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Monday Market Movement – Not Up for a Change

SPY DAILYThis is frustrating isn't it?

The S&P fell to 1,355 in the Futures, breaking our rule to get bullish as they must hold 1,360 for 2 consecutive days so we're back to watching and waiting now as it's been two full weeks of teasing this line as the index creeps back into the bottom of David Fry's SPY channel.  

We thought we were going to fail back at 1,300 but we caught a nice bounce off the bottom at the beginning of the month and flew up another 5.5% since then but now we're almost 10% over the 200 dma on less and less volume and that's one hell of an air pocket below us on the S&P so of course the lack of more free money from the G20 is going to hurt today – the question is – how much?  

We discussed the G20 over the weekend, so no need to re-hash it here.  Let's take a little time today to delve into the logic of S&P 1,360 and see if we can find some good reasons for it to stick.  In his letter to shareholders this weekend, Warren Buffett very plainly says that his entire bullish premise is based on his believe that housing will make a comeback.  Jim Bianco had an article on that this weekend noting Homebuilder Optimism has risen for 5 straight months, back to the highest level since May of 2007, at the early stages of the slowdown BUT – let's keep in mind that the sentiment level is 29 and anything below 50 is still NEGATIVE – so we have a long way to go!  

XRT WEEKLYWe have been playing XRT short, expecting it to have been rejected at $56, like it was last summer prior to a 20% drop.  Now XRT is at $58, up 31% from it's October lows and we have to wonder if the situation for Retail has REALLY gotten 31% better than high-volume investors were pricing it AFTER seeing last July's earnings reports or is this another major air bubble that's about to burst?

The January Retail Sales Report showed $361Bn in sales and that was up 5.6% from last year's $342Bn.  This month we'll see an automatic 3.5% bump as February has an extra day (people fall for that one every 4 years) and we have strong auto sales and the price of gasoline is through the roof so those sales should be stronger too.  

But the smart money expects this – that's going to be a "sell on the news" event if ever there was one – the question is:  How long until all this "good news" runs its course?  Last July, we had earnings for April, May and June and the fact of the matter is that those 3 months had 6.66% BETTER Retail Sales than they did in 2010 and those numbers were up 10% from 2009, when XRT bottomed out at $17.27.  We're certainly not expecting/hoping to go back there or even to the 2010 average at $40 but $58 (up 45%) seems like a bit of a stretch as you can't extrapolate consumer spending to keep growing when there are still no jobs and no additional stimulus.  

Yes, it's ALL about the stimulus as the G20 has done NOTHING to create jobs – except through the accident of some of their free money "trickling down" from the people they hand it to. 

I haven't seen a good breakdown, but we know a lot of retail spending is on-line sales, and that's not poor people.  New car sales are up – also not poor people, and eating out is on the rise – again, not poor people.  Unfortunately, there is a limit to how much money the CEO with a bonus can spend to make up for all the people he fired to save money to pay for that bonus.  

That's an interesting dynamic, by the way because the super-rich USED to buy houses with their extra money and building those houses did create actual jobs.  There are no jobs created when a wealthy person decides to buy a more expensive car over a cheaper car and, in fact, since most expensive cars are imports – we actually lose jobs when we lay off American workers to make sure the boss can afford a new Ferrari this year, don't we?  

And, of course, that brings us to oil, which is hovering around $109 and we will have to see how the Dollar behaves as both oil and gold have had a big run against the declining Dollar but lack of G20 action (now off until April, most likely) means we're running out of catalysts to further weaken the Dollar and a sell-off in the indexes could send Global investors scurrying back to the relative safety of our currency, engineering a sharp reversal of the current trend.  

USL WEEKLY That's the bear case – the bull case is Iran and more stimulus.  We don't have the stimulus but we'll always have Iran (unless they actually bomb someone, then they have about a month).  The last time oil was this overbought was last April, also on the recovery/Iran story.  We hit $114.83 before collapsing back to $75 but "this time it's different" according to the good folks at CNBC.   

As you can see from Dave Fry's chart on the left, USL, which is smoother than USO as it plays a 12-month strip, is at the top of it's channel and, in a vacuum – I could agree with Dave that we still have room to run but it's not oil, it's gasoline that consumers pay for and we're already back to last April's high at $3.42, which indicates the speculators have overplayed their hand.  

Whether they've overplayed their hand or whether they have the cards to show us $114 oil again, we're already at $110 and, more importantly, Brent Crude is already over, not just last year's highs – but over it's all-time high – all on SPECULATION that Iran will disrupt the markets.  Have you ever run out to Home Depot to buy a bag of salt because there was going to be a huge snow-storm and then there wasn't one?  After a while, you have all the salt you could possibly need – even if that storm does come.  Then what happens to the prices?  

Imagine what happens with oil, which is much easier to return than salt.  As with the GLD fund, which now holds 1,300 Tons of gold, almost double where it was in 2010 and represents over half of a full year's Global gold production – there will be hell to pay when those buyers become sellers.  

It's going to be a fun week – let's see what happens!  


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  1. stjeanluc

    We blew up through the oil lines this morning but we are coming back to them now…

    R3 – 110.13
    R2 – 109.95
    R1 – 109.66
    PP – 109.48
    S1 – 109.19
    S2 – 109.01
    S3 – 108.72

  2. pstas

    BRK/B-
    Warren Buffett very plainly says that his entire bullish premise is based on his believe that housing will make a comeback.
    My take on this is different. Certainly, he admits his earlier call for improvement in housing was wrong but despite this, the other Berkshire operations did very well indeed, thank you very much. Ergo, the demographics of household formation vs. housing starts is/will spark further recovery and that in turn will goose employment and growth.

  3. Pharmboy

    PP for today:

  4. pstas

    http://online.barrons.com/article/SB50001424052748703754104577237652227653404.html?mod=BOL_hps_highlight_top#articleTabs_article%3D1

    Pharm- Barrons article from the weekend. Anything worth paying attention to? (LLY; JNJ; ELN; PFE)

  5. Pharmboy

    If I missed any comments, please repost here. 

     

    LLY; JNJ; ELN; PFE/pstas – Alzheimer's is the rage right now, and it is very much like trying to find the holy grail.  LLY and PFE's drug are modifications of the same thing, and we already know they do not work.  JNJ/ELN's area is also after a similar target, so I am not interested in playing this field.  Treating a symptom is one thing, but trying to stop Azh in its tracks will be done, just not in our lifetime.  I would rather put my money in something like SGEN, IMGN, ARIA, or CRIS.  These are targeting cancer…and to me, are going to garner bigger bang for our buck.  ELN is fine, but knowing their past and rocky roads….just not interested.  If doing buy writes against them, fine.

  6. 1020

    Good Morning!
     
    Fwiw – I call B.S. on the Putin assassination "attempt"….
     
    If true, sorry "they" missed.  :)

  7. yodi

    Putin one of the smartest conman

  8. williex

    1020
    FWIW – sometimes it is better to know someone is your enemy than to have the unknown

  9. haschade

    Phil et al,
     
    In the weekend post, Phil said:
    "We made our first buy in the income Portfolio in over 3 months last week as the S&P showed a little strength at our breakout lines."
     
    I can't find an entry in the Income Portfolio.  Can someone point me to it?  
    THANKS!

  10. Pharmboy

    Income Port/haschade – under virtual portfolio's above on the selection bar.

  11. JRW III

    Good morning, still nothing new except that we have quantified the size of the problem at $2Trillion !!

     

    IWM     81.06,  81.41,  81.69,  82.00,  82.41,  82.85,  83.11,  83.38  and  83.72

     

    Also, I have ascending trend lines at 82.57 and 81.90

     

    Good hunting !!

  12. stjeanluc

    The TNA calls expired worthless on Friday, we are now naked on the TNA call side.

  13. Phil

    Good morning!  

    Europe is down over 1% and at lows as we open up stubbornly only down half a point.  More likely we go down than they go up with the Dollar climbing so let's watch it, now 78.68.

    Congrats to the oil shorts as we have now had two runs this morning from $109 to $108.50 and it could get ugly if we blow $108.50, which does seem likely.  

    So Grrrrrrrrrrrrrrrrr is the word of the day – we have a very bearish set-up and I'm only wondering where we stop and whether or not this will just lead to one of those instant snap-backs or – is this time going to be different?  

    Be careful either way!  

  14. ban2

    Good morning Phil

    Been accumulating SVU to work that .088 dividend.
    now have 6k shrs @ avg. $6.85 with yield now @ 5.2%.
    Your income portfolio shows you originally sold the Jan 2014  7 P @ C as below

    "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%)"

    Would you initiate same strategy on the same strike today?
    Tomorrow is ex-div day and stock has steadily declined into this event which I thought unusual. May be down in symp. with SWY because of high oil

    tia

  15. lflantheman

    AAPL:  Cover all April 500s with 550 calls.

  16. stjeanluc

    TSL moving in the wrong direction but TLT zooming up!

  17. stjeanluc

    Finally breaking our way…. 

  18. jabobeast

    Phil--any prediction on PCLN earnings AH today???

  19. lflantheman

    stj…I sold the 30 April 550 aapl calls for 11.35

  20. stjeanluc

    Let me know the price you got on the 550 calls lflan and I'll post the spreadsheet.

  21. stjeanluc

    Thanks lflan…

  22. yodi

    lflantheman
    AAPL good call for daytrade Scaling in on the 500 Apr calls

  23. lflantheman

    AAPL:   BTO   5   April 500 calls for 33.30

  24. jabobeast

    FU CMG!!!

  25. stjeanluc

    Since we have just matches the highs from last April, a good comparison of what various asset classes have done since then:

    http://www.bespokeinvest.com/thinkbig/2012/2/27/key-etf-performance-across-asset-classes.html

     

    With the US stock market making a new bull market high on Friday, below we take a look at how various asset classes (through ETFs) have performed since April 29th when the last bull market closing high was made.

    As shown, while the S&P 500 tracking SPY ETF is up 0.37% since 4/29, the Nasdaq 100 (QQQ) is up 8.26%.  Thank you Apple!

    And while international markets have seen nice gains lately, they’re all still down significantly since last April 29th, which really highlights the outperformance we’ve seen here in the US.

    The natural gas ETF (UNG) is down the most out of all the ETFs shown since last April 29th with a decline of 55.76%.  The 20+ Year Treasury ETF (TLT) is up the most with a gain of 25.15%.

  26. lflantheman

    BUY to CLOSE the 30  Ajpril 550 calls for 10.75

  27. stjeanluc

    Crooks helping crooks…

    http://ftalphaville.ft.com/blog/2012/02/27/898441/massive-insider-secret-dealing-scheme-with-stratfor-and-g-sachs-maybe/

    Stratfor’s use of insiders for intelligence soon turned into a money-making scheme of questionable legality. The emails show that in 2009 then-Goldman Sachs Managing Director Shea Morenz and Stratfor CEO George Friedman hatched an idea to “utilise the intelligence” it was pulling in from its insider network to start up a captive strategic investment fund. CEO George Friedman explained in a confidential August 2011 document, marked DO NOT SHARE OR DISCUSS : “What StratCap will do is use our Stratfor’s intelligence and analysis to trade in a range of geopolitical instruments, particularly government bonds, currencies and the like”. The emails show that in 2011 Goldman Sach’s Morenz invested “substantially” more than $4million and joined Stratfor’s board of directors. Throughout 2011, a complex offshore share structure extending as far as South Africa was erected, designed to make StratCap appear to be legally independent. But, confidentially, Friedman told StratFor staff : “Do not think of StratCap as an outside organisation. It will be integral… It will be useful to you if, for the sake of convenience, you think of it as another aspect of Stratfor and Shea as another executive in Stratfor… we are already working on mock portfolios and trades”. StratCap is due to launch in 2012.

  28. stjeanluc

    Are Jeremy Grantham and Phil the same person:

    http://ftalphaville.ft.com/blog/2012/02/27/897921/grantham-on-how-we-dont-value-our-grandchildren/

     

    The 14% hurdle for discount rates that was considered a minimum in the late 1990s, for example, halves the future value of a dollar every 5 years, so that in 10 years today’s dollar is worth 25¢; in 20 years 6¢; and in 50 years one tenth of one cent! It is hardly surprising that any event out that far is ignored. For example, let us say that a firm’s current actions are going to cost society at large a billion dollars’ worth of harm in 50 years. Further, let us agree that all of the costs will definitely be imposed on the company. The company would feel that pain today as equivalent to only a mere $1 million hit to earnings. Why should they care? In contrast, the income of typical individuals is likely to compound at most at 1.5% a year, their risk-free investments at an imputed zero % (today’s 30-year bond minus inflation), and an equity investment at perhaps 4%, net of inflation and tax. To take the highest of these three rates, the billion dollar pain at a 4% discount rate is going to feel to the average citizen, who faces the bill in 50 years, not like $1 million, but like $100 million. And for some societal purposes, 4% real is far too high. Surely, for example, shouldn’t the value, and hence cost, of a child’s life in 50 years be identical to the value and cost today? The reader can easily see how a corporation’s outlook on potential future damage might be a painful mismatch with that of ordinary individuals and society at large. The consequences of this not only can be disastrous but probably will be.  A few painstaking readers might remember my “Farmer and The Devil” story of last July.  In it I showed how a good capitalist farmer had to sign a contract in which the Devil guaranteed a quadrupling of the farmer’s income through very aggressive farming practices at the hidden cost of 1% a year of his soil.  The farmer would enormously profit and eagerly re-up through the first several 20-year contracts only to end up with no soil, no food, and no people at about 100 years out.  Yet each time the farmer re-upped, he did the sensible capitalist thing. In this case, Adam Smith’s “invisible hand” failed, and fatally so.

    Damage to the “commons,” known as “externalities” has been discussed for decades, although the most threatening one – loss of our collective ability to feed ourselves, through erosion and fertilizer depletion – has received little or no attention. There have been no useful tricks proposed, however, for how we will collectively impose sensible, survivable, long-term policies over problems of the “commons.” To leave it to capitalism to get us out of this fix by maximizing its short-term profits is dangerously naïve and misses the point: capitalism and corporations have absolutely no mechanism for dealing with these problems, and seen through a corporate discount rate lens, our grandchildren really do have no value.

  29. haschade

    Pharm,
    I looked at the link in the bar but there is nothing that indicates a new entry last week…. Either I've got a cache problem in my browser or I'm just stupid….

  30. Phil

    Buffett/Pstas – His insurance bets did well because there were no disasters.  He knows that's a random event.  We're not going to have a real recovery in this economy until housing begins to come back AND jobs begin to come back WITH wages – all things we're not seeing a lot of so far.  All we are seeing in the economy now is a relief rally in consumerism as the people who still have jobs loosen up on the belief their jobs are no longer in danger.  We had 2 years of delayed purchases so a lot to make up but the fact that we are not racing higher in itself is an indicator that consumers are still very cautious so extrapolating a continued increase in spending (or where do the sales come from?) is very possibly getting ahead of itself.  

    Putin/1020 – Yep, it's a good ploy ahead of the election – one he's used before a few times so it's hard to believe the people still fall for it.  

    Income Portfolio/Haschade – We only update the post once a month.  The new trade was from Friday's chat near the end of the day on ECA, selling 10 of the 2014 $20 puts for $4.60 and the last sale was $4.70 so still available.  

    FAS Money – $87.74, improving nicely.

    IWM Money – Shouldn't have been wimpy and sold more calls.  Now it's not looking as attractive so, for the purpose of this trade, we're hoping for a bounce to sell into, probably the Weekly $61s, now $1, maybe for $2 at $61 but around $1.50 we should consider pulling the trigger so keep an eye out. If we don't get there, then we'll set our sights lower.  

    $5KP – No reason not to buy back TSL $10s for .04, as it is, they only prevent us from selling something else or taking advantage of a move up.  TLT looking very good. 

    $25KP – Those GMCR March $65 puts hit $3 this morning and shame on anyone who doesn't take a double off the table.  Now back to $2.20 is much less exciting and it's a real problem having a portfolio in which we can't expect people to follow the normal rules of stopping out a position.  All I can do is work with what's left when we get to it so I guess we'll wait and see as we squander that and several other opportunities to take profits on a nice dip.   

    SVU/Ban – Isn't that a lovely stock?  I think expectations are they cut the dividend, stock will fly if they don't so a tricky play.  You have 6,000 shares so $40Kish and, if you're in for the long-haul, I'd certainly at least cover with the 2014 $7.50 calls at $1.35, that's 20% of your stock price you get PAID for taking protection.  If you don't mind owning 6,000 more, you can sell the 2014 $5 puts for $1.30 and now you've collected $2.65 against a potential $5 purchase of more shares so you net $2.35 on 6,000 more shares and your "risk" is getting called away at $7 after getting all those dividends.  This should not be a hard decision…

    PCLN/Jabob – Last Q should have been strong but guidance will probably not be so depends on when CC is.  My trade idea last week was to sell this week $605 calls for $20 and they are still $18 as I didn't see them going to $525 without a pullback – I still believe in that one. 

  31. gucci

    Hi Phil PCLN-- would a calander sell wkly 620 call for 11 and buy April 620call for 24, if no pull back, still have time roll up to a spread — before earning today thx

  32. stjeanluc

    IWM Money / Phil – The weekly TNA 61 calls are now $1.50. That was quick!

  33. Phil

    Bots are still in control as we whip back off the lows.  Of course, it's a lower low each day now.  

    CMG this week $380 puts at $1.75 are not a bad gamble. 

    Chipotle Mexican Grill: So Overvalued in So Many Ways

    Great chart StJ – Nat gas does look like a bargain, which is why I like the ECA short puts as a sideways play on it.  Your beloved France needs to be considered if Europe is really fixed (I wouldn't go near Italy!) so EWQ is worth a look, perhaps.  

    Grantham/StJ – Probably not the top name on my alias list:  

  34. stjeanluc

    25KP / Phil – I think that it's not always easy for everybody to pull the trigger on winnners (or losers) because you expect them to run even further (or come back). For example, looking at the GMCR this morning, momentum made it look like we could catch a lot more than a double…

    I will set up alerts on my side for 50% and 100% wins on our positions as well as 25% and 50% losses and post when we get there. People can take it from there – cashing winners and deciding on the losers.

  35. Phil

    PCLN/Gucci – They are going to move on earnings so you can still get burned and if they drop hard, you may not have $14 left in April but it's a reasonable gamble.  I'd sell the $610s for $15 though.  And maybe I'd only go with 4 longs and 5 shorts…  

    TNA/IWM Money – StJ – Very nice, let's sell 2 weekly $61 calls for $1.50 as I don't see strength to this bounce.  

  36. Maya1

    LFLAN
    Normally, I don’t trade AAPL except for longer term positions
    Because I could sit in front of my IPad without interruption this morning, and because of the market volatility, I thought I would trade…while my premise, as it turns out was the same as yours( I did not read your trades until after they happened),, I could not move fast enough…Came to PSW, read your trades and I came out even at best…did not get the $11.35 on calls or the $10.95 on buy back
    Now, all I have is the iPad to work with where I am, and Q:
    Do I need more than one computer?
    I don’t have automatic streaming of prices, and have to refresh, just as I have to do with PSW posts.

  37. stjeanluc

    France / Phil – Just you wait, the Socialist party will win the presidential elections there and then we'll kick a$$! 

  38. stjeanluc

    IWM Money – Sold 2 TNA Mar1 61 calls for 1.50 (these are the weeklies)

  39. lflantheman

    Maya….very difficult to do these trades quickly on an iPad.   You don't need more than one computer, although it helps; you do need something easier and faster to work with than an iPad.   I use a desktop HP  most times.  When trading at home I'm on an AAPL desktop (what else!).  I rarely have 2 computers in front of me. (I'm too cheap to buy and set up more computers). 

  40. yodi

    Maya1
    AAPL this mornings trade sell 550 APR was an absolute momentum trade as you could see the market was going down and AAPL was going to follow. With a trade like this do not leave your seat. However the buy 500c was at the bottom when the DOW was turning and one could expect AAPL to follow up. See my note scaling in and you could see at the same moment FLAN gave an order to buy.

  41. Maya1

    LFLAN
    Thanks
    I will stick to my regular day job…I think and just hang on to my longstanding and tried positions, hedged here and there as a percentage of the portfolio with puts and ‘sometimes’ short calls.

  42. stjeanluc

    Earnings strangle – The weekly PCLN options seem to price an 8% move on earnings when PCLN moves over 10% on average. I don't see any play with this that I like! 

  43. Maya1

    Yodi
    Thanks. I saw your note too…AFTER It all happened….just could not move fast and did not get the prices I wanted either….I will now go and spend some time in the gym…

  44. yodi

    Maya1
    The AAPL I personally consider as a side line game, Like going with 50$ in your pocket to the casino. Even that I have a great deal of longer term BCS aswell my monthly puts. I prefer core holdings like stock and CC with puts if you like the stock like the MSFT play from Phil the other day.

  45. Phil

    $25KP/StJ – Yes, but isn't that what we're supposed to be teaching?  We ALWAYS sell into the initial excitement and that means if we get a sudden pop that takes us to 50% or 100% winners – we set a very hard stop and get the hell out before it disappears.  Look at the differences between taking money and not taking money today.   We could have gone right back into them right now and not only missed nothing but made much more than we will by riding out the bounces.  I'm just frustrated, there's not a good solution and if people want to swing trade, they should hang out in Optrader's section, not here but we do need to spend more time talking about the basics of taking advantage of market moves.  

    As it is, I'm playing the portfolio for the big win but that tends to put our backs against the wall while we wait.  There do need to be rules, like – when we get even on the basis of a doubled down or rolled position – we take 1/2 off the table.  That's the whole point of doubling down or rolling – to get even – so why can't we find a simple way to convey that goal when we do it?

    At the open: Dow -0.5% to 12918. S&P -0.63% to 1357. Nasdaq -0.65% to 2944.

    Treasurys: 30-year +0.66%. 10-yr +0.4%. 5-yr +0.2%.

    Commodities: Crude -1.06% to $108.61. Gold -0.15% to $1773.65.

    Currencies: Euro -0.57% vs. dollar. Yen -1.26%. Pound +0.27%.

    Market preview: U.S. stocks look to follow Europe and open lower after G-20 officials punted on key decisions over the weekend regarding more international aid for Europe. S&P futures-0.4%. Concern over rising oil prices eases slightly, as Nymex crude-0.8%. The dollar is off sharply vs. the yen and euro. Still ahead: pending home sales, Texas Fed. 

    Feb. Texas Fed Manufacturing Outlook: Business Activity Index 17.8 vs. 15.3 prior. Manufacturing production 11.2 vs. 5.8 prior. New orders 5.8 vs. 9.5. Capacity utilization 10.0 vs. 8.5. Shipments 4.2 vs. 6.1. Employment 25.2 vs. 12.2

    Dec. Pending Home Sales: +2.0% to 97.0 vs. +1.5% expected; -3.5% prior and +8.0% Y/Y. "Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year," NAR's Lawrence Yun says. 

    The S&P 500's Friday close pushed the index above its April 29, 2011 peak, but "none of the 10 sectors were close to the flat index return," S&P's Howard Silverblatt says. Tech has been the best performer, +9.5%, with consumer discretionary +5.8% and utilities +5.6%. Despite financials’ big gains YTD, they’re still -11% since April, while materials -6.8% and energy -5.4%. - Actually, I think that is healthy rotation.

    The fever grows for Wednesday's liquidity gusher by the ECB, otherwise known as the LTRO. Over the last month, the median forecast for the take-up has nearly doubled to €500B, with the highest estimate rising to €750B. 

    The ECB completes $0 in purchases under its SMP, the 2nd consecutive week of it not buying any sovereign debt. R.I.P. to the emergency program … for now.

    "It's an awfully easy decision right now to not be making further investments in risk assets," says new Bond King Jeff Gundlach, as recent market gains leave no cushion of safety given the dangers still faced by the world economy. One red flag: high yield investors conceding the market has run too far, but still not selling anything – "as close as you're going to come to a sell signal."

    The bank run in Greece continues, private sector deposits declining 3% in January, according to the ECB. At €174.9B, deposits are at the lowest level since November 2006 and 28% below the December 2009 peak. 

    German parliament is set to vote today on the Greek bailout. The vote is expected to pass despite a top member of one of Merkel's coalition partners calling for Greece to exit the euro. There's also Germany's best-selling newspaper, Bild, exhorting lawmakers to"STOP!"

    Mixed messages: "No one can calculate (the) consequences of a euro exit by Greece," says Angela Merkel, urging Bundestag members to vote for the bailout even as she tells them there is "no certainty for success." The vote – expected to pass – is scheduled for around noon ET. 

    More from Merkel: She reiterates that she sees no need to boost the EU firewall (the combined EFSF and ESM funds). The IMF has said an increased rescue fund is a prerequisite of it contributing to the Greek bailout, but Merkel – for obvious domestic political concerns – is at least publicly putting up a fight against such. EU stocks are at session lows, Stoxx 50 -1.4%

    Italy sells €12.25B of 6-month bills priced to yield 1.2%, the lowest yield since September 2010 and below last month's rate near 2%. The short end of the curve continues to be boosted by the ECB's LTRO – which essentially allows banks a free roll on shorter-dated government paper.

    Cowen expects that Germany's plans to accelerate and deepen FIT cuts will result in further industry ASP pressures. As a result, the firm cuts a number of solar names: First Solar (FSLR-1.4%), SunPower (SPWR -5.3%), Suntech (STP +1.3%), and Trina Solar (TSL -3.3) are all downgraded to Neutral from Outperform.

    Carnival (CCL -1.8%) trades lower on more negative stories swirling around concerning its cruise lines. The company reportedly has a ship adrift off the coast of Italy following a fire and saw 22 customers robbed at gunpoint in Mexico last week after stopping off from a cruise that originated from California. - Yodi, please give the nice people their money back!  

    John Hempton finds a nugget in the Buffett letter - Berkshire's (BRK.A) 2002 purchase of ag equipment maker CTB. The $139M buy has – in just a decade – distributed back to Berkshire far more than the acquisition cost, and continues to earn annually an amount roughly equal to the purchase price. All it takes is a few real good decisions.

    Netflix (NFLX -2.8%) falls premarket as Raymond James downgrades the stock to "underperform" from "market perform." Details to follow.

    With a wholesale ASP of ~$650, the iPhone is much more expensive than the average Android phone before subsidies kick in. That's proving to be a problem in markets where subsidies don't exist, or where consumers prefer to buy phones prepaid rather than agree to expensive contracts. In crisis-hit Greece and Portugal, for example, Apple's (AAPL) smartphone share remains below 10%, leaving Android (GOOG) to dominate the market. (also

  46. jrod0725

    This may have been done before but other than taking 50% off on a double or breakeven are there any other rules for the 25KP that can be posted somewhere? That way some of the newbies like myself can put them on a post-it on my monitor? I was fortunate enough to at least take half of GMCR off but now I wish I would have done the same on everything else, DIA, TZA, etc.

  47. jabobeast

    FU PCLN!!!

  48. jabobeast

    FU TZA!!!

  49. Pharmboy

    Straight line up? Nice. 

  50. msf65

    Warren Buffett: Steve Jobs Didn't Take My Advice To Buy Back Apple Stock

     
    http://finance.yahoo.com/news/warren-buffett-steve-jobs-didnt-154602405.html

  51. rpme

    Same as last week, down in the morning, then up for the day.

  52. jabobeast

    WTF did the market shoot up today?

  53. jerconn

    Iflan, should we be setting a sell point for the AAPL calls (such as the 526 highs)?

  54. sagemm1

    so what is this rally du jour…just the standard early morning low and melt higher on news that things are really in great shape the bears just cannot see it?

  55. lflantheman

    For new traders:  Beside my computer I have the following list….
    TRADING RULES:
    Follow the Trend
    Sell into the Excitement
    Sell Premium
    Stay Balanced
    Use Stop-losses
    Take profits
    Cut losers quickly
    Protect Equity
    Strangles are Good
    So are Spreads
    Straddles…not so much
    Wait for Pullbacks
    These rules keep me thinking, and making money.

  56. peedlew99

    What did I miss?  Was there news?  or just dip buyers?

  57. lolobear

    Phil, is it time to buy puts on TLT?

  58. lflantheman

    jerconn….I may start scaling into some profit-taking at about 525.  I will likely peel off 5 to 10 of the 35 contracts at a time as we move up.  Alternatively, we can cover some of them as we go up.  We'll see.  Right now the minting machine is running.  

  59. kustomz

    ZH explains why everything went up..pretty simple..massive amounts of liquidity = massive balls

    When in doubt – buy. When in doubt what – everything. As the chart below shows starting with the open of the US market, literally everything has been bought: stocks, bonds, crude, gold, and 'logically', the VIX. It took the market virtually no time to remember that when trillions in liquidity are being injected into the market courtesy of central planners, a downtick is verboten. Next up: waiting for WTI $110. Should take a few minutes at most.
    http://www.zerohedge.com/news/everything-not-nailed-down-being-bought

  60. jerconn

    Iflan – thanks…also what about buying some March or April puts as we scale out?

  61. lflantheman

    No puts

  62. lflantheman

    We buy calls on dips, and sell calls on peaks, but we don't buy puts on peaks because the trend overall is UP. 

  63. jerconn

    Iflan – yes I hear you loud and clear on the overall trend.  What I don't understand is: we are currently in AAPL in long calls in order to play the retest up to AAPL highs.  Obviously the implication is that AAPL will drop, and possibly precipitously, after reaching those highs.  It seems to me that we are no less certain about that than we are that AAPL is currently going UP.  So, why not play the downside?

  64. mvex1

    Hi Phil:  In your comment on SVU/Ban above, and assuming that SVU's share value fell considerably, and the shares put to the holder with a net cost of $2.35, it would be a reasonable assumption that the company was in more financial difficulty.  With that said, assuming that the company is in financial difficulty, my question is…if you owned 12,000 shares in total after the assignments, would you, in order to protect the value of the 12,000 shares, do the same strategy of selling a covered call and buying a put?  Or, simply sell the shares on an uptick and get out.  Or, hold the shares, buy an ITM put and hope the shares move up enough to offset the cost of the put?  Or, if you think the shares are going to rise, do a BCS and sell a ATM Put?
    I am trying to think forward, using adjustments under a what if scenario.  I think the same situation can be applied to UNG in that we don't know what will happen short term with regard to it's move, but the probability longer term (several months) on an increase, is a safe bet. 
    It seems to me that using this type of strategy (covered call + sell a put) protects the principal investment and gives you a chance to maneuver if assigned.  The trick is to maneuver quickly and use the right adjustments.   How do you know which adjustment to use with the main goal being to protect the principal and profits to date?
    Thank you.
    M. 
     
         

  65. Phil

    Rules/Jrod – Those are the biggies as it's just hard for me to watch everything and call for profit taking on a strong move – especially in the mornings, when there's a lot to do around the open.  It's right in our strategy section – not complicated stuff.  

    Rally du jour/Sage – They don't even bother to pretend there's a reason anymore….

    Great rules Lflan!  

    TLT/Lol – It's such a narrow range, I only like going long below $116 and short at $123 and not really psyched about stuff in between. 

    Well we got the news out of Germany – now we'll see if they fade it:  

    Germany's Bundestag approves the 2nd Greek bailout by a vote of 496 to 90, with 5 abstentions.

    What actually happens at Davos? (New Yorker)

    Krugman: What Ails Europe?  (NYT)

    That Greek debt sustainability analysis in full (FT Alphaville)

    G-20 Snubs Germany on IMF Funding (Bloomberg)

    European shares close mostly red, but well off session lows hit as Angela Merkel – playing before a home crowd - reiterated her stance against a bigger rescue fund firewall. Stoxx 50 -0.4%, Germany -0.2%, France -0.7%, Italy -1%, Spain +0.2%, U.K. -0.3%. The euro -0.3% at $1.3404.

    China plans to push its buy-Chinese initiative by requiring government officials to stop buying imported autos. Though it's a small loss in sales for global automakers because they don't sell many cars to China's government, it represents another headwind as they try to gain more market share in a nation where consumers buy over 18M cars a year.

    Builders Feel Bite in China (WSJ)

    More fun stuff to ignore:  The entire Taiwanese banking sector is cut to sell at CLSA as the country faces the bursting of housing and tech bubbles. A decade of easy credit has led to oversupply in Dram, panels, LED, solar, and property, writes Dexter Hsu, but now credit is tightening, which "should accelerate the seasoning process." EWT +12.8% YTD.

    The Housing Recovery In One Index (Pragmatic Capitalism)

    Crocs (CROX +2.9%) expects to double sales in less than 5 years, according to CEO John McCarvel. He notes that the key to the firm's growth will be Asia – which is slated to soon pass the combined Americas in sales.

    In spite of beating Q4 estimates, Dendreon (DNDN-16.4%) is tanking in early trading. A possible culprit is the company'sguidance for a Q1 sales decline, though Street estimates had already forecast a sales drop. 

    850K Android devices are now being activated every day, says Google (GOOG) mobile chief Andy Rubin. That's up from aDecember pace of 700K and a June pace of 500K, and translates into an annual rate of 310M units. All of those activations could allow Google to meet Cowen's forecast of $5.8B in 2012 mobile ad sales. (earlier

    The Rise of the Super-Rich (NYT)

     

  66. lflantheman

    jerconn…I don't expect AAPL to drop precipitously.   Only around an EVENT would I suspect it might. 

  67. Burrben

    Phil /  TASR Question
    I got into a buy write with TASR.  Buy the stock, sell calls, puts.  Now I'm a little confused what to do next.  If you could explain next steps to the trade, that would be Mucho Appreciated!  This is a long term hold for me, as it's your "stock of the decade" :)
     
    Position:
    2000 TASR at $4.90, now $4.10.  -$1,770
    -20 TASR June 5 Call at $0.64, now $0.10.  +$1,086
    -20 TASR June 5 Put at $0.69, now $1.00.  -$514
    Net Pnl :  -$1198

  68. JRW III

    Good quote from S. Walsh :

     

    Brought to you by Government Trading, Inc.

    Update from HFTAlert at 11:23
    700+ share HFT program running limits-largest i have seen in months.

    Gee…I wonder why?

    Have you noticed that when we spike up 100+ points no reversal can be seen right away as a wave needs more time to complete? Yet this morning, one would expect a new low after a bounce. And even though it broke trendlines for the first time that should have given pause to any buying, the computers came in and started right away.

    This is a state run market. That should come as no surprise given the landscape. In 2009 with the mkt activity we wondered. Now we have known for some time. It is BTFD all the time. Our economic substructure is so abysmal they cannot allow Dow 10,000 to break. It will crush most municipalities and bring about crime waves. I don't mind so much if it truly is to try to save America, but it is the unchecked cronyism and theft that troubles me, for that is what banana republics are made of. And these thoughts really need to be filtered into any trading decisions.

  69. yodi

    Flan AAPL covering longs well done this morning! but at present DOW is only up 23 pts is it not a bit early to cover it shows a very strong uptrend

  70. shadowfax

    JRW
    Thanks for the update, I keep saying to myself this makes no sense, missing the up leg after leg. Does this indicate today is the only unique day?

  71. l4real

    JRWIII/ Quote from S.Walsh
    Well said!

  72. JRW III

    shadow / Unique

    Just look at last Thursday !!

  73. terrapin22

    Phil / TEO -  good idea in the weekly newsletter from Scott.   Are u going to add it to income portfolio?

  74. Pharmboy

    Oy vey.

  75. shadowfax

    JRW
    Thursday! A day that I was not around in the AM and figured I missed out, Thank you for pointing that out!

  76. jerconn

    Pharm – Vas iz?

  77. Phil

    I love the Najarian logic:  "JOYG is going up so that means the economy must be good."  It can't possibly mean that it's a stock and they're all going up?  Now we "prove" the market should be going up because stocks are doing well – it's a TA paradise indeed…

    Still, we're back over goal on the S&P – maybe they'll hold it this time. 

    SVU/Mvex – Well your question assumes a different kind of trading style.  I buy SVU because I think it's reasonable to pay $1.4Bn for a chain of 2,400 stores (583,333 per store) with brands like Acme, Alberson's, etc. that's been around since 1871 and has $37Bn in sales and has been dropping over 7% per Q to the bottom line in the last 3 quarters.  They have enough extra cash to generate a 5.3% dividend and I don't really care if they pay it out or not because, if they don't pay it out for 20 years, they double the value of the stock anyway.  So I don't care what the PRICE of the stock is – if you want to sell it to me for $2.35 – I'm fine buying it.  Of course, in reality, if the stock crashed 66% between now and 2014 and was below $2.35, I'd really want to know why but, if nothing has changed and now I can buy the above for $450M instead of $1.4Bn – I'm good with that too.   

    You can't know what you'll do when a stock is down 2 years from now, that's silly to "plan" for.  What I can know is that, right now, knowing what I do know about SVU – I would be thrilled to buy 6,000 shares for $2.35.  Of course, if SVU is $2.35 because of a massive market crash and AAPL is $135 – I'd probably rather have 100 shares of AAPL for the same money.  The real key, which you seem to be missing, is NOT to make a full commitment up front.  If you buy in 1/3 commitments on this strategy and your goal is to have $20,000 worth of SVU, then you can buy 1,500 for $6.62 and sell the 2014 $7 calls for $1.35 and $5 puts for $1.30 and you're in for net $3.97/4.49 so you either get called away with a $3.03 profit (76%) plus a .70 dividend (17%) at $7 or you end up with 3,000 shares at net $4.49 ($13,470) if SVU is below $5.  

    The further out you go, the more complex all the what-ifs becomes (like chess) so there's really no point in worrying about what may or may not happen in 2016, is there?   Clearly you have a comfortable entry and comfortable double down point and if SVU drops to $3 tomorrow, you're down 1,500 share x $3.62 to get out ($5,430), which is about 25% of your full allocation.  If you can live with that – then all is well and you can go ahead and begin to establish a position.  If you can't live with it and if you think there's a strong possibility SVU will plunge to $3 right after you buy it – WHY ON EARTH WOULD YOU BE BUYING IT?  

    Investing is not Roulette (and even in roulette, you have favorite numbers, don't you?) – it's not random numbers on a wheel that could come up whatever for no reason at all.  These are companies we INVEST in so your "what if" scenarios, while you should be aware of what you will do if a stock drops 20%, 40% or 50% – should not be overly focused on catastrophes because – if you are that worried about negative outcomes – the simple plan is not to buy stocks at all until you feel better about their outlook.  

    Not buying stocks is a strategy.  Waiting is a strategy – Buffett waits for years at a time.  If you wait for a good deal and you give yourself a 20% cushion on the entry and you guard against disasters along the way – your portfolio will take care of itself without all the fuss.  

    TASR/Burr – They're at $4 and it's February so nothing to do yet.  You have a net entry of $3.57/4.29 and the stock is at $4.10.  Doesn't matter what the current p/l says, you are .19 under your net ownership if it's put to you.   So there's nothing do do until June, when the premium runs out.  Then you'll probably pick up another $1.35 in premium selling Jan $4 puts and calls and that will drop your basis to $2.22/3.11 with a call away at $4, not terrible.  If you are in long-term accumulate mode and they drop another $1, then you'll have the opportunity to sell $2.50 puts for a good price too.  

    That's the point of buy/writes – if the stock goes up, you make good money.  If the stock stays flat, you roll the short strangle and lower your basis.  If the stock goes down, you buy more for cheaper and you're on the way to a full allocation at a very low price.  This works fantastically well for long-term value investors and I've been doing it here for many years now and over and over and over again the long-term value plays outperform the short-term stuff by a mile over time but still, no one believes me!  Well some do but always there is more work to convert the savage day-traders, right?  

    State Run Market/JRW – Well we just have to go with the flow.  I was tempted to go long off today's bottom but the possibility of a no vote in Germany made it too dangerous.  As it was, turns out being short continues to be the most dangerous game of them all.  This is just like the housing bubble though – the illusion that a row of homes (CMG, NFLX, GMCR, OPEN…) is worth 40x allows a new building to be put up (Facebook) at 100x and all the investors rush to put money in because "it can't miss."   The Government can have all the incentives and play all the games it wants to and the brokers can fake appraisals and play games to push prices and the IBanks and the Fed can push low rates to make it all seem affordable but, after a certain point – as Hayeck points out – all we do is create malinvestments and the whole thing collapses in on itself and leaves startled investors holding nothing while the economy itself is in shambles because we DIDN'T spend all that money on things that would have really turned into lasting businesses.  It happens all the time and, sadly, we never learn. 

    TEO/Terra – I'm not too excited about adding positions at the moment (as I expect a correction) but TEO is interesting and will become more so if they test $17 and hold it.  

    VIX is slow to calm down. 

  78. peedlew99

    Wow.  Selling calls is officially useless.  

  79. jerconn

    Iflan, you there?  AAPL up over $526 now seems to be retrenching…do you expect it to go yet higher?

  80. lflantheman

    AAPL volume at noon  12.0   Usual daily volume 13.7    Upward on volume.  Stay the course.  

  81. Phil

    Speaking of companies that are so cheap they're worth a toss:  WFR is still $4.06 and you can buy them and sell the 2014 $5 pus and calls for $2.90, which nets you in at $1.16/3.08, a nice 25% off if 2x are put to you and an even nice 330% profit if called away.  

    HOV is at $2.95 (up 5% today) and they have 2014 $2 puts at .90 and $3 calls at .90 which drops your net all the way down to $1.15/1.58 – so 50% off here, even if it's put to you and a triple if called away – these are nice ways to get bullish!  

  82. ban2

    lflan
    what chart program do you use watch tic and vol?

  83. kustomz

    Make way for the pipeline, looks like oil prices changed some minds.

  84. mvex1

    Hi Phil:  All excellent points.  Thank you.
    M.

  85. kurtww

    Phil/WFR – The 2014 $5 puts and calls are worth $2.90, but the 2013 are worth about $2.10. Does it make sense to do that instead, and hopefully do it again in January? Could you explain your rationale if you have a chance?

  86. mrmocha

    Pharm -  Should I add some extra ARIA covers for their earnings tomorrow?  It seems that biotechs don't have the dramatic earnings fluctuations of the momos so I don't pay much attention to earnings, is that your model?  Also, followed you into more YMI here.

  87. peedlew99

    I have not participated much in the last few weeks…  Just been enjoying my short Yen trade.   Today I started looking to get in, and honestly I can't bring myself to buy much.  A buy write on PEG…  Just doesn't look good here at all for entries.

  88. Phil

    1:00 PM On the hour: Dow +0.18%. 10-yr +0.34%. Euro -0.3% vs. dollar. Crude -0.53% to $109.19. Gold -0.01% to $1776.25.

    That was fast!  S&P places the eurozone bailout fund – the EFSF - on creditwatch negative (following the downgrade to AA+ in January). The agency no longer believes credit enhancements will be added to offset the lowered rating of guarantors like France, and is thus revoking its stable outlook.

    The bond market's (still the world's most hated asset class) continued strength in the face of positive economic surprises and the embracing of risk means Treasurys are treating spiking oil prices as a "deflationary shock," writes David Rosenberg, reminding that each penny increase at the pump "siphons away around $1.5B from consumer wallets."

    Portugal is expected to get high marks from its 3rd Troika review when the finance minister presents the results at a press conference tomorrow. A positive assessment is required before the next €14B tranche of bailout funds can be disbursed (and then sent right back to the country's creditors).

    In "a strong vote of confidence in commodity assets,” 56% of respondents in Barclays' annual survey say they plan to initiate or increase commodity exposure in 2012, vs. 45% last year, and only 7% plan to scale back their positions. Many investors cut their commodities exposure in 2011 because of high risk and poor returns. Biggest downside risk, the survey says: a possible hard landing in China.

    Bullish auto sales projections bode well for Sirius XM (SIRI+1.8%), argues Spencer Osborne. TrueCar's forecast for 1.09M February U.S. sales makes Sirius' guidance for 1.3M 2012 net subscriber adds look conservative, especially since the company added 1.7M subs last year. However, a recent price hike could keep Sirius from raising its guidance in the near-term, as might expected market share gains for Japanese automakers. 

    Journalists at Britain's Sun newspaper paid large sums of cash to corrupt public officials, aware the practice was criminal, apress ethics inquiry hears. The disclosure could damage News Corp. (NWSA +0.5%) if it gives ammunition to the FBI and other U.S. agencies that have stepped up their hunt for signs of illegality at Rupert Murdoch's media empire. (also

     

    The marriage of money and politics in China outdoes the U.S. by a wide margin, with the richest 70 members of the country's legislature showing a net worth of $89.8B against $7.5B for the 660 top U.S. officials. The statistic points to growing concerns within the country not just of corruption, but of the vast disparities in wealth among the citizenry.

    The Barclays Skyscraper Index – known for its uncanny correlation to market tops – shows a strong bubble reading for China and India with both nations increasing their pace for planned construction on cloud-topping buildings.

    Thermal coal prices fall at China's Qinhuangdao – the country's largest delivery port – for the 3rd consecutive week, bringing the price down to the lowest level in nearly a year. Inventories are high – power stations hold 22 days of supply vs. 17 a year ago – as demand for the fuel declines.

    TransCanada (TRP +0.7%announces that it has formally reapplied with the State Department for approval to build its Keystone XL pipeline. The company also says that it will move ahead with a plan to extend its pipeline from Cushing, Oklahoma to Port Arthur, Texas as a stand-alone project, in order to help relieve a buildup of stored oil at the Cushing terminal.

    It looks like ARM (ARMH) licensees QCOMNVDA, andTXN will be facing some real competition from Intel in the smartphone space. In addition to inking a deal with France Telecom, Intel's (INTC) has struck a deal with Indian phone maker Lava, and a multi-year partnership with fast-growing ZTE (ZTCOY.PK). Separately, Intel is announcing a more powerful successor to its Medfield chip, as well as plans for a less costly chip.

    Auriga reiterates a Buy on Cisco (CSCO) following itsacquisition of Lightwire, arguing the move (along with others) indicates a renewed focus on creating differentiated hardware based on custom chips, one that could help it stave off growing competition. Moreover, Auriga believes the Lightwire purchase is a "game-changer" that will lead Cisco to make its own optical modules (possibly bad news for JDSU and FNSR).

    A leveling out in subscriber additions and competition driving up content costs are the reasons behind Aaron Kessler'sdowngrade earlier of Netflix (NFLX -2.9%). Kessler notes Google searches for "Netflix" – after rising sharply for years – have shown no Y/Y growth in 2012 Q1. 

    Can the largest stock in the U.S. double yet again?SmartMoney's Jack Hough offers up (video) the theory that Apple's (AAPL +0.4%) upside potential for adding smartphone and computer market share – along with its relatively tame price-to-earnings valuation – keeps its bid for a four-digit trading price a reality.

    Three lunchtime reads:

    1) Ten investment lessons from Jeremy Grantham

    2) A closer look at the link between oil prices and monetary policy

    3) Regulatory risk: The rules of the game 

  89. shadowfax

    JRW
    I have noticed a change in the tick since last week and today, very odd shares like 238, 549, 126, when normally its ???00. Sometimes it's 178 followed by 122 = 300 but even that, Why?

  90. Pharmboy

    OK, Housing debt has fallen off by $14X.XX trillion…..how much is write-offs of current short sales, etc?  A lot!  And more to come.

    Mortgage and home equity lines of credit (HELOC) balances fell a combined $146 billion, a sign that consumers continue to reduce housing related debt.

    After a mild uptick in the third quarter, total household delinquency rates resumed their downward trend in the fourth quarter. The report finds that $1.12 trillion of consumer debt (or 9.8 percent of outstanding debt) is currently delinquent, with $824 billion seriously delinquent (at least 90 days late). Meanwhile about 2.2 percent of mortgage balances transitioned into delinquency during the fourth quarter, resuming the recent trend of reductions in this measure. However, delinquency rates remain elevated compared to historical figures.

     

    ….oh: As of December 31, 9.8% of outstanding debt was in some stage of delinquency, compared to 10.0% on September 30. About $1.12 trillion of consumer debt is currently delinquent, with $824 billion seriously delinquent (at least 90 days late or “severely derogatory”).

  91. lflantheman

    AAPL order placed:   If AAPL drops below 524.50…..sell to open 35   April  550 calls.   This will give me an immediated cover for the long calls if I'm away from the computer and we get an afternoon drop.     I watch the TDAmeritrade charts mostly. 

  92. stjeanluc

    The oil to gas ratio has gotten out of hand…

    http://www.bespokeinvest.com/thinkbig/2012/2/27/oil-to-natural-gas-ratio.html

  93. lolobear

    Phil, any plays on SODA?

  94. lflantheman

    Someone asked me a couple of days ago how I am able to integrate trading with full time work.  An example is that at EOD I will very likely have all AAPL calls covered, as I will have very little trading time available to me tomorrow.  If I can't watch, I have to protect.  A spread is much safer than a straight-up call.  

  95. JRW III

    shadow / changes

    Just the bots trying to find new ways to get us !!  8-)

  96. Pharmboy

    ARIA/mrm – that is a good question.  Those companies that have things have not moved much in the earnings (SGEN, EXEL, etc).  so if it were me, why not 1/2 sale of April to protect some profits and buy back if they dip.

     

    YMI trying to sell more June $2.5 puts for 75c. 

     

    PLX – for soft returns, how about covered stock with sale of April $5 puts.  If you are called away, it is a 4% gain on the covered stock, and let the puts run for another 45c gain.  I find it hard to believe that $5 will be broken.  I may be wrong, but I am happy to own more.

  97. shadowfax

    JRW
    The bots are exposing themselves!

  98. lunar

    lflan, would you suggest buying any aapl calls now or is it too late for the day? thx

  99. lflantheman

    lunar…….I would not buy calls right now.   could pull back before eod.

  100. lflantheman

    market looks to be weakening a bit, and AAPL may follow it down later today.  

  101. peedlew99

    OH Wait…
     
    LOVE theat WFR trade too.  Added that.  Thanks Phil.  I also did your PCLN bear put spread from last week.  If we can keep doing bullish AND bearish trades where we risk $700 to make $3500 it's hard to lose money over the long term.

  102. ban2

    Phil
    I had some EDZ  Feb short puts and was assigned 1500 shares  @ net $15.15 (now $12.4) and really don't want to hold these.
     Based on your comments last week to Palotay I'll will prob. sell by EOD (yes should have sold this am but thought MAYBE they wouldn't BTFD for the 20th time in a row)

    Two questions
    1. On the  suggested Jan 10/20 BCS if EDZ spikes over 22 say by end of Apr can you estimate what the value of the Jan spread would be? ( I didn't get the "you don't have to sell the 9 puts till EDZ drops another $1.50)

    2. the bid /ask  on EDZ options are VERY wide. I'm assuming we should have some kind of hedge in place. Do you like SQQQ better?
     
    ———————--
    "EDZ/Palotay – I'd worry more about EDZ simply going down than decay but they are never a good long-term hold if you aren't selling calls against them.   There's no need to own shares when you can pick up the Jan $10/20 spread for $1.40 – let that decay, not your $12.42 of cash when the $10s are already $2.42 in the money.  You can offset that with the short $9s at $1.40 and your worst case is you're back in at $9 but you don't even need to sell the puts unless EDZ drops another $1.50, right?  

  103. lflantheman

    See my 1:40 post.  I've moved the stop to 525.

  104. lflantheman

    Just keep your stop for covering about one dollar behind the ticker price. 

  105. Pharmboy

    EXEL – sell the $6 May Straddle for 1.17.  1/2 cover play on stock

  106. Pharmboy

    One can also do the Aug $7/6 strangle for 1.55.

  107. yodi

    lunar
    to late for now AAPL

  108. Pharmboy

    DD – nice big P-bar on them from last week. Now if that does not convince one of manipulation…then I am not sure what will. 

  109. Phil

    WFR/Kurt – Well you can go either way but you also may never get a chance to sell $5 puts for anywhere near that price again and it lowers the net entry enough (50% more) that it's fine for a set and forget type of play like this one.  If you prefer to be shorter – easy enough to justify that move – more a matter of preference.  

    Not much to buy/Peedle – Unfortunately, I agree.  

    LOL Pharm – Would be nice if it dropped off by $14Tn but just $1.4Tn, I think.  So, even if we assume that the 5% of the people who are unemployed have the same buying power, there's not a lot of room for a comback and the huge increase in delinquent credit indicates a very large portion of the reduction is probably write-offs.  

    SODA/Lol – I don't like them at all.  They are a silly little Momo stock so too dangerous to short as well so I guess my "play" on SODA is to take the $45.21 they charge for a share and use that as margin to sell KO 2014 $60 puts for $4, which is a very nice return on a real company.  

    Risk-Reward/Peedle – You got that right! 

    EDZ/Ban – Short-term, you're going to be looking at the net delta between your strikes of .25 so about $2.50 on a $10 move is all you should expect.  My point was that you have a great upside on the trade and you're $2.30 in the money so there's no need to even sell the put against the $10/20 bull call spread (now looks like $1.70) unless EDZ drops low enough to threaten you at about $11, at which point the $9 puts, now $1.60, should be more like $3 so why sell them now when there's no need?  If you don't want to wait for a fill, SQQQ is nice too but AAPL is a monster and won't let the Qs die.  

    Gold having an exciting day trying to shake off the shorts.  Oil back under $108.50.  

  110. Beaufleurs

    When you refer to a stop in your trading Lflan, you are referring to it as a mental stop?.., keeping an eye on the stock and executing the order to sell the calls if the stock dips to 525?  

  111. jabobeast

    CMG new all-time high again
     
    every f n day..
     
    DREK!!!

  112. lflantheman

    Beaufleurs….When I say stop I've already placed it into the computer as an order, or a trade trigger.  That keeps me from changing my mind and following a trade to the wrong place.

  113. lunar

    thx lflan and yodi.

  114. smala766

    Phil,
    i'm in the USO MAR 39 put  and i missed the roll to the APRIL 40 last week, do you think i can roll today ?
    thx

  115. stjeanluc

    And no wonder the price of nat gas keeps on going down – we produce so much:

    http://www.thereformedbroker.com/2012/02/27/the-natural-gas-game-changer/

  116. lflantheman

    lunar…don't let me ever talk you out of going long AAPL again…………..

  117. dpastramas

    AAPL / Iflan – Will you be looking in covering at the close or going naked the long calls into tomorrow? 

  118. jabobeast

    market rallying again…
    http://www.youtube.com/watch?v=J6_1Pw1xm9U

  119. lflantheman

    Sell order placed for 5 of the calls at 40.00

  120. lflantheman

    That is…………..sell 5  April 500s at 40.00

  121. yodi

    lflantheman
    Sorry do you not think it was to late to jump on the train ?

  122. lflantheman

    dpastramas…..I will be covered before the day is out.

  123. yodi

    lflantheman
    you will cover all

  124. scottmi

    SSL/Phil – cheap nat gas, expensive liquid fuel… does that equal a bright future for Sasol? they even pay a 3% dividend.

  125. lflantheman

    All 35 calls are covered and that will likely be my last AAPL trade of the day. 

  126. lflantheman

    stj…..The 35  April 550 covers sold for 12.65    Thank you stj……..

  127. dpastramas

    AAPL / Iflan – i assume you used the Apr 550$ as before right? Spot on on the timing

  128. stjeanluc

    I'll update the spreadsheet after hours lflan! 

  129. Phil

    CMG/Jabob – Wow, that is an amazing chart.  How can someone look at that and think that humans have anything to do with it?  Notice this is the 3rd time in 4 years this pattern has occurred – really and truly amazing coincidence, don't you think?  

    13,000 is a good line to short the Dow in the Futures with a tight stop over (/YM) if it crosses back below (now 13,001).  Can watch 1,370 on S&P (/ES) to confirm.

    USO/Smala – The roll is .98 but we sold short puts to offset the cost.  That's a little trickier now and, if we hold these levels – it's a bullish close so risky to roll at the moment unless you don't mind rolling up and doubling down again if it goes against you.  Does it make sense to buy $1 in strike for $1 and get a month of time as a bonus.  

    Gas/StJ – Yes, this is a whole new thing globally with shale gas.  We have 60% more gas and oil rigs running than last year already in the US so those numbers are increasing every day. 

  130. pat_swap

    Hi Phil,
    I was on a Voyeur Membership for a month and day before yesterday it got automatically renewed (which is fine). But today I upgraded my membership to Basic. So I guess I will get a refund of the Voyeur membership for the remaining days once the Basic membership is charged. You can reply after hours.
    Thanks

  131. Phil

    Whee, nice crack on the Dow and oil.  Oil flew down to $108.07!  

  132. lflantheman

    dpastrama…..Yes, I did.   But take note that the timing is not mine.  The timing is because of the trailing stop.  The computer catches the turn and makes the trade much more precisely than the trader can. 

  133. Phil

    Upgrade/Pat – You need to talk to Greg (admin at philstockworld dot com).  He can fix that with a time credit or whatever.  

    Whoa and oil fails $108.  

    XOM March $85 puts at .45 are a fun way to play oil selling off.  

  134. jabobeast

    Phil-- I have given up thinking when it comes to CMG…
     
    why believe in gravity when everything keeps floating higher and higher..???

  135. Phil

    SODA slipping too.  

    Spain misses its already revised higher budget deficit goal for 2011, coming in at 8.51% of GDP against December's estimate of 8% and the government's goal of 6%. The finmin is seeking EU approval to raise the 4.4% 2012 target, saying 2011's result combined with the recession make hitting that figure difficult.

    Politburo reformers are likely to jump upon a World Bank report highlighting China's unsustainable growth model in the hope of wresting more power away from old-time hardliners. State-owned firms – the report notes – have productivity just 2/3 that off private enterprises, yet they hoover up nearly all available credit.

  136. palotay

    WHEEEE on oil.  

  137. ban2

    lflan
    congrates on today. Your results would be hard to believe without your real time calling the turns with buy and sell points
    quite amazing you do this between the operating room and the slopes and without the the help of fibonacci, bolinger bands, stochastics, moving averages, not to mention engulfing candles and doji's :)
    thanks very much for helping us better understand and trade AAPl options

  138. Phil

    SSL/Scott – I would think it is good for them.  They are a good company overall but not cheap at $53 and not great options to spread so I think I'd start by just selling the Sept $50 puts for $4 and seeing how that goes for an initial entry.  

    $107.50!   Nothing to do with the Dollar, which is frozen at 78.56.  

    Oil cracks, sliding sharply in the past few minutes after hanging on just slightly down for most of the day. April WTI Crude-2.1% to $107.48 after flirting with $110 overnight.

    James Altucher goes all-in with his forecast for Dow 20K – seemingly holding nothing more than a low pocket pair. He tells Henry Blodget that people shouldn't be so angry (video) with his long-standing bullish call with all the metrics positive and planned buybacks by U.S. firms sitting as a huge driver for prices. The tale of the tape: At today's Dow, his uber-bullish call is for a 54% runup in about a year.

    BMO Capital is the latest firm to raise estimates and its price target - to $590 from $545 – on Apple (AAPL +0.7%), citing (what else) higher iPhone sales. AAPL’s smartphone growth will outpace the overall smartphone market this year, BMO says, with iPhone sales rising at 1.1x the pace at which the smartphone market expands in 2012 and 1.5x in 2013, as it takes away market share.

  139. lflantheman

    stochastics……..oh, yeah.      I watched my son do those flips down a Walmart aisle once.        :)    ban2…..thanks for the compliment.  

  140. sagemm1

    Phil Wednesdays LTRO…what would you expect to happen normally I would not even ask but seems at some point when everything has been projected and accounted for we really should get a sell off right, and the dollar should rise, but this is not a readable market. IMHO

  141. Weasle

    reverse stick?

  142. lflantheman

    I posted this trade earlier, but I really like it……selling PETM April 55 puts  for 2.10.   They report earnings Wed.

  143. Phil

    Great example on AAPL on why you don't have to be heavily invested to make nice money on the daily moves.  Very nicely handled starting last week with a non-greedy move to cash that left the AAPL Portfolio very flexible this morning – perfectly played during the day thanks to Iflan.  

    Wednesday/Sage – I think it's sell on the news at this point.  Anything less than $1,000,000,000,000 is going to disappoint.  

  144. Phil

    I think CSCO should be a cautionary tale for AAPL buyers.  At the time, what could possibly have better growth projections than the internet.  Even CHINA needed CSCO routers etc. and that need would expand and expand as bandwidth grew and Billions of homes and businesses would need them as well for their own lans to connect to the internet and we didn't even know they'd be in cable boxes too but look what happened to CSCO during the last decade – 85% loss of market cap!  

  145. Phil

    Mostly negative volume into the close.  Dow at 107M with a min to go.  

    XLF being really strange into the close, tried to punch up over and over again and then big dip at the bell.  

    It's going to be an interesting week.  

  146. lflantheman

    Thanks for the compliment Phil.   And speaking of AAPL…(what else do I speak about?)…..isn't this stock on an astounding run?   I myself am somewhat taken aback that it doesn't want to retrace more.  But as I've said before, now is where it gets tricky.  With it being on such a tear a ton of money can be made.  The trick now is to keep the money.  That means a lot more than just buy and hold.  It means daily study of the markets and the stock, and making all the right decisions, not only to continue to profit, but to guard against losses should the pullback eventually take place.  And, of course, it will. 

  147. Phil

    Sorry, add 40M to that close in the last 60 seconds!  

  148. Phil

    First down day for oil since 2/14!  

    Just too silly…

  149. angelcur

    pcln wow!

  150. jabobeast

    FU PCLN!!!!

  151. Canuck

    lflan/aapl;
     
    Firstly, well done and very informative.
    Secondly, would you have been anywhere near this aggressive, especially the day trades in the past week if you did not have an $80,000 profit already in the bank?

  152. jabobeast

    Phil—if you could share your opinion on PCLN we would appreciate it..
     
    up 34 already

  153. Phil

    PCLN as expected, nice Q but not so amazing at $4.41/share.  Don't forget this is a $600 stock – they'd better be earning $20 a share AT LEAST!  The CC should knock it back some and anything under $625 is a winner (and easy rolls too).  

    SAN FRANCISCO (MarketWatch) — Priceline.com Inc. PCLN +5.49% on Monday reported a fiscal fourth-quarter profit of $226 million, or $4.41 a share, on revenue of $991 million. During the same period a year ago, Priceline earned $135.7 million, or $2.66 a share, on $731 million in sales. Total bookings rose by almost 52% from a year ago to $4.96 billion. Excluding one-time charges, the online travel site would have earned $276.8 million, or $5.37 a share. Analysts surveyed by FactSet Research forecast Priceline to earn $5.06 a share on $969.3 million in revenue. 

  154. jabobeast

    Priceline.com beats by $0.33, beats on revs; guides Q1 EPS above consensus
    Font size: A | A | A
     
    4:09 PM ET 2/27/12 | Briefing.com
    Reports Q4 (Dec) earnings of $5.37 per share, $0.33 better than the Capital IQ Consensus Estimate of $5.04; revenues rose 35.6% year/year to $991 mln vs the $968.31 mln consensus. Fourth quarter gross travel bookings for the Group, which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers, were $4.96 billion, an increase of 51.8% over a year ago; The Group's international operations contributed revenues in the 4th quarter of $610 million, a 62.7% increase versus a year ago (approximately 66% on a local currency basis).

    Co issues upside guidance for Q1, sees EPS of $3.80-3.90, excluding non-recurring items, vs. $3.72 Capital IQ Consensus Estimate; y/y increase in total gross travel bookings of ~33% – 38%; y/y increase in international gross travel bookings of ~41% – 46% (an increase of approximately 43% – 48% on a local currency basis); y/y increase in domestic gross travel bookings of approximately 10%; y/y increase in revenue of approximately 22% to 27%; y/y increase in gross profit of ~40% to 45%; a djusted EBITDA of ~$243 million to $253 million.

  155. Phil

    I think this cements Shatner as a Billionaire now – live long and prosper indeed!  

  156. lflantheman

    Canuck…….   The appearance that I'm trading aggressively must be something others feel when watching my trading style,  but from my vantage point I am not trading aggressively.   Were I trading aggressively I would not fool with covers, or with going to cash  when I am unsure what movement a stock will take.   And I would not be holding cash back for opportunity trades.   No, I'm not changing my trading style as the account grows.  At least I don't think so.  If anything I may get more cautious as the account gets larger and AAPL goes higher.   

  157. stjeanluc

    It seems that the options had it right as they were indicating an 8% move on earnings for PCLN and we are getting less than that. As we stand, the strangle would have been profitable!

  158. jabobeast

    Any hope PCLN gives back these huge gains or am I fuuuked??

  159. Phil

    Please note PCLN is trading single shares after hours, really not a good idea to pay too much attention to the price action (traded 1.5M during the day).  

    Guidance looks good but $3.80-$3.90 a share next Q is up 50% from last year but that's Asia penetration, which is fading out – I don't see where they ever get to $30 a share (another 50% growth).  The number of countries they serve is up 60% to 160 – they are running out of countries.  We'll see where they end up but it's a good time for profit taking for people who came in at 450 in December (up 33%).  

    CEO Jeffrey Boyd remarked, ” We believe that each of our brands, Booking.com, Agoda and priceline.com, gained share in the retail hotel room reservations market, while our Name Your Own Price hotel business in the United States continued to be impacted by increased competition in the discount market.”

    Oops, someone just declared Greece in Selective Default – didn't catch who.

    Give back/Jabob – You really need to stay away from Momos.  What do you have?  

  160. stjeanluc

    The 1% need another poster boy:

    http://news.yahoo.com/blogs/trending-now/banker-insulting-tip-incites-class-warfare-between-1-164624882.html

     

    Just when you may have thought the ongoing battle between the 99% and the 1% was dying down, it may have been reignited. A wealthy banker left a $1.33 tip on a $133 lunch at the True Food Kitchen restaurant in Newport Beach, California.

    To add insult to injury the word "tip" was circled on the receipt, and the banker wrote "get a real job" on the bill. The picture of the receipt was taken and uploaded to the blog Future Ex-Banker by a person who was dining with the anonymous banker. As expected, the blog received a lot of attentionand has now been taken down. The author of the blog wrote, "mention the 99% in my boss' presence and feel his wrath. So proudly does he wear his 1% badge of honor that he tips exactly 1% every time he feels the server doesn't sufficiently bow down to his holiness."

  161. jabobeast

    Phil--not a real big position but I am short the weekly 605s and some 710 Jan 2013s
    just frustrating because these MoMos keep flying
     
    you are probably right-- the headache probably isn't worth it

  162. diamond

    stjeanluc – RE: Top 1%;-)

  163. BertII

    I got buried by PCLN last year for 20,000.00 after rolling 4 times and watching my small account cut in half I finally bit the bullet and took the loss which I still haven't recouped. I would keep away from this one until there is an overall market drop

  164. stjeanluc

    Good one Diamond…

    The Official Dilbert Website featuring Scott Adams Dilbert strips, animations and more

  165. stjeanluc

    Big dividend payers have under-performed this year… as opposed to last year. Of course this market is so correlated now that it might just be everybody else catching up now. It is starting to make little sense of picking winners and losers. Maybe we should just play the ETF – works for us with FAS. No earning spike to worry about, only one symbol to track. What's not to like!

    http://www.bespokeinvest.com/thinkbig/2012/2/27/high-yield-continues-to-underperform.html

  166. stjeanluc

    The WSJ seems surprised that people in Greece and Portugal are shying away from smartphones costing over $300!

    Of course, when your monthly income is only $300, you might have other expenses ahead of the iPhone! Unless you work in a restaurant and wait table for the top 1% in which case, you are golden!

  167. jabobeast

    looks like PCLN is even higher ;-(
    FU me!!!

  168. jmm1951

    stjean/iPhones
     
    Yes, you don't seem many of them in the Dominican Republic either although Blackberries and Nokias are ubiquitous. There is a huge difference between a phone you have to pay $600 cash for, and one that you can get for $50 downpayment and an 18-month contract at $25 per month. From what I can see, if you get an iPhone with AT&T, your monthly payments are probably over $100 per month, whereas there are several prepaid providers in the US where you buy your cell phone for maybe less than $100 and then pay about $50 per month for unlimited calling, texts, and Internet. So evidently you pay for your phone one way or another, even if the payments are hidden in your monthly bill.
     
    I think  providers are able to do this in the US because most people have credit cards and computerized credit scores, and the providers are able to enforce 2-year contracts without too many people reneging.  I don't think they could pull that off here in the DR, and probably the same in many other countries. I don't think there is a way, though, to hide a $100 per month payment in a $25 monthly bill.
     
    Also see article in Seeking Alpha about the large number of hounds of hell snapping at Apple's heels over the smart phone business. It is not just Nokia, but now Intel and Huawei entering the fray , not to mention the existing Android phone makers. May gthe best phone  win!
     
    http://seekingalpha.com/article/316937-the-android-freight-train-kept-a-rollin

  169. 1020

    Does anyone know how to "un-ignore"?
     
    I ignored….hate to say it…..STJEANLUC!!!! 
     
    Sorry Stjean, I had no idea what pressing the tab would do…… :(
     
    http://www.youtube.com/watch?v=Zj0a4a0U13c

  170. Beaufleurs

    Lflan and aapl portfolio followers.  I have a lot to learn, but Phil's guidance and Lflan's rule's for new traders that was posted this morning is certainly helping.  I started the morning with 3 aprl 500 calls from friday and during the early morning dip and the climb, I added 4 more for a total of 7.  Near the end of the day, with a nice profit showing,  I decided to close all contracts, rather than cover.  Of course as soon as I did that I had "seller's remorse" and felt like I lost a chance on more profits if Aapl keeps going up tomorrow.  I think the hardest lesson for me , and perhaps most new traders on this journey is going to be that's it's ok to take profits because there is always another opportunity around the corner.   Anyway, thanks for all the guidance.

  171. Pharmboy

    1020 – I am tired of it, I ignored you as well, so you are now……bottom of page…. :)

  172. jmm1951

    Plan for an economic 9/11': Analysts warn Americans to buy guns and gold, predicting market crash and street riots within a year

    • Gerald Celente, Harry Dent and Robert Prechter, (&Phil Davis) all predicting big trouble
    • Markets and unemployment figures posting best showings in four year

    http://www.dailymail.co.uk/news/article-2107315/Market-crash-street-riots-year-Americans-plan-economic-9-11.html

  173. bobhu

    Pharmboy, what is your take on MLY and PRGO? TIA and have a good night.

  174. Pharmboy

    bobhu – MLY?

    PRGO – I like them ok, so a BCS with a sale of a put would be ok, but I like WPI, TEVA, WCRX and MRX better.

  175. stjeanluc

    iPhone / Jmm – Actually I had a post a while back linking to an article that mentioned that AT&T, Verizon and Sprint saw their margin compress as soon as they started selling the iPhones. Apparently they don't get the money back from their clients on the subsidies they have to offer to sell these $500 phones. 

    There has been a couple of post in the last couple of weeks on how Apple can keep on growing revenues on the face of competition. They have been successful so far, but they are quite dependent on the iPhone for revenues now (close to 56%) and that is never a healthy situation especially as the competition gets better – I don't see much difference between the iPhone and the newest Android phones, even the apps are getting better. The saving grace for Apple is their loyal (cultish?) customers, some of whom are willing to upgrade to a new phone (or new tablet, new Mac) no matter how old theirs is. I kept my Android phone for over 3 years (I had the original one) before I upgraded to a new one. I didn't feel the need to have the latest until mine finally broke down. But every time there is a new iPhone, lines form. There were people upgrading their iPhone 4 to iPhone 4S looking forward to the iPhone 5 in 6 months I guess. That's a guaranteed base right there… And I don't think anyone else has that in that industry. But the fear is always that someone will come up with something cooler one day and you are left with your base and it slowly erodes as cool eventually prevails. Look at what happened to Sony with their walkmans, Motorola with their Razors, RIMM with their Blackberries. No one is immune… And competition could come from nowhere on multiple fronts – innovation, price, or your own failure! I don't see it right now though, but I am sure some people at Apple are thinking about it, if not they would not be spending these millions on the patent wars!

  176. yodi

    Beaufleurs
    AAPL look at it this way I covered part of my longs which will cap profit if stock goes up If stock goes down I will gain on the cover but lose on the long call so you diciding to close is not such a bad move at all!!!

  177. Canuck

    Phil/SVU
    Sell Jan 13 $5c and $7.50p for $2.80, acb of $2.80/5.65, dividend yield is 12.5%/6.2%, and if called away you net $2.20 plus 0.35 dividends ($2.55) for a 90% gain on $2.80.
    Comments?

  178. pstas

    AAPL trades- another possible trade adjustment on a run up is to roll up your call and which lowers your delta a bit and takes some off the table. If it looks as if it will pull back, you can still cover all or partial. If not, you will not get hurt as badly on a pullback due to lower delta.

  179. jmm1951

    Actually I had a post a while back linking to an article that mentioned that AT&T, Verizon and Sprint saw their margin compress as soon as they started selling the iPhones.

    Kind of hilarious, when you think about it, that all three companies would offer the damn thing at a loss for fear of losing business to each other. I don't really understand the iPhone cult. I have an iPod touch which is the same as an iPhone only without the calling. I use it mostly as an e-reader, camera, music player, and Skype handset, and for reading PSW in bed if I wake up early and it is a nice little device, but I could live without it. It would be better as an e-reader if the screen was a tad larger and in the same proportions as a typical document. It would be better as a camera if there were an external button instead of tapping the screen to take a picture, and you could see what you are shooting in bright sunlight. It would be better as a handset if it were shaped better for the human hand and face. It would be better as a music player if there was a memory card slot… and so on.

  180. diamond

    Canuck – RE: "… if you did not have an $80,000 profit already in the bank?"
     
    lflantheman's AAPL 50K Portfolio is up over $125K (profit) since 12/6/11 (not $80K)!

  181. Weasle

    Here are some fun study results that I think we all already knew (didn't see this posted yet):
    http://www.ctv.ca/generic/generated/static/business/article2351690.html

  182. Phil

    PCLN $630!  There was a great spike down back to $592, I hope Jabob got out there!  Don't worry Jabob, we can roll into the initial excitement if Japan doesn't take down the markets first:  

    Japanese retail sales slowed their growth in January, rising 1.9% from a year earlier compared to December's gain of 2.5%. Large retailers saw their January sales drop a seasonally adjusted 1.0%, widening from the previous month's 0.3% fall

    Japanese stocks opened lower today, with tech shares weighed by the bankruptcy filing of Japan's lone DRAM-chip maker Elpida Memory (ELPDF.PK). The Nikkei Average is currently down 0.6% to 9,577: Renesas Electronics (RNECY.PK -6.8%), Advantest (ATE -6.5%) and NEC ([[NIPNF.PK -3.1%).

    While the BOJ's surprise commitment to raising the country's inflation rate is thought to be behind the yen's recent decline, perhaps it's all about oil. Already a major importer, Japan is even more dependent on crude thanks to the idling of its nuclear industry. Simon Derrick of BNY says the correlation between oil's rise and the yen's decline has jumped to nearly 1.

    S&P cuts Greece's credit rating to SD – Selective Default – from  CC following the country's insertion of retroactive collective action clauses into its debt. "The effect of a CAC is to bind all bondholders of a particular series to amended bond payment terms … (it) materially changes the original terms of the affected debt."

    Total consumer debt levels fell 1.1% to $11.53T in Q4 Y/Y, largely due to a 1.6% drop in mortgage related borrowing, NY Fed reports. those with credit-related troubles fell. Total delinquency rates moved to 9.8% of total outstanding debt from 10% in Q3; $1.12T in consumer debt was delinquent, and $824B was deemed “seriously delinquent.” 

    With the U.S. economy finally in recovery mode, Wells Capital's Jim Paulsen thinks "it's time for the Fed to shake off its ‘crisis mindset’ and begin to normalize its remarkably accommodative monetary policy." Failure to make such an adjustment "to better reflect the maturation of this economic cycle from crisis to recovery… risks potentially creating a new crisis – an inflation crisis."

    Natural gas will be a game-changer for the U.S. economy, enabling the U.S. to potentially overtake Russia to become the world's biggest energy producer in the next 10 years, according to analysis from Pimco's Mark Kissel. It's lowering costs, pushing down prices and is even now making the U.S. less energy reliant – nat gas imports are already less than half their 2008 totals. 

    When looking across the investment spectrum, the stock market appears to represent "the best house in the financial asset neighborhood," says Omega Advisors CEO Leon Cooperman. When cash is at zero, Treasurys lag inflation and are reaching record high spreads versus high-yield bonds, "then you're left with equities." His favorites: financials like JP Morgan (JPM) and technology stocks like Apple (AAPL) and Qualcomm (QCOM).

    Unignore/1020 – Under your comment box should be a list of people you are ignoring.  Just uncheck them.

    Always another opportunity/Beah – Yes, especially when you go to cash and have all that lovely buying power in the morning!  Hell, if we wise up, we should just cash out every night, wait for the morning dip and BUYBUYBUY – pretty much works every day…

    Big trouble/JMM – Not me, I'm bullish if the S&P can just hold up for another day.  Although, even then, a year is kind of a long time so yeah, I guess I'm still on that list for now.  

    Money back/StJ – They get it back but just $100 per month so takes most of the 2 years fro them to recoup the phone subsidy.  They have to weigh that against losing customers and, for most carriers, they have spare capacity so each new customer drops to the bottom line.  T's big problem is all the IPhones are now pushing their capacity to the limit as well.  

    SVU/Canuck – The put sale is a little aggressive.  I prefer to go conservative on an initial entry unless I totally love a stock and SVU has not been all that loveable for the past couple of years.  So selling the 2014 $5 puts for $1.25 instead of the Jan $7.50 puts for $1.90 changes the net to $3.37/4.19 (with the stock purchase at $6.62 – I have no idea how you got $2.80), which is 25% cheaper if put to you and still a very respectable 50% gain if called away plus another 10% dividend.  Not really a need to be greedy if you are getting those numbers.  

    Good study Weasle. 

  183. Canuck

    Diamond,
    I was reading the $130,000 balance as a portfolio balance not a pure profit – so $130,000 minus $50,000 starting point equals $50,000 — thanks for clearing that up.

  184. Canuck

    Phil,
    SVU Jan 13 $5 call at $1.95 + Jan 13 $7.50 put at $1.85 equals $3.80, so $6.60 less $3.80 = $2.80.
    That being said, I get your point.

  185. Canuck

    Diamond,
    apparently brain has retired for the evening.  130 – 80 = 50.

  186. enni_82

    Phil,
    Trying to understand the math behind this adjustment. Hopefully it isn't too novice of a question, but does this sound correct? At the end of Jan I bought the TZA 18/23 BCS for 3.91/1.71 or net 2.20. Last week I bought back the 23 calls for 0.42 leaving me 1.29 profit on that leg. Subtracting the 1.29 from the 2.20 leaves me a breakeven at 91 on the long 18s. The last trade for the 18s was 1.35 so I could pull them for a 0.44 profit but being this oversold I am tempted let them ride or cover by selling the 19s for 0.96 leaving a 0.05 credit, or basically a free $1 spread. Do I have the math here correct? Which option would you suggest? Thank you kindly!

  187. bobhu

    Pharmboy, sorry, it's MYL – Mylan Inc.  Thanks again.

  188. diamond

    Flashback …
     
    "I will be using various techniques to capitalize on stock movements, but only AAPL will be traded in the portfolio.  My goal will be to double this portfolio yearly, and to turn the 50k into 1 million within 4.5 years.  It should be fun."  -- lflantheman on December 6th, 2011
     
    83 days later: $50K (start) + $125K+ (profit) = $175K+ total

  189. rdn4evr

    Phil, I don't know if you guys are looking at the Build a Berkshire page anymore but I left a comment there regarding this:
    http://www.fhfa.gov/webfiles/23403/REOPR22712F.pdf

  190. Pharmboy

    MYL – they are ok, but I like WCRX better.

  191. ronresnick

    Robin Hood Foundation / Phil – Founded in the late 1980s by my former boss, Glenn Dubin, his long-time commodities trading friend, Paul Jones, and their mutual friend and client, John Kennedy, Jr., the Robin Hood Foundation dinner in Manhattan has for many years been the annual hedge fund ball.  Glenn and Paul started it primarily to reduce poverty and promote opportunity in New York City, and distantly and secondarily to access the worlds of Hollywood, acting, fashion and music which perennially fascinate finance people in Manhattan.  Thanks to Highbridge I attended every dinner from 1993 to 2009.  Robin Hood's objective was to apply to charity the same level of due diligence applied to investment decisions.  Donations to Robin Hood were invested and managed by the hedge funds managed by Robin Hood's founders.  Grants were made and programs were funded only after careful cost benefit, feasibility and efficacy analyses.  Originally held at the New York Hilton Hotel, the event became so popular that it outgrew first the New York Hilton and then the Lexington Avenue Armory and, in the late 1990s, became so well-attended that only the Jacob Javits Convention Center could accommodate the event.  In the early years each guest was given a table seating chart and it was fun to look on the chart for your friends and business acquaintances and search for them on the floor like a treasure hunt and mingle.  in the later years the event became so massive and the seating arrangement so complex that you were grateful just to be able to find your own seat.   There is almost as much money represented at the annual Robin Hood dinner as there is at a meeting of OPEC ministers.  Last year Robin Hood raised in one night almost $50 million.

  192. Phil

    TZA/Enni – You're looking at your net wrong.  You bought the $18s for $3.91 and you sold the $23s for $1.71 for net $2.20 but when you bought back the $23s for .42, you RAISED your net to $2.62 so your break-even is $20.62.  Not that it matters what your break-even is – don't let your need for a profit distract you from making the right trade!   TZA is at $18.45 and I assume we're talking about the March $18s, now $1.35 so the question is, how likely are you to get to $2.62 and do you have time before your loss of premium destroys you.  The $18s are .90 in premium with 17 days to go so every day you lose about .05 – not terrible until the weekend, when you lose .15 between Friday and Monday.   At the moment, the $16s are $2.65 so you need a $2 move in TZA to get even and yesterday's dip topped your calls out at $1.80 and Thursday's dip was about the same so you need a more significant breakdown this week to get even – let's say we're less than confident of that…  So, we can sell some other sucker the this week $18 calls for .77 and use that money plus $1 to roll back to the April $16s ($3.15) and now you've picked up $2 in position and a month for net $1 and you have somewhat capped your gains (and you have to be comfortable rolling your caller but the March $20s are .70 so hopefully you get at least a $4 spread out of it) but vastly improved your position.  If you want to be adventurous, you can do the roll first and hope we have our usual pattern of a dip after the open, which will give you a chance to sell maybe the $19s for .75 or better instead.  

    REO/Rdn – Thanks, that's actually why I've been too busy to get back to BBBW the last two weeks, my real-estate venture is in high gear do to that and changes in the foreclosure rules that are kicking that market up again.  

    The Fed released yesterday the documents submitted by banks outlining their plans to fix foreclosure problems. This first data dump (with more likely to follow) includes papers from BofA (BAC), Citigroup (C), JPMorgan (JPM) and Wells Fargo (WFC), among others.

    Fed Governor Elizabeth Duke will testify in Congress today,laying out the Fed's case for more action to bolster a housing market that is a "significant drag" on the economic recovery. The Fed, which issued suggested steps last month to lawmakers and regulators, is being accused by some of overreaching and political meddling.

    Robin Hood/Ron – Those guys are so amazingly helpful in NYC.  That's why I was not going to be happy if they closed it – that would be a gap that would almost be impossible to fill. 

    Meanwhile:

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:30 Durable Goods

    8:55 Redbook Chain Store Sales

    9:00 S&P Case-Shiller Home Price Index

    10:00 Consumer Confidence

    10:00 State Street Investor Confidence Index

    10:00 Richmond Fed Mfg

    2:23 AM Asian markets are solidly in positive territory today, with Hong Kong getting a boost from its banking stocks. Japan +0.9% to 9723. Hong Kong +1.3% to 21490. China +0.2% to 2452. India +1.5%to 17707

    German consumer confidence is heading for a 12-month high in March, market research company GfK says, with its consumer-sentiment index set to inch up to 6.0 points from 5.9 in February.

    The Swiss UBS Consumption Indicator dipped to 0.92 in January from 0.94 the month before. Consumption was driven mainly by a record number of new car sales, while the retail sector remained at recessionary levels. 

    Europe Puts Highest Since July Before ECB Loan Package: Options. Options traders, concerned a three-month rally in European equities is ending, pushed bearish contracts to the highest level since July on an ETF that gets most of its value from the region's equities. Options to protect against a 10% drop in the iShares MSCI EAFE Index Fund cost 71% more than contracts betting on a 10% gain, according to data compiled by Bloomberg. Put volume jumped to a record on Feb. 24. The ETF has gained 16% since global equities bottomed last year on Oct. 4.

    The ECB temporarily suspends Greek debt for use as collateral. (statement)

    ECB Special Lender Status Threatens Bond Backlash: Euro Credit. The ECB's willingness to ride roughshod over bondholder rights risks pushing up borrowing costs for indebted governments by making investors less willing to lend. The ECB swapped about $67 billion of Greek bonds for new notes, identical to the old ones in every way save for their identification numbers, according to Moritz Kraemer, head of sovereign ratings at S&P. The switch exempts the central bank from the largest sovereign restructuring in history as Greece rewrites the terms of its securities to ensure lenders forgive 53.5% of the debt. "Bondholders are effectively being subordinated," said Saul Doctor, a credit strategist at JPMorgan Chase & Co. in London. "Foreign investors are going to be less willing to buy sovereign bonds when the ECB can exert itself."

    Credit Swaps Panel Asked If Greek Parliament Triggered PayoutsA committee of banks and investors that governs credit-default swaps was asked to rule whether Greece’s parliament triggered payouts on contracts that protect against losses on the country’s debt. The International Swaps and Derivatives Association’s determinations committee was asked whether a so-called restructuring credit event was caused by publication today of legislation that the Greek parliament passed as part of its agreement to exchange bonds for new securities, the trade group said on its website. The restructuring, in which bondholders take a 53.5 percent reduction in the value of their investments, uses collective action clauses to discourage holdouts. The use of such clauses would trigger swap contracts, according to ISDA rules. The committee is being asked whether the contracts have already been triggered because the deal gives the European Central bank and national central banks “a change in the ranking in priority of payment” by allowing them to exchange out of their eligible debt prior to the collective-action clauses taking effect, according to the ISDA website. The committee will decide whether to accept the question by Feb. 29, ISDA said in a statement today.

    Macau Feb. Gaming Revenue Growth May Slow to 15.8% Y/Y. The percentage growth may be the lowest in over 3 years, the report said. Macau Jan. casino revenue growth rose 35% y/y.

    China Risks 'Middle Income Trap' Without Free Market Revolution. China’s spectacular catch-up growth is nearing its limits, leaving the country prey to the "middle income trap" over coming years unless Beijing embraces the free market and relaxes its suffocating grip over the economy.

    China will set up an electricity price policy "soon" that punishes companies for exceeding limits for industrial energy use, citing a Ministry of Industry and Information Technology official.

    China's National Development and Reform Commission will continue to introduce measures to stabilize prices and ensure the supply of basic necessities, citing Zhou Wangjun, deputy director at the price department of the commission.

    Oil Tankers Seen Falling 42% as Japan Weakens Most Since Tsunami: FreightThe largest drop in Japanese oil consumption since last year’s earthquake and tsunami may cause tanker rates to plunge 42 percent next quarter, threatening the biggest rally in shares of shipping companies since 2005. Demand in Japan, the second-largest destination for supertankers after China, will drop 19 percent in the second quarter from now, according to the International Energy Agency in Paris. Daily rates for the 1,000-foot-long ships will average $17,000, compared with $29,280 now, the median of nine analyst estimates compiled by Bloomberg show.

    PIMCO: Natural Gas Is Already A Game Changer.

    Water Bills Expected To Triple In Some Parts Of U.S.

    U.S. Considers New Message on IranComplaints from Israel about the U.S.'s public engagement with Iran have pushed the White House to consider more forcefully outlining potential military actions, and the "red lines" Iran must not cross, as soon as this weekend, according to people familiar with the discussions. President Barack Obama could use a speech on Sunday before a powerful pro-Israel lobby to more clearly define U.S. policy on military action against Iran in advance of his meeting on Monday with Israeli Prime Minister Benjamin Netanyahu, these people said.

    Gas Prices Climb For 20th Day.

    A Class Action Lawsuit Alleges Wells Fargo(WFC) Partnered With Insurers To Rip Off Homeowners.

  193. Phil

    Nice list from Jeremy Grantham, via Marketwatch:

    1. Believe in history
    “All bubbles break; all investment frenzies pass. The market is gloriously inefficient and wanders far from fair price, but eventually, after breaking your heart and your patience … it will go back to fair value. Your task is to survive until that happens.”

    2. ‘Neither a lender nor a borrower be’
    “Leverage reduces the investor’s critical asset: patience. It encourages financial aggressiveness, recklessness and greed.”

    3. Don’t put all of your treasure in one boat
    “The more investments you have and the more different they are, the more likely you are to survive those critical periods when your big bets move against you.”

    4. Be patient and focus on the long term
    “Wait for the good cards this will be your margin of safety.”

    5. Recognize your advantages over the professionals
    “The individual is far better positioned to wait patiently for the right pitch while paying no regard to what others are doing.”

    6. Try to contain natural optimism
    “Optimism is a lousy investment strategy”

    7. On rare occasions, try hard to be brave
    “If the numbers tell you it’s a real outlier of a mispriced market, grit your teeth and go for it.”

    8. Resist the crowd; cherish numbers only
    “Ignore especially the short-term news. The ebb and flow of economic and political news is irrelevant. Do your own simple measurements of value or find a reliable source.”

    9. In the end it’s quite simple. really
    “[GMO] estimates are not about nuances or Ph.D.s. They are about ignoring the crowd, working out simple ratios and being patient.”

    10. ‘This above all: To thine own self be true’
    “It is utterly imperative that you know your limitations as well as your strengths and weaknesses. You must know your pain and patience thresholds accurately and not play over your head. If you cannot resist temptation, you absolutely must not manage your own money.”

  194. Phil

    Great article:  Teller (of Penn & Teller) Reveals His Secrets (Smithsonian)

    Brain study finds what eases pain of financial loss (Reuters)

    What High-I.Q. Investors Do Differently (NYT)

    MBIA tells judge of newly uncovered Countrywide fraud database (Reuters)

    Short Selling and the Great Depression (Bloomberg)

    How the GOP is tearing itself apart: The Lost Party (NY Mag

    The Perversity of Extremism Tends Toward The Maximum (Stonekettle Station)

    The Housing Recovery In One Index (Pragmatic Capitalism)

  195. jmm1951

    Housing recovery
     
    It is always the swing voters who determine elections.  Probably the majority of people  will still buy homes if they can afford one, so that eventually they own one free and clear and no longer have to pay a  mortgage, but the swingers who are not sure if they can afford a home, not sure whether the home will hold its value, or who are professionally mobile and frequently have to relocate may be more wary about buying.
     
    Then you have to look at other megatrends. The Florida housing market for a number of years was very much fueled by well-pensioned retirees from the midwestern automobile industry or health service and public employees from the affluent north east, who were able to sell their modest suburban homes for a huge profit over the original cost 20 or 30 years ago, build nice-looking retirement homes in gated subdivisions in Florida, pocket the difference, and live off their pensions while paying no state income tax to Florida. Them days may be gone. Certainly now there is little incentive to build when there are so many cheap pre-owned homes waiting to be adopted. Another issue might be the specter of student loans to be repaid  at a time when there aren't a lot of well paid jobs for graduates.
     
    Real estate markets are regional. You can't pick up loads of empty houses and move them from Florida to North Dakota. It seems to me unlikely that house building  will recover until we see a real increase in demand for new homes in at least one major densely-populated market.
     
    And the people in the houses
    All went to the university,
    Where they were put in boxes
    And they came out all the same,
    And there's doctors and lawyers,
    And business executives,
    And they're all made out of ticky tacky
    And they all look just the same.

  196. Pharmboy

    XRT – chart looks like CMG and PCLN and AAPL…..

  197. barfinger

    :*) ?

  198. barfinger

    NM. Pharmboy: where do you get your emoticons from?

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