Guest View
User: Pass: | become a member


Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Monday Monetary Madness – This is what the Yield’s Like when Fed Doves Cry

 

 

 

Why do we scream at each other
This is what it sounds like
When doves cry – Prince

It's no coincidence that this week we will be hearing from Fed Governors Kocherllakota (1pm Tues), Hoenig (12:30 Weds), Plosser (1:30 Weds), and Bullard (9:15 Thurs) ahead of our 2-Year Note Auction (1pm Tues), 5-Year Note Auction (1pm Weds) and 7-Year Note Auction (1pm Thursday) as the Fed needs to bring out 4 of it's 5 most hawkish members to talk up the Dollar (by talking down QE3) to keep those rates paid as low as possible for Treasury

Once the Hawks drive the rates down and the notes are sold, the Doves will once again be released to talk them back up by extolling the glories of QE3 – completely reversing whatever was said before just as the Hawks will once again be called upon to reverse what the Doves say at a later date – when they need rates to come back down.  The joke of it all is that traders will react to each statement, every time, as if it's a "game changer" and adjust their positions to reflect the new reality of the moment.  It reminds me of a quote from Orwell's 1984:

As soon as all the corrections which happened to be necessary in any particular number of The Times had been assembled and collated, that number would be reprinted, the original copy destroyed, and the corrected copy placed on the files in its stead. This process of continuous alteration was applied not only to newspapers, but to books, periodicals, pamphlets, posters, leaflets, films, sound-tracks, cartoons, photographs – to every kind of literature or documentation which might conceivably hold any political or ideological significance.

Day by day and almost minute by minute the past was brought up to date. In this way every prediction made by the Party could be shown by documentary evidence to have been correct, nor was any item of news, or any expression of opinion, which conflicted with the needs of the moment, ever allowed to remain on record. All history was a palimpsest, scraped clean and reinscribed exactly as often as was necessary. In no case would it have been possible, once the deed was done, to prove that any falsification had taken place. 

After all, what is "the truth"?  On the left we have a chart of industrial output ex-construction from Econoday.  That would seem like a pretty definitive fact, wouldn't you think?  But it's not a fact if nobody talks about it!

December industrial output dropped 1.1 percent on the month and 2.0 percent on the year. Capital goods production was down 0.8 percent while intermediates slid 0.7 percent. Durable consumer goods (0.2 percent) managed a small gain but nondurables were just flat and energy contracted 2.0 percent. Regionally, much of the damage was caused by Germany where output slumped 2.7 percent, but France (down 1.3 percent) also struggled badly. Italy saw a much needed 1.4 percent gain but its second successive increase still failed to make up for a near-5 percent plunge in September. Spain advanced 0.9 percent, only its first positive reading in four months. Among the smaller member states, Greece witnessed a 2.4 percent monthly decline while Portugal was down 1.6 percent.   

That seems pretty bad, doesn't it?  As does this chart of EMU GDP which is in a horrific downturn and GDP for all of Europe CONTRACTED 0.3% in Q4 and those austerity measures for the PIIGS are only just starting to kick in while we are, in fact, CELEBRATING the complete subjugation of Greece and it's people to the will of the Troika and the Banksters who pull their strings.  national statistics showed a mixed, and generally poor, performance by the larger member states. Germany suffered a 0.2 percent decline on the quarter while Italy was down 0.7 percent and Spain 0.3 percent yet none of this even slowed the rise of oil this month as it flew from $95.44 at the beginning of February to $105.28 this morning – up 10.3% in just over two weeks!  

It wasn't the US GDP that cheered up the markets, fourth quarter flash gross domestic product slipped 0.2 percent on the quarter — the first contraction in real GDP since January through March 2009. The third quarter was revised to show a slightly stronger 0.6 percent gain and lowered workday adjusted annual growth by 0.7 percentage points to 2.0 percent. As usual with the flash report, the Federal Statistics Office provided no details behind the headline figures but it did indicate that investment made the only positive contribution to quarterly growth and that net exports were a drag.  

The Times of the nineteenth of December had published the official forecasts of the output of various classes of consumption goods in the fourth quarter of 1983, which was also the sixth quarter of the Ninth Three-Year Plan. Today's issue contained a statement of the actual output, from which it appeared that the forecasts were in every instance grossly wrong. Winston's job was to rectify the original figures by making them agree with the later ones.

As for the third message, it referred to a very simple error which could be set right in a couple of minutes. As short a time ago as February, the Ministry of Plenty had issued a promise (a "categorical pledge" were the official words) that there would be no reduction of the chocolate ration during 1984. Actually, as Winston was aware, the chocolate ration was to be reduced from thirty grams to twenty at the end of the present week. All that was needed was to substitute for the original promise a warning that it would probably be necessary to reduce the ration at some time in April. 

Our expectations are played with and adjusted by our own Trioka of Big Business, Government and their puppet Media and the FACT that Asia's Q4 GDP is even WORSE than the US and Europe's doesn't even rate a mention in our Mainstream Media, because it does not fit the narrative of the new bull market, of Greece being "fixed" and the joys of austerity that is being rammed down the throats of all the World's downtrodden masses – yearning for TV.

Fourth quarter gross domestic product in Asia/Pacific dropped 0.6 percent and was down 1.0 percent when compared with the same quarter a year ago. On an annualized basis, GDP contracted 2.3 percent. For the year 2011, GDP dropped 0.9 percent after expanding 4.4 percent in 2010.  Yes, there was Fukushima but wasn't that supposed to come back at some point?  At the moment, the Asian economy looks like it's been sealed in concrete as well.  

 "Who controls the past," ran the Party slogan, "controls the future: who controls the present controls the past." And yet the past, though of its nature alterable, never had been altered. Whatever was true now was true from everlasting to everlasting. It was quite simple. All that was needed was an unending series of victories over your own memory. "Reality control," they called it: in Newspeak, "doublethink." 

Well, that's enough bearishness from me!  How about that Economy, huh – gooooooooooooooo OIL!!!!  I see the Dollar plunging to 78.95 this morning, down from 79.60 on Friday (1%) and the Futures are up almost 1% and oil is up another 2%, almost at $106 and gold is $1,735 so all must be well in the World – bless Big Brother…

"Don't you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it. Every concept that can ever be needed will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten." 

SPY 5 MINUTEActually, we were shorting the pumped-up Futures in Member Chat this morning (just don't mention it to HomeSec!) as Friday's action was a page straight out of Market Manipulation 101 and I share David Fry's frustration as we were both feeling very good about our bearish bets until just after 11 on Friday when yet another low-volume rally took us back to the low-volume targets set in the Futures

Despite our EXTREME skepticism regarding this rally, TECHNICALLY it IS a rally and we continue with our February strategy of adding one more bullish position for each day the Dow holds 12,750 (now 13,000) that we initiated back on the 2nd, where our initial plays were the very aggressive FAS spreads – one of which expired Friday (Feb $77/80 bull call spread at $2, selling $75 puts for $1.50 for net .50) up 500% and the other (March $75/80 bull call spread at $3.05, selling $70 puts for $3 for net .05) is well on-track for the full 9,900% potential gain on cash with FAS currently at $91.86.  

Both of those trades make 50% if you did the bull call spread without the offset and that's not so bad if you don't have margin – that's the kind of trades we like to get into when we're forced to take positions we don't really believe in.  Another trick I mentioned that day was offsetting the same plays with stocks that you REALLY want to own if the market does do what you think and drops 20%, instead of rising 5% as it has SO FAR this month.  Our offsetting short puts were:

  • CHK Jan $17.50 puts sold for $2.05, now $1.20 – up 41%
  • GE 2014 $17.50 puts sold for $2.50, now $1.44 – up 42%
  • GOOG June $450 puts sold for $4, now $2.85 – up 28%
  • ISRG Jan $310 puts sold for $10, now $8.80 – up 12%
  • KO Jan $62.50 puts sold for $3, now $2.60 – up 13%
  • MO 2014 $23 puts sold for $2.15, now $1.85 – up 14%
  • PFE 2014 $20 puts sold for $2.65, now $2.75 – down 2%
  • XOM Jan $65 puts sold for $2.50, now $2.30 – up 8%

XOM is still a great offset to bearish energy bets.  The stock is at $85 and those $65 puts are almost 20% out of the money – so nearly margin-free in a PM account to use those offsets against aggressive bearish plays, like our SCO longs.  Nonetheless, we were not done being bullish in February 2nd's morning post as we needed lots of bullish trade ideas for our one a day plan, our other three ideas were:

  • CHK 2014 $15/20 bull call spread at $2.65, selling $15 puts for $2.35 for net .30, now $1.35 – up 450%
  • AA July $8/10 bull call spread at $1.40, selling 2014 $10 puts for $2.10 for net .70 credit, still .70 credit – even 
  • AMZN Jan $170/180 bull call spread at $5.20, selling Jan $110 puts for $4.15 for net $1.05, still $1.05 – even 

So we have two that are still playable and one that is up 450% already – there's always a fresh horse to move to, right?  On Friday, the 3rd, I ran short on time in the morning and was only able to put up the first 3 bullish trade ideas in the main post, adding the rest in our morning Alert to Members.  Those were:

  • BA 2014 $60/80 bull call spread at $11, selling 2014 $65 puts for $8 for net $3, now $3.35 – up 11% 
  • F 2014 $8/12 bull call spread at $2.40, selling $10 puts for $1.50 for net .90, now $1.40 – up 55%
  • GS 2014 $80/110 bull call spread at $20, selling $90 puts for $12.50 for net $7.50, now $6.75 – down 10%
  • SVU at $7.10, selling 2014 $7 puts and calls for $3.70 for net $3.40/5.20 (2nd number being your average on 2x if put to you below $7), now net $3.26 – on track (within 20%)
  • HPQ 2014 $20/30 bull call spread at $5.60, selling $23 puts for $3 for net $2.60, now $3.26 – up 25%
  • SKX July $11/13 bull call spread at $1.20, selling $11 puts for .90 for net .30, now .40 – up 33%
  • 2 BTU 2014 $30 puts sold for $5.40 ($10.80), buying 1 Jan $40/50 bull call spread at $3.20 for net credit of $7.60, now $8.60 to buy back – down 13%

Still a few that are good to buy.  Even SKX, although up 33% is "only" up .10 out of a possible $1.70 so plenty of room to run is SKX holds $13 through July expirations (now $13.04).  This is how we get bullish in our long-term betting – step by step with long-term plays where we can deploy serious capital while we offset the short-term risk with more bearish shorter-term plays with MUCH LESS capital.  Fighting the Fed is not our job – just a hobby

On Tuesday, the 7th, the Dollar was also back down at the 79 line and, in that morning's post, I discussed our trade idea for CSTR from the previous Member Chat, which was the Jan $45/60 bull call spread at $6, selling the Jan $42.50 puts for the same.  That net $0 trade did very well as CSTR rocketed on earnings with the bull spread now netting $8 and the short $42.50 puts down to $4 for net $4 of profit (so far).  What's the theme of these plays?  We identify companies with strong fundamentals that we DO want to own, even if the market turns down and we construct trade ideas to give us entries at or below the current prices.  

Could we have done better by being more aggressively bullish?  Of course we could – but we sleep a lot better this way and the returns are just fine as they are.  On Wednesday, the 8th, I was unable to find anymore bullish plays I liked but I reviewed the ones above in the morning post saying:

So let's not fear the rally.  Of course we balance out our winners with a few bear hedges (see yesterday's Member Chat for TZA spread) to lock in some of our quick gains.  Also, there's nothing wrong with taking some cash back off the table here as this "rally" is just ridiculous and, if the tide comes in this week or next, we'll be thrilled to get back to cash but, if we're going to head up forever – we can do this week after week so we're not going to miss much by sitting out a few! 

The next day (Thursday), the BOE performed more QE of their own on a massive scale so we went back to the well on DMND, which had just fallen back to $20.50 (now $24.50 again, up 20%) and I re-cast our One Trade for 2012 on BAC and we also jumped on IRBT in our morning Alert to Members as that stock got slammed down to $25 and we were able to sell the Sept $25 puts for $3 for a net $22 entry and although IRBT is back to $26, those puts are now $3.30 so down 10% and I still like them for a net $21.70 entry.  

We don't like to be bullish into the weekends – although Black Monday never does come – and that Monday I found nothing to be bullish about but last Tuesday (14th), on Valentine's day, we liked EXC and got back on our bullish horse (partying like it's 1929) on Wednesday morning with the following:  

  • ABX Jan $43/52.50 bull call spread at $4.40, selling $40 puts for $3.05 for net $1.35, Still $1.35 – even
  • SPY Jan $115/125 bull call spread at $7.25, selling $120 puts for $6.85 for net .40, now $1 up 150%
  • BAC Jan $5/7.50 bull call spread at $1.75, selling $7.50 puts for $1.20 for net .55, now .53, down 4%

In the morning Alert to Members, we added 3 very aggressive FAS trade ideas as we were already set to cash in our first 500% effort from way back on the 2nd.  Those worked out great as we caught the week's lows, around $86.50 and, as with the first set, we added bullish offsets on a few stocks we REALLY wanted to buy if they got cheaper:  

 

  • FAS March $70/75 bull call spread at $4.20, selling March $75 puts for $2.60 for net $1.60, now $3.20 – up 100%
  • FAS March $80/85 bull call spread at $3.30, selling $71 puts for $4.10 for net $1, now $2.85 up 185
  • FAS April $85/95 bull call spread at $5.10, selling $71 puts for $4.10 for net $1, now 4.85 – up 385%
  • GS Jan $80 puts sold for $5.10, now $4.70 – up 8%
  • GS Apr $100 puts sold for $2.35, now $1.65 – up 30%
  • EDC March $125 calls sold for $3.20, now $3.70 – down 16%
  • XOM Jan $70 puts sold for $3.30, now $3 – up 10%
  • DMND March $22.50 puts sold for $2.30, now $1.45 – up 37%

That was bullish enough to last us another 10 days so, in Thursday morning's post, we looked at two short trade ideas we had picked up after the Fed Minutes on Wednesday (see Stock World Weekly) gave us no clear indication of QE3 and our new disaster hedges were:  

 

  • SQQQ March $12/14 bull call spread at $1, selling TZA March $18 puts for $1.03 for a .03 credit, now .35 credit – down 1,100%
  • TZA March $19/23 bull call spread at $1.05, selling TZA March $18 puts for $1.03 for .02, now .52 credit – down 2,500%

Boy, when these spreads go bad, they REALLY go bad.  Of course, as long as we only sell short puts on positions we REALLY want to own as a long-term hedge, no big deal and TZA is actually at $18.34 so it's all premium with the Russess testing our 835 line and still well below it's breakout at 851 – at which point we probably would no longer REALLY want to be ultra-short on that index!  

There was just no way I was able to come up with another bullish play last Friday, into the long weekend and we pressed our oil puts in Member chat and then could only sit back in horror as oil was jammed up from $103 to $105.50 in after-hours trading.  Today, all we can do is watch and wait on our option positions as the US markets are closed but Europe is up about a point as we wait for the announcement that Greece is fixed…. again. 

I promise to be nice and bullish tomorrow if our levels hold – but I can't promise I'll like it!  

The voice from the telescreen was still pouring forth its tale of prisoners and booty and slaughter, but the shouting outside had died down a little. The waiters were turning back to their work. One of them approached with the gin bottle. Winston, sitting in a blissful dream, paid no attention as his glass was filled up. He was not running or cheering any longer. He was back in the Ministry of Love, with everything forgiven, his soul white as snow. He was in the public dock, confessing everything, implicating everybody. He was walking down the white-tiled corridor, with the feeling of walking in sunlight, and an armed guard at his back. The longhoped-for bullet was entering his brain.



He gazed up at the enormous face. Forty years it had taken him to learn what kind of smile was hidden beneath the dark moustache. O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother. - 1984 by George Orwell


Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!

  1. jromeha

    Phil – Ive been stuck in a transient tent in a snowstorm at Bagram airfield the last few days…Not in the best mood. But you can cheer me up by helping my bank account out :) . With your premise of the Fed trotting out the Hawkish members this week, should we go long /dx or UUP later in the day if/when the dollar falls to 78.50ish? 

  2. flipspiceland

    A succinct lesson in WHY SIZE MATTERS:
    "Icelandic Anger Bringing Record Debt Relief in Best Crisis Recovery Story".
    Try pelting theBernank and see what happens instead.

  3. Phil

    Yes, Jrom – This week I do like playing the Dollar (/DX) up over the 79 line (now 78.995) with very tight stops below and, of course, TLT over $116 (now $116.57).  

  4. Phil

    I'm watching Bill Gross and Larry Fink's interview on Bloomberg – it's from November but very good.  

  5. jmm1951

    Phil/Orwell
     
    I am a huge fan  of Orwell and have read all of his novels, journalism etc. and it is very interesting to see how his ideas about the manipulation of official news developed as a result of his experiences 1) as a high-ranking colonial police officer in  Burmah (where one of his responsibilities was security against terrorists for a major oil refinery),  2) as a volunteer in the trenches in the Spanish Civil War where he encountered the propaganda methods of the Communist Party, and 3) in his job during World War II with the BBC overseas services broadcasting propaganda to India with news of the unending success of the British war effort. Nineteen Eighty-Four is a kind of synthesis of the cream of his ideas and experiences and was INTENDED as a awful warning of what the future might become if certain trends continued, seen from the perspective of 1948. It is therefore rather tragic that the powers that be have taken his book as a MANUAL for government and business when it was intended to be the opposite.

  6. dpastramas

    Reminder / Phil – If you have some spare time and you feel like it, maybe you can have a look at any cheap Japanese exporters for a bullish play. 

  7. barfinger

    Jmm: Perfectly said.

  8. checho

    Gold/ Phil
    How

  9. stjeanluc

    Feel the austerity working in Ireland…

    http://krugman.blogs.nytimes.com/2012/02/19/the-irish-success-story/

  10. checho

    Gold/ Phil
     
    How do you read gold at the current moment?  Greece being fixed this time do you think 'FEAR' is eliminated and therefore Gold corrects?

  11. stjeanluc

    And if you feel like playing oil today:

    R3 – 106.56
    R2 – 106.06
    R1 – 105.70
    PP – 105.20
    S1 – 104.84
    S2 – 104.34
    S1 – 103.98

    We have been bouncing between S1 and R 1 this morning. 

  12. stjeanluc

    Gas prices might have actually hurt the economy:

    http://pragcap.com/gas-prices-hit-highest-level-ever-for-this-time-of-year

    “You’re going to see a lot more staycations this year,” says Michael Lynch, president of Strategic Energy & Economic Research. “When the price gets anywhere near $4, you really see people react.”[...]

    It’s a real shame that this country doesn’t have a substantial energy plan in place.  The added volatility in the business cycle and the constant risk of cost push inflation suffocates policy options.  But here we go again.  If energy prices continue their push higher my theory of QE3 in June is dead in the water and the odds of a weaker second half economy will rise substantially….

    My brother was telling me that even diesel which is usually kept cheaper through different taxation is now 1.55 euros per liter ($7.77 per gallon) in France. Even heating oil is now over 1 euros per liter ($5 a gallon). And yet we worry about $4 per gallon here! But it's going to painful everywhere!

  13. stjeanluc

    Follow the money says Josh…

    http://www.thereformedbroker.com/2012/02/20/using-ibds-accumulationdistribution-ratings/

     

    My friend Joe Fahmy once explained to me that 90% of new traders entering the market lose money not because of technique or lack of focus but because of the very first step they take – stock selection.  They simply have no idea where to begin looking for the "right" stocks to trade.

    Investors Business Daily has a letter-grading system that shows which stocks are under either accumulation or distribution based on volume and trend – A,B and D stocks are "under accumulation".  It's not a magic fix to the stock selection problem but it may be a crucial fix for people who simply don't know where to begin – these are the stocks that big institutions are buying and this buying can take weeks or months.

  14. jmm1951

    Stjean/accumulation & distribution
     
    Yes,  but this pertains more, perhaps, to timing than to selection of companies. I have been following a stock called MSFT for some time, and one thing that has perplexed me is that one of the founders has been liquidating stock in vast quantities to endow a philanthropic foundation that bears the names of himself and his wife. 20 million shares sold in October, and again 20 million in January. This has been going on for some years and the supply of new stock may have had some effect on keeping the stock range bound although the company has been quite profitable and has global reach. Many stockholders have expressed frustration over this situation,  though personally if I was able to find a stock that was guaranteed never to go up nor down, I would be very happy to trade it.
     
    Oh, the grand old Duke of York,
    He had ten thousand men;
    He marched them up to the top of the hill,
    And he marched them down again.
    And when they were up, they were up,
    And when they were down, they were down,
    And when they were only half way up,
    They were neither up nor down.




  15. ldm18

    In regards to trading oil, is there/is anyone assembling a post which describes Phil's strategy.  I've been following the comments for some time and feel like there are some underlying parameters for the trades which I am missing.
     
    Thanks for the help.

  16. stjeanluc

    Timing / Jmm – I agree, but timing as we know is also important!

    As for MSFT, there is something to be said about the stock that a well defined floor!

  17. Phil

    I won't be around today – at Trader's Expo in NYC.  

  18. jmm1951

    Reformed Broker/ US public education vs the world
     
    Interesting graphics comparing educational achievement of 15 year olds with some other countries. China seems to be #1 in all subjects. One wonders what their statistics for dyslexia are like, and whether we should switch over to their alphabet. The US comes in at the head of its class, just below the developed nations, but above the rest.
     
    It is easy to take education for granted when you come from a country that has a lot of it, but even universal schooling is no guarantee of education. Here in the Dominican Republic expatriates continuously marvel at how innumerate Dominicans are after a decade of schooling. For example when I paid for breakfast yesterday the bill was 250 pesos and I tendered 400 pesos (2 x 200 pesos). The waitress looked puzzled,  so I said "el cambio estare 150 pesos". She whipped out a calculator and subtracted 250 from 400, and sure enough the change was 150 pesos. She then asked me how I knew that. She is not a retard. This is very common. I was counting out a pile of 20 dollar bills five at a time, and was asked how I knew that 5 twenties were equal to a hundred. The person who asked me that speaks 3 languages fluently and is extremely intelligent in practical and business matters.
     
    When I was a kid in school back in the middle of the last century, we had TESTS in mental arithmetic. These days children often use calculators in school to solve math problems.  I think calculators are excellent tools for business and for ensuring accuracy in multiple calculations, but I can't see their value as a learning tool. If you give a child a method of solving a problem without providing them with the underlying mechanics of calculation, you are depriving them of education. It is like giving someone a bottle of milk versus teaching them how to milk a cow.
     
    http://www.thereformedbroker.com/2012/02/19/american-public-schools-vs-the-world/

  19. 2can

    jmm / It's the same story in costa Rica.  The official statistic is a literacy rate of 90+ %, but no one can give you change with out a calculator.  The people who can write, do so with great difficulty.  Yes there are the 5% who wanted to learn enough to teach themselves how to read and write Spanish and to speak Engish for it's employment guarantee, but the other 95% who were relying on the public school system got the bottle of milk.

  20. deano

    Seems like Barry's QOTD works well with Phil's theme of 1984:


    "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." —Alexis de Tocqueville

  21. stjeanluc

    Deano – Only de Tocqueville could not imagine that Congress itself would have been bribed by huge corporations who interest it is that Congress bribes the public!

  22. pstas

    jmm- your waitress may not be able to add and subtract but if she was educated under the American model I bet she has great self-esteem; knows all about conflict resolution and the plight of the polar bears.

  23. stjeanluc

    Apparently ABC Nightline will have a report with video on Foxconn tomorrow night…

    I know that there was a discussion yesterday about the impact of the 50% raise of the Foxconn employees on Apple's profit, but the fact is that labor represent not 10% as mentioned but much less – the labor cost for an iPhone is about $6. Do even going to $9, that would represent very little impact (a hit of about 1% at most) on margins that are close to 50% to begin with…

  24. jmm1951

    2can/literacy
     
    Yes, I believe it is the same through Latin America. It  raises interesting questions about the meaning of the word "literate". Many discussions about education center around Ph.Ds etc., but for most of the people on the planet being able to count money and fill in a simple form and sign their name is considered an achievement worthy of a diploma. Island nations have a considerable problem, because if they have a sophisticated economy, the population simply cannot produce enough bankers, lawyers, architects, engineers, doctors, dentists, pharmacists to fill the need, so they have to be imported from nations that are overendowed with brain power. For example even the US and the UK cannot produce enough physicians to serve their own populations (this being an occupation with high barriers to entry), but fortunately thanks to the former British empire, medical schools in India are able to churn out thousands of surplus medical graduates who are fluent in English.

  25. jmm1951

    stjean/AAPL pips squeaking?
     
    They will probably just add a $6 "fair trade" fee onto the cost of an iPhone. $3 will be to cover the extra wages and the other $3 will be for "administrative expenses" and executive bonuses. They will also gift subscribers a free digital recording of the theme tune from Les Miserables.

  26. stjeanluc

    Apple / Jmm – Add a copy of Germinal from Zola in he iBook app and you have a deal…

  27. jmm1951

    pstas/waitress self esteem
     
    No, I doubt if she has heard of polar bears, or indeed of the poles. Very few Dominicans can tell you where the island of Hispaniola can be found. But she is a sweetheart and she gave me free ice this morning to make papaya milk shakes for the 2 children I am baby sitting. Some things are more important than education.

  28. msf65

    Lflan,
    watching you do live APPL trades is very helpful and your short explanations of what you are thinking are great. Thanks for sharing and keep them coming. I have a couple of questions for you.
    1. How do you handle trading with your other job? You mentioned that you are on many different computers during the day, do you have thinkorswim installed on all of them? How do you watch the price during the day? Do you trade from your phone?
    2. Also you mentioned before that you use stops. Could you elaborate on that more? I find it hard watching the market during the day when I am at work, mostly because I need to concentrate on what I am doing at the moment and don't like being distracted by other things. But your job requires tremendous concentration too, so how do you handle that?

    3. After analyzing your trades I think that your success depends on being very proficient in the techniques you use and having confidence that even if you are wrong you can either fix the trade or cut your losses small. Did you paper trade at the beginning to master those techniques?
    4. And the last question. Your plan is to double your money every year. Are you going to use the same techniques when your portfolio grows but just trading more contracts? Won't it be harder to get filled ?
    Thanks in advance.

  29. pentaxon

    Good article by Bob Janjuah. I share his view and it covers pretty much everything: ;-)
    http://www.zerohedge.com/news/bob-janjuah-markets-are-so-rigged-policy-makers-i-have-no-meaningful-insights-offer

  30. Pharmboy

    HGSI/pstas – I need to see revenues.  The drug is extremely expensive, and from what I have read (and it may have changed recently), insurance was having a hard time paying for it….

    ZIOP/alik – well, they have several things in the pipe, and data from what I can see is not due out anytime soon.  A stock offering is in the works, about 10M shares at $5.20 (that includes the 15% overallotment).  I would be very limited in how much to own right now, but selling a July $5 straddle on the calls and puts is ~ 1.50 in the pocket.  Not a bad return for a few months work.  This would be a 1/4 entry, so if you plan on 500 shares, then 100 shares plus the calls and puts is 200 shares if put to you.  Wash, rince and repeat.  I am not crazy about their drugs….but I do need to read more about them.

  31. williex

    Pharma
     
    I am putting together a small portfolio of stocks that I am looking to sell put premium and/or buy writes for a retirement portfolio.
    can you recommend a few health or drug companies that you like for long term holds.   "Granny stocks" as they could be called.  if they paid dividends it would be good and option premium would be a requirement. 
    I was looking at abt but it seems high.  also thought bmy might be good but then thought of you. 
     
    just looking to diversify with a little health and or drugs
     
    thanks
    Bill

  32. barfinger

    Phil: When one's bullish positions are significantly option based, and they are winning, they contribute less and less bull power as they near expiration. A number of mine expired in Feb., and would require a substantial reload if I am to regain the same bullish tilt that I had a week or two ago. I had planned to leg back in gradually over the next two weeks, but the more I read, the more I want to hide under the bed instead.
     
    Do you feel that additional bullishness is indicated, existing levels of commitment should be maintained, or should I not replace those bullish option plays that just expired?

  33. williex

    Phil
     
    If you are still around.  I won SDRL at $29 and it is at $40.  I sold the July $38 calls when it was at $35.  It does not seem to be slowing and I don't want to give up the stock.  I know I can roll to jan but the only option available is the $40 for only a small credit.  is there a strategy for dealing with this? 
    I do have the cash to buy more of the stock.

  34. Pharmboy

    williex – with the VIX so low, there is not a lot of 'option' premium right now.  If I were scaling in here, I would go for MRK and BMY.  Maybe sell the Jan14 $35 straddle on MRK and the Jan strangle ($35/32) on BMY.  These would be 1/4 entries of course, b'c I am not certain that things will be here in a few months.  Both pay dividends (>4%) and have robust pipelines. 

    If one is into riskier places, BIIB, BMRN and SGEN are good ones to take the risk in.  All are buyout candidates, and if this market will not retreat, then they are likely to keep going up.  LLY needs something, so those are the ones I would shoot for.

     

    BMRN – July $40 calls w/ 30 puts.

    BIIB – Bull call spread with July 100/105 with sale of the 100s (25c credit w/ heavy margin)

    SGEN – Sale of $17.5 Jun Ps.  (This will be the best bang for buck b'c of the short interest in the stock.

  35. williex

    thanks pharm

  36. l4real

    stjeanluc /Diesel
    The difference between diesel here in the U.S. and Europe is not just price.
    The Europeans have diesel vehicles that get 50+ MPG!
    They are made by the same companies whose imports we buy here in the U.S., but for whatever reason, we cannot import the high mileage diesel vehicles!
    Go figure!

  37. stjeanluc

    Diesel / l4real – That is true, and the fact is that when I go there I usually request a diesel rental because the ones from BMW, Audi or MB (not to pick brands) run just as well as the gas ones and get much better mileage. And are still nice to drive!

    But you can buy diesel versions of most of the VW cars here in the US. But you don't get the additional price break that European drivers get on diesel fuel though… Even though diesel is more expensive to refine than regular gas. I guess truck drivers and farmers (the original beneficiaries of the tax breaks on diesel) are more vocal in Europe than here. Nothing like blocking a bunch of highways around Paris to make your point!

  38. cslanson2

    stjeanluc
    You are correct, I have a Mercedes "E" Class diesel at 37 mpg & I just purchased  a VW Jetta Sportwagon that gives 42+ mpg.  I'm not sure I agree with you about the cost of refining since it depends on a number of factors however I firmly believe that whatever the price differential in production it is far less that the 15% greater price over regular gasoline. Personally, I suspect that it is true capitalism at work by charging what the market will bear.  As a group, diesel consumers are less like to become vocal voters since most people who consume diesel are not spending their own money and can add fuel surcharges. This makes them better candidates for price gouging which is what is actually happening.
    What I find so discouraging is the fact that we appear to have no plan to convert our massive natural gas surplus into diesel fuel and then encourage it's use. Three (3) such production facilities are already in operation (1 in Malaysia & 2 owned by Shell Oil in Qatar).  Such a plan could dramatically reduce our dependence on foreign oil and provide new employment.  And of course, diesel and jet fuel made with natural gas as a feedstock would undoubtedly cost less to produce than gasoline from crude which would help the economy on so many levels.
    8 Presidents and 40 years and still no national energy plan. Oh the power of "K" street!

  39. Pharmboy

    From the NYT:

    Is This the End of Market Democracy?

  40. mrmocha

    Pharm, thanks, that was a great read; hopefully Phil will repost for everyone tomorrow.  I liked the mix of opinions and insights, as opposed to an individual pontification.  What I didn't like was that these smart guys were fairly dour about the current system with no consensus on what the next system should be.  Unless some great thinker has a real inspiration that can be sold to the populace, it appears that global geopolitics will continue to painfully evolve in fits and starts until it finds its new balance.

  41. shadowfax

    Diesel fuel
    1. More diesel is produced from a fixed amount of crude than gasoline.
    2. Refining leads to diesel, more refining produces gasoline, even more for premium.
    3. Higher price for premium is justified but last I heard it is about $.03 per gallon.
    The higher price for diesel than premium gas is not justified by cost. Maybe the higher price is a way of making the cost per mile closer to incourage gas use over diesel. That sells more oil by production and consumption. The oil producers simply sell more oil and make more money. This tends to go along with the US being controled by big corporations and big money. The media is what Phil keeps saying, the pimps of big money and the people believe what they hear without question. The few love a plan the comes together, they get what they pay for and big returns on investment.

  42. acd54

    lflan-
    I've followed your AAPL portfolio since its inception and have benefited much from the posting of your thoughts as you enter and exit each trade, as well as your general comments on how you intend to trade AAPL in the future.  I can't follow each trade in real time and when I initiate a trade I usually enter a more conservative version than the ones you post; purchasing fewer contracts, or at lower stikes on the BCS, but am very happy with the return in such a short period of time.  The ways you've handled the portfolio and comments works for me.  Many thanks.

  43. livingfull

    A big part of our domestic fuel cost issue is boutique fuel production within the US.  For example only a small portion of domestic refining is set aside for diesel production.  In fact a lot of diesel is imported product. 
    If there were a national standard production for the three unleaded grades of gasoline (all 50 States adopt California's unleaded gas refining standrds for example) it would go a long way to bringing retial pump prices down.  Instead of every state in the Union making a myriad of different grades of unleaded on a regional basis.  One grade of premium, one grade of 88-89 octane and one grade of low octane, across the country.  Refining costs would drop at the retail level…economies of scale.  Each region refining a different grade of unleaded, California throwing in the strictest emission standards in the country. creates what the industry calls boutique fuel production.  That translates into 'we can charge a lot more and get away with it'.   if we standardized the unleaded fuel product nationwide we could free up a lot more refinery production for deisel refinement.  That would also bring the cost of deisel down.
    And with one of the largest supplies of natural gas in the world (North America) why aren't we following Qatar's example?  build refineries that convert natural gas into clean burning deisel.  Yes expensive initially to build….but look waht not building refineries for the last 30 years has done to production and retail.  Penny wise pound foolsih.
    http://www.nytimes.com/2010/12/24/business/energy-environment/24fuel.html

  44. Canuck

    pstas/waitress,
     
    but if you asked her to compose an essay on the topic, it would be like this "Pollar Bares"

  45. shadowfax

    livingful/fuels
    Different regional fuels is a problem as you have stated, but diesel is the standard everywhere. I never heard about diesel imports, what I heard was refineries changed production from more gas in summer to more diesel (heating) in winter. We now export more fuel than import, is that gas only? Then we have to import diesel now?
    Another regional issue on gas is what does it cost to make cars adapt to the different fuels, computing power and fuel efficiency. I am very aware of the differences because I have a diesel truck and a highly modified turbo car. I have a map flasher/ log recorder of everything from fuel/ai ratios, fine knock detection, boost, and timing. I have different maps for different fuels, elevations, and programs that require my laptop and access port plugged into my car. California fuel, I have not experienced it, is the worst but oxigenated and ethonal additions for smog controled areas not only lower MPGs by up to 20% but all I can do is reduce turbo boost and retard timing. This causes more comsumpion of crude oil, corn, and those costs added on a most of population basis. Funny fact that is not known is my X2 power car gets 20% better mileage at cruise 55 to 75 mph than stock and can get to 75 in 5 seconds, extra fuel but very short peiod. Fun factor bonus for someone that barely moves by self!

  46. stjeanluc

    Diesel fuel used to be cheaper to produce, but I believe it's not true anymore due to the steps needed to remove the sulfur. The additional refining cost for the ultra-low sulfur diesel are between $0.05 and $0.25 more per gallon. The higher diesel cost in the US is also a product of the production issues. In Europe is all taxation!

    In any case, this is not a long term solution no matter what – emission are still bad… We need a greener energy plan!

  47. shadowfax

    stjeanluc
    The sulfur is removed from gas that costs less and we don't refine that heavy crude here @ $.25. That is the next joke about the Canada to Gulf pipe line, we won't use it, we are being used to transport it to the port where we unload tankers of what we want, and then they leave full instead of empty. This is efficient for shippers and all exporters, Big Oil, they get the gold mine, we get the shaft!

  48. stjeanluc

    I heard that about the Keystone pipeline Shadow. The oil is not for us, but for export…

    Speaking of oil prices, Newt was on TV this weekend pounding the high gas prices as an Obama failure… Said that President Newt would have $2.00/gallon gas! Of course, the same guy also wants to bomb Iran. Not sure that's the way to $2 gas. And oil prices went to $150 while we had an oil friendly president in charge so I am not sure how much impact one man would have on prices. On the other hand, I understand his position, the economy is doing slightly better, the culture war doesn't seem to be a winning proposition right now so you have to attack on the price of gas. Of course if gas prices was the biggest driver in American politics it might make sense to cut the middle man and elect Exxon's CEO as president!

  49. aussie_opt

    AAPL/lflan – I also enjoy following your AAPL portfolio trades. Keep up the trade and strategy postings…it is nice to feel part of this PSW community!

  50. barfinger

    I have never understood this, but since I upgraded to a diesel powered boat, I could take advantage of the significantly lower price for marine diesel over gas. This has not always been true, btw, and it even when it was true in FL, it wasn't true in northern states (or less true). So, generally speaking, diesel is cheaper on the water than gas, and more expensive on land? Why do I suspect regulation is responsible?

  51. barfinger

    JeanLuc: I can't see the way to $2 gas. There's so much peripheral bullshit in the cost of energy that a regular person simply can't tell what makes energy cost what it does. And the peripheral bullshit is probably responsible for the reason we don't use more solar or wind or natural gas. Should I be pining for the free market to be unleashed? Or is that wrong?
     

  52. barfinger

    Trade idea: You may be able to sell SPX 1st qtr (mar 31) calls at 1410 for 7.50 soon after the open tomorrow. It is hard to see why that won't be a good trade. That's another 4% or so from here, making for 13% or so for the year through the 1st quarter. We may keep up the rally, but I find it hard to accept we go straight to there from here. No chart, nothing but suspicion and history on my side.

  53. sparky123

    I don't know about prices bar, but I can tell you from personal experience that if you ever get T-boned in that boat from someone in a larger one crossing a channel in a dense fog with no running lights, you will be very glad that your boat is diesel and not gas, (and a couple of bulkheads can't hurt either).

  54. barfinger

    sparky – I work really, really hard to avoid the T-bone :)
    However, that's why I went diesel at the size where both were possible.

  55. sparky123

    bar,
    in pea soup, when you're in the channel, and some nut comes at you wide open with no running lights, all your hard work may come down to the fact that your boat didn't explode and you had time to get a line onto his bow and get everyone off. I can still hear the giant sucking sound when it sank-but everyone was OK thanks to the diesel and the two bulkheads.

  56. Phil

    How's that Greece thing doing?  

    I see the futures are failing so congrats to all who played them short (very brave) but I'm going to bed as it's been a long day – will catch up in the morning!

    3:50 AM The IMF now expects Greece's debt to reach 129% of GDP in 2020, sources say, an even heavier debt burden than previously thought. The IMF is proposing four options for Greece's official lenders to bring the ratio closer to the 120% level viewed as "sustainable," with options to be discussed today.

    4:42 AM The IMF is likely to offer minimal funds for Greece's second bailout, say officials, reflecting fears among the fund's membership that it's becoming overexposed to the eurozone. That decision would leave the eurozone with a much larger bill. (see also)

    12:10 PM The eurozone's crisis has shifted focus away from the U.S.'s enormous debt load and has lifted foreign demand for Treasurys. Once global factors cede the spotlight, and eventually they will, and as the Fed starts to remove itself as a buyer, Treasurys may be poised for some pain.

    1:05 PM Oil markets, the EU included, can cope with the loss of Iranian oil exports, asserts the IEA's Didier Houssin, but oil's elevated price "could represent a risk to the global economic recovery." In triple-digits, the burden of oil prices on the global economy is nearing 2008 levels. Crude +1.8% to $105.13.

    1:15 PM Economic growth in developed countries slowed to a measly 0.1% in Q4, according to provisional OECD estimates, down from +0.6% in Q3. The overall figure "masks diverging patterns," with accelerated growth in the U.S. and deterioration in Japan. The eurozone, unsurprisingly, also posted a decline.

    7:11 PM A "strictly confidential" sustainability analysis prepared for eurozone officials paints a bleak picture of where Greece is headed, a "tailored downside scenario" suggesting the country will come nowhere near the 2020 120% debt/GDP target set by the IMF. Further, any gains from the PSI will be lost as a now-scared investor class will shun future Greek debt.

    7:18 PM It's after midnight in Europe and still no deal on the Greek rescue. The euro, which took a tumble on the leaked sustainability analysis, is buying $1.3210. S&P 500 futures have given back a chunk of their President's Day gains, now +0.2%.

     

  57. stjeanluc

    Gas / Barfinger – I don’t see $2 gas either and there is not much that the president can do, but apparently voting for Newt will get you that. And a nice lollipop I guess… And big fields of unicorns!

  58. stjeanluc

    Greece / Phil – I really find it ironic that discussions about the Greece bailout revolve around the debt ratio in 2020. They are afraid it will be 129% and not 120%. I mean, common, who cares at this point. No one in their right mind could predict where it will be 2 years from now, let alone 8 years. The way it is going, it will be 200%… And there are pretty much doing everything they can to make sure that happens. Not because the debt will grow but because they are destroying the economy there.

  59. angelcur

    i don't see the futres tanking or was that 45 minutes ago?

  60. jabobeast

    angel-- that might have been before the greece is saved again news

  61. angelcur

    they must be saving each different historical era of the greek dark ages the archaic period the classical period right through the gyros truck phenomenon so this could take a while..it is a total joke on the greek tradition of paidia..there is nothing about this that doesnt demean the greek people and its a pox on all of the asshats who loaned the money to begin with..what would alan bates and tony quinn do?

  62. barfinger

    Well, Greece is worth 100 points on the SP500. Let's keep saving it every week, what do you say?
    I may be sick….

  63. angelcur

    if you are sick you will be fine so long as you are thirsty as well!

  64. freeflow

    I’m happy to see futures dropping shortly after the “Greece is fixed” news. That’s a sign of a top to me. 

  65. Cap

    Big News — Worlds Collided Today !
    Yet the World did not come to an end.
     
    Here's what happened:
    Cap & Phil bumped into each other today at the NY Trader's Expo.
    We had a fun time catching up, with a little teasing thrown in.  At least it was fun for me, I'll let Phil speak for himself.
     
    I'll leave it to y'all to determine if this is a buy the market event, or a sell the news event.
     
    I also had the pleasure of meeting Ilene, who is super nice; and also Scott Brown of Sabrient, who seems like a good guy and filled me in on Sabrient's product lines, which I was not up to speed on.
     
    It was a nice surprise for me today.  Also sat in on a few interesting presentations, but am too tired to recap here.
     
    One tidbit:  Fidelity's Director of Research gave a talk to Fidelity Customers (followed by Joe Terranova), who noted that out of 200 large tech stocks on Fidelity's radar, all are looking good technically — except for 1 — AMZN.
     
    AMZN stock price critic that I am I thought that was an interesting nugget.

  66. Cap

    Jabo – I second that emotion re: Greece – LOL
     
    On Skype, the emoticon for that is (finger)

  67. zeroxzero

    freef:  Yeah, the Euro doesn't look as happy as it might, either.  And oil doesn't seem to be taking off any further at the moment.  But ya never know.

  68. zeroxzero

    Iceland:  The "Iceland went bankrupt, blew off its unpayable debts, was a pariah for a half dozen years and now is Styling" story is gaining legs within the pan-European zeitgeist.   The story sounds like an ECB plant.  The subliminal message is newspeak for "it's OK to go bankrupt, if you're little, like Greece and Portugal."
     
    Germany has probably decided to bite the bullet and go for the two-speed Europe on the currency side; otherwise, it will end up biting the .458 Winchester cartridge of paying off the current account deficits and rising debt service of all Peripheral countries indefinitely — and that's a long time, since liquidity is in scarce supply and the price of capital ain't going down much from here.   According to Orwell, also floating around the zeitgeist lately on PSW,  "Sanity is not statistical."

  69. zeroxzero

    Iceland II:  Here's the Eurozone fear in black & white: [FT, February 21, 2012 4:39 am ]     " The 10-page debt sustainability analysis, distributed to eurozone officials last week but obtained by the Financial Times on Monday night, found that even under the most optimistic scenario, the austerity measures being imposed on Athens risk a recession so deep that Greece will not be able to climb out of the debt hole over the course of a new three-year, €170bn bail-out.
     
    It warned that two of the new bail-out’s main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy while its €200bn debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors.
     
     
    “Prolonged financial support on appropriate terms by the official sector may be necessary,” the report said.'

  70. Phil

    Good morning!

    I woke up at 2am, saw the futures up again and went back to bed as I wasn't in the mood for more BS.  This time I woke up and we're down again so I felt like getting up – such a silly market.  

    10:15 PM The deal's in for Greece on a second bailout, and the euro's soared in response, buying $1.329. Financing will total €130B and involve a 70% loss for private debt holders, significantly higher than expected.

    10:33 PM More details from the Greek bailout deal: The goal of the €130B program is to shrink Greece's debt to 121% of GDP by 2020, from about 160% now. National central banks won't be a part of the debt swap. Private debt holders will get "sweeteners" including 30-year bonds in exchange for the ones they give up. S&P 500 futures+0.5%

     

     

    Europe Reaches a Greek Deal

    Euro-zone finance ministers agreed on a long-awaited accord to secure a new $171.9 billion bailout and debt-restructuring deal for Greece, after haggling into the early hours Tuesday.

    Next!  Spain's debt load is set to nearly double, rising from 40% of GDP before the eurozone's crisis began to 78% by next year. The ballooning debt is erasing some of the economic advantages that differentiated Spain from the periphery and that helped shield the country from Greek contagion. 

    Euro rejected at $1.33, now $1.3254.  Pound $1.5837, 79.8 Yen to the Dollar (go BOJ!), EUR/CHF $1.2075, Dollar 79.13 (still a long off 79), oil $104.97 (dare I say short?), gold $1,740, silver $33.65, copper $3,79 (also short below $3.80), nat gas $2.639, gasoline $3.0286.

    Futures:  S&P 1,362.25 (look out if they can't hold 1,360), Nas 2,565, Dow 12.965, RUT 628.2.  

    None of them look very strong at the moment.  

  71. Phil

    From Barry:

     

    Property laws? Civil Liberties? Not when they stand in the way of profits:

    “Corrections Corporation of America (CCA) has reached out to 48 states as part of a $250 million plan to own existing prisons and manage their operations. But in return CCA wants a 20-year contract and assurances that the state will keep the prisons at least 90% full.”
    -AllGov

    90% occupancy? I guess the marijuana laws cannot be overturned then or it would violate this 20 year contract.

    Here is my compromise: Let’s fill the prisons with CCA Executives!

  72. Phil

  73. Phil

    Orwell/JMM – Like any good science fiction writer, he was a very good futurist and, sadly, he did lay out the road-map for controlling the masses – even to the point of noting that the state would dumb down the masses so that warnings like his would remain unread.  

    Japan/Dpast – HMC and TM, of course, FUJHY, KNBWY, HIT, MSBHY, MTU (bank) all possible beneficiaries from weaker Yen.  Of the group, you can't play 3 here and TM we picked ages ago and they and HMC ran up a lot already.  MTU has been flying this month but still not bad and HIT would be my top pick here at $57.70, selling July $55 puts and calls for $9 for net $48.70/51.85.

    Gold/Checho – That was the plan.  Greece is fixed, nothing to fear except Iran, but that's been going on since 1970 so hard to sustain good fear levels there.  

    IBD/StJ – You know my basic objection to their system is that you are just chasing winners there.  I prefer to go lower in the list and identify stocks that are moving from the middle of the pack into the top 1/3 – those have more room to run and then you take advantage of other investors as they pile into the top of that list.  

    Oil strategy/LDM – Always good to make a Wiki page if there isn't already one.  My general strategy for oil is short it over $100 and more so at $105 and even more at $110.  The plan at $120 involves a lot of bad words….

    Math/JMM – Milk comes from cows???  I was appalled our school lets kids use calculators.  We weren't allowed to touch them until High School.  I drilled my poor kids on times tables, ratios and percentages because – as we are well aware – if you don't KNOW your numbers, then you don't know when people are just making things up by feeding you BS projections or extrapolating ridiculous outcomes or claiming statistics that make no sense.  If people can't do basic math in their head without thinking – then politicians can lie with impunity – pretty much what the situation is now.  

    Tocqueville/StJ – Actually, he did: 

    The surface of American society is covered with a layer of democratic paint, but from time to time one can see the old aristocratic colours breaking through.

    What is most important for democracy is not that great fortunes should not exist, but that great fortunes should not remain in the same hands. In that way there are rich men, but they do not form a class.

    Self esteem/Pstas – Reminds me of this one, still cracks me up:

  74. Phil

    Winning/Barf – As I mentioned above, you always need to be looking for fresh horses.  Once you have a spread that's far enough in the money that your gains slow down, it's time to set stops and add a new one – usually further out in time with higher strikes (assuming you think things keep going, of course).  It's good to just make rules and stick to them and raise the bars on your stop levels as well.  Nothing wrong with taking a step back and sitting out part of a rally, especially if you've had a good run.  As I said way back at the beginning of the month, adding one bullish play a day and taking off the short-term winners as they begin to mature and provide less upside is a good way to force yourself to layer into bullish positions but it's VERY important to have a firm stop line or some good disaster hedges as your inventory of bullish plays builds up.  

    SDRL/Willie – It's only at $39.41 – do you really want to throw out your protection?  Also, at $2.60, the July $38 calls are 1/2 premium AND the Jan $39.80s are the same price so you have a clear roll path.  I'd be a Hell of a lot more worried about not being covered enough for a pullback to the 50 dma at $36 than about how you'll miss out if the stock tops $40.  Frankly, I'd cash out happy at $40 and, if you can't live without it, you can sell the 2014 $30 puts for $4.60 and buy the 2014 $30/40 bull call spread for $5.20 for net .60 on your next $10.  Worst case is you own you beloved stock again at $30.60 and best case is you make another $9.40, which you don't do with the stock until they get to about $50 (up 25% more).  The dividend is only $3.04 so $3 more than dividends this way.  

    Good article, Pharm. 

    XOM CEO as President/StJ – I doubt he'd accept the cut in either pay or influence. 

    SPX/Barf – I agree logically but, the way we go up and up and up every day, I'd go light on the position.  

    Greece/StJ – It's a total farce.  Apparently the markets know it too.  

    Good seeing you too Cap and very funny to see how fast you pissed off that nice guy with your politics (although I admired your restraint because his arguments were weak and you could have ripped his face off).  As to Fidelity, I'd short them if they can only find one stock in 200 that looks overbought.  

    Thanks for FT – ZZ!  

  75. jromeha

    It's funny, ive been stuck in this sh!thole for 4 days due to snow and fog and didnt even realize this was happening outside the gates until i read yahoo news!  http://news.yahoo.com/afghans-protest-report-korans-desecrated-u-074108214.html
    Phil,  stuck here another night so looking forward to you KILLING it today!

  76. msf65

    Phil,
    Orwell … brings back memories. When I was in high school in Poland our literature teacher asked us to write an essay about a book that we have recently read and would recommend to a friend.
    I wrote about “1984″. My teacher was terrified and didn’t know what to do. It was the time of marshall law and Orwell ‘s book was only available from underground printing shops.
    Possessing and reading it was illegal. It was classified as subversive literature.

  77. flipspiceland

    It's 7:45 (somewhere) a.m. Do you know where your Bank Bailout money has been going?
    "…Investment banks have paid their staff three times as much as they have generated in pre-tax profits over the past six years, raising fresh questions about the division of rewards between employees and shareholders in the securities industry.."   (MarketWatch)

  78. grenowoods

    jromeha – I think my son left that sh!thole today. It may be tomorrow but you never know. Will be good to see him. Things look a lot calmer weather wise in Kabul.

Dashboard

 Sector Performances (Today)

 Thermal Imaging