassandra I should stop writing headlines like this and stop pointing out all the bad stuff I see.  My consulting company is called Delphi consulting for the same reason – I don’t always tell people what they want to hear.  Market forecasting is not astrology – we should not be here to "entertain you" or to "get ratings" by telling you what you want to hear.  I’m not even saying I’m right, this is simply what I see going on and I STRONGLY ENCOURAGE you to read people who totally disagree with me as well – I sure do. 

  • GLW complex spread – on target (good opportunity for new entry)
  • BTU artificial buy/write – on target
  • BIDU Apr $540/March $540 calendar spread at net $11.80, now $14.30 – up 21%
  • Oil futures, short at $82, out at $81 – up $10 per penny per contract!
  • USO Apr $38 puts at .77, now .80 – up 3.8%
  • ERY Apr $9 puts sold for .30, still .30  - even
  • AIG March $37 calls sold for $1.60, now .49 – up 69%
  • AIG March $40/36 bear put spread at $2.90, now $3.60 – up 24%
  • BAC complex spread – on target
  • KEY Jan buy/write at net $5.14/6.32 – on target
  • POT Apr $110 puts at $2.65, out at $3.25 – up 22% (now $1.50!)

Several fundamental things caused us to get more bearish on Wednesday: Commodities were looking toppy; We recorded a record budget deficit of $221Bn in February with $328Bn in outlays (up 17% from the last year) against just $107Bn in collections; We had a weak day despite the Senate approving a $149Bn job stimulus package.  When $149Bn worth of stimulus spending gets a big yawn from the market and the government is already burning $221Bn a month – it does tend to sour your long-term outlook…

218 New Billionaires Averaged $500M in Gains Last Year – How Are You Doing?

It turns out our PSW Members Chat is the wrong place to ask this question as many are doing very, very well from all this stimulus and government and private manipulation of the markets and they are not looking to change things (other than, perhaps, the guy who has been in charge during the recovery for some reason).  Needless to say, we had some very spirited debates on the subject so I’m not going to rehash it here – we are moving on now as we have no time for socio-political discussion in the upcoming expiration week but it is a lot of fun having spirited debates with so many well-represented viewpoints in the same virtual room.

Once I was done with my rant on the pitfalls of Capitalism my closing comments on the market that morning were: "It looks like we have a bit of a sell-off this morning and I predicted yesterday in Member Chat that we’d hit 10,400 by tomorrow so I hope I’m right as we still have a bearish short-term stance but we will continue to watch our technicals and play the hand that’s dealt."  It didn’t take long for Mr. Market to show us his bullish cards so my 9:42 Alert has 2 bullish plays to offset our losses in the bearish positions we kept without forcing us to abandon them.  Those were the DIA Apr $106 calls and the TNA bull call spread but, as I did earlier in the week, I had already called for a BA bull spread and the old reliable Oil Futures short in our early morning Chat:

  • BA 2012 complex spread – on target
  • Oil futures, short at $82, out at $81 – up $10 per penny per contract!
  • TNA Apr $52/53 bull call spread at .45, out at .60 – up 33%
  • DIA Apr $106 calls at $1.08, out at $1.40 – up 29%
  • AMLN double diagonal - on target
  • C complex spread – on target
  • WMT artificial buy/write – on target
  • SONC Sept $10 calls at $1, now $1.20 – up 20%
  • SONC Sept $10 puts sold for .90, now .85 – up 5.5% (pair trade)

Notice we are still taking many bullish positions to offset our bearish betting but we are taking quick profits and setting up a lot of complex, well-headed spreads to guard against a possible downturn.  The whole week has been all about staying nimble and just cherry-picking the easy opportunities to set up plays we can make 20% on and get done with them along with some cautious entries on stocks like C, BA and SONC, that we still feel have room to run in a hot market. 

Friday Chart Toppers – Breaking Up Is Hard To Do!

Despite all our bullish bets for the week I was sad to see us breaking up on Friday.  Perhaps that’s where the writer’s block is coming from (this, by the way, is me with writer’s block – 4 pages later!) – we don’t mind BS manipulated market moves as long as we understand the motivation behind them and the likely next move.  If the red card is never going to be the card the con man flips over, we are NOT ashamed to bet that the next card will not be the red card.  Sure we feel bad for the guy playing the game but if he insists on going for his "sure thing" then we’re happy to make a little cash making side bets against him!

As I noted earlier, I did get disgusted by the 50-point gap up at the open and decided it was a good time to take the money and run on unhedged long positions.  We were only 50 points from 10,700 where we either pull back or break out in some spectacular fashion and the same goes for S&P 1,150 is we make them… Well, I already indicated my enthusiasm at the close of Friday’s commentary: "So rah, rah markets – what an amazing rally, woo-hoo – everything must be great because the markets are making new highs.  At least for now…"

  • IYT complex spread – on target
  • FXP Apr $75 puts at $1.50, now $1.72 – up 14%
  • GMXR May $10 puts sold for $1.20, now $1.30 – up 8%
  • TBT Apr $48 calls at $1.07, still $1.07 – even
  • OIH March $125 puts at $1.10, now .90 – down 18%
  • OIH March $125 calls sold for $2.88, now $3.05 – down 6%
  • C Jan $4/5 bull call spread at .30, still .30 – even

I’m TRYING to get more bullish, really I am.  I’d love to buy on every dip and cheer at each end of day rally but I just can’t get myself to believe it.  It’s kind of like going through the motions on December 24th – you can lay out the milk and cookies and hang the stockings but are you really going to stay up all night listening for the sound of hooves on your roof?  That’s how I feel about the market rally and economic recovery - it’s a nice story that we tell the proletariat so they don’t realize that yes, Virginia (and every other state), there is no safety net. 


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  1. foss

    Phil,
    I am thinking of doing a traditional IRA to Roth IRA conversion. Your thoughts? wikipedia seems to like roth ira if tax bracket same or higher at retirement
    http://en.wikipedia.org/wiki/401%28k%29_IRA_matrix#IRA:_Roth_vs._Traditional

  2. Jtiff

    Phil-
    I’m thinking of selling premium and using my proceeds, or a big portion of that, to pay down my mortgage.  I have to move in a little over a year and I want to get the payments down so that I can rent the property.  It’s a condo and there is no way that it will be anywhere near my purchase price.  What do you think of this strategy?  Also, what are your thoughts on college savings accounts?  Can you recommend a good one?  Thanks.

  3. aclend

    Phil,
    Can you comment on the new Denninger article if you have a chance? Thanks.

  4. Phil

    Roth/Foss – Way outside my area of expertise.  You need to discuss your long-term goal with a financial planner.  My understanding is the Roths are better for setting up an investment account with (that you are going to play the market with) but I’m sure it greatly depends on your individual circumstances. 

    College/Jtiff – LOL, when did I become that guy?  My attitude about accounting stuff is to hire a guy so I can concentrate on my work.  I am in favor of paying off a mortgage as quickly as possible – assets are generally better than debt but – if you have a fixed mortgage and inflation takes hold – then paying it off early is a waste so I say yes, work to pay it off but don’t go crazy.  As to college stuff, I think that, like the Roths above, is so dependent on your personal situation that there’s no way to give a generic answer.  On the whole, I think it is VITAL to put that money away as soon as possible into something that you expect to keep up with inflation but my kids (2000, 2002) are at the tail end of the echo boom so I’m hoping that college costs stop rising at some point when the population thins out but that may never happen if getting a US education remains in vogue for global citizens as the Global top 10%’s kids provide an endless supply of students willing to pay up for an American education and we’re pretty much the only country where cash is king when it comes to educating our children so we get efficiently priced out of the private college system that was built on tax breaks provided on the back of US citizens – another great example of how the invisible hand smacks the people around. 

    Denninger/Ac – Gosh he’s just SO negative, isn’t he?  It’s nothing we don’t know – if they go back to mark to market then all banks are technically insolvent and most of them probably are anyway but I advocated getting off M2M since early in the crash because, as I’ve pointed out in other articles – banks collect 270% of the price of a home over the course of a mortgage so, even if there was a 50% failure rate – they’d still do better than break even after 30 years.  That doesn’t make them a sexy investment but it also means they are only BK if you force the issue and, obviously, no one in governement is going to let that happen. 

    $3Tn sounds very scary but it’s $100Bn a year for 30 years (assuming they don’t screw anything else up) and that’s $100Bn a year and Uncle Ben can write those checks in his sleep and that’s why the market rallies when they float a rumor that Yellen is lining up to replace him.  After Yellen, they’re going to have to go with the free money guy in the green suit on the infomercials to find someone more willing to open the government spigots on the banks but nothing is out of the question…

    This thing doesn’t break down until our creditors put their foot down.  Since all of them are in as bad a shape as we are (even China), then NOBODY in power is willing to let anything fail and they will simply keep things going until it become physically impossible to sustain it.  Since money is not physical and only has arbitrary limitations, this can go on for a very long time.

  5. Pharmboy

    I am trying to do a review of the Pharma/Biotech/MedDevice Picks from the past week.  Note, for many of the positions (like the posts) are 1/4 to 1/2 starter positions.  The same can be said for the recommendations here; so the wrap up is:
    Monday:
     
    HK 20 Apr10 P for 85c (did not fill)
    ABPIQ stock buy on Tuesday for 83c (1/4 position; even)
     
    Tueday:
     
    MRK 35/40 Jan11 bull call spread for 2.15 (now 2.35)
    MRK 35 Apr10 P (sell) for 35c (to pay for part of above; still 35c)
     
    Wednesday:
     
    ISIS – 10 Apr10 C for 65c (1/4 position; now 57c)
    SVNT – 16 Apr10 for 37c (were up to 50c if one sold them, now 40c)
     
    Friday:
     
    DCTH 5/7.5 Jun10 Bull call spread for $1 (didn’t fill but we will try again)
    ARNA 3 Apr10 P (sell) for 20c (even)
    AMLN 21 Apr10 C for $3 (1/4 position; now 2.80)
     
    That’s my review….hope all are having a nice weekend.

  6. tradinv1

    Pharm, Thanks!

  7. Pharmboy

    For the Divine Device Comapnies (1/4 positions)
     
    VIVO – 22.94 stock buy; sell 22.5 Jul10 C/P for 3.25 (didn’t get the fill, so adjusted to 2.85)
    VOLC – have not gotten the covered call to fill, but the 22.5 Oct10 P sold for 1.60.  Trying to get the covered call Oct 25 for 22 total.

  8. aclend

    Phil,
    I know you like AAPL, BA, WMT, MCD, VLO, GE. I want to start transitioning into more, safer names such as these. Obviously, I’m watching and using the Buy List but would like more "dead money" investments that I can buy for dividends and/or LEAPs to write against. Do you have like a Top 10 or 20 list other than these that might be helpful? If I knew they were "safer" then I think I could just increase position size instead of having 100 different positions. Thanks.

  9. aclend

    JRW,
    I know 1 or 2 others have asked about this. For those of us, with less daytrade knowledge, would you mind laying out a paragraph or two taking us through a typical trade for you? It would be much appreciated. Thanks.

  10. terrapin22

    The post below has some excellent commentary by Robert Reich on the weak recovery.  
    http://www.zerohedge.com/article/life-great-only-if-you-are-already-wealthy
    TOS rated #1 online broker by Barrons in latest issue.  I plan to sign up.  Schwab is killing me on options. 

  11. terrapin22

    The post below has some excellent commentary by Robert Reich on the weak recovery.  
    http://www.zerohedge.com/article/life-great-only-if-you-are-already-wealthy
    TOS rated #1 online broker by Barrons in latest issue.  I plan to sign up.  Schwab is killing me on options. 

  12. dflam

    Terrapin: I use Schwab also & read the same article in Barrons. Baed on the article,Schwab is cheaper to use on option trades than TOS. Did I miss something? Would appreciate your clarification.

  13. JRW III

    aclend,
    The best thing to do is follow the daily chat. I usually give out the lines I’m watching and indicate the trend,then I will give my feeling of direction, if I have one. So let’s say I say IWM 66.50, 67.00, and 67.50, and it’s Monday so probably up. Then the market opens at 66.60, well I set up for a TNA buy and if it falls to 66.50 or so and DOESN"T fail, I buy. If I’m wrong and it then fails, I’m out with a small loss and reevaluate, but that rarely happens in a scenario as I described above; usually, in this market, after that initial weakness, it will go to 67.50, or higher. But it’s Mr Market that I follow, I don’t limit myself by my own predictions !!

  14. JRW III

    aclend,
    The above assumes no news.

  15. aclend

    Thanks, JRW. Now we’re getting somewhere; it’s like pulling teeth with you man! HAHA. I’m just giving you a hard time. How are you defining a fail?

  16. JRW III

    aclend,
    In that example, depending on the trend lines, probably 66.44

  17. aclend

    Gotcha. I really do appreciate it as I would like to start making some quick trades. Good day to you.

  18. deano

     Phil
    Any SDS or DXD plays on tap for Monday?

  19. lflantheman

    Is there anyone here that can expain (in detail) how I can see trade graphs on TOS?   I’m not even sure they exist there , as I’ve been told .  I’m talking about graphs that show possible earnings/loss scenarios in graphic form plotting derivatives against time, as for example spreads, or more complex trades.  I use to subscribe to an online service that did this very well called POWEROPTIONS, but I see no reason to resubscribe to it if it’s on TOS.  Anyone know?

  20. tchayipov

    Iflantheman
    what kind of TOS system do you use? web based or stand alone system?

  21. lflantheman

    Have both.

  22. lflantheman

    I have to go offline for awhile.  I’ll check back later. Thanks.

  23. ocelli7

    Phil,
     
    Seems VIX is quite low and wondered if you are entertaining any spreads if the market cracks a little. A month or two ago you made some great trades.

  24. terrapin22

    Dflam - yes, schwab shows up as having lower overall costs in the table but everything I’ve heard on this site is that TOS is cheaper for trading options.  And it’s rated #1 for options.  Schwab does not make the list in that category.  Plus, i want to separate out my dedicated options funds from my regular account.   

  25. cwan120

    TOS – Send an email to scott at thinkorswim dot com, and mention that you are a member of PSW.  You should be able to negotiate a discount on commissions.  Last time some members reported $1.50 per contract, no per ticket fees.  That means if you put in an order with a total of X contracts, the commission is X * $1.50.
    If you trade a lot per month, like 1000, 2000 contracts per month, you should be able to negotiate for an even better discount.

  26. diamond

    Phil you need to reset this board time to Eastern Daylight Time (EDT) (i.e., March 14th, 2010 at 9:47 pm).

  27. Cap

    Phil / rents / thanks for the congrats.   We had a nice time and contributed to the NJ economy at the same time.
     
    Any big news this weekend ?
    -  Goog may be out of China; or the rumor mongering is hardball Chinese style.
    - Pru / AIG deal being criticized by some Pru investors
    - Rumor that Hosni Mubarak died in surgery in Germany – unconfirmed

  28. Phil

    Very nice Pharm – Thanks!  Great idea to keep a reference in the weeklies and if you get them to me on Saturday’s, I’ll be happy to include them in the main post. 

    Top stocks/Ac – Well, as a value investor my top stocks change depending on whether they are up or down at the moment.  BA was a tough call last week but, after much consideration, I decided I still like them near $70 as I think high oil is a long-term plus for them and low oil is a long-term plus for the airlines so they almost can’t lose.  To me a general top 20 is a bunch of companies I would be proud to leaving for my kids when I die so:  AAPL, IBM, GE, PG, KO, WMT, BA, MCD, DIS, VZ, KFT, CL, ABX, JNJ, MDT, INTC, MSFT (hopefully I will outlive Ballmer!), WHR, ZMH, UN, NKE, XLF (no individual bank makes me feel safe but banking will survive) and DBA.  Those are all stocks that, when they falter, like a cheap pair of my favorite jeans I’m happy to buy some more while they’re on sale. 

    It used to be that on sale meant 10% off but, as I’m very skeptical about the market in general and as the MSM has gotten investors to enter some fantasy world where 2008 never happened, I have a hard time picking any of these guys back near highs until we solidify a higher base.  Of course, if you have 100 posiions, cutting back 75% and keeping any 10 of these (diversified) as long-term core positions and doggedly selling calls to wear down the basis over time is a prudent strategy. 

    Remember I’m talking lifetime holds here and this is not an exhaustive list – just off the top of my head at the moment and notice it doesn’t include oil companies (will we be using it in 30 years?) or other commodites (crazy fluctuations) or even computer makers like HPQ, who lose out to AAPL and IBM because I have to decide which management team I’d trust to show up with my retirement money fully grown with inflation plus a nice return and they lose.  I love ISRG now and for the next 10 years but, after that, they could be made obsolete by nanotech…  So that kind of thinking… 

    Reich et al/Terrapin – I love it when my ranting spreads out to other places.  That’s really my main goal a lot of the time, I just like to see an issue addressed, even if it’s just in the blogosphere.  Stuff like this just doesn’t get discussed enough in polite society…

    Cheaper/Dflam – If you are up around $100K and an active trader, TOS will negotiate with you.  Scott is our guy at TOS, you should see if he’ll match fees.  To me, nothing is more important than good execution and I’m generally very happy with TOS.  They also have great customer service and, of course, I do like their platform even though I only use about 10% of it.

    SDS, DXD/Deano – If you are not in the disaster hedges we set up about 2 weeks ago, yes, you shold be in something!  The VIX is lower now but remind me tomorrow and I’ll see what still looks good.

    TOS/Iflan – Unfortunately, that’s part of the 90% of TOS’s capabilities I never use.  I do have PowerOptions but I actually still use OXPS for that because they have the nice chart of what you make or lose at X Dollars and I’m not, by nature, a visual person so the list of numbers makes me much happier. 

    VIX/Ocelli – Well we made a spread last week betting the VIX wouldn’t go below $17.50 (not stay there anyway) and that’s another good one to remind me of tomorrow when trading starts as we could probably find a nice bull call spread on the VIX to play for a move back up BUT – keep in mind that 10-15 on the VIX is "normal" historically, not over 20.  I do think we have a fairly volatile year but I don’t think we go much out of our range for a while so VIX 17.50 – 25 is all I expect.

    Time/Diamond – Thanks! 

    News/Cap – Glad you asked, I was just going to look…  Hansi seems fine and it was just a rumor.  That’s the very dangerout thing about the blogosphere – it’s bigger than the newsphere and a rumor can overwhelm facts and it’s way too easy to make some money trading oil and dropping a bomb like that as you don’t need much of a reaction to heat up prices.  Sadly, rumors take companies up or down but they really only can be used to boost commodities – that’s one of the problems we have these days – the terror premium on oil is well over $20.  Thanks for spending your money in NJ – we sure need it after that last storm! 

  29. Phil

    And now, some news:

    A recent study picks up on a disturbing trend: For the first time ever, premium borrowers are defaulting on their mortgages quicker than on their credit card debt. A possible explanation: Those in danger of losing their homes anyway still need credit cards to buy groceries.  We knew this ages ago.

    The 28th bank failure of 2010 is Park Avenue Bank of New York City, with $520M in assets. The estimated cost to the FDIC’s Deposit Insurance Fund: $50.7M.

    Bank failures #29 and #30: Old Southern Bank in Orlando, Fla., and Statewide Bank in Covington, La. Respective assets: $315.6M and $243.2M. Between them, cost to the Deposit Insurance Fund is estimated at $132.7M.

    I don’t know if this helps or hurts but1 Pixel = 1 Million Dollars (INFOGRAPHIC)

    Barclays (BCS) tries something new to optimize sales: Its new phone banking system will connect clients with low credit scores to Indian call centers, while wealthy clients will speak to a U.K. rep. The goal is for the British staff to potentially be able to sell to every caller.  This is funny, you can quicly check your credit score by just calling BCS and seeing what kind of accent answers your call!

    The FDIC’s fire sale (of real estate, mortgages and even personal property from failed banks) continues – with $3B in loans obtained from AmTrust Bank in its December shutdown. The agency has completed 10 such deals since 2008, with a book value of $14.75B.

    Uh oh: Lots of folks think that the Fed shouldn’t be the eventual home of consumer financial protection. That includes the Fed’s own Consumer Advisory Council, which writes that consumers are served "only by having the CFPA as an independent agency."

    Pimping for the Fed: Economists Credit Fed For Alleviating Crisis (WSJ) The $787 billion stimulus package was a good for the U.S. economy, but the Federal Reserve played the biggest role in rescuing the economy from the financial crisis.

    Pointing to recent light volume as a sign of weakness, Marc Faber joins Mish Shedlock in looking for a correction soon. Faber is confident we won’t "see 666 on the S&P 500 ever again… If we go down by 10-20% on the S&P 500, our money printer Ben Bernanke will flood the market, weakening the dollar" and drive up stock prices. But Mish goes even further, predicting a "50-50 chance the bottom is not in yet."

    "Business investment went up somewhat in the fourth quarter but is far below what it ought to be in a cyclical recovery like this," FedEx (FDX) CEO Fred Smith tells FT, adding that companies are still reluctant to invest in new equipment and technology due to continuing "uncertainty" over the economic outlook.  Fred Smith majored in economics at Yale and founded FDX – I think I’ll take his word over the projections of all the Bloomber economists together!

    Speaking of smart guys – you go Rob!  The Q4 GDP looks good until you account for structural changes like rising healthcare costs, says Robert Reich: You’d have to be crazy to think things are getting better just because WellPoint raised premiums. Until we know where demand comes from after the Fed starts tightening (and post-stimulus), it’s a sham recovery.

    Spending

    Interesting chart of the "Best Jobs in America."

    For many California areas, unemployment rates moved persistently higher in January, indicating that the national economic recovery hasn’t yet translated into jobs for the Golden State. The state’s jobless rate of 12.5% in January was its worst on record and fifth-highest in the nation, but for eight counties it is over 20%.

    Perhaps not the intention of the graph but to me it’s "How Fortune 500 Companies Are Ruining Social Media."

    In a strong vote of confidence in Greece’s government, French Finance Minister Christine Lagarde says Greece’s clean-up of its finances has so far negated the need for any EU bailout.

    Hans-Werner Sinn, head of the Ifo think tank, says the rush to rescue Greece through a new European Monetary Fund could endanger the euro: "I fear the fund would become a redistribution system, distributing the resources of the more prudent countries to the less prudent ones."

    COO Tim Cook gets a $5M thank-you from Apple (AAPL), along with some stock, for "outstanding performance" at the helm while CEO Steve Jobs was on medical leave. The company joined a small club this week, becoming just the fifth U.S. company with a market value of $200B.

    Apple (AAPL) didn’t release any numbers after the iPad became available for pre-order Friday morning, but unofficial estimates range from 20,000 to 25,000 iPads sold per hour following its debut. Even if the majority of sales are the $499 entry-level model, Apple could be grossing over $10M hourly.

    More subdued but still impressiveInitial estimates peg first-day iPad (AAPL) sales at 120K, for delivery beginning April 3. Analyst Victor Castroll: "Apple has been able to generate over $75M in revenue in one day on a product that 99.9% of purchasers haven’t touched or for that matter, even seen in person, and we’re still three weeks away. That is amazing."

    In the square-off between Google (GOOG) and China, the Chinese government almost certainly has the advantage. The local search engine Baidu (BIDU) has about 60% of the Chinese market, and Yahoo (YHOO) and Microsoft (MSFT) say they have no intention of leaving China and will follow local laws. So China does not need Google, but Google does need China.

    Google (GOOG) is ’99.9%’ certain that it will shut down its search engine in China, sources say, and has drawn up detailed plans to that effect.

    What if China revalues the yuan? It would increase trade competitiveness, boost employment and take a bite of out of U.S debt.

    "I don’t think the yuan is undervalued," says Chinese Premier Wen Jiabao, rebuffing calls for an appreciation. He’s still concerned about dollar volatility, and wants America to “take concrete steps to reassure investors” about the safety of dollar assets.

    After a report earlier this week showing prices in China reached a 16-month high in February, officials say Chinese inflation is "mild and controllable." But with a 3% inflation target for 2010, last month’s 2.7% may prompt the central bank to raise its rates.

    China’s Property: Bubble, Bubble, Toil and Trouble (Time)

    There is an interesting PBS series titled “Your Mind and Your Money,” with an extensive section on Behavioral Finance.  There is a full run of video discussions with the likes of Daniel Kahneman of Princeton (Prospect Theory), Richard Thaler of University of Chicago (practical implications of behavioral finance) and Robert Shiller of Yale (How psychology impacts investor behavior).

    Take our companies… PLEASE!  US takeover defenses come tumbling down (FT) Only 28% of S&P1,500 companies had a poison pill in place last year, vs 43% the prior 2 years

    And, taking the markets down this evening:  For Stocks, 16 Lean Years (Barron’s)

  30. Phil

    Big, huge spin by GS in Newsweek:  The global middle class is rising faster than expected, in numbers and in wealth. Last year 70 million people joined the emerging-market middle class, with incomes between $6,000 and $30,000. They have become "the story of the decade," says Goldman Sachs’s chief economist Jim O’Neill, and will surpass their Western peers in global spending power within two decades.

    Interesting look at who’s grabbing the eyeballs:

    Nice credit card chart from Kipplinger:

    Map

    Notice my 20 solid stock list included most of the World’s top brand names by value

    Cool chart of SBUX and MCD global footprints.  Princeton has lots of cool graphical charts like this one on the next major global shortage – Water

    Analyzing what Carlos Slim’s fortune is made of.

    5 cool new applications and how to turn them into a tool for your business.

  31. Phil

    Time check.

  32. diamond

    Phil – At the end of your post tomorrow morning (Monday) would you please add the indices box with your +2.5%/-2.5% watch levels? Thanks!
     
    This just might be an interesting week …

  33. matt1966

    Would you buy futures for a movie?
    If there is one article you should read about what is wrong with Wall Street then read this.  Don’t worry, it’s short and to the point.
     
    http://www.washingtonpost.com/wp-dyn/content/article/2010/03/11/AR2010031104794.html

  34. matt1966

    If you read only one book about the causes of the recent financial crisis, let it be Michael Lewis’s, "The Big Short."
     
    http://www.washingtonpost.com/wp-dyn/content/article/2010/03/12/AR2010031202291.html

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