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Ten Percent Tuesday – Over or Under?

We are right on our 10% lines for the Dow, S&P and Nasdaq.  

The S&P rests just 6 points under our final line of resistance on the Big Chart and the Dow and Nasdaq have been over the line since the beginning of the month.  Now it's up to the S&P to put up or shut up as we test 1,359, which is exactly were we expected to top out on this rally – only we expected it months from now.  

We went over the Dow components previously and determined they were a bit stretched at 12,749 and the Nasdaq would be under the mark if not for AAPL – and a sell-off there along with an overall pullback in the Nasdaq can lead to an extremely rapid decline in the index.  Obviously it seems like my timing is off with AAPL just hitting $505 yesterday but, on a run from $420 pre-earnings, that's 20% and certainly due for a $16 pullback to test $485-490 in the very least.  

SPY WEEKLY That's 3% and AAPL is 10% of the Nasdaq so 0.3% of a drag coming there is very likely and I have long been pointing out to Members that the Tech sector – minus AAPL and AAPL partners – is not having a very good year.  That's why the rally does not make sense – AAPL is strong but many, many other techs are weak yet they have all been moving in lock-step higher and higher and higher – up 450 Nasdaq points (18%) since Thanksgiving – despite 70 out of 100 of the components having lower revenues and lower earnings than they did a year ago.  

GOOG and AMZN both missed, with AMZN earning less than half of what it earned in Q4 of 2010.  Financials are down 21% from last year's Q4 reports – what is everyone so excited about?  That sector is the largest in the S&P!  Overall, earnings in the S&P are up 2.7% from Q4 2010 – a drastic slowing of growth from the 33% gains we had over Q4 2009.  Taking out the drag of the Financials but leaving in AAPL, S&P earnings growth is 8% over last year.  

BAC WEEKLY As you can see from David Fry's SPY chart above – we're already 10% higher than we were last February and last February we certainly thought (forward-pricing mechanism) that the S&P would grow earnings more than 4% in 2011.  In fact, realization that growth was slowing in July along with the Japan disaster of March and the ongoing Greek crisis led to a 20% pullback over the summer – from 1,350 to 1,100 on the S&P.  

This nifty chart of our "One Trade for 2012," BAC, shows that there are certainly bargains to be had.  BAC, in fact, is responsible for 20% of the S&P's earnings gains this year – yet it still gets relatively no respect as it's still 40% LOWER than it was last February.  What kind of rally is this if BAC can't get any traction on $1.6Bn in Net Income from a loss of $1.5Bn last year?  

If course the stock has already gone nuts since our Jan 5th pick – hopefully we'll get a little pullback here, back to $7 and then we can reload as there's nothing wrong with BAC – or hundreds of other individual stocks in the S&P or the Nasdaq but ramming thousands of stocks in those indexes all up in synch like this is just ridiculous.  Just this morning, we were playing with the oil pumpers and getting a few nice runs to short oil at $101.50 (after our first failed attempt to short them below $101.20, which almost cost us our Egg McMuffin money!).

SPY 5 MINThere is simply too much effort being put towards convincing us that there is a rally with gaps up before the market opens and stick saves into the close to get back to the gap up open after the rest of the day is spent transferring shares from the institutions – who pump up the prices when the lights are out – to retail traders – who buy on the morning dips thinking they are catching a trend that will last.  

The epic weakness of the Dollar is a huge concern but not so much that we're willing to take our precious Dollars off the sidelines and throw them into the markets at these valuations.  Sure we like to trade – we trade every day – but it's been almost a month since we've found many long-term positions we're willing to get attached to.   That's been a month in which the McClellan Summation Index (which tracks longer-term trends than the Oscillator) has run back up to overbought levels we have not seen since the Summer of 2009, when the market had already moved up 50% from it's lows.  

NYSI

That did not, of course, prevent us from moving higher.  We went from 666 in March to 1,000 in August of 2009 on the S&P (50%) as the summation index finally hit that overbought line – THEN we went from 1,000 in August of 2009 to 1,150 in January of 2010 before falling back to 1,050 and then back to our story of last Summer we discussed above.  What is key though is that, once we hit the seriously overbought levels we're at now – that was pretty much it for the market gain for quite a while.

So shorting has a much higher probability of success than going long at the moment.  It's much easier for the markets – even assuming the move up was not a prop job put up by the Fund Managers to herd the retail sheep in for the slaughter – to go down than up at the best of times but trying to move a $40Tn US market up ANOTHER $10Tn after we just moved it up $10Tn on almost no volume without MASSIVE inflows of capital begins to strain the bounds of Financial Physics (see "Stock Market Physics," which I used to warn people the markets were overbought (too early) at the end of 2006).  

The science doesn't change.  The Nasdaq is 20% higher now than it was then and, on our 5% rule, it's due for a 4% pullback to 2,725.  That just so happens to be about what we're expecting from AAPL on a test of $500 but I learned my lesson in 2006 and, IF the S&P can pop 1,359 – I will happily bite my lip and BUYBUYBUY until this thing (whatever it is) finally exhausts itself.  For the moment, however, I remain skeptical.  


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  1. stjeanluc

    Oil Lines

    R3 – 102.90
    R2 – 101.95
    R1 – 101.23
    PP – 100.28
    S1 – 99.57
    S2 – 98.62
    S3 – 97.91

    Yesterday's high and low – 101 / 99.34

  2. lflantheman

    Good Morning AAPL players!   Take note of Phil's comments above.  AAPL is toppy, the market is ripe for a pullback, so don't get carried away trying to get long AAPL right now.   Sure, it might go up, but the more it climbs the riskier your new long plays become.   Only about 20% of our AAPL portfolio is invested in AAPL, and that is 10  April 490/540 bull call spreads which have another 2 months to play out.  The rest is in cash.  Doubtful I'll play AAPL today.  I see more opportunity so far in TNA/TZA. 

  3. Pharmboy

    PP for today…..

  4. jromeha

    ZeroZero – just responding to your comment yesterday about the DOD taking the Dept of State's jobs/duties. I have to disagree. I am the finance OIC in country for the Commander's Emergency Response Program (CERP), Afghan Reintegration Program (ARP), and the Afghan Infrastructure Fund (AIF)….I can tell you that the DOS and USAID do not want to take over/manage many of our development projects which are supposed to be a partnership between DOD and DOS. We are TRYING to give them money and sign over projects and they wont take ownership of them. Further, they havent even approved the project list for fiscal year 12 and we are 5 months into the FY!!!! These projects are waiting while DOS sits on their asses…. I personally dont care. Id rather fix our electrical grid here than invest 200 million dollars for NEPS and SEPS…. Anyways, sorry for the diatribe but as a DOD member I can tell you it isnt the DOD that is refusing to work with the DOS…. At least not in Afghanistan….

  5. stjeanluc

    A good study of our debt problem (total – private, corporate and government) on Barry's site with updated charts (to 2011)… No matter where you are, we are in a world of hurt!

    Although it seems that the US (at least on the private and corporate side) has been de-leveraging faster!

    http://www.ritholtz.com/blog/2012/02/face-the-music/

    The situation in Europe is worse. I put together some charts that are interesting; took a lot of effort, anyway. If you look at U.K. debt, public and private it’s 100 percentage points higher than in the U.S. The Japanese debt is approaching 150 percentage points higher. The Eurozone, just the countries in the Euro currency zone, have got about $62 trillion in current debt equivalence. They only have $14 trillion of GDP equivalent. So they’ve got about $10 trillion dollars more of debt than we do and $1 trillion less of GDP. I have another little piece of information on that score that’s interesting: Their unfunded liabilities also appear to be greater than ours. A study published in 2009, but really based on data from 2006, called “Pension Obligations of Government Employer Pension Schemes and Social Security Pension Schemes Established in EU countries,” by Freiburg University, which was commissioned by the European Central Bank, showed that the unfunded pension liabilities of the EU member countries studied amounted to about five times their GDP. And the report only covered unfunded liabilities in 19 of the 27 EU member countries — 11 members of the Euro currency zone and 8 non-currency zone countries. Now, Europe had a big recession, too, in 2008, which opened the gap further. So their unfunded liabilities are about five times their GDP, whereas in the U.S., they are about four times. The debt problems in Europe are at an advanced stage relative to where they are here. Also, their demographics are much worse than ours. So we’ve got this situation, if you accept what Fisher said about debt controlling all other economic variables in a debt deflation, then the levels of indebtedness in the U.S. and Europe are also playing a heavy hand in the foreign exchange markets.

  6. chaps

    robert/cwan long strangles from last night
     
    i prefer not to cover with long strangles. my style is to keep is simple/nimble/flexible. the conjecture on longs came up as part of a discussion on the specific IB PM restrictions that can materially affect margin usage under certain conditions. i don't know what my answer to that issue is yet. i haven't worked it through (been down with a knock-out stomach virus.)
     
    when only standard PM is used (like with TOS), i think judicious use of margin, rolling, and stopping out are the way to go. the advantage of PM, if you know how to manage it, is that it doesn't force you into more complex trade like short iron condors and variations involving covering all your shorts. that promotes keeping it simple/nimble/flexible.
     
    robert/delta and decay on longs: my experience is that the more complex the trade, the harder it is to understand what can happen to you in the future. things like the TOS tool are great, but they're just models.

  7. rustle123
    • The time to short technology might be soon at hand.

    "What the wise man does in the beginning, the fool does in the end."
    -- Warren Buffett
    Last night on "Fast Money," with Mel, Dan, Guy, Karen and Joe, I raised concerns regarding the Nasdaq market, and I have taken a short position in the PowerShares QQQ (QQQ).
    Let's go to the tape.
    The NBA Market — Nothing But Apple
    With apologies to the New York Knicks' Jeremy Lin, Apple (AAPL) shares have been nothing short of "Lin-tastic."
    Apple's stock is a phenomenon unto itself — it has taken over clear dominance as the largest-cap stock — but enthusiasm has a downside.
    It has now started to move in a semi-parabolic way, and it has begun to detach itself from the action of the broader markets.
    Some in the media are now even projecting that Apple will become the first trillion-dollar-cap stock. The last time this happened was the forecast in early 2000 that Cisco (CSCO), which reached a market cap of nearly $600 billion, would become the first trillion-dollar company. We all recognize that Cisco was far more overvalued back then than Apple will ever be, but it did proceed to fall 85% to an equity capitalization of less than $100 billion.
    These are all warning signs, which, combined with some other factors listed below, have encouraged me to short the Nasdaq.
    Technical Moorings Weakening
    The Nasdaq's market's breadth has started to diminish (often a sign of a potential top), as a few (and narrowing field of) high-profile stocks seems to be responsible for most of the recent advance.
    As I mentioned on "Fast Money" last night, Bob Farrell (Merrill Lynch's legendary technical analysts) has taught us all to be careful when breadth narrows and divergences develop.
    On that subject, "Fast Money" panelist Dan Nathan's Risk Reversal blog had some interesting observations on the number of new highs yesterday that underscore the developing S&P 500 divergences:
    This is an interesting chart. It shows the SPX vs. a composite index of new 52-week highs across all U.S. exchanges. Today's reading, with the SPX at 1351, is 183 new highs. Back in May, at the highs, the reading was 1200. In July, before we collapsed, it was above 800. This shows the lack of market breadth as we make new highs on the year and how narrow this rally is focused amongst some names like XOM and AAPL. The market would need greater breadth normally to hold these levels and make higher highs. If that doesn't happen, we may be due for a pullback. Something to keep an eye on.

    S&P 500 vs. Composite Index
    Source: Bloomberg
    View Chart » View in New Window »

    Here are some more technical issues specifically facing the Nasdaq:

    • Some larger-cap stocks have begun to underperform — Amazon (AMZN), Oracle (ORCL) and so on.
    • The Philadelphia Stock Exchange Semiconductor Index is now weakening — another technical divergence.
    • Tech, on the shoulders of Apple, is now over 20% of the S&P 500 — a level that has been repelled over time.
    • Leading old-tech stocks Microsoft (MSFT) and Intel (INTC) are now approaching former rally highs (made in 2008 and 2004, respectively), and both are at similar percentages above their 200-day moving averages that have historically marked intermediate-term highs.

    Three Thin-Reed Indicators That Suggest Caution

    1. The combined market capitalization of Google (GOOG) at $200 billion and Microsoft at $257 billion is less than Apple's capitalization at $475 billion.
    2. The combined market capitalization of each of Apple's key vendor rivals — Samsung, Nokia (NOK) HTC, Motorola Mobility (MMI), Research In Motion (RIMM), Sony (SNE) and LG — stands at $235 billion (less than half Apple's capitalization).
    3. The 17 brands that make up Apple's smartphone competition have a total market capitalization that falls about $100 billion short of Apple's current equity value.

    Let's now take a look at a chart of Apple's shares measured against its moving averages.

    Apple (AAPL)
    Source: Bloomberg
    View Chart » View in New Window »

    The relationship is stretched, unprecedented and probably not sustainable.
    Finally, a couple of months ago, I made Apple one of my "15 Surprises for 2012":
    Surprise No. 10: Despite the advance in the U.S. stock market, high-beta stocks underperform. Though counterintuitive within the framework of a new bull-market leg, the market's lowfliers (low multiple, slower growth) become market highfliers, as their P/E ratios expand.
    With the exception of Apple (AAPL), the highfliers — Priceline (PCLN), Baidu (BIDU),Google (GOOG), Amazon (AMZN) and the like — disappoint. Apple's share price rises above $550, however, based on continued above-consensus volume growth in the iPhone and iPad. Profit forecasts for 2012 rise to $45 a share (up 60%). In the second quarter, Apple pays a $20-a-share special cash dividend, introduces a regular $1.25-a-share quarterly dividend and splits its shares 10-1. Apple becomes the AT&T (T) of a previous investing generation, a stock now owned by this generation's widows and orphans.
    Strategy: Long Apple (common and calls).
    My seemingly outlandish prediction for Apple's 2012 earnings ($45 share) and share price (over $550) back in December 2011 no longer seems so outlandish. Indeed, upward and onward (for Apple) is now a generally accepted viewpoint.
    One cannot know how far the heavily weighted Nasdaq Apple's shares might rally to, but some of the observations I have made regarding what is going on within and surrounding Apple (in the S&P 500 and in the Nasdaq) suggests that the time to short technology might be soon at hand.

    Position: Short QQQ

     

    Douglas A. Kass
    Seabreeze Partners Management Inc.

  8. JRW III

    Good morning,

     

    IWM     79.10,  79.53,  79.80,  80.46,  81.12,  81.41,  81.92,  82.42,  82.81,  83.07  and 83.75

  9. mampcsA

    JRW, long off 81.92 or are you still expecting a selloff?

  10. stjeanluc

  11. jabobeast

    PCLN up another $8 WTF????

  12. Pharmboy

    SGEN trades went off….CHTP…moved too fast.  Will continue on that one from last night, but I will not overpay…..

  13. stjeanluc

  14. Lincoln

    Jromeha: ???
    Made me feel stupid with all those acronyms ;)

  15. stjeanluc

  16. roro

    stjeanluc……….i guess Hoisington's subliminal message here is that austerity cannot work to solve that debt or you want to be in cash.
     
    so, what is the alternative for policy makers except to print to infinity and print the debt away?

  17. jromeha

    Lincoln! Sorry! I HATE acronyms but Im in the mil, we make up acronyms for everything, even when it's easier to just say the words! NEPS and SEPS is north east power and south east power, it basically is improving the Afghan's electrical grid/system in Kandahar and Kabul…. FY = fiscal year…All the others I think I spelled out right ?:)

  18. Pharmboy

    WFR – going straight back to the crapper……

  19. stjeanluc

    Phil, I have only one question on DMND calls. Last Thursday when we entered that traded, we rolled the 37 calls to the 29 calls that were at $1.90 – I had that wrong in the spreadsheet (I had 1.80). But you also said to DD at $1.80. Jrod pointed out that these calls fell and came back to 1.80 so he DD. So it seems that we have 4 of them now at an average of 1.85. Let me know if you see anything wrong!

  20. mrmocha

    Pharm – this morning I was dreaming that I woke up to a 700 point market drop.  My shorts based on JRW's nasty December chart were rollicking and you and Jabo were downright giddy.  Then my alarm went off, I ran downstairs, and found that it was Groundhog Day again…

  21. Phil

    Happy Valentine's Day!

    We had a little dip there into the open but coming back now.  Dollar topped out at 79.40 and was soundly rejected (now 79.29) and oil flew from $101 back to $101.80 and we will be looking to press our USO shorts in the $25KP if they are determined to have a big run but I'd rather wait for the usual pre-inventory pump tomorrow.

    With the Fed Minutes tomorrow at 2, today is a watch and wait day, on the whole. 

    TLT $117.50 so someone is still nervous about something but the VIX is still under 20 for the moment (19.40) so not too much panic despite a huge miss in retail sales and inflationary import numbers:  

    Jan. Retail Sales: +0.4% vs. +0.7% expected, flat (revised) prior. Ex-auto +0.7% vs. +0.6% expected, -0.5% (revised) prior. - Priors were +.01% and -0.2% ex auto

    ICSC Retail Store Sales: -2% W/W, vs. +1.8% last week.+2.8% Y/Y, vs. +3.5% last week. "Unseasonably mild temperatures hurt demand for cold-weather goods and pulled down store sales".

    Jan. Import/Export Prices: Import prices +0.3% vs. consensus of +0.3% and up from a -0.1% decrease in December. Ex-petroleum prices were +0.1%. Export prices were +0.2% vs. consensus of +0.1%, following a 0.5% decrease in November.  - When we export inflation, people begin to starve!

     Tuesday's economic calendar:
    7:30 NFIB Small Business Optimism Index
    7:45 ICSC Retail Store Sales
    8:30 Retail Sales
    8:30 Import/Export Prices
    8:45 Fed's Plosser: Economic Outlook
    8:55 Redbook Chain Store Sales
    9:00 Ceridian-UCLA Pulse of Commerce Index
    10:00 Hearing: President’s Budget for FY 2013 (Geithner)
    10:00 Business Inventories
    5:40 PM Fed's Lockhart: Economic Outlook

    At the open: Dow -0.21% to 12847. S&P -0.28% to 1348. Nasdaq -0.3% to 2562.

    Treasurys: 30-year +0.24%. 10-yr +0.11%. 5-yr +0.03%.

    Commodities: Crude +0.76% to $102.06. Gold +0.17% to $1727.85.

    Currencies: Euro -0.15% vs. dollar. Yen +0.69%. Pound +0.44%.

    Market preview: EU shares and U.S. futures turn red in choppy trading, with Moody's downgrade bonanza (III), successful EU bonds sales, unexpectedly bullish Germans, and weak U.S. retail sales pulling investors in different directions. S&P benchmark futures-0.3%. Following earnings, HMA is +5.2%, Michael Kors +15.8% but Avon is -5%Later: Business Inventories, Geithner, Fed's Lockhart

    Encouraged by recent data, Philadelphia Fed chief Plosser sees no need for further monetary accommodation, the existence of which, he argues, has caused substantial inflation risk. He again notes his opposition to the Fed's new move of forecasting what it will do, saying policy should be contingent on conditions, not the calendar.

    Just 8% of fund managers believe China will have a hard landing in 2012, according to a BAML survey, down from 16% in November. A crashing Chinese real estate market is now 3rd in estimations of the biggest tail risk, losing out the #2 spot to "premature fiscal tightening." The EU debt crisis remains #1. 

    The ECB's cheap LTRO financing – AKA back-door bond-purchases – continues to weave its magic, enabling Italy, Spain, Belgium and even Greece to hold successful bond auctions. Italy sold €6B of bonds, bringing its issuance this year to €35.4B, or over a third of the €90B it needs to repay or roll over in 2012. 

    Although Greece approved further austerity on Sunday, key elements of the country's bailout are still to be decided, including the contribution of eurozone governments to reducing Greece's debt. The EU also wants the nation to find an extra €325M ($429M) of budget cuts and further assurances from party leaders about the austerity package.

    More confirmation of the freefall in Greece's economy – its Q4 GDP shrank 7% annualized based on a seasonally unadjusted flash estimate. GDP fell 5% in Q3. "The policy cannot command democratic consent over time."

    The EU will likely impose sanctions on Spain's new government, according to sources, accusing it of overstating the 2011 deficit to make 2012 look better. The government has also delayed implementing austerity measures until after a regional election next month.

    The shale oil and gas booms have changed the trajectory of the U.S. current account deficit and the outlook for the dollar, writes UBS' Mansoor Mohi-Uddin. A U.S. in surplus means a lot less greenbacks floating around, meaning a stronger dollar – benefiting the American consumer, and calling into question the need for easy Fed policy.

    Ceridian-UCLA Pulse of Commerce Index: -2.2% Y/Y in January, vs. -0.7% in December. "It seems difficult to square the behavior of the PCI with the evident improvement in a number of economic indicators," UCLA's Ed Leamer says. 

    NFIB Small Business Optimism Index: +0.1 to 93.9, from 93.8 prior. It's the fifth consecutive month of increases, but an almost negligible increase at that and optimism remains at recession levels (and below the readings from January and February 2011).

    The cut in German solar subsidies will be worse than expected, says Citibank, suggesting they'll be in the 20-35% range instead of the expected 10-20%. Deutsche Bank reckons First Solar (FSLR -2.4%) has the most near-term downside risk, with Trina (TSL-2.4%), Yingli (YGE -0.6%), and Suntech (STPalso vulnerable.

    The solar sector looks set for a bloody day after Deutsche Bank and Citibank issue negative comments (previous) on the industry highlighted by the bombshell that Germany subsidy cuts might be even steeper than originally forecast. JA Solar (JASO-3.9%, LDK Solar (LDK-2.5%, and JinkoSolar (JKS-2.6% have joined the cavalcade of solar names in the red in premarket trading.

    U.S. consumer electronics spending fell 0.5% in 2011 to $144Bclaims NPD. But there were some big changes in the mix: While PCs, TVs, and gaming consoles all saw their share of electronics spending decline, the share held by tablets and e-readers more than doubled to 10.7%. In addition, sales from bricks-and-mortar stores fell 2.5%, while online sales rose 7%. 

  22. Phil


    CrackBerry provides 
    leaked images of Research In Motion's (RIMM) delayed BlackBerry 10 OS – one shows homescreen widgets, while another shows app icons similar to iOS and Android. Steve Kovach isn't impressed: "…right now it looks like RIM's savior OS is just an amalgamation of other successful mobile platforms with little or no original innovation." (yesterday

    Apple (AAPL) is working with component suppliers in Asia to test a new tablet computer with a smaller screenWSJ reports. Unnamed officials at some of Apple's suppliers say the company has shown them designs for a new device with a screen size of roughly eight inches, and say it is qualifying suppliers for it. The iPad 2 comes with a 9.7-inch screen. AAPL +0.3% premarket. 

    More on the iPad: In-line with earlier rumors, the WSJ claims Apple (AAPL) will offer a 4G LTE version of the iPad 3, and that Verizon (VZVOD) and AT&T (T) will be among the companies to sell it. The arrival of a 4G iPad would be a slight positive for baseband chip supplier Qualcomm (QCOM), though the unwillingness of many consumers to pay for an extra data plan has hurt sales of 3G tablets thus far.

    Bespoke steps into the Apple (AAPLvaluation game, saying the company at a market multiple (on a weighted basis) would trade at $573, while at an average market multiple would sell for $752. Valued the same as the entire tech sector – $728, the entire retail sector – $698, Amazon – $3,346. Yesterdays close: $502. 

  23. stjeanluc

    Debt / roro – Inflation, roro, inflation is what will solve the debt problem. Obviously when you reach 500% of GDP there are few ways out! The same way that when you buy a house that is worth 5 times your salary, it's with the hope that both your salary and the price of the house will increase to drown the mortgage in the long run!

  24. chaps

    For those interested in portfolio margin for retail investors like us, I found this site last night. Can't attest to it's quality yet, but I think it's a good idea for retailers investors whose trading style orients them to PM to hear what folks have to say.
     
    http://www.themargininvestor.com/index.html

  25. zeroxzero

    Jrom:  I have an almost genetic tendency to agree with you.  My father worked, you might say, alongside the State Dept., but wasn't one of them, and over the many years I was able to observe there operations I was not impressed.  But Rumsfeld definitely blew it in Iraq — maybe it was just his fault, not DOD as a whole.  I had the good luck to sit next to Gen. Norman Schwarzkopf for 11 hours on a London-LAX flight the year after the Gulf War, in Spring of '92.  I asked him why we didn't stay in Iraq and eject Saddam Hussein.  He said, "Because the rules of war are, if you break it, you buy it. Once you have occupied a country and removed their government, it's yours — you have to feed, clothe, police and rebuild it for the inhabitants. Bush decided that the American people would never tolerate that level of expense and political involvement in a Middle Eastern country, as it would turn into a tremendous drain on the U.S. economy."
     
    Gee.  You'd have thought George I might have mentioned this to Dubya, since it was beyond prophetic.  And I attribute 100% of the error to Rumsfeld, one of those too-clever-by-half types in which ideology replaced common sense.  The Roman Empire and many others committed the sin of overstretch, but that's why we have history books.  Perhaps if the State Department were to have been involved, they would have crapped it up even worse.  But I find that hard to imagine, and that's the basis of my comment.  I am far from anti-military, but I am no fan of "nation-building" on other continents. 

  26. mvex1

    HI Phil:
    The Transports (shipping seem to be gathering momentum).  Do you see a problem with this BCS + SP (sell a put)?  Is there a better strategy that I should have considered?  Thank you.  M.
     

  27. dpastramas

    JRW, care to be my valentine today and tell me when to go long on this drop :-) ? Thanks!

  28. stjeanluc

    Good link chaps! Thanks.

  29. mvex1

    For some reason my graphics won't go through.

    The structure is:
    Long 4 Calls $8.00 April Expiration $1.70
    Short 4 Calls $11.00 April Expiration $.55
    Short 2 Puts $7.00 April Expiration .65
    Return at $11.00 target is 76%
    Return at $8 is -74%
    Thank you.
    M.

  30. Burrben

    25K – Feb GLL Puts?  
     
    Are we still praying gold comes down by friday, or planning to close or roll?

  31. JRW III

    IWM 81.41 could be the turn !!

  32. lflantheman

    Making $ on:   V long, BIDU long, PCLN long, FSLR short (FSLR trade idea from Optrader). 

  33. stjeanluc

    And AAPL long lflan?   :-)

  34. scottmi

    UNG – Cramer is calling a bottom in NatGas yesterday… and it is up today!

  35. lflantheman

    And of course, AAPL long.    :)

  36. scottmi

    BBH – this Biotech fund going for a 3-1 split… hoping to suck in ever more $$s and boost the sector?

  37. lflantheman

    PCLN trade:   They report on  Feb 27th Monday.  Presently  582.     Feb 18  580/590  bull call spread at 5.00 pays double if they go up 8 more points by next Friday.     Likely.

  38. japarikh

    Phil, lflan:

    What do you think about a bear call spread on AAPL and why? Asking more as a learning point than a trade b/c I think the best thing to do with AAPL right now is to stay away until it pulls back. Thanks.

  39. roro

    stjeanluc………i agree. i am just expressing the kind of frustration expressed in this morning's post about how the markets are so manipulated as is the message from the ruling elites.
     
    here is a perfect example; "EU'S REHN: Need to probe structural causes of high Spain jobless."
     
    is thaT  a joke!…..or the beginning of the next Greek tragedy? i just find it difficult to believe that Rehn is that stupid (obviously not however i guess one must consider the audience first) or that detached (obviously so).
     
    maybe Rehn is just a bit of the mark on the timing!

  40. craigzooka

    IRA Portfolio adjustment:

    Closing out both DMND covered calls today.  I was able to get $20.65 to close out the march covered call and $21.75 for the FEB covered Call.  This will be the first losses we have taken so far and I will update the spreadsheet.

  41. revtodd64

    From the Financial Times:
     
    Dollar bears in for a shock if US cuts energy imports
     
    http://www.ft.com/cms/s/0/91501a42-5273-11e1-ae2c-00144feabdc0.html#ixzz1mN2umPpq
     

    The future of the dollar is more likely to be determined in the shale gas and oilfields of Dakota and Texas than in the sovereign wealth funds of Asia and the Middle East.  This is becasue striking new technological developments are set to transform America's energy supplies, significantly improving the US balance of payments and the long-term outlook for the greenback.

  42. lflantheman

    japarikha….I wouldn't short AAPL right now.  Short something else! 

  43. Phil

    Kass/Rustle – Wow, if I knew he was doing all that work, it would have saved me writing a whole post on the same subject! 

    FAS Money/StJ – $87.33 still over target 

    IWM Money/StJ – $59.97 dropping fast

    $5KP – Big dip in TSL means prudent move is to buy back March $10s, now .97 so let's do that.  

    $25KP Moves:  

    • DMND – I would have killed 2 of the calls last week if I knew we had 4 but too late and we'll just see how they go. 
    • XRT still ridiculous
    • GLL – Gold will not give up!
    • SCO – NOW we should beuy the $37 callers back for .55 and our goal is to sell the $35s for $2.55 or better (they were $3.75 on Friday).
    • FAS – fine
    • TZA looking better but 1/2 out at $2.80 (the cheaper half so we can keep better track!)
    • SQQQ – still hope 
    • USO – waiting 
    • IWM – Since we have TZA, let's put a stop at $1.50 (now $1.59) and raise it to a .20 trailing stop once we pass $1.75.  
  44. stjeanluc

    Detached roro…. all of them are!

  45. David Ristau

    Lflan -

     

    Issue with PCLN is that that expires on Friday…so you need it go to 590 by this Friday not next Friday…

     

    Did you mean March?

  46. pstas

    jromeha- Do you have any insight from your perspective on the drug trade in Afgan?

  47. stjeanluc

    25KP / Phil – On the TZA puts, they are at $2.20 now. Do you expect them to make $2.80 today and is that the goal?

  48. 1020

    ENER filed for bankruptcy today – WFR feeling a bit empathy…..

  49. revtodd64

    pstas/jromeha – drug trade
     
    I'd like to hear about this as well.  From my perspective running a drug-related program, in the past five years we have gone from almost never seeing heroin use (but plenty of prescription pain-killer opiate abuse) to seeing heroin use rampant.  In the emergency shelter, we have to deal with heroin overdoses again and finding needles, which was unheard of a few years ago.  We treatment providers thought we had really gotten heroin use way down and under control, focusing more on cocaine and crack, but now the increased supply of cheap heroin has created a demand.  My two cents, would love to hear from the Afghan side.

  50. Pharmboy

    OMG, mrm, I had the same dream!  ROFLMAO!

    Hugs & Kisses to U2!

  51. scottmi

    KGC – selling the May $9 puts gives you some low margin premium – TOS says $90 margin per $35 sold.. a 40% return for 3 months.. the $10 strike will likely be the max pain target for this with 29,273 open countracts vs 3,112 for the $9 strike, so should be quite safe that way, and KGC at $9, if you got put to is probably a fair deal.  

  52. jmm1951

    Zerox
     
    You'd have thought George I might have mentioned this to Dubya, since it was beyond prophetic.
     
    But that is exactly what Obama was saying in his famous speech about the Iraq war in 2002 just before it happened. That is why Obama is now President and not Clinton's wife.
    http://usliberals.about.com/od/extraordinaryspeeches/a/Obama2002War.htm
    I know that even a successful war against Iraq will require a U.S. occupation of undetermined length, at undetermined cost, with undetermined consequences…
     
     
    Good speech,though clearly it owes something to Antony's speech addressed to the Roman mob after the death of Julius Caesar in Shakespeare's Antony and Cleopatra
     
    "I come to bury Caesar, not to praise him…"

  53. rustle123

    Kass/Phil
     
    I love when you two are in alignment.  It's like a can't miss at that point.  He was very off last year, but he's on track so far this one.

  54. jabobeast

    FU groundhog day!!!

  55. stjeanluc

    Interesting points on oil prices:

    http://www.thereformedbroker.com/2012/02/14/oil-myths-the-hedgeye-rebuttal/

  56. Phil

    Debt/Roro – Yes, as StJ says, you can't pay back 500% of your GDP in debt.  It's like you owing $500,000 when your net worth is $100,000 and your income is $20,000 (US government collects 20% of GDP in taxes) and you have no disposable income (or you wouldn't be borrowing).  If the interest is just 2%, that's 50% of your salary per year gone on that so when we talk about cutting back – where do you cut back?  That's why the austerity crowd is simply in a fantasy camp – it can't be done in the real World.  Greece is forced into crisis because they have done exactly what every other country has done except the big, bad ECB/IMF has said "Oh no, you can't print money".   

    Can't print money?  What kind of idiot obligates himself to be 25 years of tax collections in debt if they can't print money?  Had the EU explained that this is the end game to their members – I don't think they would have had quite so many people getting on board.  The UK was too smart to fall into this trap but it's going to be a very rough ride for the rest.  

    What does it cost to feed, house, heal and bury a human being for 77 years?  If we say that's $5,000 a year (which is about what most of the World gets by on) then, at minimum, the Government has to have $385,000 put aside for the poorest 20% of its citizens as a "safety net" ($23Tn for the US) or it needs to decide at what point it puts a bullet in their brains because they are not cost effective.  That's under the assumption that the other 80% of the population is going to be completely self-sufficient.  This is why those crazy LIBERALS wanted to eliminate poverty in the 60s – it's actually cost-effective to do so!  Now we're back to making more and more poor people every day and we wonder why things aren't working out???

    Schwarzkopf/ZZ – Interesting that he said "you have to feed, clothe, police and rebuild it for the inhabitants" – that's essentially the same minimum standard I am saying should be applied to US Citizens right here at home yet that's "too liberal."  And don't forget, the "Pottery Barn Rule" was very much an issue BEFORE we went back into Iraq as Powell had learned that lesson from his mentor.  Unfortunately, it all fell on death ears who, as you say, were too clever by half…

    Transports/Mvex – A bull call spread on the transports.  What, like IYT?  I don't think they look cheap at all.  Retail sales are not very exciting and fuel costs are higher.  They are still businesses, right?  We buy them based on what they can make, not what they can sell.  Massive surplus of shipping in the BDI does not bode well for shipping rates, whatever the reason so I'd wait for a pullback or, if you like to gamble, YRCW is still under $13 (and no one would listen to me at $10).  

    Graphics/Mvex – You don't have that ability, you can just post a link.  

    GLL/Burr – Yep, we're only going to roll them anyway so no hurry.  

    Nat gas/Scott – $2.40 is the bottom that CHK has been supporting.  

    AAPL/Japar – I had one last week that isn't working already.   Just stay out of they way is why – it's like a runaway freight train.  

    Dollar rejected at $79.50 so good time to cash in those IWMs in the $25KP if you haven't already stopped out. 

  57. stjeanluc

    KGC / Scott – That's an ugly chart… even with the latest runup on gold they don't seem to move in the right direction. There seems to be support around $10, but you keep on getting lower lows and lower highs. Not a good trend! That being said, I don't really know the internals there so maybe there is a turnaround point somewhere, but if gold were to start going down, might be painful!

  58. cwan120

    chaps,
    "Keep it simple", I like that, too.  In fact, I like the new strategy of buying puts as hedges, instead of the old strategy of buying put verticals.  Because we have one less leg to keep track of.
     
    I hope that you get well soon.

  59. stjeanluc

    25KP – The IWM 83 puts stop triggered at $1.50

  60. Tarpoon88

    JR. nice 10:17 bottom call. What do you think is the upward target on this run, 81.92, or all the way back up to 82.42? Thanks!

  61. cwan120

    revtodd:
    Did you enter that CHK Feb 21/22 bull call spread?  I got in for $0.67.  It's doing quite well.  Only 3 more days to go.  But I am worried about a general market correction.  I entered the trade in an IRA account.  So, adjustments, if necessary, are harder.  I am thinking, "when in double, sell half".

  62. scottmi

     /CL – did oil stop trading again today? sheesh.

  63. angelcur

    COPPER//t  that is comex..not shanghai..shanghai at all time high

  64. Phil

    TZA/StJ – Looking for $2.80, plenty of time to be right but, if it comes today, we'll take it.  

    KGC/Scott – They do LOOK cheap but they have a high extraction cost ($650) compared to most miners and about 2.6M ounces production if all goes well.  So, at $1,500 an ounce, a lovely operation that can make about $1Bn on a $12Bn valuation but if gold falls hard – these guys become toxic so be careful.  Although, down from $15 last year to $10, most of those concerns are baked in.  

    Oil/StJ – That's what makes a market.  Meanwhile, we have another nice shorting entry at $101.50 on (/CL)! 

    Europe closing – we can assume they are the nervous Nellys who've been selling for now.

    10:00 AM On the hour: Dow -0.29%. 10-yr +0.11%. Euro -0.24% vs. dollar. Crude +0.37% to $101.67. Gold +0.06% to $1725.85.

    11:00 AM On the hour: Dow -0.32%. 10-yr +0.13%. Euro -0.4% vs. dollar. Crude +0.46% to $101.75. Gold -0.19% to $1721.55.

    Dec. Business Inventories: +0.4% to $1,555.5B vs. +0.5% expected and +0.3% last month. Sales +0.7% to $1,230B. Inventory/sales ratio falls to 1.26 from 1.27 last month, and vs. 1.28 a year ago.

    If the 2011 investing theme was stocks moving in near lockstep and swinging wildly up and down, than 2012′s has been thecollapse of the herd mentality. If the new pattern continues, expect narrower trading ranges and correlations to keep diminishing, which should translate to smaller daily moves. Individual stocks would rise or fall more significantly vs. when everything trades in unison. 

    S&P analysts forecast that dividends from S&P 500 firms could exceed the record $247.9B shared in 2008, although the percentage of earnings paid out as dividends is at a record low 27%, well below the historical average ratio of 53%. Wells Fargo reckons there could be a long-term opportunity in dividend-paying stocks.

    About time!  The White House will soon unveil a framework foroverhauling the corporate tax system, Timothy Geithner tells a Senate committee. "The large number of loopholes and special interest carve-outs," allows some firms to avoid paying income taxes almost entirely. Boeing (BA) and GE (GE) are among those very good at avoiding taxes.

    Dennis Gartman says he’s pulling back on stocks after the big run-up: "The time’s come to be defensive for the next several weeks… We shall strongly urge those who are long to become less so, taking defensive actions where necessary to reduce exposures." But Gartman still likes shipping companies, even as the sector surges, notably DRYS +7.8%DSX +3.7%GNK +2.8%.

    Goodyear (GT -8.7%) shares burst following its Q4 earnings, with the tire maker forecasting slowing gobal demand and warning it faces increases of 20%-25% in raw-material costs in Q1. The fall in Goodyear's stock price comes despite the company posting its first annual profit in three years. 

    Volatile solar stocks head lower (TAN -5.9%) thanks to a combination of bearish Deutsche commentary about German subsidy cuts, and Auriga's downgrades of Yingli Green Energy (YGE -8.3%), Trina Solar (TSL -8.2%), and JinkoSolar (JKS -7.6%). Auriga notes the industry's costs haven't yet caught up with the massive price declines seen in 2011, and doesn't expect any profits before Q4.

    Trading resumes in Energy Conversion Devices (ENER) with a 81% drop following the firm's bankruptcy filing. Shares of the solar industry supplier now trade at $0.28 – after once flying high at over $79. 

    Just jealous?  Bank of America (BAC -3%) is up 48% YTD, but Citigroup thinks the rally may be getting ahead of itself, and cuts its stock rating to Neutral from Buy. “BAC’s recent outperformance reflects the market’s increased comfort with its capital position, but at these levels we believe investor focus will shift to earnings, which have been weak,” Citi says, expecting 2012 EPS at $0.50 vs. $0.71 consensus.

    Shares of Zipcar (ZIP -14.1%) sink after the firm misses with its Q4 report and issues a tepid outlook for Q1. The car sharing provider increased its usage revenue per vehicle up 7% to $63 a day, but expansion in Europe isn't adding revenue to keep up with growth stateside. 

    IMAX (IMAX +4.6%) sees a bounce after posting a note on its website that Q1 box office sales through Feb. 12 are up 45% Y/Y to $55M – driven by strong sales for Mission Impossible – Ghost Protocol.

    In order to keep itself from running afoul of the SEC's 500-shareholder rule, Twitter has been preventing its equity holders from selling more than 20% of their stake in the company. The rule has already led to the resignation of a senior engineer. In addition, a leaked August e-mail from CEO Dick Costolo claims Twitter, currentlyvalued around $8B, won't be ready to go public "for a couple years."

    Dividend fever is driving AAPL:  The latest buzz about the iPad 3 or a potential dividend has pushed Apple (AAPL) shares up 24.1% YTD. Jeff Hirsch notes a "fairly repeatable and predictable product announcement and update cycle" in AAPL through the years, so if AAPL's surge succumbs to profit taking, its enormous market cap would burden the S&P 500 and Nasdaq 100 via its outsized weighting in SPY and QQQ.

  65. angelcur

    people wonder how an $80B market neutral fund can be up 30% in a year….THIS IS HOW….every day the same pattern.no matter what the news or how much market opens down…it is always the same pattern

  66. scottmi

    KGC/Stj  – they are under pressure from a mine project taking longer than expected, and political risk in i think 3 counties they are big in. Certainly has smackd it down, but they are a low avg cost producer so a lot of potential here. Certainly speculative but i think gold is not going to crash anytime soon. maybe a pullback if we have a larger market crash, but as i have commented before, gold is like a story stock…

  67. jromeha

    PStas/Rev – what do you all want to know about the drug trade?

  68. Inkarri1982

    Jabob – Are you married?  I sense a lot of anger and frustration in your posts?  I am just kidding but you should change your username and save yourself time as Phil suggested. 

  69. revtodd64

    cwan – I got into the CHK trade for the same price  and plan on watching it closely right now.  It looks like it is at about .90 cents now, so that is a .23 profit with potentially .10 of potential profit left if CHK stays above $22 by Friday.  CHK is at $22.80 and up today, so it would have to drop almost 4% by Friday to get down to $22 again.  That could certainly happen, but right now I'm inclined to watch closely and see if I can squeeze a little more profit out of it as time decay intensifies towards the end of the week.  I'm inclined to hold and bail only if things look bad all of a sudden.  The other option is to set a limit order at .95 if it rises more today and get out with only .05 left on the table.  I did 10 contracts, so making $280 instead of $330 isn't bad, but I'm staying aggressive for now.  My two cents, what do others think who went into the spread?

  70. stjeanluc

    The early bird Scott…. Good luck!

  71. chaps

    cwan/robert "simple nimble strategy":
     
    the other component (besides margin management, rolling, and stopping out) is disciplined profit taking. I take profits at 70% (buy back for .30 or less on what i sold for 1.00.) in a highly manipulated market, it's interesting to see how often i have to fight my greedy instincts to go for the remaining profit – only to see the market turn. Hence the short, had i stayed in it, would've been a headache to manage.
     
    if you take profits on the side you're winning on, and don't get greedy in terms by pushing to exceed your monthly profit target by selling even more on that side, you free up that side for rolls from the losing side without taking on too many commitments.

  72. jabobeast

    Ink-- I am never angry.

  73. stjeanluc

    Apparently, there is a SI Swimsuit indicator now…

    http://www.bespokeinvest.com/thinkbig/2012/2/14/sports-illustrated-swimsuit-issue-score-one-for-the-bulls.html

    Since 1978, an American has now appeared on the cover of the annual Sports Illustrated Swimsuit Issue in 18 different years.  The average total return of the S&P 500 during the 17 prior years has been a gain of 14.3% with positive returns 88.2% of the time.  Of the 17 years where no American appeared on the cover, the S&P 500 has averaged a total return of 10.8% with positive returns 76.5% of the time. 

    Probably just an excuse to publish the cover picture as I don't see a convincing correlation…. I am not going to lower the standard of this board by posting it. But Kate Upton is American so that's bullish!

  74. cwan120

    jabob,
    Precisely!  FU is actually a very good way of releasing pressure! :)

  75. Phil

    $100.90 on oil is mission accomplished (stop at $101 again).  What a great day for shorting! 

    CHK/Rev – They look strong but I'd take .95 and run if possible. 

    From Barry:  

     

    I warned before the 2008 election that regardless of the outcome, the reckless borrowing & spending of the Bush years would lead to inevitable deficits and tax increases. As Milton Friedman once said, an unfunded tax cut is a tax increase on our children.

    That day of reckoning has been coming ever closer. As the coming year’s proposed budget suggests, tax increases, especially on the wealthy, are here.

    $1.4 trillion in new tax revenue over the next decade, heavily weighted to the top of the income scale, has been proposed.

    Those of you interested in deficits, accounting, tax policy — or simply are high earners — may want to take a close look at the proposals:

    • Top individual income tax rate of 39.6%, starting in 2013 (up from 35%)

    • Long- term capital gains top rate of 20%, up from 15%.

    • 3.8% tax on unearned income of couples earning $250,000 or more; individuals making$200,000 — is to take effect in 2013 to pay for the 2010 health- care reform law.

    • Dividends are treated like ordinary income. Top Federal bracket for some taxpayers = 43.4% (including dividends). Top dividend tax rate is now 15%

    • The AMT is replaced with a 30% minimum tax for individuals with annual incomes of at least $1 million.

    • The Carried Interest option benefiting hedge fund managers and private equity managers moves to ordinary income rates instead of a preferential 15%

    Ultimately, this is an election year manuever that most of the Left expected in tear p1 of the Obama presidency. It is likely to be popular amongst the swath of the public that earns under $100k per year (read most of them), though by no means unanimously. It also seeks to paint the GOP as defenders of the rich as the expense of everyone else.

    I suspect there are built in compromise points — the dividend rate wont go up to 43%, but may end up at 20% with long term capital gains.

     

    • In New Year, Being More Active Is Thus Far Good (Financial) Advice (WSJ)
    • Why Tax Policy Assumes People Are Richer Than They Think (Economix
    • Private Equity Tax Break ‘Indefensible’ (Bloomberg)
    • What Would the End of Football Look Like? (Grantland)
    • Austerity Tourism: Greek Travel Deals (Smart Money)
  76. pstas

    jromeha- My general impression is it is a significant economic factor and will likely remain so as is the case elsewhere given the risk/reward . Enormous amounts of money to be made, etc. So, what do you observe, if anything? What is the official military position? Is the trade "open" or under the radar?  Where does this economic factor place in the scheme for the country? Now that I think of it, kind of a market analysis?

  77. zeroxzero

    Phil:  "Death ears" — now there's a nice Freudian reference to the authors of our [latest] Iraq war!!

  78. kustomz

    JRW any new chart predictions? I've seen a few showing IWM topping out on the 3rd with price target of 80.38 on the short side. Thoughts..

  79. zeroxzero

    Pstas/Rev – Drug trade.  Having spent 1998-2006 living in Spain, I can tell you that most Afghan heroin ended up in Europe. Maybe something changed that, so it's been re-routed to the U.S.   Poorer Euro junkies?  Just a guess.

  80. cwan120

    Revtodd:
    I am out 1/2 at $0.90.  I can't babysit all day.  So, I'd rather take it easy.  I also entered a limit order to sell the other 1/2 for $0.95, as you suggested.
     

  81. jabobeast

    FU Cwan!!!  ;-)

  82. angelcur

    gartman just said one of the reasons im turning cautious is a few days ago i was interviewed and said "'i'm wild-eyed bullish for stocks"!!!! he is afraid of his own bullishness….that is tooo  funny!!!

  83. revtodd64

    cwan – good move, I have meetings all afternoon and think I will do the same.

  84. scottmi

    KGC – ok, i better go check my production cost numbers again..

  85. Weasle

    VXX or VIX up pretty good… could this be a sign of a larger drop, like last thursday?

  86. kustomz

    not exactly angel, he said he was interviewed 2 weeks ago and it got carried in the papers 2 days ago….he's got a great eye in picking sectors that get squeezed..he's bullish shippers and letting them run which looks like a classic ss that may be coming to an end. Same thing going on with AAPL, they squeeze the whole sector using one stock.

  87. mrmocha

    CMG - Jabo, did you take my post from yesterday to heart?  CMG now going on day 12 of upswings after 10:30 am, so keep your shorts but play the daily upswing to make some coin to roll them, that's what I'm doing…

  88. jabobeast

    Mrmocha--I just can't do it…
    If I did the streak would end.

  89. yodi

    Phil DMND I entered a Bull call 10 Mar 25/26 and than you changed your mind to buy the 22.5/24 both plays are about 120 down I do not see any record of these plays ???

  90. stjeanluc

    DMND / Yodi – 5KP portfolio in the spreadsheet!

  91. stjeanluc

    And FAS down $4 from yesterday's high after running up $4 the day before and down $4 on Thursday. It's really unplayable on a short term basis!

  92. yodi

    stjeanluc
    Thanks

  93. stjeanluc

    Hold the presses, Greece not fixed yet…

    http://ftalphaville.ft.com/blog/2012/02/14/881341/latest-eurozone-downgrade/

     

    With Greek party leaders still to provide their written commitments to the austerity plan and details still awaited on how the recently identified €325m funding gap will be filled, the best guess is that the Great Second Greek Bailout will now have to wait till aan EU summit, set for March 1.

    But what about that “debt sustainability analysis?”  That sounds like we are back to discussing the fact that €130bn isn’t enough for Greece.  It really needs €150bn.

  94. scottmi

    DRYS – yay!  finally go out of my split-adjusted march $4 calls i figured were dead money… with a 275% profit! what a pop!  reduce positions.. get to more cash…

  95. angelcur

    DENNIS G//well that is exactly what he said and he said it this am on CNBC..what am i missing ?…anyone know how his etf is doing?

  96. angelcur

    magocal sloppy buyer pattern breaking down..uhoh!

  97. scottmi

    EXC – hitting lows. $2.10 dividend is 5.35% at current $39.06

  98. Phil

    Death ears/ZZ – Hmm, very interesting…

    Not much of a bounce so far.  

    Volume just 50M on the Dow at 12:50, about 20M down from yesterday.  Maybe a good sign for bulls that there are no sellers either.  

    On the whole, we're still looking weak and if the Dollar pops 79.50 – BIG TROUBLE!  

    12:00 On the hour: Dow -0.18%. 10-yr +0.13%. Euro -0.36% vs. dollar. Crude +0.01% to $101.31. Gold -0.08% to $1723.45.

    1:00 PM On the hour: Dow -0.38%. 10-yr +0.21%. Euro -0.54% vs. dollar. Crude -0.24% to $101.05. Gold -0.42% to $1717.65.

    For all the angst about U.S. debt and the deficit, low interest rates means that America is spending less per year to finance its debt than it was in the mid-1990s in absolute terms, as a percentage of GDP, and as a proportion of tax dollars. However, the government is still paying towards $240B a year in interest. 

    With official figures showing that U.K. CPI fell to +3.6%, theTelegraph's Ian Cowie asks, "Which planet are these economists on?" The declines, which are due to VAT rises a year ago dropping out the figures, don't reflect sharp increases in gas, electricity and water bills.

    BofA’s Equity Strategy group notes that higher quality is still cheaper than lower quality, and within large-cap stocks, high quality has traded at a significant P/E discount vs. low quality ever since the tech bubble. Expecting earnings estimates to continue to fall – even more so for smaller, lower-quality firms – BofA sees an environment where higher quality stocks win out.

    Adding to an earlier article about dividends, CNBC's Patti Domm post two more. In one, Domm lists 13 high-yielding dividend stocks in the S&P 500, with Frontier Communications (FTR) leading the pack with 17.4%. Another article lists the "Aristocrat" firms that have increased payouts for 25 years.

    For sale, 236 year-old Democracy, CHEAP!  Chinese direct investment in the US could grow even faster- after doubling in each of the last two years – with the launch of a new website geared to Chinese investors and small businesses. Whether it's a sign of the times or an effort to increase its ability to spy on the U.S. – the government now promotes through its U.S. embassy a Chinese-language site called simply "Guide to Investing in the United States."

    A week after naming a new top exec in China, Wal-Mart (WMT +0.5%), says it expects to boost growth and market share in the nation. The bigger question: After taking a few political stumbles and facing a billion consumers used to shopping at mom-and-pop stores and open air markets, can the Wal-Mart recipe work in China?

    Jamie Dimon (JPM) continues to rail against over-regulation, telling Fox Business that policies coming out of Washington have led to a slower and rockier recovery: "It could have been better. I do think we have made this recovery slower and worse by uncoordinated policy, the debt ceiling crisis and tons of other things that were misguided."

    A group of Senators plan to push a cybersecurity bill in Congress that focuses on protecting the nation's water and power systems after hackers continue to break into government agency computer systems – highlighted last fall by a breach at an Illinos utility. The bill would designate specific infrastructure as critical operations that would need improved security protection. 

    Tesoro (TSO +3.1%) and Valero (VLO +1%) are in the green today on positive comments out of Oppenheimer, saying it remains upbeat about U.S. refining stocks due to cost advantages crude oil oversupply and ongoing refining capacity rationalization, and both stocks have the best risk/reward ratios in the sector. 

    Heading into Baidu's (BIDU) Thursday Q4 report, Deutsche thinks the Chinese search giant could beat estimates thanks to its potential to grow ad sales to small businesses, and the broader shift towards targeted online advertising. However, Goldman is concerned about the tough competition Baidu faces in mobile search – an increasingly important issue as Chinese smartphone adoption takes off. (Brean Murray

    The company that registered the “iPad” trademark in China doesn’t just want to keep Apple (AAPL) from selling its device inside China; now it wants to keep Apple from shipping iPads across China’s borders as well. Proview’s request comes a day after officials in one Chinese city confiscated iPads from local resellers, and a week after it filed suit to stop Apple from using the iPad name in China.

    China's Huawei boasts it sold 20M smartphones in 2011, up 5x from 2010. This figure speaks to the threat posed by Huawei and ZTE (ZTCOY.PK) in the low-end smartphone space, courtesy of cheap Android phones (III). Between Apple and Samsung's control of the high-end, and Huawei and ZTE's growing presence on the low-end, the likes of Nokia, HTC, and Motorola Mobility could find themselves in a tough spot. 

    What do CEOs do all week? It turns out that on their own, not much. A new study shows that in a 55-hour working week, CEOs spend 18 hours in meetings, over three hours on calls, five hours in business meals, and just six hours working alone.

    And wheeeeeeeeeeeeeeeee!!!!

  99. terrapin22

    Phil / short – what's your fav play now?  

  100. scottmi

    EXC – recent lows… good merger or not?

  101. stjeanluc

    The SCO 35 calls in the 25KP are now at $2.20. They were $1.70 at the open.

  102. JRW III

    Tarpoon88 / Target

    IWM 81.91, then 82.27

     

     

  103. JRW III

    kustomz / 80.38?

    Do you mean 83.38?
     

  104. kustomz

    8-) JRW

  105. Phil

    DMND/Yodi – That ($22.50/24) was our $5KP play.  I don't get your trade at all.  How are you down $1.20 on a $1 spread?  Even if you make the whole Dollar, you lose .20???

    Greece/StJ – Yawn at this point…

    DRYS/Scott – Nice pop finally, congrats! 

    Gartman/Angel – He's pretty much in my ignore pile.  

    EXC/Scott – I like them as a long-term play.  Other than internal flash crashes, they really don't fail $35, even in the crashes and you can buy them for $39.04 and sell the 2014 $35 puts and calls for $8.70 for net $30.34/32.67 plus your $2.10 dividend is a nice 7% bonus while you wait.  

    Keep in mind, if they change the dividend rules, all hell will break loose on these companies. 

    Shorts/Terra – I think we did CMG yesterday, MA is too high, PCLN can drop 20% in a crash, NFLX always a favorite, BNO I'm now looking at.  Those are my leading candidates for a Put List.  

    Watch 79.50 on the Dollar to see if it holds on this pullback (for the Dollar).  That was $1.31 on the Euro holding just now, giving us a bounce.  $1.57 held on the Pound.  78.48 Yen to the Dollar was the top-out.  Gasoline is still weak at $2.975 (down from $3.02) so I don't think much of oil bouncing off $100.50 but now we're into the last hour on the NYMEX and yesterday they turned off the machines to pump oil back over $100 so anything is possible.  

  106. mampcsA

    Phil, do you still like the CMG Feb 370 puts? They are down to 1 today from 1.5 yesterday.

  107. yodi

    Phil Explanation DMND/Yodi – That ($22.50/24) was our $5KP play.  I don't get your trade at all.
    B March 22.5 for 3.00 sold 24 for 2.20  now we have 675.00 credit and -875.00 debit I am now negative 200.00

  108. mrmocha

    Looks like they're gunning for JRW's IWM targets, simply amazing…

  109. Phil

    This is interesting:  

    klombies_021412_5.JPG

    CMG/Mampcs – Disappointing but yes, I like them as a speculative put because CMG can drop $5 very fast than the $375 puts are $2 so you can make 100% on a 1.5% drop in CMG with stunning amounts on a $10+ drop.  However, as it expires Friday, it's a huge gamble, the kind you should only be risking a small loss on with the intention of playing trades like this regularly so the occasional winner pays for the losers.  From a conviction standpoint (that CMG WILL drop one day) – you are better off with the March $335 puts at $1.40 as they have a .13 delta so a double on a $10 drop (but you have more time) but the delta goes up rapidly from there – especially as it would with CMG tumbling further.  

    DMND/Yodi – Oh, I thought you meant down $1.20 on a $1 spread as you said you had March $25/26 and were down 120.  DMND held $22 today and I still like them here.  Our trade was a net .65 spread in the $5KP and it's now $2.05/2.20 for the $22.50s and $1.45/1.60 for the $24s so a small drop if you want to quit now but March is 31 days to expiration and it's kind of hard to get all worked up every time 10 contracts wiggle 12 cents on you – don't you think?

    CNBC making a good point – Apparently higher taxes on the wealthy and on dividends and cap gains not bothering the markets much at all.  I guess we should have done all that a lot sooner!  

     

    2:00 PM On the hour: Dow -0.35%. 10-yr +0.21%. Euro -0.55% vs. dollar. Crude -0.1% to $101.19. Gold -0.37% to $1718.55.

    The U.K., Italy and France are among 12 countries the EU has identified as having major structural problems that undermine growth, and which leave them vulnerable to market attacks and global shocks. Following this surveillance exercise, the first of its kind, the EU will make proposals that countries will need to follow or face fines.

    Shares of Rite Aid (RAD +5.8%) kick up a healthy gain after the company announces that it will offer $481M in senior notes to help it repurchase higher-rate debt that is slated to come due in 2015. The bigger issue: Rite Aid is now up 26% YTD, standing in stark contrast to rival Walgreen's (WAG -1.1%) lagging 3.7% YTD gain as millions of Express Scripts customers fill prescriptions elsewhere

    The Street wasn't thrilled with Cisco's (CSCOFQ2 report, but L.D. Salmanson likes what he saw. Cisco's dominant position in the 10-Gig Ethernet switch market, and leading position in the market for "edge" routers and switches, often used to support mobile and cloud infrastructures, is giving it a boost. As is the strength of its UCS server line, whose networking capabilities are proving popular with enterprises.

    Despite its status as one of the most widely-shorted stocks around, supporters of Tesla (TSLA +1.4%keep the faith that the electric car make will become "self-sustaining" next year when Model S sales kick into overdrive. Analyst Alan Baum says the automaker has gained credibility through the initial unveiling of its new model, while Barclays Capital's Amir Rozwadowski keeps a Buy rating locked in place on the longer-term prospects for the company.

    Yahoo (YHOO -1.2%talks to sell its Asian assets have been called off after hitting a deal-breaking impasse over the efficacy of the centerpiece of the complex negotiation — a cash-rich split-off, according to reports from All Things D.

    And this is why we don't own index funds!  You can't stop owning Facebook (FB), you can only hope to contain it: Even if investors pass on buying into the highly-anticipated IPO, Facebook could end up in their holdings indirectly through both index funds and actively managed funds. While in all likelihood the company will quickly land on some high-profile indexes based on its beefy market cap, it's just as probable that many portfolio managers won't be able to resist holding the name in their actively managed funds. 

    Faced with a steady decline in wireline voice revenues, major telcos such as AT&T (T), Verizon (VZ), and NTT are betting on the massive growth expected for cloud services to give them a lift. Verizon has shored up its cloud offerings by acquiring Terremark, while CenturyLink (CTL) has done so by acquiring Savvis. However,tough competition exists from AMZNRAX, and others. 

  110. sagemm1

    Iflan/AAPL
     
    What do you expect to happen with aapl, should they NOT announce a div at this next meeting/announcement?

  111. palotay

    STJ – FAS Strangle  - I thought it may be helpful to share how I have handled the strangle the last couple weeks.  I fortunately had a higher strike than you did that week where FAS rallied huge.  I think it was the $85 Feb1 Call.  I rolled that at the end of the week to the $88 Feb call for about even.  Then I decided to roll up to the $92 Feb call and double down on February 9th.  That adjustment is working great now, so I should be back on track after this week (knock on wood).  Although I should be back on track, I'm very weary about selling puts on FAS right now with the market looking so toppy, and will probably wait until we have some kind of correction.  With that being said, I think calls will be relatively safe.

    I'm fortunate to have PM, and a ton of excess margin, so I can afford to make these kinds of adjustments.  
    Either way, I appreciated all the work you did on this.  Keep it up.  Hopefully we will have a higher VIX soon, to really make some money.

  112. Phil

    Wow, I love CNBC's premise on rare diseases: "It's a limited customer base but they don't have a choice so you can make them pay through the nose to get treatment – isn't that fantastic?"  Then they interview a guy and he says "Our only concern is some big company comes along and helps people for less money – that would suck…

    Dollar poking over 79.60 – if they get to 80 (not today) that's going to send off all sorts of alarms – especially as it may put the Euro back below $1.30. 

  113. Peter D

    chaps,
    Thanks for posting the useful PM link.  The "all you can eat dividend" part is what I haven't experiment.  It's partly because I don't want to pay for margin interest.  On a whole, the author is a bit more optimistic than what we know about PM.  What kills us on PM (leveraging) are black swan events.  He is light on the topic of defending the margin in a crisis mode.  There is a lien on "long positions" in PM accounts that TDA has in their disclosure statement.  A small risk, but not insignificant.  Overall, good starting points.

  114. dpastramas

    And AAPL keeps going.  I kick myself for selling the Feb 490/500 BC too soon.  I need more patience.
    Oh champions league night.  Very fitting on Valentine's day. Me, my wife and Lionel Messi

  115. Phil

    CAT Feb $110 puts at .27, 10 in the $25KP.  

  116. angelcur

    PHIL/DENNIS Hes is a tradition despite himself…he uses terms such as 'one must needs' in his news letter seriously…supercilios but has been right a few times

  117. BertII

    How are they keeping oil up

  118. kallenjr

    Phil
    What is trading plan for CAT Puts in 25KP?

  119. stjeanluc

    Thanks for the information Palotay… I am still mulling a return of the trade but in a different form!

  120. kallenjr

    Anyone looking at VIX or VXX calls?

  121. chaps

    Peter D/"all you can eat dividend" strategy:
     
    I've been in that one. You can get around margin interest by selling the puts after your covered calls have soaked up your cash. With big dividend payers, the dividend (net the time value of money) shows up as a difference in the extrinsic of puts vs calls at the same strikes (i.e, put extrinsic higher by div minus time value of money, in theory) Also, whereas TOS reams you for margin interest, IB encourages it by passing Uncle Ben's rates on largely to its clients. So, with IB, you could continue on leveraging up with covered calls.
     
    I'm not surprised the guy doesn't have the PM scars we do. :)
     
    But the bottom line, after a lot of thought, is there's no free lunch. If you limit your risk and hone your skills, you'll do as well with index SS. Anyhow, that's my premise. I converted all my IRAs so that PM applies there as well. Trying to focus…

  122. Inkarri1982

    Kallen – I just read an article that pointed to today's move in the VXX to expiring VXX Feb contracts.  Just something you may want to look at and investigate if you are considering VXX 

  123. jthoma

    Kallen- sell them when they go up- LOL!

  124. mampcsA

    Is XRT on steroids or is AAPL part of XRT now.

  125. shadowfax

    Big buy @81.56, may go up now.

  126. kallenjr

    Ink,
    Got a link to VXX article?

  127. morxlntway

    PHarm – what do you think is up with PLX today?

  128. mrmocha

    BertII - It's me that's keeping oil up, I'm long SCO for several weeks now 8) .

  129. scottmi

    AAPL Div/Sage – why, they will go UP.. and if they do announce a div, will go up too.. just up at different rates, not sure which will be faster. ;-)

  130. scottmi

    CAT/Phil – do you have a target with these or is there a specific event coming up tomorrow?

  131. Inkarri1982

    Kallen – Here is the link:
    http://vixandmore.blogspot.com/2012/02/who-is-trading-tvix.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+VixAndMore+%28VIX+and+More%29
    Again, worth looking into what the article claims if you are attempting to trade the VXX calls. 

  132. kurtww

    Phil – I have 3 March FAS 86/90 BCS with 66 puts sold against it. It was supposed to be a bullish offset to my EDZ spread, but it seems to not go up as much as EDZ goes down, but goes down faster than EDZ goes up. Any suggestions? Do you still like the trade?

  133. David Ristau

    New Earnings Position:

    PCLN, Mar17, $505/$500 Bull Put Spread

    Max Gain: 21%

    Looks good as PCLN has not dropped more than 7% in the past five reports in two weeks prior to earnings and popped 4/5 times. Can take a nice % off pre-earnings.

  134. pstas

    Chaps:
    I converted all my IRAs so that PM applies there as well. Trying to focus…
    How?

  135. chaps

    pstas:
     
    You need to create an LLC owned by the IRAs. There are custodians/lawyers who focus on self-directed IRAs. I did it about 13 months ago. Was probably $1,000-1,200 in legal fees.

  136. l4real

    Chaps/LLC
    Did you do that for claiming "Trader Status"?

  137. angelcur

    the longer aapl stays parabolic and broad maket flat to lower….odds rise of bad pullback in market i think

  138. chaps

    l4real/LLC/Trader Status:
     
    No. I don't have Trader Status. My recollection is that Trader Status is an independent thing.
     
    I did it strictly to get margin in IRAs.

  139. jromeha

    Pstas – Afghan drug trade – It finances the taliban. The Taliban 'tax' the farmers (something like 80%+ of the profit)…. THe farmers still grow it A) b/c they dont want to get killed and B), b/c it is more profitable than other crops, even with the Taliban taking 80%. We tried burning the crops back in the day but that alienated a lot of the rural people and took away their livelyhood.  I dont think we do much of that anymore. The taliban also help harvest it… Not only do they lay down their weapons b/c it is too damn cold in the winter, but they also tend to go work on the farms… THe opium goes through one of the stans (usually Uzbekistan) onto Russia via rail and runs the length of Russia where it then spreads throughout eastern Europe and onto western Europe.

  140. Inkarri1982

    Kallen – I tried twoce but it didn't work. 

  141. Inkarri1982

    Kallen – Google "VIX and More:  Who Is Trading TVIX"

  142. danny3399

    Our law firm (Which I work for and my dad owns) has done some self-directed IRA's. A lot of times people will do it to open a restaurant, purchase land, or for real estate development. I have never thought about doing it to be able to access margin. Good Idea

  143. zeroxzero

    Euro drops like a stone today, and the S&P can't catch a break.  Now that's bearish.

  144. sagemm1

    scottmi/aapl  rofl

  145. chaps

    danny/self-directed:
     
    Yes, the vast majority of them are done for real estate. Not surprisingly, the brokerage/mutual fund industry is not going to advertise that the law about how you can set up IRAs is actually quite broad and liberal. It always has been.
     
    The law is complex. But the basic idea is that you can't set something up where you're getting tangible benefit before retirement. Like investing in vacation real estate and then taking vacations there every year before retirement, etc.

  146. mrmocha

    SQQQ - FYI if you have some tech gains to protect, the SQQQ MAR 14/15 BCS is cheap at .25.

  147. jabobeast

    Anyone-- I  wanted to get a 15yr loan and the mortgage broker keeps pushing a 30yr saying you could always pay more every month and it is basically the same thing. I keep remembering something Phil wrote before that said that it isn't true? Am I mistaken?

  148. l4real

    Chaps/ LLC
     
    Very interesting legal maneuver!

  149. cwan120

    danny, chaps,
    What are the tax consequences of such an LLC owning IRAs?  Do you have to report ANYTHING on your tax returns?  Filing one more thing (even if tax is zero) takes accountant fees.

  150. sdsam

    Jabob,
    In most cases you can pay  higher than the regular mortgage amount but the interest rate for 30 year is going to be higher than 15 year. That you cannot recover.

  151. Pharmboy

    PLX – risk off.  I will sell puts if it goes to $6.  I am 1/4 covered by Feb $5 calls.  Nothing to worry about (for now).

  152. sparky123

    jabo you can always make payments to amortize a loan over whatever schedule you want as long as there is no prepayment penalty,  but isn't the 30 year rate higher?

  153. Pharmboy

    SGEN holdling like a champ.  That one could be as big a winner as ARIA.

  154. sagemm1

    jabo that is true you can pay down early…if you take a 30 you will pay a higher rate, so if you can afford to pay a 15yr, even if it gets worse out there then you are probably better off with the 15. If there is any chance you would get in a pickle and not be able to pay the 15yr then do the 30 and pay it off in 15. The old banker's secret on a 30 yr mortgae is that is you pay one extra payment per year for the entire mortgage duration  you take a 30 to almost a 22 yr loan!

  155. jabobeast

    30 yr is almost 1% higher!

  156. chaps

    cwan/Taxes
     
    The LLC is a "pass through" entity, meaning that all the tax consequences pass through to the owners as individuals. Since the owners in this case are IRAs (actually, the custodian technically owns it and is legally restricted to doing what the IRA owner wants), taxes are what they are with IRAs.
     
    The LLC definitely needs to file every year. But it won't owe any money. Haven't been through that yet. I do all my own taxes. It's kind of a hobby. We'll see how it goes. :)
     

  157. shadowfax

    jabobeast
    Find another morgage company.

  158. danny3399

    Cwan
    Like chaps said there are no immediate tax implications. But at age 70 1/2 you do have to take RMD's but if you just turn it into a margin account there is no problem there. If you buy real estate with it and have no other IRA's then that could be a little bit problem.

  159. rustle123

    Amazing how the bots bring the market back on nothing every single day at the end.

  160. danny3399

    This is unreal is there any news out that would pop the market like this.

  161. jabobeast

    I can't believe the pattern of CMG that was pointed out earlier! WTF???
     
    FU CMG!!!

  162. l4real

    rustle123/danny3399
    Welcome to the "Twilight Zone" fellas!

  163. jbaker2447

    CAT Feb $110 puts at .23 now … is this trade still on?

  164. jromeha

    Seriously!!?!? WTF. Im short the /NQ and it went up 12 points the last 15 minutes? ANy news? lol I Know, dumb question

  165. stjeanluc

    In Le Monde they have collected stories from Greek people relating the daily life in Greece now:

    http://www.lemonde.fr/crise-financiere/article/2012/02/14/vie-quotidienne-en-grece-toutes-les-classes-sociales-sont-rattrapees-par-la-crise_1643046_1581613.html

    It's in French though. But the gist of it is that people now have to make do with about 1/2 the money they had only a couple of years back – salaries are being cut, taxes raised. Unemployment is now 360 euros per month and when it affects 20% of the population it has to take a toll. All in all, not very optimistic!

  166. Weasle

    These markets are hilarious! (if you're positioned right, anyway)

  167. zeroxzero

    danny:  It's not obvious to me.  But the U.S. 10 year is popping, and stocks aren't giving up much ground with a rising dollar.  My guess is "capital flight from Europe", not all of it belonging to Europeans, I wouldn't think.
     
    “Eurozone officials have called off an emergency meeting of finance ministers to approve a vital €130bn bail-out for Athens amid a growing fight among the country’s European creditors about the merits of allowing Greece to go bankrupt.
     
     
    Jean-Claude Juncker, the Luxembourg prime minister who chairs the eurogroup, said the delay in Wednesday’s scheduled meeting had been prompted by the continued failure of Greece’s political leaders to commit to the bail-out’s tough terms after April elections.
     
     
    But senior European officials said Tuesday’s meeting of the “euro working group” – senior officials from eurozone finance ministries – was also coloured by a widening split over whether Athens should be trusted with a second bail-out.
     
    The delay heightens the risk Greece will be forced into a full-scale default next month when a €14.5bn bond is due for repayment….a group of eurozone governments, particularly those that retain triple-A credit ratings, has lost faith Greece will ever deliver its end of the bargain. Hardline officials in Germany, the Netherlands and Finland are increasingly urging a Greek default.”

  168. kinkistyle

    cwan: you have to file a K-1 to each member of an LLC every year, and in NY State at least there is a Biennial registration to update your address and management info, which is $9.00.  
    The biggest thing is that there is some initial overhead, as there are filing fees (around $200 in NY) and then you must "publicize" the existence of the LLC in a trade newspaper and that can cost around $1000.00.

  169. zeroxzero

    That's from FT, 7:40 PM UK [GMT].

  170. stjeanluc

    Since when do we need news for a big stick at the end. Typical manipulation… move along!

  171. scottmi

    TZA – selling premium.. can sell the March 16/17 put spread for .30 

  172. rainman

    Pretty impressive 30 minute stick. Wagers to green?

  173. sparky123

    ZZ    It did seem like the market reacted badly when that meeting was cancelled, and it also has been looking more and more like Germany wants Greece out.

  174. dpastramas

    This is so wrong, its comical.  I am so tempted to sell buy puts into the close..

  175. rustle123

    Keep the HFT programs legal and this is what you have forever.  No wonder mass public has stayed away from the market. 

  176. zeroxzero

    I dunno, Stj, if we should break out the tinfoil for every inexplicable fibrillation.  I don't find it hard to believe that global money might increasingly seek U.S. refuge at the moment, both bonds and stocks, apparently..  

  177. Phil

    Oil refusing to go down so far.  

    CAT/Scott – I think $111 is likely if the sell-off follows though – it's really an overnight craps roll to catch a gap down in the morning.  I figure they can't escape a big Dow sell-off.  

    FAS/Kurt – Well no direct relationship there.  Our classic bullish offset to EDZ is CHL.  Also, a bullish spread like that will never gain quickly, at best you are "on target" as your other play drops but, as I said, no direct relationship between your two spreads.  For an EDZ offset, I still prefer to sell the March $13 puts, now $1.30 and that pays for the March $10/13 bull call spread at $1.90 for net .60 on the $3 spread that's 100% in the money.  

    PCLN/David – I was looking at that earlier, very tempting.  

    Wow, markets perking up right at 3:30 on the button!  

    15-year/Jabob – I had been talking about making twice monthly payments on a 30-year (same amount, just pay every other week) and that pays you off in about 22 years without paying more.  You can (as long as it's IN THE CONTRACT) make additional principal payments anytime and mimic a 15-year when you can afford it but the nice thing is – any month you need some cash, you just make a lower payment (your 30-year minimum payment).   Of course the key is interest, though – just make sure you do the calculations both ways because 30s are going for about 4% but you can get a 15-year loan now for about 2.4% so make sure you use a mortgage calculator with an amortization schedule and play with it until you are comfortable with the trade-offs.  This one lets you calculate the impact of making extra payments.  

    LOL – and what Rain and others said!  

    Oh wow – they just popped the Dow 50 points in 5 minutes on nothing.  Volume just 84M, barely budged but plenty to goose this dead market.  

    CAT/$25KP, JBaker – Disappointing but still on.  If something goes wrong with Greece they can do very well.  

    WTF/Jrom – That's why I can't imagine why you want to play the futures if you even have to go to the bathroom for 5 minutes – this market is nuts!  

    Greece/StJ – The NYTimes had a similar piece.  Very sad and a preview of things to come over here.  

    Greece/ZZ – This is all very silly.  Maybe they cancel giving them $130Bn but I bet someone gives them $14.5Bn to put it off another month or two, until the next payment is due.  Then we can do this all again for another few months!  In fact, I'll bet it's worth LLoyd and Jamie putting up the cash – just to keep this game going.  

    DIA FEb $128 puts at .59, 5 in the $5KP.  

  178. chaps

    kinki/LLC/K1:
     
    I found a lawyer in AZ who focuses on IRA-owed LLCs that are based in AZ. (I live in NH. LLC doesn't have to be in the state where you reside.) He did the whole thing, including the newspaper part, for $1,000-1,200. He's like an LLC factory. Plug and play, etc.
     
    For ongoing costs, he charges me $99 a year to be my AZ LLC's statutory agent and $100 a year to use his office address as the LLC's known place of business in AZ. Just got his bill.

  179. kallenjr

    Phil,
    For swing trades with IWM and using TNA/TZA, is there a trade off of puts on the 3X TNA vs Calls on 3X inverse TZA?

  180. JRW III

  181. rainman

    Goooooaaaaaalllll!

  182. rehat

    This pump is happening because Tim Cook is talking at the Goldman conference… AAPL all the way

  183. rustle123

    Last time I saw the markets ignoring all news and having huge sticks at the EOD was July of last year.

  184. l4real

    IWM/ manipulation
    Five  "No volume blips" and one medium sized bar to take the IWM from 81.80 to 81.94 in the last 3 min of trading!
    No retail participation of course!

  185. Phil

    See what happens – pumped up pre-market (no volume), light selling all day long to whatever suckers are buying (about 75M shares sold), then 10M shares are bought in 15 minutes to pump us back up to yesterday's close.  This is how the funds are dumping all of their shares to retailers.  The people who come and buy all day are, in fact, rewarded.  The only problem will come when it finally ends and the all realize there is no one actually around to buy their shares.  

    Global money/ZZ – Yes but would global money have such perfect timing, day after day?  

    Trade off/Kallen – I don't like either for swing trades.  I prefer an in-the money weekly IWM put or call for direction to paying premiums on the ultras.  

    Well, that was crazy!  Happy Valentines day everyone – I'm out of here. 

  186. angelcur

     Shanghai Copper Inventories are up +618.0% ytd to a new all-time high as they eclipsed their April 2010 record today.

  187. Phil

    Volume finished at 120M on the Dow, about 50% of the Day in last 30 mins and the big blocks dumped at the close were not buys – just matching unfilled retail orders at the very top by blocks of sales that were held up – very slick.  

  188. Canuck

    NYC -
    1st trip to NYC tomorrow for 5 days.  Where do I get the best slice of pizza??

  189. kallenjr

    Phil,
    How do you get that information on volume and matching unfilled retail orders on the Dow?

  190. dpastramas

    Zynga faces reality after hours  -9% and dropping.  9Bil out of facebook games, yeah right..

  191. l4real

    Canuck
     
    Joe's Pizza, Di Faras and Saluggi's

  192. Burrben

    Canuck  -  Lombardi's White Ricotta Pizza with sauce on the side.  IT will change your life.

  193. rustle123

    Canuck
     
    Be like Steve Carrell in "The Office", when he came to NY, he went for the best place for pizza, Sbarro's

  194. zeroxzero

    Phil/Greece:  Greece is, as you pointed out recently, the size of Delaware.  So, in and of itself, all the clamor is indeed silly, "a tale told by an idiot, full of sound and fury, signifying nothing.    Unless, of course, it's a portent of what an Eurozone / ECB bailout of Italy might look like.  If the Eurozone can't afford to bailout Greece without tears, firebombs and endless committee meetings, then when Italy's crisis rolls around  -- with Sarkozy  already given the boot in France in favor of Francois Hollande --. we'll see the true colors of Eurozone solidarity.  

  195. roberthjrfl

    Cwan, Chaps, Peter D – Covering short SPX strangles with longs from yesterday.
     
    Guys, this is an idea i have been experimenting with for a couple of months. How far out of the money are you guys using on the longs? Are you looking at them as just a tool to reduce the margin requirements or do you set up the longs to limit losses? I have been seeing that you can sell about the same amount of premium (depends on how close you get to the money on the shorts) that you have as potential loss ( IE, if you sell 2k in premium, you would have a max loss up or down of 2k).

    Even though this position is an "iron condor" i have been working the short strangle portion like Peter had outlined. I kind of look at the longs / shorts as 2 different, although related, trades. My concern has been the errosion of the longs. It seems like the longs loose more value on a move than the delta would predict. I tyically set up the longs so they end up delta neutral. Any insight you guys could give would be great. 
     
    An rough example of this from the close would be Short 1375c / 1325p with longs 1425c / 1275p.  Max profit TOS says is $19.75 and max loss is $30.24.   
     
    How are you guys using the longs to cover the shorts?  TIA.

  196. pstas

    Chaps:
    IRA- extremely interesting. Do you have contact info for the AZ atty?

  197. cwan120

    Thank you all about the pass-thru LCC for IRA.

  198. pstas

    Chaps- do you happen to know if a SEP IRA is also convertible?
    Also- can the LLC place the account for trading anywhere? i.e.,TOS?

  199. cwan120

    craigzooka,
    For IRA portfolio, how about EXC covered calls, buy shares and sell Jan 2013 $40 calls?  About 7% returns if called away + dividends.

  200. cwan120

    robert,
    As I mentioned yesterday, I just started looking into this strategy recently.  I am still using Peter D's put verticals as my hedges.  My current put verticals are expiring in March.  So, I am waiting until they are gone, and then I'll start the new strategy.
    I'll be interested to see what chaps and Peter have to say.

  201. chaps

    pstas: The lawyer is Richard Keyt. The firm is KeytLaw, LLC. Based in Phoenix. The guy maintains a large web-site with all sorts of information on setting up LLCs. He writes on the subject frequently, has a large database of stuff, etc. If you're seriously considering this, I suggest you read a bunch of stuff until the concepts settle in your mind and you're comfortable with it.
     
    I don't know about SEP IRA.
     
    LLCs/brokerage firms: I'd assume you can do it anywhere. My LLC has been with TOS for a year. To them, it's an LLC. There's no reason for the to know or care about how the LLC is structured, as long as it's a legal entity with proper recognition as such. I have PM on the account.
     
    One word of caution: The lawyer I used highly recommended that the LLC be restricted to the IRA money I currently had. In other words, to play it safe with the complex laws, any future IRA contributions have to go somewhere else. In the future, you could pool those contributions into another LLC, if you wanted. So, basically, this concept is probably only appropriate if you currently have a large enough chunk of IRA money with which to set up the LLC.

  202. barfinger

    EDC is the bullish offset for EDZ. It is the best performing ETF this year, last I looked up 52.9%.It's a 3x, and up much more than 3 times the market. This is why I say long EDZ or short EDC is a terrible hedge.

  203. pstas

    Chaps- thx. I will check it out. Any idea why he suggests excluding contributory IRA's?That would rule out my SEP, if so.
    I still have another one though.

  204. stjeanluc

    Europe / Zero – This is what I was saying yesterday, you might not want to be long the euros by the time the French elections come around as Hollande already said he wants another look at all the agreements hammered by Merkel and Sarkozy. And the current polls have him 15 points ahead… It's still 100 days away, but not looking good!

    As far as tin hats and manipulation – it might not be human driven. They have all these algos looking at volume, resistance, support, open orders and such. Good enough to fabricate sticks every day!

  205. chaps

    pstas:
     
    He probably covers the reason on his site. My recollection is that, roughly, the letter of the law is not the same as the spirit of the law. The spirit of the law is not to obtain tangible benefit from assets before retirement. The letter of the law is complex and you are technically violating it if you contribute to the entity after the fact. It was really legally intricate. Had something to do with the timing of the creation and funding of the entity. (I'm over my head here.) But if you ask the firm, they'll know. They've been through it 1,000 times.
     
    BTW: You can combine IRAs as joint owners of the LLC. My LLC is jointly owned by my wife and me (our IRAs.)

  206. stjeanluc

    Zero – Look at the chart of /ES today with support and resistance….

    And it's like that most days… no wonder JRW lines work so well too. 

  207. pakdog

    Flip – Just read your response from yesterday's thread. Love the story about the judge, and I have to agree things look pretty dark. In fact, I agree with a lot of what you said (and a lot of what Phil says looks in line with your view, too, but he could address that better than me). To put it in terms that resonate here, I've taken a long but well-hedged position on the human futures (/PPL) while you've gone (almost?) all-in short. Peace out dude.

  208. pakdog

    15-yr / Jabo – Any chance his commission is higher on the 30-yr?

  209. kinkistyle

    LOL, I think I see the Left Shoulder, Head and Right "20 Inch Python" formation. Do you? :D

    S&P 500 Completing a “Hulkamania” Formation

  210. Peter D

    chaps, cwan & others/IRA,
    Thanks chaps for the contact information.  I will definitely use it in the future when I transfer my 401k.  It's a dream to have PM on IRAs that can grow like weeds with short strangles and tax is deferred.  The only thing we need to watch is not getting the margin call, which would kill the account without cash injection.

  211. sagemm1

    looks like roubini was a bull for about 3 days. from the telegraph a roubini tweet
     
    RoubiniGlobal Roubini Global @Nouriel: The U.S. economic upturn may already have peaked, and global growth is weakening significantly #RGE About five hours ago via web Favorite Retweet Reply

  212. Peter D

    robert/short strangle,
    We are not thinking to that level of complication.  There are 2 ways to deploy the longs.  One is to buy it at the same time that you sell short.  For instance, sell 10 SPX Apr 1100 puts and buy 11 SPX Apr 1050 puts.  We'd get $1,000 credit or so.  Reg-T margin is $49,000.  PM initial margin is about $3,000, growing to approximately $40,000 if SPX drops to 1100.  Allowing for a 2X roll, we'd reserve $100k, getting 0.5% a month, which is a good rate of return with minimal stress.  Of course, you additionally can sell 2 SPX Mar 1150 puts for $2 each, and 1 SPX 1435 call for $1, getting $500 for March, making it 1% return for every month, leaving plenty of margin (on PM) for adjustments.
     
    The other way is to buy longs to "cover" the shorts after they have decayed a bit.  For example, if the Apr 1100 puts goes from $4.9 to $2, instead of buying it back, you'd buy the 1080, 1070 or 1050 puts for say $1, reducing the maximum return, but reducing risks and cutting the margin requirement.  I'm not understanding your statement of "if you sell 2k in premium, you would have a max loss up or down of 2k".  The loss can be much larger than the premium when you sell short.

  213. BertII

    Does anyone know how via etf or options to short euro vs dollar.

  214. mvex1

    HI Phil:
    Sorry for the confusion.  The transport (Water Transporation) I was referring to was labled on the graphic that did not go through and I did not see that until you asnwered about IYT.  The symbol was GNK.  I thought about this company because in my portfolio is DRYS that I bought shares at $2.10.   I thought about a BCS on GNK as a good compliment/diversity to DRYS without adding a heavy cash commitment.  If it could generate a 20% quick yield as a boost to my "shipping" sectors that would be nice. 
    I am leaning how to use the options as a vehical to trade around different stock postions, and learning how to fix bad transactions.  The though was that GNK fits into the trading around an existing postion.
    Am I on the right track?
    M.  

  215. mvex1

    Hi JRW:  If it is not proprietary, what are the calcuations for the pivot lines you are using?
    Thank you.
    M.

  216. pstas

    Chaps- indeed, very complex. I read through some of the material on the site. Headache.
    Couple of general questions – If I understand it correctly, with the LLC as the owner of the assets held within the IRA- the assets (in this case stocks, etc) can be transferred to a regular brokerage account which then may qualify for PM?
    When you set this up, did you have to liquidate any positions to effect the transfer?

  217. BertII

    Oil going the right direction now, but in a very thinly trading after hours

  218. roro

    Canuck,
     
    don't know how much time you have…….. a few addresses………..
     
    Jean Claude Cafe/bar, 137 Sullivan St 212-475-9232……….cash only, no credit cards. very cool and undone place in SOHO off of Spring St.
    also lots of  sales this time of year and some nice stores close to JeanClaude too….great place to walk
     
    Bar and Books…….636 Hudson St (between Jane and Horatio) West Village………very cool atmosphere……library for drinks and conversation……….212-229-2642
     
    Museum of Natural History, if you have time 200 Central PARK wEST

  219. Cap

    Now we know why … BAC and C were sold out by Paulson in 4th Q, same for much of his GLD.

    This is why they dumped so hard.

    Scottmi – great post last night; Flip, you a well.

    As for those insidious drones, one as spotted over northern NJ today …

    :wink:

    How bout that BS last 1/2 hour today ?

  220. pstas

    Trucks and Trains
    http://blog.yardeni.com/2012/02/trucks-trains.html

    "The truckers must have put the pedal to the metal during December because the ATA index soared 6.8% to a record high of 124.4. This is yet another indicator suggesting that the recovery is over and that the economy is expanding into record territory"

  221. Cap

    Mocha – HK is back !

    New HK that is.

    But dont buy it here …

  222. elliotteldrich

  223. Canuck

    NYC/Roro, Burrben, Rustle123, l4real:
     
    Thanks, looking forward to checking these places out and I will update — doing the red-eye tonight from Vancouver to NYC.  Have tickets to Chicago and Madame Butterfly as well.  Just got a serious upgrade in accomodations too, so excited about the trip.

  224. chaps

    pstas/LLC:
     
    Complicated. Yes. It's a process. I thought about it for awhile and studied it. Took a lot of time but, as noted, it wasn't very expensive.
     
    LLC/brokerage: Yes. LLCs can setup brokerage accounts and they can have PM if the manager of the assets qualifies. I'm the manager of the LLC in the LLC's operating agreement and am designated as such to TOS. Because I qualify for PM, I can trade using PM on the LLC's behalf in the account.
     
    Transferring stocks: I did liquidate all the positions because I intended to trade using a different strategy. I'm guessing you could transfer stocks, but I don't know what the process is for that. It is the IRA custodian (a third party firm) that takes hold of your assets initially and then deploys them according to your instructions. So it was relatively easy to have the custodian make a single cash transfer to the LLC for each of the IRAs.

  225. pakdog

    Euro etfs / BertII – Some ideas for you at this site.
     
    http://etf.stock-encyclopedia.com/category/euro-etfs.html

  226. zeroxzero

    Liberty Media, DTV — what's Buffett buying?  Eyes?

  227. zeroxzero

    Yesterday I discussed the Western Hemispheric population and geographic advantages.  Add to that the demographics described herein, and Latam, the U.S. & Canada starting looking like real bright spots on the global roulette wheel..
     
     http://www.washingtontimes.com/news/2012/feb/14/as-china-goes-geriatric-we-have-the-advantage/

  228. celesteschein

    What happened to the futures?

  229. pstas

    Chaps- LLC- OK, now that begins to make some sense and I can wrap my mental arms around it. I have made such in kind transfers previously. A bit cumbersome but relatively painless. Takes a week to ten days usually which can be a problem depending on what market conditions are.
    Approximately how long did the process take to complete?

  230. kustomz
    • CHINA PBOC'S ZHOU SAYS HE'S CONFIDENT EU WILL SOLVE CRISIS: MNI
    • CHINA PBOC'S ZHOU SAYS HE SUPPORTS EU, ECB MEASURES: MNI
    • PBOC'S ZHOU: CHINA WILL PARTICIPATE IN RESOLVING EU DEBT CRISIS
    • CHINA PBOC GOVERNOR ZHOU SAYS HE HAS CONFIDENCE IN EURO: MNI

      FU CHINA!!!

  231. freeflow

    NYC pizza is best at Di Fara’s. It’s an experience and a journey so don’t leave hungry. The wait is usually over an hour for a pie. It also takes about an hour to arrive by subway.

  232. chaps

    pstas:
     
    The biggest time component was studying it and making sure I wanted to do it. The lawyer offered, I think, two levels of expediting the process for additional money. I paid for the first level of hurry-up. Once I decided to do it, I'm guessing a five to six weeks to do everything.
     
    There's the lawyer setting it up. There's the IRS (the lawyer handles that.) You have to get a custodian who handles self-directed IRAs. The custodian reviews the operating agreement, or something to that effect. I used SunWest Trust in NM as custodian. You have to set up bank accounts, etc. for the LLC. You have to set it up with TOS, take the margin test, etc. So lots of parties involved.
     
    Like I said, the law firm is like a factory with a process. They do what they do and don't charge a lot. My impression is this guy really thought it through, understands AZ law, and built an LLC-generating factory. I'm guessing you won't get a lot of hand-holding without paying more. But the process worked and, so far, no problems.
     
    And I don't think it should be a problem, because it's really not like you're buying real-estate or running a complex operating business with your IRA money. You're just investing your retirement money, like before, except now with margin.

  233. craigzooka

    @cwan120 I took a look at them, they are near the bottom of their range but their volatility is lower that the S&P500, however, I will add them to my watch list.  If their Volatility ever perks up I would love to start writing covered calls against them.

  234. kinkistyle

    Looks like a new "Too Big To Fail" bank is about to be born:
     
    Capital One-ING deal gets U.S. approval

     
    This makes it the fifth largest bank.  Whats in YOUR wallet?

  235. cwan120

    Hi, Peter,
    Thanks for such a detailed explanation of your strangle strategy.

  236. cwan120

    Hi, All New Yorkers,
    I live NJ and always wanted to try Peter Luger.  Years ago, I called once to ask about reservations.  They gave me 4:30pm or something like that.  I couldn't make it.  So, I didn't pursue.  Can you just walk in without reservations?  If reservations are necessary, how can I get a better time, like 6pm? 
     
    Or, should I consider myself so lucky that I could get a 4:30pm slot??  And I should've taken it no matter what??

  237. kallenjr

    mvex1,
    JRW's lines are lines of 'confluence' – numerous factors go into determining them – previous support/resistance, fibonacci levels, and perhaps some pivot points. I don't know how long it takes (and how he does it) to determine the lines.

  238. cwan120

    Hi, craig,
    Thanks for pointing out the volatility.  What's your criteria on that?

  239. cwan120

    kinki,
    Capital One is very good, IMHO.  Their credit cards and debit cards do not charge any fees if you use them overseas.  Last year, just before I went on vacation overseas, I got their promotions in the mail, and I jumped on the opportunity.  In comparison, Chase charges a hefty 3% for overseas transactions!  Chase will waive that 3% only if you have a huge balance in your checking accounts.
     
    I hope that the merger won't hurt that aspect of Capital One.

  240. Phil

    Wow, the Dow is now up over 150 points from where it was at 3:30.  Percentage-wise, the RUT is up more, from 814 back to 827.  Nas from 2,555 to 2,590, S&P from 1,338 to 1,355.  Oil back to $101.67 and gold 1,727.  The Dollar is back to 79.30, from 79.76 so about 0.5% drop there doesn't even cover the over 1% moves up.

    The futures were driven up at 9:30 in the same pattern that they were at 3:30 so really, why fight this anymore as it's not only apparently legal, but celebrated:

    Isn't that interesting?  Sell, sell, sell all day – then one huge buy then sell, sell, sell after hours and one huge buy – yeah, that's a very natural trading pattern…

    Nikkei up 200 points! 

    Euro $1.3166, Pound $1.5719, 78.46 Yen to the Dollar, EUR/CHF at $1.207.  Silver $33.70, Copper $3.2865, nat gas $2.553, gasoline $3.005.  

  241. kongen

    Chaps: Thank you for the useful discussion of LLC IRAs.

  242. Phil

    As near as I can tell, there is still no Greece deal really.  Oil at $101.65 is a good short (/CL) but, of course, you have to have balls of steel to short this market….

  243. Phil

    That LLC/IRA discussion should be saved into the Wiki – very good stuff!  

    Dow 12,900 is a good shorting line (/YM), RUT 825 also (/TF) – tight stops, of course.   This is insane, every day I want to get bullish but I see the charts and I read the news and it makes me more bearish than I was before…

  244. Phil

    From Dave Fry:  

     

    SPY 5 MINUTEWith the market sharply lower suddenly HFT driven buy programs were unleashed at 3:30 PM. A Reuters report stated that Antonis Samaras is “expected” to deliver a letter of commitment to the country’s international lenders on Wednesday. It doesn’t take much when volume is light to manipulate prices. And, no, you can’t make this stuff up! Ahem, so stocks closed slightly higher on the day making up large losses in the last 30 minutes.

     

     

     

     

    Before this late stock rally gained traction, the dollar had rallied and euro sank. This in turn forced commodity prices (gold, base metals, grains, softs and so forth) lower. Bonds on the other hand rallied. These conditions may quickly reverse should the Greek rumor bear fruit. Frankly, with HFT algos in charge of conditions they’ll launch buy or sell programs with impunity knowing light volume will maximize their impact. The fee conflicted NYSE and others don’t wish to stop them.

     

     

     

    The strongest sector was technology led by Apple (AAPL) which was also much higher late. This may have been another stimulus due to an upcoming speech by CEO Tim Cook at the Goldman Sachs technology conference. Apple’s great performance may mask underlying market weakness.

     

     

     

    Volume was slightly higher on buy programs but breadth overall remained negative.

  245. Phil

    Look, I started a trend!  

     

    Apple Clouds Market

    Apple's gargantuan size is prompting some equity analysts to cut Apple out of the big-picture view of corporate earnings and find a dimmer outlook for the broader market.

  246. Phil

    Late Snags Push Back Greek Deal

    Greek bailout talks entered a new round of brinkmanship, as euro-zone finance ministers scrapped a meeting to approve a new aid package.

  247. peedlew99

    Why should any of us trade this market?  It's madness when they can be manipulated with such  impunity.  Makes me want to buy a car wash or two and never look back.

  248. Phil

    Pizza/Canuck – I like Lorenzo's on days when the good chef is there (by my house in NJ) – this guy is so good I don't even bother going to NYC for Pizza anymore but, when I do get tempted, it's usually Saluggi's on Church Street in the Village.  I like STUFF on my pizza and that's going to make a big difference in who likes what pizza place.  I'm actually fascinated that L4 likes Saluggi's and Joes (Carmine St, Village), because Joe's is pretty basic (but very good).  As to Burr's choice of ricotta pizza – BLASPHEMY!!!  Rustle is right though, there is nothing funnier than going all the way to New York City and then getting a pizza you could have microwaved at home!  If you generally like Italian food and want to go to a cool place (aside from Little Italy) – try Eataly at 200 5th Avenue.  It's a gigantic Italian supermarket with restaurants inside where you can try the food and Manzo (gourmet) is excellent for lunch but so are most of the other ones.

    By the way, to enjoy NY – don't be afraid of the subway – it takes you from place to place very quickly and forces you to do a little walking, which is kind of the point of seeing a city anyway.  They have 7-day passes ($29) which pay for themselves as soon as you skip your first couple of cab rides.  Works on buses too.  

    $101.55!  10 cents is a nice win in this chop.  Can pick it up again on a cross below $101.50 (and then your net basis is $101.60 so already a cushion).  

    Volume info/Kallen – I watch it and the unfilled orders get filled in a process called "Market on Close", which is the trick I referred to and discussed here in detail last month.  What people don't realize is that, when there's a trade imbalance at the close (caused by bots stuffing buy orders into the close) the Nasdaq or NYMEX will broadcast the price and imbalance information back to their dealer network and essentially put the block of orders up for bid so the brokers can rescue the buys of their own bots at the lower price – that's why you often see the price suddenly collapse as soon as trading stops.  

    Greece/ZZ – Very good point, this is just a test run but, of course, when the test run blows up in your face – it does not bode well.  

  249. Phil

    Buying a car wash/Peedle – That plus the shift to capital gains as the last kind of tax break is what the Build a Berkshire Workshop is all about.  

    $101.65 again – to reload or not to reload, that is the question…  Looking for a reason first as we'd hate to give back our dimes.  

    EDC/Barf – I think they are starting to look like a good short.  Decay will hit them over time and, as you say, the run-up is disproportionate so very possible they correct sharply.  

    Hollande/StJ – Won't matter what he wants to look at if Greece already has the money.  He could attempt to enforce some clause harshly but not likely Greece will give back anything they get their hands on.  

    $101.75 – the joy of indecision!  Now we can play this line with a tight stop.  

  250. Phil

    Europe's Growth Woes Worsen

    Economic output in Greece and Portugal plunged last year, according to figures released on Tuesday, challenging the prevailing European view that fiscal belt-tightening will foster growth.

     

    Moody's Flags U.K.'s Rating, Cuts 6 Others

    Moody's downgraded six European nations and became the first ratings firm to warn the U.K.'s rating could be at risk.

  251. Phil

    Very good from Kid Dynamite, thanks Kinki:  

     

     

    Obvious Hulkamania Formation

     

    What does this mean?    Well, it means that the market is likely to be driven by a lot of hype, cheerleading, noise, and fake manipulations.   You’ll be riding high, printing PnL by daytrading$TVIX$ZNGA and $LULU, prognosticating on the future value and accounting scandal outcomes for $DMND and accumulating adoring Stocktwits followers.   You’ve just body slammed Andre the Giant, for goodness sake -  you’re on top of the trading world.   Suddenly, out of nowhere,  you’ll be getting pile-drived into the mat by Mr. Wonderful Paul Orndorff, or having a guitar crushed over the back of your neck by the Honky Tonk Man as Mean Gene screams in horror.   You’ll start to have back, neck, knee problems – the PnL won’t be coming in so steadily anymore.

    Eventually, the chart will start to look like an old lady who has been out in the sun for too long, and the pattern is likely to collapse in a sad blaze of glory that will leave former supporters shaking their heads and asking out loud, “How could this happen? Hogan Knows Best?   Is there no limit to the shame? OH THE HUMANITY…” 

  252. Phil

    Dollar dumped to 79.20 very fast, oil still $101.72 but not worth shorting until we find out what's up.  

  253. Phil

    Roubini/Sage – I wondered how long he'd last. 

    I see nothing, back on oil shorts but very itchy trigger finger.  

  254. Phil

    GNK/Mvex – Well, that's different.  Like all shippers, they were beaten to Hell and for a pretty good reason (overcapacity) that is not going away.  GNK is a nice little company but they do have $2Bn in debt and there's no market for used ships at the moment so, I sure wouldn't lend them any money and if I wouldn't lend them money then why would I buy their stock?  GNK is certainly NOT "diversifying" your DRYS unless you have some sort of Transports portfolio where you must hold more than one of each kind.   

    $101.64!  This is fun.  Range on oil super-narrow this morning.  So, when you get your dime, you switch to watching the Dollar and the bid/ask spread (also Euro, Pound and Yen to confirm).  If you are at goal and the Dollar ticks the wrong way – just kill it.  There's always another opportunity on another cross.   

  255. Phil

    I'm sorry, doesn't have to be a dime.  Just oil's movement in your direction stops, then you need to watch the Dollar to see if it's causing a problem.  In the short-run, it's a very direct relationship clearly led by the Dollar.  

    In other words – other things being equal – oil's price will be directly affected by changes in the value of the Dollar as oil is priced in Dollars and constantly traded Internationally so each barrel of oil is worth what it's worth and it's the number of Dollars you need at that given moment that becomes the main variable.  

    GNK/MVex – IF I were going to play GNK, I'd sell the 2014 $10 puts for $4.50 and leave it at that.  That's a net $5.50 entry and makes you 40% a year against even 100% margin if they just hover around $9.50.

    Americas/ZZ – Good premise. 

    China/Kustomz – LOL.  They want to see reforms first.  Just another banker pushing for austerity so they can get paid back before the Euro becomes as worthless as the Dollar.

    Speaking of the Dollar – that was a nice flush to dump the suckers (worked on me for a minute) – now flying over 79.30 again.  Oil just failed $101.60.  

  256. Phil

    COF/Kinki – You would think these deals would get an automatic NO from the regulators who will have to bail them out but Noooooooooo!  

    $101.55 again and the Dollar halted at 79.33 and my logic is $101.55 is a good place to stop out because we can pick up the cross (3rd times a charm) below $101.50 anyway and I'd rather miss a nickel that way than blow it when we bounce back again – especially when that bounce back makes for another opportunity to short if I'm clean.  

  257. roro

    Phil,
     
    you are up early……..i guess you got your 1360 S&P! ….not believable!!! i went to bed at 8 after a very long day. just woke up to a world of altered price states……..waiting a few more minutes to see how Spain and Italy open up.

  258. Phil

    Peter Lugar/Cwan – If you give them 2 weeks, you can usually get a normal time.  I will tell you a trick for any restaurant that usually works if you want a table around 6pm as a walk in (and guys, please don't tell this to other people or you'll ruin it for all of us) – tell them you are on your way to a show and just want to get a quick bite and get out.  Usually, restaurants have plenty of open tables around 6-7 but they fear that you'll use up a table they promised someone for 7:30-8 but, if you tell them in advance you are going to a show and intend to get out by 7:30, they are often thrilled to add a turnover for the night.  You'd be surprised how many really good restaurants this works in.  I like Peter Lugers but Two Toms is better (255 3rd, Brooklyn).  Also very hard to get in and cash only, not open Sunday, wine is red or white (and don't order white or you get "the look") – it's a wise-guy steakhouse with huge portions and a great atmosphere, not a date place at all.  In fact, you almost never see a girl there.  

    Up early/Roro – Yeah, nap time for me now.  Just getting our $101.50 cross on oil (/CL) and game on for the RUT 825 (/TF) and Dow 12,900 (YM) lines with tight stops if we cross below.  Dollar at 79.31 so 79.30 is a good stop line.  Europe opening up 1% because they see our futures up 1% but it's all so silly, isn't it?  

    GDP numbers start to trickle in from Europe: German Q4 GDP -0.2%, slightly better than the -0.3% expected but a pullback from +0.5% in Q3. Germany's full-year number was +1.5% vs. +1.8% consensus. In France, Q4 GDP +0.2%, beating expectations for a 0.2% contraction and a shade below Q3's +0.3%. Full-year growth of +1.4% vs. +1.1% expected

    Wow, where to begin on how stupid this is.  German GDP down 0.7% Q/Q.  Isn't that BAD?  I don't know, not being an "expert economist" but I seem to remember something from Econ 101 where contracting GDPs are not good things – especially in the economy that's supposed to be leading the Continent.  Nonetheless, Germany gapped up 1% at the open.

    FU Germany – Oil failed $101.50 anyway!  

  259. roro

    Spike up open for the UK100 (FTSE) from 5905 to 5935 on a 1 minute candle. then 2 minutes to place a sell order at 5940 followed by a 5 minute candle back down to 5910.
     
    it is hard to believe this market is legal.

  260. Phil

     Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    8:30 Empire State Mfg Survey
    9:15 Industrial Production
    10:00 NAHB Housing Market Index
    10:30 EIA Petroleum Inventories
    2:00 PM FOMC minutes

    Notable earnings before Wednesday's open: ANF,CMCSACVEDEDFDPSDVNHSICOCSCGSIX

    TEVA,TLMWCGWSOXEC

    Notable earnings after Wednesday's close: AAEMCAR,CBSCFCLFCLWRCTLEQIXETEETPFRT

    GGGGCHBI,KGCMARNTAPNTESNVDAOITEXTRNVMCWFR

    7:52 PM Japanese stocks are higher in early trading, with major exporters rallying on further losses for the Japanese yen after the central bank surprised markets with fresh monetary easing. The Nikkei Average is currently up 0.9% to 9,128: Sony (SNE +2.5%), Panasonic (PC +2.2%), Toyota (TM +2.1%) and Mazda (MZDAY.PK+6.2%)

    China will invest in Europe’s bailout funds and continue to hold euro assets, says PBOC governor Zhou Xiaochuan, echoing similar comments from Premier Wen Jiabao yesterday. While short on details, it's good news for European finmins, and could help stabilize the economy in China's largest export market

    A meeting of eurozone finmins at which they were expected to approve the €130B Greek bailout has been cancelled, with Eurogroup chief Juncker citing the need to continue "technical work." After years of can-kicking, markets expect more of the same, but it certainly must be clear to even the hackiest eurocrat that Greece isn't coming out on the other side of this. Do they really want to shovel another €130B into Athens?

    S&P raises its outlook on the state of California for all long-term and underlying ratings to Positive from Stable. - Go Jerry!

    Consumers in New Zealand and Australia are proving fairly resilient. Despite a growth slowdown in Asia and the ongoing eurozone debt crisis, Aussie consumer confidence rose 4.2% this month to the highest level since November while retail sales in N.Z. gained 2.2% last quarter.

    Some of the world's biggest investors boosted their technology holdings during the quarter, according to recent filings. Warren Buffett added to positions in Intel (INTC) and IBM, while George Soros upped his stake in Google (GOOG) and Yahoo (YHOO). Other heavyweights such as David Tepper and David Einhorn piled in to Apple (AAPL). One exception was John Paulson who, after a string of heavy losses, liquidated his losing position in Hewlett-Packard (HPQ).

    Warren Buffett mostly tweaked around the edges of Berkshire Hathaway's (BRK.AQ4 holdings, but the firm bought 2.7M shares of Davita (DVA), which runs dialysis centers, and 1.7M shares of Liberty Media (LMCA), a communications and entertainment company. It raised its stake in DirecTV (DTV) to 20M shares from 4.2M.

  261. Phil


    Bruce Berkowitz's Fairholme Capital Management 
    cut substantial parts of stakes in Berkshire Hathaway (BRK.A), Citigroup (C) and Regions Financial (RF) in Q4, and completely sold out of holdings in telecoms AT&T (T), Telefonica (TEF), Verizon (VZ) and Vodafone (VOD). He keeps the faith in Bank of America (BAC), maintaining a stake of nearly 105M shares. 

    David Tepper has substantially reduced his equity portfolio in the last two quarters, according to an SEC filing, as the value of his stock holdings at Q4's end fell to $765M from $4.2B two quarters prior. Tepper’s entire stakes in airlines AMR (AAMRQ.PK), Delta (DAL) and US Airways (LCC), plus all shares in Citigroup (C), are gone in the new filing. He opened a big new position in ORCL.

    Global regulators' Libor probe has exposed flaws in banks' internal controls that may have allowed traders to manipulate interest rates around the world, sources say, along with email evidence of potential Libor collusion between firms. Banks may face civil fines as a result, though probably not this year. There has been no move toward criminal charges. 

    Did Americans get smarter? It wasn't that long ago that home owners fell in love with the 125% mortgage refi option, but nownew data out from Freddie Mac tips off that more sensible mortgage options are being picked. 95% of Americans refinancing their mortgage chose a garden variety fixed-rate loan, while 43% opted for the 15- or 20-year loan – marking the highest level since 2003 to pick the shorter loan that potentially saves them thousands of dollars in interest over the lifetime of the mortgage.

    With increasing talk that a gallon of gasoline could cost $5 for the first time this summer, at least two commodity pundits say it'smore likely that prices will remain closer to $4. “To get to $5-a-gallon gasoline, you’d need a geopolitical event, like a war with Iran,” one says. With so much speculative money betting on higher prices, buyers may lose patience and bail out, easing prices, another says.

    BNP Paribas (BNPQY.PKQ4 net income -51% to €765M. Revenue -6.1% to €9.7B. Took a €567M impairment on its Greek sovereign debt, increased its provisions so that 75% of its exposure to Greek debt is now covered, and reduced sovereign debt outstanding by 29%. Declares a dividend of €1.2/share, down from €2.1/share in 2010. 

    Shares of Tata Motors (TTM +6.2%) zoom higher after the automaker reports a 41% Y/Y profit gain for its FQ3, aided by sales in China and at its Jaguar-Land Rover unit. Revenue totaled 452.6B rupees ($8.5B), up 44%; profit was 34B rupees ($641.8M). Jaguar and Land Rover sales rose 37% to 86,322, "supported by the overwhelming response to the recently launched Range Rover Evoque."

    Netflix (NFLX), which ended Q4 with less than 24M streaming subscribers, is aiming to eventually have 60M-90M, or 2x-3x as many as HBO, according to a presentation from Reed Hastings. His logic: Netflix is cheaper than HBO, doesn't require a cable subscription, offers a wider selection of content, and features a personalized UI. It has also been labeled as "rerun TV" due to its focus on older shows. (earlier)

    Research In Motion (RIMMrises 1.9% AH after David Einhorn's Greenlight Capital discloses a 2.9M share stake in the struggling smartphone maker. Einhorn offered mildly positive remarkson RIM during a recent talk.

    Amazon's (AMZN) Prime service has just 3-5M subscribersas of October, fewer than estimated, according to a Bloomberg report. The shares immediately dive nearly 3% on the news, before bouncing a bit. Analysts had estimated the current tally to be around 10M.

    Tim Cook adds fuel to rising hopes (III) for an Apple (AAPL) dividend announcement by stating the company is very actively discussing at the board level what it should do with its giant cash pile (probably over $100B at this point). Cook also hints at the possibility of a future Apple TV, and suggests the iPhone's "halo effect" is boosting iPad sales.

    Jefferies believes Apple (AAPL +0.9%) has the ability tomaintain higher margins for longer than the market realizes given its supply chain initiatives. By leveraging its cash flow to fund suppliers' manufacturing, Jefferies says AAPL can potentially mitigate margin pressures by securing lower prices and exploiting its technological edge.

  262. Phil

    Not only legal but Government approved and sponsored.  Well enjoy – I'm going back to bed and seeing if 3 more hours can make things more realistic or not.  

  263. roro

    just a late night thought, but if this thing rweally takes off the DAX has a lot of catching up to do to get back to correlated highs with the Dow and S&P currently at 12,900 and 1360
     
    last summer the DOW was at 12,750 and S&P at 1350 the DAX was at 7500……….currently 6800
     
    if you want to get really freaky for a long ITaly's ITA40 currently at 16,600 was at 22,500 last MAy
     
    Spain's ESP35 (Ibex) currently at 8800…………last summer 10,500
     
    Nikki currently 9250………..last march 10,500 – 11,000
     
    i may take up Kool Aid!

  264. roro

    remember this;
     
    Kool Aid, Kool Aid…….tastes great!     Kool Ai, Kool Aid….can't wait!
     
    it is getting bad. i know.

  265. roro

    The ITA40 (Italy) and ESP35(Spain) are right up against the 200 MAs – day chart
     
    The CAC has just crossed the 200 MA as has the Nikki with the break over 9000.
     
    Kool Aid, Kool Aid
     
    never say never but if this THING takes off then what is the outlook for OIL? …….
     
    central banks……….mirabile dictu!………….

  266. roro

    so, i am wondering if the NA session is a sell into the open and then a close out before 3:30 because that seems to have been the play lately, or is this the REAL DEAL and the beginning of the markets'  French Foreign Legion march much higher?

  267. roro

    big ranges here for equities and currency pairs
     
    breakout? or pullback? flip a coin……….the miracle of money printing.

  268. roro

    don't know if this is relevant/worth noting in the age of central bank intervention sine pari, but last time the NASDAQ100 was at 2600 (oct 99) it went parabolic for 5 months up to 4800 and  then crashed back to 3000 by may of 2000.

  269. freeflow

    Cwan/Peter Lugers – you can definitely walk in. I’ve done it several times for lunch and dinner. Wait times are about an hour. Ignore the ‘look’ you get and sit at the bar. I also agree with Phil that Two Toms is better in Brooklyn, Fette Sau is probably the best non bovine meat in the city however. Right around the corner from Lugers.

  270. kinkistyle

    Looks like Kellogg's is officially going to be buying Pringles from PG and not DMND. 

  271. angelcur

    roro! this thing HAS taken off

  272. Phil

    Good morning Wonderland!

    I'm so glad to have made my last bearish trade of 2012 earlier this morning – time to drink the Kool-Aid with Roro if we pop the S&P today (still a bit shy).  Oil back to $101.95 (and /CL is still a short with a stop at $102) but $102.50 was where we were going to roll up and DD on our put so a tricky situation considering the unstoppable force moving the markets higher.

    This has a very 1999 feel to it but, then again, 1999 was a good year to be a bull – it was 2000 that sucked.  

    The Dollar is at 79.40 so this is NOT a down Dollar rally – this is just MADNESS!  Probably all anticipation that the Fed minutes will let them declare some indication of QEvermore that we already knew about but will be made to seem like news anyway.  

    6:00 AM Overseas: Japan +2.3%. Hong Kong +2.1%. China +0.9%. India +2.0%. London +0.2%. Paris +0.9%. Frankfurt +1.1%.

    Eurozone GDP -0.3% in Q4 2011 compared with the third quarter, the first contraction since Q2 2009 but a smaller pullback than had been expected. Q4 GDP +0.7% on a year-on-year basis. (eurostat release .pdf

    GDP numbers start to trickle in from Europe: German Q4 GDP -0.2%, slightly better than the -0.3% expected but a pullback from +0.5% in Q3. Germany's full-year number was +1.5% vs. +1.8% consensus. In France, Q4 GDP +0.2%, beating expectations for a 0.2% contraction and a shade below Q3's +0.3%. Full-year growth of +1.4% vs. +1.1% expected.

    U.K. Q4 unemployment rate at 8.4%, up 0.1% on the quarter, with 2.67M unemployed people. It's the highest unemployment rate since 1995, and puts more pressure on the government to take action. FTSE +0.3%.

    The Bank of England's inflation report (.pdf) sees U.K. CPI slowing to 2% by the end of 2012, down from 4.2% in Dec. 2011. Though recent surveys suggest a brighter picture for activity, the country's recovery still faces significant headwinds, including spending cuts, export weakness and tight credit conditions.

    Discontent among Greece's private creditors to the proposed bond swap is growing, with some possibly open to court action to fight it. The holdout camp is estimated to represent €28B of the €207B in question. The bonds due March 20 are trading at a premium, due to whispers the debt will get special treatment.

    Antonis Samaras, the favorite to be Greece's next PM after April's vote, will today send a letter to the EU pledging to abide by the country's bailout terms, Reuters reports. Samaras' pronouncements that he'd try to renegotiate if elected caused EU finmins to cancel a meeting for today, but they will speak by phone and are due to meet on Monday.

    Diamond Foods (DMNDissues a statement confirming that it won't buy Pringles from Procter & Gamble. Shares are currently under a trading halt.

  273. seer

    No breakup fee for DMND.  Seems like a price drop to the teens would make them a M&A target.

  274. roro

    angel……i don't know what to tell you?
     
    i cannot remember seeing overnight moves in the Dow like this before. not only that the tricks are quicker than the eye. maybe i can't remember that far back either.
     
    The Dow is approaching a 200 point move up since 3:30 yesterday afternoon and it is only 7:30 AM???!!!, and Europe's economy is contracting while BOE's Mervyn king is on the wires with comments of the UK facing challenging times and recovery facing strong headwinds and Euro policy failure may trigger "disorderly outcome".
     
    risk……..what is that?

  275. angelcur

    i am just saying (remmeber i am hedged short) that the market has made a huge move since decemeber 31..massive by any standard..if i had believed in it i could have made my year by now..so it HAS taken off the quesiton is will it continue..the board including me has tried to look for rational reasons for the surge..and by doing so has discounted it validity..price is the final aribter and so far we suck..sigh..i am still up on th eyear but the gap is closing

  276. angelcur

    i spelled december like that greek finmin huh phil!

  277. angelcur

    i see the chinese are riding to the rescue that explains the new and better good feeling!

  278. roro

    angel……..i stepped out for 10 minutes and the Dow is already down 25…….guess i missed my short for today.
     
    seroiusly though, the thought crossed my mind about the Euro and it becoming a funding currency for everything but the Euro as in people stuffing Euros all over and everywhere, anywhere but the Euro???
     
    any thoughts on that angle, angel?

  279. roro

    another question i intend to repeat in the post for later is the insidious nature (parasitic nature) of the algos/HFTs.
     
    don't know much about that really, but if the market can be so manipulated then what?…….is there a market or is this just a sophisticated computer game for the ones who can afford to play at that level?

  280. dpastramas

    Look at the EUR/USD and the DIA futures. I am pretty sure monkeys are trading this market. No sense what so ever!
     
    Really funny if i had not any money into this..

  281. angelcur

    i wouldnt over think it we are in a distinct uptrend until we aren't..for no reason except WE ARE

  282. angelcur

    we lost those points because th ebailout has had a delay..now wehre is Phil Connors

  283. craigzooka

    @cwan120,  I like to sell at least twice S&P volatility.  

  284. mvex1

    Hi Phil: 2 very good points.  "Would you want to own the debt of the company as distinct from the company itself" is a great question and that laser focuses the issue.   In addition to my regular diversified portfolio of stocks and options, I have speculative bucket with small options plays, nothing above $1,000 in cost and maximum exposure in the case of sellign puts in excess of $3,000.  I am mostly in cash 80%, some long term value stocks that I bought cheap (I think), and about $15K in bear options plays ranging from March through June.   I will put the 2014 sell put on GNK into speculative bucket this morning.  Going out that far is very creative.  Thank you.
    M.

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