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Wednesday – Will Another $712Bn Buy Us Another Day at 13,000?

$712,800,000,0000.  

That's how much the ECB dished out to 800 lenders this morning –  close to $1Bn per bank of cheap, 3-year loans in the hopes that they, in turn, will turn around and lend them out to people and businesses throughout the EU at less-than-cheap rates so the EU banks can make a nice profit and back-fill the gaping holes in their balance sheets that have been devastated by defaults and currently are being ignored by the mutually assured distraction that allows everyone's assets to be marked to fantasy.

As we saw yesterday, US foreclosures in Q4 were jumping at a rate of 100,000 per month – and that was before the settlement.  There is a backlog of 4M homes in foreclosure in the US and Case-Shiller's Home Price Index have hit record lows on the 20-city Composite Index.  So it's not just the $400Bn worth of losses on homes in foreclosure (4% of all homes) that have not been taken by the banks but the impuned damage of another $10Tn of asset devaluation on the other 96M homes that is being ignored by US banks.  

Europe has more people and more homes and more unemployment than the US.  While there is no convenient Case-Shiller report in the EU, we can reasonably expect that EU banks are at least as screwed as US banks and we're not even discussing their Trillions of questionably-valued bond holdings

So, when you watch the markets today and wonder how it's possible that a $712Bn injection of capital widely distributed throughout the European Banking System (exact details a guarded secret, of course) doesn't do anything to boost the markets – that's why.

I read the news today oh boy

Four thousand holes in Blackburn, Lancashire

And though the holes were rather small

They had to count them all

Now they know how many holes it takes to fill the Albert Hall.

Until we do an actual reconciliation of all the holes in all the banks around the World, we'll never have a true picture of where we stand.  Of course there is a massive, Global Government conspiracy to cover this all up – the truth is simply too horrible to bear.  

That's why Ben Bernanke will once again perjure himself in front of Congress today and sing the same old song and dance he's been singing for 3 years now as he A) tells you everything is fine and B) tells you he still needs to pump Trillions of Dollars into the system at the expense of the taxpayers – despite the obvious inflation it's causing.  

That's why we are seeing a shift in focus by the Fed towards "fixing" housing.  The whole theory of market to fantasy is that we can keep up the charade and things will get better and housing (and commercial real estate) will re-inflate and then the banks can once again take a realistic look at their asset base.  At the same time, we're all doing our best to kick those bond cans down the road as well – quite a lot of juggling going on – let's hope no one drops a ball or this act can end in total disaster!

Bank earnings are not quite what they seem either as banks take advantage of accounting rules that let them book a profit when the value of their bonds go down.  That's like Greece declaring a $150Bn profit on the $200Bn worth of Greek bonds that were written down 75% in value – Greece didn't GET any money – they are just benefiting from having to pay less out down the road.  While this is legitimate from a valuation standpoint – unless the banks plan on defaulting – it's also very misleading because, as they regain strength (if ever) that relationship will flow back the other way.  

Another good game in bank valuations is deferred tax assets.  One third of Citibank's book value is carry-forward tax losses, which only become valuable if the bank ever earns a profit.  The devaluation of that particular asset as companies begin to close in on a bankruptcy is one of the main reasons you see these drastic, sudden dips in companies as they near the end.  YRCW, for example, is a $70M company with Billions of Dollars of tax write-offs contributing to their enterprise value of $1.25Bn but good luck finding someone to pay that!  Including their tax deferred assets, C has a book value of $60 a share – again, good luck finding someone to pay that. 

But it's a Billion here and a Billion there all tucked away into those S&P "earnings" reports.  Bob Pozen (linked above) estimates it was over $25Bn last year in the US and UK alone while the Globe pegs it around $10Bn PER QUARTER.   Another banking trick cited by the Globe, which was responsible for 70% of JPM's profits in 2011, is the reduction of loan-loss reserves.  These are completely random numbers as the bank simply decides what percentage of their $2Tn in loans are likely to default so a 1% change nets $20Bn in "income" whenever they desire.  As you can see above, ALL of C's earnings last Q were loan loss releases.  

Don't worry, if they drive their ratio too low and end up with more defaults than they expected – you'll bail them out – and you'll do it AFTER you lose your ass on their stock as reality causes it to plummet when they realize the losses they denied existed in order to pump up the stock price (getting you to buy it with your hard-earned money) and, of course, justify their bonuses.  

Central bankers are operating under the supposition that you can fool consumers and investors into being confident – under the theory that confident investors and consumers will go out and spend money and boost the GDP enough to overcome the negative effect of Global Government cut-backs and that you will go out and borrow the money they gave to the banks for free and generate Billions of Dollars in profits for the banks so they can fill in the holes in their balance sheet before the next crisis forces their hand.  As long as all those plates keep spinning – everything will be "fine."  

So far, it's working great – no one (well, no one anyone listens to) is pointing out the scam because we all make more money in a bull market than we do in a bear market.  That goes for my subscriptions, CNBC's rating, Bank earnings, Corporate Profits, Government Tax Receipts, Campaign Contributions, IPOs (Facebook's IPO will lead to $2.5Bn in California Income tax generation!), Commodity profits, etc. – Who would want to call an end to this party?   

That's why these parties can go on longer than you would rationally expect and we are now in that critical stage where we're either exhausted and reality begins to set in OR someone delivers a fresh keg and someone else puts on a way better party tape and we kick this thing up a notch.  The ECB just delivered a $712Bn keg but that, by itself won't be enough – the IMF and the Fed need to break out the hard stuff really soon or this party may crash and burn.

Meanwhile, as long as the S&P is holding our 1,360 line and now the Dow is over 13,000 (to all be confirmed with Nasdaq 3,000) – we're happy to stay and dance a little as well.  


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  1. stjeanluc

    Oil lines

    R3 – 111.13
    R2 – 109.96
    R1 – 108.54
    PP – 107.37
    S1 – 105.95
    S2 – 104.78
    S3 – 103.36

    Yesterday's high and low – 108.79 / 106.2

  2. stjeanluc

  3. 1020

    Well, here's one way to help clean up your balance sheet…..
     
    http://now.msn.com/living/0228-asteroid-smash-2040.aspx
     
    Problem solved  :)

  4. stjeanluc

    Asteroid / 1020 – The 1 in 625 chances does not look good with games, but with my life in the balance it suddenly doesn't look so remote!

  5. jmm1951

    Europe may not have had quite the same property bubble as the US, because it probably didn't have the same rush of overbuilding. In the US it is a relatively simple matter for a developer to get a new tract of virgin land lay down some roads, and put up a new "subdivision". In Europe this is practically impossible.
     
    For some reason, strange as there was never really a shortage of housing in places like Florida or Nevada, home prices in the US for a while became completely misaligned with the actual cost of construction, materials, permits, labor, etc. and when this was combined with  cheap and easy mortgages, you had a firestorm of construction activity, and a case of the Greater Fool on The Hill.
     
    http://www.thisislondon.co.uk/standard/article-24039208-london-house-prices-hit-record-high-of-pound-351305-as-buyers-besiege-market

  6. stjeanluc

    Good China analysis:

    http://business.time.com/2012/02/27/why-china-will-have-an-economic-crisis/

     

    When I bring up these issues with China watchers, I’m usually scolded — Beijing’s policy mandarins have it all figured out, I’m informed. It is true that China’s policymakers have done a superior job managing the rapidly changing economy in recent years. But as any stock investor knows all too well, past performance does not ensure future performance. Back in the 1970s and ’80s, analysts in the West considered Japan’s bureaucrats near supermen as well. Now the stodgy Japanese bureaucracy is considered one of the main impediments to an economic revival. Chinese bureaucrats today suffer from the same problem that led Japanese bureaucrats astray — they believe the economy can be managed by fiat. The tools of classical economics — getting prices right — are secondary. Why guide an economy with abstract measures like interest rates when you can just tell the banks what to do?

    That attitude is what killed Japan’s economic miracle, and now I see China slipping toward the same fate. Japan could not escape the forces of basic mathematics. China can’t either, no matter how brilliant its policymakers might be. When would a meltdown happen? It is interesting to play with a bit of history. Both Japan and Korea suffered their crises roughly 35 years after the Asian development model was switched on — the early 1950s to ’89 in Japan, and 1962 to ’97 in Korea. That puts a China crisis at around 2014-15 or so. I’m not predicting a firm date here. What I am saying is that China is running out of time to fix the problems of its economy.

  7. jmm1951

    Pain in Spain mainly in plains
     
     
    However the situation in Spain may have been more similar to Florida, with a huge epidemic of home construction aimed at sales to foreigners, plus massive apartment constructions around Madrid.
     
    http://www.guardian.co.uk/money/2010/dec/26/spain-housing-market-falling-house-prices

  8. acobra65

    Phil/Bearish
    As Ronald Reagan said during the debates…… "There you go AGAIN"… (Sounding Bearish)…. LOL

  9. stjeanluc

    Real Estate / Jmm – The real estate bubble was by some measure just as bad in Europe…. The only countries immune to the bubble have been Germany and Japan.

    And going back further, it has been a while getting there!

  10. Pharmboy

    PP for today:

  11. 1020

    stjeanluc – I like our chances…. :)

  12. jmm1951

    Asteroid
     
    I hope future presidential debates will include a question about this, as it will enable the candidates to demonstrate their approach to problem solving and crisis management. Santorum will presumably shun prophylaxis, Romney will throw money at the problem, Paul  will dismiss the threat as scaremongering, and Gingrich will go out to meet it in an open carriage.

  13. rpme

    Phil, you are making it incredibly hard to be Bullish. Have not all the things you bring up day after day (alone on a hill) existed for the last 3 years as we continue to grind ever upward.

    I understand we are at the top of a channel (TA) and could go either way but what would it take for you to get Bullish?

  14. kallenjr

    Phil or JRW,
    I am attempting to develop a viable strategy for me around IWM and TNA with monthly and weekly options. Within your experience, does TNA accurately reflect the 3X of the IWM over a week? Over a month? I want to take advantage of premium decay of Out Of the Money weeklies. Would the underlying (TNA) for In the Money Options generally remain consistent with 3X expectations? Or is there inherent decay in the TNA underlying?

  15. stjeanluc

    1020 / Chances – Well, do you feel lucky …. punk?

    http://www.youtube.com/watch?v=A732Cuuo2tI&feature=related

  16. angelcur

    jmm…romney and paul will go out to meet it in an open carriage..gingrich will rage against the timing of it santorum will call it gabriel..and obama will sing to it

  17. JRW III

    Good morning,

     

    IWM     81.06,  81.41,  81.69,  82.00,  82.41,  82.66,  82.86,  83.11,  83.38  and  83.72

     

    And an interesting comparison from PUG:

  18. angelcur

    we live in a time that is magical!

  19. stjeanluc

    IWM-TNA / Kallen – Looking at monthly results from last year, I have found a relationship that varies between 2.8 and 3.7 for IWM and TNA. That 3x relationship is probably valid over short periods like days and maybe a week. After that decay will usually take a toll.

  20. Pharmboy

    rpme – there are 10 bullish plays from a few days ago…..
     

  21. dclark41

    Apple just going to the moon!

  22. jabobeast

    CMG down in the morning…
     
    http://www.youtube.com/watch?v=J6_1Pw1xm9U

  23. stjeanluc

  24. jabobeast

    James Murdoch to step down at News Corp. U.K. unit

  25. snow

    Housing/all and any – but isn't the US unusual in that we have this whole "American Dream" of house ownership myth? Without looking it up, which I shall do in a moment, I'd always understood that Europeans rent a lot more and own a lot less than we USians do. Certainly that's the case in Japan and Korea, and Korea has several alternatives to rent that still are not ownership and which sound very odd to me (an arrangement called ??, charter, chief among these), but I think most actual owners are farmers, and there're a lot less of those than there used to be.

  26. stjeanluc

  27. jmm1951

    stjeam/housing bubble
     
    Nice charts. My impression of rising house prices in the UK is that this has always been fueled by a relative shortage of available homes being chased by too much money.  Even today, while 3 bedroom homes are the standard, there are remarkably few 4-bedroom homes available. Prices are going up in London, but this is fueled by foreigners (Greeks, etc.) buying the better quality homes. In the US I don't think there was ever any shortage of homes. In 1953 yy parents bought a somewhat primitive five-bedroom home in the country in the UK with a barn 1953 for 1500 pounds.
     
    Here it is now for sale for 975,000 pounds, however part of the land has been sold off and redeveloped and now contains 8 other apartments with an appraisal value of about 250,000 pounds each.
    http://www.zoopla.co.uk/property-history/redlands-house/redland-lane/bishop-sutton/bristol/bs39-5tw/15885795

  28. stjeanluc

    The TLT vertical could be closed for $0.90 now (remember I post the Mark price not the bid or ask). We looked for $0.95 yesterday but never got there.

  29. sagemm1

    snow here is what wiki said;FWIW
     

    Rank
    Country
    Home ownership
    rate(%)
    Date of
    Information

    1
     Bulgaria
    97
    2011[2][3]

    2
     Singapore
    87
    2010[4]

    3
     Italy
    78
    2011

    4
     Ireland
    83
    2002

    5
     Spain
    78
    2001[5]

    6
     Slovenia
    82
    2002

    7
     Palestine
    84
    2000[6]

    8
     Norway
    77
    2002

    9
     Brazil
    74
    2008[7]

    10=
     Belgium
    71
    2002

    10=
     Israel
    71
    2002

    12=
     United Kingdom
    69
    2002

    13=
     Australia
    69
    2002

    14
     United States
    68
    2002

    15=
     Canada
    67
    2002

    15=
     Finland
    67
    2000

    17
     New Zealand
    65
    2004[8]

    18
     Portugal
    64
    2002

    19=
     Japan
    60
    2000

    19=
     Sweden
    60
    2000

    21
     Austria
    56
    2002

    22
     France
    55
    2000

    23
     Denmark
    51
    2000

    24
     Netherlands
    49
    2000

    25
     Germany
    42
    2002

  30. sagemm1

    sorry about that long post it was much smaller should have just linked it…oops!

  31. stjeanluc

    The FAS 70/75 BCS could be sold for $4.80 now and we were looking for $4.85 yesterday. With the spread it might be possible to close at $4.85 though. Maybe someone can tell me if they can get out at that price. Thanks.

  32. jabobeast

    FU EDZ,FAZ,TZA!!!!!

  33. stjeanluc

    Housing / Jmm – That looked like a pretty good investment by your parents but I am guessing that they sold way before it got to that price!

  34. stjeanluc

    25KP – OK, the FAS 70/75 is gone now at $4.87….

  35. etradingsignals

    JRW: It used very helpful when u used to post ur trade signals when you took your trade. Do you think you could do that toady as well? I am sitting in front of the computer and I could more closely follow ur system (and hopefully understand it), if I see ur signals. Thx in advance.

  36. msf65

    In general if you have a BCS and it gets in the money before expiration what do you do with it? Sell it, hold to expiration?

  37. Phil

    Good morning!

    Asteroid/1020 – This is a function of our ability to identify threats, which improved by leaps and bounds every year.  This happens all the time and we even get hit with a few and I'm not saying it's not good to look but a 1/625 chance of getting hit by a 460 FOOT asteroid somewhere on our 5,490,383,247,360,000 square feet of planetary surface (assuming it makes it through the atmosphere because it could be mostly ice) should really rank way below the 1/100,000 chance you have of being hit by a car crossing the street – which you will probably do about 50,000 times in 28 years, raising the possibility to 50/50 for you.  Also keep in mind this is the "best" threat they've been able to come up with to generate a buzz – we have to wait until 2040 for a 1/625 chance and the funny thing is that, by then, we'll be disappointed if it's too far away and doesn't at least give us a good comet.  

    Europe/JMM – They do benefit from lack of space so all their housing has "good" location and holds value well and comes back well but, as you can see from the chart above – they still took severe hits and the main reason the banks there haven't had the foreclosure issues we've had is that they never really played the no money down game, which forces the banks hands here sooner than it does there.  Still, whether mark to market would reveal "just" $10Tn in losses or $20Tn – the bottom line is $712Bn is a drop in the bucket but, if the Fed and the IMF step up with their own Trillions, then we're getting somewhere and hope springs eternal for now.   Spain is a good example – as you say, a less congested country that overbuilt for speculators and is now sitting on massive empty inventory (and 20% unemployment).  

    "the forces of basic mathematics."/StJ  - That's the point I'm making with the EU too.  We have a big hole to fill and we need big commitments.  We'll see how well this $700Bn is received before we break out the champagne.  

    There I go again/Acobra – Hey, I put up my bullish trades a week ago and we're not doing new ones – just adjusting old ones until we finally have to give them up.  I'm not going to get much bullish than that until next week – assuming we're high enough to redraw our 5% lines to reflect sustainable new levels.  At the moment, I'm still not convinced it's sustainable as I think that we've run up in anticipation of $700Bn and now we have $700Bn and so what?  I don't mind making bullish trades and joining in the fun but I'm not going to start lying to people and pretend everything is great and CMG is a $400 stock, etc – there are plenty of stocks that are cheap like AA, BAC, CHK, DMND, GE, HOV, HPQ, MO, SKX, T, WFR, WMT…  PLENTY of things to buy if you think the economy is all better and no need to chase other stocks at their all-time highs. 

    Gemany/StJ – The reason they didn't have a crash is because they never had much of a run-up, not sure if that counts as "crash-proof".  Japan, on the other hand, crashed 30 years ago and they are still waiting to recover.  Without job and wage growth – I'd look for the rest of those markets to join Germany and Japan on a multi-decade decline and, as I said above, the trick is to fill in those losses for the banks before they have to accept that reality.  And, of course, hyperinflation will fix everything and I still think that's the long-term outcome but the Fed has to be more generous than they are being now.  

    Looks like SODA ran into reality this morning!  

    At the open: Dow +0.16% to 13026. S&P +0.2% to 1375. Nasdaq +0.17% to 2991.

    Treasurys: 30-year +0.07%. 10-yr +0.02%. 5-yr -0.01%.

    Commodities: Crude +0.27% to $106.83. Gold -0.22% to $1784.45.

    Currencies: Euro -0.04% vs. dollar. Yen -0.16%. Pound -0.44%.

    Market preview: U.S. stock futures are mildly higher following GDP being revised up to 3% and the ECB flooding the EUwith another €530B of cash, with S&P benchmark futures +0.1%. First Solar is -7.4% after a fairly awful earnings reports, while Sodastream is -11.7% despite beating forecasts. Happily, Apple could hit half a trillion dollars market cap today. Later: Fed's Bernanke, Fisher and Beige Book

    Q4 GDP (Second Estimate): +3.0% vs. +2.8% forecast, +2.8% advance estimate. Price index +1.1% vs. +0.4% forecast. Personal consumption expenditures +2.1%, nonresidential fixed investment +2.8%, federal government expenditures -6.9%, exports +4.3%, imports +3.8%. 

    MBA Mortgage Applications: -0.3% vs. -4.5% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 4.07% from 4.09%.

    Chicago PMI: 64 vs. 61.5 expected, 60.2 prior. Employment 64.2 vs. 54.7 prior. New orders 69.2 vs. 63.6 prior. Prices paid 65.6 vs. 62.4 prior

    Eurozone January inflation +2.6% Y/Y vs initial estimate of +2.7% but still above the ECB's target of almost 2%; CPI -0.8% M/M, the largest decline in 2 years, and probably caused by post-holiday dicounts. Core CPI -1.7% M/M, +1.5% Y/Y. (PR)

    Greece's December retail sales -12.7% Y/Y by volume and -11% by revenue, a continued deterioration from November's -8.9% (volume). Take a guess what January's numbers are going to look like.

    Passenger air traffic rose 5.7% Y/Y in January, says the IATA, but air freight demand declined 8% Y/Y. Stripping out distortions from the Chinese New Year's occurrence in January (vs. in February last year), "the underlying trend was for stronger passenger growth, while stabilized weakness in cargo markets continues."

    Oh yeah, all is well:  Thought to have been mothballed after 2 weeks of no action, the SMP – the ECB's emergency sovereign bond purchase program – may be back. Bloomberg's Linda Yueh reports the central bank is hoovering up Portuguese paper as the 10-year yield blows out today.

    Greece "solved" and the ECB wave of liquidity calming things for most troubled sovereigns, markets turn to Portugal, where the 10-year bond yield is skying, +84 bps to 13.86%. The short end of the curve – where any buying thanks to the LTRO is likely to be happening – is better behaved, flat at 12.8%.

    Better than doing nothing, ECB liquidity operations to date have failed to reverse or even slow down collapsing money supplies in the EU periphery. Few have noticed because there are few monetarists left, but the declines are worse than occurred during the Great Depression, writes Ambrose Evans-Pritchard.

    "Central banks are fast getting locked into a destructive cycle," writes Matthew Lynn on MarketWatch. "They print money to try and pump up demand. Commodity prices rise, which then takes demand out of the economy again." It's the main reason why oil is increasing and why other commodities will follow. 

    LOL, Butler must have been reading us this morning:   "Catastrophe has been avoided," says Citi chief economist (and former central banker) Willem Buiter of the ECB's liquidity gusher. Buiter expects "other episodes of near-panic and paralysis in the markets" to call on the ECB again as more EU sovereigns restructure debt and more holes are discovered in bank balance sheets. (video)

  38. stjeanluc

    Earning strangle – If you played the FSLR 32/42 strangle sold for 0.70 yesterday, it can be bought back for 0.55 this morning. The options were anticipating an 8% move and we got close to that… So the 12% margin was safe. I am guessing that the strangle will expire worthless by end of week. The call side can be closed in any case. In case of a selloff, the 32 puts roll to the Mar 28 puts now.

  39. Weasle

    Well that was a funny little bot charge to tap Nas 3k…

  40. morxlntway

    A little help with my USO please.
    I bought the first round of Mar 39.50s at $1.49 then doubled at $1.17 (1.295). Then when at .34c rolled to Apr 40s for $1.17. Should i have sold half yesterday when they hit 1.50? or does the roll throw that rule of thumb out the window?
    Thanks

  41. scottmi

    DX – wow! quite a spike!

  42. stjeanluc

    Asteroid / Phil – One point that we are also missing in that piece of news – for all the big government haters, I would like to see a free market solution for a potential catastrophe like this one! Government science is what found the potential problem and if a solution is needed I am willing to bet that government will foot the bill as well. Unless of course we have no more money in 2040 because of all the tax cuts and spending cuts. That would be somewhat ironic (and also tragic).

  43. crussell14

    Phil
    I have been a beneficiary of the market melt up since later December, though lately I have been more cautious. you recommended a June $75/65 bear put spread on BWLD in late December (my only BPS) which has gone against me due to strong earnings release on Feb 8. What do you recommend?  Wait for a potential pulback with 4 months to expiration or roll-up now? Thanks very much   

  44. williex

    Phil
     
    I never got filled on the TLT BCS close at .95.  thoughts on the TLT trade now?

  45. pakdog

    $$ / scottmi – stopped just about $78.50 but will it just drift down from there?

  46. 1020

    Phil/asteroid   So what you're saying is, there is a slim chance that it would land on Joe Kernan?
     
    Damn….

  47. snow

    Home ownership – Ok, I stand corrected by actual data – there are a fair proportion of Europeans owning houses, although not necessarily in the places you'd expect: http://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate
    Note that "proportion of adults owning a house" and "proportion of houses occupied by the owner" are very different, and the latter is what's commonly used.
    By the way, my Korean font doesn't come through here, and I keep forgetting that – so in my previous post, the ?? was meant to be "chunse" (to use the atrocious Korean romanization system).

  48. jmm1951

    stjean/real estate
     
    Yes, they sold it three years later and we went to live in an apartment over the top of a convenience store run by my father and I read David Copperfield in bed.

  49. jabobeast

    what are the odds that CMG closes down today? 0%??
    probably the same as EDZ being up?
    Grouchy Jabo ;-(

  50. stjeanluc

    We were talking about iPhone subsidies costing the telco companies big money. Well, look at Sprint… 

    http://www.youtube.com/watch?v=A732Cuuo2tI&feature=related

    Sprint's SEC filings have revealed that the carrier has committed to purchasing $15.5 billion worth ofiPhones as part of the long-promised $20 billion gamble. If each handset costs around $630 at trade, then we're talking about the network holding nearly 24 million units. Given that the company mostrecently ate a loss of $1.3 billion, most of which was caused by carrier subsidies for the 4S, there's a genuine fear that the company won't be able to make enough back on each customer to offset the initial outlay. Given the Baller-style purchasing decisions of Dan Hesse of late, we'll be watching how this unfolds with great interest and our fingers very firmly crossed.

    I am not sure that it's worth it in the long run!

  51. dpastramas

    Who the f%^K is buying into these levels?!?! For god's shake DJI needs to drop like a rock at least 500 points! Jesus.  
     
    Sorry guys have to let off some steam..

  52. 8800

    Phil,
    Given the low VIX would you change your basic preference and buy USO puts rather than sell the calls (to collect premium)? Theoretically stronger bear oil case since the IRAN nuclear weapons scare supposedly has been back-burnered along with their  Straits of H gambit..
    Thanks

  53. jmm1951

    snow/Bulgaria
     
    Interesting that Bulgaria leads with 97% home ownership. Maybe we will see mass emigration from the US in search of the Bulgarian dream. But wait…
    In terms of utilities, the survey found a wide gap between Bulgarian homes in urban and rural areas. Although on average 58 percent of the residential units have electricity, running water and sewerage infrastructure, only 14 percent of rural homes offer such utilities, whereas in urban area the percentage is as high as 85 percent.

  54. rainman

    Jabo / odds -- You made me associate the odds with Groucho:  There's no such thing as a sanity clause.

  55. jabobeast

    you made my day Rainman!! Love the Marx Brothers!

  56. danny3399

    anybody know what crude inventories were

  57. jabobeast

    Oil supplies up 4.2 million barrels: EIA

  58. Phil

    Hard to be bullish/Rpme – See above.   I'm just writing what I'm thinking and, if that makes you a bit cautious – GOOD!  I hope my overall strategy is clear – we do add bullish trades (10 listed last Wednesday morning's post, aside from many more in chat) day by day ***IF*** the S&P holds our line.  So far, we have yet to have 2 consecutive days over our line.  Is it really too much to ask before committing our money to "the rally"?  

    Think of the economy as a guy who got broken up in a car accident and he would be dead but he's on all sorts of life support – kept alive because they pump in blood, and make his heart beat and have a machine replacing his kidneys and another machine making his lungs go up and down.  It costs an incredible amount of money every day just to keep him alive and if you remove any of those machines – he begins to flatline and all the other machines can't help him live if just one is disconnected.  No one wants him to be dead and, as long as no one pulls the plug – I can make a lot of money betting he will be alive tomorrow, right?  He may have a better chance of dying than the average guy but, if he's the only guy I can bet on – then it's a good bet that we go another day.  That does NOT, however, mean he should be my first draft choice to quarterback for the Jets next year, does it?  

    So make sure you differentiate our discussions regarding the overall health of the economy with our TRADES, where we are playing near-term trends.  In the morning, I tend to focus on the macro view, usually regarding whatever is going on in the news – trying to give a bigger picture perspective on whatever the markets are reacting to that day.  We expected today to be the blow-off top and also the possible turning point and now we have to sit back and see if the Central Bankers will, in fact, fool all of the people some of the time or if they did, in fact (and we have volume to support this) only fool some of the people all of the time with that time now running out.  Maybe Lincoln was wrong and you can fool all of the people all of the time but, in 150 years so far – he's been nailing it… 

    TNA/Kallen – Close enough but I still maintain that XLF and FAS are the best plays.  You concentrate on one sector and the 10 leaders of XLF for news and that's that.  They generally move in lock-step anyway so what's the point of worrying about two positions when your initial premise is you don't have time in the day to monitor one very effectively?  

    Weak internals/JRW – Oh, don't show me that stuff when I'm trying to get bullish!   8-)  

    AAPL $540!

    CMG/Jabob – Only down from being ridiculously up so far.  They want that $400 line really badly.  Ells is a very smart cookie – he runs the company like a .com with PR and such to push the image of "Fast food with integrity" that makes a trip to Chipotle like visiting a Church for the Whole Foods crowd.  So, like Whole Foods, CMG gets a premium well beyond what it would have if it were a "normal" chain because the customers are also investors and WFM is a grocery store with a p/e of 39 and CMC is a fast food store with a p/e of 57 – all crazy but I don't look at the prices in WFM (I don't even think they put prices on things) and I doubt people buying CMG look at the earnings either.  As long as they don't overtly screw up, they can keep this up forever but, it's only one misstep until a 20% correction – just ask SODA, who are down 15% on great earnings (up 17%) because they just aren't great enough to sustain the BS valuation.  

    Murdoch/Jabob – That's interesting because it's now in the Murdoch family's best interest to sell NWS before Rupert dies as there will be no family at the helm and it's not likely that's how they want to tie up their Billions.  

    American Dream/Snow – 68% of the people in America own their own homes.  97% of the people in Bulgaria do, 87% in Singapore, 78% in Italy, 83% in Ireland, 69% in England but just 40% in Germany.  This is why Germany is better off, I suppose – people's investments aren't tied up in homes.  That whole "American Dream" thing was nothing more than a PR campaign initiated by the Housing Industry (one which I sat on a panel for) to encourage people to buy homes.  We advertised and put articles in newspapers and lobbied Congress and paid think tanks to do studies that proved that nothing could be finer than pushing home ownership for Americans and we supported politicians who had friendly views towards housing and deposed those who questioned our agenda.  That was back in the 80s and 90s – by 2003 the Banksters got on board (I was out then but still knew/know all the major players) and cranked it up a few notches as they realized in the late 90s that they too could make stunning amounts of money by encouraging home ownership but they also perverted it into encouraging leveraging homes to borrow money – something we, in the housing industry, had never intended.  That led to the bubble, the explosion of the bubble and the extraction of about $15Tn worth of wealth from those 68% homeowners, who put their life savings AND FUTURE EARNINGS into that dream – even when it became a lie and a nightmare.  

    Bernanke working his magic – Wheeeeeee!  

  59. williex

    Phil
    "Central banks are fast getting locked into a destructive cycle," writes Matthew Lynn on MarketWatch. "They print money to try and pump up demand. Commodity prices rise, which then takes demand out of the economy again." It's the main reason why oil is increasing and why other commodities will follow.
     
    could you or somebody explain why printed money causes commodity prices to rise.  income hasn't gone up, earnings were not great and other than the banks balance sheet I don't know where the new money went. 
    seems to me that just because $ is added to the system does not mean that the cost of commodities should automatically go up until the $ gets into the hands of the consumer and then demand goes up
     seems like more wall street BS

  60. Weasle

    dpastramas,
    I'm guessing we hit 12,880 before the bots wake up again, though they'll put up a fight at 13k.  I'll dump some bearing bets just to break even if we get that lucky.

  61. jmm1951

    stjean/Sprint
     
    I always wondered why XOM does not give away free cars so that people will buy gasoline. There has to be a reason.

  62. Weasle

    there goes 13k yay

  63. danny3399

    How low can we go before the stick

  64. kustomz

    Somethings wrong, Im actually making money!!!
     

  65. Phil

    Go Ron Paul!!!  

  66. tommyt

    wheeeee on oil

  67. jabobeast

    Phil— you are a great writer and I love your analogies… thank you!

  68. lolobear

    Where is LFlan when you need him?? :-)   Wondering if i should daytrade AAPL right now.  Low for the day. 

  69. lflantheman

    Good Morning everyone!    And what a fine morning (again) for AAPL.  The iPad news, another analyst upgrade, and rumors of a dividend keep pushing it higher.  I hope some of you caught this morning's pop (stayed long overnight).  I just had to rest it for awhile, as I said yesterday.  This morning I had significant computer problems and was unable to repurchase any calls before  the morning's upturn.   I did, however, just go back in for 49 April 500s for the portfolio at 50.00.  I don't see this upward push on AAPL ending before next week.   I have placed "take profit" orders on these at prices of 57, 58 and 60 just in case things get crazy this afternoon and I'm not around.  If the calls are still present by weekend, then I'm fairly certain I'll just hold them. 

  70. stjeanluc

    And wheeeeeee on gold!

  71. rehat

    wow. look at GLD fall

  72. lflantheman

    That is a typo stj….I have 40 April 500s at 50.00

  73. stjeanluc

    25KP / Phil – That move in gold is giving our GLL position a good boost. The bid/ask spread on these options are very big so tough to guess but it looks like the the short puts are close to even and the long calls are now profitable!

  74. rainman

    Phil / CMG — IMO the difference between CMG, WFM and SODA is that one is a fad. I don't believe the other two are.

  75. rainman

    Phil / CMG — Oh, and before you blow a circuit, that doesn't mean ANY of them deserve the valuations they have.

  76. rdn4evr

    Hi JRW, Do you have any idea why 81.25 seems to be such strong support on IWM?  It's been bouncing off of it since the 10th.

  77. lflantheman

    lolobear…..I'm a buyer here.  Daytrade if you want to, but the market is a bit twitchy right now and could pull AAPL down with it today.  

  78. rainman

    Phil / Dream — I'm guessing those stats include people who have mortgages. Not really ownership in my book. It might be interesting to see the numbers for non-collateralized owners.

  79. lolobear

    Thanks Lflan – bought with you. 

  80. Weasle

    whoops, I meant 12,980 and there we are again

  81. jabobeast

    BTMFD???
    WTF???

  82. Beaufleurs

    Hi llflan. For those of us just startin out, What about if we wanted to play it a little safer and maybe buy a spread closer to at the money? Any suggestions?

  83. Beaufleurs

    Hi llflan. For those of us just starting out, What about if we wanted to play it a little safer and maybe buy a spread closer to at the money? Any suggestions?

  84. calch

    Phil- I am in the USO March 39 puts @ .66. I missed the roll to April last week and am not sure if I should watch and wait today before making a roll?

  85. stjeanluc

    There is support for gold around 1730 on a daily chart. The S/R lines are obviously blown on a large move like this one!

  86. David Ristau

    Lflan -

    Did you close the 500 calls that you had gotten into last week yesterday?

  87. lflantheman

    Beafleurs:   Here are a couple of spreads under 6 months that I like, with the long calls slightly ITM (in the money):    April 525/550  which pays 93% if AAPL over 550 in April.   Also  July  525/575 paying 113% if AAPL over 575 in July.  I purposely choose earnings months for these spreads because AAPL tends to ramp up during those months. 

  88. Weasle

    VIX / VXX still down, does that suggest "smart" money betting on a big stick today?

  89. rainman

    williex / prices — I agree with you and believe that's why inflation is in check (by the fed definition of inflation). All the printing is doing is shoring up the banks balance sheets to survive the next down turn. Otherwise they would be lending it. Until they clean up their balance sheets, they won't be lending which keeps demand in check. The housing market will be the indicator to watch, when it turns around, inflation will start creeping in.

  90. jabobeast

    Phil-- do you 2pm is a big deal today?

  91. mrmocha

    Pharm / ARIA - will be interesting to see what happens here.  On both Feb 21 and 22 it bounced off of exactly 14.14, and it's close to that again.  Am closing out some covers here and getting more long, hoping that 'third time's a charm'…

  92. mrmocha

    AAPL players, tread carefully, I bot some calls here and we all know how that went last time!

  93. ariveraA

    Wheee on silver!!

  94. lolobear

    No mrmocha… NO NO  :-)

  95. lflantheman

    Yes, David, sold them for 44.35.   I should have held them, huh?    :)      Purchased back 40 today at 50.00

  96. lolobear

    mrmocha… sell your calls damnit sell em right now.  I know exactly what happened last time.  You took the air right out of apple.  :-)

  97. dpastramas

    MrMocha i think we are ok, the other time you had sold calls on aapl :-)

  98. stjeanluc

    Looks like you called the top again MrM….

  99. aussie_opt

    MrM – say it isn't so?!?

  100. Phil

    Portfolios – Not reacting to morning BS – all erased now anyway so we'll see where we stop falling and then assess.  

    Ron Paul holds up a one-ounce silver dollar and points out it can buy 11 gallons of gas now and says "but if you try to use it they'll arrest you" – PRICELESS!   Based on that speech alone – he should be our next President. 

    USO/8800 – We did buy puts, the April $40 puts at the moment for exactly that reason.  We need a better drop than this but inventories were net slight build so no help for the oil bulls today ($106!). 

     EIA Petroleum Inventories: Crude +4.2M vs. consensus of +0.8M. Gasoline -1.6M vs. consensus of +0.1M. Distillates -2.1Mvs. consensus of -0.6M. Futures -0.28% to $106.25. 

    I love the way AAPL can now reverse any Nas drop all by itself (see 5-day view)!  

    Bulgaria/JMM – Well the definition of home seems to be kind of loose.  My kids have a tree-house like that but I don't think they are listed as homeowners…

    Good clip Rain.  

    Oil/Willie – There's no direct connection, just speculation.  The Bush stimulus went right to people's pockets and that money was immediately stolen by the oil companies, who raised the price of gas so fast that that's what happened to the whole $168Bn that summer.  Since that worked, the logic is that all stiumulus can be stolen that way and, of course, the payroll tax reduction does put $1,000 average back in people's pockets so that money is being immediately stolen at the pump but nothing from the EU, the IMF or the Fed is finding it's way into people's pockets so we can only justify a $20 per tank increase in gas prices but then there's food costs and other inflation so even .50 a gallon at the pump is too much and we're already past that so – unsustainable unless wages begin to rise.  This stuff isn't hard to figure out – it's the "experts" on TV who wrap everything up in endless mumbo-jumbo that make it confusing as everyone tries to push their agendas.  

    XOM/JMM – It would make sense for them to offer a $1,000 rebate to people who buy Hummers (maybe through 10% gas discounts on their XOM cards) – if they could encourage enough people to switch to cars that get 11mpg, they could get gas past $5 in no time.  That's the beauty of the top 1%, you only have to soak up the marginal production of goods and services with your excess consumption to drastically inflate the price for everyone else!  The more they pay, the more you make and the more you can afford to over-consume to keep the cycle going.  That's why there are all these magazines encouraging rich folks to out-consume each other.  

    Thanks Jabob!

    GLL/StJ – Amazing, isn't it?  

    CMG/Rain – I'm not saying either CMG or WFM are fads but, I am saying that a mature fast food franchise has a p/e of 25 not 57 so even if we say 30, then CMG has to double earnings in 3 years to grow into a "normal" valuation.  Since that's very unlikely, they are currently overpriced.  Whole Foods is in the same boat as grocery stores are more like 10 in p/es, not 40 and, while SVU may have 2,400 stores (and a p/e of 5, by the way), WFM does have 320 but clearly doesn't hit the same general demographic and will have a very, very, VERY hard time doing more than a double unless you want to argue that the are a destination for more than the top 20%.  So not blowing a circuit – just pointing out some common-sense ways people need to look at valuations before jumping on the bandwagon just because a chart looks good and Cramer says CHINA loves $10 burritos.  

    Mortgages/Rain – Of course that includes them.  That's why it's called a dream.  All slaves have dreams – even wage slaves…  

    Oh no…………….  Come on Ben – I WANT MY QE3!!!!

  101. palotay

    Phil/EDZ – Phil can you comment on why EDZ keeps going down, when the market is down?  Like right now EDZ is even from yesterday's close, but SPX is down 0.50%.  Is the emerging markets still your hedge choice, or should I move part of my hedge to a different instrument?

  102. lflantheman

    msf65….on the BCS question.   If it gets about 80% profitable then I usually cash it out and put the money somewhere else.   jBy that I mean if I've got say a 400/425 spread that becomes worth over $20 then I'll think about getting rid of it.  The last 10 to 15% of the spread is hard to squeeze out, and you can make more money quicker in a spread that is closer to strike price. 

  103. rainman

    Anyone follow FDP?

  104. David Ristau

    Larry -

     

    What;s your plan for the $500 calls…I directed the clients to exit today since I did not receive any information about exiting yesterday. Should we reenter $500 calls or let money on sideline as we are far from your entry?

  105. lionel

    XOM Puts Mar $85 can be sold for 70c (50% profit)
    Thanks Phil for the trade.

  106. lflantheman

    David……If they exited the calls today for a good profit, that's fine.  And they probably did, if they bought where I did earlier.  But AAPL is probably going to contiue to push upward, with iPad and earnings coming soon.   I have re-entered, because I believe this is what will happen.  I suspect they may have gotten out this a.m. at a higher level than we are at right now, so I would repurchase the April 500s.  I choose them because it's earnings month.  By the way, look at the volume on AAPL today……17 mil, and not even noon yet!

  107. Pharmboy

    IRWD – selling May $12.5 Ps for $1.  This is now a buy write for the original buy with sale of the 12.5 May Calls.  We bought back the short month puts a while ago.

  108. stjeanluc

    These gold and oil moves have erased more than $6000 of losses in the 25KP portfolio… 

    Phil, here is the latest situation if you need to make adjustments:

  109. stjeanluc

    EDZ / Palotay – EDZ is more correlated to EEM and even with a down market here, EEM is still up 0.2% today so EDZ is down….

  110. lflantheman

    Just for fun………IF both DOW and NAS are in green at close, AAPL teases 550.  (Don't make any trades based on that).

  111. rainman

    FDP — Too thin a market.

  112. Phil

    $25KP:

    • Let's take $1.40 and run on the GLL April $15s and again, shame on anyone who didn't take $1.60 on that dip (double).   This is why Rule #1 (and we only have 2 rules) is ALWAYS sell into the initial excitement.  We can also get out of those March $17 short calls at .20 so of course let's be done with gold!  
    • USO I think we can do better.  GMCR too and the others are all on work-out.  
    • DIA puts got back to even but now back to $1 so let's see what happens today.  

     

  113. jabobeast

    stjean and Phil— my question (like Palatoy) would be why does EEM go up every day? Even today it is up and never seems to drop? Why is it immune to the market dropping? IS PCLN and CMG in the index? ;-)

  114. stjeanluc

    25KP / Phil – We don't have the Mar 17 calls anymore, we have the Mar 17 puts short now $1.33 for a 10% win! Do we buy them back or do we wait and roll them?

  115. stjeanluc

    EEM / Jabo – Look at a long time chart of EEM, they have been punished much worse than the markets in the US. If you look back at May when the Dow made its highs, we have now gone over. But EEM was at 50 last May at the same time and it's now at 44 or more than 10% behind. So maybe they are just catching now… 

  116. pstas

    Anyone else having problems with the slow refresh rate on this site today?I am on Comcast and trying to figure out if it is on Phil's end or my end?

  117. Pharmboy

    Um…VRTX.  Yeah.  Gotta love pharma.

  118. chaps

    pstas: no problems here on refreshing.

  119. joemayo

    Yes page is slow to refresh I'm on Verizon

  120. bobhu

    No problem here with Cablevision.

  121. ricpar

    Pharmboy / Phil
    What do you think of SHPGY?
    Dividend low but looks like they  have stuff in the pipeline, new MFG facilities in Europe. Forward PE 15.12 (Yahoo) with 76% earnings growth last quarter.

  122. rainman

    pstas / refresh — no problem with TDS.

  123. palotay

    I understand that EDZ is correlated to emerging markets, and not to SPX. I’m just wondering if there is a better hedge to be in. I can’t afford to be down for the day in my very underwater hedge when the market is down.

    What are you guys using for hedges?

  124. jmm1951

    Phil/Bulgarian dream
     
    I bought a car from a Bulgarian salesman in Sarasota, Florida. I asked him what he did back home in Bulgaria. He said he was a violinist in an orchestra. Once he came to the US there was no work for violinists, so he adapted to a different kind of fiddle. He said he learned English very quickly so he could get girls.

  125. Pharmboy

    Shire/ripc – I liked them when they were at 70.  Too much $$ for my blood, and I like BMY more for its dividend and pipeline.  I would do a BCS on them and sell a put if you have the margin, but again, ~$1.50/yr dividend for a 100 stock is not worth it to me.

  126. Phil

    Those IWM $80s popped $1 off 815 again (yesterday we got $1 off 820) – this is why it's important to learn these tricks and not just wait for me as I was busy running through the $25KP positions on that dip so I didn't get a chance to post it.  Those are what you want to do on 1st time breaks (where we expect the bounce), not the 2nd time if we get it later.  If 820 acts as a top now – then we're still in that downtrend I noted yesterday and eventually other analysts may snap out of their stupor and realize the picture isn't as pretty as they thought it was now that the lights are on it.  

    USO/Calch – Well, you can see why we rolled!  They just topped out at .50 and had you doubled down at .24 yesterday, you'd be out with a 10% profit.  You can't do NOTHING with a position.  You are either going to stop out at 20% or you are going to resolve to DD or roll when you are down 40% or lower.  Once you are down below 20%, you need a 25% gain just to get even and it very quickly deteriorates from there.   Very important for all to read strategy section article on Scaling AND all the commentary below it where we discuss doubling down, rolling, etc.  At this moment, with USO at $40.44, I would not roll to April first, I would spend .33 to roll up to the March $40s (.77), which puts you there at net .99 and that's very realistic to get you out even.  Then if oil spikes back up (and it might tomorrow into nat gas inventories), you can either DD or roll to April (or both) if you want to make a larger commitment..  If that doesn't happen (opportunity to DD or roll) then that means oil is flat or heading down and you're in good shape for getting your .22 back.  

    CNBC banging the dip-buying drums already.  After all, we pulled back 0.5%, you don't want to let a once-in-a-lifetime opportunity like that get away, do you?

    VIX/Weasle – Certainly suggests a lack of panic but I wouldn't go so far as to call it smart just yet. 

    2pm/Jabob – Ah the Beige Book!  I love the BBook and it's a big deal to me but I don't think it will move the market much.  

    EDZ/Palotay – It's about Asia, Brazil, Russia etc, not US.  Yes, I still think they have a good chance of blowing up in a truly spectacular manner but I don't know WHEN.  July $11/18 bull call spread is $1.50 and the $10 puts can be sold for $1.25 for net .25 on the $7 spread that's currently .75 (200%) in the money.  If you risk owning $10,250 worth of EDZ (10 contracts), you can buy $7,000 worth of insurance so let's say your bullish plays work out as EDZ stays flat or goes down for the next 6 months – will that offset a 50% loss on the short position ($5,215)?  If you have $100,000 of buy/writes or short puts that make 20% in a flat or up market – then yes, right?  That's all a hedge is supposed to do, offset PART of the losses but it's not a magic trick – it WILL cost you PART of your gains as well.  

    FDP/Rain – Nice, boring company.  Down on gas prices and Europe suckiness that the rest of the market is ignoring.  Unfortunately, option spreads very thinly trades so not an appealing stock for us to play BUT, if you can sell the Sept $20 puts for $1 and buy the Sept $17.50/22.50 bull call spread for $3.50, you're essentially buying the stock at $20 with all of the upside above it and worst case is you enter 1x at today's price (rollable, of course).  

    And what Rain said!  

    XOM/Lionel – Very nice but we did that yesterday!  

    GLD/StJ – Absolutely right and don't wait for me to take $6,000 off the table.  We can always go back in, right?  

    EEM/Jabob – It's just like FUCMG, they can manipulate EEM, which is, on the whole, a small, thinly traded ETF and that brings in buyers on emerging market shares and makes them go up and then they float China rumors and take their exits while the bagholders pour in.  As with our market pumping, it works every day until it doesn't.   This is what a ponzi scheme is – each person coming in believes the next person will pay more and it all works fine until you finally run out of suckers and then you (those of you still in the stock or whatever) realize that there isn't actually anyone to sell your shares to and all your paper profits suddenly vanish in a puff of smoke as you fight all the other geniuses to get what you can for the shares you bought at top dollar.  Also like a Ponzi scheme – the guys who bought in and got out could care less – they are back to cash and the guy who ran it (the IBanks) got all their money in fees and they don't give a crap what happens to you, as long as they get their commissions.  

    By the way, notice in this whole financial crisis, mortgage fraud etc. etc. no one EVER suggested that these people give back their fees…

    GLL/StJ – Oh silly me.  Those we can keep then as I think we have a chance of getting out at .20 if we wait and, if not, the April $17 puts pay another .35 and I never say no to $350.  

  127. biodieselchris

    Looking at puts ….. March AAPL and PCLN are too expensive. CMG 370 just about right.

  128. ban2

    fyi for all involved with EDZ (includes me) here's top holdings
    The iShares MSCI Emerging Markets Index Fund (EEM) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in emerging markets, as represented by the MSCI Emerging Markets Index.

    Top Holdings*as of 2/27/2012

     

    Name
    % of Fund

    SAMSUNG ELECTRONICS CO LTD
    3.14%

    GAZPROM OAO
    1.88%

    CHINA MOBILE LTD
    1.69%

    PETROBRAS – PETROLEO BRAS-PR
    1.62%

    VALE SA-PREF
    1.36%

    TAIWAN SEMICONDUCTOR MANUFAC
    1.32%

    AMERICA MOVIL SAB DE C-SER L
    1.26%

    CHINA CONSTRUCTION BANK-H
    1.26%

    ITAU UNIBANCO HOLDING S-PREF
    1.24%

    PETROBRAS – PETROLEO BRAS
    1.20%

    Total
    15.98%

  129. JRW III

    rdn4evr / 81.25

    .02 below 81.41, standard deviation !!

     

  130. pstas

    Refresh rate- thanks all- just like that- all back to normal now. I have no idea.

  131. lionel

    Phil/ XOM
    "Now we're getting somewhere on those XOM March $85 puts – .66!   It's 50% now but could do better so maybe 1/2 out at .60 and stop the rest back at .45 (.20 trail).  "
    Since XOM puts closed at 50c yesterday, I was still long 1/2 position following your advice.
    And 70c or above today was a good exit for the unsold half position.

  132. pstas

    MIL- Angel- it that Pea Ridge report due today?" Do you know if it will be a PR release or internal?

  133. palotay

    Phil/ EDZ –  I'm concerned because I do have $100k+ in buy/writes, mainly US dividend blue chips, which I want to be protected.  If we start going down, but the emerging markets don't, EDZ wasn't an effective hedge for my portfolio.  I thought that we were in EDZ because we believed that the emerging markets would go down faster than our markets in a correction.  Lately, this hasn't been the case.  If you thinks this may continue, I should be in something else. Let me know if I'm missing something.
    Can you recommend a hedge that is more correlated to the US market?  I know you have been recommending a SQQQ spread, but that is kind of scary with the Apple freight train.  
     
    Thx for the help as always.

  134. jmm1951

    Ban2/EEM
     
    Interesting, but one might argue that companies like Samsung and Petrobras are not really about emerging markets. Even American Movil has several lines of prepaid phones in the US, like Tracfone. Vale is a miner, but its markets are global. Gazprom is also in global energy markets. Maybe I am off track on this, but…?

  135. kustomz

    They've created this wonderful illusion that volatility does not exist by forcing everyone to wage the same bets. Killing volatility in equities makes them a safer investment. Am I the only one shaking in my boots?

    JRW do have an upside target for this afternoon?

  136. newbie

    Refresh / Comcast / Minnesota
    Refresh seems fine here. The last post I see is at 1:02pm by kustomz, having hit refresh now at 12:11pm Central

  137. Phil

    Refresh/Pstas – Comcast said there would be issues for two weeks and that may affect me and other Comcast people but not the servers.  I was having slow reloads but better now.  Matt took out a couple of slow-loading graphics – sometimes when people put up charts or images, they come from a place that takes too long to load or they are on our server and are too big and take up a lot of bandwidth with a lot of people hitting it.  

    SHPGY/Rip – I'm clueless on them.  Seems like a nice enough company and their stock goes up and up like they are selling $10 burritos or something but I don't know their business and they are very thinly traded options so off my radar.  

    EDZ/Palotay – Then TZA is still my favorite, followed by SQQQ.  I don't see how small caps can be doing so well with high oil prices and tough lending standards.  I mentioned SQQQ again on Friday along with DXD in the morning Alert.  TZA at $18.83 is nice and you can pick up the July $17/22 bull call spread for $1.40 and you don't have to be super-bearish selling the $14 puts for $1 to make it .40 on the $5 spread with a 1,000% upside – just find something you REALLY want to buy if the market pulls back, sell puts on that and use that money to buy the spread – very simple.  

    Bulgaria/JMM – Drop your average American in Bulgaria and see if he lands on his feet…

    Wow – CNBC has a guy saying $80 oil?!?  This guy says aggressive drilling finding new supplies will cause glut but long-term outlook.  Cool, he actually told CNBC viewers US demand is falling.  Time-frame is two years it seems.  I think that's a very bearish signal from CNBC – they are covering their asses by bringing on an oil bear so they can later tell people how they called it.  

    Touch screen/StJ – Damn, now I want that too!  I think that's what AAPL is going to roll out – a touch-screen TV system.  

    XOM/Lionel – Nothing wrong with accidentally making more money.  The way XOM moved, we could have gotten back in at .45 this morning.  Crazy stuff but fun to play when you get used to it.  

    EDZ/Palotay – You are extrapolating an EXTREMELY unlikely scenario (that the emerging markets won't follow the US down) based on 4 hours of movement that isn't going as you expect it to.  We are in EDZ because it is very possible that the Emerging markets collapse before we do or even without us.  This is unusual and probable presents an excellent opportunity for people who need a hedge to grab EDZ as a lagging index.  See above for other picks.  

  138. Pharmboy

    VIX is even, market is down….all is calm, b'f the storm.

  139. Pharmboy

    TWO – selling the Sept 10 Ps for 65c.  Seems to me that yield is moving stocks, and I would be happy to have them in there.  I am already in the stock as well.

  140. Pharmboy

    ANR – selling the Jan $15 puts for a 12.xx entry on them. 

  141. stjeanluc

    Apple TV / Phil – I thought that I read that they were looking at something like the Kinect and included Siri for control of the TV which would be ironic copying MSFT ideas! Once you get used to it, that Kinect control is actually intuitive and you can use voice control as well but I don't really like talking at my TV that much… Except when Kudlow is on of course!

  142. Pharmboy

    OK, is everyone having IT problems…..Hello?  Meeeoooow?  Hola?

  143. stjeanluc

    Did MrM buy some more AAPL calls around 1:00 PM?

  144. Inkarri1982

    Yes – having IT problems too.

  145. randers1

    Pharm- How about VRX- Buy, sell , hold or don't care?  Thanks,

  146. qcmike

    comcast  OK in St. Paul  Mn

  147. Phil

    11:40 AM European shares give up gains in the wake of LTRO II, finishing in the red as Chairman Bernanke douses hope the Fed will keep up with the pace of money creation across the pond. Stox 50-0.4%, Germany -0.5%, France -0.1%, Italy flat, Spain -0.8%, U.K.-1%. The euro -0.8% at $1.3353.

    12:00 PM On the hour: Dow -0.27%. 10-yr -0.38%. Euro -0.71% vs. dollar. Crude -0.82% to $105.67. Gold -3.45% to $1726.65.

    1:00 PM On the hour: Dow -0.04%. 10-yr -0.38%. Euro -0.74% vs. dollar. Crude -0.63% to $105.88. Gold -3.46% to $1726.55.

    tweet from Blackrock attributed to Larry Fink reads ominously, "a broad crisis of confidence is paralyzing our ability to make long-term decisions." Just one question: Is that the U.S. that's incapacitated or the portfolio managers at Blackrock?

    79% of fund managers failed to beat the S&P 500 in 2011 – repping the worst performance by managers for that widely used measuring stick since 1997. ETFs, anyone?

    P-E firms are facing a fight for survival as they look to to raise $177.4B of new capital, up 81% from this time last year and against a background of risk aversion, a lending freeze and global economic problems. In 2011, funds attracted $263B, well below the $600B they raised at the peak of the buyout boom.

    Excuse du jour:  Big moves (iiiiiiiv) in a number of markets just after Bernanke's testimony was released this morning may have been spurred by an unusually large sell order hitting the Treasury market which then caused algorithms from precious metals, to currencies, to stocks to fly into action, sending all the markets reeling. It may have been a fat-finger, but one trader suspects it was "a very big asset allocation."

    Bernanke's prepared remarks: The chairman stands by the plan to keep exceptionally low rates until late 2014, saying the highly accommodative stance meets the dual Fed goals of full employment and stable prices. While seeing bright spots in the labor market, he says it remains "far from normal."

    Reality:  Precious metals fall off a cliff as well as it becomes clear no new candy is imminently forthcoming from the Fed. Gold -2.3% to $1,747/oz., Silver -2.5% to $36.22/oz. Oil slides too, -0.6% to $105.94. (also)

    Deutsche Bank is taking a more defensive stance on oil-levered stocks due to valuation concerns and its weaker outlook for crude oil. The firm cuts Oasis Petroleum (OAS -3.9%), Marathon Oil (MRO -2.9%), Murphy Oil (MUR -0.8%) and Canadian Natural (CNQ-1%) all to Hold.

    "No clear signal that the (FOMC) is considering further monetary easing," is Goldman's Jan Hatzius' take on the Bernanke testimony. Other than the Chairman's reputation for easy money, what led anyone to believe QE3 or its ilk was to be announced today? Stocks throw a minor fit, the DJIA -0.5%, and the euro continues to slide, -0.7%

    QE Anyone!  The BOE has considered expanding its QE program by buying assets other than U.K. debt, says member Adam Posen (an American and leader of the dovish faction). Current policy prevents such purchases, but Posen expects it could be quickly altered if conditions warrant.

    A counterweight to dovish Adam Posen, the BOE's Martin Weale hits the tape, saying rate hikes may come sooner than the market expects and there may be a case for no more QE in May. Sterling remains as is, +0.2% at $1.5936.

    The ISDA may not reach a decision Thursday on whether CDS should be triggered on Greek paper. The group tells Dow Jones it has until Monday to make its determination. 

    The Italian yield curve – the 2-year off (since Dec.) 550 bps to 2.23%, the 10-year off only 200 bps to 5.22% - shows the limits(distortions) of the ECB's LTRO, which offers cheap funding for only 3 years. Bank traders are happy to play with the near-free money in short maturities, but have little interest in taking serious credit risk.

    "The next big global financial crisis will emanate from China," writes Martin Wolf. "That is not a firm prediction," but he notes how the U.S., Japan and a host of others suffered crises following financial liberalization and global integration. Still, Wolf is encouraged by China's cautious and "sensible" plans for reform.

    North Korea agrees to a nuclear moratorium in exchange for food aid, according to the State Department. The country will suspend uranium enrichment, cease nuclear and long-range missile tests, and allow the IAEA to monitor such as well as confirm disablement of its nuclear reactor at Yongbyon.

    Argentina faces a day of reckoning with lobbyists representing investors of its debt in London trying to drum up support with British officials to vote against new IADB and World Bank loans for the nation. The goal of the group is to "vigorously pursue" a fair reconciliation of the government's default in December 2001 on some $95B of debt. Political tension between the two nations dating back to the Falklands War continues to influence negotiations.

    Now you know why the Kochs want to stop the Dems:  Mayor Rahm Emanuel and environmental groups win a dealin Chicago to close down two coal-fired power plants earlier than expected. The operator of the plants – Edison International's (EIX-0.6%) Midwest Generation – will have the option to overhaul the plants to burn natural gas under the terms of the deal.  With Mayor Rahm Emanuel successfully influencing a deal to convert 2 coal-burning power plants in the Chicago area to natural gas, a bigger question jumps to the forefront: How closely will the future of coal-fired plants be tied to which party wins local and national elections in the fall?

    Morningstar's Ultimate Stock Pickers offer their 10 highest conviction buysGILDGSKRIMMCDVNITWSCHWJNJTIF,DHR.

    I almost took a job with these guys back in the day:  Intel Capital (INTC), the chip giant's VC arm, is announcing a $100M fund that will invest in companies developing automotive technologies and services, with the goal of creating new in-vehicle services and improving device connectivity. The company is also opening up a German lab that will focus on automotive innovations. (more

  148. Phil


    I almost took a job with these guys back in the day:
      Intel Capital (INTC), the chip giant's VC arm, is announcing a $100M fund that will invest in companies developing automotive technologies and services, with the goal of creating new in-vehicle services and improving device connectivity. The company is also opening up a German lab that will focus on automotive innovations. (more)

    Toll Brothers (TOL +3.9%) rallies after ebullient CEO Douglas Yearly tells CNBC he sees "improvement everywhere," adding that his company feels "the best" it has in five years. Although TOL reported a FQ1 loss, Yearly says orders were up 43% in the first three weeks of February. Rival homebuilders also jump: PHM +3.9%,DHI +2.7%LEN +2.7%.

    J.C. Penney (JCP -2.5%) dips after saying February sales will come in below expectations. Cleveland Research notes that the company continues to struggle as market share losses rise unabated.

    Why I love CSCO, part 25:  Wi-Fi networking equipment sales rose 14% Y/Y in Q4, estimates Dell'Oro. CSCO is believed to have a majority of the lucrative enterprise market, and is followed by ARUN and HPQ. It's also noted that shipments to service providers rose 170% Y/Y (indirectly a positive for WIFI) and BelAir Networks, recently acquiredby ERIC, is the leading provider of outdoor "mesh" Wi-Fi gear.  (Q3 data)

    Apple's (AAPL) market cap passes $500B, making it the the first U.S. company to top that level since Exxon in 2008. Apple has risen 34% in 2012, but with a PE multiple of 12 times this year’s expected earnings, a new iPad and possibly phone on the way, not to mention a potential dividend, the bulls are charging. Shares +1.4%.

    The smaller bonus checks hitting accounts across the financial services industry this month are making it difficult to maintain the lifestyles that Wall Streeters expect, as they're forced to give up things like ski trips to Tahoe or Aspen. “People who don’t have money don’t understand the stress,” says a financial planner for the wealthy. –  It's true, imagine having to settle for Vail – so cruel, they don't even have a decent sushi restaurant and their private airport is in Gypsum- GYPSUM – that's like 15 miles away!!!!

     

    Three lunchtime reads:

    1) Why conventional commodity indexes will likely disappoint

    2) Wall Street was never on your side

    3) Market breadth aligns with pullback scenario 

  149. Phil

    From my local cable guys (Optimium On-Line):

     

    Reception Issues Related to Satellite Sun Outages

     
     

    For a two-week period in both the spring and fall, you may experience some degree of video interference due to a phenomena known as sun outages.
    Image
    For the spring of 2012, sun outages are expected between February 29th and March 8th. Check back in the fall for additional information.

    Sun outages are a normal consequence of satellite communications. Our programmers send us their signal via a satellite downlink. The interference is caused when the sun is in a direct line with a communication satellite. The sun's radiation overwhelms the satellite signal.

    Related disruptions in service typically last about 15 minutes per day, per satellite. Some symptoms of sun outages include:

    Video
      • static, sparkles or fading picture
      • frozen picture
      • black screen
      • snow

    Audio
      • hissing
      • popping
      • stutters

    If you continue to experience signal loss beyond the typical sun outage timeframe, please contact your local service representative.      

  150. samz3700

    For Phil -
    Barron's article on using risk reversal play on IMAX – sorry if someone already posted -
    Sell June 22 puts and Buy June 27 calls
    http://online.barrons.com/article/SB50001424052748704097904577251303125601594.html?mod=BOL_hps_dc

  151. JRW III

    kustomz / Target

    Upside 82.25-35

    Downside 81.34-40
     

  152. newbie

    kallen / TNA
    I've been trading TNA/TZA for 2.5 years. It's all I trade. I only do a couple trades a month, typically. I buy and sell SHARES only, I know nothing about the options.
    I can't comment on IWM tracking RUT, although I assume it is close to perfect. But I can competently comment on the relationship of TNA + TZA to RUT.
    The tracking is extremely good. Not perfect. I have done numerous studies on the subject. If you want more info, you can search for comments by "aspiring_beginner" on SA underneath  Phil's articles. There may be a few comments under other persons' articles as well.
    What I have found is that in time periods of 3 or 4 weeks or less, the tracking is usually close to perfect. Beyond a month or so it CAN start to drift a little, but that doesn't mean it WILL. Over 4 or 5 months or more though, you'll almost always see some fairly significant decay, you can be down to 2.3 or 2.4x.
    The tracking accuracy depends upon how straight the price path is. When the path is very linear, such as TZA from Dec 19 to Feb 3, the ratio can actually be a little LARGER than 3.00x.  And the opposite during very choppy "up one day-down one day-up one day"  type RUT movement.
    I wrote a longer comment on this subject a week or two ago here on the PSW daily thread, sorry I don't know what day it was.
    In summary, if you are happy with a TZA or TNA that would track between 2.9x and 3.1x the RUT within a time frame of three or four weeks, I think it will work for you.
    It would be pretty easy for you to do your own study. Just pick two random dates from the past, and check the closing price ratio of RUT to TZA or TNA on both dates, and do the percentage change math. I think you'll find very good correlation short term, but it worsens when you get into the several months range.
    Also keep in mind that the ratio can be say 2.97 over a given period, say 2 weeks, and then if the price direction reverses and goes ballistic for three straight weeks, the ratio can change and cross the 3.00x point up to say 3.05 or 3.10.
     
    Happy Trading……..

  153. Phil

    Talking to the TV/StJ – Yes, if there was a way I could tweet them while watching, I would fill their box quite nicely!  My daughter has Kinect on her TV and she loves it – it can do all sorts of things responding to small gestures from her bed – a lot more refined than I thought it was.  I'll tell you what I would love, I'd like something to follow my eyes and make the window I'm looking at active – that would save me amazing amounts of time with the mouse, as I have 3 monitors and 5 windows on my main pc.  

    IMAX/Samz – Did you know they like movies in CHINA!!!?  I love IMAX as a long-term play but no longer a no-brainer at $25.84.  Still, as Barrons notes, the implied volatility is pretty good so you can sell 2014 $20 puts for $5 and be very happy with a net $15 entry or you can be greedy and add the Jan $20/25 bull call spread for $2.50 and you still have a net $17.50 entry, worst case and you pocket an extra $2.50 if they hold $25 this year.  

    BBook is out, nothing stunning in quick glance – more in a little while.

  154. stjeanluc

    Control PC / Phil – You mean something like this:

    http://www.tobii.com/pceye

  155. newbie

    TZA
    I am long 100% in TZA shares at the moment. Bought 1 lot Jan 23 at $21.87 and 1 lot Feb 16 at $18.42.
    I put in a Stop at $17.67 on Feb 21 but it hasn't been hit yet. I'm happy with where I am at now. TZA has been VERY flat for the last three weeks, unusually so. I'll move my stop up a little in a day or two if TZA gains another dollar or two.

  156. newbie

    refresh is still perfect here in Minnesota via comcast

  157. Pharmboy

    VRX – yes, they are fine as well. They want to own derm, and derm is a BIG business.  Hence us owning MRX…and I think MRX will be a part of VRX soon….

  158. stjeanluc

    I don't know how this would play in the markets but this from an AP report:

    Israeli officials say they won't warn the U.S. if they decide to launch a pre-emptive strike against Iranian nuclear facilities, according to one U.S. intelligence official familiar with the discussions. The pronouncement, delivered in a series of private, top-level conversations, sets a tense tone ahead of meetings in the coming days at the White House and Capitol Hill.

    The level of uncertainty in the world is nowhere near reflected in these markets….

  159. lflantheman

    newbie……TZA/TNA is all you trade?   Keep your eye on the yellow box. 

  160. newbie

    stjean / Control PC / PCEye
    It says "for people with higher cognitive abilities"
    I think that leaves Phil out   ;)

  161. newbie

    iflan
    yes, it is all I trade
    what's the yellow box?

  162. kallenjr

    newbie,
    Thanks very much. My strategy is based on buying monthlies and selling weeklies against them. I did look at a comparison chart over 90 days, and it looked like it tracked pretty well. I like the 3X for the volatility, but like JRW's method, looking at triggers off IWM.

  163. lflantheman

    newbie… The yellow box is JRW lll     He's an expert at TNA/TZA trading. 

  164. newbie

    are you talking about the yellow back tinted IWM "lines" postings?

  165. newbie

    yep, i understand now. thanks

  166. shadowfax

    The sunspots were a while back. Diesel fuel has taken ego PUs off the road in cowboy country.

  167. lflantheman

    …yes, just above us a few boxes. 

  168. stjeanluc

    Oil has recovered more than $1 since the lows, but gold is still looking weak!

  169. Inkarri1982

    Phil – Any thoughts on the GDP price deflator coming in at 0.9% in this second Q4 estimate compared to about 2.6% for the first three quarters?  TIA 

  170. stjeanluc

    By now we should be expecting rate hikes…. but these are not normal times I guess:

    http://blogs.reuters.com/scott-barber/2012/02/29/qe3-off/

  171. BertII

    what a run back up on oil into nymex closing

  172. snow

    Eyeball control/Phil – control with eye motion is already here; that's how my friend John Pixley talks – http://queerx3.blogspot.com/

  173. peedlew99

    does anyone know how to run a study to compare spx in February  normal to buying at 10:30 AM and selling on the close everyday?

  174. Phil

    Beige Book (Fed BS in purple):

    Prepared at the Federal Reserve Bank of St. Louis and based on information collected on or before February 17, 2012. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.


    Reports from the twelve Federal Reserve Districts suggest that overall economic activity continued to increase at a modest to moderate pace in January and early February. Activity expanded at a moderate pace in the Cleveland, Chicago, Kansas City, Dallas, and San Francisco Districts. St. Louis noted a modest pace of growth and Minneapolis characterized the pace of growth as firm. Economic activity rose at a somewhat faster pace in the Philadelphia and Atlanta Districts, while the New York District noted a somewhat slower pace of expansion. The Boston and Richmond Districts, in turn, noted that economic activity expanded or improved in most sectors.

    Manufacturing continued to expand at a steady pace across the nation, with many Districts reporting increases in new orders, shipments, or production and several Districts indicating gains in capital spending, especially in auto-related industries. Activity in nonfinancial services industries remained stable or increased. Reports of consumer spending were generally positive except for sales of seasonal items, and the sales outlook for the near future was mostly optimistic. Tourism remained strong in some reporting Districts, but declined in the Minneapolis and Kansas City Districts because of reduced snowfall. Residential real estate market conditions improved somewhat in most Districts, with several reports of increased home sales and some reports of increased construction. Commercial real estate markets also showed positive results in some Districts. Banking conditions generally improved across the Districts. Agricultural conditions were mixed, while extraction activity generally increased.

    Hiring increased slightly across several Districts, and contacts in a variety of industries faced difficulties finding skilled workers. Wage pressures were generally contained, and prices of final goods remained stable, although contacts in some Districts anticipate passing rising input prices through to consumer prices.

    I'm not trying to be nit-picky here – I would be more lenient in my grading if the Dow wasn't up 5% since the last report on Jan 11th.  Is this 5% worth of improvements?  Is this stocks back at all-time highs kind of improvements?  Come on people – get real!  We are priced back at the levels of 2007, when we had no problems, no debt issues, no nations in default, we were marking to market and money was rolling in from all over the World and China was going to be the next big thing with their booming middle class and Russian money was pouring in and we had to block Arabs from buying our ports with all their money and India was the new China and we'd have another Billion cars to sell over there, etc. etc.  As silly as that sounds now – that's the price you are paying today to buy back into the market at this level.  

    Manufacturing and Other Business Activity

    Manufacturing has continued to increase across all twelve Federal Reserve Districts since the previous report. Most Districts reported gains in new orders, shipments, or production. Contacts reported increased capital spending in the Boston, Richmond, Chicago, Kansas City, St. Louis, Minneapolis, and Dallas Districts; contacts in Philadelphia and Cleveland also anticipate higher capital spending. Manufacturing contacts in San Francisco also continued to invest in information technology equipment. Auto-related manufacturers in the Richmond, Atlanta, St. Louis, and Minneapolis Districts reported increased activity and announced plans to expand operations and open new plants. Primary metal manufacturing showed strong growth in the Philadelphia, St. Louis, and Dallas Districts. Fabricated metal manufacturing increased in the Richmond, Kansas City, and Dallas Districts but was essentially flat in the San Francisco District. Steel producers reported that shipping volume was trending higher in the Cleveland District and specialty metal contacts reported solid order bookings in the Chicago District. In contrast to the many positive reports, contacts in some Districts reported plans to decrease operations and close plants. Contacts in chemical and paper product manufacturing in the St. Louis District reported plans to close plants and lay off workers, while manufacturers of household goods and building materials reported soft demand on average in the Chicago District. Manufacturing contacts in the Boston, Philadelphia, and Cleveland Districts expressed concern about the risks posed by the situation in Europe.

    Nonfinancial services activity was stable or increased in the New York, Philadelphia, Richmond, Atlanta, St. Louis, Minneapolis, Dallas, and San Francisco Districts. Transportation services were stable or trending higher in the Cleveland, Richmond, Atlanta, and Dallas Districts. In contrast, freight transportation contacts in the St. Louis and Kansas City Districts reported that business had slowed. Information technology service firms in the Boston, St. Louis, Kansas City, and San Francisco Districts have experienced increased demand since the previous reporting period. Additionally, contacts in health care announced plans to increase capital spending or expand operations in the Richmond and St. Louis Districts.

    Generally very good but I worry that the vast majority of this is all coming from autos.  That's not a bad thing but it's not really enough to drive a sustainable recovery.  

    Consumer Spending and Tourism
    Retail sales in the Philadelphia, Atlanta, St. Louis, Minneapolis, and Kansas City Districts were higher than year-earlier sales. The Boston District reported strong same-store sales in the last few months of 2011, but mixed results for same-store sales in January. Retail sales increased in the Richmond and San Francisco Districts, but were mixed in the New York and Cleveland Districts and weakened in the Kansas City District. Retail sales growth in the Dallas District was tepid and consumer spending growth slowed in the Chicago District. The Boston, New York, Philadelphia, Cleveland, Chicago, and Dallas Districts noted that mild winter weather had depressed sales of seasonal items. Mark-downs on winter merchandise to clear inventory were reported in the Boston, Chicago, and Richmond Districts. Aside from unsold seasonal items, inventories were more broadly reported to be at satisfactory levels. All Districts reporting sales expectations for the coming months indicated optimism among contacts that sales will improve.

    Gains in auto sales were reported in the Philadelphia, Atlanta, St. Louis, and Minneapolis Districts. Chicago also reported sales increases in January, but noted that sales were down slightly in early February. Auto dealers in the New York, Cleveland, and Richmond Districts reported a slowdown in recent auto sales, while auto sales held steady in the Dallas District and contacts in the Kansas City District reported a post-holiday lull in sales. All Districts reporting on sales outlooks conveyed optimism. Dealers in the Kansas City District expect demand for smaller, fuel-efficient cars to spur sales in coming months, while contacts in the Cleveland District were optimistic but uncertain that sales increases in 2011 could be repeated in 2012.

    Tourism strengthened or remained strong in the New York, Richmond, Atlanta, and San Francisco Districts. The Minneapolis and Kansas City Districts reported a decrease in tourism largely attributed to below-average snowfall.

    Notice the optimism.  No REAL things improving but things must be getting better because the market is up 5% and the Fed is giving away MORE FREE MONEY and everyone on CNBC and in the Government says things are great so they MUST be getting better, right?  

    By the skillful and sustained use of propaganda, one can make a people see even heaven as hell or an extremely wretched life as paradise. – Hitler

    Real Estate and Construction

    Residential real estate activity increased modestly in most Districts. Boston, Cleveland, Richmond, Atlanta, Kansas City, and Dallas reported growth in home sales, while New York noted steady to slightly softer home sales. Philadelphia reported strong residential real estate activity. In contrast, home sales declined in St. Louis and San Francisco noted that home demand persisted at low levels. Contacts' outlooks on home sales growth were mostly optimistic. Contacts in Boston, Philadelphia, Atlanta, and Dallas expect home sales to rise further. Home prices declined or held steady in many areas. Cleveland and Atlanta reported little movement in house prices, while contacts in Boston, New York, Philadelphia, Richmond, Chicago, and Kansas City reported some declines. Single-family residential construction was weak in Chicago and declined in St. Louis; Cleveland noted that the year-end uptick seen in construction has abated somewhat, and Minneapolis noted increased single-family building permits. In contrast, Boston, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco reported increased multifamily construction activity.

    Commercial real estate markets displayed positive results in some Districts, as leasing showed overall improvement. Minneapolis, Richmond, Chicago, and Dallas noted increased leasing. Boston, however, reported mostly unchanged leasing fundamentals with some modest improvement since the previous report. Commercial vacancy rates were mixed in New York, decreased in Chicago, increased in St. Louis, and stayed high in San Francisco. Boston and Dallas noted limited levels of nonresidential construction, while Cleveland and Chicago noted improved nonresidential construction.

    Not very inspiring, is it?  12M people used to work in construction, now 4M do.  When will these jobs come back?  Home builders and Mortgage companies used to make up a considerable portion of the S&P, as well as banks that were up about 100% from where they are now.  Instead we now have $10 burritos that are projected to grow at 50% a year for the next decade and companies like Facebook, NFLX, OPEN…  with 100x valuations driving the index back to 2007 highs – despite not having anywhere near the ACTUAL sales or ACTUAL profits of the companies we had leading us back them.  

    Banking and Finance
    Reports on banking conditions were generally positive across Districts. Lending increased to varying degree in the New York, Philadelphia, Richmond, Chicago, Dallas, and San Francisco Districts. Lending was little changed in St. Louis and Kansas City, while loan demand was described as weak in Richmond and soft at regional banks in Atlanta. Demand for business credit was flat to slightly higher in Cleveland and increased slightly in Richmond, San Francisco, and at some large banks in Atlanta. Dallas reported strength in middle-market and large corporate lending, and Chicago noted that business loan growth continued at a moderate pace. On the consumer side, loan demand saw little change in New York and San Francisco. Cleveland and Atlanta noted increased auto lending, while Kansas City reported slightly weaker consumer installment lending. Consumer lending in St. Louis ranged from moderately weaker to unchanged. Demand for residential mortgage loans increased in New York, Richmond, and Kansas City; mortgage demand was flat to moderately stronger in St. Louis and softened in Kansas City. Cleveland noted increases in requests for commercial real estate lending, while contacts in Chicago and San Francisco noted improvement in the availability of credit for this sector. Meanwhile Philadelphia and Kansas City reported flat or steady commercial real estate lending. Demand for commercial real estate loans was flat to moderately stronger in St. Louis.

    Overall lending standards remained restrictive in San Francisco and Richmond and were largely unchanged in St. Louis and Kansas City. Lending standards tightened further for commercial borrowers in New York. Credit conditions in Chicago improved slightly, while quality improved in Philadelphia and Kansas City. Delinquencies were steady or declined in Cleveland. Mortgage delinquencies were steady in the New York District but delinquencies decreased in other loan categories.

    Agriculture and Natural Resource Industries
    Drought conditions and warm temperatures affected agricultural conditions in some Districts. However, recent rainfalls in parts of the Richmond, Atlanta, Kansas City, and Dallas Districts helped ease the dry conditions. Crop yields for St. Louis were mixed, with only winter wheat, rice, and tobacco showing positive gains for 2011. Tobacco and cotton yields in Richmond were lower than historical averages. San Francisco reported growth in orders and final sales for agriculture products. Farm values and incomes were stronger in Minneapolis and Kansas City, while Richmond saw a slight drop in farmland values.

    Kansas City, Dallas, and San Francisco noted higher crude oil extraction activity. Similarly, Chicago and Minneapolis reported robust activity in energy and mining, and energy-related service firms in Dallas reported very strong demand. Mining for various metals also increased in the San Francisco District. Cleveland reported flat conventional oil and natural gas drilling and production, and San Francisco observed lower demand for natural gas. The Dallas District noted drilling cuts by a few gas-directed firms, but contacts anticipate that oil-directed activity will offset losses. Compared with a year ago, current coal production is lower in St. Louis and higher in Kansas City.

    Not a very exciting couple of sections.  Commodity demand can be driven by speculation so we can't even count that as a positive until we see those commodities actually being used somewhere – as opposed to being stockpiled by various ETFs.

    Employment, Wages, and Prices

    Of the Districts reporting on hiring, most indicated a slight increase. Boston, New York, Cleveland, Richmond, St. Louis, and Minneapolis reported increased hiring in manufacturing, and contacts in Philadelphia and Kansas City anticipate future hiring in the sector. Several businesses in the Atlanta District also reported plans to increase payrolls. Philadelphia, Kansas City, and Dallas noted increased hiring among auto dealers. Contacts in Boston, Cleveland, Richmond, Chicago, Kansas City, and Dallas were having difficulties finding skilled or specialized workers in a variety of industries. In contrast, Boston manufacturing contacts reported fewer complaints about being unable to find qualified workers. Chicago noted that hiring remains selective and long-term unemployment elevated, while San Francisco noted limited demand for new workers. Staffing firms in Boston noted that the hiring cycle remains "elongated" despite stronger demand. Staffing firms in Dallas also noted high demand, while a major employment agency in New York indicated flat hiring.

    Among Districts commenting on wages, upward pressures appeared limited. Boston noted limited pay rises in retail and manufacturing. Richmond reported some upward wage pressures in the service sector and manufacturing. Dallas and San Francisco reported minimal wage pressures, although upward pressure for certain specialized positions was reported in both Districts. Similarly, wage pressures remained largely subdued in Kansas City except for high-tech and energy positions. Wage pressures were modest or largely contained in Cleveland and Dallas, while Philadelphia noted flat wages and Minneapolis reported modest wage increases. New York noted that Wall Street compensation remains under downward pressure.

    Prices of final goods and services were relatively stable in most Districts. Retail prices increased at a moderate pace in the Richmond and Kansas City Districts. Contacts in the New York District reported modest increases in selling prices and prices paid. Contacts in the Cleveland, Richmond, Kansas City, and Dallas Districts noted rising input prices with some expectation of pass-through to consumer prices. Cost pressures were largely unchanged in Chicago and input prices have stabilized in the Boston District, while business contacts noted some increase in cost pressures in the New York District. Minneapolis and San Francisco noted increases in the costs of employee benefits. Philadelphia noted mixed price pressures among manufacturing firms, with some firms unable to pass their higher costs along. Atlanta reported that concerns over increased input costs eased, although several manufacturing firms noted an increase in commodity prices since the previous report.

    Well those commodity prices sure didn't get any better since then!  This is the worst BBook we've seen in a year ironically, nothing to get excited about EXCEPT the screaming need for more Fed action – and who doesn't like MORE FREE MONEY?

    So, on the whole, a report so bad – it's good.  

  175. Pharmboy

    Gosh darn it Phil.  I was getting my rosie glasses on….now I am back to Manhattans and Salty Dogs. Sheesh.

  176. Pharmboy

    VIX is down more…no one panicking b'c no one bought in except us fools. 

  177. Pharmboy

    NSPH… up up and away….

  178. shadowfax

    Pharm
    There is still moonshine and roadkill. ID considering to make taking roadkill OK, feeds the masses!

  179. Phil

    Eye control/StJ – Thanks, looks cool, much more than I need but good to know the tech is being worked on.  

    Oops, got 815 again on the RUT while I was doing BBook – did anyone pick up the IWM $80s?  

    Dollar 78.80 – nice play off my bottom call at 78.20!  

    Oil back to $107 for NYMEX close.  

    We would like it to be known the exhibits that were shownwere exclusively our own,All our own. All our own.Come and see the show! Come and see the show! Come and see the show!

  180. gucci

    Iflan — keep april 500 call overnight no cover today, or cover EOD? thx

  181. newbie

     

    Beaufleurs / AAPL profit / Monday
    B:  on Monday you posted the below. If it's not too inquisitive, would you care to comment on how "much" you made, if not necessarily in dollars (although that would be nice), then at least the % in profit?
    Your comment about taking a profit and then wondering about the decision is really one of the two or three most basic aspects of investing/trading that every single person struggles with, at least in the beginning. Every single book on trading and investing that I've ever read has emphasized the difference between respecting and accepting a healthy profit, even a small profit,  versus trying to squeeze every penny or tick out of every trade. Remember, even the greatest have a lot of loosing trades. I don't remember if I've heard Phil say it (I think I have) but I know I've read Buffet saying it….it goes like this:
    Rule #1 – Don't loose money.
    Rule #2- Don't forget Rule #1
    So, you made a trade, you didn't loose money, you made a profit-whether small or large. AND you have more than you did before the trade. AND you are ready to start looking for the next proper trade set-up that you like. And you don't have to hurry. That's another one of the rules of the pro's, and one that Phil repeats: "Don't force a trade". In other words, if you don't see anything you like, spend the afternoon flying a kite or something. There's no law that says you always have to be in a trade. When you're all in cash, you're not loosing money.
    Beaufleurs
    February 27th, 2012 at 6:39 pm | Permalink
    Ignore this user
    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.

  182. Pharmboy

    And to think Iran is accepting gold for oil.  That's thinking.

  183. rpme

    Phil, I loved that album, Brain Salad Surgery, kind of like this market.

  184. kustomz

    Pharm ….Not much to fear when your on top of the mountain looking up, its once you look down that makes one queasy.

  185. Phil

    Israel/StJ – I heard that one over the weekend.  That's just a way of keeping our (US) hands clean if push comes to shove.  

    Deflator/Ink – That's a wacko indicator that attempts to measure the "value" of a product so, if the IPhone 4 costs 20% more than the IPhone 3 but has 50% more power and features then they say it's 30% cheaper in "real GDP" terms.  Apply that logic to 100,000 goods and services and you'll see why it's an indicator to ignore, not to mention oil is up $20 from it's Q4 average of $87 so what does it really tell us?  

    Hike/StJ – ROFL!!!  That's a good one….

    815 on the RUT again – IWM $80s should be $1.50 with IWM at 81.30 and the RUT at 815  so .15 premium and all you have to do is stop out at $1.45 and look for a .25 or .50 profit and that's how you play for Mr. Stick!  (over RUT 815 only, of course).  

  186. Pharmboy

    LOL Kust – don't I know it. 

  187. jabobeast

    and here comes the CMG push before the close as usual…
    you can find me in the padded room… ;-(

  188. lflantheman

    AAPL portfolio:  I have SOLD 30 of the 40 Apr 500  calls for 53.65.  I will KEEP 10 calls as is (no covers).  I am reducing position because I just do not trust this market.  Although we may miss some of a big runup in AAPL tomorrow I just think it's too risky to have such a large position.    I'm more fearful of waking up to a huge drop in the market than I am of losing some AAPL upside. 

  189. Inkarri1982

    Deflator/Phil – Right, but they used the wacko to bump up the GDP number which continues to make me very careful(aside from everything else).  Thanks for the insight, much appreciated. 

  190. Phil

    Pixley/Snow – Sounds interesting. 

    Study/Peedle – Certainly not me. 

    Rosie/Pharm – They don't make it easy do they?  

    But Rosie, you're all right

    You wear my ring

    When you hold me tight

    Rosie, that's my thing

    When you turn out the light

    I've got to hand it to me

    Looks like it's me and you again tonight, Rosie

    And from the same song for Jabob: 

    With all the times that I've been burned

    By now you'd think I'd have learned

     

  191. jabobeast

    FU Rosie!!!

  192. Pharmboy

    Thank you for the words of encouragement Phil….tickles me pink!

  193. Dennis

    Thanks for saving me a fortune today, Phil.  I cashed out in the morning and I'm getting happier about it as the day goes on.  Your article today really drove the point home for me.  Thanks.  

  194. kustomz

    My risk on indicator AUD looking mighty weak and probably over done short term…if not markets pay ketchup on further weakness.

  195. dpastramas

    The USD strength might kill Mr Stick today

  196. peedlew99

    that's it!  bet the farm short!
     
     
     
    my sister in law just bragged that she bought Apple….  

  197. newbie

    kallen / RUT / TNA
    I've noticed that the RUT has more beta than the other 3 main indexes. That's why I chose it when I started trading. Then you've got the triple leverage of TNA/TZA. Then you've got options on those, which is good for at least another 5 to 10 times leverage, if not more. And now we've got weekly options just to make it even more interesting.
    If that's not enough nitro to play with, you belong in pyrotechnics school  :)   Wear your Nomex!

  198. stjeanluc

    Israel / Phil – That's one way to look at it, but here is another reading…

    http://andrewsullivan.thedailybeast.com/2012/02/obamas-most-dangerous-gop-opponent-netanyahu.html

    So Israel would, without warning, put US troops and Western civilians at direct risk of terrorist assaults, would likely tip Pakistan into even more outright hostility to any cooperation with the West, and rally the Iranian opposition to its foul regime. It would destroy the global coalition against Iran, increase even further its own global isolation, and only set back Iranian nuclear development for a few years – and make it, or a Third World War based on religion, inevitable.  My own fear is that global recruitment for Jihad would boom as well – reversing all the gains of the last three years. The war would also galvanize Islamist parties in the new Arab democracies, giving Israel more ammunition in blocking any rapprochement between the US and the Muslim world. And following this essential blackmail, the Israeli government would doubtless rally much of the US Congress, the entire GOP, its media outlets (like Fox, and the Washington Post), and a key part of the Democratic fundraising machinery to side entirely with Israel against the US president. [...]

    Here's a prediction. Netanyahu, in league and concert with Romney, Santorum and Gingrich, will make his move to get rid of Obama soon. And he will be more lethal to this president than any of his domestic foes.

    That might be worse case scenario, but there are so many possible outcomes and many of them bad for us…  

  199. lflantheman

    Mild AAPL downdraft.  Released those 30 calls just in time!

  200. kustomz

    Someone post that picture of the deer in the headlights

  201. stjeanluc

    In the meantime, big moves in oil but back to where we were this morning…. But gold is now below 1700! 

    Phil yesterday – "GLL – I do not accept $1,800 gold."

  202. lflantheman

    Sold last 10 at 49.45

  203. lflantheman

    All cash!!! in the AAPL port.   Now let's see you go to 520 AAPL!!!

  204. shadowfax

    BOTS selling DIPS buying!

  205. dpastramas

    But i dont want to sell my AAPL!!! Its my only profitable trade…FU MrMOcha :-) !!!

  206. stjeanluc

    Quite a surreal day for gold – losing $100 in one day….

    The next big lines are at 1689 and 1657! I didn't think I would say that today!

  207. stjeanluc

    2012 Gold chart…

  208. Pharmboy

    GLD is at the 50 and 200d MA.  Shoudl bounce here, no?

     

    Lots of buying of ABX and GG.   $45 looks like a good place to sell puts in the front months, esp. if there is an attack on Iran.

  209. rpme

    Dpast, that's hilarious, poor Mr Mocha.

  210. shadowfax

    Phil
    Did whoever quit do the market news like BIG BAD BEN today at ????????

  211. Phil

    Woops, lost it on IWM but better to make that bet and lose a bit than stop out our shorts on a bounce, right?  When we do get the bounce, we can use those quarters to roll our short positions.  

    Not going there Pharm.  

    You're welcome Dennis – congrats!  

    78.87, 79 will be very discouraging for bulls.  

    84M on the Dow at 3:30 is not much volume – will be interesting to see how last 1/2 hour goes.  

    Nomex/Newbie – It frightens me that you know that…  

    Israel/StJ – Wow, all that extrapolated from one statement?  Of course, you'll have to forgive me if I hear Sullivan's name and expect the Israel-bashing from the outset as the guy was too conservative for the New Republic:  

    In 1994, Sullivan published excerpts on race and intelligence from Richard Herrnstein and Charles Murray's controversial The Bell Curve, which argued that some of the measured difference in IQ scores between racially defined groups was the result of genetic inheritance. Almost the entire editorial staff of the magazine threatened to resign if material that they considered racist was published.[19] In order to appease them, Sullivan included lengthy rebuttals from 19 writers and contributors. Sullivan has continued to speak approvingly of the research and arguments presented in The Bell Curve: "the book… still holds up as one of the most insightful and careful of the last decade. The fact of human inequality and the subtle and complex differences between various manifestations of being human — gay, straight, male, female, black, Asian — is a subject worth exploring, period."[20]

    For Kustomz:  

    GLL/StJ – Too bad we were so loaded up already – I would have loved to put more money where my mouth was in the $25KP but I was worried we'd have to roll another month first.  

    Cash/Iflan – Very nice!  

    ROFL on that gold chart!  That's why we stick with them – we started at that $1,650 line and rode it out for a 10% move but by rolling and doubling we were able to ride out the silliness.  

  212. yodi

    Scaling in to AAPL again what you thinh FLAN

  213. lflantheman

    I may make an AAPL re-entry at very EOD.  Will post.

  214. Pharmboy

    U started it…not me!  What happened to my emoticon?

  215. lflantheman

    Back in 20 april calls      50.90

  216. jmm1951

    CMG overvalued.
     
    I have never eaten in a CMG and have never even seen a CMG, but my understanding is that they are popular because they offer freshly prepared food from fresh ingredients at a premium price. A kind of AAPL for fast food. This seems like a revolutionary idea in fast food, where the general idea seems to be to produce a product that is as cheap as possible and sell it for as much as possible via marketing and promotions. Hence the success of Domino's Pizza as a money-making machine, despite the fact that it makes no attempt whatsoever to produce a decent pizza. The same can be said for various hamburger chains.
    I note that the company was founded by a guy who was trained as a chef or cook and had practical experience in that area. As someone who can cook quite well myself, I almost never visit fast food restaurants on the basis that I don't want to pay extra money to eat something that I can make better myself for less money.
    Isn't it possible that the CMG company might expand by designing other types of restaurant (different menus), like pizza restaurants and hamburger restaurants that could be the iPhone and iPad to their Mexican iPod, and that they might then look cheap at today's price?

  217. stjeanluc

    Gold chart / Phil – I wonder what the Japanese name is for that candle pattern… Some come to mind but might be insensitive!

  218. dpastramas

    RPME – OK aapl is back, my star trade is saved :-)
     
    We all love Mr MOCHA!! No hard feelings Mister :-)

  219. Weasle

    Suprisingly choppy; does this indicate that pump bots are being met by selling?  Or is it still low volume in the last 45 minutes?

  220. ban2

    Wow — and 2 min later AAPl takes a nose dive!!
    Might be lotsa folks just following you!!
    Think I mentioned way back when you stared, to trade before your post.
     
    Now I sure hope it goes back up. I had a buy on 3 of those 500 C @ $48.30 and it triggered !!!
     
    Thank you  — I think

    lflantheman February 29th, 2012 at 3:15 pm | PermalinkIgnore this user AAPL portfolio:  I have SOLD 30 of the 40 Apr 500  calls for 53.65.
     

  221. rainman

    jmm / CMG — Yes. They are doing asian next.

  222. lflantheman

    We will keep these 20.   That's it!    See you tomorrow!

  223. shadowfax

    XXXXX S1! XXXXXX 81.06!!!!!!!!!!!! Sell Sell Sell!!!!!!!!

  224. Phil

    Damn, I was .09 off on IWM, it popped off $1.41.  

    GLD/Pharm – I SHOULD at least pause there.  It didn't have much respect for those lines on the way up so I'm not sure how firm they'll be on the way down (see December).  I think if they weren't both at $163ish, gold wouldn't have stopped today.  The two of them together makes them stronger but there's A LOT of selling pressure on gold.  But only because it's completely overvalued BS…

    Whoever/Shadow – Elliott quit, he just does Stock World Weekly and makes the Big Chart.  

    Speaking of news: 

    3:00 PM On the hour: Dow -0.24%. 10-yr -0.33%. Euro -0.9% vs. dollar. Crude +0.31% to $106.88. Gold -4.25% to $1712.45.

    At the close: Dow -0.56% to 12932. S&P -0.74% to 1362. Nasdaq -0.73% to 2965.

    Treasurys: 30-year -0.46%. 10-yr -0.27%. 5-yr -0.14%.
    Commodities: Crude +0.34% to $106.92. Gold -5.33% to $1693.05.
    Currencies: Euro -1.01% vs. dollar. Yen +1.03%. Pound -0.05%.

    Ground-hugging interest rates mean an investor hoping for an 8% return from a 60/40 mix of equities and bonds needs to compound stock gains at 12% annually. Given a cyclically adjusted earnings yield of just over 4%, such returns seem unlikely. It's time to look outside traditional stock/bond allocations or, even revisit that 8% target (are pension funds listening).

    The bottom continues to fall out of precious metals prices, gold off nearly $100/oz., -5.1% to $1,697. Silver is off $2.55/oz., -7%to $34.61. The slide began right around the time Bernanke's testimony gave no hint of additional easing, but may have been triggered by algorithms kicking in when a large sell order hit the Treasury pits. - Yeah, remember how they told people it was a fat finger last year and we spiked down and Cramer et al told everyone to come back in because the water was fine and they caught the guy who did it and it won't ever happen again – AND THEN WE HAD A MUCH BIGGER SELL-OFF.  It's all BS – anything to get the retailers to keep buying while the funds are dumping.  

    Corning (GLW -2.2%) trades lower after Morgan Stanleyreiterates an Underwight, noting downbeat remarks made by CFO James Flaws at a conference. Flaws mentioned his company's Samsung Corning JV (SCP) has chosen not to match a price cut from rival Nippon Electric, and has thus lost share at customer LG Display (LPL). As a result, SCP is now expected to see a "low-double-digit" shipment decline. (previously)

    CHINA!!! Piper reports the Chinese government has introduced itsexpected LED lighting subsidies, and considers the news a "positive catalyst" for the industry. SemiLEDs (LEDS +2.4%), which has Chinese manufacturing facilities, is trading higher. However, other industry players are heading in the opposite direction. CREE -2.6%.RBCN -5.8%VECO -1.5%AIXG -3%GTAT -5.6%

    Just hours after Interpol announces the arrests of 25 hackers linked to Anonymous, the international police agency’s website was targeted in a cyberattack that left it unreachable for a period of time. It's probably not the tipping point for cybersecurity stocks such asFTNTWBSNWAVX - but it adds to a growing discussion on how many companies and governments still remain ill-prepared to ward off sophisticated attacks on their systems.

  225. kustomz

     Mini mini mini flash crash in /ES, looks like it went illiquid for .000000000000001 of a sec

  226. shadowfax

    When the going gets down Street smart edge checks out everyday. Nice software but glad I don't trade with it!

  227. rdn4evr

    wow, after hours selling in IWM!  Also, please note that CMG did NOT make a new high today.  

  228. rdn4evr

    Shadow, I just like SS Edge for the chart.  Also, I notice that since the TOS switch to TDAmeritrade, TOS won't fill at a better than offered price, but SSEdge will if it is available.  

  229. dpastramas

    IWM / General question, tried to play the stick buying IWM weekly 80$ calls.  IWM finished at 81.05 while the Russell around 814. Is this disconnect normal? Will i see a rebalance later/tomorrow?  Thanks guys!

  230. deano

    It's leap year folks once every four years – don't get too excited – we'll be back on the low volume increase tomorrow I'm sure.

  231. shadowfax

    rdn4evr
    I use etrade and they fixxed there last problem 18 months ago, I like SSEdge charts set a line and it stays 3 min. OK.

  232. shadowfax

    Sorry, lots of shaking today!

  233. shadowfax

    Thanks Phil!

  234. peedlew99

    No stick at all on the RUT… unlike the failed stick of the big boys

  235. Phil

    CMG/JMM – That's what's driving their valuation now.  They have a new concept called (awfully) ShopHouse, which is just like CMG but with Asian food.  Their test restaurant is SUPPOSEDLY doing well (supposedly because why aren't there more after almost a year) so people assume that CMG can now double up very easily but don't seem to realize that it took them 20 years to open 1,200 restaurants and that's WITH MCD backing them.  So they have opened about 60 restaurants a year but they are priced for 30% annualized growth or 360 restaurants a year.  I don't know if you ever opened a restaurant but that's just not going to happen.  I'm not even sure MCD opens that many and they have 33,000 restaurants.  

    This is the problem with investors – they don't understand physics.  Money on a spreadsheet doesn't make things happen – at some point, a human being has to take that money and talk to another human being and put a deposit down on land or a lease and then they need other human beings to construct a store and they have to wait for permits and they have to order equipment and hire people and train people and promote the business, etc.  And, of course, the more teams you have dedicated to building new restaurants, the more overhead you have and the more cash flow drains out while you spend ahead of revenues and the momentum you build up means you can't pull the plug quickly when you go off course and God forbid you ever stop expanding at that kind of pace then you have a huge development operation to shut down.  

    As I said earlier, Ells runs CMG like a .com, which you can get away with while you are small and growing fast but now Google's law of large numbers begins to kick in (same with WFM) and the new locations are no longer no-brainers and your really good team that was building 60 to 100 restaurants a year becomes diluted into 2 or 3 teams as you try to build faster and faster to keep up your growth and now you have 2-3 times more critical people who DON'T have 20 years experience and don't even know you (Ells) so they don't think like you do or decide like you do and suddenly mistakes are made and sales disappoint and margins compress….    I made a very nice living dealing with this sort of crap for people – it would be very impressive if they can skip along through this phase unscathed.  

    Candle/StJ – I believe that's called a "Sayonara Suckers!" event.  

    Disconnect/Dpast – They don't match tick for tick, they periodically rebalance but the RUT itself is just the sum of the 2,000 stocks being traded while IWM is based on the sentiment of the people betting on the RUT so usually in balance but, especially at the open and the close – capable of pretty big divergences.  

    Wow, Dow finished 182M – So more than half the day in last half hour.  

    Market recap: Stocks stumbled after Bernanke’s commentssuggested QE3 may be less likely than many people apparently were hoping for. Gold and silver staged a big selloff after Bernanke's remarks, and commodity shares led S&P sector losers. The dollarbounced higher. Crude oil moved up, capping an 8.7% gain for the month. NYSE declining issues led advancers three to one.

  236. mrmocha

    Sorry about that AAPL thing boys, but if it's any consolation I held overnight in order to try to give you a nice discounted entry point when it opens much lower!

  237. stjeanluc

  238. pakdog

    Israel / StJean – This article questions Israel's capacity to manage it. Hard to sort fact from public posturing at this point.
     
    “There’s only one superpower in the world that can carry this off,” General Deptula said.
     
    http://www.nytimes.com/2012/02/20/world/middleeast/iran-raid-seen-as-complex-task-for-israeli-military.html?pagewanted=1&sq=elisabeth%20bumiller&st=cse&scp=2

  239. pakdog

    TWO / Pharm – Why do you like them vs other mortgage REITs like HTS or IVR – had some problems but looks like they're back on track?

  240. jmm1951

    Phil/CMG
     
    OK, I see your point now. Good explanation. Yes, training trainers to train new employees and making sure they get Sexual Harassment and Americans With Disabilities and a thousand other items all takes time and money. No, Shophouse is a weird name. A play on Chophouse, but why? Chop suey, I suppose.  (A bit too close to shithouse for my liking.)

  241. jabobeast

    Phil— great CMG write-up but not nice because I read it and want to be short!!!
    Makes me think it could one day be another NFLX ;-)
    I thought you were going to turn off your brain if the S&P stayed over 1360???

  242. craigzooka

    Shophouse is crap, I go by there all the time.  It is somewhat crowded but their food has absolutely no mass appeal.  I have tried it and I haven't found anything I want to go back to the restaurant for.

  243. pstas

     Based on that speech alone – he should be our next President.

    An epiphany? We could only wish!!!
    http://paul.house.gov/index.php?option=com_content&task=view&id=1106&Itemid=69

     
    I believe the proper role for government in America is to provide national defense, a court system for civil disputes, a criminal justice system for acts of force and fraud, and little else.   In other words, the state as referee rather than an active participant in our society. Those who hold political power, however, would lose their status in a society with truly limited government.   It simply would not matter much who occupied various political posts, since their ability to tax, spend, and regulate would be severely curtailed.  This is why champions of political power promote an activist government that involves itself in every area of our lives from cradle to grave.  They gain popular support by promising voters that government will take care of everyone, while the media shower them with praise for their bold vision.   Political power is inherently dangerous in a free society: it threatens the rule of law, and thus threatens our fundamental freedoms.   Those who understand this should object whenever political power is glorified.

  244. stjeanluc

  245. newbie

    The Bell Curve  (book)
    I read that book. I was very interested in the subject when it came out. The general consensus formed later by sociologists who studied it was that the various these'es (what's the plural of thesis?) it postulated were incorrect, and that the book was not valid in the way it examined and interpreted the data.
    My general impression after reading the whole thing was that the book showed that if you were a black kid and your father was a Harvard professor and your mother was a cellist for a symphony you were likely to have more social mobility than if your father was a mailman and you mother was a crack dealer. Really?  'who'd a thunk it?. That's basically all the book said.
    Just goes to show if you you write a thick book and make it seem academic, have a publisher who creates a Title that will capture the contemporary societal attention, and charge a lot for it, you can make a bunch of money, no matter what is in the book. I've seen that book in the remainders bin for $2.95.

  246. kongen

    stjean, pakdog, phil/ Netanyahu.  I am also not a fan of Sullivan, but he has this spot on, in my opinion.  The fact that Israel can’t finish the job (pakdog) is a perfect strategy for sucking the US into an unnecessary and dangerous war.  Iran does not have nuclear weapons, but Israel does.  Who is more dangerous?

  247. stjeanluc

    When gold goes down 5% it doesn't seem to be a clear signal of things to come:

    http://www.bespokeinvest.com/thinkbig/2012/2/29/gold-down-5.html

    But as Angel would say, we live in magical times!

  248. jmm1951

    Newie/Bell curve
     
    Yes, it seems to me that most of it is self evident. Assuming a child is born without brain damage, whether this be caused by the mother drinking or using crack in pregnancy, or by genetic defects, or by deprivation of oxygen at birth (often one identical twin is decidedly smarter than another) and that the child has parents who encourage learning, the child is more likely to have upward social mobility. But there are so many other factors that also come into play. For example my girlfriend speaks two languages fluently and another language at intermediate level. However her daughter, age 3 speaks only one language right now, however it is very likely that she will be speaking English quite well by the time she gets to middle school age, which will give her an enormous leg up and lifelong advantage over her peers and almost guarantee upward social mobility provided that she does not detour into delinquency, early pregnancy, etc. She can already swim, and is familiar with the use of cell phones, Skype, etc.

    However one might dispute your thesis regarding the father being a mailman and the mother a crack dealer. In the US,due to the civil service reforms of the Garfield era, mailmen are selected by competitive examination, so are often individuals of high intelligence, but possibly low achievement.
    A crack dealer is a self-employed business person and entrepreneur in a highly competitive field, so success would certainly require an above amount of smarts, so a child born of such a mating might inherit both good genes and money!

  249. Pharmboy

    TWO/pak – cheaper. ;)   My account is very small after all the shorting I have done.

  250. Canuck

    StJeanLuc/Morning Lines
     
    Now that many of us are following and trading Apple, do you think it would be helpful to add Apple to the morning resistance, pivot point and support chart and/or the 5% 10 % and must hold chart??

  251. Kwan

    Craigzooka/Shophouse – it looks like Yelp agrees with you. 3/5 stars = I wouldn't even bother with it after a single trip.

  252. pakdog

    Pharm – ahso

  253. stjeanluc

    Lines / Canuck – I can certainly give you the AAPL daily lines in the morning. The 5%/10% and Must hold lines would not be very telling in a freight train like Apple.

  254. stjeanluc

    Looks like there is some money coming from the sideline…

    http://www.reuters.com/article/2012/02/29/us-asset-poll-idUSTRE81S15N20120229

     

    The poll, which surveyed 13 U.S.-based fund management companies between February 17 and 28, found that firms allocated 65.6 percent of their assets into equities, a gain of nearly 3 percentage points since January.

     

     

    February's equity allocation figure is only exceeded over a 14-month period by 66.8 percent in December.

  255. newbie

    jmm
    can't argue with that.
    Just to clarify what I was saying, the thesis that the authors CLAIMED they were going to more or less prove, was that white people are genetically superior, and other races and demo groups are lesser. Setting that whole issue aside completely, 'cause I certainly don't want to get into that, all they really showed was the kind of conclusion I mentioned above. They didn't really draw straight lines to their point. I shouldn't have been so specific and narrow in my example. Here is a more clear and less potentially controversial summation of what their book DID show (which should not have surprised anybody):
    Offspring from upper class families end up (ON AVERAGE) in higher social strata and in higher level occupations than offspring from lower class families do. That's basically what their data showed.
    Yes, of course, there are outliers, where the outcome is the reverse of that.
    The data they used though (and there were hundreds and hundreds of graphs and data set's if memory serves), did show that relationship, but they did not successfully tie it to the whole race/demographic/ancestry type data that they claimed it did.
    In other words, they did not get the two curves to line up.
     
    And just to be clear, I wasn't really trying to agree,disagree, or really comment in any depth on the book itself. My whole point was that the book sold zillions of copies, they made a lot of money and got a lot of speaking tour money, and then LATER as more and more sociologists and statisticians began dissecting the book and it's conclusions, it got discredited by the vast majority of the academic world.

  256. newbie

    I'm off for the day.

  257. Canuck

    StJeanLuc,
    thanks – point taken on the Must hold…

  258. pakdog

    Israel / Kongen – From what I read there is definitely friction over this b/w US and Israel right now. But Sullivan's prediction seems really outlandish.  – Wouldn't Richard Nixon be surprised to hear the Post – formerly called Pravda on the Potomac by conservatives and which endorsed Obama in '08 – is now a GOP media outlet.

  259. Inkarri1982

    Hello All – Any thoughts on the ZH article showing a drop in China's US Treasuries holdings of $100B from Nov. – Dec.?

  260. jmm1951

    newbie/Bell curve
     
    Just kidding you about the mailman's genes. Yes, children of highly educated people tend to get a lot of exposure to ideas, and that shapes their future. My nephew, age 31, was the world's greatest authority on fossils and dinosaurs at the age of 5. Whether this had anything to do with his father being a geologist is a moot point.

  261. pstas

    The Eagles are back:
    http://biggeekdad.com/2011/03/decorah-eagles-webcam/

    When you get tired of watching the charts and need a dose of reality- check this out. This is a 24 hr live webcam of a bald eagle's nesting site in Iowa. This was up last year and it is fascinating to watch the developments. Not much to see right now The female is incubating her eggs. Be careful, once they hatch, it is addicting. 

  262. scottmi

    Gold – just speculating, mind you, but i wouldn't be suprised if the drop in gold and silver today was a retaliation for Ron Paul's questions with the Bernank.. can't go having people think Paul was making sense now. Keep 'em scared of such archaeic relics.. just sayin'..

  263. Phil

    Turning off brain/Jabob – I am trying.  S&P Futures failed 1,360 near the close.  

    Actual S&P held up but, to me, this is still a bit shaky.  

    We certainly need to see the RUT back over the 5% line now, and the NYSE still hasn't made the 5% line so it's very hard to get bullish under these strange circumstances.  

    Bell Curve/Newbie – It's one of those things that can be used by various pundits to "prove" their points so it became very popular for a while.  

    Of course it feeds right into Conservative stereotypes – that people are destined to be rich or poor and you can't help the poor with social engineering so why bother and the people who succeed are just better than the rest so they should get the spoils.  

    Social Darwinism by any other name…

    Israel/Kongen – Iran has implicitly stated that their goal is to wipe Israel off the map.  

    WE attacked Iran because they might have non-nuclear WMDs and there is an ocean between us.  Why does Israel not have the right to defend itself or are we war criminals who attacked Iraq without provocation – I'm not sure which way you are going here…  

    Israel doesn't get any oil from Iran, they could care less if Iran blocades the Straight of Hormuz for a year.  It's OUR strategic interests that are at stake and, when we did decide to attack Iran and Afghanistan, which was the ONLY country in the mid-east that would let us stage troops?  Yes, Israel.  I guess we can discard them as an ally, claim their interests are not ours because it doesn't suit us at the moment and just roll the dice on the outcome.  

    What difference would it make if we had nowhere to land our planes in that part of the World?  I'm sure Israeli intelligence isn't that helpful to us – despite the fact that they are fluent in all Arab dialects and can pass as locals in all parts of the middle east while we, 11 years after 9/11 – still can't fill positions at the CIA for even Arabic translators.  

    Meanwhile, this is all ridiculous, idle speculation.  Do you expect Israel to say they will never attack Iran?  They simply said they are keeping their options open and will not be told what to do by America.  That's not a declaration of war – it's a declaration of independence – funny how the Conservative pundits don't like that.  Who is more dangerous you ask – yeah, it's a toss up:  

  264. Phil

    Here's our day's superstar:  

  265. Phil

    Sideline/StJ – Well doesn't that mean we're running out of sideline money?  2/3 invested is a lot.  What if funds are 75% or 85% invested and they want to get out – there's no one left to buy…

    China/Ink – $100Bn out of $3,000Bn – not a big deal overall but does indicate China may be tiring of funding our ever-increasing debt as they probably begin to see themselves on the wrong end of a Greek-style haircut one day.  

    Pretty chart of the day: The stock market just finished going through all of January and February without a down day of 1% or more for the first time since 1995, a year the S&P powered to a 34% gain.

    We are no longer in a crisis, so we should step away from crisis thinking, Philadelphia Fed chief Plosser tells CNBC, going on to say a rate hike could be coming in 2012. The similarities between 2011 and 2012 continue to grow. It was about this time last year Fed hawks were floating 2011 hikes … just as the economy was set to roll over. 

    The five biggest U.S. banks are too powerful and should be broken up, Dallas Fed President Richard Fisher says after a speechlauding Mexico's economic reformsBACJPMGSMS and C have "a higher concentration of deposits than they did before the crisis… perversely, these banks are now even bigger, they are too 'bigger' to fail than before."

    Yen at 81.15!  Japanese stocks are higher in early trading, as exporters gain on the back of a weaker yen. The Nikkei Stock Average is currently up 1% to 9,764: Sony (SNE +0.8%), Canon (CAJ +1.4%), Toshiba (TOSYY.PK +1.1%), and Honda (HMC +0.8%).

    Investors are ignoring the financial aspects of living longer, says Blackrock's Larry Fink. Americans are facing an enormous "savings gap" and need an investment strategy with a time horizon greater than just a year. With bonds and bank interest paying next to nothing, the biggest risk for investors isn't market volatility, but investment indecision, and holding on to cash as a safe haven.

    The risk-on rally will not last, and the secular investment theme remains risk-off, Richard Bernstein writes in FT. Risk-on assets’ performance during the 2000s was fueled by credit, but today's economy is on the downside of a credit bubble, with the full effect yet to be felt in places such as emerging markets. Note that Bernstein, writing from across the pond, seems to consider U.S. stocks risk-off. 

    With the January air thick with forecasts of the euro dropping to $1.15 or even parity, the currency took flight, rising 6% in 6 weeks and squashing the shorts. Now - on the day of the continent-saving LTRO - from the FT:  "ECB loan boost heartens euro bulls," coming to print just about the time the currency reverses and dives 1%. Market cycles never get old.

    U.S. 2011 exports of gasoline, diesel and other fuels exceeded imports for the first time since 1949, the Energy Department reports. Shipments abroad of petroleum products exceeded imports by 439,000 bpd; in 2010, daily net imports averaged 269,000 barrels. Total crude and product imports fell 11% Y/Y to 8.436M bpd, lowest since 1995. - So that's 160M barrels we shipped OUT of the country and OUT off our inventories in 2011 – 3Mb/week taken off our inventories to "prove" that oil was in high demand.  Restickulous!  

    More on Sotheby's (BID): Q4 misses estimates across the board. The auctioneer's profit slumped 26% on lower net auction sales, fewer single-owner sales and a significant decline in auction commission margins. Shares -8% AH.

  266. stjeanluc

    Gee look at that, gold is up $30 after hours… magical times I guess!

  267. stjeanluc

    Sideline money / Phil – I think that it's tough to read a conclusion into these numbers. This looked like interesting news, but I am not informed enough to know if this indicates a top or simply more fuel for the rally. Are these money managers investing more in equities because there is an inflow of money in the funds and they need to get better returns? Are they worried they missed the last 20%? Are they getting out of bonds by fear? Or commodities? A large inflow or retail money in the market historically speaking is an indication that we might getting close to a top, but managed money? Who knows…

  268. stjeanluc

    Speaking of managed money, they have been pouring money into the oil trade… Here is the latest Commitment of Trader chart for Oil from Barchart:


     

    The three types of positions are shown on the top chart are:

    • Commercial positions (red line) - Farmers, Hedgers, Producers, and Factories
    • Large positions (green line) - Banks and Large Financial Money Managers
    • Small positions (blue line) - individual investors
  269. scottmi

    Gold – the breathless Eric King interviews Jim Sinclair "Mr. Gold" re today's drop…

  270. kallenjr

    Phil,
    I read a posting reinforcing what Ahmadinejad said per the more accurate translation – "the Imam said this regime occupying Jerusalem must vanish from the page of time" – not wiped from the map.
     
    I have read that Iran has historically been all noise – except for our hostages, they have not ever really taken much action (versus words). They were attacked by Iraq in the  Iran/Iraq war. Ahmadenijad is a dictator – I generally intend to believe what a dictator says. But the intelligence sources referred to don't believe there is a nuclear weapon in their immediate future. Too many contradictions here to believe there is a real long term threat. They can surely close the Strait and cause significant problems. Will they?

  271. kallenjr

    Sorry for the bold. I could not get rid of that after pasting a few words.

  272. Maya1

    Phil
    Hi
    Your favorite WFR is under $4 today, and do you still have the same confidence you did earlier or are you disenchanted, finally?
    I was planning to re-initiate into the 2013 short puts.
    And how about FTR? Their dividend has been cut to $.40, from $.80 plus. The stock saw the south side $4 last month…too risky to initiate anything?

  273. zeroxzero

    There will be surprisingly large demonstrations of social unrest in Europe this year over austerity measures.  It's not evident from reading most English-language news, but it is evident nonetheless, that there is a zero chance of 20+% unemployment rates being tolerated for a sustained period during which government budgets are forced down, as is now the case in certain Peripherals.  This will lead to government requests directed at Brussels/Bonn to relax budget targets in very short order. 

  274. kallenjr

    Maya,
    Seems like WFR is at a bottom – from support level, and from at least 1 cycle time. However, I don't see anything that makes me think it's ready to have a solid move back up – maybe small gains over next few weeks.

  275. diamond

    Cobra's Market View: 02/29/2012 AAPL Review

  276. newbie

    i couldn't sleep
     
    Bell Curve – Phil
    I kkknnnooowwww phil. I've had some statistics. I understand that Standard Distrbution
    My i.q. tests along with my SAT tests showed me at about the+3 stdev point, which on the Weschler is 131 points of I/Q.
    I'm not as far out on the right end tail as you are, but I can see you with my binoculars   w a y   o v e r   t h e r e >
    So if I wanted to go hang out at coffee's with professors in tweed vests and sweaters drinking tea, I probably could. Yippii!   I'll get right on that. But you wouldn't know it by what I've contributed here today.
    I'm sleepy _ I am under the influence of psyche--, aw what the word, o yeah, psychopharmacueticals, at the moment,,,
    the letters are spinning – is that bad?

  277. newbie

    whadyou guys doin' up this hour here?

  278. newbie

    phil go to bed

  279. newbie

    phil  / nomex
    you'd be shocked by the things i know
    you'd also be shocked by the things i don't know

  280. kongen

    Phil \ “Iran has implicitly stated that their goal is to wipe Israel off the map.”  
     
    Yes, the leaders of Iran are as crazy as the leaders of Israel.  But are they remotely capable of such a thing?  Doubtful.  Likud uses propaganda like Bush did – stoke up the fear.  I very much want Israel to survive and prosper, and I think Likud is a greater threat to this goal than Iran.

  281. Phil

    Good morning!

    Dollar still at 78.80 but oil jammed up to $107.25 and gold $1,719 so they ain't done playing yet.  

    Asia had the Hang Seng and BSE down 1%, finishing at day's lows but Nikkei and Shanghai, although also near lows, finished flat on the day.  

    Europe opened down half a point but is now super-spiking and up half a point into lunch on good PMI news as well as UBS cheerleading the market but seems silly to me.  

    Our indexes are up a bit but I like oil short (/CL).  Certainly if they cross $107 with tight stops on that line but worth a toss below $107.25 too.  Gold (/YG) also below the $1,720 line that gave us a good breakdown yesterday and is now acting as resistance – all depending on Dollar holding 78.80.  I think bluffs just need to be called on this low volume…

    hursday's economic calendar:

    Chain Store Sales

    Auto sales

    8:30 Initial Jobless Claims

    8:30 Personal Income and Outlays

    10:00 ISM Manufacturing Index

    10:00 Construction Spending

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    2:21 AM Asian markets break their winning streak, posting losses across the board. Japan -0.2% to 9707. Hong Kong -1.2% to 21428. China -0.1% to 2426. India -1.1% to 17566. 

    The Swiss economy unexpectedly expanded in Q4, rising 0.1% Q/Q vs. expectations for a 0.1% contraction. The Q3 growth rate was upwardly revised to +0.3% from +0.2%. On an annual basis, Q4 +1.3% vs. expectations of +1.1%. - Of course, didn't they spend Billions in QE trying to knock down EUR/CHF?  Then what Economorons didn't expect this?  

    Eurozone February PMI edges up to 49.0 in February from 48.8, indicating the manufacturing sector is still contracting but at a slower rate. While some countries, including Germany, saw modest expansion, Greece posted a record-low reading of 37.7

    Eurozone unemployment hits 10.7% in January, the highest jobless rate since the euro was established in 1999. December was revised up to 10.6% from 10.4%. Economists had expected 10.4% in January.

    German Manufacturing PMI fell to 50.2 in February from 51.0 the month before, generally in-line with expectations of 50.1 and dangerously close to contractionary territory.

    Two Chinese manufacturing surveys released today both indicated mild improvement in February, but underlying data showed surging input prices and deteriorating new orders, suggesting further weakening in the Chinese economy. The two surveys were both near the key 50 level separating expansion from contraction, though HSBC's index showed 49.6 and the government-backed PMI was 50.5.

    European leaders meet today and tomorrow to finalize Greece's second bailout package and discuss ways to boost long-term growth. Officials say there will be no decision on increasing the size of the eurozone rescue fund.

    The Greek Parliament approves permanent changes to pension funds and healthcare spending, a day after ratifying a €3.2B package of spending cuts. Lawmakers voted 213-58 in favor of the law, bringing the country one step closer to securing its rescue.

  282. Phil

    Eagles/Pstas – They've just never been the same since the made Joe Walsh stop doing drugs….

    Gold/StJ – I hope it holds so we can re-enter a short play.  

    Sideline/StJ – Without hard numbers, it really doesn't prove anything.  Maybe money flowed out of the funds, raising the percentage.  Maybe just their current holdings of stocks went up in value, raising their percentage.  That's why I don't pay too much attention to those kind of statistics.  

    Well, Dollar failed first and then oil spiked to $107.50 so now we can use that line instead.  Gold behaving and Pound stuck below $1.595 so another line to watch and Yen right at 81 so we don't want to see that fail either.  

  283. Phil

    Oh and Davey Jones died – 8( - 

  284. Phil

    Translation/Kallen – LOL!  So I guess you also have clips of Amadinejad clarifying this to make sure his words weren't taken out of context?  A fine diplomat like him would, of course, be quick to clear up such a nasty misconception.  Actually, his real problem is he's a self-hating Jew in heavy denial…  As to believing what he says – you go right ahead:  

     

    No "Zionists" were killed in the World Trade Center, because "one day earlier they were told not to go to their workplace."

    "They announced that 3,000 people were killed in this incident, but there were no reports that reveal their names. Maybe you saw that, but I did not."

    "What was the story of September 11? During five to six days, and with the aid of the media, they created and prepared public opinion so that everyone considered an attack on Afghanistan and Iraq as (their) right."

    "Who used the mysterious September 11 incident as a pretext to attack Afghanistan and Iraq, killing, injuring, and displacing millions in two countries with the ultimate goal of bringing into its domination the Middle East and its oil resources? … If some European countries still use the Holocaust, after six decades, as the excuse to pay fine or ransom to the Zionists, should it not be an obligation upon the slave masters or colonial powers to pay reparations to the affected nations? … By using their imperialistic media network which is under the influence of colonialism they threaten anyone who questions the Holocaust and the September 11 event with sanctions and military action … Last year, when the need to form a fact-finding team to undertake a thorough investigation concerning the hidden elements involved in September 11 incident was brought up; an idea also endorsed by all independent governments and nations as well as by the majority in the United States, my country and myself came under pressure and threat by the government of the United States. Instead of assigning a fact-finding team, they killed the main perpetrator and threw his body into the sea. Would it not have been reasonable to bring to justice and openly bring to trial the main perpetrator of the incident in order to identify the elements behind the safe space provided for the invading aircraft to attack the twin world trade towers? Why should it not have been allowed to bring him to trial to help recognize those who launched terrorist groups and brought wars and other miseries into the region? 

    WFR/Maya – I like the LONG-TERM.  So I'm no more disenchanted with them at $4 than I am with HOV at $2 or when VLO is at $17 or when a pair of jeans I like is on sale for 40% off.  FTR is another good one but not if you want to make profits soon.  GLW also nice and also on sale.  If you don't buy stocks when they are cheap, when are you going to buy them? 

    Unrest/ZZ – I can't believe how docile people are being so far.  

    Bell  curve/Newbie – I think sleep might help there.  

    Had a nice run on oil that time down to $107.20 but that held and bear in mind that $107.25 did not work so we're not too psyched about using that line anymore and we should stick with our .50s.  

  285. dpastramas

    WFR FTR GLW / Phil – What time frame should i be looking for to play them bullish? If you have feel like it can you advise some plays?

  286. Phil

    Fantastic quote from Bastiat:

    “When plunder becomes a way of life for a group of men living in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.”

    Frederic Bastiat, French writer and economist, as quoted by Bill Moyers.

  287. emunster

    Good morning PHIL. As I mentioned on Tuesday's post I am new and the deep end of the pool. I am amazed at joining HOW MUCH I DO NOT KNOW after 23 years of investing. Everyday you teach me, and learning is good. I also enjoy the stories you tell, Like the one where you bought a new laptop and gave the older one to a friend who could not afford (at the time) to purchase a new one. Very cool. I appreciate all your hard work, and allowing us to learn. That is a very BIG DEAL to me. THANKS! 

  288. Phil

    Time frames/Dpast – If I have $100,000 to spend and I want to allocate 10% to WFR, then I can sell the 15 2014 $5 puts for $1.90 ($2,850) and buy 7 Jan $2.50/5 bull call spreads for $1.15 ($805) for a net credit of $2,045 and a net entry of $3.64 on 1,500 ($5,455) so if WFR finishes over $5, you keep the $2,045 plus the $1,750 from the spread ($3,795 is a nice pick-up on $5,455 committed!) and anything over $2.50 further lowers your basis and anything under $2.50 means you can buy 2,000 more shares for $2.50 or less ($5,000) and you'd be full at an average of no more than $3.07, which is 22% off the current price.  Of course you can roll the short puts or sell more calls or stop out along the way but the key is to have it clear in your head that you REALLY WANT to own 3,500 shares of WFR as a long-term investment for $3.07 and then nothing that happens between now and 2014 other than WFR falling below $2.50 should bother you.  

    If I had done that when WFR was $5 (25% higher) and I had 1,500 shares put to me today at net $4.07, what would I be doing?  Well the March $5 puts are $1.10 so I can shave .80 more off my basis just by rolling the obligation to 2014 so presto – I'm in the same trade you are if you started from scratch except I started at $5 a year ago.  In another year, if WFR is at $3, maybe I roll to 2015 $3 puts even (the 2014 $3 puts are .72 now) or maybe I sell 2014 $5 puts for .90 to knock another 20% off my basis.  If we keep playing this game for 5 years and my basis goes down to net 0 – I'll probably take the assignment at that point…

     FTR, on the other hand, pays a dividend so we want to own the stock at $4.57.  Then you can sell the 2014 $5 puts and calls for $2.20 for net $2.37/3.68.  If they pay their .40 dividend, that's another .80 knocked off the basis and you're down to net $1.57/3.29 so, if you are called away at $5, you have a total take of $3.43 over 2 years against a max commitment of $3.68 so almost 100% in two years at $5+.  Again, using a $10K allocation, you can buy 1,000 shares and sell the puts and calls and your worst case is getting into 2,000 at net $3.68 ($7,360) but that's assuming they kill the dividend, of course.  

    With the dividend, it's $800 less so $6,560 and keep in mind you are even or better $3.29 so, again using $2.50 as the bad example, you have $3,500 left to buy 1,400 more shares and that puts you in 3,400 shares for right about $10K and, if they are still paying their .10 per quarter, that's $1,360 back on your $10,000 (13.6%) without even selling calls but, of course we'd sell calls and the 2014 $5 calls are .50 so (assuming the 2016 $3 calls are .50) that would be another $1,700 in your pocket.  

    You should have a trading plan like this for every position you are in.  Knowing what I'll probably do in 2014 if FTR is below $2.50 means I won't worry too much is 2012 if it fluctuates between $4.50 and $4, right.  Then I can concentrate my attention on trades that do need it, rather than fretting over why one sapling I planted is 2 inches shorter than another in it's first year.  

  289. Phil

    Thanks Emunster and welcome!  

  290. jerconn

    Phil, StJ and everyone on the Israel/Iran posts – living here in Jlm and hearing all the "posturing" going on about whether Israel has the capabilities or not, and whether Israel and the US are "getting along" or not is all rather beside the point.  If and when anything happens, I don't think any of us will have any idea until it's done.  Did we know about Stutnext before it happened, or about the various magnetic bombs taking out Iranian scientists?  Whatever is happening/will happen is probably beyond our purview…but what this guy "Bell Curve" wrote is rather scary and nobody's paying much attention to it:  First he wrote a bunch of worst case scenario scare tactics.  Then, he followed up with the following (from StJ's earlier post)
    "And following this essential blackmail, the Israeli government would doubtless rally much of the US Congress, the entire GOP, its media outlets (like Fox, and the Washington Post), and a key part of the Democratic fundraising machinery to side entirely with Israel against the US president. [...]
    Here's a prediction. Netanyahu, in league and concert with Romney, Santorum and Gingrich, will make his move to get rid of Obama soon. And he will be more lethal to this president than any of his domestic foes."
    [my words following, for some reason can't get rid of the italics]
    Unless all nations acting in their own interest constitutes "blackmail," which I don't believe is the case, then Israel acting in its own interest is not blackmail either.  Furthermore, it is not the Israeli gov't that rallies the Congress, media outlets, political parties etc, – it is bona fide US citizens who do so.  Netanyahu could not bring Congress and Senate to their feet 26 times in the course of a speech if there wasn't significant support for Israel on a grass roots level.  And while it is true that Israel has an effective advocacy group working for it in DC, so do of course many other groups, as we know (oil, agriculture, AARP to name just a few).  That is also very American, and would not be effective if it did not resonate with a large number of American citizens.  So, I submit that this guy (Sullivan?) is nothing more than a bigot in disguise and is trying to play on people's lower instincts.  Therefore it would be best to just ignore him and not give him a forum…

  291. flipspiceland

    Ron Paul has to take the award for the most inarticulate advocate for the people in CONgress.
    I cannot stand to listen to him, all over the map. Once he gets started he just talks, and talks, and talks  like a dyslexic Battery Rabbit.
    Does he not know the first thing about asking a question and then shutting his mouth? And let the answer come forth?
    He has many fans because of his willingness to be a maverick and confront people like theBernank, but his rhetorical attacks would have far more influence if he could learn something about debate, argument, and salesmanship.
    As POTUS I cannot imagine what a failure he would be to those who elect him because he cannot succinctly articulate one point as a time and then close it off. In negotiations he woould be abysmal.

  292. kallenjr

    Phil,
     
    Regarding Ahmadinejad. I was just trying to clarify what some have said was the accurate translation versus the media statement (and yours) of  "wipe Israel off the map" – plenty of references on that out there. In fact, in that statement he is quoting Khomeini.
     
    When I said "I generally intend to believe what a dictator says", I was referring to the openly hostile (and illogical) positions he has publicly taken. I have to believe he, as a dictator, intends to try and follow through with his statements – his beliefs.
     
    Great point on Ahmadinejad being a "self-hating Jew in heavy denial".

  293. jerconn

    Phil, Kallen – Ahmadinebad's family past is immaterial.  A surprising number of Jew tormentors have emerged from their own midst.  One was Torquemada who initiated the Inquisition, another was Stalin, who was said to be of Jewish heritage.  Many anti-Jewish leaders of the Bolshevik revolution were also Jews.  Some even say that Hitler had Jewish ancestry tho I have never seen that verified.  The Taliban claim Jewish ancestry (proudly – figure that one out).  Here in Israel, it is well known at least among the Palestinians that many of them stem from Jewish ancestry.  No matter – the fact of the matter is that these madmen wreaked havoc on Jews and everyone else as well.  I personally know a Muslim convert to Judaism who told me that many of his card bearing Hamas family were forcibly converted from among Yemenite Jews.  However, having Jewish ancestry is not to be equated with "being Jewish."  Jewishness is passed on through the mother, so if any of these men had mothers who were not Jewish, then they are not considered Jewish.

  294. zeroxzero

    Equating the AARP with AIPAC is sophism.  One is composed of elderly U.S. citizens, the other is a lobbying group for a foreign country.
     
     Many Jews have, over the last many hundreds of years, chosen assimilation and political engagement in their country of residence.  Others took the line of Theodore Hertzl, creating a separate Jewish state and the Zionist cause.  It has become evident that views and priorities of Jewish people abroad and the orthodox influenced-Jews in Israel have diverged considerably since the formation of Israel,  which is to be expected, given the "nationalist" models on which most modern nation-states have been built since the 19th century.
     
     To suggest that there is no real distinction between an AARP and an AIPAC among U.S. lobbying groups is to gloss over the most essential aspect of AIPAC — that it represents the Jewish state, not an American "interest group."  I think you would be surprised to know how many American Jews, while sympathetic to Israel, do not necessarily equate Israel's best interests, nor the activities of AIPAC, with those of the United States, let alone the non-Jewish bulk of the U.S. population.

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