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Threatening Thursday – Grantham Goes Marxist!

Capitalism threatens our existence.”

That's the message today from legendary investor Jeremy Grantham, who's GMO Capital manages $97Bn and, like Buffett, writes an annual letter to his investors.  Part one of the letter has some great general investing advice but part two gets very interesting as Grantham titles it "Your Grandchildren Have No Value (And Other Deficiencies of Capitalism)" exposing what he considers the "two or three main flaws" of Capitalism that are "potentially fatal and have gone largely unaddressed."

A sustainable economic system, for instance, can’t be based on ever-increasing debt, corporations can’t be allowed to run governments and loot treasuries, and “growth at any cost” is a recipe for planetary suicide.

Grantham points out that a company is now free to spend money to influence political outcomes and need tell no one, least of all its own shareholders, the technical owners. So, rich industries can exert so much political influence that they now have a dangerous degree of influence over Congress. And the issues they most influence are precisely the ones that matter most, the ones that are most important to society’s long-term wellbeing, indeed its very existence.

Thus, taking huge benefits from Nature and damaging it in return is completely free and all attempts at government control are fought with costly lobbying and advertising. And one of the first victims  in this campaign has been the truth. If scientific evidence suggests costs and limits be imposed on industry to protect  the long-term environment, then science will be opposed by clever disinformation. It’s now getting to be an old and obvious story, but because their propaganda is good and despite the solidness of the data, half of the people believe the problem is a government run wild, mad to control everything

Here are some of Grantham’s finer points:

  • Capitalism too heavily discounts the future value of cash flows as it seeks to raise debts: “Your grandchildren have no value.”
  • "For example, let us say that a firm’s current actions are going to cost society at large a billion dollars’ worth of harm in 50 years. Further, let us agree that all of the costs will definitely be imposed on the company. The company would feel that pain today as equivalent to only a mere $1 million hit to earnings. Why should they care?
  • Companies foolishly reward executives for taking on debt: “Total remuneration … for senior officers … rose as a percentage of the average worker’s pay from 40 times in Eisenhower’s era to over 600 times today with no indication of any general improvement in talent.”
  • It’s about profit, not people: “Capitalism in general has no sense of ethics or conscience. Whatever the Supreme Court may think, it is not a person.”
  • The more people borrow, the more they just gamble: “Leverage … increases your returns over and over until, suddenly, it ruins you. … There are no Investors Anonymous meetings to attend.”
  • This time, it’s not so different: “Ignore the … inevitable cheerleaders who will assure you that this time it’s a new high plateau … even if that view comes from the Federal Reserve itself. No. Make that, especially if it comes from there.”
  • Washington is becoming a corporate subsidiary: “What Capitalism has always had is money with which to try to buy influence. … The issues they influence are precisely … the ones that are most important to society’s … very existence.”
  • Big companies can’t help it: “Ethical CEOs can drag a company along for a while, but this is an undependable and temporary fix.”
  • Economic theory ignores natural laws. It suffers an “absolute inability to process the finiteness of resources. … Capitalism wants to eat into … limited resources at an accelerating rate with the subtext that everyone on the planet has the right to live like the wasteful polluting developed countries do today.”
  • It’s not just inexpensive oil we are running out of: The “loss of our collective ability to feed ourselves, through erosion and fertilizer depletion — has received little or no attention.”
  • Americans are too optimistic: “They adopt a hear-no-evil approach to life and listen exclusively to good news. … There are always a few experts lacking in long-horizon vision, simple common sense, or whose co-operation has been rented, like “expert” witnesses at a murder trial, who can be dragged out to reliably say that everything will always work out fine.”
  • Governments must step in. “To interfere with Marx’s apocalyptic vision, we need some enlightened governmental moderation … before capitalism gets so cocky that we have some serious social reaction.”
  • Where Marx and Engels got it wrong was in thinking workers would unite. “It’s going to be hard to have a workers’ revolution with no workers. Organizing robotic machine tools will not be easy.”

Does Grantham go too far or is he just part of the growing chorus of Capitalists questioning Capitalism?  As I said way back in 2009 in "A Tale of Two Economies," the widening gap between the rich and the poor has gotten to the point where it is now harming the system and some (not too many, I'm afraid) of us Capitalists don't think it's prudent to simply take what we can from what's left of the bottom 99%'s wealth as if our fate is not entwined with theirs.  

The concept of "giving back" has been ground out of the American mind-set and it's led to mountains of unsustainable debt World-wide as well as the destruction of the US and European Middle Class – turning the First World into a nation of haves and have-nots – a situation that simply cannot last, no matter how many new reality shows we come up with to distract the masses.  

Eurozone unemployment hit 10.7% in January, the highest level since the Euro was established in 1999 and, outside of Germany, it's over 12% with Spain and Greece at 20% unemployed.  December was revised up another 0.2% to 10.6% as well.  24M people in the Eurozone are unemployed and inflation is up 2.7% so those benefit checks buy less and less every month yet investors continue to believe that, where there is a whole lot of smoke – there is no fire.  

Our own economy lost another 351,000 jobs last week with 7.5M people in the US collecting benefits and the other 9M finding that even 99 weeks isn't long enough to find a job before those benefits run out.  

Personal income was up 0.3% in January but Disposable Personal Income was up just 0.1% as every dime of that extra $14.1Bn went straight into our gas tanks.  That left Real Disposable income up just 0.1%, which is down from 0.3% in December and half of what was expected by Economorons, who don't seem to know that people buy gas and food – despite what the Fed says.  

We wisely shorted oil (/CL) at $107.50 and gold (/YG) Futures at $1,720 in the morning's Member Chat and we've had two runs back to $107.25 on oil already and gold is back to $1,704 as the Dollar heads back up to test the 79 line with the Euro already failing to hold $1.33 and the Pound rejected at $1.595 but with a long way to fall to catch up to the Euro.  We expect oil to run up to perhaps $108.50 again into natural gas inventories at 10:30 but then we'll want to get short again, most likely. 

The Pound is holding up well because Martin Weale, of the BOE says that U.K. inflation may prove more persistent than expected, making it unlikely the economy will require further stimulus once the current round of bond purchases ends. Higher oil prices and potential wage pressures as the economy recovers “suggest a risk that there may be more persistence to inflation than one might expect at a time of rising unemployment and weak demand,” Weale said in a speech in London late yesterday. “I do not think there is likely to be a further case once our current program is complete” in early May for more bond purchases.

That will be good news for JP Morgan, who purchased $147.3Bn worth of insurance against just $142.4Bn in debt against bonds they sold to the PIIGS as well as for Goldman Sachs, who reported yesterday that they had purchased $147.3Bn worth of insurance against just $142.4Bn in debt.  Before you go thinking there might be some sort of conspiracy involving what would have to be clearly illegal communications and coordination between our biggest Banksters, and not just the most amazing cosmic coincidence of all time – let's hear what one of their pet analysts, Chris Kotowski of Oppenheimer, has to say on their behalf:

"There are a nearly infinite number of possible coincidences that could occur any day of the year but don't.  Every now and then, they do."

Well, I certainly feel better.  Until I remember that we have a 1 in 625 chance of being destroyed by a giant asteroid in 2040 – we'd better hope that JPM and GS aren't rolling those dice!  


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  1. 1020

    Good Morning!

  2. 1020

    I do believe Orrin Hatch and the majority of republicans to be racist…..
     
    http://now.msn.com/now/0229-orrin-hatch-hipster-fedora.aspx

  3. Burrben

    RSSOwl Alerts  -  RSS Owl is awesome, especially if you are on a slow connection.  I'm having trouble with alerts though.  I setup two filters for LFMAN and AAPL, and neither are working.
    Could someone tell me how they setup working alerts?

  4. stjeanluc

    Oil Lines

    R3 – 110.65
    R2 – 109.04
    R1 – 108.06
    PP – 106.45
    S1 – 105.47
    S2 – 103.86
    S3 – 102.88

    Yesterday's high and low – 107.43 / 104.84

  5. stjeanluc

    Gold lines

    R1 – 1886
    R2 – 1839
    R1 – 1782
    PP – 1735
    S1 – 1678
    S2 – 1631
    S3 – 1574

  6. kinkistyle

    Overall volume is down, but effect is magnified by increased dark pool trading:


    Dark Pools Capture Record U.S. Volume Share

     
    "Private trading venues known as dark pools accounted for more U.S. equity trading than ever in January as volume fell on the biggest exchanges.
    Dark pools matched 935 million shares a day, or 13.5 percent of stock changing hands, compared with 1.02 billion, or 12.4 percent, a year earlier, according to data compiled by Rosenblatt Securities Inc. That topped the prior market-share record of 13.2 percent in April. The firm tracks transactions on 18 dark pools, or venues that don’t publish bids and offers and are used by fund managers and brokers trying to limit the impact of their trades on prices."

  7. stjeanluc

    This is not the first time that Grantham has warned against the direction that capitalism (if it can still be called that in its current form) has taken. He had similar warnings last year but obviously no one reads the thinking of some old idealist… especially when there is still so much to squeeze from the bottom 99% and they follow along with such docility! 

    Not sure we'll get an answer to his worries in the next election – certainly not from the likes of Romney who embodies what's wrong as described by Grantham! 

  8. kinkistyle

    1020:  I believe thats today's equivalent of "Long-haired hippie".   Though I have never seen Obama wear a fedora…

  9. stjeanluc

    That Bastiat quote you posted this morning really hit it on the head and bear repeating (every day!)….It really summarizes what has been going on the last 20 years or so. The Citizens United decision in the Supreme Court is the ultimate demonstration….

     

    “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.

  10. Pharmboy

    PP for today:

  11. stjeanluc

    YTD Performances:

    http://www.bespokeinvest.com/thinkbig/2012/2/29/asset-class-performance-in-february-ytd.html

    The Nasdaq is probably beating all other US indices on Apple's back alone!

    But no wonder EEM is up (and EDZ down), look at India, Russia and Brazil. China is the laggard, up only 15% YTD! Germany is strong (not sure why, their main export market is going up in flame) Silver is killing it and Nat gas is getting killed. Treasuries seem to be so 2011… And I guess the BOJ is happy with the yen down 5% YTD. 

  12. kinkistyle

    Bastiat/Stjean:  Addendum; "…with a general populace that is blind to it."
     
    Oh well.
     
    "Its good to be the king".

    - King Louis XVI (Mel Brooks), History of the World Part 1

  13. roberthjrfl

    Phil, can you comment on how the USD / Yen got back over 80 with the dollar being very weak at 79.  You always comment that "they" want the USD /Yen ratio over 80 which would lead to the BOJ (i think) driving dollar down.  How did they get the dollar down AND get the USD / Yen over 80.  TIA.

  14. lunar

    phil, can you or your website admin make it possible to switch to the "iphone view" for desktop users so that the reload is more efficient throughout the day, after having read the lead post.  thx.

  15. Pharmboy

    Someone lit a fire under oil….

  16. stjeanluc

    Bastiat / Kinki – Phil posted that this morning and it felt so right… Amazing analysis and it does show that history repeats itself as Bastiat probably wrote that in the context of 19th century France!

  17. acobra65

    1020/Hatch
    Hatch is also an A$$H***, an excellent example of "the Arrogant Entitled Politician"…

  18. Pharmboy

    Well, markets are happy b'c those that sold CDS's on Greek bonds can keep it all.  Unreal…after agencies called it a selective default….

    Officials Rule No Payout on Greek Swaps The International Swaps and Derivatives Association said on Thursday that based on current evidence the Greek bailout would not prompt payments on the credit default swaps.

    But the organization warned that the situation in Greece was "still evolving" and such payouts might be necessary in the future "as further facts come to light."

    In the midst of the Greek drama, credit-default swaps, financial instruments intended to protect against losses on debt, have been a point of concern.

    As part of a restructuring, bondholders will be required to take a 70 percent loss on their holdings. The deal was structured as a voluntary exchange, which would not have triggered the credit-default swaps.

    But in recent weeks, Greece has prepared to require bondholders to accept the losses through legal means. The situation raised worries that parties would need to make good on the swaps.

  19. JRW III

    Good morning,

     

    IWM    79.80,  80.46,  81.06,  81.41,  81.69,  82.00,  82.41,  82.66,  82.86,  83.11,  83.38  and  83.72

     

    For weeks my lowest level has been IWM 81.06 (bottom of channel) so likely a rebound from here

    Unless of course the banks have loaded up on puts !!

  20. JRW III

    Also, this from King Cobra

  21. rainman

    +1 on the iPhone view being available on all platforms. Could use it on Android as well (even though you still can't post using android).

  22. stjeanluc

    CDS / Pharm – I guess the bondholders didn't realize that they had a 70% deductible on the default insurance! Great racket if you can get in…

  23. rainman

    stj / 19th century — Which means that nothing has changed and it's no different at this time.

  24. stjeanluc

    Looks like AAPL might be at $600 next week! I predict $1000 by June…. and I am surprised that June options only go to $820.

  25. kramer36350

    ISDA Unanimous – No Payout On Greek CD
    Voting Dealers
    Bank of America / Merrill Lynch
    Barclays
    BNP Paribas
    Credit Suisse
    Deutsche Bank
    Goldman Sachs
    JPMorgan Chase Bank, N.A.
    Morgan Stanley
    Societe Generale
    UBS
    Consultative Dealers
    Citibank
    The Royal Bank of Scotland
    Voting Non-dealers
    BlueMountain Capital (Second Term Non-dealer)
    Citadel LLC(First Term Non-dealer)
    D.E. Shaw Group (First Term Non-dealer)
    Elliott Management Corporation (Third Term Non-dealer)
    Pacific Investment Management Co., LLC (Second Term Non-dealer)

  26. stjeanluc

    And AAPL lines

    R3 – 560
    R2 – 554
    R1 – 548
    PP – 541
    S1 – 536
    S2 – 530
    S3 – 524

  27. jmm1951

    stjeanluc/deductible
     
    But the whole thing about CDS is that they are not insurance policies, but private agreements between parties. If those who sold and those who bought didn't read the fine print, whose fault was that? A homeowner who signs a mortgage is expected to read and digest 20 pages of fine print in two minutes and once they have signed every clause is legally enforceable. One would expect finance professionals dealing in billions of dollars would be more aware of potential outcomes and possibly even ask their attorneys to run an quick eye over the deals.

  28. stjeanluc

  29. stjeanluc

    CDS / Jmm – In this case the fine print probably read "no matter what, we won't pay out…."

    It looks to me like the CDS sellers are rewriting the fine print as they go… but none of us as read the contracts so we can only speculate at this point.

  30. stjeanluc

  31. stjeanluc

  32. stjeanluc

  33. rainman

    ART CASHIN: We May Have Just Witnessed The Presence Of Artificial Intelligence In The Stock Market

    Read more: http://www.businessinsider.com/art-cashin-artificial-intelligence-stock-market-2012-3#ixzz1nsPRCh8G
     
    "Wednesday morning, there was a violent sell-off in stocks that seemed to start exactly at 10:00 AM. This had some New York Stock Exchange floor traders scratching their heads"

  34. dpastramas

    Something is wrong with the aapl graph, its going the wrong direction. did they flip the axis? higher price is now down? Strange… maybe its my laptop

  35. Phil

    Good morning! 

    VERY important to watch our levels now as the RUT had a critical failure yesterday so now the NYSE and RUT are back to underperforming and that gave us an early indicator of the last two big crashes.  If ANYTHING else goes red, that's bad and it's not good again until we take back those RUT and NYSE levels.  

    Oil is up $2 over yesterday's low at $100.75 but we're not playing .75s so we have to wait for $108 or $107.50 to be crossed going down – too dangerous in between and really not smart to short oil ahead of the Nat gas report at 10:30, where they are likely to pump it up anyway.  

    If they can get the Dollar back below 78.80, that should boost the markets a bit, right now 78.83 and the Euro is right on the $1.33 line and the Pound is $1.5941 so both need to move up to get the Dollar lower.  

    AAPL gapping up at the open always helps, $546 now so I guess we go for $550 but if AAPL can't hold $540 today, it's going to have a nasty toppy look to the last few days so be careful.  

    Dow 13,000 is a short to me and we already have DIA March $128 puts in the $25KP so let's DD on those at .80.

    Lots of stuff going on today but, if Dollar doesn't break down, I think buyers will exhaust themselves.  

    Thursday's economic calendar:

    Chain Store Sales

    Auto sales

    8:00 Fed's Pianalto: 'Keys to Growth for the Nation and the Region'

    8:30 Initial Jobless Claims

    8:30 Personal Income and Outlays

    10:00 ISM Manufacturing Index

    10:00 Construction Spending

    10:00 Hearing: 'The Semiannual Monetary Policy' (Bernanke)

    10:30 EIA Natural Gas Inventory

    12:30 PM Fed's Lockhart: Economic Outlook

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    10:00 PM Fed's Williams: Economic Outlook

    At the open: Dow +0.38% to 13002. S&P +0.36% to 1371. Nasdaq +0.42% to 2979.

    Treasurys: 30-year -0.91%. 10-yr -0.47%. 5-yr -0.22%.

    Commodities: Crude +0.59% to $107.7. Gold +0.11% to $1713.25.

    Currencies: Euro -0.06% vs. dollar. Yen +0.05%. Pound -0.13%.

    Market preview: Stock futures hold on to gains after weekly jobless claims fell slightly more than forecast. S&P +0.2%. EU shares are also higher despite more wretched data, while gold -0.3% and continues yesterday's sell-off. Gap tears 10.4% higher following strongsales growth, but Finisar dives 9.2% in the wake of earningsLater: Bernanke, ISM manufacturing, construction spending, auto sales.

    Cleveland Fed President Sandra Pianalto says she's comfortable with the current stance of monetary policy: "I would prefer nothing more than to support an increase in interest rates before late 2014 on the basis of a brighter outlook for economic growth, but I am not there yet." Further easing steps at this time could stir inflation, and doing nothing could risk weakening an already slow expansion.

    Americans are still eating out, as the National Restaurant Association’s performance index stood at 101.3 in January; a reading over 100 signifies expansion. “Restaurant operators reported positive same-store sales for the eighth consecutive month, and a majority of them expect business to continue to improve in the months ahead," the trade group says.

     "(The) Irish people will not be bribed" to vote "yes" in the fiscal pact referendum, says PM Enda Kenny. Actually, if recent history holds, it will be the opposite – with Brussels threatening to withhold emergency funding and predicting economic mayhem for the Emerald Isle should the vote not pass.

  36. stjeanluc

    The GMCR puts are up over 50% as of now….

  37. 1020

    Andrew Breitbart dead at 43 – WoW….

  38. Maya1

    Phil/ back to AAPL
    Good morning!
    Thanks for your comment on WFR/FTR
    A couple weeks ago, I asked about my AAPL Short July 500, sold for $7, now $67. ( was $49 a couple weeks ago)
    So, despite my impatience ( yes, I am aware and working on it, as I want results NOW in everything in life), when and to what would you roll?
    And roll, I MUST. Would you add some longs in addition, instead of rolling the short calls or a combination of both?

  39. kustomz

    Phil EUR from Forexlive
    Axel Weber, the first Bundesbanker to resigned his post in protest over the SMP (bond buying) program, says the euro will weaken. Everyone has a loose monetary policy, he says, so fundamentals will drive the exchange rate. Europe has the weakest fundamentals, he says.
    A weaker euro will help the periphery and will be part of the adjustment process, he says.

  40. l4real

    Phil,
     
    Check Yahoo Finance's cover page. They show an oil /supply consumption chart for 2010 by DOE that I can't find anywhere and the accuracy looks questionable. 

  41. stjeanluc

    It was not just bad news yesterday, there was some decent revisions…

    http://www.esa.doc.gov/Blog/2012/02/29/economic-indicator-gdp-gdi-surprise-personal-income-and-saving-revised

    Economic Indicator: GDP, GDI, Surprise! Personal income and saving revised up, i

    Economic Indicator: GDP, GDI, Surprise! Personal income and saving revised up, s

    The trend is not great, but still better….

  42. rpme

    Wow, that was fast, AI at work, maybe Art was right.

  43. samz3700

    ?? what was that

  44. kustomz

    weaker ISM samz

  45. dpastramas

    But why is the market going up? Why is the weak USD?

  46. yodi

    Flan AAPL do we sell first again and buy later or what

  47. stjeanluc

    Felix thinks that Greece might kill the sovereign debt CDS:

    http://blogs.reuters.com/felix-salmon/2012/02/29/how-greeces-default-could-kill-the-sovereign-cds-market/

     

    The whole point about credit default swaps is that they’re meant to behave in a predictable manner in the event of default; one thing we know for sure about Greece is that the behavior of its CDS is going to be anything but predictable. We don’t even know for sure whether they’ll be triggered, let alone what they’ll be worth if and when they are.

    Now there are a lot of people, among them European policymakers, who would actually be quite happy if the Greek default killed off the sovereign CDS market as a side effect. But I actually believe that sovereign CDS, when they work, are rather useful things. It’s just that Greece is having the effect of showing that they don’t necessarily work. And if you can’t be sure that they’ll work when triggered, there’s really no point in buying them at all.

  48. kramer36350

    Goldman Sachs lowers Q1 US GDP forecast to 2.0% from 2.3% on weaker consumer data (RANSquawk)

  49. Phil

    Wow, did Mr.M actually make money on his AAPL longs?  

    31M at 10:15 is pretty good volume so far.  Europe is up a point so you would think we want to catch up.  

    Yen/Robert – Did I say that?  The BOJ wants more Yen to the Dollar so they weaken the Yen by raising the Dollar and the Euro.  Lately, they seem to be alternating between the two, which has been pretty effective.  

    IPhone view/Lunar – I guess.  Talk to Greg (admin at philstockworld dot com). 

    Oil moving to $108 ahead of Nat gas report!    Dollar down to 78.71 so a dangerous short.  Maybe a spike to $108.50 if there's any kind of draw over expectations (even though nat gas consumption has almost nothing to do with oil).  

  50. jabobeast

    FU EDZ!!!

  51. stjeanluc

    Corrections on my AAPL lines, PP is at 541.9 or 542… and that seems to be the holding point there for now.

  52. pakdog

    Cashin / Rain – It's stranger than that. At 10:00 the dollar was $78.17, shot up to $78.50 by 10:07 and made $78.72 by 10:51 . Also starting at 10:00 stocks, gold and oil run down in lockstep…until they change direction at exactly 10.51.
     
    Gold -$63 starting at 10:00 until it pivots at 10:51
    Oil -$1.90 same time
    SPX -$11.97 same time
     
    Not looking for any conspiracy just want to get a handle on cause and effect. I want to think the move in the dollar came first with stocks and commodities following but it happened instanteously or nearly. So is it that the bots led the way and everyone else followed. Any thoughts Phil or others? Or maybe the guy at Oppenheimer has something to say.

  53. kramer36350

    if there was an 'uh' or 'um' drinking game with bernake . . .

  54. Phil

    100%/JRW – Can't argue with that! 

    Greece – What a total screw job.

    Portfolios – Same as yesterday, ignoring the morning nonsense except the above DIA.

    $5KP – We didn't get out of TLT?  That sucks because I would have added the next week $116/117 bull call spread for .49 (10) but not if we're still in the other spread.  Same goes for $25KP. 

    Nope, nothing exciting in nat gas:  

    EIA Natural Gas Inventory: -82 bcf vs. consensus of -90 bcf. Futures dip further, -5.33% to $2.477.

    That's right, we had trade ideas for WFR and FTR at the end of yesterday's chat, in case anyone's interested.  

  55. craigzooka

    IRA Portfolio:

    We have almost no capital deployed so I feel like initiating another very tiny position with the HOPE that the market declines and I get a chance to buy more.

    Buying 100 STX, Selling 1 APR 26 CALL, NET $23.86 per share 

  56. lflantheman

    I've started in the aapl port with 20 April 500 calls, now just added 5 more at  52.90 and placed an order for 5 more at 51.00 (the last order has not triggered yet)

  57. stjeanluc

    5KP / Phil – We were looking for $0.95 on the TLT trade and I don't believe it triggered yesterday!

  58. pentaxon

    Phil or crowd,
    Does anyone know a good natural stock that is highly correlated with the natural gas price.
    I have calculated the energy price of gas versus oil and it is at a record 14% so burning oil is 7x more expensive than burning gas… I think the industry will find that out pretty soon and this ratio will move closer to 1 again.
    However betting on this with futures is hard since the monthly contango of oil is 0.5% whereas the contango of NG is 4% Therefore the cost of carry for this bet would be 3.5% a month and that would demand perfect timing of course. So my idea would be to go long on stocks that are highly correlated while shorting the CL future in an approriate ratio.
    Does anyone have good ideas for stocks that are highly correlated with the price of natural gas?

  59. pentaxon

    PS. Here's the NG/CL chart for you: http://www.pentaxon.com/psw/CL_NG.png

  60. Inkarri1982

    Pentaxon – I think UNG might be one.

  61. Pharmboy

    From l4real…..and the question noted above.

  62. jomptien

    Pentx,
    UNG

  63. rainman

    UNG — I'm pretty sure UNG suffers from contango.

  64. mrmocha

    'Wow, did Mr.M actually make money on his AAPL longs?'  Nope, my entry points were 545 and 542, on weeklies, so I'll provide resistance through tomorrow…

  65. stjeanluc

    Pentax, I posted a relevant chart on Monday:

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

    I don't know that any gas company will correlate greatly with the price of Nat Gas. For example, one of Phil's favorite CHK (very gasy) was trading at $14 in March 2009 when Nat Gas was at $4.00  and it's trading now at 24.84 with Nat Gas at $2.45. 

  66. stjeanluc

    And UNG decays badly – In March 2009 it was at 140 with Nat Gas at $4.00. It's now at 19.55 with Nat Gas at $2.45!

  67. stjeanluc

    I wonder if something like XLU (Utilities ETF) might be a better tracking instrument. As Nat Gas goes down in prices, margins for the utilities improve and vice versa. In March 09, XLU was at $23 with Nat Gas at 4.00. It is now at 35.1 with Nat Gas at 2.45.

    I could run a correlation analysis to check.

  68. mrmocha

    Pharm, yesterday I posted that ARIA likes to bounce off of 14.14, and look where it bounced today = 14.17.  Hopefully that level is her new baseline and we can confidently buy on the dips…

  69. jabobeast

    FU CMG!!!

  70. sagemm1

    dollar weighing on oil…go DX!

  71. iTrade

    Phil…
     
    What's you take on SDOW March $22 Calls for $0.15
      – compared to your 25k portfolio $128 puts for $.80
     
    One is a gamble, but theoretically provides more protection?
    Thanks!

  72. Phil

    AAPL/Maya – Well it's only worth $42 so you have a burning desire to give your caller $25 in premium as soon as possible – is that the gist of it?  If you are so positive AAPL can't possibly go below $500 by July, the simplest thing to do is sell the $500 puts for $24 and you can ether pretend you gave the money to your caller and leave him where he is since you have $24 more upside cushion or you can actually pay the $25 in premium and roll your loss ($60, of which, almost half is premium because you didn't want to wait) up to the $550s ($38.50) which, with the $24 you sold gives you $62.50 on the spread, now all premium and hopefully AAPL stays between $500 and $550 – but won't you feel silly if they fall below $500?

    I know markets never go down, especially AAPL so I will point out that you can also spend $25 (the premium you want to pay so badly) to buy the AAPL 2014 $600/700 bull call spread for $30 so another $5 and you have $100 of upside protection over $600 and then you can feel less worried about selling those puts and waiting a bit on rolling the calls (the July $500s can be rolled to the 2014 $620s even but, at $40, you hit the 2014 $725s, another $25 over the long spread).  Any time you get nervous that AAPL will go to $100,000, you can spend $10 more to add something like the 2014 $700/745 bull call spread, which would seem to be the easiest 350% gain in the universe according to all this AAPL forever talk I'm hearing…

    Euro/Kustomz – It absolutely will if we don't start printing more money to catch up.  

    Oil/L4 – I don't see it, do you have a link?  

    Revisions/StJ – Notice they are estimates and higher oil prices blow the curve anyway.  It's just a question of when the Data starts showing up.  

    Up/Dpast – We're still short of goal but the SellBots have woken up and the BuyBots are running out of Free Money.  

    CDS/StJ – Who in their right minds would buy them now.  With Greece, 70% of the protection you thought you had was BS and they only haven't tested that last 30% yet.  I wonder if there will now be lawsuits?  

    Conspiracy/Pak – Don't forget all the Bots see things way before you do (about 3 seconds) so they are reacting, usually to the Dollar, when they all move in lock-step like that.  Intra-day, everything should react to the Dollar.  There's really no difference between a pound of gold or a pound of oil or a pound of stock certificates in a vacuum so the determining factor is how many Dollars you need to buy them.  If the Dollar drops 1% in "value", then you need 1% more Dollars than you did before.  These are the kind of things that computers SHOULD be doing very quickly for trading firms – taking currency fluctuations into account.  

    TLT/StJ – Wow, that's ridiculous that we can't get a fill during a $2 drop WITH a $1 bounce at the end.  Oh well, so we sit on it I guess.  

    Finally oil heads to $107 again!  Hopefully we can have as much fun as yesterday but this time we want 1/2 out of the USO puts in the $25KP even or better as that bounce was violent.  

    Nat gas/Pentax – CHK is the one we play long-term as a nat gas trade.  The question is, is nat gas too cheap or is oil too expensive?  

    Oil consumption/L4, Pharm – That looks about right.  We're probably supplying a bit more now and they left out Canada and Mexico so you can already tell it's a biased chart trying to skew things to look worse than they are because – if you include them, then the Americas are short about 1Mbd and the Middle East's extra 17Mb goes to supply 10 to Europe and 5 to China and everyone is happy.  And does the Middle East include Nigeria?  Russia?  It's a pointless chart when you just slice up choice bits.  

    $107!

  73. kustomz

    Bernanke just a little while ago mentioned he is less concerned about deflation. Sounds much more confidant than just a few weeks ago.

  74. neverworkagain

    Pentaxon:  Although CHK may not correlate that well to the Natural Gas spot price, I can ensure you that a rally in /NG will do wonders for CHK's profits, and is very likely to spike the share price. Check out the company's calculations of their financials at different estimated prices of Natural Gas in their investor presentation:  http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDUxODQ2fENoaWxkSUQ9NDgyODY0fFR5cGU9MQ==&t=1

  75. kustomz

    *Confident
     

  76. pentaxon

    Thanks all for the comments so far.
    UNG: certainly the wrong choice. UNG is the same as holding NG futures long and therefore you suffer from the contango big time. The idea was to hold something that creates value and has a high correlation with the price of natural gas (UNG only loses value)
    Phil: the aim of my bet would be that it doesn't matter if oil is too expensive or natural gas too cheap. The fact is that NG is too cheap relatively to oil. As in many industries it might even be the better choice than oil. I think the matter for this missprcing is that the production technique of NG has advanced faster that the industry could change it's "consumption habits".  I will check CHK thanks.

  77. mrmocha

    I have meetings all day so I gave up on AAPL, all clear.  Lflan you are free to resume your magic.  Happy trading!

  78. Burrben

    AAPL  -  Its down today?
     
    Wait a minute….  The markets are all UP and AAPL is DOWN?  WTF?

  79. pentaxon

    neverworkagain: good stuff. thanks.

  80. Phil

    CHK/StJ – That's WHY I like them.  I don't want a stock that drops 40% along with nat gas but I'll bet CHK flies up if nat gas goes back to $4. 

    And what Never said! 

    SDOW/ITrade – I don't play it.  There's no option traffic and you can drive a truck through the bid/ask spreads – not a smart play.  I do see your logic but it's .15/40 for the $22s – if you can get the .15, great but, otherwise, if you are the sucker who buys for .40, you'll have a very hard time getting more than .15 back unless SDOW flies.  

    Keep in mind 11:30 (EU close) was our morning low yesterday and we rocketed up off that level. 

    Gas/Pentax – I completely agree with the premise but I'm leery of betting direct on nat gas.  CHK is the kind of company you can own for 20 years.  

    AAPL blew $540, whole market not bullish if they don't take that back!  

  81. stjeanluc

    CHK / Phil – No disagreement from me, I was just looking at the straight correlation between the 2 instruments. On a straight mathematical point of view, it seems that there is a better inverse relationship between Nat Gas and XLU. But I am not sure I would want to play that.

  82. pakdog

    Conspiracy/Phil – So what triggered the move up in the dollar that started it all? There had to be a human decision in there somewhere, right?

  83. morxlntway

    Re USO – after a double down and a roll, how  does one determine what is "even" on the half out, please?
    sorry for what's probably a dumb question.

  84. pentaxon

    The strong contango makes any direct long on NG to bad bets. That's why I have been looking for alternatives. CHK seems to be nice. It's enough if they have upside correlation, don't need the downside correlation for this bet… ;-)

  85. lolobear

    Lflan, you still bullish on AAPL?

  86. Burrben

    AAPL might be down due to the report that it's not going to have enough high-res screens to ship Ipad3 until Q2
    http://www.digitimes.com/pda/a20120301PD203.html

  87. enni_82

    Phil I dumped TLT last week at .90 from the 5K. Over 50% was enough for me. Thanks!
    What do you think about the next week 115/116 BCS at around .58 now?

  88. morxlntway

    i entered the TLT 115/116 for .51c. Hope he says he likes it.

  89. Winston

    Up/Down/Sideways – whichever way it goes it is our job to make money. Rather make money than be right. Try this one on for size:
    Jan 13 SLB 65/70 BCS – cost $3.45
    financed by:
    SELL Jan 13 SLB 52.5 Put – credit $2.60 for a cost of $0.85 on the $5 spread that is already $8.50 ITM.  Worst case is you own SLB in Jan 13 at net $53.35 with SLB currently at $78.50.
    This is the closest you get to free money. Apart from following lflan (who got me into AAPL many moons ago when he religiously focused on that stock from dawn til dusk). When you get one of those trends, forget denial, forget value, you have to ride it as long as it lasts. Those kinds of trends only come along every so often.

  90. Phil

    Dollar/Pak – Sure, it was the release of Ben's statement at 10 with no mention of QE3.  That leads fund managers, one after another, to tighten a parameter on their Bot programs to set up trading for the Dollar up – some begin trading currencies, some commodities, some stocks but anyone reading that stuff would have concluded the Dollar should be stronger than previously expected (due to lack of fresh QE vs. EU just dumping $700Bn).  Then, in the afternoon, we got a 2nd sell-off on the BBook – also not making a case for more QE per the Fed's new data standards.  

    Even/Morx – If you buy for $1 and spend .40 to roll to longer puts that are at $1 and then you DD at $1 you spent $1.40 + $1 for a $1.20 average.  

    $107.50 again but watch gold at $1,720 (over is not good for shorting oil).  Dollar 78.77 so no longer an easy play but still this "rally" looks very weak.  Volume at 11:51 on Dow is 56M.  

    TLT/Enni – I do like that.  $116 has been a great line to hold.  

    SLB/Winston – That's a good one, I like them best on the OIH.  

  91. yodi

    AAPL Maya,
    I can not resist to chip in To the remarks of Phil. By the way Scaling in on AAPL 500 c at 50.25
    I think I refered to your Jul 500 c before. As long as you have a LONG call Jul or any month further out of AAPL below the 500 you can fligh blind.
    IF and if the stock will go strongly down you can only lose. But with your concern it might be a good idea not to trade in options of AAPL . The other day I did an AAPL trade which possible would be more to your liking and rest at night
    I bought JAN14 410 and sold Jan 14 480 as I was not very keen to pay for it I sold a Jan 14 400P to keep up the short fall. This is the type of trade you just put in a drawer and you will sleep well Hope this helps

  92. yodi

    FAS Maya I do hope you are not trading this play. Last week I discussed with Phil and stjeanluc where to roll my weekly 92 short call.  stjeanluc was pulling my leg telling me to roll it to Mar1 100 He did not know how close he would be.
    Today the 92c is trading at 2.74 well over my sales price However there are still .40 cents odd of premium do you really think some one would call this option and giving me an extra .40 cents? On top of it we still have time untill tomorrow to roll, would I be nerves no My other plays same stock showing a nice profit so that is how the cookie crumbles!!!

     

  93. Burrben

    Phil / SLB  -  I like the trade put up by Winston (thanks), but I don't understand what you mean.   Like them best in OIH.
     
    What do you think about this trade?  They are up 15% or so YTD, but down 14% for a year.

  94. stjeanluc

    GMCR is up $2 today and the 25KP puts are now even. There was 50% on the table this morning as I mentioned when I posted the portfolio. 

  95. sagemm1

    this market is very difficult to trade as bad news comes out the pundits will say this bad number such as ISM today is not that distrurbing but when a number comes in slightly better or even just in line, it's this economy is showing great improvement???
     
    I may have to just sit back on my shorts (that I am taking a bath in) and just cease trading for a few weeks. Really do not know what else today, thought it should have been a definite down day today but it just won't happen…

  96. Maya1

    Phil/AAPL
    “burning desire” !
    I love it!
    You are of course, correct. But your thought process creates more ‘options’ for me and not to mention, stimulates the old brain a little in the process.
    Thank you

  97. stjeanluc

    That FAS Mar 100 play might still be a loser Yodi…. You can sell next week's 102 for $0.30 now!

  98. rainman

    burrben — OIH = Market Vectors Oil Services

  99. stjeanluc

    FAS / Yodi – And you can still roll this week's 92 to next week's 94 even!

  100. yodi

    stjeanluc
    Thanks you are a great guy!!!!!!!!!!!11

  101. yodi

    stjeanluc
    FAS will take my chances until tomorrow why give .40 away

  102. lflantheman

    stj….I got the 5 AAPL calls for 51.00.   Now have 30.  

  103. stjeanluc

    Gotcha lflan!

  104. stjeanluc

    FAS / Yodi – I was not suggesting you roll today… just planning ahead.

  105. lflantheman

    Sell orders placed (triggers ) to sell 10 of the AAPL calls for 55.00 and 10 more for 56,00, the next 5 for 57.00 and the last 5 would require 58.00

  106. yodi

    stjeanluc
    Somehow have the feeling that market will somewhat run out of steam on Friday

  107. shadowfax

    The forth touch of a 1 day trend broke over, must hold 82.85 ish.

  108. shadowfax

    81.85 sorry!

  109. gucci

    Iflan if not triger by EOD would you cover ? thx

  110. Pharmboy

    Buying back short GG Ps sold yesterday for a 50% gain.  Gold….what a laughable metal.

  111. Pharmboy

    Love this from Bloomberg…GM posts gain (but note the picture of the Dodge Ram Truck….)

  112. sagemm1

    Phil/CDS
     
    I am trying to figure out how the ISDA decision is good for investors or that would be a positive for the market, in my mind today's decision should be the death knell for CDS, again am I missing something and who benefits?

  113. jomptien

    Phi,-AAPL traders,
    If you hold an April 500/550 BCS and it goes over 550, do you have to give them the shares at 550? Thanks

  114. Burrben

    LFlantheman / AAPL stop
     
    Do you put a stop price in for the AAPL calls you trade, just in case there is a "massive" event to protect the position?  I like how you "scale out" of the trade, but when I'm long over 100K of AAPL, I don't even like to walk away and get a drink…
     
    Just wondering since I put a trailing stop on the calls yesterday and instead of a +3K gain, I had a 800 loss since my stop was hit and the option sold at the bid…  then the price bounced right back up again.

  115. lflantheman

    jomptien….no

  116. Burrben

    Rainman / OIH
    Yes I understand what OIH is (especially since my last HF lost over 15million trading it), but I was wondering what Phil meant.  Did he like a trade in OIH instead of SLB (which we used to call "slob" on the desk).  

  117. jabobeast

    phil— are you ready to turn your brain off yet??
    or is this a sucker's rally?

  118. yodi

    jomptien
    You give only up shares of any stock if the option runs out of premium

  119. David Ristau

    Larry -

     

    Those calls are so far in the money. Is that to try to be sure they still have some value at expiration in a falling aapl situation? Why do you choose that strike?

  120. yodi

    jomptien
    Or if the premium is less than the div the relevant stock will pay.

  121. Pharmboy

    Amarin – US Patent Office rejects it again with a non-final rejection.  Lightening up on the sold puts, still cover the stock.  This one is fun to play the huge moves…until it is not…..

  122. jomptien

    Thanks Iflan – a load off my mind

  123. lflantheman

    burrben……with a rising stock like this  I don't generally set a trailing stop to sell.   I set a trailing stop to BUY.  That is, if our options fall to say 49, I'm not interested in selling, I'm interested in owning more.   So use your example from yesterday.  Had you set a downward price to buy, you would have been able to sell later at a higher price.   Now, if I have a very profitable position, THEN I might set a trailing stop to sell, to take profits.  But if you watch how I trade AAPL, I rarely accept taking a loss.    If the stock is dropping I just buy more and wait.  If I own options and it's rising , then I take profits.  It's a bit hard to explain, but you see today I'm setting triggers to SELL as the options rise in value.  Yesterday I thought the options were going to drop in price so I sold 3/4 of them, and they dropped, and sold. 

  124. jomptien

    Yodi, thanks too

  125. wappler

    Phil,
    I know that stocks only go up, so what I am about to ask you is pure lunacy (and probably heresy as well), but here goes:  P (Pandora) looks interesting as a short – they don't seem to have much of a business model and the technicals are not too impressive, either.  How would you go about an April short position – would you do a simple 16/15 Bear Call or is there anything else that comes to mind?  Thanks!
     

  126. scottmi

    FTR – buying shares at $4.50 and selling August $5 straddle for $1.05 making a nice entry today net $3.53 per share after commissions. . Collect the March and June dividends (.10 each) for a  5.6% return from dividends while you wait to give the shares up at $5 for a 39% capital gain in just under 6 months, or if still under $5 and another round put to you, will then be averaging about $4.30/share. What's not to like for another slice here?

  127. lflantheman

    David….I choose the April strike, in the money,  for safety and flexibility.   I can cover it, I can wait for it to turn (50days from expiration), I can buy it or sell it.    But let's say I'm working with March 540 calls and AAPL pulls back to 540 and stays there for a week or two.  Then what can  I do?  I'm stuck with a loss.  I like April, July, October and Jan calls because they are expiration months, and AAPL does well those months.  I like ITM calls for flexibility and safety.  Sure, you can make a lot more money playing the weeklies, for instance, but that's dangerous.  Now sometimes I do play the weeklies, mainly for day-trading AAPL.  I do some of that without even posting (in other accounts).   But it's difficult and risky to use ATM options same month to trade AAPL as the only stock in the portfolio. 

  128. sbrownA

    Hey Phil, et al,
    Check out one of my favorite stocks to pick on HUSA today.  :)
     
    Scott

  129. pstas

    P – be careful on any short- earning report on 3/6. I am long and just sold 1/2. Swing trade.

  130. msf65

    Lflan, 
    out of curiosity… did you papertrade AAPL at first? If so, how long before you felt you were ready?

  131. pakdog

    Conspiracy/Phil – thanks, still seems amazing that it all happened the way it did

  132. David Ristau

    Larry -

     

    Thank you.

     

    Got that question from someone and wanted to clarify.

     

    Also that DFS positioned we designed just hit 50% gain.

  133. diamond

    Dilbert
     
    Non Sequitur

  134. lflantheman

    I'm looking at the AAPL 2 day chart.  Today almost a mirror image of yesterday.  This would mean a possible afternoon mild sell-off.  I'll be watching this with great interest.   If I think it's going to occur, I'll be letting go of some of these options.

  135. lflantheman

    Yes, I've papertraded a lot.  Very good idea to get experience befor doing the real thing.

  136. ricpar

    Good morning. Lost a close friend last night so I am way behind between that and work.
    Has anything important happened.
    Am slightly biased to the down side and thank God (And Phil) for being  hedged.
    Will be aback in 30 minutes

  137. Burrben

    Anyone / What to do with 200K?
     
    I'm going to be buying a house down here in Nicaragua in 6mo to 1yr and need about 200K to do it.  I would like to get some type of return on that 200K while I have it sitting on the sidelines in a "safe" money market account.  
     
    Just wondering if there are any opinions on how to "safely" invest it until I need to use it other than a CD or MM account.   

  138. Burrben

    lflantheman / charts
     
    Would it be possible for you to share your chart setups that you use to watch AAPL?  For example:
    Candle or Bar
    Time frames
    Overlays
    Moving Avgs

  139. Phil

    SLB/Burr – Out of that ETF, I like them best.  Same as CHK, they are the best in a sector and I don't see the point of buying ETFs when there is a clearly top stock in the group.  

    GMCR/StJ – Yeah that one flew up on us, 3% today.  Doesn't make them a good stock, just makes us stupid for not taking profits!  Yesterday morning, I sadi I thought we could do better than $2.25 on GMCR and they closed at $2.50 but I guess if I didn't specifically say to take it off the table then it's still open no matter how many times I say we take 50% profits off the table on naked stocks.  I really can't sit here and run a portfolio as if it's traded by people who don't know a thing about trading – I am busy answering other comments during the day and I can't sit here and stare at every single position in the $25KP all day long to make sure people follow even the most basic strategies – it's getting silly.  

    I called to get out of a TLT spread at .95, and no one got out at .90 or .85 or .80 or .75 or .70 so today, instead of having the cash I intended and an open slot for a new trade, we're stuck in a play that should have closed yesterday with $150 more profit.  You CAN'T throw money away like that in a small portfolio!  I think we're getting away from the concept of teaching people how to trade and enforcing the idea that they should only mindlessly follow whatever I say – if I have time to say it.  That's a major flaw in this new system – we have to find a way to put rules in for every position if we're going to assume people are too dumb to follow them or we'll have to cut it down to just one or two positions that I have time to babysit.  

    Speaking of babysitting – oil (/CL) failed to make $108.50 so the short line is below $108 and we're lucky to get quarters the way things trade today. 

    Time off/Sage – This is the same as yesterday but no catalyst at 2pm to take us back down.  Still, the Dow is failing to get 13,000 back and the Nas not 3,000 and S&P off highs at 1,373 so hope springs eternal for the bears but it is exhausting.  

    You're welcome Maya – that's exactly what I'm trying to do, get you to step through the possibilities but in my own way…

    NFLX is a hot stock again too!  

    ISDA/Sage – It's bad for bonds so money goes into stocks.  It's great for everyone who sold CDS swaps as, apparently, the only way they'll ever have to pay is a 100% default so it's always going to be cheaper for them to enable the debtor to pay 30%, which means their implied liabilities just dropped 70%.

    AAPL/Jomp – No, you can close them both for the net.  If your caller exercises on you (doubtful) then you can exercise on your calls too.  

    Brain off/Jabob – As I said above, RUT and NYSE need to recover now but that doesn't change the plan to buy one bullish position per day that the S&P is over 1,360.  At this point, better to let yourself get a little bit burned on a sudden dip than miss out the next leg up when we have such an obvious floor to stop out at.  

    Wow, and back up oil goes, over $108 again – maybe $108.50 this time.  Dollar 78.845 so don't blame it.  

    Speaking of nat gas (/NG), the Futures are at $2.45 and they make a good long off that line with oil so insane.  

    P/Wappler – Logical as that is, with the Momos back on the move today it's a dangerous time to be short but yes, I do like it although I think safer to wait for earnings, hope they are good and then sell into a big move up.   

    FTR/Scott – Thats a good shorter-term play on them.  

    HSUA/Scott – Wow, what did they do? 

    Non Sequitur

     

    Sorry to hear that Rip.  

  140. yodi

    Burrben
    200K in Nicaragua lots of money  Would go to LV set on black you have a good chance 50% of doubling

  141. Pharmboy

    SGEN – for a fun play, and I think something is up in the stock and they way it is behaving…I am buying the Apr 20 C and selling 2 $15 puts/call.  VERY SMALL position, b'c someone is playing with this stock, and I think it is positioning for a move up.

  142. lflantheman

    Burrben….this evening after trading done.  OK?

  143. sbrownA

    12:33PM Houston American Energy provides update on the Tamandua #1 Well – completion attempt in the C-9 and C-7 Sands (HUSA) 7.48 -3.35 : As of March 1, 2012, the Tamandua #1 sidetrack well had a 7 inch liner run to 13,913 feet and was drilled to total depth at 15,562 feet. Upon drilling the well to TD, the well encountered Paleozoics which was a clear indication that the TD had been reached. While the well exhibited oil shows while drilling, and other indications of hydrocarbons such as log analysis that indicate possible productive sands, hole conditions have prohibited sufficient testing on the bottom hole sections. There have been many attempts to evaluate the well resulting in tool failures and stuck pipe, and current conditions are such that the operator has made the decision not to try to reenter the bottom hole sections. As a result of these developments, the decision has been made that without the ability to effectively test the lower zones, the most prudent course of action is to plug back the well and to further evaluate the C-7 and C-9 Formations.
    Hard to sustain with $3 million cash on the balance sheet :)

  144. cslanson2

    Burrben
    Why don't you consider selling the Jan 2012 AAPL $275 Puts @ $2.75 – Pays approximately 4% on margin and I would think for the price of AAPL to go to half in 10 months would mean the world has indeed come to an end.

  145. 2can

    Phil /  With FAS at 94.80, I'm short the March FAS 87 calls. I have them covered with the FAS Apr 85 calls and 71 short puts, so I'm not loosing on the position as we go up.  I can roll  the short calls to the  April 93s for a dollar.  I gain a month and $6 in position for $1.  Is it too early in the cycle to be rolling these calls?  What do you think?

  146. rainman

    Nice come back on FNSR.

  147. Inkarri1982

    WFR/Phil – When considering taking a position in WFR, should we look past 2011 and the big hit they took on their Income Statement as a one time expense?  Thank you very much.

  148. rehat

    Just want to give a shout out to my Biotech pick IMUC. It went all the way down to $1 and now has had a spectacular rally to 2.6… wheee..
     
    BTW. I think this is a good one to accumulate. I think Pharma disagrees but I still am positive on their phase 2 studies of the ICT 107 molecule. They have passed the 50% enrollement level with good results.. Worth researching this one, as you learn a lot about Immunotherapies which is potentially a very potent way to cure cancer..
     
    Again, I am an engineer so take this with a grain of salt.. FWIW

  149. Pharmboy

    IMUC/rehat – we played them at $1 and got out at $1.50.  Good that you continued…..It is not that I disagree, but DNDN, ONTY and others all are in the same space for making vaccines for cancer.  Passing enrollment rates is good, but it does not mean that it works….I would sell some IMHO.

  150. stjeanluc

    Portfolios / Phil – I doubt that we can come up with the perfect educational system with the 25KP where we have a lot of positions as opposed to the Money portfolios. I don't mind calling the exits but I think that we have had that discussion before. I might call a more conservative exit (let's say at 50% like this morning in GMCR – or getting out of the USO puts yesterday) only to perhaps face criticism for not going for a double or getting out to early. Or cutting losses too early. I can't run the portfolio myself because we all have our risk and pain threshold and I don't want these portfolios to reflect my personal preferences. No matter what we do, you and I can't win.

    The only solution would be to set more rigid rules that we stick with and live with. But that takes away some of the flexibility we might have now. But it would make it simpler for everybody.

  151. Pharmboy

    Looking at IMUC's balance sheet and the stock action with no info being released, my guess is they are driving up the price for a sale of stock and day traders are picking up on the 'trend'. Again, my opinion.

  152. lflantheman

    I just sold 10 of those AAPL 500s for 54.00    I will take 55.00 for the next 10,   56 for the next 5, and 57 for the last 5

  153. Pharmboy

    For my chime in….we are not here to hand hold on every position – don't mean to be harsh, but that is the fact of the matter.  If that were the case, give your money to me and I will make the decisions (for a fee of course!).  If you are up in a position, used rules. Opts are good ones to follow for swing trades, otherwise, income portfolio it and just trade what you see. 

    Do you see what I see?  Consolidation = up.  But we are at a PP, so 'they' need to get it through.

  154. Phil

    $200K/Burr – Build a bomb shelter, keep it well-supplied!  Right now I favor cash so I don't think stocks are going to be "safer" than a money market – especially when you have a certain time you need to pull it out (so you can't afford to ride out a dip).  My preference would be setting up a "Money" portfolio and just using a small portion of your $200K for margin and just play around with shorting the ultras for weekly income.  Even IWM Money is massively outperforming the interest you'd get in a Money market and you're far from likely to lose more than $5K, even if some event went horrifically against you.  

    If you want to play something less hectic, you can pick a stock like WMT and buy, for example, 100 Jan $45/55 bull call spread at $8.50 ($85,000) and sell 100 April $57.50 calls for $1.70 ($17,000) and that puts you in the $10 spread for net $6.80 and you are .80 below your caller with 8 months to roll.  WMT got knocked back harshly on earnings but that was $4 down and their 200 dma is another $4 down so not likely to fall that far and the 50 dma is at $60.33 so not likely the stock flies up.   If you manage to pick up just $4K in premium each month, that's a 20% return on your $200,000 plus, if WMT is over $60, that's a bonus $15,000.  

    $108.50! 

  155. lflantheman

    See fellas, it's like a friggin auction.  I own the calls on AAPL.  They are mine.  They are just going to get more expensive with time .  You want some?   You have to pay me what I ask, otherwise I will keep them and sell them LATER at a higher price.    :)

  156. kustomz

    Look at what shorts are up against!!

    The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.
     
    The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.
     
    A small number of central banks have started investing part of their reserves in equities. About 9 percent of the foreign- exchange reserves of Switzerland’s central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.
     
    The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said.
    http://www.zerohedge.com/news/next-leg-ponzi-revealed-central-banks-begin-buying-us-stocks-outright-starting-today

  157. 2can

    CL/   Looks like they want 109 into the close.  I'm out and giving it a rest till tomorrow. 

  158. scottmi

    and a jabo-cheer for oil……. :-(

  159. l4real

    Phil /Stj 
    How do we get started trading the IWM Money portfolio? Also what risk management should we use if the trade was started next week?

  160. Weasle

    Why is the Nasdaq bulletproof today?  Any reasonable answer?

  161. terrapin22

    President Obama is having a dinner fundraiser tonight in NYC at ABC Kitchen, a trendy restaurant in Flatiron a block from my apt.  $35k a plate.  I'm going on a dinner date across the street at same time.  Hopefully I won't get arrested. 

  162. JRW III

    Well, if not more free money, at least, other people's money !!

     

    The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.

    The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.
     

  163. lflantheman

    Hey, I just thought of a new term.   It's the opposite of stop loss.   It's start profit.   Instead of stopping your losses below what you paid for the option you start your profit-taking above the price you paid for your option.  That's what I do!    I buy (or sell) options, then I pick a price where I want to start taking profits, put the order in and let the market and the computer program do the work.  Phil, isn't this the way the BOTS do it?      Have you heard this term?   If not I'll publish something on it quickly and try to find my 15 minutes of fame.

  164. Burrben

    Phil  -  200K Bomb Shelter
     
    Well that's kinda the idea.  There is a fully sustainable farm community here that is on top of a mountain over looking a panoramic view of the ocean.  The farm makes all it's own food from meat's to veggies to fertilizer.  It's also amply supplied with solar/wind power generation, and a lots of guns and guards.  The funny thing is, it's mostly 1%'ers from Cali that have built houses and moved on the farm in case the whole thing does collapse one day.  If there isn't a collapse, then so be it, we live on a beautiful secure piece of the world where we don't impact the local community.  I'll look into the WMT trade.  I'm a little scared of selling calls in this market, but I like the idea of the ITM BCS, maybe with some put offsets.  

  165. jromeha

    When is this bullsh!t going to end!!!? Straight up!? FU MARKETS! Phil, Im an idiot and have help my /NQ short way too long. Now Im thinking Im going to get destroyed going into AAPL's announcement March 7…

  166. jromeha

    help = held…Have got 11 hours sleep the past 3 days… Tomorrow should be interesting, with the Koran burning report….These people hate us so much!

  167. willsons

    Phil     I have GOOG 500 puts sold for Jan 13 and they are 50 percent profitable.  Question for you is would you stay on track or do a 2x roll to a lower strike? 

  168. lflantheman

    I'm going off line until after market closes.  I have 20 AAPL calls left with start profit orders placed, as above.  I'm placing one more order……..If April 500 calls 47.00 or less, repurchase  10.  See you this evening.

  169. jabobeast

    Is there any reason why that MoFo piece of drek CMG is hitting all-time highs again today or is it the typical sell the morning buy the afternoon manipulation BS???

  170. 2can

    Phil /  You were making some excellent observations earlier about just blindly following your posts to make trades.   If it makes you feel any better about your "class of 2011/2012 students", I followed your instructions today and closed JPM short puts for +90%,  the TLT short calls at a small gain, (I didn't get a fill on the long calls of the BCS, so I was happy to close the naked shorts);  doubled down on my USO 37.5 puts, and rolled to the APR 42s, and just missed closing half of my USO MAR 40 puts at even money, when oil took a dive earlier today, and made the egg Mc Muffin money shorting oil.   Not tooting my own horn, but wanted you to know I've learned a lot in the last 2 months.  Thanks for the education

  171. Phil

    HUSA/Scott – That's why I don't touch those little drillers – total crap shoot.  

    FAS/2Can – I certainly think that's worth $1 as long as you are able to lock in the profits on your $85s by stopping them out if FAS heads down as you are giving up protection.  Until XLF is over $15, this is a tough spot to get more aggressive. 

    WFR/Ink – Yes, other than keeping in mind that management entered into a bone-head contract, as long as they learned their lesson and don't do it again – I wouldn't call it a long-term negative.  That's the same logic we use when we buy BP on the oil spill or MEE on the mine collapse – these are the "disasters" that give us an opportunity to buy good companies cheap but then you have a company like RIMM, who makes costly mistake after costly mistake – that's when you have to start worrying.  

    Exits/StJ – Yes, but I'd rather have you call conservative exits than none at all.  That's the problem though, I didn't sign up to run FAS Money, IWM Money, a $5KP and a $25KP all by myself.  That's why, last year, we had ONE portfolio at a time.  I do have limits in how much stuff I can do at one time.  As I said, either put up rules that people follow (20% trailing stop (of the profits) after making a 20% profit on an open trade, stopping out or doubling down or rolling on a 20% loss, taking profits into initial excitement – especially if over 50%, etc.) in general (which are already in the Strategy section) or add a line under each item for instructions on that item.  

    Consolidation/Pharm – Could be the good kind if we break up.  

    AAPL/Iflan – Today you are benefiting from CNBC running Woz every hour saying AAPL is a $1,000 stock.  This is the kind of thing they do when they are dumping out at a top.  2 days in a row, big down volume, light up volume.

    Speaking of volume, Dow volume just 79M at 2:20.  

    Equities/Kustomz – They gotta pump money in from somewhere.  I don't know why this all gives me a bad feeling…

    Oil/2Can – $108.50 was our target top.  I don't mind they hit it into the NYMEX close (2:35).  As long as we get a break under $108.50, I'll still like the shorts.  

    IWM Money/L4 – I'd go with 10 Jan $80/84 bull call spreads at $2.20 and sell 2 TNA March $61 calls for $2.85 to start as the two short calls pay for 1/4 of your long position.  RUT is too high to sell puts at the moment.  

    Nasdaq/Weasle – AAPL $545 and the MoMos are flying – what can go wrong?  

    $108.80!  Might get a crack at $109 and another great example of how useless the .25 lines have become. 

  172. mb22

    I second Pharm (minus people giving me there money!).  I don't chat often, but have been around here for more than a year.  I originally started following the trades too literally, but eventually learned the strategy and reasoning behind trades enough to make adjustments on my own.  I may not make the same returns as the portfolios, but I am learning and becoming more confident in my decisions and gut feel.  Not perfect yet – smart enough to sell the USO puts, but held AAPL longer than my gut wanted too and missed the double dip.  So keep coming up with the great trade ideas and explanations, and don't worry about the portfolio format, they are working well for the intended purpose.

  173. terrapin22

    Maybe we should be buying some naked long calls on SSO….it should be able to hit 100 by year-end if this story is true. 
    http://www.zerohedge.com/news/next-leg-ponzi-revealed-central-banks-begin-buying-us-stocks-outright-starting-today

  174. ricpar

    Phil sold the TLT Mar 115 puts at $1,76 on 2-21-12 bought back at .48 on 2-28. Looking at selling the May $115 puts  at $3.25 for another go. Any other suggestions.

  175. rehat

    IMUC/ Pharm,
     
    Just FYI. They raised like $10 at $1 when the stock corrected and now have capitalized for about 2 years. I see this action in the last two days as some hedge fund trying to take a position in front of some news that they expect. Also DNDN's drug is not in the efficacy range of IMUC by quite a factor.
    Also, I did take my cost basis off here and now I am in for the ride, going up hopefully. 

  176. lionel

    XOM/ March 85 Puts are back to where we started – scaling in…

  177. deano

    Phil – Question  about pulling in an option -:
    I have the AMZN 2014 120/160 BCS, with the 130puts sold to finance – set up on a AMZN dip, this spread is up nicely. On a AMZN run, I also sold against it the APR 190's for 16.5, now up on that due to AMZN's recent decline. There is $4 left on the APR caller – would you suggest pulling that in to the MAR 180 to speed the decay?
    Thx

  178. rehat

    Sorry that was $10 Million not $10

  179. Canuck

    Lflan/Start Profit,
     
    just put in my first SP order.

  180. Phil

    ABC/Terra – I've eaten there, meal worth $15,000 tops – sounds like a rip-off.  ;)  

    Start profit/Iflan – Yes, that's the idea behind scaling in AND out of positions.  You're either in for a quick trade, in which case you should be thrilled with 20% or you are in for the long haul and you still lighten up to reduce your basis.  

    Farm/Burr – Just shoot me over the address in case I can't make it to my own island.  

    LOL, I love them bashing Obama's economy with the markets back at their highs.  When the markets were down, they were PROOF that Obama was mishandling things but now that they are up 100% from the lows – they are no longer a factor to consider.  Now it's jobs and if jobs come back – I bet they stop mattering too!  Santorum sounds a bit clueless spouting this BS.  

    Nas short/Jrom – Wow, what a thing to short!  Just watch that 3,000 line.  If we're over that, then it's time to worry.  If not, it's a 500-point run for the year so a 100-point pullback would be expected (and healthy).  Just make sure you don't get the greedies if we're lucky enough to have a pullback finally.  

    GOOG/Wilsons – I don't know why you'd roll to a lower strike.  I'd just put a stop on it at 40% (20% of the profits) and be thrilled to make money so early.  The only reason you'd stop out is because GOOG gets weak and then you can just wait for a nice opportunity to sell another put.  Otherwise, the stop never triggers and you make the other 50%.  

    CMG/Jabob – They are going to hit $400, one way or the other. That's up $100 for the year and then it will be interesting. 

    Thanks 2Can, I needed that!  

    Thanks Mb22!

    Central banks/Terra – Yes but what that really is is the Fed using OUR money to buy stocks from the Banksters, who pumped up the market using money they borrowed from the Fed, at top Dollar.  So, like all the real estate crap they bought – we will get stuck with Trillions in losses while the Banksters go back to cash.  

    TLT/Rip – May is a little long. One day this game will end.  I'd go a month at a time.  

  181. Phil

    XOM/Lionel – Good call! 

    AMZN/Deano – Very good strategic thinking but AMZN is not particularly high in it's channel so I don't think I'd want to drop a caller right on top of it at $179.50 since we know that they CAN jump $20 very fast (see Jan).  Better safe than sorry when playing these crazy stocks.  If they were at $200, with the 200 dma at $201.20 and the Nas toppy – I'd feel totally different.  

  182. rainman

    Burrben / farm — Sounds like an interesting place. What does it take to buy into a community like that? 

  183. cslanson2

    Phil,
    I'm short the AAPL Jan 2014 $380 Puts.  Just today with the VIX actually 1% lower, these puts have risen in price by more than 12%.  Is this consistent with your view that CNBC is pumping?
    Thanks

  184. ricpar

    We need to vote for Rick Sanitarium for President.
    He can save us $5 trillion by not covering condoms on health insurance and zero tax for manufacturing. My tax attorney says we can offer to  assemble toys for our casualty insurance customers before Christmas at no extra charge. That way they do not have to try to assemble the toys (There is always a missing part)  on Christmas eve, and we can count all the revenue from the customers insurance as manufacturing.
    With zero taxes we can afford condoms and will double down on our condom purchases to sell them later as the demand increases from people who got someone pregnant when they could not afford a condom earlier because their insurance would not cover them. In fact if we give a few condoms away we could probably qualify for a 501(C3) non profit. That way we could solicit funds from everyone and would have extra tax free cash to bribe politicians and afford an attorney if the IRS came after us.
    If enough of us do it we can form a PAC and keep him in office for two terms. We sell out everything before the end of his second term and have cash to support our next crony in office.
    Damn it feels like I am channeling Phil.

  185. rudycharlie

    Phil/Stj
    don’t count all of us newbies short, that TLT spread in the 5k was up over 50% coupla days ago, “when in doubt, sell half” is a rule taught here, so that’s what I did!

  186. jthoma

    Phil- All you can be expected to do is offer ideas- after that we are all big boys and on our own or we should buy a mutual fund. I appreciate all your help and remember- markets that make no sense get to us all sooner or later. Much frustration for many at present but this too shall pass!

  187. stardawg

    Seems there are some frustrated members.  Frustration is the child of UNMET expectations.  Check your expectations on both your or PSW's trading rules and views around Phil's time. :-) AAPL seems like a classic bearish Bump and Run chart pattern to me…….

  188. sbrownA

    Agreed, I only like finding the really overvalued ones with a really poor quality story.  HUSA in particular used to make Press Releases about the # of days remaining for a short squeeze.  We talk about it a lot but poor or in their case, pitiful, earnings quality, comibined with management focused more on stock manipulation than running a business.  There are 4 employees at in the past when they would make or participate in a one-off sale I would find in the 10-k where they bonused 80% of the profit to the 4 headed beast and leave PR and stock pumping for the shareholders.

  189. kustomz

    Phil Bad feeling/ would you trust a crew of mad scientists trying to control the weather! Neither would I. Markets are a force, sooner or later they lash out no matter how much CB's try and engineer the outcome.

  190. sundevils

    Burrben,
    I am planning a trip down there sometime later this year to look at second homes…Have you heard of a place called Rancho Santana? On the Pacific coast not all that far from the Costa Rica border….Supposed to be very nice according to what I've read… Thx

  191. rainman

    NOK starting to look attractive at $5.25. Might be a good one for Craig's IRA with a 5% dividend. You can buy the stock and sell the 2014 $5 c/p for about $2.80 for  $2.45/3.73 entries or a 104% if called. I'm going to wait for a higher VIX and/or another break of $5.

  192. kustomz

    Pipeline In Saudi A went boom oil to 115 shortly

  193. Pharmboy

    USO just has mojo….what the hell.

  194. rainman

    kustomz / oil — thanks! That explains the spike in volume on uso.

  195. morxlntway

    can i borrow your bb bat?

  196. scottmi

    USO – time to double down AGAIN!? hell, wtih oil at 109.90 i have to!

  197. Pharmboy

    Dar she blows!

  198. scottmi

    Saudi/Kustomz – can't find any news on this. do you have a link?

  199. Pharmboy

    Nutin' like derailing a recovery, no?

  200. lionel

    Oil/ how convenient to blow up something at 11pm (?) in SA so it can affect a low volume trading session after NYMEX close.
    The rebels should be on this trading board :)

  201. rainman

    Anyone have confirmation of the explosion? Where's our real time google maps?

  202. shadowfax

    3:30 stick?

  203. Phil

    Wow, that was nice of oil – all the way to $110.55 without a pullback and now a quick $1 below $110.50!  

  204. jthoma

    3:30 sink for a change?

  205. scottmi

    Link/ripcar – thanks. what a dirty 'game.'

  206. dclark41

    3:26 PM Already higher on the day, crude oil tacks on even more on a report of an attack and explosion on a Saudi pipeline. WTI crude (USO) +2.3% to $109.48, Brent crude (BNO) +3.7% to $127.20 [Global & FX, Energy, On the Move] Comment!

  207. jabobeast

    jthoma--wishful thinking?

  208. yodi

    Any one of you computer experts. Will be in Europe this year. Need to place the Lotus system we use in my business in a type of cloud where I can make changes and see what is going on without being at the local computer.
    Thanks

  209. sagemm1

    jthoma/sink
     
    …..good luck with that I have been wishing that for about 2 months, ready to go out and panhandle, seems to be a better option that shorting this one way market!

  210. Inkarri1982

    INTU/Phil – I'm long 250 shares of Intuit at $32.56.  Would you recommend selling either the Jan 2013 $60 calls or the 2014s?  Thank you very much as always!

  211. rainman

    yodi / lotus — Google docs? Microsoft Office 365?

  212. sagemm1

    wonder if that attack on the Saudi pipeline was perpetrated by GS:)

  213. Phil

    AAPL/Csl – Yep, that's right in line with my theory.  That's what the big boys do on day's like this, load up on puts.  

    LOL Rip – you're hired!

    Thanks for encouragement guys, just having a frustrating day as I keep getting an hour behind every morning and it feels like I'm saying the same thing about the same trades over and over.  Maybe I just need to stop feeling forced to comment but that goes back to people following rules and not waiting for instructions.  

    Nice $5 move since yesterday in oil.  Sure, we can afford that, no problem!  

    Sooner or later/Kustomz – But when? 

    NOK/Rain – They are becoming a low-margin commodity and I'm not even sure they can win that game.  It's kind of like thinking Sony would make a comeback with Walkmen 3 years after the IPod came out because "they used to be so good in that sector!"  

    Talk about a blow-off top!  Already up on the day, crude oil flies higher on a report of an attack and explosion on a Saudi pipeline. WTI crude (USO+2.3% to $109.48, Brent crude (BNO+3.7% to $127.20.

    I'm loving those USO April $40s now at $1.08 but we're full in the $25KP so no DD.  

    USO/Scott – Yes, if you have the buying power to play it.  Next move would be to sell the $42s, now $1.95 for about $1.50 and then roll out to the May $43s (now $3) for a small net if oil stays over $110.  You just have to keep rolling back and rolling up and eventually – we HOPE – oil will get tired.  

    Speaking of tired.  Those DIA $129 puts are .95 and we're in 20 for .955 so lets' take the new 10 off the table for a .15 profit that leaves us with a basis of .96 on the original 10.  AND .95 is up 20% anyway (.96, actually) and that's where we take profits on a day trade, right?  

    Bat/Morx – As long as you don't mind the bits of brain all over it.  

     

    Re: BREAKING! OIL Pipeline explodes in Saudi Arabia – one of the world's largest
    Oh Shit
  214. scottmi

    USO/Phil – took a quick 25% gain ( on the USO i added 30 minutes ago) and is paying for a roll up on original position..

  215. yodi

    rainman
    Lotus thanks let me see what I can do with this

  216. Phil

    INTU/Ink – When you bought them for $32.56, did you intend to tie up twice as much money in a stock that's unlikely to gain more than 20% more going forward with a risk of correcting back to the 200 dma at $51 and costing you 20%?  They don't pay much of a dividend so you can cash out and sell the 2015 $50 puts for $6.  If effectively selling the stock right now for net $63.84 isn't enough for you, you can spend $3 on the Jan $52.50/57.50 bull call spread and then all the stock has to do is stay flat and you make another $2 ($65.85) and your worst case is it's put back to you at net $47, which is "only" 50% over where you first liked them.  Meanwhile, you have $60 in cash to play with somewhere else and TOS says net $5 in margin.  

    Attack/Sage – This is the problem with the oil market.  For $50,000 you can get people in that part of the world to kill themselves so their family can have money.  "Rebels" will attack anything you want for much less and knowing something like that is going to happen in advance is worth many Millions of Dollars.   Isn't it funny how yesterday we had a huge sell-off – too fast for Da Boyz to exit, so they drive oil back up to new highs, capped by a pipeline attack but then it gets sold on huge volume around $110 (now $109.40)?  Just another one of those "coincidences" that coincidentally happen at the top of every NYMEX rally.  

    USO/Scott – Very nice.  Don't look those gift horses in the mouth and great use of the profits!  

  217. scottmi

    USO – well i should say "subsidizing" a roll..

  218. malsg

    The pictures of the fire are taken in daylight … but Saudi sunset was several hours ago … the oil market only stared going nuts after the close.

  219. Phil

    And next week is auction week again – fun, Fun, FUN!

     

    Wednesday Mar 9

     

    Dennis Lockhart Speaks
    8:00 AM ET

    Consumer Credit
    [Report][Bullet
    3:00 PM ET

     

    Redbook
    [Report][Bullet
    8:55 AM ET

     

    Wholesale Trade
    [Report][Bullet
    10:00 AM ET

     

    Weekly Bill Settlement

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

    Treasury Budget
    [Report][djStar]
    2:00 PM ET

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

     

    Retail Sales
    [Report][Star]
    8:30 AM ET

    William Dudley Speaks
    8:30 AM ET

    Interesting not much Fed speak to steer us – wonder what that's about?  

  220. Phil

    Good catch Malsg!  

  221. dclark41

    Phil
    Just amazing what they still insist as true. How many times did you refute this capacity issue.
    "Barclays Capital’s analysts were out this morning urging clients to find exposure to oil and LNG markets. They cited how little spare capacity exists in the oil markets and they also cited signs of faster demand in Asia."

  222. yodi

    rainman
    Google has a spreadssheet my question is can you copy your lotus spreadsheet in to this Google spreadsheet???
    thanks

  223. Phil

    CNBC right now saying it just happened.  

  224. Kwan

    Phil, regarding the newer people not understanding the basic rules, you may want to have Matt look into redirecting new members to a page containing  the rules so that it is literally put in front of their eyeballs and thereby eliminating any excuse for not knowing. Think of it as an ad, and have the rate it is displayed follow a fibonacci sequence if need be.
    Just a thought.

  225. lflantheman

    I may sell 10 more of the 20 AAjPL calls before close, at market, if near 54

  226. Phil

    BNO (Brent oil) March $88 calls can be sold for $2.20 and that pays for the April $87 puts – a ballsy way to short oil!  

  227. Inkarri1982

    ZH just reporting that Saudi official saying report is untrue.

  228. rdn4evr

    Anyone know why Lulu is up almost 6% today?  I'm not even short it.

  229. Phil

    Capacity/DC – LNG is a total joke.  Last summer, they had to PAY commercial consumers to pull gas out of the pipelines in Europe as they were over their storage capacity.  As we know, the Nat gas numbers in the US are AFTER CHK shut down 10% of US production.  As to oil, the US is now a net exporter of crude – who is it that using all this oil?  Oh, right – CHINA!!!  

    Rules/Kwan – That's  in the New Member Guide which we direct people to in the Intro EMail.  Generally it's fine but when I call for a profit to be taken at .95 and people are still sitting on it at .70 – I'm not sure if a link is going to help…

    Untrue/Ink – No way!  That is just ristickulous!  

  230. scottmi

    LULU/rdn – "I'm not even short it."   LMAO!

  231. rainman

    yodi  — I don't know if you can copy the spreadsheets directly. I doubt it with google since they are still pretty primative. Excel use to be compatible with lotus long ago but it doesn't appear to be the case any more. Excel can read and write "OpenDocument" spreadsheets, if Lotus can write them, you might be able to use that format for a conversion.

  232. Phil

    LULU/Rdn – Just a Momo catch up day although retail sales were good and I guess LULU is a retailer, albeit specialty.  

    February retail sales far outpaced expectations across the board, with the 18 retailers reporting results posting 6.4% Y/Y growth, vs. 4.8% consensus. Gap (GPS +7.8%) shook off its long slide to post 4% growth in same-store sales. Kroger (KR +2.2%) beat estimates and offered a strong 2012 outlook. Target (TGT -0.4%) same-store sales grew 7%, but it didn't raise guidance. 

    Of course Feb had an extra day and 1/28 = 3.5% but shhhhhhhhhh…..  

     

  233. yodi

    rainman
    I have been using Lotus for a long time do use excel for certain applications but prefer lotus However still Excel is only on one computer and I do not see how you can open it via the internet at an other computer??

  234. lflantheman

    stj….we go overnight with 20 of the April 500 calls.  I will be placing some high-priced sell orders on at least 10 of these before open in the am.  I noted a very early pop on AAPL at open today that I did not expect and had not prepared for by placing some standing sell orders.  The options popped over 57, then dropped rapidly as the stock dropped back into a more 'normal' range.  As Phil has mentioned before, you can place some ridiculous buy (low) and sell (high) orders on options and sometimes an unusual dip or spike will get you a fill at a very good price.  Never hurts to have some standing orders like this.  

  235. chasw

    Iflan, I have been following you on papermoney and want to start getting into real trading with you. I really appreciate your detailing of your strategy and moves. However, I don't yet understand on a $50,000 portfolio, how can you buy 10, 20, 40 contracts at a time when the basic stock price is $500. Thanks for taking the question.

  236. barfinger

    I wasnt paying close attention when AGNC took off recently. I covered my long with jan13 30s, and as of today, there is zero premium left. Any suggestions?

  237. williex

    yodi/rainman
     
    take a look at open office I know it works with excel and probably lotus also

  238. rainman

    yodi — there are only two ways. 1) move the file out to cloud storage (and possibly convert to excel or google docs) or 2) remotely access the computer across the net using something like Remote Desktop. There are likely to be complications either way based on your needs.

  239. scottmi

    Phil, Roro – any thoughts on the USD/JPY pair?

  240. palotay

    It looks like the pipeline story is BS. The picture they are running of the explosion is during the day, when it is definitely the middle of the night in Saudi Arabia. I wish I added to my shorts on that spike.

  241. yodi

    williex
    Thanks I will play with it

  242. stjeanluc

    Portfolios / Phil – I have another solution to track the 25KP portfolio that might alleviate our frustration and actually add some educational value. It involves changing the way we track the trades, but I think that we have reached the point now. What I propose is the following:

    1. I will enter the trades that you propose daily and in a timely manner.
    2. Instead of tracking exit, I will add columns calculating a 25, 50, 75 and 100% profits as well as 25 and 50% losses and if you suggest DD or not. We can play with these numbers and rules. I will take BCS calculations into account.
    3. I will not track the exits but mark on the spreadsheet using colors if the targets were reached at any time on either side.

    This way, whoever wants to check the portfolio can adjust their returns based on their greed and pain threshold. It's not ideal but you and I don't have to worry about tracking exits. That should not stop us from making suggestions or answering questions, but would simplify tracking.

    If that makes sense to you and members, I'll change the spreadsheet over the weekend and start using that system on Monday. If anyone has better ideas, I am open to suggestions, I just want to lower the frustration levels….

    The Money portfolios can stay as is since they usually involve a couple of trades a week anyway.

  243. pat_swap

    Hi,
    Is there a way to get a RSS feed for updated on this page? I guess this has been discussed before but I missed it.
    Thanks,

  244. stjeanluc

  245. Phil

    At the close: Dow +0.22% to 12981. S&P +0.63% to 1374. Nasdaq +0.7% to 2988.

    Treasurys: 30-year -0.87%. 10-yr -0.34%. 5-yr -0.1%.

    Commodities: Crude +1.92% to $109.13. Gold +0.38% to $1717.75.

    Currencies: Euro -0.12% vs. dollar. Yen -0.04%. Pound -0.2%.

    11:46 AM European shares close sharply higher, returning to levels they were at just ahead of the Greek bailout approval last Monday. Stoxx 50 +1.4%, Germany +1.2%, France +1.4%, Italy +2.9%, Spain+0.9%, U.K. +1%. Euro flat at $1.3331.

    Market recap: Stocks pared early gains but stayed positive after a disappointing ISM report and news of a blast destroying oil pipelines in Saudi Arabia that sent oil futures past $110/barrel in electronic trading. Automakers and retailers reported mostly strong February sales. Treasury prices fell, pushing five-year yields to their highest level this year. NYSE gainers led losers nearly three to two.

    I'm not even going to use red anymore – all news is good news, no matter how bad: Jan. Construction Spending: -0.1% to $827B/year vs. consensus +1%, +1.4% in December (revised from +1.5%). Firstly monthly drop since July. +7.1% Y/Y. 

    February ISM Manufacturing Index: 52.4 vs. 54.6 expected (54.1 previous). New orders 54.9 (57.6 previous), Production 55.3 (55.7), Employment 53.2 (54.3), Prices 61.5 (55.5), Supplier Deliveries 49.0 (53.6). - Yawn.

    Greece February PMI dives to 37.7 (previous 41), the lowest-ever read (survey began in 1999). Some respondents report vendors are demanding cash payment for supplies as access to working capital declines. "Rapid declines in output and sales (mean) further cuts to payroll numbers, which fell at a marked and accelerated pace in February." - Yawn

    Here's why we can ignore this bad data:  Although the ISM disappointed, some economists aren't too perturbed. TD Securities: "The underlying guts of the ISM were not as bad as the headline might suggest." Deutsche: "The factory sector continues to expand at a healthy pace." RBS: today's economic figures "suggest that the acceleration in activity remains persistent but restrained." 

    See, we haven't missed a thing so far:  The S&P could reach 1,700 by year's end should economic growth surprise investors the same way falling bond rates did in 1995, Laszlo Birinyi says. “In 1995, the consensus trade was higher yields, today it is tepid economic growth and the market is suggesting – perhaps insisting – an alternative to that consensus," he says, encouraging an "aggressive" investment posture. 

    The S&P has hit four-year highs, but UBS analyst Jonathan Golub argues the rally is just in its infancy. His new end-of-year S&P target is 1,475, up from 1,325, citing at least four emerging trends which should support stronger corporate profits: better U.S. economic data, less severe results in Europe, higher oil prices ("a positive at current levels"), reduced financial sector stress. 

    Of the 180 S&P 500 firms that have raised dividends by more than 9% over the past year, just half have outperformed the index, which is up 5%. A look at the top 20 companies with some of the largest increases in dividends highlights the almost total lack of correlation between payouts and share price performance. 

    "If you have a basket of high-quality stocks that can generate cash flow in whatever the outliers of the economy…that’s how you increase wealth," CEO Mario Gabelli tells CNBC. "It’s not a very complicated story."

    In a classic case of bad news must follow good news, BlackRock notes that a healthy couple aged 65 in the U.S. has a 50% chance that at least one of them will live to the age of 92 and a 25% chance that one of them will reach 97. While it's great that the Grim Reaper is slower to pay a visit, it begs the question of whether the classic retirement withdrawal rate guidelines will still work?

    Nearly 28% of U.S. homes (13.6M) had negative or near-negative equity at year's end, reports CoreLogic, compared to 27.1% previously. The firm calculates more than 22M borrowers may be eligible to refinance under the new HARP, which allows LTVs up to 125%. 

    The Bank of Israel begins a pilot program, investing a portion of its fx reserves in U.S. equities, with the goal of ultimately putting 10% of its stash (currently $77B) in U.S. equity index trackers. UBS and BlackRock ("Be 100% in equities") will manage the funds. - They should buy Defense contractors and start a war!

    Eurozone finmins approve the cash necessary for Greece's bond swap and to keep the banks open, but hold up aid intended to go to the Greek government. Only a successful bond swap and satisfactory progress on the country's austerity measures will see the release of cash to the government. (PR)

    Lou Basenese says its almost the last call for buying into Vietnam before it's too late. As the lowest cost center for manufacturing in Asia, Vietnam will continue to land plush jobs from U.S. and Chinese companies. A youngish population and inflation that's starting to come under control also favors the potential for strong investment returns. The Market Vectors Vietnam ETF VNM gives investors broad exposure to Vietnamese companies. 

    Japan is in talks to buy exported U.S. liquefied natural gasfrom companies including Sempra (SRE), Dominion (D) and Freeport McMoran (FCX), Bloomberg reports, citing comments from an official at Japan's trade ministry. Japan needs LNG after last March's earthquake rendered 52 of its 54 nuclear reactors inoperable. Cheniere Energy (LNG +8.8%) surges, even though it isn't mentionedin the report.

    A trading halt can't stop the freefall of Houston American Energy (HUSA -30.1%) after the company admits it had to cap one of its wells unexpectedly. Shares hit a multi-year low in intraday trading.

    The report about an attack on a Saudi pipeline is untrue, claim Saudi oil officials. "They originated from Facebook and Twitter and the pipeline is still up and running." A screenshot from PressTV says differently. Oil remains higher, but far below its initial spike. WTI crude (USO+1.7% at $108.92. Brent crude (BNO+3% to $126.35.

    A check of the precious metals finds them gaining back just a bit of yesterday's dive. Gold +0.3% to $1,717, silver +1.8% to $35.35. On the industrial side, copper is gearing up for another run at $4/lb., a level it hasn't hit since SeptemberJJC +1.5%.

  246. Phil


    Gambling revenue in Macau 
    jumped 22.3% Y/Y in February, topping $3B, as players from mainland China continued to fuel solid growth, though not at the blistering pace recorded last year. Casinos with Macau exposure rally: WYNN +2.9%MPEL +3.1%LVS+2.3%

    Told you so:  With James Murdoch out of the way, speculation is growing that News Corp. (NWSNWSA) will spin off its publishing arm. Wells Fargo estimates the business, which includes Dow Jones, Barron's, and the WSJ, would be worth $5.4B as a standalone business, even if no value is assigned to its scandal-ridden U.K. papers.

    I'm sure we can all relate to this problem:  Sotheby's (BID -10.4%) shares sink after Q4 profit slumped 26%; CFO William Sheridan blames Europe: “If you have a Picasso and you’re concerned with what’s going on in Europe, you may just say, ‘Let me wait 12 months until I see some stability there.'" But there was also narrowing margins from commissions due to “competitive pressures to win high value consignments." 

    Lululemon Athletica (LULU +4.3%) is making new highs thanks to a bullish Stifel note, which claims in-store and online checks indicate Lululemon is showing positive momentum going into Spring. In particular, Stifel is encouraged by the "positive consumer response" to new products, minimal clearance activity, and the successful revamp of Lululemon's online store. Lulelemon reports earnings on March 16. 

    Rumors of a new Top Gun movie starring Tom Cruise as a pilot of a Lockheed Martin (LMT -0.3%) F-35 puzzles Gizmodo given the context of the fighter jet's long history of delays and problems. "What will Tom Cruise do? Stand on a runway, staring at his grounded F-35?"

    After losing 28K subscribers in Q3, U.S. pay-TV providersadded 241K subs in Q4, estimates Bernstein. While cable providers lost 318K TV subs (an improvement from Q3's 547K loss), this was more than offset by respective gains of 147K and 412K for satellite and telco providers. The data suggests "cord-cutting" remains a limited phenomenon for the time being, in spite of growing content costs. (also)

    Although no one was expecting Steve Wozniak to make a bearish call on Apple (AAPL +0.1%), the Woz shows he's onboard with current management by calling for a $1,000 share price and noting that he still sees large room for growth for the company that started in his partner's family garage. 

    In addition to reporting of iPad 3 supply-chain issues, Digitimes claims Apple (AAPL) will introduce an 8GB iPad 2 in the $349-$399 price range in tandem with its iPad 3 launch. Meanwhile,another rumor claims a 7.85-inch iPad will arrive in Q3 or later, and at a price of $249-$299. Speculation about the arrival of a smaller iPad has run high (III) since the release of the $199 Kindle Fire (AMZN).

    Doug Kass says he has taken up a "small short position" in Apple (AAPL -0.3%) given that the stock is “trading at an historic premium to any of its moving averages” (Tiernan Ray of Barron'sprovides the numbers) and shares displayed weakness after disappointing ISM results. Kass was on CNBC last night with more of his short selling ideas

    Three lunchtime reads:

    1) ECB's Draghi raises the stakes with €1T gamble

    2) The recovery: false starts

    3) Will Fed push oil to $200 a barrel?

  247. pakdog

    Apparently the pipeline "explosion" is a fire a kilometer away from the actual pipeline. There's also some blather about oppressed tribesmen or something and the US needing to pressure the Saudis to deal with it. I don't normally say this, but WTF?? From the link dropped earlier by dclark41.
     
    "A pipeline between Awamiya and Safwa has been reportedly targeted, and is under fire; the Saudi government sources were quick to claim that the fire is one kilometer away from the pipeline."

     
    http://www.thearabdigest.com/2012/03/saudi-arabias-eastern-revolution.html

  248. Phil

    I like that idea StJ – As long as it's not too much hassle for you, let's give it a try.  

  249. stjeanluc

  250. flipspiceland

    @Iflantheman
    re: Start Profit
    Then I would like to take credit for coining the phrases, "Start Loss" and "Stop Profit", for those trades made that resulted in same.
    F'r  instance, you would execute a, "Start Loss", transaction when you have a monstrous recognized gain in AAPL by 12/31, (which all of yours would be because you are buying and selling within a few hours or day) and have, in another security, a sizeable loss that has very little likelihood of redeeming itself within the 30 day' wash sale' rule.  This would reduce your capital gain taxes (shhh…..don't tell Felipe..) .

  251. stjeanluc

    Portfolio / Phil – I'll see this weekend if it's a problem and we can adjust Monday, but can't be much more of a hassle than what I do now… And that will leave people to make choices instead of being guided along!

  252. stjeanluc

    I have meant to post this article, but Dylan is talking about that now…

    http://www.bloomberg.com/news/2012-02-27/wealthier-people-more-likely-than-poorer-to-lie-or-cheat-researchers-find.html

     

    The “upper class,” as defined by the study, were more likely to break the law while driving, take candy from children, lie in negotiation, cheat to raise their odds of winning a prize and endorse unethical behavior at work, the research found. The solution, Piff said, is to find a way to increase empathy among wealthier people.

    “It’s not that the rich are innately bad, but as you rise in the ranks — whether as a person or a nonhuman primate — you become more self-focused,” Piff said. “You can change that by reminding upper-class people of the needs of others. That may not be their default, but have them do it is sufficient to increase their patterns of altruistic behavior.”

    That goes along with the post I had last week on getting rich changes you! It seems that there are proofs now.

  253. Inkarri1982

    So I take it blue is the new red. 

  254. scottmi

    Proof/Stj – or does it just mean that lying, cheating and stealing actually pays…? Seems to work for Congressmen.

  255. diamond

    chasw – lflantheman's AAPl 50K Portfolio started out as 50K on 12/6/11, but now has grown to (at least) 225K (175K profit + 50K start) … that is how can he can buy 10, 20, 40 contracts at a time.

  256. lflantheman

    Burrben…..from your earlier question 1:26 post.  Nothing fancy.   I trade mostly on TDA.  Their charts are decent and I look at the 10 day, 5 day, 1 hour  candlesticks.  I look for trends, but don't often overlay with moving averages or other derivatives.   Because I'm so familiar with this stock the price trends over time are pretty much burned into my brain, but I note particularly the 5 to 10 day trend.  I study the overall market trends several times daily, because if the overall market moves up or reverses AAPL usually follows (or leads), but not always.  I read as much news as I can find (in the time I have available to me) on AAPL.  A lot of it is crap, but some is useful.   I read what Phil has to say about the markets, and about AAPL, but I don't allow any other trader (not even Phil!) to influence my AAPL trading decisions much.  Many seem confused as they watch me trade this stock, which tells me that my trading techniques are somewhat unique, or out of the ordinary.  Perhaps, but it works for me.  Hope that helps.
    chasw….4:13 post.    Well, I just buy and sell them.  The options I'm using right now are the April 500s, and the portfolio is no longer 50k, but more like 225k, so I have to choose options that are expensive in order to keep trading costs lower, because one of the ways I make money on AAPL is by swing trading, my definition of which is buying options, then selling them when they "swing" to profit.  So if I need to move 25k or 50k in and out the market at a time, then I have to use expensive options.  Otherwise I'd be spending thousands of dollars just to trade.  Right now the April 500s are about $50 per option, so I can buy just 10 for 50k.  I don't expect most others following my trades to be moving these amounts around (yet….but keep trading AAPL and maybe!) so they can work in percentages of what I'm using for the trades.  Buy one option , or two, instead of 10 or 20, and so on.   Hope that answers your question.

  257. stardawg

    Stjeanluc……think dylans article is similar to reciprocal altruism….which can be distorted into pointing out as people need other people less, reciprocity ends.  Hence, when the rich get richer it is our nature not to help others or compound our generosity…its simply in our DNA……(sad i know)

  258. chasw

    Iflan/diamond, Thanks for answering, just looking for confirmation.

  259. pstas

    http://blogs.barrons.com/techtraderdaily/2012/03/01/apple-kass-says-short-as-it-escapes-the-averages/?mod=BOLBlog

    Doug Kass of Seabreeze Partners Management this morning advised investors that he has taken up a “small short position” in Apple (AAPL) stock given that it is “trading at an historic premium to any of its moving averages.”
    With Apple shares up 14 cents at $542.58 this morning, the stock is above the 30-day average of $477.48, the 50-day average of $450, and the 100-day average of $420.72.
    Kass a short while later tweeted he was shorting more of the PowerShares QQQ Trust as Apple seemed to display weakness after the Institute for Supply Chain Management published its “Report on Business” for the Month of February, showing a reading of 52.4 versus economists’ expectation for a 54.6 reading.

  260. Kwan

    RSS/Atom feed for this page's comments - feed://www.philstockworld.com/2012/03/01/threatening-thursday-grantham-goes-marxist/feed/atom/
    You can add /feed/atom to end of the post url to get a link to the rss feed of the comments for a day's post. 

  261. stjeanluc

    Sad indeed Stardawg!

  262. sagemm1

    looks like the oil pipeline explosion rumors were false, anyone want to bet we we do not drop to where we beagn the day. I have noticed rumors that move a market seem to maintain the market in favor of the direction of the rumor…my 2 cents

  263. pakdog

    sage – I'm guessing one reason it holds on is it's tough for the bagholders who bought during the frenzy to let go.

  264. ronresnick

    Joe Walsh / Phil
    Joe lives two houses away from me.  He has visited a couple of times because we have a hobby in common — amateur radio.  He is extremely nice, down-to-earth, reliable and humble.  I think he is happy without the drugs. 

  265. zeroxzero

    RonR:  Joe Walsh?  Damn.  I've got the last Crossroads show CDs, he did a great set, I'd love to know what boxes/set up he hooks up to his equipment.  With or without the drugs or the Eagles, great player.   Love to see his guitar collection.  I've got one, but not likely in the same league.  Did hang onto a '59 Strat that has the tone, though – - not all of 'em do.   I asked a luthier about that once, and he told me "the average wood used today is superior — back in the day, quality was widely dispersed.  But today's wood has less variation in quality, back then you would occasionally get an amazing piece, a function of that dispersion."  I lucked into one that does, off of Ebay @ 2002, the Holy Grail of Strats, slab rosewood, the whole deal.  I'll bet he has one at least as good, in what must be a dream team collection.

  266. kinkistyle

    Blue/Ink:  Thats what happens when you take the blue pill.  Everything is SO much nicer.

  267. lionel

    Shorting oil futures at 108 with dollar rising
     

  268. lionel

    Dollar being sold/ oil rising and out with a small loss

  269. lionel

    Same conditions, dollar rising and off $108

  270. exec

    Well…..I've been gone for 10 days and I see nothing much has changed. 
     
    The rising channel is still in tact for most of the index's.  They've been bouncing off the 10 DMA like it's an impervious force field.
     
    BTFD's still the flavor of the day.  I'd imagine they'll spike the RUT to get it back in line shortly.

  271. lionel

    Oil/
    6:24 AM Oil futures are -0.7% as the market buys a Saudi denial of reported pipeline explosion in its Eastern province, which SEB strategist Filip Petersson described as a "very successful scam" by the Iranians. "They want higher oil prices to compensate for lost export barrels and are obviously using various means to achieve it."
    Ohh it was an "Iranian' scam!
    So we should be back to where we were then … below $107 and with a dollar stronger today may be even lower…

  272. pakdog

    lionel – Looks like you're not buying their story?

  273. pakdog

    …And there it goes!

  274. lionel

    Pakdog/
    No I am not.
    I am outraged by the rubbish US financial media spit out every day.
    Now, I made 30c on the trade just because I was saved by poor German retail sales data.
    Oil is well "defended' by our "Iranian" friends :)

  275. pakdog

    Amazing how easy it is to spook the oil market.  The picture I saw of the "Explosion!" looked like a brush fire with no pipeline anywhere in sight.

  276. lionel

    Mate, I swap teams and go with the flow.
    Buying oil now below 108 looking for 30 c up

  277. Phil

    Good morning!

    Lost my morning commentary as my computer decided to freak out but better now that I turned my trusty baseball bat on it.  Side effect is – now it's bullish!  

    Anyway, short story is BOJ said they would expand messing around with Dollar and Dollar is 79.34 so it's amazing we aren't down more this morning but I think we will be if the Dollar stays up as we were 78.80 yesterday so it's a 1% gain.  

    Oil right on $108 line, Gold $1,715 so both of those should fail if the Dollar stays over 79.25 and our indexes are already down 0.25% but could do much worse with little prodding.  

    On to new post…

  278. Burrben

    Phil / WordPress
    If you are writing you post in the WordPress blog editor, and not our little "comment" box, WordPress will save a copy of the post every minute.  So you can just revert back to the Autosave.
    FWIW, I stopped writing in the comment box.  I now write in a editor with autosave, and copy/paste into the comment box.

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