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Friday Finale – This is the End – But for Who?

SPY DAILYA day late and a point short on the S&P.  

Our senior index finished the day at 1,358.04, just 0.96 under our 10% line at 1,359.  Oddly enough, it never actually crossed the line that we had predicted would be the top of this run in April of 2009.  It's a simple 2% overshoot of the 100% run from the S&P bottom at 666.  

If the S&P can get over the line and hold it – we will be THRILLED to finally redraw our Big Chart but, if not, then this is just the blow-off top of the range, reeling in the suckers ahead of the big reversal that no one could have possibly seen coming (except this guy but he's like 100 and just got divorced, so he's bound to be in a bad mood).  

Is there anyone who was born SINCE radio who is willing to still be bearish?  As you can see from David Fry's chart, since December 19th, other than a few red days out of over 40 – it's been tough to be a bear.  This is what it was like in 1999, when the experienced market players would be well-hedged and missing the rally while some kid who works for him quits because he bet his student loan money on Yahoo and now drives a Porsche.   

Sure 9 months later the Porsche was repossessed and the kid was flipping burgers but WE WANT TO BE THAT KID – IT'S FUN TO BE THAT KID – until it isn't again.  The funny thing is, we only gave those dot com companies Millions when they IPO'd – now we give out Billions because, of course, this time is different, it's a new paradigm, this changes everything, you have to understand the new metrics, sock puppets rule….  

McDonald's was founded in 1940 by two brothers actually named McDonald.  Ray Krok bought the chain from them and created the World's greatest franchise which now has over 26,000 franchise operations and over 6,000 company stores employing about 1.7M people worldwide selling $24Bn worth of food a year with a $5Bn net profit.  Facebook has 3,200 people but they generate $1.2M in revenues per employee ($3.8Bn) and drops $1Bn to the bottom line.  Facebook's assets are mainly IP and those are about as valuable as MySpace's assets now that people have lost interest.  McDonald's has $30Bn of cash, plants, equipment and real estate and only $2.5Bn of "Goodwill," which includes their brand name.  

Facebook likes to say they have 800M users and I remember when McDonalds first rolled their sign into the 1,000,000,000 range.  Now 27M people a day eat there, 9.85Bn people a year – enough for every man woman and child on earth and clearly, the MCD customers are generating 4 times the revenue of the Facebook customers and 5 times the profits.

McDonalds' value was discovered over time and it's actually short-changing MCD to say they are "only" worth $100Bn as people forget that CMG, the new "hot" chain was spun out of MCD and now has $2Bn of sales of it's own with $200M in profits – perhaps not as good as MCD but they get a phenomenal $12Bn valuation (2.5x MCD's p/e ratio) because they are new and exciting and this time is different and it's a new paradigm which changes everything and you need to understand the new metrics and I hear they are getting a sock puppet (they already have the happy cartoon pigs getting brutally slaughtered).  

Think about it, when you steer your car to a McDonald's, you have made an affirmative decision to take $5 of your hard-earned money and exchange it for food.  Not just any food – their food!  They sell you food and they drop $1 to the bottom line and they do that 27M times a day – THAT'S A BUSINESS!!!  What does Facebook do?  They are free, so of course people like them – they sell advertisers your eyeballs at a rate of $3M per day for 800M eyeballs, which is 0.375 per eyeball.  MCD makes 25 times more per customer than they do in profits alone!  

Will Facebook get 25 times more customers?  Not unless we colonize other planets (Newt says the Moon is nice) as that's 20Bn people on Facebook.  Will Facebook be able to convince advertisers to pay them 25 times more for each current customers or – let's say they double the number of customers and get advertisers to pay them "just" 12x more per customer – 48 cents each for people who are not even buying anything directly sounds steep, doesn't it, especially when MCD, for a FACT, makes $1 from each of their customers and that's a Dollar that the customers carry in AND HAND RIGHT TO THEM!  Wow, it's just like we learned about way back in business school

Of course my BUS101 teacher had long hair in a pony tail so what did he know?  I had this same conversation with people in 1999 about Yahoo and many other dot com companies and boy oh boy was I proven wrong – for about 6 months.  I've been wrong calling a top in this rally for over a month now.  To this moment I'm still too cautious because – as I keep reminding our members – we can make 20% or so anytime we want to with our Buy/Writes in a bull market but, as I explained last night:  If you lose 20% you have 80% and then even if you make 20% back, you only have 96% whereas if the market drops 20% and you are hedged and don't lose, then you can afford to buy 125% of the stocks that you liked when they were 20% higher (using our same hedges to protect against an additional 20% drop) and, when those come back 20%, you have 150% of your original money.  

A person chasing a rally has to be right 2 and half times to catch up to a patient, well-hedged player who is right once.  This is why Warren Buffet likes cash (and he did just cash out some major positions) – he plays for the long-run.  While we all want to be the kid who gets rich quick and drives away in the Porsche – it's also nice to be the guy who retires with money and gets to relax sipping lemonade on the porch.

Have a nice weekend, 

- Phil


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  1. pakdog

    Phil – Interesting you hitting on FB this morning. I was waiting to post this article on retailers quickly closing their FB storefronts for lack of customers. The company has much going for it but it would take a lot of faith to buy those shares.
    http://www.bloomberg.com/news/2012-02-17/f-commerce-trips-as-gap-to-penney-shut-facebook-stores-retail.html
     
     
     

     

  2. lionel

    CL short – I am diving in -just too tempting

  3. pakdog

    Lionel – crazy action on CL

  4. lionel

    Yes Pakdog, last trading day is the 21st  and we are heading for a long weekend.
    Let s see what happens…

  5. pakdog

    CL – Is this the final effort to flush out the shorts before expiration?

  6. stjeanluc

    Oil Lines

    R3 – 105.30
    R2 – 104.15
    R1 – 103.46 (just crossed that)
    PP – 102.32
    S1 – 101.63
    S2 – 100.49
    S3 – 99.80

    Yesterday's high and low – 103.01 / 101.18

  7. Pharmboy

    PP

  8. lionel

    CL – it costs 30c to roll over to APRIL.
    Someone has to pay the bill if they want peace of mind over the weekend :)

     

  9. dpastramas

    Gilead / Pharmboy – They are down -20% premarket.  Whats your perspective? Thanks

  10. Pharmboy

    GILD – that is a very hard to treat patient population….so sell puts if one wants to establish a position. 

  11. JRW III

    Good morning,

     

    IWM     81.12,  81.41,  81.73,  82.00,  82.43,  82.87,  83.07,  83.38  and  83.75

     

    I also have an ascending trend line at  IWM  82.33;  good hunting !!

  12. stjeanluc

  13. Pharmboy

    Falling to $42 (GILD) in AH…that is absurd.  Though, I do like the VRTX move.

  14. kallenjr

    JRW,
    Can you tell me what/when you entered/exited yesterday? I am trying to test my understanding of your method.

  15. pakdog

    Lionel – Yeah, it moves up like this on no news and the $ holding steady, you know it's a game.

  16. Phil

    Good morning!  

    Very exciting already with oil up at $103.50.  It's on for the DD on our USO short in the $25KP of course.  This is the 2nd to last day to trade March contracts as we're off Monday and of course they want to goose the hell out of it before rolling into April.  As I mentioned yesterday, they had gotten their March barrel count down to a manageable amount so it gives them the ability to pump it up in hopes of gathering some buyers – maybe there will be some Iran alert or a Rent-A-Rebel attack to give us a big pop before we reverse but $103.50 is a good line to short off with tight stops.  

  17. stjeanluc

    Yup, we don't need banking regulations….

    http://online.wsj.com/article/SB10001424052970204059804577227452963906044.html

    Behind the WSJ firewall but key point:

     

    The yen Libor rate is set daily by a 16-bank panel, organized by the British Bankers' Association. Around 11 a.m. London time every day, each bank submits estimates to the BBA of what rates it would pay to borrow from other banks for different time periods. The top four and bottom four quotes are then discarded, and Libor is calculated using an average of the middle eight quotes.

    The Canadian watchdog [investigating the case] said lawyers acting for the cooperating bank had told it that traders at six banks on the yen Libor panel—Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, J.P. Morgan Chase & Co., Royal Bank of Scotland Group PLC and UBS—"entered into agreements to submit artificially high or artificially low" quotes, according to the court documents.

    The traders used emails and instant messages to tell each other whether they wanted "to see a higher or lower yen Libor [rate] to aid their trading position(s)," according to a court filing. Each of the traders would then "communicate internally" with the person at their bank who was responsible for submitting the Libor quote, before letting each other know if this attempt to influence the quote had worked.

    Just a few rogue traders, I'm sure. Nothing to be concerned about. 

  18. Phil

    The Dollar is smacked down to 79.27 just ahead of the Bell so all the stops are being pulled out to goose oil right now.  I just heard that Iran backed down from their military exercise and that's gotta disappoint some oil bulls so again – this may be it for the pop and the Dollar is being taken down to give oil a final goose before this news spreads.  

  19. Phil

    Euro $1.3195 makes me confident 79.25 on the Dollar will hold as I don't see people paying $1.32 for the Euro ahead of the Greek still-possible (but unlikely) blow-up on Monday.  Still, we must have discipline and ONLY play below the .50 line or below the .00 line if oil gets to $104.  It's fine to lose .05 a few times as we blow the crosses as .15 or .20 is easy to get back when we get lucky but not easy at all to make bigger scores so why risk it?  

    As I said, USO March $39 puts are now .95 so that's our goal to DD in the $25KP.  Good for a regular play too, of course as they were $1.33 on Thursday.  

  20. stjeanluc

    The FAS 84 calls expires today and needs to be rolled.

  21. pakdog

    Stjean – At what point do we finally initiate RICO investigations of these organizations?

  22. stjeanluc

    The TNA 63 calls also expires today. It's right ATM now.

  23. Phil

    VIX smacked down to 18.69.  VXX March $24 puts can be sold for $1.20 and you can use that to buy the $22/28 bull call spread for $3 for net $1.80 on the $6 spread that's 100% in the money.  

    Of course we are just over 1,360 on the S&P and 1,363.61 is the official new 52-week high so let's watch that and not go too crazy betting against the rally – tempting though it may be.  

  24. pentaxon

    what a crazy open for the NASDAQ alias AAPL

  25. Pharmboy

    GILD – sell Mar $41 P for $1 or better.

  26. stjeanluc

    Pretty good day yesterday… Well played lflan!

  27. Pharmboy

    Moved too fast while I was typing…..$42s now.

  28. Savi

    Good Evening from Kuala Lumpur
    Phil-just caught your oil play and made some money for croissants or over here roti chanai
    Thanks—now if only you can help me pay for my trip  :-)

  29. stjeanluc

    The TLT BCS expire today and is also ATM right now!

  30. Phil

    In the $25KP, our SCO $35 call is toasted at .50 but let's take advantage to buy 10 March $32/36 bull call spreads at $2 and sell 10 $34 puts for $1.55.  Our other short puts will expire later so no big deal.  It's not a roll, hopefully we get $1 for the current $35s as oil calms down later.  

  31. l4real

    $4.00 plus gas here in San Ramon Ca. It was $.50 cheaper a few weeks ago!
    Must be my tax dollars at work!

  32. morxlntway

    now 43 :)

  33. Pharmboy

    GILD – Jan13  $35/40 BCS, selling the $35 Ps for $1.40…..or sell the $40 Ps for 15c on the $5 spread….that's not too bad…..

  34. stjeanluc

    No trade yesterday but we just DD on the USO puts. Expiring today are the SCO options – puts and calls.

  35. Phil

    Facebook/Pak – They are the hot thing and command too much for advertising with difficult to measure results.  GOOG's value to advertisers is Adwords, where you bid for ad space (so you don't feel cheated) and their reporting metrics are top-notch.  If you don't provide value to your advertising clients you will quickly go the way of the Yellow Pages and Television Networks and Radio, etc…

    Garfield/Jomp – Kennedy made similar comments before he was shot too. 

    Woops, $6Tn of fake Treasury Bonds just came off the market.  Shouldn't that be a Dollar booster?

  36. Phil

    That's when you know you've lost control of the money supply, when $6Tn of fake bonds can be floating around for years.

    Italian anti-mafia prosecutors said they seized a record $6 trillion of allegedly fake U.S. Treasury bonds, an amount that’s almost half of theU.S.’s public debt.

    The bonds were found hidden in makeshift compartments of three safety deposit boxes in Zurich, the prosecutors from the southern city of Potenza said in an e-mailed statement. The Italian authorities arrested eight people in connection with the probe, dubbed “Operation Vulcanica,” the prosecutors said.

    The U.S. embassy in Rome has examined the securities dated 1934, which had a nominal value of $1 billion apiece, they said in the statement. Officials for the embassy didn’t have an immediate comment.

    Record $6 Trillion of Fake U.S. Bonds Seized in Mafia Probe

  37. JRW III

    kallenjr

    After hours, please
     

  38. kallenjr

    JRW,
    Understand after hours. I had requested this twice yesterday but I don't think you saw. Thanks very much in advance.

  39. morxlntway

    Garfield/Kennedy – maybe body guards could be a business venture

  40. dpastramas

    Gilead / Pharm – Thanks for trade, actually i went directly for the $42 put, couldnt get the $1 you mentioned on the $41.  Already recovering nicely! Cheers for that

  41. jabobeast

    CMG another new all-time high! WTF???

  42. dpastramas

    SCO / Wouldnt it be nice if oil crushed to 97$ by this afternoon… I can  still dream…

  43. Phil

    Libor/StJ – I want a formal apology from all the people who used to argue with me that the markets weren't fixed!  Holy cow, it never ends!  And these are just the guys dumb enough to get caught.  

    YRCW having a nice day.  

    FAS Money – Have to roll the 2 Feb $84 calls ($7.60) to next week $84 calls ($8) and pocket $80 while we wait to see if Greece is really fixed or not.  Keep in mind, if FAS goes up, then we have $2.70 from the two short puts to put towards the cost of rolling these higher but we don't count those chickens before they're hatched.  

    Nice Savi – Congrats!  Going well off $103.50 too, just hit $103 for 1/2 out with a stop at $103.25 on the rest.  

    IWM Money – Don't forget we have to deal with the $63 call later but let's sell 2 TNA next week $63 calls now for $2 and hope that these Feb $63 calls expire worthless.  

    AAPL $50K (now $105K) – Congrats to all – now take the money and run this time!!!  

  44. tommyt

    Does anyone know if cnbc texas crude futures price is real time or how much delayed?
    thanks

  45. Phil

    By the way, when you stop out oil Futures at resistance, you can go back in on the cross so you're only really "risking" not making an extra 0.2-.05 on the cross of major lines – that beats blowing all your gains on a bounce, doesn't it?  Then you have buying power to jump back in when it goes up and is rejected at a good resistance spot again.

  46. stjeanluc

    Reg-T margin for 25KP / Phil – I mentioned to you yesterday that TOS doesn't calculate the Reg-T margin correctly in the Paper Money platform for the 3x ETF (you need 90% of the value of the strike) so I went back to the correct calculations in a Reg-T account and here is where we stand with the 25KP portfolio as far as margin is concerned:

    Short FAS Call – $40K
    Short FAS Put – $32K
    Short GLL Put – $10K
    Short SCO Put – 20K
    Short SQQQ Put – $11K
    Short XRT Calls – $11K (not a 3x ETF so regular margin)

    These 3x ETF are margin killers. This will of course vary with the latest price and this is just for information as many players have PM margin on their accounts, but even that requires about 1/2 of the amount listed above. 

  47. pakdog

    Phony bonds – That's crazy. For some reason it reminds me of this story. Guy's probably still trying to figure out how he went wrong.
     
    Dallas, Texas: Rule #1 of trying to cash a bogus check: make it out for a reasonable amount. Charles Ray Fuller, 21, broke that rule and all conventions of common sense when he tried to cash a check for 360 BILLION DOLLARS. To top it off, the check wasn't even made out to him. He was arrested on forgery charges.
     
    http://www.criminaljusticeschools.com/blog/21-dumbest-criminals-of-the-21st-century-so-far

  48. Phil

    $5KP – Cutting it close but TLT should expire at $1.  Obviously, if you can close it for $1, may as well.  Others are watch and wait.  TSL coming back strong today, as expected.  

    $25KP – Now we're gambling on a Greek blow up over the weekend OR that, even if Greece is fixed, it's a sell on the news event.  VERY RISKY going with our gut sort of move – keep that in mind.    So, since we handled SCO and we're mostly bearish into March – nothing to do but see what happens on Monday.  

  49. bobhu

    stjeanluc/AAPL Portfolio, did lflan sold weekly $490 calls and covered yesterday?

  50. dclark41

    Die oil…..Die!!!!!!!!!!!

  51. stjeanluc

    FAS Money – Rolling the FAS 84 Calls (now 7.05) to the Feb4 84 Calls (now 7.60)

  52. aussie_opt

    stjean/AAPL Portfolio – Should be holding 10 $490 calls and 10 $490/515 spreads now

  53. Phil

    Now we can watch USO $39.50 for a stop signal on Futures. 

    CMG March $325 puts at $1 are a fun play.  They were $1.55 on Wednesday (and .85 that same morning so DANGEROUS).  

  54. stjeanluc

    AAPL / Bobhu – He did and the trade is in the closed trade section in the spreadsheet.

  55. Phil

    Euro trying to get back over $1.315 and Pound trying to hold $1.58 but Yen is at highs so they're boosting the Dollar (and we're just under 79.50).  You can tell because the Swiss are failing with EUR/CHF back to $1.2075 again. Yen at 79.36 so we're rooting (if you are betting oil down) for the BOJ to shoot for 79.50 and the Dollar to pop over 79.50 as well (must be a pair trade in that somewhere). 

  56. stjeanluc

    IWM Money – Selling 2 TNA Feb4 63 calls (now 2.00)

    This week 63 calls are now OK, but need to be watched as it's close.

  57. dpastramas

    I think BoJ is losing..

  58. stjeanluc

    Pair Trade / Phil – Actually, that pair trade tab in TOS is good for that as they have a correlation graph and if you check, the correlation between dollar and yen is not nearly as strong as the dollar/euro one. Or even the dollar/pound pair… I guess the Japanese play one against the other between euro and dollar!

  59. jomptien

    Phil/SCO,
    Any adjustments on the March 35/39 BCS, selling the 34 puts – or just wait? Thanks

  60. stjeanluc

    AAPL / Aussie – I have 20 Apr 490 calls long and 10 Apr 515 Calls short. The problem is that lflan bought his 490 in lots of 15 at different prices so I could not keep 10 at the same price to make the spread. But it should be the right number!

  61. flipspiceland

    @Felipe
    re:  TNA
    I have a substantial gain in TNA and have hedged by selling the 2013 $60 calls, which need rolled, no?
    Thinking of rolling them to a LOWER strike, (i'm even at 50 (without the calls included)  on the supposition that by 2014 the market will suffer a serious setback, even if only temporary.
    Do you have any thought about this that would be a better trade?

  62. stjeanluc

    AAPL / Aussie – To remove the confusion, I split the 15 calls into 5 and 10 to make a 10 BCS setup.

  63. aussie_opt

    stjean – thanks, makes it easier to follow!

  64. bobhu

    stjeanluc/AAPL, yes, thanks, it's my bad.

  65. Phil

    CNBC oil/Tommy – I believe they have rolled their ticker to the April contracts.  It's a game they play when close to expiration as it gives you the impression oil is trading higher (usually but, with today's shenanigans, I think April is lower than March).  

    Forget CMG, check out BWLD! 

    Margin/StJ – Well, we can stop playing them I guess but then that's no longer what I would do with $25,000 of a $250,000 conservative portfolio.  Whatever people decide is fine with me, I'm already trading with handicaps in the $5KP so margin-restricted people can just trade 5x of those.  

    LOL Pak!  Well, if you're going to do the crime – may as well go for it, I guess.  

    How the hell is GRMN making new highs? 

    BOJ/Dpast – Gotta look at the big picture – look at the pattern of moves up and pullbacks.  Key is holding the 79.25 line.  

  66. kramer36350

    Market talk that rating agencies will declare that Greece is in default following a potential announcement of a deal on Monday – Unconfirmed (from RANsquawk)

  67. mrmocha

    Good morning, CMG, it's 10:30, can you come out and play?

  68. mrmocha

    Gee Pharm, do you think someone had a bunch of ARIA covers they wanted to get out of cheaply today or what?  Look at that chart oscillate around 15.

  69. stjeanluc

    Margin / Phil – I don't think we want to stop trading the 3x ETF, but people should be aware that these ETF are margin heavy if they want to enter in the portfolio! Unless you have PM margin, you really need to be careful. I had the same issue with the FAS strangle…

  70. flipspiceland

    No apology on the Fixed Markets, since I have believed this and have seen it for years.
    I don't think it's any stretch to assemble the myriad facts into a 100% scenario that markets have moved from 1) some negligible influence, to 2) significant influence, 3) mostly influenced, 4) control,  to, finally 5) complete dominance and manipulation.
    The anomaly being the panic in 2008 that 'they' had all simultaneously tried to save each of their own asses 'irregardless'  of consequences to anyone.  IT was sell, sell, at any price.
    Since then 'they' have taken greater control (with far less players of consequence) to avoid any kind of drop like that again, ever.
    'They' will prop up this market no matter what the fundamentals, charts, or Nancy Reagan's astrologers, and phrenologists, gypsies predict.

    "They" is the FED, their accomplices in Goldman, JP,  BAC and the international banking Cartels. I'm certain without feeling the least paranoid or neurotic, that there is a conspiracy or Coincidence of Interests, if that's a more PC term,  that assure us there will be no chance for the Shorts to make any serious money. Short Triple ETFs will be seen to diminish to nothing as one indication of their power.
    BTMFD.

  71. Turning1

    Phil,
    What is the best plan of action on the FAS March $74/80 BCS that you recommended ?
     
    TIA

  72. Inkarri1982

    Hello All – ZH reporting that Iceland was raised to investment grade by Fitch.  And to think, all they had to do was tell a few bankers to go screw themselves.

  73. Phil

    Correlation/StJ – That's their new thing and a much better strategy than the mess they made last time they Yentervened.  

    SCO/Jomp – No, I think we have enough eggs in that basket for the weekend.  I'd like to have $12,500 left if there's some major "Greece is Fixed" rally on Monday and Tuesday in Europe before we open.  

    TNA/Flips – It's only at $63.  Do you have TNA stock?  If you have the margin to have naked Jan calls, I'd cash the stock for $63 and put $22 into 2x the 2014 $45/70 bull call spread at $11 as that gives you $90 of well-protected upside against your $18 caller that's $3 in the money.  So the premium alone that will expire on the short calls is 2/3 of the cost of the short calls and you have $41 in your pocket.  If TNA begins to go down, you can stop out one set of spreads at $9 and there's your $50 back in pocket with one $25 spread covering the caller.  

    $103.50 again!  Tricky heading into EU close (11:30) and Germany and France are up 1.5% so they are happy there:

     

    Germany, Bank Ease Tensions on Bailout

    A debt restructuring and second bailout for Greece appeared likely to go ahead.

    I'd just let USO $39.50 be the bull/bear signal for oil at the $103.50 line – can make dimes in both directions but super-tight stops on the cross.  

  74. stjeanluc

    For those wanting to play the earnings here is the list from Bloomberg that someone else pointed to last week. It is updated every day:

    http://www.bloomberg.com/news/2012-02-17/implied-stock-price-moves-for-u-s-companies-reporting-results.html

    It's interesting because it shows what the options are implying as far as reaction to the earnings and the average move. I am sure there are some plays there…  

  75. crussell14

    Phil
    do you think BWLD is overextended and there may be a bear put spread opportunity? Thanks

  76. Canuck

    Hedges/Feb-Mar
     
    rolled over my Feb SQQQ, SPXU, and TZA  hedges to March during yesterdays move up, waiting for pull back to deploy cash on buy-writes…

  77. jomptien

    Phil, OOps, saw your post on SCO before – nevermind.

  78. Pharmboy

    AMRN no different MrM……I bought a ton of them at 7.XX and yesterday they rocket, today the boosters came off and they fell back some.

     

    That HFT article yesterday freaks me out……but makes me want to buy penny puts every week JIC there is a flash crash……

  79. jabobeast

    Flips—loved your post! BTMFD..Hilarious

  80. Canuck

    Newbie/Pizza,
    heading to Little Italy for lunch, will post pizza results.

  81. dpastramas

    Margin / StJ – Thanks for the analysis. I should have done that myself at the beginning as i started gung ho and now i am working on pennies. Probably will follow Phil's advice and x5 the $5K plays.  TLT looks like a winner today.

  82. Phil

    Margin/StJ – Maybe a note when we make 3x trades attached to the sheet?  

    Conspiracy of interests/Flips – That's exactly what it is.  Same thing that creeps laws in the US to favor the top 0.1% over time.  Everyone looks out for their own interest but some people actually have the power to affect things while other people just LOOK OUT!  All this manipulation works fine until it doesn't.  I made the same complaints in late 2007 all the way through Fall (and I do mean FALL) of 2008 – you can go back and read the posts, not too different from what I'm saying now except more people said I was just a conspiracy nut back then.  You had the Fed lowering rates, Bush giving people $165Bn to pay for $5 gas at the pumps and oil companies were trading like dot coms at the time with another M&A deal announced every Monday to keep things going while GS, JPM et al all took turns raising their targets for oil to justify each new crazy move up in the sector.  Same was going on with home prices – CNBC used to look like one of those real estate channels with their daily dose of house porn – another bubble that was never going to stop.  It all works great when "THEY" coordinate things just like it works great when my wife and I and our brothers and sisters and parents all (without an actual conspiracy meeting) fool our kids into thinking a fat elf from the North Pole flies around the World at 10 times the speed of light delivering 50Bn presents in 24 hours.  That "works" too until the first time our kids are alone and we're not there to fake everything and suddenly the market value of Santa's presents goes from +$1,000 to "now they have to spend $1,000 and fake it for their kids".   That's when the market turns – when "THEY" are done faking it and the retailers are left holding that empty bag of toys.  

    FAS/Turning – Bull call spreads like that are directional bets.  We are either on or off target while we wait for the premium to expire.  At the moment, the spread is net $5 of possible $6 though so no reason not to take $5 and run.  Rather than risk $5 to wait a month to make another $1.  

  83. Phil

    Iceland/Ink – I know!  It's amazing to me how the Greek people have allowed themselves to get under the thumb of the bankers like this.  Ireland just as stupid – stupider actually as they have a debt their Great-Great Grandchildren will never be able to pay.  

    BWLD/Crussell – Yes, I do think it's a bit much but they are a BARGAIN with a p/e of 31 compared to CMG so just a stay-away in this crazy market.  

    Can't get the Euro ($1.315) and Pound ($1.5809) to break down.  Dollar 79.48, USO gave us a signal after oil gave us $103.50 and already down to $103.15 so wheeeeeee again and, as I have said before – maybe just go all cash and play oil futures – most days you can sit down, catch one good trade and you're done.  

  84. stjeanluc

    Margin / Phil – I'll have to go back to try calculating the margin hits on the spreadsheet. At least an approximation!

  85. Inkarri1982

    I believe CNBC just compared Rick Santelli to the comedian Gallagher.  Made him look like a fool with that comparison if you ask me.  He may be one of the few voices of reason on CNBC and they downplay him(I don't watch CNBC much but I know that he does goes against the grain every now and then).  Just funny(sad) at this point.

  86. flipspiceland

    @Felipe
    That doesn't mean there really is no santa claus—--he's just more discriminating as to WHO  gets the benefits of his bounty.

  87. scottmi

    Penny Puts/Pharm – excellent idea..! pharm/phil, any good suggestions for such disaster insurance? for example, to cover if SPX dives to 1300 in short order?

  88. aussie_opt

    MSFT / Phil – Was the MSFT Jan $25/30 BCS at $3.55 you talked about in this morning's post Jan 2013 or Jan 2014?

  89. Pharmboy

    Wait, what?  There is no Santa Clause….ok, my day is ruined – cancel my membership.  Stop the train……I twittered no more Santa!  Say NO more Phil….I love fantasy land and use Amazon Prime to watch Fantasy Island…..sheesh.  No Santa.

  90. flipspiceland

    @Felipe
    Yes I do have the stock.  Thx for the strategery.

  91. Pharmboy

    I am sailing away….

  92. roro

    the Irish are dumb the Greeks are dumb the subordinated sovereign bond holders are dumber.
     
    the ECB is smart the banks are smart and the Icelanders are really smart.

  93. pakdog

    Santelli / Ink – Someone's gonna swat that fly, might as well take a shot. I've often thought he's cast as the fool to provide some kind of levity or contrast to a lot of the other nonsense they put out there to make it seem less ridiculous. Maybe like one of the fools in Shakespeare's plays. I don't watch much of CNBC because I find it so offensive, but as you can tell my impression of Santelli from what I've seen isn't good.

  94. Phil

    Breakdown – Euro and the Pound, Dollar 79.52!  

  95. Pharmboy

    As The Spicy Flip says….JBTFD.  Facebook IPO…they need to keep it up.  And that valuation is absurd….absolutely astoundingly….flat ass absurd.

  96. roro

    the bond deals are so simple but at the same time mind boggling stupid……….

  97. scottmi

    Nuclear – BBC talking it up mildly today as UK and France sign a deal and UK plans to build up to eight new plants..

  98. acobra65

    Phil/Fake
    "Fake Treasury Bonds" found in Official ???  "Chicago Federal Reserve Compartment"….. .  

  99. zeroxzero

    Pharm: 
    "Stock and Awe for Facebook and Zynga Investors"    - Stock compensation overwhelms Zynga operating profit, taking it almost half a billion negative.  
     http://online.wsj.com/article/SB10001424052970204059804577227662383460078.html?mod=djemheard_t

  100. Canuck

    Phil/TLT weekly 115/117 bcs for $1.15 ish, already $1.30 in the money?  outlook for TLT next week?

  101. ricpar

    I4Real
    I live in Alamo, CA next door.
    With to all the refineries near by it is amazing we always pay more than the rest of the country. (It must cost more to ship locally, right!)
    Internet says we are paying $4.23 per gallon here when Idaho is  paying  only $3.37. We should invest in a pipeline from Idaho. But by the time we did the environmental impact study and got permits cars will run on banana  peals and empty beer cans.
    Phil, how can we play banana futures long term.

  102. Gingbaum

    lflan,

    Do you think AAPL is going to peg 500 today?

  103. zeroxzero

    ricpar:  Buy land that grows bananas.  I grow them; they're a lot better than anything you'd find in a supermarket.  

  104. bobhu

    Pharmboy/SGEN, as your idea, I sold some SGEN Feb, $17.50 puts, will expire worthless today, thanks.  Do you think it's good idea to sell Mar. $17.50 puts?  TIA.

  105. stjeanluc

    John Bogle speaks about PE, taxes and investment:

    http://www.ritholtz.com/blog/2012/02/vanguard-founder-bogle-on-strategy-u-s-tax-laws/

    Some good stuff there…

    “Look, I would think most people in this room would say that there should be no tax rate that is lower than the earned income tax rate that people earn by the sweat of their brow or the burrows of their brain. That should be the regular tax rate. I think that there are a lot of good arguments out there for having a higher tax rate on capital gains, in particular short-term capital gains…What is the explanation for the tax break for gambling?” [..]

    On which presidential candidate has the best tax policy:

     

    “I’d say the Obama plan to the extent that I understand it. Everybody knows deep down that carried interest is a technical fraud…I am a lifelong Republican, but unfortunately to ruin the sentence, I am what I would call an Abraham Lincoln or Teddy Roosevelt Republican, and they are a vanishing breed. But I think that we will eventually have to come back…I don’t see anything from any of the other candidates, when you do the math, whether it’s Herman Cain–that just simply doesn’t work. The Romney plan, I have no idea what the Gingrich plan is, and Santorum, no comment.”

    “As a general policy, equalize the taxes, raise the taxes on capital gains. He may not have to raise the taxes on people who earn more than $250,000 because he’s going to pick up so much on the capital gains change. Again, I want to emphasize that this has nothing to do with capital formation…I look at this position as just simply logic, with maybe a touch of concern for our fellow human beings who aren’t doing as well as we are all doing.”

     

     

  106. l4real

    Ripcar/Refineries
    I agree! Not sure how we pay so much more when demand is down and supply is everywhere! But of course the higher prices represent inflation and according to "Ben"  and the CPI, inflation simply does not exist!

  107. yodi

    Phil Nobody saying anything about XRT they growing by the day the 53 Mar call is left with a premium of .15 I think we should have bought that call insted. What you day?

  108. Phil

    Copper dropped 9 cents since the open (2.5%), that's good money at $250 per penny per contract!  

    At the open: Dow +0.36% to 12950. S&P +0.34% to 1363. Nasdaq -0.24% to 2586.

    Treasurys: 30-year -0.46%. 10-yr -0.27%. 5-yr -0.13%.

    Commodities: Crude +1.04% to $103.7. Gold +0.15% to $1730.95.

    Currencies: Euro +0.44% vs. dollar. Yen +0.45%. Pound -0.19%.

    10:00 AM On the hour: Dow +0.24%. 10-yr -0.24%. Euro +0.32%vs. dollar. Crude +0.66% to $103.31. Gold -0.18% to $1725.25.

    11:00 AM On the hour: Dow +0.15%. 10-yr -0.19%. Euro +0.24%vs. dollar. Crude +0.81% to $103.47. Gold -0.24% to $1724.25.

    11:36 AM European shares close sharply higher, catching up to yesterday's afternoon rally in the U.S. as the vibe on the Greek bailout turned positive. Stoxx 50 +1.2%, Germany +1.4%, France +1.3%, Italy+1.1%, Spain +1.2%, U.K. +0.3%. Euro +0.1% at $1.3148

    Market preview: Stock futures cling to gains after consumer prices edged up last month amid spiking gasoline costs. S&P futures +0.2%. Optimism over an expected bailout for Greece pushes European and Asian markets to solid gains. The euro edges higher vs. the dollar, Treasury prices tumble, and Nymex crude eases past $103. Still ahead: leading economic indicators.

    More FREE MONEY!!! The House votes to approve a bill extend the current 4.2% payroll tax through the end of 2012, as well as extend prolonged jobless benefits and prevent payment cuts for Medicare doctors. The bill is expected to clear the Senate later today.

    Jan. Leading Indicators: Leading Index +0.4% vs. +0.5% expected, +0.4% prior. Coincident Index +0.2% vs. +0.3% prior. Lagging Index +0.4% vs. +0.3% prior.

    Jan. Consumer Price Index: +0.2% vs. +0.3% expected, +0.3% prior. Core CPI +0.2% in-line with expectation, +0.1% prior.

    Canada's January CPI rises 2.5% Y/Y vs. 2.3% in December. Core CPI up 2.1% against consensus 1.9%. The loonie adds a few pips to its morning gains, +0.2% to $1.005.

    One interesting pattern to note from a graph of core inflation rates in the U.S., U.K., eurozone, and Japan is they're less loosely correlated than one may have imagined. Of recent interest is the clear rise in the U.S. core CPI vs. declines (or, at minimum, flattening) elsewhere.

    January Real Earnings: +0.2 for real average hourly earnings M/M, -1% Y/Y. Real avg. weekly earnings unchanged M/M. Avg. workweek +0.6%. - So, if real earnings are down 1% from last year – how do we project Corporate Revenues to be up?  Only more consumer debt makes this work and we are seeing it but we've been on this ride before, haven't we?    

    While Apple, with its huge weighting in the S&P and Nasdaq, has helped buoy the market over the past two weeks, underlying breadth has weakened, and the VIX fear index has shot higher. According to Bespoke, 78% of stocks in the S&P 500 are trading above their 50-day moving averages, down from a reading in the mid-80s earlier this month. 

    The ECB is now considering allowing Greek bonds held by EU central banks to subjected to PSI writedowns, according to a Reuters report. European shares and the euro rip off to new highs for the session. You can't make this stuff up. (yesterday

    The EFSF announces the creation of another acronym with the launching of the European Sovereign Bond Protection Facility (ESBPF). The program will issue certificates – able to be traded on their own – protecting the first 20-30% of new debt issues of EU nations in the hope this will increase investor demand and lower funding costs.

    The IMF is seen contributing just €13B towards the supposedly soon-to-be-wrapped up €130B Greek rescue package, reports the WSJ; that's far less than the 33% share the agency had of the previous bailout. That should please the Finns. The euro slides, giving up its gains on the day, but shares remain unfazed.

    The IMF's smaller contribution to the Greek rescue reflects fears of the fund's membership that it's become over-exposed to the eurozone, but the amount is not yet finalized, reports the WSJ. Maybe cynical, but it sounds like the IMF has decided not to throw good money after bad.

    Fitch upgrades Iceland to BBB- from BB+, marking a return to investment grade for the country's debt for the first time since the financial crisis. "A promising economic recovery is under way, financial sector restructuring is well-advanced, while public debt/GDP appears to be close to peaking on the back of a robust fiscal consolidation program." Will the news reach Athens?

    The bad-debt ratio of Spain's banking sector rises for the 9th straight month – 7.61% of loans are 90 days or more overdue in December (7.51% previously). It's a 17-year high for the figure, which was below 1% prior to 2008. Overall credit continues to shirk, down 3.3% Y/Y in December.

    GS now will control your credit rating and have all your financial data:  Big-three consumer credit firm TransUnion will sell itself to Goldman Sachs' (GS) private-equity arm and Advent International, valuing TransUnion at $3B. The transaction – one of the year's biggest in P-E – comes after months of jockeying and a $325M IPO filing.

    Freddie Mac has begun talks with investors interested in buying single-family properties and converting them into rental units, according to sources. The idea is key to Administration and Fed beliefs that turning foreclosures into rentals will help heal the housing market. 

    An audit of recent foreclosures in San Francisco finds rampant abuse continuing despite all the light having been shone on the matter, a pattern likely mirrored across the country. Banks, of course, have never formally admitted wrongdoing and the national settlement will include no admission of such.

    "Property firms talk about a crash to frighten the government," says Fan Jianping – the chief of China's economic forecasting agency – who sees robust GDP growth of 8.5% this year. He credits his government with creating a soft-landing in the property sector.

    Lehman Brothers and its creditors said late yesterday they want to force Timothy Geithner to respond to a subpoena issued in August, with the aim of questioning the Treasury Secretary on allegations JPMorgan (JPM) illegally siphoned billions of dollars from the collapsing I-bank in the days before it filed for bankruptcy.

    China hikes taxes on the mining of iron ore, tin, and several other minerals – a bid to squeeze smaller, marginal producers out of the business, according to analysts. Tin production looks to be most affected, as the tax will make up a more significant portion of that metal's cost.

    The PBOC made significant gold purchases as 2011 drew to a close, according to the World Gold Council, noting a large discrepancy between Chinese imports and the WGC's estimates of consumer demand. "The obvious inference is that the central bank is buying."

    Even as a smiling China VP Xi Jinping tours the U.S., Chinese state-owned importer Unipec renewed a contract to supply Iranian crude, dashing any hopes it might obey tighter U.S. sanctions against Iran. The agreement sends a strong message that while China acknowledges Iran’s nuclear issue, it isn’t about to cave to Western pressure.

    WTI crude oil 

  109. Phil


    WTI crude oil breaks out to its highest price since May, +1% to $103.29/barrel. One is reminded of the move in oil late last winter and spring, when its rise above $110/barrel helped snuff out what were then the stirrings of a stronger economy. 

    The concept of Peak Oil is being buried in North Dakota, argues Citigroup (.pdf), with finds there leading the U.S. to be the "fastest growing oil producer in the world." A decade of supply being unable to meet optimistic forecasts is coming to an end at the same time that demand declines. 

    Solar stocks are moving higher premarket following SunPower's better-than-expected Q4 and Suntech's upward guidancefor Q4 and FY2011: SPWR +12.3%STP +11.6%FSLR +6.5%,JASO +6.5%TSL +6.4%SOL +6.2%JKS +5.7%YGE +5.1%LDK+4.9%

    Ukrainian grain merchants agree to export no more than another 1.7M MT of wheat this marketing year (ending June 30), bringing the total to just 4.8M tons, about half of what had been expected. Wheat +1.2% in electronic trade.

    Baidu (BIDU -4.4%), which sports a trailing P/E of 46, is selling off after the in-line guidance that accompanied its Q4 beatfailed to impress. Morgan Stanley (Equal Weight), noting the slowdown in Baidu's customer adds, is concerned the macro issues faced by Chinese SMEs will slow down the company's growth. But Collins Stewart, Jefferies, and other are still bullish on Baidu's growth potential. (transcript)

    When it comes to profits, a big chunk of what is generated in Silicon Valley stays in Silicon Valley. Besides its tepid Q4 results, Zynga's (ZNGA$600M stock compensation expense in 2011 overwhelmed profits, and its $425M forecast stock comp for 2012 will again take operating profit negative. ZNGA, LNKD and GRPN use non-GAAP metrics that gloss over stock comp.

    Apple TV (AAPL) – the set-top box, not the rumored TV set – might soon be seeing a refresh. Best Buy, Wal-Mart, and Amazon's sites no longer list the $99 device for sale, and it's also out of stock at many brick-and-mortar stores. The next-gen Apple TV is widely expected to feature a faster processor and support for 1080p video – the current model maxes out at 720p. 1.4M Apple TV units were sold in FQ1. 

    Oppenheimer boosts Apple's (AAPL +1%) target price to $570 from $510 based on multiple potential catalysts for the stock, including expanded iPhone and iPad penetration, a potential dividend and entry into the smart-TV market. Noting that its checks suggest only a small post-holiday slowdown in iPhone 4S demand, the firm lifts March quarter iPhone sales to 31M from 29M.

    Apple (AAPL) contract manufacturer Foxconn, under fire (I,II) once again over its labor practices, says it has raised wages for Chinese workers by 16%-25%. The wage hike is Foxconn's third since 2010, and represents a doubling of pay since 2009. Fellow contract manufacturer Nam Tai (NTE) recently said its labor costs/employee would rise 23% this year.

    Apple (AAPLagreed in 2009 to pay Chinese computer display maker Proview ~$55,000 for the iPad trademark in a number of countries, documents show, but Proview insists China wasn't included. The documents would seem to back Apple's contention that it purchased rights to the iPad name from Proview, a key issue in a dispute between the companies. 

  110. lionel

    Ripcar/Bananas
    I found this for US banana prices
    http://www.indexmundi.com/commodities/?commodity=bananas&months=120
    For the empty beer cans, I just follow StJean's AA portfolio :)

  111. Pharmboy

    SGEN/bobhu – I did Feb, Mar, and June…..take your pick from the new rounds…..

  112. kallenjr

    Gingbaum,
    I think AAPL pins at 500 today. I bought a 505/500 Put spread this morning when AAPL was near the $505 price. We'll see…

  113. oknoman

    Asset Transfers:
    Sandy Weil's uptown pad just sold to a Russian for $88 million. Seems about right in these 'heady' economic times...http://www.nytimes.com/aponline/2012/02/17/us/AP-US-Pricey-Apartment.html?_r=1&hp
    Rumors of a lien on behalf of the US taxpayer unsubstantiated (just kidding).

  114. Pharmboy

    VRTX – buying back the Apr $30 puts (again).  35c.  That company has been a big winner for my short portfolio…..I wish I could stop shorting this thing we call a market…..

  115. yodi

    Phil PXP hold stk at 28.94 now 45.10 sold May 30c for 5.34 now 15.05 Just about at the money Does it make sence to roll say to Jan13 40 call and sell some Jan 13 40p or let it go?

  116. Turning1

    FAS/Turning – Bull call spreads like that are directional bets.  We are either on or off target while we wait for the premium to expire.  At the moment, the spread is net $5 of possible $6 though so no reason not to take $5 and run.  Rather than risk $5 to wait a month to make another $1.  
    Sorry Phil for asking newbie questions, but does this mean on the $74/80 BCS, sell to close the $74 call and buy to close the $80 and keep the difference in premium or does it mean exercise the $74 call? Just trying to understand better the best course of action on these BCS I have been doing lately with you. Thanks

  117. Pharmboy

    USO – 39.5 pin; XOM – $85 pin.  GLD – 167 pin; SPY – 136 pin…..and on and on and on….

  118. ricpar

    Thanks for all the advise about going bananas.
    My garden was being eaten up by ground squirrels until I built some hawk perches. The hawks cleaned out  the ground squirrels but the deer made up for it by eating every thing anyway. Maybe bananas would work. I like the idea.

  119. chaps

    Pharm/scottmi Penny puts:
     
    Not sure, but I think Nassim Taleb (the Black Swan guy) had a hedge fund that did some variation of that. Thousands of losing cheap bets until rare-event options mispricing eventually led to the big payout. Maybe he still does.

  120. lionel

    Chaps/ Nassim
    http://www.universa.net/people.html

  121. Jbur

    gas prices/ripcar: The first thing that comes to my mind is that Californians pay a lot more b/c of the high taxes on gas in CA, where they are the highest in the U.S.  except for Connecticut. Idaho has half the taxes on gas than CA.
    http://www.californiagasprices.com/tax_info.aspx

  122. zeroxzero

    Rip:  Eat the deer.  Wild venison is way better than commercially-sold beef.  Especially if they're banana-fed. :)

  123. craigzooka

    IRA portfolio update:

    I should have time this weekend to update the IRA Portfolio spread sheet and post our results.  I also feel like we should deploy some more of our capital.  I would like to bring us up to around 25k of capital allocated on monday.  So, lets scour the stock market for a few stocks which are 

    1.  At least twice the volatility of the S&P500

    2.  Pay at least a 1% dividend

    3.  Spreads no wider than a nickel on the options

     

    Hopefully we can come up with some candidates this weekend,  Right now the only one I have been looking at is RIG.  I think we can come up with a few more by monday!

  124. Phil

    TLT/Canuck – Could go either way but same as our overall premise for $25KP, either Greece blows up and the Dollar flies (good for TLT) or Greece is fixed and it's a non-event and should still be OK for TLT.  If Greece is fixed and we pop our S&P level (still under) then TLT is screwed along with every other flavor of short.  

    Banana/Rip – CQB.  Actually a nice little company and not too expensive at $9.21!  Earnings are Monday so a good time to sell the Aug $8 puts and calls against the stock for $2.75 for a net $6.46/7.23 entry.  1,000 shares of that with the 10 short puts and calls pays $1,540 (23%) if they hold $8 through August and that should pay for a few tanks of gas – even in California….

    XRT/Yodi – Yes, we should go back in time and buy the calls – wish I would have thought of that sooner but I guess, since we are going back in time – I already did!  Meanwhile, in the reality of our linear situation – we'll roll the calls further out in time if we are forced to give up being bearish next week. 

    Dollar now getting knocked back – seems to have been just EU traders taking advantage of the BOJ to dump Euros for a while.  Now they are asleep and it's just our regular manipulators in charge.  

    AAPL/Kallen – I like that play.  Could be $502.50 as that messes up more people. 

    Apartment/  - 66% above the previous record.  Think that guy overpaid?  Plus he paid $3.5M commission and $2.5M in taxes and now is on the hook for about $2M a year in property taxes too.  That's just nuts…  And the funny thing is, when he orders a pizza – I bet the guy tips $1.  

    PXP/Yodi – No dividend so why not cash out at $45 and buy 2014 $25s for $22 so you pocket $23 in exchange for $2 of premium.  The May $30 caller is $15ish and you can roll them to the Aug $35s at $11.70 for about $3.30 and there is your $2 back if it works out.  If you want to get more aggressive, you can add 1/2 x the 2014 $45 calls for $9.50 and roll the May $45 callers to 1.5x the Aug $40s at $8 and then you are still well-protected with a $15 spread on 2/3 and a -$5 spread on 1/3 and still about $15 off the table.  

    FAS/Turning – No, just to close the two for net $5.  Most trading platforms have a net price you can put in to open or close a spread.  Whenever you initiate a spread, you should make a note somewhere as to your goal.  For example, if I wanted to pick up the SCO March $30/34 bull call spread at $3 and sell the $33 puts for $1.10, then I'm in for net $1.90 on the $4 spread.   So what's my plan?  Well it's 28 days to expiration and the trade is 100% in the money so that $3.10 I expect to make is all premium.  That means, if I am "on track", I should make about .10 per day on the total spread.  Let's say if it's 5 days ahead or 5 days behind it's "off track" and needs to be adjusted or closed.  You can make a little chart and just check your status each day and then you know when to do something.  

    Gas tax/Jbur – Sure but it's just abotu .30 more than other states, the rest is just them being ripped off. 

  125. scottmi

    TOS – the Swimlessons chat doing a good presentation on watching order flow and price action

  126. Gingbaum

    kallenjr,
    Thanks for your response.  I bought a 505 put this morning, made 3 bucks, and am trying to reload again as I agree with you, i think it will peg 500, but it looks like it is losing steam today.
    Good luck

  127. lflantheman

    Good afternoon!    Sold 10 AAPL April 490s for 32.80.   This leaves only the  10  490/515 bull call spreads in the portfolio, the rest cash.   We will remain in what is about 90% cash over the weekend.   I would have sold these straight up calls early this morning but I was stuck in my other job.   Anyway, still profitable.  Don't depend on a 500 pin!

  128. kallenjr

    AAPL usually pins pretty close to a strike unless heavy selling in the market.

  129. JRW III

    Back to the highs of yesteryear; thanks for the good feelings Uncle Ben and sidekick Timmy !!

    And pay no attention to nasty distractions:

    Or the cost, after all you kids will pay for it !!

  130. zeroxzero

    JRW:  At least Europe is finally doing well, as reflected by it's strengthening currency:  WSJ, 2/17/2012
     
     

    • Spain GDP Shrank in Fourth Quarter
      The Spanish economy shrank in the fourth quarter under pressure from Europe's debt crisis and the broader European slowdown, the country's statistics institute confirmed.
    •  
    •  
      Portugal's Jobless Rate Jumps
      Portugal's unemployment rate jumped in the fourth quarter to 14%, from 12.4% in the third, the country's national statistics bureau said.
  131. Phil

    Love the bear charts JRW! 

    I knew it – an old variation of Rent-A-Rebel they haven't used in a while called the "Oopsie Play" – works just as well to boost oil prices in a pinch:  

    11:58 AM The Coast Guard isn't sure how long the Mississippi river will be closed after an oil-spilling barge collision 40 miles upriver from downtown New Orleans. There's no more oil leaking into water now, but the closure – downriver from refineries of MPCXOM and RDS.Aand upriver from those including VLO and COP - may slow shipments out of plants making up 12.4% of U.S. capacity.

  132. zeroxzero

    Peripheral European nations are actually doing so well that they can retire years earlier than other, less prosperous countries. FT, 2/17 – "in Sweden, where more than 70 per cent of people aged 55 to 64 still work. Further south, in France or Italy for example, the figure is under 40 per cent."

  133. stjeanluc

    Unemployed / Zero  - I read that 50% of men over 55 in France are in pre-retirement! The problem is that they yank them from the unemployment rolls (it's really tough to find jobs at that age in France) and put them in the what they call pre-retirement where they collect a reduced pension and will do so for the remainder of their lives. The upside for the government is lower unemployment rates and lower pension payment. The downside for the citizen – much less money over the next 30 years!

  134. ricpar

    California is the leader in collecting and spending revenue. We had to pass an initiative on the ballot to convince our legislature that fees were actually taxes. They were adding fees with a majority vote not the required two thirds. We had to pass an initiative to require gas tax money actually be spent on roads.  CA taxpayers are very demanding.
    Phil, Thanks for CQB, bought the 1000 shares and sold the options. The best part is the deer can't eat the stock.

  135. mampcsA

    Phil, do you think it makes sense to have a bullish offset in the 25KP for Tuesday?
    Also, is it worth keeping the FAS 70/75 spread in the 25KP? Seems to risk 4.2 to make just .8. Why not just keep the short 75 puts? The max gain on the play is 1700, where 1300 comes from the short put. Given that we could go either way on Tuesday (or nowhere i guess), should we be risking the 4.2?

  136. stjeanluc

    All set lflan. Thanks for the info.

  137. zeroxzero

     Stj:  When you juxtapose that with the fact of aging populations in Europe, you can see why money will tend to flow this way over the next decade or so: " William H. Frey, an analyst for the Brookings Institution think tank, predicts the median age in Europe will increase from 37.7 years old in 2003 to 52.3 years old by 2050 while the median age of Americans will rise to only 35.4 years old."

  138. Phil

    $103.50 again!  Wow, this is getting very expensive for someone!  

    Not the best short entry as USO is at $39.63 now and the Euro is at $1.3151 and the Pound $1.582 with 79.42 Yen to the Dollar but the Dollar, strangely is holding 79.47 so far and you would think it would be lower so SOMETHING is going to snap eventually – will be interesting to see which. 

    LOL Rip, that is a plus.  

  139. mampcsA

    Phil, by the way those were 2 different questions. One was to see if we should add a bullish play to the 25KP since we are so bearish there and the other was to see if we still want to keep the FAS one or replace the call spread with a cheaper one.

  140. lflantheman

    A note to AAPL players on how I will continue to think about and play AAPL in the coming months:    If I believe  strongly that AAPL is going to move up I will move in with calls, usually ATM and 1 or 2 months out.   If I get confirmation I'll often quickly add more calls.  If I get a strong move I will take partial profits by selling some of the calls.  This could happen in a matter of one day or a few hours.    If I think AAPL is going to hold level then I will often convert some calls to spreads.  This gives me flexibility.  If they go up the spreads are becoming profitable.  If they go down I will buy back some or all of the covers.  I might at that time also buy more long calls.   If I think AAPL is going to drop I will usually just go mainly to cash.  It would be rare that I would short AAPL, although I have in past.   In order to figure out which way I think it will go I read the news on AAPL and the markets daily, I watch the volume and the movement of the stock very closely just before and after trades,  and I don't hesitate to reverse a trade immediately if I change my mind.  As in yesterday, when I sold some weekly calls, then bought them back within an hour when I confirmed that I had made the incorrect trade.  My strategy for growing this account will be much as described above.  This weekend I'm staying mainly in cash.  A lot can happen in 3 days,  and it's just safer to wait until Tuesday to start growing the account some more.  I need some feedback from you AAPL trading addicts over the weekend.  Let me know what you like or dislike about my posts re the AAPL portfolio.  And now, I'm going skiing!  Have a great weekend all!

  141. Pharmboy

    Doug Kass just tweeted this -  "Alert! Alert! George Lindsay's Three Peaks and a Domed House pattern has now been completed!"

  142. scottmi

    CQB/Phil – looks pretty good but no dividend so why buying the underlying rather than synthetic with an ITM call in place of the stock?  a variation:  buy the Aug 5/7 BCS @ 1.53, sell Aug $8 put @ .75.  gives a $78 entry per set, with $117 payout (50% gain) with same goal of over $8. If under $8 buy still above $7, you get to enter for net $6.78/share.  I think i'll play this setup if drops back under $9 share..

  143. stjeanluc

    The latest controversy on Greece from Le Monde:

    http://www.lemonde.fr/europe/article/2012/02/17/l-allemagne-a-t-elle-une-dette-de-guerre-envers-la-grece_1644633_3214.html

    Apparently Germany never paid in full the damages from WW2. Some people are calculating that Germany owes Greece over 160 billions euros before interest. The good Greeks also remind the world that Germany defaulted on its debt in the 30's, in 1953 (as mentioned by Phil the other day) and also in 1990 (as part of a treaty to forget war reparations). German counters that the 1953 and 1993 treaties basically washed any claim on the money. 

    It's getting pretty heated there. It's going to be tough keeping these countries together.

  144. stjeanluc

    Demography / Zero – I have been making the point for a long time. Demography favors the USA in the long run as opposed to Europe, Japan and even China (there are many articles on the fact that they will get older before they get rich). A strong immigration is what has been the energy behind the growth here and will remain so for years to come! Why people don't see that is beyond me – countries who get older don't grow as fast.

  145. JRW III

    Pharm / Domed house

    This is what is advertised:

    This is what we get:

  146. scottmi

    Oil – even if greece is fixed, not even the greeks will want $103/bbl oil… 

  147. dpastramas

    Greece / StJ – Yes that is the main line of defence for many people back in greece. Unfortunately in the 60s Greece forfeited all future damage claims from Germany in exchange for a hefty loan in Deutsche Marks. Thats why you dont see any official bitching about this, only populist media. Maybe i can find an article for you (it may be in greek though)

  148. jabobeast

    should we expect mr stick to join today's party???

  149. Phil

    "The people have spoken," writes Josh Brown, "Investing advice should be paid for, not investing products." Nobody wants to sell "products" anymore, and wirehouses no longer have either a technological or marketing advantage over independents and will continue to lose market share. 

    2012 has been a good year to own large-cap tech stocks; while Apple's run-up has received the most attention, less flashy names such as Microsoft (MSFT - previously), Intel (INTC), Dell (DELL), and H-P (HPQ) are also posting solid gains. Low P/Es and hefty cash balances (even if much of the cash is offshore) are drawing investors to the space, as is optimism that the bottom might not fall out of enterprise IT spending.

    The Greek government is preparing legislation - possibly to be introduced in coming days – to impose losses on investors who don't "voluntarily" take part in the debt swap, reports Bloomberg, citing anonymous officials. It's not just kids who play the game of chicken, apparently.

    Outstanding. The €130B Greek rescue (assuming it gets completed) will have the dubious achievement of increasing the exposure of EU taxpayers to Greece without reducing the burden of the country's indebtedness by more than a bit, writes Gavyn Davies. Further rounds of restructuring and default are soon to come. 

    Zions Bancorp (ZION +4.8%) shares surge following the regional bank’s investor day, where it tells investors it has enough capital and liquidity to repay its TARP obligations.

    A company representing Proview's creditors is planning to sue Apple (AAPL) for $2B in the U.S. over the iPad trademark. At a Beijing press conference, Li Su – chairman of the creditor group – says it's in the process of choosing representation from among 3 U.S. law firms.

    Ahead of its Chinese iPhone 4S launch, Apple's (AAPL) share of China's smartphone market fell to a mere 7.5% in Q4, down 290 bps Q/Q. Samsung (SSNLF.PK) claimed 24.3% of the market, while Nokia (NOK) saw its Chinese share cut by more than half, to below 20%. Local vendor ZTE (ZTCOY.PK) saw its share surge to 11% on the back of its Android lineup.

    Quick take on Apple/China: Given how the 4S' arrival provided a huge lift to Apple's U.S. share, the Q4 share decline might prove a mere speedbump. However, the iPhone is facing growing competition  from cheaper Android models in China, where most phones are bought unsubsidized and per capita GDP is still below $5,500. Signing up new carrier partners (III) could give Apple a lift.

    Three lunchtime reads:

    1) Roubini: The uptick’s downside

    2) Europe's supply-side revolution

    3) Respectfully disagreeing with Buffett's recent views on gold

  150. mrmocha

    My crazy opex plays in case they mess with us: QQQ today 35 calls @ .35 with stop at .20, and SLW today 36 calls at .05.

  151. stjeanluc

    Greece / Dpas – That was mentioned in the article as well… And Greece has received a lot of help from Europe over the last 20 or so years. But desperate people call for desperate claims…

  152. zeroxzero

    Stj:  Immigration sustains the U.S. economy.  Very few foreigners can integrate successfully into European society, especially the non-white.  All countries have some ethnic or racial pushback on immigration, but the U.S. is far more successful than most in making immigrants comfortable. Japan and some other Asian countries are actually worse than Europe in that respect. Demographics control the future of nations.

  153. stjeanluc

    Negative political ads Venezuela style:

    http://www.guardian.co.uk/world/2012/feb/16/hugo-chavez-opposition-low-life-pig

     

    The socialist leader [Chavez] vowed to crush Henrique Capriles in October's vote, branding him an agent of imperialism and oligarchy hiding behind a mask of moderation.

    "Now we have the loser, welcome! We're going to pulverise you," he told an audience of medical students. "You have a pig's tail, a pig's ears, you snort like a pig, you're a low-life pig. You're a pig, don't try and hide it." He avoided calling Capriles by name, referring instead to "el majunche", slang for "the crappy one".

    This makes the GOP primary almost classy!

  154. diamond

    Crickey!  227K May12 Call 16 were bought today! That would be $114+ on FAS … OUCH!!!
     
    Phil – Are the banks fixed? ;-)

  155. Pharmboy

    That was 225K at the open on XLF….Someone is betting big.  Which way though?

  156. terrapin22

    SVU on the move…

  157. stjeanluc

    FAS / Diamond – It did calculate the other day that if we reclaim last year's high on XLF (17.21), we could see FAS at 136! That was one of the reason I didn't want to roll calls forward. Not saying it will happen but food for thoughts…

    This is part of the discussion about using 3x ETF to hedge or as an income play! They will decay over the long run and the premiums are great, but watch out for the violent rallies!

  158. mrmocha

    AAPL chart creating one of the tightening wedge thingies, which way will it break?  Place your bets now!  I'm in from yesterday for a 500 pin so you'd be wise to bet on 505!

  159. pakdog

    Stjean – Surprising because I didn't think Venezuela has competitive elections requiring Chavez to go on the attack. Here's what crazy looks like in the US election.
     
    Rick Santorum warned a quiet North Dakota audience Wednesday that their state’s booming oil industry positioned the region as a prime target for terrorism.
    “Folks, you’ve got energy here. They’re going to bother you. They’ll bother you, because you are a very key and strategic resource for this country,” the Republican presidential candidate said. “No one is safe. No one is safe from asymmetric threats of terrorism.”
     
    http://www.nationalreview.com/corner/291233/santorum-warns-iran-attack-north-dakota-charles-c-w-cooke

  160. jasu1

    Phil,  Teach me this trick OH GREAT GURU! I got my brass spheres flattened yesterday. HELP!
    after oil gave us $103.50 and already down to $103.15 so wheeeeeee again and, as I have said before – maybe just go all cash and play oil futures – most days you can sit down, catch one good trade and you're done.  

  161. Pharmboy

    Pounding AMRN today…

  162. diamond

    Pharmboy – The order flow shows they were bought for $.20 and $.21 so either bullish or putting cap on XLF.
     
    Correction to first post: forgot to mention they were XLF … thanks Pharmboy!

  163. dpastramas

    The TLT trade is really on the edge.  What time is the options expiration? 

  164. Pharmboy

    then recovery…..Vut's up with dat?

  165. Pharmboy

    I guess the libdo get did not 'lift' BPAX……for very long that is!

  166. scottmi

    It is becoming clear, even as i am UP today, that I am not the surfer who rides the markets gracefully at will.. i am more like the guy paddling generally one way or the other, hanging onto the floatsom of my accounts…   now i could just fit that into a haiku!

  167. mrmocha

    Pharm, last week I picked up some BPAX SEP 1.5 calls for a nickle, just for grins…

  168. mrmocha

    Pharm, thoughts on the AMRN JUN 8/6 bull put spread for $1 credit?

  169. Phil

    Bullish/Mampcs – We have the FAS spread and the DMNDs and the GLL's, in theory, should do well if the fear factor comes out of the market so not entirely bearish.  You can add more to the FAS spread or add a new FAS spread.  If you want to be more bearish, you can cash the bull call spread but $800 is $800 and we're deep enough in the money where I didn't feel the Financials will fall that far, which is why we took the conservative position in the first place.  OK, so they were two questions I see – so we have a bullish play and you can pump it up but I'm not that bullish is the answer and I think that $800 in the hand (that we are fairly sure we'll gain) is worth $1,600 in the bush on a play further out of the money.  

    Median 52.3/ZZ – Wow, that does not bode well…

    Have fun lflan!  

    LOL JRW – the old cone of silence. 

    Oil/Scott – Maybe they figure all the Germans and French will drive down to Greece to see what they just bought.  

    FAS/Diamond – Well if Greek default is off the table you could say we may pop XLF big-time.  I don't see how that's not baked in already and then there's the rest of Europe still to go so not a bet I'd make but a fun one.  

    AAPL/MrM – $502.50 is what I said earlier.  Looking good so far.  Screws all the people who think it's going one way or the other.  

    Chavez/StJ, Pak – Unfortunately, he seems to have been watching the GOP Debates and now thinks that's the way you are supposed to act in an election.   As to Santorum, I pray that I don't ever have to address that guy as a serious political candidate (see, he's got me praying though!). 

    Trick/Jasu – We need to have another seminar but A) Learn to trade with 1 or two contract.  B) Be patient and C) Be happy to make $100.  You need to have at least 3 indicators that correlate with your premise of oil crossing below a key support line (usually .50 or $1 lines).  If you get your cross AND 2 of your 3 indicators are green – then make a bet and just keep a very tight stop on it.  If ANY of your indicators goes red – cash out.   Expect that 3 out of 4 times, at least, that you sit down to trade the futures, there will not be a good set-up and just walk away and come back to it next time one of your key indicators looks good (like $103.50 on oil today).  Notice how solid $103.50 is on both sides?  We can be pretty confident that, if it breaks below, it will have a hard time going back over so we sell a contract at $103.50 or $103.49 with a stop at $103.51 and hopefully catch a nice move down to $103ish (we had 2 earlier).  If you lose .05 twice, then your main goal has to be making .10 back and getting out even and then resetting for the next good opportunity.  If you ONLY play for good-looking opportunities, and you aren't totally misreading the set-ups and you get to be 50/50 successful at picking entries and you limit your losses to .05 and once in a while gain a lot more than .10 – you'll find it adds up pretty fast.  

    TLT/Dpast – Depending on your broker, you either get the net at market close or they both exercise, which is about the same thing.  You should be able to close it for .95+ anyway if you don't want to risk the close.  

    Haiku/Scott – Don't forget to include a season.  

    CNBC parading the oil bulls into the NYMEX close (2:35).  

    Ah, here's that nice indicator.  Dollar over 79.50, oil crossing $103.50, Euro below $1.32 but USO at $39.64.   We can also watch VLO at the $25 line.  So if we get the oil cross with the others in place – game on!  

  170. stjeanluc

    TLT / Dpas – The trade is now worth $0.90 of a potential $1.00 so you could close it if you are worried. 116 seems to have held so far today, but I have bad memories of late Fridays….

  171. mampcsA

    Phil, it's actually 400 on the FAS spread (we have 5 of them).

  172. scottmi

    CSCO – the bots are on.. at 11:01 the Time and Sales order flow started running screenfuls at a time..

  173. pakdog

    Parade of the oil bulls – Looks like they got paraded to the firing squad.

  174. Phil

    FAS/Mampcs – Well whatever, then certainly we're not too bullish on that one.  

    $100.30 – this is where greed kills – a very quick $200 and you can get 1/2 out and set a stop at $100.40 (trialing .10) until we cross $100.25 and then that becomes the stop line until you get to $100.10 and then back to trailing .10 etc….

    Oops, and Dollar just failed so all out anyway.  Now we can wait for another nice set-up. 

  175. dpastramas

    TLT / StJ – Thanks for the warning. I already cashed out short SCO puts as i got shitscared at the last oil spike.  Probably will see the TLT trade throught. Even if TLT fails 116, and ends up to 115.8 we still get paid the $0.8 of the spread (minus the cost) no?

  176. Inkarri1982

    Question - Haven't the markets rallied the prior Tuesdays after the market was closed on Monday?

  177. morxlntway

    Phil – i will be leaving my last shorts behind today and probably should have a little something for the weekend. Yesterday you posted a SQQQ and a TZA at 2PMish and they seem to be still doable. Then this morning there was the $VIX but that seems to have changed since then.
    Then i could just go straight up DIA puts a la mattress play.
    What's your recommendation of the moment, please.

  178. stjeanluc

    TLT / Dpas – It will really all depend where we end. At 115.8, the 115 calls will be worth 0.80 and the 116 will be worthless so you collect $0.80. It goes down quickly.

  179. morxlntway

    Inkarri – JRW has positive statistics re three day weekends.

  180. Pharmboy

    RIG moving up ahead of the dividend…..

  181. Inkarri1982

    Morx – Thanks

  182. diamond

    What a GREAT week selling into the excitement/B.S. 
     
    I have plenty of PM and cash if there is a correction next week/month/year? ;-)
     
    I am out of here … enjoy your weekend all!

  183. jabobeast

    FU CMG!!!!

  184. Pharmboy

    Shifted the dip out to 8 this morning, up since then.  VIX fell out of the tree.

  185. David Ristau

    New earnings play in Monster (MNST). We went into a Jun17 $MNST earning play with 55/60 bull call spread at 1.80. Looking for a double post-earnings in March.

  186. stjeanluc

    Options to watch in the last 90 minutes of trading in the virtual portfolios:

    IWM Money – Feb 63 TNA calls (TNA 62.50 / Calls 0.10)
    $25KP Portfolio – SCO 35 puts (SCO 35.16 / puts 0.05)
    $25KP Portfolio – SCO 35 calls (SCO 35.16 / calls 0.15)
    $5KP Portfolio – TLT 116 calls (TLT 116.06 / calls 0.17)

    Coming down to the wire….

  187. rainman

    IWM not going along with the plan.

  188. mrmocha

    CMG back to its old pattern, Jabo did you play the game?  I sold the today 385 P covers at 10:30 per plan, will close them EOD and use the proceeds to roll my puts up (for perhaps the fifteenth time)!

  189. JRW III

    morxlntway / 3-day weekend

    My play is that IF on the LAST trading day before the weekend there is a major move, buy the direction of the move over the weekend. We are at MAJOR resistance and no move TODAY (follow through from yesterday) so no hold for me !!
     

  190. Phil

    Well they jammed April oil contracts to $103.30 at the NYMEX close.  That's a 9-month high but still over $35 on SCO!  That's matching up with $103.67 on the March contracts and the Dollar remains our best indicator of whether or not it's safe to short on the 79.50 line but now we're into super-thin after hours trading.  So what they've accomplished today is to sell their March barrels and roll to April and pocket .37 for their troubles – not bad!  

    Rallies/Ink – I don't keep track of that.  If I did, I might start believing in it and then, before you know it, I'll be wanting to know what sign my stocks were "born under."  8-)  

    Shorts/Morx – You want to be short into the weekend?  I'd have to go with SQQQ – the Nas is crazy high and they are crazy low and if the Nas goes up 2.5%, SQQQ drops 7.5% but, at $13.23, that's only $1 so selling the April $12 puts for $1.15 lets you buy the 3 March $13/14 bull call spreads for .35 so a 2.5% drop in the Nas and you make $3.10 in the net .10 credit and worst case is you own SQQQ at net $11.90, which would be about 5% up on the Nas from here at 3,100 so that's what you're betting against between now and April.  

    Dow up 0.35% but Transports down 0.4%.  Nas up 0.3% but SOX down 0.7% – not at all natural today.  Volume 173M with 1:15 to go, so at least someone showed up today.   

    Have a good weekend Diamond and all you early exiters!  

    Watchings/StJ — I think TLT ends up fine.  Bad thing about $25KP as they can't cash out and leave long caller naked.  SCO calls hosed us but puts seem fine – a bit late for oil to spike now.   

    Russell is getting weal looking but not the others.  

  191. Pharmboy

    10yrs are moving back up from a low today…….

  192. lol730

    dpastramas
    If TLT ends 115.80 – you will get shares at 155 and can sell them Tuesday. But they may go down.
    So if it closes under 116 it's safer to close the spread

  193. lol730

    I meant 115 (not 155 :)

  194. Pharmboy

    How much of that 173M was in the first 1.5 hrs of Down trading?  How much since 8 (11 EST).

  195. stjeanluc

    TLT / Lol – Thanks for adding that! Of course, if Greece blows up, owning TLT at 115 might actually be a winner… Not that I would risk it though!

  196. dpastramas

    TLT / Lol – Thanks actually that was another question i had. So if the spread finishes between the long and the short call values, there is a chance i get stuck with the underlying. But if it finishes above (deep in the money) there is no chance i get assignment. Is this correct?

  197. rpme

    Phil, are you officially Bullish, I need to know.

  198. Phil

    2:00 PM On the hour: Dow +0.31%. 10-yr -0.23%. Euro +0.14% vs. dollar. Crude +0.71% to $103.36. Gold -0.21% to $1724.85.

    The good news: Italian police have seized about $6T in fake U.S. Treasury bonds in Switzerland. The bad news: They were on their way to the ECB to be used as collateral in the February 29 LTRO (a little lunchtime humor).

    Art Cashin: Here’s The Real Risk If Greece Defaults (WSJ)

    Athens faces tough bail-out terms (FT.com)

    Soybean merchants sold 2.923M metric tons of product to China today, the biggest one-day amount on record. Not surprisingly, the sales occurred amidst China's putative next leader Xi Jinping's visit to Iowa. Beans continue a nice run, +1.1% today, up about 10% in the last month. 

    The big airlines should earn a combined $6B in 2012 vs. $3.5 in 2011, Maxim Group says, having already pushed through two ticket price increases this year and looking to keep capacity tight. The smart money for now is with the smaller niche carriers, the firm says, which are “not trying to be all things to all customers”: ALGTALKHA,SAVE.

    The housing market in U.S. southern states is among the most attractive asset classes in the world, Marc Faber tells CNBC, as property prices hadn't moved much despite rallies in homebuilder stocks. Pointing to cities such as Atlanta, Phoenix and Miami, Faber says investors could earn a rental yield of 8%/year and buy homes at a 40%-50% discount to construction costs. 

    Student Loans Near $1 Trillion Hurt Young Home Buyers (Bloomberg)

    S&L giant Washington Mutual (WAMUQ.PK) finally gets the go-ahead to exit bankruptcy proceedings after more than three years of brutal legal battles. The plan calls for ~$7B to be distributed to creditors and includes significant recoveries for shareholders, who often are left with nothing in bankruptcy cases. WaMu's assets were sold to JPMorgan Chase (JPM +1%) in 2008.

    How Citibank Dumped Lousy Mortgages on Taxpayers (Pro Publica)

    Chesapeake Energy (CHK +4.2%) shares jump after receiving an upgrade to Buy from Hold at Stifel Nicolaus. This is "an attractive entry point for a company whose stock has gone nowhere since late 2008 and yet has amassed a huge resource exposure with some large acreage positions in some of the best plays," the firm says.

    Nestle (NSRGY.PK) and Danone (DANOY.PK) havesubmitted preliminary bids of ~$10B for Pfizer's (PFE) infant nutrition business, according to Bloomberg, in-line with the unit's estimated value. However, with the bids likely to face regulatory hurdles, Nestle is said to be considering making asset sales as part of any deal, while Danone is reportedly considering a joint bid with Mead Johnson (MJN). 

    They're loving ketchup in Russia, China and Brazil but not so much in the U.S., where Heinz (HNZ +4.6%) says FQ3 sales trailed strong international results. While revenue abroad spiked 20% and made up 20% of all sales, North American sales rose just 1.3% while volume slipped 2% as HNZ raised prices on its frozen potatoes, sauces and ketchup. 

    With 425M monthly mobile users to serve ads to, Facebook (FB) could generate $1.2B in mobile ad revenue in its first year just from the U.S. and the EU-5, claims research firm MobileSquared. Facebook, whose slowing PC ad revenue growth is a concern for some, currently doesn't serve ads on its mobile sites and apps, but has announced plans to do so. 

    Twitter looks to cast a wider net in its advertising efforts, pitching to small and medium-sized merchants alongside existing efforts to lure larger firms. The plans come as the company tries to build revenue that lives up to its $8.4B valuation, and as CEO Dick Costolo urges employees to be patient about going public. - And nobody ever wonders where these Billions of new ad spending Dollars will come from?

    Apple’s Stock Is a Bargain (Slate)

  199. sundevils

    STJ,
    Are you stll looking at earnings strangles? Money was definitely made on some of the earnings this week ie BIDU, CLF APA etc using strangles….Maybe a few plays for next week?

  200. zeroxzero

    The U.S. and Europe may be broke, but the money had to go somewhere. Where a good part of it seems to be going towards superluxury goods.  Probably a  trend with legs.   http://online.wsj.com/article/SB10001424052970204792404577227274215171072.html?mod=business_newsreel

  201. Inkarri1982

    Phil – Would you consider selling the $9 CQB calls instead of the $8s?

  202. 2can

    Phil / Thanks for the oil tips today.  I have to go, so have a good weekend all. 

  203. kallenjr

    AAPL reversing to 505?

  204. scottmi

    Phil – think there will be much sell-off in final minutes before holiday weekend what with greece, possible iran war…

  205. cwan120

    STICK coming?  JRW, where is that STICK pix?
     
    Seriously, Phil, try another stick play?

  206. scottmi

    Legs – did someone say Legs?

  207. Phil

    Dollar heading south, making room for Mr. Stick?  

    Volume/Pharm – I wasn't watching it closely today but was very heavy in morning sell-off and then we went up on light trading – as usual.   What's the difference though to people who are trained to buy those dips – they are rewarded every time – so far.  

    Spread/Dpast – You must ask your broker what their policy is.  It's different from broker to broker and probably based on account sizes within brokers so no one can tell you what will happen.  

    Bullish/Rpme – Has to hold 1,360 on S&P for 48 hours.  This is day one so Tuesday would be official if we're over.  

    CQB/Ink – If you are scaling in and happy to DD if they fall to $7 or something, then sure.  

    You're welcome 2Can.  

    Dollar bouncing a bit – let's see what happens.  (/CL) at $103.80 at the moment, Dollar 79.445, USO $39.72 so not a good-looking set-up to jump in (too messy – no clear lines to play).  

  208. Pharmboy

    VIX info FWIW.  Don't quite get it, but someone is bracing for a big move.

  209. Inkarri1982

    Thank you Phil!

  210. Pharmboy

    Market rising….10 yr still rising.  So is 30 yr. 

  211. Phil

    Sell-off/Scott – I think fund managers are nuts not to be cashing longs into this weekend but even the morning sell-off wasn't so much volume.  VIX is 17.90 and TLT barely $116 so no one seems worried about what could be a Globally catastrophic event on Monday (if the Greek deal blows up).  Maybe I'm just getting old but it doesn't seem worth the risk to me.  

    Stick play/Cwan – Clearly they usually work but these indexes are so toppy I can't see wasting the money. 

    You're welcome Ink.  

    Big Move/Pharm – I'm ready, let's go!  

  212. JRW III

    cwan120 / Stick

    IWM should close between 82.84 and 83.11, we'll have to see !!
     

  213. stjeanluc

    Strangles / Sundevil – Look at the list I posted earlier of the earning players next week. If you see a ratio over 1.5, it might be worth playing a strangle. For example, MYL, CAKE, BKS and WLT. Don't know about MYL as this is not in my universe (and maybe Pharm has an opinion on that) but the others might be a play. For example, you can sell a BKS Mar 10/16 Strangle for over $1.00. I assumes a 20% move after earnings when the usual move is about 10%. Of course, there is uncertainty about their tablet sales so it's not without risk! You can also sell a CAKE Mar 28/36 strangle for $0.87 (25% of margin) assuming a 12% move when the average move is 4.5%.

    I am not pushing these ideas, just outlining the logic. With the right size, all these strikes can of course be rolled!

  214. Phil

    Just to be clear, re. positioning:  We are clearly at the top of a huge rally.  Whether it's the top of the first leg or the end of the rally – I don't know (see headline today).  In any case, if you were bullish, you could not really be doing better.  If Greece is fixed on Monday – that's kind of what everyone is counting on so I doubt we snap higher although, obviously, we'll be happy to play along on Tuesday and we can do that from cash.  If, on the other hand, Greece goes sour – then we may crash Monday while our markets are closed and be further down Tuesday a la Lehman (which also was "fixed") before we even get a chance to look and then it will be a long, long, time before you are offered these prices again for your longs.  So – game theory dictates cashing out longs – having plenty of cash into the weekend and not being too short either. 

  215. jromeha

    Are we getting a stick? SHould I buy the weekly IWM calls or puts? I got a half hour left at the Ali Asleem air terminal to make some $ to pay for my flight back to Kabul… Let's getir done :)

  216. yodi

    Hi Fellows help me out do we have a 3 day week end egain ??? thanks

  217. scottmi

    Funds/Phil – interesting point about funds NOT appearing to be liquidating. i think they must be holding on wiht bullish hopes, and perhaps the VIX and XLF are making up some serious hedging, just in case..

  218. Phil

    QCOM making new highs.  Where would the global economy be without smart phones?  

    3:00 PM On the hour: Dow +0.38%. 10-yr -0.09%. Euro +0.24% vs. dollar. Crude +1.15% to $103.83. Gold -0.19% to $1725.05.

    Stocks keep rallying, and investors keep ignoring the major warning signals coming from corporate profit forecasts. With earnings season nearly done, 86 S&P 500 firms have issued guidance: 54 negative, 26 positive, six in-line. Q1 earnings growth is set to drop sharply, to just 1.2%; earnings are on track to rise 8.3% Y/Y in Q4, and 16% for all of 2011.

     

    "We're the law and you're not," the ECB seems to be saying to Greek bondholders as it gets to do a bond swap with no loss while private holders will have no such luck. It's a violation of the principal that holders of the same paper rank equally, but the ECB, says Richard Barley, is more worried about its credibility. 

     

    Barry's succinct summation of week’s events:

    Positives:

    1) Greek bailout and PSI deal looking more likely AGAIN, at least that’s what markets think as Greek stocks rally 3.4% on week, European credit CDS narrower, European banks bounce and US stocks continue their march
    2) German ZEW investor confidence figure rises to best since April
    3)Initial Jobless Claims fall to lowest since Mar ’08 at 348k, well below estimates of 365k
    4) Philly and NY mfr’g surveys gain but components mixed as headline #’s are not sum of parts
    5) Multi family housing starts continue to grow
    6) NAHB home builder index up 4 pts, 3 pts better than expected and highest since May ’07
    7) India’s wholesale inflation rises at slowest pace since Nov ’09, leaves open room to cut rates
    8) Japanese exporters see some breathing room with weaker yen to lowest since July after BoJ embarks on even more QE

    Negatives:

    1) Greek drama never ending, ECB wants special treatment
    2) Euro zone GDP in Q4 contracts .3% q/o/q, although touch better than estimates of .4%
    3) Portugal’s unemployment rate rises to 14% in Q4 from 12.4%, the highest since at least ’98
    4) Singapore confirms Jan estimate of Q4 GDP contraction
    5) Japanese economy shrinks more than expected in Q4, BoJ can’t help itself with more QE
    6) Chinese FDI in Jan falls .3%, 3rd month in a row of declines
    7) US Jan Retail Sales ex auto’s weaker than expected (but Dec revised up)
    8) MBA said purchase apps fell 8.4% on the week to the slowest of the yr
    9) While CPI rate of change a touch below estimate m/o/m, core rate rises to highest since Sept ’08 y/o/y. Overall index at another record high.

  219. yodi

    OK I see it it is OBAMAS day

  220. Burrben

    Really SCO??? 35.03????   You're going to make me sit here until the bitter end of a crap week….  

  221. dpastramas

    Video Vix / Pharm – The trader said somehting about a call stupid. Is this trading floor jargon for bull call spread? Interesting they are betting on high Vol (from what i understood)

  222. dpastramas

    Best tweet i read today by zerohedge:  :-)
     
    Did the NYSE hire actors to pretend humans still trade?

  223. stjeanluc

    Burrben – You could buy the SCO put back and call it a day!

  224. Phil

    I was just looking for rolls in the Income Portfolio and this is interesting:  We moved to the June $119 puts at $2.60 on the 7th and they are now $2.50.  We also went to the SDS June $15 calls that day at $2.24 and they are now $2 so – all other things aside – SOMETHING is keeping these prices up.  

    That being said, there's no good roll on SDS but the 50 DIA June $119 puts in the Income Portfolio can be rolled up to the June $124 puts for $1.12 ($5,600) and that's worth doing to lock in some of our gains over the past two weeks.  

  225. stjeanluc

    Speaking of the VIX, down to 17.85. Selling premium is so 2011!

    And it probably accurately reflects the market risks. What could possibly go wrong in the coming months!

  226. Pharmboy

    dpast – thx.  Call stupid is my new jargon as well.  GILD Jan13 35/40 call stupid then…..oh, I already did that one earlier, how stupid!

  227. kurtww

    No idea if this is true, but Google turned up this:
    A stupid spread is where you buy both legs instead of buying one and selling the other, as you would in a regular spread. In a regular 75/80 call spread, you would buy the 75 call and sell the 80 call. If you bought the 75/80 call stupid, you would buy the 75 call AND the 80 call. Same thing with a put stupid. You would buy or sell both legs at the same time. 

    It does sound kind of stupid. What's the rationale?

  228. sparky123

    dpas, pharm,
    I had never heard of call stupid (though I've made a few).Looked it up.  Both calls are bought so it's not really a spread. So that means someone really thinks the vix is going to double??

  229. Burrben

    Phil / SCO Puts
     
    SCO is 35.01.  What's the plan in the 25K if we go under 35?  Take assignment, or close the position for 0.10 now?

  230. dpastramas

    VIX Stupid – Wow thanks guys for the info. Double wammy on the VIX. Maybe i ll have a look at Phil's VXX play from earlier today

  231. Phil

    No stick/Jrom – Looks like a lot of selling into any attempt to move us higher.  I like those long CMG puts from this morning as a gamble over the weekend.  If things collapse and CMG drops 5% ($20) the March $325 puts should go from .95 (now) to $1.80 (the price of the $345 puts).  Figure CMG will at least pause at $400 the other way and the $310 puts are .60 so risking .35 loss to possibly make .95 is a good risk/reward profile for a weekend hedge.  

    3-Day Weekend/Yodi – Yep.  And I won't even be around on Monday.  

    LOL Dpast – Good point! 

  232. scottmi

    Stupid/Kurt – maybe if you are tring to get a certain delta…to play with/against some other position, or the underlying..
    me, i've got a stupid put ladder on USO right now.. and the higher it get's the stupider… >-(

  233. dclark41

    Wow! Last second pin to 500 on AAPL?!

  234. Pharmboy

    Well, damn….GILD is no longer that stupid!  Thx.  I think for a little, I will try some fun.

  235. Phil

    MSG and CMCSA up at new highs because they have a player from – CHINA!!!  

    Stupid/Kurt – I can't imagine why someone would do that.  

    SCO/Burr – It depends on your broker.  TOS just gives you the net (assuming you rate that treatment) and I have no idea what other brokers do or what other accounts at TOS get but it's very simple there – do nothing.  As I said earlier, if this is giving you stress, then there have been .95 spreads closed all day long and, in fact, right now the spread is $1/1.10 and 0.0/0.05 so hard to believe you can have such a crappy broker that you can't take .95 and run.  For .10 – they can shove it, I would rather get assigned.  

    Oh no, selling into the close – will the S&P hold it?  

  236. sundevils

    Thanks STJ…. The strangle play is interesting for earnings and looks like it could be profitable as long as there are no really unpleasant suprises with the announcement….will look at those next week

  237. Phil

    205M with 1 minute to go – we'll see how much imbalance there is after the bell.  

  238. scottmi

    TOS – wow major lag here at the end!

  239. stjeanluc

    Saved by the bell on SCO!

  240. stjeanluc

    Strangles / Sundevil – Might be too late for BKS as they report before the open on Tuesday I believe. CAKE is still OK.

    Once again, you have to plan on having to roll 2x or maybe even 4x on a bad move so I would play that really small!

  241. zipla

    SCO
    That was exciting. Wow!

  242. lol730

    dpastramas
    even if it closes over 116 there is (very slim – close to 0% chance) that you may get stuck with stock.
    That's because (although it's very very very very very very very rarely happens) in money short options may get not assigned.
     
    But chances so low, that I'd not worry.
    On the other hand – as Phil mentioned, depending on your broker policy – even if it over 116, but very close to 116 and you don't have enough margin to get assigned – they may liquidate 10-15-20-25 minutes before market close.

  243. Burrben

    Finally a win on SCO puts!  Today I utilized my new "Hope and Pray" strategy!  Seemed to work….
     
    Phil, I was just asking about the SCO put, not a spread.  If SCO would have been 34.95, I think we would have had the shares assigned to us.  Not a biggie, but most brokers charge a assignment fee.  Since it expired worthless, there isn't any charges..

  244. stjeanluc

    Hey look at AAPL, 502.12. Close enough Phil?

  245. Phil

    Looks like 230M on the Dow so a fairly honest close (comparably).  Oil $103.87 is highest since last April ($114.83 was the high but we flopped to $89.61 after that).  

    Dollar finishing at 79.49, Euro $1.31506, Pound $1.58341, 79.504 Yen to the Dollar and 1.2080 Euros to the Franc.  

    TSLA making new highs – looks like we'll get a free car at least! 

    Have a good weekend everyone!  

    - Phil

  246. barfinger

    PHIL!
    " We are clearly at the top of a huge rally.  Whether it's the top of the first leg or the end of the rally – I don't know (see headline today)."
     
    WHAT? That's what we pay you for! I'm shocked! ;)
     
    Interesting, I was short some VLO 25 puts and it closed exactly at 25. I presume no assignment? (not that it matters)

  247. dpastramas

    Assingment / Lol – Thanks for the follow up.  I checked with trading support at optionxpress and they confirmed that if the bull call spread is deep in the money then I should not expect any assignment.  If however it is between the long and the short leg then there is a possibility of assignment.  
     
    Very interesting week guys. Enjoy your long weekend.  Talk to you next week!

  248. elliotteldrich

  249. Phil

    SCO/StJ – I wasn't worried.  Or TLT either.  Maybe people should consider letting themselves get assigned 1 share on the call side one month and 1 on the put side the next month (any old cheap stock would do) just to go through the clearing process so they understand how it works.  That way, they won't be too freaked out by the possibility of an assignment.  

    SCO/Burr – Oh open stock, that's different.  I would rather pay the nickel to avoid the hassle of owning something I don't actually want.  Then again, at this price, SCO is a stock I would want to have.  

    AAPL/StJ – I see $502.80

    Oil touching $104 after hours despite Dollar 79.52.  

    Shock/Barf – Better to be honest than be one of those guys who says they know when they don't.  Not sure what happens anymore on the money but should wash out.  Used to be .05 you wouldn't get assigned, now I think .01.  

    That was fast Elliott, thanks!  

  250. Phil

    At the close: Dow +0.34% to 12948. S&P +0.23% to 1361. Nasdaq -0.27% to 2951.
    Treasurys: 30-year -0.15%. 10-yr -0.06%. 5-yr -0.01%.
    Commodities: Crude +1.24% to $103.92. Gold -0.24% to $1724.25.
    Currencies: Euro +0.14% vs. dollar. Yen +0.79%. Pound -0.23%.

    Market recap: Stocks closed mixed in lackluster trading ahead of the holiday weekend, but the three major averages logged solid gains for the week as "no one wants to risk staying short" if a deal in Greece is concluded. Natural gas futures surged, pushing two-day gains to 11%, amid more planned cuts in output. Crude oil settled at nine-month highs. NYSE gainers and losers ended roughly even.

    Wells Fargo's (WFC) perceived creditworthiness is rising relative to peers at the fastest rate in three months, as investors reward it for limited risk from mortgage litigation and the European debt crisis. Credit default swaps tied to WFC's bonds have held steady as contracts on JPM and other banks climb; the difference, 112 bps, has more than doubled since August.

    Goldman Sachs cuts Cliffs Natural Resources (CLF -2.9%) from its Conviction Buy list, noting the coal and iron ore producer's shares didn't get the expected boost from iron ore prices post-Lunar New Year. The firm remains bullish on CLF due to its leverage to the strong iron ore market, though it faces near-term pressure on a lagging iron ore price recovery.

    Time Warner (TWC) and Madison Square Garden (MSG+3.8%have ended - according to sources – their 7-week standoff, which had deprived Time Warner Cable customers access to games on the MSG network – a difficult situation that became a crisis when Jeremy Lin arrived on the scene. 

    Yay!  Frontier Communications (FTR +6.5%) shares push higher after reporting a weaker Q4 amid fewer subscribers but beating earnings estimates. Meanwhile, S&P Capital raises its rating on the regional telecommunications provider to Buy from Hold, saying its 47% dividend cut should help with debt reduction and support capital expenditures

    Eric Demers, who recently resigned as the head of AMD's graphics division, has turned up at mobile chip giant Qualcomm (QCOM). Qualcomm has invested heavily in boosting the performance of the Adreno graphics processing cores that go into its Snapdragonprocessors, and with the company hungry to boost Snapdragon's adoption within the PC, tablet, and TV markets, Demers could be a useful addition.

  251. scottmi

    Gold says no war this weekend: Gold and the Next Great War.
    "Gold is an excellent barometer of, among other things, military aggression. The gold price will typically spike significantly higher for at least two months prior to the outbreak of war. As you can see here, gold has been in a comatose state for the last several months and has made a series of lower highs since peaking last summer. Gold doesn't smell war as yet. If a major war is coming this year then we should see gold overcoming its nearest high from November followed by a strong and sustained rally in which gold goes on to make a series of higher highs and higher lows."

  252. scottmi

    Gold/War – of course, Jim Rickards positis that we are ALREADY at war with Iran..
    http://seekingalpha.com/article/348261-iran-the-dollar-and-financial-warfare

  253. scottmi

    "posits"  that is..

  254. stjeanluc

    Looking at the levels, it's interesting that the 2 broadest indices (NYSE and Russell) are the ones having the most trouble passing our lines. We know the Dow is meaningless as an index with only 30 stocks and the Nasdaq is basically benefiting from Apple. At the same time, the S&P is barely above the 10% line. So this rally is not as broad as it looks. Just sayin'

  255. Burrben

    Short Oil Trade
     
    I'm loving the idea of this trade more and more.  I'd love to hear some advice on the best way's to accomplish this.  I plan to continue scaling into the USO put position next week.  I'd love to make a larger sized bet on it coming back to $100 or lower.  
     
    My 2c is that this is much higher prob bet than shorting the general market.  Thoughts?

  256. Canuck

    Pizza/Lombardi's
     
    Fantastic Pizza — sorry Burrben, couldn't do the white one on the first visit, went more classic and old school.
    Met the owner who was holding court at the end of the bar – he seemed like a guy who could do you a favor… just saying.
    He leans over to me and says "you want some good italian food?  Around the corner, Peasant, Frankie's cookin' tonight – tell him I sent ya (doesn't tell me HIS name)" 
    Really, you just can't make this stuff up, or at least, you don't need to.
     
    Thanks to all who gave me some tips on exploring and eating in this great city – nice to be able to avoid some of the tourist traps and see beneath that layer.  Must come here more often.  Two more days left though…

  257. Canuck

    Burrben/SCO – what is your trade idea? selling SCO puts or something else?
     
    I did that all last fall and had great success, but in the past month & half, have sat on the sidelines after having my hands slapped on a few trades.
    Oil SHOULD go lower from here
    BUT if Iraq decides to do something stupid,
    THEN all bets are off…  just something to consider when choosing position size.
     
    Here's a quote I shared with Phil last week:
     
    "It's not the things you don't know that will hurt you,
    It's the things you KNOW 100% for sure are going to happen
    that turn out to be just NOT so,
    THOSE are the things that can hurt you real bad."

  258. sparky123

    Canuck,
    I've vicariously enjoyed your NY trip. Used to work there on and off many years ago, but don't get that many chances these days. The best pizza contest was great fun. Have a safe trip home!

  259. roro

    Burrben…………i trade oil using futures and CFDs(100 barrels per so scaling opp excellent) what i don't like about shorting OIL  is the ascending channel it is in and whatever time you look at on a chart 1H, 2H 4H,8H Day or Month the channel is consistent since the beginning of the run feb 10 from 97.50 ………….minor pullbacks so have to be nimble and hit and run.
     
    i am am looking for a position trade but am also waiting. Oil is pushin the top of a longer term important range high at 1.0365 (up to 104.20 at the close) so if it breaks higher than 104.50  i am looking for 106/106.50 next stop.
     
    i did take several equity shorts into today's close…..a risk, yes, but i think the upside IF Greece is 'fixed' (like a dog) is probably a lot lower than if it is NOT and guess a short up here is maybe at least a 2 to 1 bet maybe a lot more., but mostly still in cash

  260. newbie

    BSX/peedlew99
    A few days back you asked about BSX. Here: http://www.bostonmagazine.com/articles/boston_scientific_and_the_road_to_ruin/page1
    you will find an excellent in depth article on the subject. I found this after I made my posting about my own career at Boston. I did some surfing to try and find out what happened to them, and how they went so wrong. I read some other articles about the company, but this one really nails it, no holds barred.
    Everything in this article (which is spread across 8 web pages) rings totally true with my experience. The article was written July 2011, and I left the company around 1995-1996, yet after all these years it still seems to be right on in it's observations.
    The combination of a horrible culture, massive patent lawsuits year after year after year (which is pretty much normal in the med device business), horrible product quality issues year after year (which are NOT quite so normal for the business and can be massively crippling, when the doctors loose faith in your brand), bribery (kickbacks, which again are not terribly unusual in the business), their arrogance concerning the FDA and regulation in general, the fact they just bought and bought and bought many companies (partly to eliminate competition) and could not integrate them or manage them……..all of these are factors in their "downfall".
    I agree with the people who posted "comments" below the magazine article, completely. They fired and laid off a lot of their best people, year after year. The political machinations and the "knife everybody in the back" culture took time (years) to show up in tangible measurable terms (financial results) but they did, in the end, really backfire.
    I wouldn't touch this company with the proverbial 10 foot pole.
    Sometimes a 5 dollar company is a 5 dollar company because they're only worth 5 dollars (or less).
     
     
     
    READ THE LAST SENTENCE OF THE ARTICLE of page 8.

  261. sparky123

    roro,
    First, I would never bet against Phil on oil prices. Other than that my short view is based on some deeper reading on the Iran situation, which is much of the current hype priced into oil. My read is that Iran won't do anything stupid anytime soon, and oil has moved up a lot on that hype. Distillates aren't confirming the move either. This may be convoluted logic, but I don't think it will break out from here, because it can't without taking the economy down a la last year. This time last year it topped at 114 so I'm (hopium) that rhymes with 104 this year.

  262. sparky123

    Also, the imminent Israeli strike sounds a bit like media hype too.

  263. roro

    sparky……….not betting against Phil. more like trying to trade price and clearly the better trade was being long off of support on the descending channel. once OIL made a decisive break at R on the upper bounds then higher targets came into view………..just saying.
     
    Iran and a shooting war is all a risk that gets pushed around and Bush was the pro when it came to pushing price up to 140.
     
    i am looking at the levels and today the close was above 104………..a big number, and may be a terrific place to short but i don't see a top forming in the ascending channel ……yet.(btw the Month chart was a typo) Oil is definitely in a tight and rising ascending channel and i am looking for some kind of signal that it has met major resistance. so far the push above 1.0365 (triple top) is not inspiring me to start taking shorts.
     
    maybe next week.

  264. roro

    sparky……you raised an excellent point about trading which was made in an article Phil posted here this week from Barry Ritholz about using all of the tools/advantages available when making trade decisions and using technical and fundamentals and experience and one of the reasons i came here in the first place is that i discerned (from a far bit of looking too) was that PSW offered informed and timely viewplanes probably very difficult to find elsewhere.
     
    whether i agree or not with Phil's trade ideas i come here to learn and get thoughtful informed intelligent insights from Phil and you and the others who comment that are general or specific or intangible, but are all integral to the synthesizing of broad information and my own personal experience with the intent of becoming more competent at what i do everyday which is primarily trade futures/CFDs and currencies.
     
    i love the subject matter and how price connects all of the dots from  the social and economic and pol/geopol issues, not to mention morals too, and the underlying implied responsibility that comes with assuming responsibility for taking one's own decisions and that kind of summarizes trading for me.

  265. roro

    sparky………..you got me going………a few other thoughts about OIL and price; i think Europe is having a freeze and relies on Russia's NG for herating and supplies of NG have been an issue lately, and so that maybe putting upward pressure on price. Brent has been rising and i imagine the NG issue with the unusually cold winter may have an impact.
     
    then there is the real or imagined embargo back and forth between Europe and Iran
     
    also, there is the closure of parts of the Mississippi by the USCG today/yesterday that may impact refineries/deliveries.
     
    i think Burrben is right about the opportunities trading OIL because of the volatility, but if you watch how Phil trades it and manages the risk it is for quick hit and runs as opposed to swing or longer term position trading.(entails being in a position to scale in or take larger drawdowns – psychology of being down and riding out a plan)
     
    i am working to get a mix of the 3 styles and use several accounts so 1 for h/r style the other for more swing trading etc.
     
    trading is a lot of work. i work hard at it, and being at PSW has helped me a LOT

  266. roro

    another thing that is bothering is this swap deal between Greece and the ECB and the way the ECB has subsumed the authority to subordinate private sovereign bond holders.
     
    it is an unnatural act by an organization that is not of business and is of technocrats and beaurocrats and politics and prints money that belongs to the public and i think this subordination to save face will have negative repercussions in the markets and not just the bond markets

  267. freeflow

    Canuck/Pizza
    Brooklyn has the best Italian food – hands down.  The owner of Lombardi's is right.  Frankie's is incredible (Frankie's in Carroll Gardens that is).  2nd best Italian food I've had in my whole life – 1st was in Roma.  For pizza – Lombardi's is 2nd tier.  Go to Di Fara's – It will change your life…
    FYI – thanks for coming to our great city!! As a long time resident, I can say that contrary to popular belief – we love visitors!

  268. sparky123

    roro,
    A long time investor, I've moved from no experience with options last year to getting comfortable selling puts last fall and now am making small directional bets based on my opinion and what Phil is doing, while my long portfolio grows (hedged with calls maybe sold too soon), and my cash gives me margin and flexibility. I am no where near trading futures contracts yet.  I follow some tech stuff, (self-fulfilling prophecy it can be) but when people get to the point of three peaks and a dome it reminds me of naming cloud formations, a rorschach test. I'll stick to reading and thinking-  albeit old fashioned and low tech, except for the medium.

  269. roro

    sparky….thanks for the insights about your learning options which is as aspect of trading i also want to learn so it is encouraging to hear you tell me about your own experience.
     
    when it comes to futures i started in 2005 which was probably a really good time for a whole lot of different reasons. one of the issues with futures is the contract size so for smaller traders that can be a problem especially as margin requirements fluctuate. i live outside the US (now) and am able to also trade CFDs which afford me access to all of the same products in the futures markets but in lot sizes of approx $10,000 per contract as opposed to a MYMEX mini OIL of 500 barrels or a Mini Euro futures contract at $62,500 or an Australian dollar contract at $100,000.
     
    after learning futures i started at forex and opened an account with GMT and started trading spot currency in the same lot sizes of $10,000 as opposed to the larger futures contracts……….again, i had more flexibility for position sizing and scaling and also a LOT more choice when it came to selecting pairs to trade.
     
    another edge the CFDs and spot forex gave me was i was much more inclined to 'take' a trade than when i was only trading futures just for the sheer size…………if i wanted to play the AUD/USD i didn't have to commit to $100,000 right off the bat.
     
    also with the CFDs i am able to access all of the European equity indexes and the Asian equity indexes – not possible trading the US futures market, at least not where i have an account.
     
    my options knowledge is very basic but i read the posts here and am starting to at least pick up the vocabulary

  270. exec

    Not sure if this article has been posted yet, but it's a good read.

  271. pstas

    Phil, if you around today- reminder to look at RRD & PBI.

  272. Burrben

    Good Read : Fed Sloshing Around in the Liquidity Pool
    http://www.mcoscillator.com/learning_center/weekly_chart/fed_sloshing_the_liquidity_pool/

  273. dclark41

    Exec
    This was written later as a rebuttal to Warren’s thoughts on gold. I still don’t understand what the exit strategy is for holding gold. If you are holding it to retain value won’t you ultimately be too late to the table when it comes time to sell? I think I am with Warren on this one, but interesting debate nonetheless.
    http://seekingalpha.com/#article/374351-respectfully-disagreeing-with-buffett-s-recent-views-on-gold

  274. deano

    Really good set of videos on the Greek situation courtesy of Jesse – looks to me like the Europeans are sowing the seeds of the next dictator:
     
    http://jessescrossroadscafe.blogspot.com/2012/02/greek-experiment.html

  275. pstas

    Gold – Barrons did an interview with Jim Grant a while back where I think he hit the nail on gold:
    Barron's: Is gold in bubbly territory?

    Grant: A bubble is a bull market in which the user of the word "bubble" has not fully participated. You can think of gold as a stock that went from 2? to 18 in a dozen years. I'm not sure that's a bubble. It is the nature of gold that its valuation must forever be a mystery. It earns nothing. It pays no dividend. No conference call, no management to call up and complain to. What I do think is gold is simply the reciprocal of the world's faith in the institution of managed currencies. It is one divided by T, where T stands for trust. And trust is a shrinking number and will continue to shrink. Therefore, I am still bullish on gold.
    If a bubble connotes absurdity, what is absurd are the monetary conditions that supported this gold bull market. Gold is an expression of the world's justifiable distrust of the way our central bankers conduct their affairs. The poetry of it is that it can't be quantified. The central banks are unworthy opponents. The Fed has pledged 0% money-market rates for the next two years, so that's not much competition. And the governments of the world are taking under advisement this notion called financial repression—short-circuiting market mechanisms, capital controls, punitive taxes or intrusive taxes and the like.
    http://online.barrons.com/article/SB50001424052702303392404576566862208601914.html#articleTabs_article%3D1

    I don't own gold- only  an occasional trade. Ultimately, it's similar to momo stocks- lots of money to be made both long and short anticipating when the music starts and stops.

  276. Canuck

    FREEFLOW/NYC
     
    We have felt nothing but warmth, openess, a willingness to help from everyone we have bumped into on this trip.  We spent the days walking thru upper east and west sides, SOHO,  NOHO, Village, Little Italy, Chinatown, Bowery, Central Park,  … NYC is quieter than I would have expected, less crowded and much friendlier.   Subways are no problem to navigate, cabs everywhere…
    The one thing I think that comes across accurately in the media is the there is no shortages of opinions in this city!!  And that is a good thing.
    We will be back and soon I hope.
    Again, I thank everyone for sharing their top spots with me – it made it much easier to do a quick overview of a number of great spots, and eliminate so other more pedestrian things.  Off to Museum of Natural History today!!

  277. Pharmboy

    Good article on Tax Receipts and Economic Expansion

  278. dclark41

    http://www.zerohedge.com/news/very-different-take-iran-barters-food-story

    Ok, here’s another interesting argument that supports gold. It is, in my mind, teaming the rest of the world against the US. The real question is does anyone think the rest of the world can get their act together enough to pull it off. And who would be willing to risk butting heads with the US to achieve this destiny? Of course they mention China and Russia, but is the world ready to follow them as world leaders?
    This also makes me contenplate whether or not the US really cares if the Euro is weakened in the near term. A weak Euro may push the EU to stronger ties with the US rather than being a group confident enough to act in its own best interest.

  279. jmm1951

    Was looking at Phil's old post on "option tricks" recently and wondered how the concept of doubling down  would operate if the trade consisted of selling puts or selling put spreads. If you sold at-the-money  puts and the stock (which you would like to own long term at the right price) headed downwards and you wanted to double down, would it be better to sell more puts at the original strike price, or would just to sell more puts at the current at-the-money strike price.

  280. roro

    Silver backwardation subsides……….cobasis not positive. not bullish for silver
     
    http://dailycapitalist.com/2012/02/17/the-arbitrageur-silver-backwardation/

  281. cwan120

    RRD / Phil, pstas: RRD is in the Income Portfolio.  Someone (pstas?) mentioned that RRD's profits are paper thin.  Would be interested in hearing what you think of them long term.  Right now, I believe that the position in Income Portfolio is slightly in the money.

  282. dpastramas

    Interesting comparison between QE2 and european LTRO that started in Dec.  It may explain the rally.  And a second wave is coming end of feb, although of smaller magnitude.
     
    http://www.zerohedge.com/contributed/ltro-and-markets
     
    I may start flipping bullish for the next couple of months.

  283. Pharmboy

    dpastra – yeah, as bearish as I am, I think it is not a bad idea….China just cut bank requirements again as well.

  284. Pharmboy

    'They' are totally creating an oligarchy in each of the continents.  Maybe I will buy a greek island.

  285. Pharmboy

    Then again, when I get bullish…..that will be the sign, oh my!

  286. dpastramas

    Pharm – Now china?!?! Oh the liquidity… One can only hope for a quick correction before the second LTRO
    I would settle for a nice beach house, an island may be too much.  Too many fixed costs (plus most of them dont have any drinking water supply)
    When i go back home in March will start to look around. Hopefully by then my account will be in better shape :-)

  287. roro

    Pharm…..good news!………PM dealers brace; what better way to be ready to BUY at firesale prices after the selloff and the the FED can also step up with its Atomic money bomb along with the ECB BOE BOJ and really lever it to the moon.
     
    make sense? why buy now as Phil points out this has already been a real nice run up
     
    if this makes you feel better you know i have been looking both ways long or short?, or trying, so did several equity index shorts at the close friday……….and then there is the silver backwardation story i posted above.
     
    i am mostly cash but willing to take a hit so as to not miss a really nice crash……..also i picked up this from a trading blog ………  "rumours of official documentation and contingency planning for a default for Greece that will be announced on March the 23rd, after the markets close."
     
    don't know whether it is accurate or not but it has a certain ring to it
     
     
     
    http://www.zerohedge.com/news/primary-dealers-quietly-brace-impact-total-dealer-treasury-holdings-record-high

  288. dpastramas

    Default / Roro – I have also read a similar story that mentions an "official doc" giving instructions about the default end of March. It is also quite convinient as March 25th is a national holiday. Only problem is that it falls on a Sunday but they can still move it on a Monday (they have done it with 1st of May many times in the past).
     
    But still we can party till end of March!

  289. roro

    dpast………….it all looks very fake, and over contrived and why all of the delays after delays?………more to the story than meets the eye and possibly it is as Phil pointed out that Soros is along for the ride up to the end and then balks at participating in the meanwhile having established a massive short position………
     
    bottom line overall call from my gut is that this is an economic war conducted through finance and if the Greeks agree to sign it all off then that is sovereign capitulation and the Troika is making it pretty clear it is dictating the terms of surrender.

  290. roro

    dpast and Pharm………..regardless of my indecision one way or the other or the LTRO 2 i think there are some pretty ominous signs around none of which give me real confidence in being long………just common sense…….if you look at that article depast posted the authors also point out the market has become a stimulus junkie.
     
    we all have seen the results when the money spigot gets turned off……….that is when the real shit gets started and the fun begins……..cash buys lots of tickets to that thrilling ride………..and the runups are all practically identical and all you have to do is look at a chart for QE1, 2 and LTRO and the pattern is all the same………..then bang!

  291. jmm1951

    Corporate taxes
    This is what the US needs.From the Dominican Republic tax code:
     
    Businesses and corporations must pay a 1% annual tax on assets (Arts. 401 and 404) in two instalments due on April 30 and October 30 (Art. 405). For the purposes of this tax, all assets are taken into account, minus depreciation and amortization, except: a) stock holdings in other corporations, b) real estate in rural areas, c) real estate used for agriculture or animal husbandry, d) tax advances and e) provisions for bad debts (Art. 402).
    The tax on assets operates as a kind of minimum income tax. If the income tax paid by the business or corporation is equal or higher than the amount of the tax on assets, then the business will have no obligation to pay the tax on assets (Art. 405). If the income tax paid is less than the amount of tax on assets due, the business must pay the difference.
    New capital-intensive businesses may obtain a temporary exemption from this tax if certain conditions are met.

     
    Really I don't know whether this would work in the US or not, but I think the concept shows that there are probably hundreds of ways of attacking the problem of the federal deficit that would work if the Congress would just stop grandstanding and get down to discussing realistic solutions.

  292. Burrben

    freeflow / Canuck – Pizza
     
    Glad you enjoyed it!  You should have gotten the white and a regular and took half back to the hotel for late night, early morning snacks!
     
    Freeflow, you're right about Brooklyn pizza, by far the best.  Problem is most people won't take the time to go over there from Manhattan if they don't know public transit.  Di Fara's is the #1 place… but I doubted Canuck would make the effort since it wasn't a "pizza" trip.   I did a two day Pizza Tour about 3 years ago.  Ranks in the top 10 best two days of my life….(as long as you include the nights we spent at Avenue)…

  293. pakdog

    Pretty cool video of snowboarding in the dark.
     
    http://www.youtube.com/watch?v=U7nHdo5Bx9g

  294. roro

    Pharm,

     
    d-day for Greece………..looking more like it.
     
    if it CACs like a………

  295. newbie

    Canuck / Pizza
    I too have enjoyed reading the reports from the Big Apple. I've never been there, hope I get there sometime.
    My mouth has been watering as you and Phil and everybody else has talked about pizza and steak and italian food! Italian food (pasta) is one of my most favorite foods in the world.  Beer has not been mentioned, but beer  is available anywhere. But a big thick grilled steak, a big salad, a baked potato, some vegetables and rolls, all drowned out with some super cold high end beer is as good as it gets, to my pedestrian tongue.
    It's been nice reading some "warmth" or "color commentary" about a little bit of Real Life, sprinkled amongst all the usual commentary here about oil Futures and the collapse of Greece.
    Glad you had a good trip. I've always had the impression that going to NYC meant spending 24 hours a day being cognizant about getting knifed. Very encouraging that it wasn't like that for you.
    It was a nice reminder about what the whole point of working hard here trading markets is all about, specifically that it allows people to do things like go to NYC and spend a week enjoying culture, food, and the good life.
    Take Care.

  296. Canuck

    Burrben/Pizza,
     
    we scoured the upper and mid westside for pizza slices today (where my wife lived 20yrs ago) and all the old pizza joingts are gone, likely forced out by higher rents.  This trip did not allow a Brooklyn trip or NJ, but next time I will as I am convinced that, by my experience this trip, and all of your comments, the economics of real estate force these places to move and/or only the ones farther out could survive.  The ONLY decent place by the slice was the one I found by accident on day 1, Bella Vita on 58th across from the New York City Athletic Club on central park south.
     
    RORO,
    Thanks for recommending the Museum of Natural History – could have spent a week in there. 
     
    FREEFLOW,
     
    I know I had a preconcieved notion about life in a big city like this, and often thought about how to raise kids in a big city — but today I ran backwards and had a three year old chase me on his new tricycle; 
    met a father and daughter at a (mediocre) pizza shop on the upper westside, his wife was 8.5 months pregnant on 9/11 and she had to walk about 50 blocks home pregnant with this now beautiful 10 year old precocious girl (who loves acting and singing), his mother writes plays, he is a photographer,…  rich vibrant people with wonderful life stories. 
    Stuff and stories — this city is full of them.

  297. Canuck

    Newbie/Knifed,
     
    two main points. 
    One, I have likely been in more of the touristy and/or  wealthier areas, and therefore safer.
    Two, I am just under 6'5" and 230 lbs and athletic, so I may have a built in safety factor.  That being said, two guys with a knife and/or gun and I am in deep  trouble.

  298. roro

    Canuck……you're welcome. Coming from Lion's Bay I just had a feeling you'd like it.
     
    I used to hang out at the MNH……really, Hours and hours. I had a lot of trips to New York from Boston and kept a place on Horatio for a while.
     
    One time I brought my parents and put them up in a nice place on the Upper East Side so they could walk everywhere, and they literally spent a week between the Museum of Natural Histroy and the Metropolitan Museum of  Art, but mostly at the Met. Every night I met them for supper at some place a friend would recommend and they would be so enthusiastic about the day's adventures it was like they couldn't stop talking about all they had seen and done. They loved it.
     
    I never had problems and was back and forth for 10 years…….5'10, 170 ……….very nice memories of my times in New York. Very nice people too.

  299. kongen

    Crime in NYC – guess you guys don't keep up with the news.  It's way, way down, and had been going down for at least a decade.

  300. roro

    Canuck………one other thought since you are obviously a pro explorer; i never spent time in NJ except for trains to Baltimore or changing LAX redeyes in/out of Newark, but do have a deep insider NJ connection so let me know if you want pizza……….i'll put her up against Phil any day.
     
    btw………..thanks for asking.

  301. crussell14

    Phil,
    I own the DMND June 20/37 BCS which is actually quite a bit in the money because the  20 call is up and the short call is down so much. I am wondering if I just let it go a while or roll the 37 call down to 29 or so for a credit? Thanks   

  302. crussell14

    Phil
    when you own a bear put spread that goes against you when do you look to roll? I have a June expiration. Thanks

  303. newbie

    Canuck and kongen/NYC
    Understood, on both accounts.
    Thanks

  304. Phil

    Good morning!

    Gold/Scott – Gold is all things to all people.  To some extent, that's what makes it valuable.  Jewelry and industrial demand are down because it's too expensive but speculative demand is flying because it's too expensive and that then triggers store of wealth demand because the speculative demand "proves" gold is a good place to put money.  This all worked out so well when gold ran up to $1,932 last year that I'm sure it's just as fantastic an idea now that we've crawled back to $1,726 and the fact that it was $250 in 2005 shouldn't even begin to give us a clue as to gold's real value in calmer economic times.  Besides – we're not even at the 1980 inflation-adjusted high yet – and that worked out so well for those people:  

    wpid-EGCP_20100521_OuncesofGoldtoBuyOilandSP500-2010-05-23-14-37.png

    NYSE & Russell/StJ – They are the hardest to manipulate.  As you say, the others benefit from AAPL and the Dow is a joke anyway.

    Oil/Burr – Well I agree on that one but I don't understand why it went to $105.  If it turns out to be a blip and quickly corrects, that will make sense but there was nothing on Iran or anything other than that spill in the Mississippi to justify the bump on Friday.  China cut their reserve ratio to goose the economy and, of course, Greece is fixed but demand is clearly down in the US and probably heading lower in Europe.  

    Pizza/Canuck – Glad you're having fun.  If you want a change of pace, try brunch at Celcius in Bryant Park – as tomorrow's going to be nice, you can eat outside and watch the skaters.  Also lot's of cool little stores there – kind of like a flea market but with walls.  There's also the fancier (but not better) Bryant Park Grill or the Spice Market downtown.  

    Hit and run/Roro – Yep, that's the way to play oil and hopefully, one day, we'll catch the big ride down.  The last 3 times we were this high were good for drops back to $95 and the time before we hit $75 in Aug (but that high in April was $115).  

    Israel/Sparky – Barak (Deputy PM) was in Japan this week trying to get them to impose sanctions on Iran.  Israel would make themselves look like idiots if they push everyone to sanction Iran but then don't give it time to work.  I've also heard rumors that Iran is coming back to the table on nuke talks already and I do suspect that the reason for the spike (and the spill) was to jam prices up into the holiday weekend before things calm down again next week. 

    RRD/Pstas – $12.50 was our target price on them and earnings were delayed, which bothered me but it seems OK (I think they are now coming this Wednesday).  I don't see a lot of long-term growth but they make a nice dividend hold although, keep in mind that if the tax rules change on dividends, a lot of these stocks could get hammered.  Still, you can sell the 2014 $13 puts for $3.40, which is a net $10 entry and leave it at that (making 33% on net $9.60 at $13, which beats the $1.03 dividend).  You can add a buy/write of the stock at $13.23 and the Jan $12.50 calls at $2 and then you're net $7.83/8.91 plus the $1.04 dividend so it depends on what you'd comfortable with.  

    PBI/Pstas – I still have trouble figuring out how they hold their model.  Clearly EPS is declining and projected to decline further but not so far as to justify a drop back this low.  Again my concern is a general movement out of dividend stocks and they don't pay as much premium as RRD on short contracts so much less sexy overall.  In fact, I'd give them a pass. 

  305. Phil

    Thanks Burr:

    POMOs 20-day total

    Good article Deano, when history points back to Greece, will we be better off if it's as an example of what to do in a crisis or what not to do?  Either way, it seems pretty scary…

    Gold/Pastas – Grant makes the usual mistake of gold bugs – the assumption that gold is like a stock.  Gold is like a stock but like a stock that issues new shares constantly (mining).  It is being created all the time, like oil – and, unlike oil, since none of it is destroyed, there must be constantly increasing demand to meet the constantly increasing supply.  Fortunately, ETFs like GLD have created massive false demand by storing 1,300 TONS of gold – about 1% of the World's entire supply and about 1/2 a year's worth of output.  

    The really scary thing about gold is that, if we do have a crash – this ETF alone, dumping it's holdings (forced to by the declining price of gold as people cash out the ETF (if)) can completely destroy the price of gold for a long time.  While you may think your currency is unsafe (it is), it's bullet-proof compared to how quickly gold can fall from grace.  

    Article broke, Pharm.

    Destiny/DC – Destiny to do what?  Do we still all think that way?  Do we need to be number 1? What does that even mean?  The US has been #1, I guess since WWII and it costs us $1Tn a year (6% of GDP) to maintain our World Police force and, other than eliminating fascism, which we didn't do on our own, I'm not quite sure what the benefit is.  What's the end game here – are we going to let China take a turn as leader or are we going to fight them to our dying breath so we can "stay #1"?

    Doubling down/JMM – It works great when you are scaling in but you still have to have a point at which you quit.  If I sell those RRD 2014 $13 puts for $3.40 and RRD drops $2 to $11.23 and they go to $5.10 (price of the $15s) then I can roll down to 2x the $11 puts at $3.40 (price of the $13s now) and then if we drop another $2 to $9.23 I can roll down to 2x the $9 puts at $3.40 and then we're in 4x the $9 puts for net collections of 2x $3.40 + $1.70 (the difference) + 2x $1.70 = $2.12 per contract for new net $6.88.  

    So, if we like RRD and we're willing to allocate $10,000 to buying it long-term, we work backwards from our "worst case" net ownership of 4x at $6.88, which would be 1,450 shares and then we find we can afford to do 3-4 contracts in round one.  So we sell, if we feel like being aggressive, 4 of the 2014 $13 contracts for $3.40 ($1,360) and we've collected 13.6% of a full allocation over 2 years which is just about the 7.9% dividend you would get if you committed all $10K now and tried to protect the hell out of it.  

    This way, you are committing to buying just 400 shares at net $9.60 ($3,840) and, if you are doing this right – you will be DISAPPOINTED if RRD doesn't drop and let you buy 2x at a lower price.  When you are scaling in according to plan – it's great – when you are doubling down because you blew it on your entry and stretching the bounds of a proper allocation – it's a nightmare.  

    LRTO/Dpast – Yep, a Trillion Euros will do that for you.  Still, is this ALL we get from $1.3Tn?  

    DR Taxes/JMM – We need SOMETHING to stop the madness.  

    Knives/Newbie, Canuck – Guiliani really did clean up crime in the 90s – making an incredible difference in life in NYC and 9/11 has (for sad reasons) kept the police budget high during the recession but I was just in NYC yesterday and I already see the trash piling up (less frequent collections) and the cracks in the streets (repair cutbacks) and that means we're steps away from that death spiral that leads us back to higher crime rates (people are already out of work and out of food) if the economy doesn't get back on track soon.  

    So fire up those printing presses and let's keep NY safe (especially for us top 10%'ers).  

    DMND/Crussell – I think we've let go of $35 so picking up $1 and still having a $9 spread is not a bad idea BUT you could roll the $20s ($5.60)  up to the $26s ($2.70) and take $2.90 off the table AND roll the caller down to the $29s to take another $1.10 and you put $4 in your pocket with another $3 upside at $29, which would be $2 less than if you left the spread alone but you put the $4 bird firmly in your hand now.  

    Bear spread/Crussell – Depends on position.  See above, we talked about having a trading plan and an expectation timeline and not being more than 2 units off track (in the case of June, that would be months).  

  306. Phil

    5:04 AM Germany has drawn up plans for Greece to default and possibly leave the euro, the Daily Telegraph reports. Finmin Wolfgang Schauble doesn't believe the Greek government will be able to implement the austerity that it has pledged to, nor that the measures would anyway save Greece, although Angela Merkel still holds out hope

    5:11 AM While Germany is reportedly looking at how Greece canleave the euro, the country itself is doing its best to convince everyone that it can be saved, with the cabinet yesterday approving the latest austerity measures demanded by the Troika. All eyes are now on tomorrow's meeting of eurozone finmins.

     

  307. jmm1951

    Phil/Gold
     
    Excellent comments about gold. This would make a great standalone article for Seeking Alpha, but we would need to know ahead of time if you were about to publish as you would probably knock $50 per ounce off the price of that metal (and cause an epidemic of dental work in certain neighborhoods.) People certainly have some strange ideas about gold. It all started with the Golden Fleece, Golden Goose, Croesus, Midas, down to Columbus, the Conquistadors, Scrooge, The Forty Niners, the Klondike, Auric Goldfinger, etc.  and has got progressively worse. Wealthy soccer player David Beckham is, for example, also known as Goldenballs.
     
    Some people seem to believe that in the coming apocalypse you will be able to go down to Walmart to buy frozen strawberries and caviar and you will insert a gold coin into a Coinstar machine which will clip off the required weight of gold for your purchase. There is no shortage of other people willing to help them  fulfill their fantasies.

  308. jmm1951

    Phil/Doubling down put sales and working backwards on position size.
     
    Thanks that makes a LOT of sense. Funny how none of the books on investing for dummies, compleat idiots, marks, gullible fools, etc. mention these elementary strategies for opening positions in stocks.

  309. jmm1951

    Footlocker
     
    Occasionally you find a really fascinating business article, and this is one, which explains why being looted in a riot may actually be a good free promotion for certain types of business selling aspirational products.
     
     
    http://www.guardian.co.uk/business/2012/feb/17/foot-locker-brand-spells-trouble

  310. pstas

    Oil futures trading- Phil, you posted this short note the other day in answer to someone's question -
    You need to have at least 3 indicators that correlate with your premise of oil crossing below a key support line (usually .50 or $1 lines).  If you get your cross AND 2 of your 3 indicators are green – then make a bet and just keep a very tight stop on it
    Obviously, /DX would be a likely indicator- what are the others?

  311. roro

    Phil,
     
    correct me if i am wrong here but i fail to see the logic of Scauble's premise that "Greece is already bankrupt so a formal bankruptcy will have no negative consequences for other Euro members."
     
    ???
     
    not certain i see it that way although do not pretend to be close to Schauble in skill or experience however if Greece fails and Portugal, Spain and Italy are already distressed as is fairly obvious by the respective sovereign bond (soaring) yields of late then the logic follows if PSI are that much larger than Greece how can all of this be 'positive' for others?

    in other words, what is the upside for the markets here?…….i do not see it especially given equity markets are all trading at the tops of major ranges not seen since the summer of 2011, and on what exactly?…….the prospect for improvements in earnings?
     
    i really want to take a run at getting long but none of this makes sense . Schauble is probably a very smart man so if someone can please explain how this makes sense then thank you very much 100,000 times.

  312. Pharmboy

    Try again …..  Tax Receipts and Economic Expansion.

  313. crussell14

    Thanks Phil,
    like the DMND roll. Good call

  314. roro

    March 23 Greek default story……….the source also remarks that "GS and JP Morgan are 2 of the Wall Street banks that I have been told are in the loop on this one, and so it would be interesting to see their open positions."
     
    so far the information has be reliable before it was officially published yesterday and that includes the story posted at ZH

  315. roro

    Greek default…….that story ZH posted about the Primary Dealers being very LONG bonds in the "Bills" and "Under 3 Year" category (CASH) makes a lot of sense in the context of the possible Greek default story which seems to be getting traction for Sunday morning reading ahead of the EU FM meetings tomorrow.
     
    http://www.zerohedge.com/news/primary-dealers-quietly-brace-impact-total-dealer-treasury-holdings-record-high

  316. roro

    pstas………OIL………..one of the primary indicators i will look for to get short OIL is a Greek default or high probability for it which is looking more like the flavor of the week upcoming.

  317. Pharmboy

    roro – I have often said here that no matter where the market heads, Treasuries do NOT lie!  1.5% on 10yrs is my target…if they get there in a hurry, I would not be surprised if 1% is next……

  318. roro

    Pharm………i had some short USDs opened late last week and i REMEMBER you telling me EXACTLY that about the UST 10 Y yield. i closed out and went short several equity indexes a few minutes before friday's close. the more i read about this 'subordination' of sovereign bonds and the plans for a Greek default and the Primary dealers in cash and leaked information the more it looks like a sell off is coming or a top really is in place, at least for the interim.
     
    Schauble's assurances or not, i am not assured that other Euro members will not be affected by a default more so with the subordination which i think is a pandora's box unless it is all part of a bloodless(so far) financial coup d'etat on a grand scale
     

  319. jmm1951

    Schauble is probably a very smart man
     
    He is a politician, so he must be smart!
     
    It may also be that he is looking at the situation from a different perspective, perhaps not terribly concerned about the short term effect on stock markets, but more on the long term future of German prosperity.

  320. roro

    jmm…….no doubt you are spot on with that score, and it looks like the germans are pulling away from the 'subordination' maneuver , possibly to distance the BUBA from litigation soon to be visited upon the ECB
     
    "Litigation Arbitrage
    It appears that for many hedge funds, buying Greek debt (and ostensibly Portuguese, Irish, and so forth), at absolutely firesale prices, is one of two things: i) an attempt to build a blocking stake as discussed above, or ii) a means to generate an actionable adverse claim in international litigation  (following a cram down or any other disputed subversion of creditor rights), which as shown previously, is on an annualized basis arguably the most profitable type of transaction ever."
     
    and,
     
    "Needless to say, and contrary to conventional wisdom, the incentive for funds is to find a pretense to sue at all costs, so what Greece is doing is actually making the HF cartel's life that much easier, especially when Greek bonds can be bought at just over 20 cents on the dollar."
     
    http://www.zerohedge.com/news/subordination-101-walkthru-sovereign-bond-markets-post-greek-default-world

  321. Pharmboy

    Well, damn….I just lost my post.  I want to apologize for not having any write ups over the past month, as I am having a problem finding anything that is really worth our while.  I am not bullish ( :) ), and I will not put my capital to work – hence I cannot post what I do not believe in.  I have a few I am watching (ENDO being one), and others I want to revisit (CRIS), but overall, I am just plain not in the mood to stick my neck out there.

    In SWW, I have been doing very conservative hits by selling puts, but the rest is here on the daily chat.  My overall portfolio of biotechs have kept my investing afloat, as shorting this casino is not doing me any good…..either case, my core stays the same with PLX and now SGEN being a huge chunck of it.  IMGN and DEPO I am slowly reducing by 1/4, but still big portions.  ARIA I am completely out of, as I think they are too big for their britches right now, but would love for them to get back to 12 or so.  CRIS & AMRN are steady as she goes (medium size positions).  EXEL and YMI I am slowly accumulating.  IRWD, INFI, TSRX, GTHP, CERS, NSPH are small.  VRTX, HSP, AVEO, MRX, GILD are all owned by sold puts or smallish buy writes.  MRK and BMY are my big boys. 

     

    Hope this helps, and I will have something in the next month or so….patience is the key, as I see the biotechs starting to roll a bit, and they should be my gauge to market conditions….although the spring and summer tend to be slow for investing in them, thus a good time to start buying for the fall run…..  Good rest of the weekend to all….

  322. Pharmboy

    In addition, don't hesitate for any newbies out there to ask about other biotech/pharma companies or ones noted above that may be of interest to you…..I always have an opinion, right or wrong as it may be!  PLX is due in May for the FDA….and that will be a doozie for me, and I will most likely have a risky option in the next week or so for us to play into that event.

  323. kinkistyle

    So is AAPL (and everyone else who uses them) going to eat the higher costs of goods sold from the 25% increase in wages at Foxconn or are they going to try and pass it on to the consumer?

  324. kinkistyle

    Doesn't seem like this CHK news has been mentioned yet:
     
    Chesapeake looks to sell Texas, New Mexico fields for $12B

     
     
     
    "Chesapeake Energy Corp.(NYSE: CHK) is preparing to sell its oil and gas fields in Texas and New Mexico worth as much as $12 billion.

    Bloomberg reports that Chesapeake, the second-largest U.S. natural-gas producer is facing a cash squeeze and continued pressure from falling gas prices.

    The company is looking to unload gas fields in the Permian Basin region, and said it would also receive about $2 billion in the next 60 days from the sale of advanced output from Texas and Oklahoma.

    The company is looking at a $3.5 billion gap this year between drilling costs and cash flow, Bloomberg reports, according to analysts Raymond James & Associates Inc. "

  325. jthoma

    Pharmboy- I appreciate your predicament- when one is concerned about the market, in spite of the current giddy euphoria being exhibited, and the games being played by the high frequency traders, it is hard to communicate one's believes. Being out of step wt times with the world around you is a difficult position. As Phil say, it is times like this when one who reads and actually gives thought to the world as it currently exists- we are presented with a dilemma. Thanks for all your thoughts and help at all times!

  326. kinkistyle

    Oops.
     
    U.S. Unemployment Increases in Mid-February

     
    "The U.S. unemployment rate, as measured by Gallup without seasonal adjustment, is 9.0% in mid-February, up from 8.6% for January. The mid-month reading normally reflects what the U.S. government reports for the entire month, and is up from 8.3% in mid-January.

    Underemployment, a measure that combines the percentage of workers who are unemployed with the percentage working part time but wanting full-time work, is 19.0% in mid-February. This is higher than the 18.7% recorded for January, and is up significantly compared with January's mid-month reading of 18.1%.

    Regardless of what the government reports, Gallup's unemployment and underemployment measures show a sharp deterioration in job market conditions since mid-January. This is consistent with a similar decline in Gallup's Job Creation Index to +13 in the second week of February, from +16 for January. It is also consistent with an economy that continues to struggle with modest growth, particularly as gas prices surge. Further, it suggests that it is premature to assume the condition of the economy will not remain a major issue for Americans both financially and politically in 2012."

  327. pstas

    Pharm- what is your strategy on SGEN? If I were to sell puts what month/strike would you suggest?

  328. alik

    Pharm/HGSI Hello Pharm, Do you have an opinion about HGSI? It seems to me that they are quite beaten down yet they have an approved drug and no competition. But I am not a specialist. What do you think?

  329. pstas

    SGEN- I see you already adddresed this Mar and June.

  330. jmm1951

    Pharmboy/ZIOP
     
    Do you have any opinions on ZIOP? I bought a small position in that stock after having realized a large gain in CLDA after their new antidepressant was approved. ZIOP is also also associated with billionaire entrepreneur J. Roland  Kirk.

  331. Burrben

    Phil / 25K – SCO 35 Short Puts  
     
    Ok, this doesn't make much sense to me, but I was assigned on the 10 short 35 puts we had in the 25K.  SCO ended ABOVE 35 on friday, but when I open up IB I see it right now as 34.82×35.03.  
     
    It's not a big deal that I was assigned, I'm just wondering WHY?  If it closed over 35, but after hours it may have traded down, could someone still put in an assignment?
     
    What is the policy in the 25K?  Pretend it expired, or hold 1000 SCO at 35 on Tue open?  

  332. zeroxzero

    MBS are back in town, and the Big Short is morphing into the Great Long, populated the the same cast of characters.  http://dealbook.nytimes.com/2012/02/18/bonds-backed-by-mortgages-regain-allure/?hp

  333. pakdog

    Iran's import cuts to France and Britain more symbolic than substantial. Their actions look increasingly haphazard and desparate. And are the US and Israel coordinating in a Good Cop – Bad Cop act on Iran with the US as the voice of reason urging patience and caution, and working to keep the snarling Bad Cop, Israel, under control? Whether it's deliberate or not it could be very effective in pressuring Iran to accept the transparent monitoring of their nuclear program that's needed.
     
    "France bought only 3% of its oil from Iran last year, Britain no longer imports any Iranian oil"

    http://www.nydailynews.com/news/world/israel-urged-attack-iran-britain-france-cut-iran-oil-exports-article-1.1025442#ixzz1mstYamrM

  334. Phil

    Good morning!

    I guess Greece must be super-fixed now because the Futures are up over half a point and oil is $105.32 with gold at $1,737 and the Dollar at 79.20.  The Euro is $1.3209, Pound $1.5871 and a whopping 79.52 Yen just to buy $1.  

    Silver $33.57, copper $3.769, nat gas $2.655, gasoline $3.0547.  

    Asia is up about half a point but the big excitement seems to be that Japan and China have agreed to put in more money through the IMF to bail out EU debt – so that fixes everything with MORE FREE MONEY!!!

    Japan and China "will coordinate closely and will jointly respond" if the IMF asks for more cash to help it deal with the eurozone debt crisis, Japan finmin Jun Azumi says while on a visit to China. Jun Azumi didn't say how much either country would put in, although it would help if Europe could work out a solution.

     

    Japan Posts Largest Trade Deficit on Record

    Japan posted a record $18.5 billion merchandise trade deficit in January as a global economic slowdown and the strong yen hurt exports and fuel imports continued to increase.

     

    China Loosens Bank Requirements

    Germany backs away from the idea it was ready to nix the Greek bailout no matter what promises come out of Athens and futures markets are lit green on Sunday evening. S&P 500 +0.7%, German Dax +1%, euro +0.7% vs. the dollar, April WTI crude +1.5% (to $105.16), gold +0.5%.

    While Germany is reportedly looking at how Greece canleave the euro, the country itself is doing its best to convince everyone that it can be saved, with the cabinet yesterday approving the latest austerity measures demanded by the Troika. All eyes are now on Monday's meeting of eurozone finmins.

     

    Europe Faces Larger Greek Bill

    The IMF is expected to contribute just $17.07 billion to a second Greek aid package, leaving euro-zone governments to provide a much bigger share of funds than they did in the euro zone's three earlier bailouts.

     

    IMF Draft Sees Greek Debt Reaching 129% of GDP in 2020

    The IMF now expects Greece's debt to reach 129% of the country's gross domestic product in 2020, three people with direct knowledge of a draft debt-sustainability analysis put together by the fund said on Sunday.

    I've been having meetings all weekend and will be having more tomorrow at the Money Show in NYC but back to normal on Tuesday.  

  335. Phil

    Wow, China is truly magical:  

     

    Ireland Hails Xi's Visit as a Vote of Confidence

    China's Vice President Xi Jinping visited the Irish capital in a three-day visit, which the Dublin government says is an exceptional vote of confidence in Ireland's economy.

  336. Phil

    Gold/JMM – Almost as magical as China.  Did you know Chinese people like gold.  Say no more…

    Elementary Strategies/JMM – I do find that amazing too.  I hope people are putting these things in the Wiki so that some day we can assemble a book of this stuff.  

    Getting looted/JMM – Like they say, "as long as they spell your name right – it's good publicity." 

    3 Indicators/Pstas – It's not the same 3, it's whichever 3 make strong signals with significant crosses of their own to watch.  So, at the moment, the Nasdaq (/NQ) is at 2,598.25 so I'd watch them not to go over 2,600.  The Euro is at $1.32078 so I want to see them below $1.32, the Dow (/YM) is at 12,994 so I want to see them below 13,000 and the RUT (/TF) is 834.60 so I want to see them stay below 835.  If we get the Euro below $1.32 (and the Dollar is currently 79.21 for reference but not a good point of resistance except that we certainly don't want to see it below 79.20 to short) – then, as long as 2 of our 3 indexes are below the line, we can short the 3rd as they cross their line or short oil below $105.25 (now $105.29) until and unless 2 of 3 of our indexes cross back over.  

    So, each time, you have to find a few things to watch which each have some resistance point you can benchmark and, if there aren't at least 3 things you can confirm with – don't make the trade.  

    Greece/Roro – I don't agree with that premise either.  Greece is obviously bankrupt but hasn't declared it but that's like saying AIG or LEH or Bear Stearns were "obviously bankrupt" – there's a huge difference between how the stock is treated the day before and the day after they are declared insolvent, right.  They don't actually have to go bankrupt either (AIG didn't and BSC technically didn't) – once sentiment decides you are dead – THEN you are dead.  The "upside" is based on the very bad math that if Greece can be "fixed" then Portugal, Ireland, Italy, Spain, France, the UK, Japan and the US can be fixed as well (all by Germany and China, presumably).  

    The reality is though, that if all these countries are going to just print money (and Japan pledging to bail out anyone is nothing more than money-printing) – then a wave of inflation will eventually wash over the World and wipe out all debt and we will, in fact, be "saved" – from the debt crisis – and then we begin the inflation crisis.  Usually someone steps in and starts a World War at that point so this should be a really fun ride!  

  337. Phil

    Thanks Pharm – Patience is key – also wearing thin at this point with this madness.  

    Ah, those shorts we discussed above are looking good, Dow (/YM) still playable down at 12,987.  

  338. Phil

    Foxconn/Kinki – It's not just AAPL, it affects any companies using Foxconn and it's spreading through China.  Wage inflation is the key to real inflation that we've been expecting for ages but these things are very slow to pick up steam.  Wage inflation usually leads to margin pressure first, then price increases and then more wage inflation etc…  At the moment, I don't think raising Foxconn workers from $300 a month to $400 a month is going to mess up AAPL's bottom line by enough to make them charge $514 instead of $499 for an IPad (as labor (up 33%) is 10% of the cost). 

    CHK/Kinki – Interested but makes sense for them to sell underperforming assets as they are cutting capacity anyway and probably don't expect demand to come back for a while.  

    Galup/Kinki – Thanks but I was trying to get more bullish!

    SCO/Burr – That's going to suck as oil is up another $1.50 since then but SCO closed at $35.04 and should have expired worthless.  I guess if it trades after hours then someone could have exercised you but that's super-rare.  It does make sense though since their goal is to squeeze the shorts and forcing assignment is a good way to panic an open on Tuesday.  Check with your broker but you should have a few days to settle and, of course, the logical thing to do is sell the SCO and sell more puts as you still made money on the short puts the first time, just not as much if you get caught below $35 when you dump the stock.  Now the bid/ask on SCO is $34.64/39.50 – you can drive a truck through that!  

    IRAN/Pak – They are now highly motivated to max out the price of oil to make up for the oil they are not selling.  G20 need to realize this plan won't work if oil goes to $110 – they need to cut Iran's sales opportunities (accomplished) AND keep prices down.  

  339. Phil

    Didn't we only used to have these note auctions once a month?  Now it's every two weeks…

     

    A Primer on the Euro Breakup

    Photobucket

     

     

    Tuesday Feb 22
    US Holiday: Presidents' Day

    All Markets Closed

     

    Narayana Kocherlakota Speaks
    1:00 PM ET

     

    Redbook
    [Report][Bullet
    8:55 AM ET

    Thomas Hoenig Speaks
    12:30 PM ET

    Charles Plosser Speaks
    1:30 PM ET
     

     

    Weekly Bill Settlement

    Jobless Claims
    [Report][Star]
    8:30 AM ET

    James Bullard Speaks
    9:15 AM ET

    New Home Sales
    [Report][Star]
    10:00 AM ET

    Money Supply
    [Report][Bullet
    4:30 PM ET

     

    GDP
    [Report][Star]
    8:30 AM ET

    Janet Yellen Speaks
    1:30 PM ET
     

      Equity Settlement
    2-25-11
    Equity Settlement
    2-28-11
    Equity Settlement
    3-1-11
    Equity Settlement
    3-2-11
  340. Phil

  341. Phil

    Notice it's hawks on parade next week, ahead of the auctions.  I think TLT up may be a good play again!  

  342. zipla

    SCO/Burr & Phil,
    Just saw the post about getting assigned and checked my account (Fidelity). And I got assigned too. Time on it is Saturday about 11. So looks like we might all have got hit with this. I’ll phone them tomorrow and see what they say.

  343. dpastramas

    SCO / Burr & Phil – On my case the long call $35 that expired on Friday got exercised and now i am stuck with shitload of SCO.  Was under the impression that if a long call expired out of the money i wouldnt risk getting the stock.  Next time i will close all expiring positions no matter what.

  344. knightpilot

    I too am now the proud owner of masses of SCO! Luckily I was sitting on enough cash that it isn’t a true disaster, but not excited for Tuesday. I am thinking my gains from the calls and puts I sold will be eaten by the time I get out of it. Oh well. Looks like I was hit after hours.

  345. dpastramas

    Knightpilot / i am not so lucky, the SCO exercise chewed up most of my margin. i am now in negative margin, will dump them at the open tomorrow to release cash

  346. Burrben

    Dpastramas / Long SCO call
     
    If SCO closed at 35.04 then your long call didn't expire worthless, it was 0.04 in the money.  So I think it's correct that you got assigned SCO at 35.  Phil, correct me if I'm wrong.
     
    The 25KP had 10 Short 35 SCO puts, that DID expire out of the money, but since it traded down after hours I guess all those smart people assigned us.   Anyway, for the 25KP I think we SHOULD enter this as a Assignment scenerio.  It's a good learning experience for all of us, and shows that you can't cut it so close.  We should show 1000 SCO at 35 in the Open Positions.

  347. dpastramas

    SCoi / Burrben – Oh damn you are right! I got confused. I thought that since the SCO finished lower than the strike price plus the initial premium (around 38.5) it would be considered out of the money. But since it finished above 35 it is ITM.  Damn, you are right. Thanks so much. As you said valuable lesson for the future.  You get screwed once then you remember it forever.

  348. wappler

    Re SCO assignment:
    I just looked up the definition of ‘Stock option expiration’ in Investopia and it says the following: “The last day to trade the option is the third Friday of the expiration month, but the actual expiration Time is not until the next time (Saturday). A public holder of an option usually must declare their notice to exercise by 5:00 pm on the Friday”.

    Since SCO was down to 36.60 after hours and close at 34.81 at 5pm, some folks must have hit the assignment button shortly before 5 pm, at least that’s how I understand it.

    Live and learn, I guess – if the option is ATM it may be better to close the trade before before 1pm rather than being exposed over the weekend…

  349. wappler

    Sorry, definition should read “not until the next DAY (Saturday). Not enough coffee, I guess ;-)

  350. dpastramas

    Chasw – Thanks for the definition. I read it to in the past.  However what confused me was :
     
    A public holder of an option usually must declare their notice to exercise by 5:00 pm on the Friday
     
    I didnt declare anything, was just holding the long call and got the stock nonetheless. Well, i agree with you, will sell everything by expiration day to avoid surprises

  351. Burrben

    Dpas / You were the victim of a Automatic Exercise…
    http://www.888options.com/help/faq/exercise.jsp#6

  352. dpastramas

    FU Automatic exercise!!! 
     
    Thanks Burrben. Will contact optionxpress tomorrow to disable automatic exercise. Never again!!  (except for Aapl, only stock i wouldnt mind owning :-) )

  353. wappler

    Dpas.
    I did not realize you were long a call – the definition above only explains why in the case of a short put you could be assigned stock even though the instrument closed above the strike at 1 pm.

    Guess I'll have to read through Burrben's link to learn about the rules for automated exercise – in my simple world an option is called just that because one could choose whether or not one wanted to own the stock, but apparently this is not always the case!

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