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Fake News Friday – What A Fool Believes

Oil shot up  to $110.55 yesterday.

The news was that a pipeline in Saudi Arabia had been attacked and oil had been running up all day into this "news," which, funnily enough, turned out to be fake.  We caught the news at 3:05 in Member Chat (thanks Kustomz) and we had been waiting for oil to stop going up so we could short it.  The turn came at the $110.50 in the Futures (/CL) and we caught a nice run down to $109 and I reiterated, at 3:36, with oil still at $109.88 my love for the USO April $40 puts, which were $1.08 at the time and finished the day at $1.15.

As Malsg pointed out in Member Chat: "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."  A very good observation that gave us the resolve to stay short on oil – which is working out fantastically this morning as well. 

We also grabbed an aggressive short spread on BNO, as it seemed the whole day's run had been BS, with traders in the know stocking up ahead of the fake news so they could unload barrels into the retail suckers who bought into the spike.  Don't worry though – no one who bought oil up from $105 on Thursday to $109 ahead of the news will be arrested or even questioned – we'll just keep pretending the total farce of oil trading is a legitimate pricing mechanism, even though it costs people around the world hundreds of Billions of Dollars each year in excess charges (see "Goldman's Global Oil Scam Passes the 50 Madoff Mark").  

SPY DAILY Now, this is the part where I would usually point out how the economy is weaker than we think etc. but I'm not going to do that this morning because the S&P still over 1,360 and, if a stronger Dollar isn't going to stop this rally – nothing will.  Even yesterday, I joked to Members that I wasn't going to highlight negative news items in red anymore as there was no such thing as bad news in this market.  

As you can see from David Fry's SPY chart, we''re back testing the bottom of that channel today and, if we don't break down here, then we can go another week at least on the bull run.  Just last Friday I was pretty sure we'd break under and we didn't and, as Dave says – it's just like 1999 – but 1999 was a great year to be in the markets, it was 2000 that sucked.  

Last Wednesday we poked over 1,360 and I laid out 10 trade ideas with the goal of adding "one more bullish trade each day that we're over the line" as 1,360 and our other Big Chart lines made for excellent signals to take profits off the table.  Before we buy, we hedge, of course and our two hedge plays were:

  • SQQQ April $13/17 bull call spread at .70, now .50 – down 28%
  • DXD April $13/15 bull call spread at .55, now .50 – down 10%

As I pointed out in the post, both of these hedges have strong upsides on their own and don't NEED bullish offsets but I did suggest the AAPL 2014 $300 puts (selling to raise cash), which are still $15, despite the fact that there are now 2,300 open contracts ($3.45M) – that funds a lot of bearish spreads!  Another offset for DXD was the FDX April $80 puts at $1.10, those are down to .75 already (up 32%) and would have completely offset the loss of either hedge so far.  T was another 2014 offset with the $25 puts sold for $2.15 and those are still $2.15 as we don't get much movement out of 2-year options.  Our last offset was SKX, with the Oct $12 puts selling for $1.55 – the same price they are now.  

So you can get better prices for the spreads and 3 of our 4 bullish offsets are the same price as last week – that's pretty good for a start.  Now let's see how our 10 bullish trade ideas are looking after 7 trading days (see original post for logic on each trade):  

  • SKX Oct $10/14 bull call spread at $2.20, selling $12 puts for $1.55 for net .65 – still .65
  • SU 2014 $25/37 bull call spread at $6, selling XOM 2014 $65 puts for $5 for net $1, now $1.86 – up 86%
  • USO June $40/46 bull call spread at $2, selling SCO Oct $26 puts for $3 for net $1 credit, now .82 credit – up 18%.  I like this one because you are long and short oil at the same time.  
  • AA 2014 $10 puts sold for $2, still $2 – even
  • X Jan $25/2014 $20 buy write at $17.04/18.52, now $17.57 – up 3%
  • PEG Sept $30 buy/write at $27.07/28.53, now $27.20 – up 1%
  • HOV 2014 $2 puts sold for .90, now .85 – up 5%
  • BAC 2014 $3/7 bull call spread at $2.75, selling $10 puts for $3.30 for net .55 credit, not .35 credit – up 36%.  36% seems like a lot but it's just .20 out of $5.10 (927%) of potential gains so still very playable.  
  • HCBK Jan $7 buy/write at $5.14/6.07, now $5.23 – up 2%
  • FTR 2014 $5 buy/write at $2.43/3.71, now $2.50 – up 3%

Not much was missed so far if you didn't participate.  "Unfortunately" nothing got cheaper, other than our hedges and, as expected, only our energy plays did much in the past week as we're still at the same top we were iffy about at the time.  Still – we're over our mark on the S&P and especially if the Dow is over 13,000 and for sure if the Nas breaks over 3,000, we'd BETTER have bullish plays in our portfolio and these are my 10 favorites for a breakout.   

Of course, during chat in the past week, we put up another 20 bullish trade ideas and we'll continue to do so whenever there is a good opportunity – these just make a good benchmark list we can keep an eye on but clearly, so far, there has been nothing wrong with remaining cashy and cautious as we test these major range-tops.  

IWM WEEKLYI am most worried about the Russell, as they have shown weakness this week and we've had some horrific dips that sure don't make it look like there's a whole lot of support above that 775 line. Also, on Dave's chart, you can see RSI and MACD curving over – that's not usually a good sign either but I'm not much of a Technical guy, just an old-fashioned Fundamentalist who thinks things are horribly overvalued at the moment but clearly, like 1999, the Fundamentals are out the window for now so we'll run with the herd and play the technicals until they fail us and THEN we'll party like it's January 2000 – or October 2008…

If you want reasons to be cautious, I'm not going to give them to you (been working hard to get myself more bullish) but there's a great presentation by Jason Leach of Cravens Brothers called "Sleepwalking Toward a Precipice" that gives a great overview of where we are and how we got here.  

Even now, oil just spiked back to our shorting spot at $108.50 (as noted most recently in yesterday's post) on another ridiculous spike up from $107.60 and that's one bearish bet we will keep making.  Our other bearish note going into the weekend is that, once again, our Treasury has another $140Bn worth of debt to pawn off next week in 4 days worth of auctions and we already got another nice entry on TLT, as they tested $115.50 yesterday – as that has probably been the easiest money of the year so far – betting TLT to go up when we're selling our notes.  

"Paper Promises" Next week, now that Greece is fixed, we should be hearing more about Spain, who are missing their 2012 budget goals by a mile, with a 5.8% deficit now forecast this year and -1.7% GDP projected to go with their now 23% unemployment.  Phil Coggan is not worried about Spain – well, not when "the entire European Ponzi scheme is running out of suckers" and if you need to get gloomy this weekend – try his new book "Paper Promises."  

“The massive debts accumulated over the last 40 years can’t be paid in full, and they won’t be paid,” Coggan says. “The debt crises of Greece, Ireland and Portugal are just the start.”

Coggan, the Economist’s Buttonwood columnist, is too levelheaded to predict a financial Armageddon. He does foresee a tipping point as wrenching as the collapse of Lehman Brothers Holdings Inc. (LEHMQ), complete with plunging markets, plummeting industrial output and corporate bankruptcies. No wonder it has taken $1 trillion in cheap money from the European Central Bank to get lenders to buy Italian and Spanish debt. 

Have a great weekend, 

- Phil


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  1. stjeanluc

    That fake news oil spike is doing some damage to the lines…

    R3 – 114.52
    R2 – 112.52
    R1 – 110.52
    PP – 108.53
    S1 – 106.52
    S2 – 104.53
    S3 – 102.52

    Yesterday's high and low – 110.55 / 106.55

    Seems that the 0.50 lines are in play!

  2. stjeanluc

    Gold lines

    R3 – 1756
    R2 – 1741
    R1 – 1732
    PP – 1717
    S1 – 1708
    S2 – 1693
    S3 – 1683

    Dollar lines

    R3 – 79.38 (we are here now so be careful)
    R2 – 79.18
    R1 – 79.07
    PP – 78.88
    S1 – 18.77
    S2 – 78.57
    S3 – 78.46

  3. stjeanluc

    Someone is super bullish on Microsoft:

    http://dragonflycap.com/2012/03/01/microsoft-to-58-was-not-a-typo-but-it-was-wrong-too-low/

    There are some positive things over the next couple of years – new version of Windows, tablets, a new Xbox. That might be driving revenues aggressively. Now, if Ballmer could also retire, who knows…

  4. flipspiceland

    @Felipe
    re: AAPL put
    Couldn't spot the 2014 Put on AAPL in yesterday's stream.
    As a  hedge, you are suggesting BUYING the 2014 300 puts?

  5. stjeanluc

    Interesting trade deconstruction – how to trade an opening gap down (on AAPL)

    http://bclund.com/2012/03/01/deconstructing-a-trade-buying-a-down-open-raising-stops/

  6. diamond

    (Interesting Charts)
    Up January and February is Bullish Omen for $DJIA, $SPX, $COMPQ, $RUT – Stock Trader's Almanac Blog

  7. Burrben

    LFlantheman  -  Thanks for the comments yesterday night.  My internet just came back online.

  8. stjeanluc

  9. Pharmboy

    PP for today:

  10. jmm1951

    stjean/MSFT
     
    MSFT could be the new AAPL? I have been trading it in very much the same manner as Lflantheman with AAPL, only making a fraction of the money, but with a lot less volatility, of course. I like to hold the January '13 $20s, which have almost no premium and cover them on peaks and uncover again on troughs. As I've said before, a lot of people whine about MSFT as a stock that has gone nowhere for years, but if you can find a stock that is 100% guaranteed not to go down (much) , then untold wealth is yours. Of course there is no such stock, but MSFT might be a contender.

  11. Kwan

    Phil, following up on Burr's post in the other thread on lost comments – if you are using our editor there's a plugin for the editor we use to post comments (CKEditor) that will autosave your text. It has multiple autosave options. Have Matt look into it as it's silly for any of you to be losing (still) entire posts.

  12. flipspiceland

     @Felipe
    Nevermind just found it. 

  13. lflantheman

    stjeanluc, thank you for posting that excellent video.    Members trading AAPL…this post of stj at 8:47 is a must read for all of you trading this stock.  This is how you do it.   He describes moving into AAPL at a pullback, and as the stock goes up placing trailing stops and taking partial profitsThis is exactly how you do it.  This is required reading for any and all of you wanting to maximize your trading profits on AAPL.  

  14. Burrben

    Anyone see this?
     
     
    The Credit Card for the .001%
    The card itself is actually made with palladium and 23-karat gold — reportedly putting its cost in materials alone at about $1,000 — giving it real heft when you hold it in your hand. 
    http://www.bloomberg.com/news/2012-02-29/the-credit-card-for-the-1-percent-of-the-1-percent-the-ticker.html

  15. JRW III

    Good morning, still nothing new

     

    IWM    79.80, 80.17, 80.46,  80.76,  81.06,  81.26,  81.41,  81.69,  82.00,  82.41,  82.66,  82.86  and  83.12

  16. stjeanluc

    MSFT / Jmm – I know they always get knocked in comparison to AAPL, but that's a bad comparison. They do compare OK with INTC, CSCO or ORCL who make more appropriate comparisons. You won't get the $5 daily swing with them, but they do pay a dividend which puts a floor under the price, they still have a 90% share of the OS market, they are kicking butts with their gaming division and their search engine seems to be doing better (I don't use it). And they have piles of cash as well. What's not to like!

  17. Kwan

    jmm/MSFT – maybe it's worth conducting a similar experiment on MSFT like lflan's been doing on AAPL?
     
    I'm actually pretty impressed with the look of Windows 8, which is saying a lot from someone who switched 8-9 years ago. I remember even dismissing Apple's OS X circa 2001 because it looked too candy-like to me. I haven't spent the time playing with Windows 8 yet, but I agree at least on the surface it looks like Microsoft is at least trying again, and that may be enough to suggest the stock at least won't go down. (Which leaves us with two other options – trading flat or trading up.)

  18. stjeanluc

    MSFT / Kwan – And trading flat is good for whoever is selling options…

  19. stjeanluc

    Video / Lflan – Thanks for the post… What I also find interesting is how he uses the first 3 bars of the trading to guide his day as far as support and resistance are concerned. I want to check into it this weekend. I know that Tom DeMark has some ideas on that as well and I'll have to dig up his books again.

  20. Kwan

    stj – I've also started using Bing as my search engine on my phone because I've noticed google (sometimes) seems to redirect back to google when you click a link from their search results. I'm in places sometimes where the cell phone reception isn't great (AT&T) and that extra delay is enough to piss me off after a few searches!
     
    So no, Bing isn't a complete joke of a substitute for Google.

  21. stjeanluc

    The Short FAS 85 calls have to be rolled today. Also, the short puts are now over 80% profitable. Phil, would it make sense to roll them to a higher strike – for example, the Mar 90 puts can be sold for $2.00. The 85 puts (safer!) are over $1.00.

  22. stjeanluc

    This one has played out perfectly. The short TNA calls should expire worthless but have to be watched in case we get a late stick!

  23. lflantheman

    All 20 AAPL calls sold for 52.50. 

  24. stjeanluc

  25. stjeanluc

    Gee Lflan, great timing….

  26. lflantheman

    Don't like the looks of the morning.  In cash in the AAPL portfolio. 

  27. stjeanluc

    The DMND vertical sold for 0.65 is now worth $1.03 so up close to 60%. 

  28. stjeanluc

    Dollar has pushed above the R3 line that held for the last 3 hours.

  29. stjeanluc

    Lflan – Funny, but this morning is starting to look like the video I posted….

  30. Weasle

    bullet-proof Nas refusing to budge again

  31. jabobeast

    FU PCLN!!!

  32. Phil

    Good morning! 

    .50 lines/StJ – Yep, that's what I saw forming up the past few days.  See, you don't need those pivot points – you can "feel" the resistance if you pay attention.  By the way, that S1 line on the Dollar is a bitch of a drop!  ;)  

    MSFT/StJ – And they are another huge multi-index driver, almost as heavy as AAPL in tech indexes and, with a $270Bn market cap, no slouch in the major indexes either.  Getting rid of Ballmer would sure get me to buy – look how good AAPL's done since the got rid of Jobs…  

    AAPL/Flips – That was a bullish offset (sell the puts to raise cash to pay for bearish hedges).  

    Good video StJ.  

    Nice charts Diamond – does look like things are in our favor (technically).  Unfortunately, Fundamentally, I think we're in that 1931 mode – where all those stimulus gains vanished in a puff of smoke.  But, I am trying to stay bullish so – LOOKING GOOD!  

    Top 21 DJIA Starts

    Big Chart (well Medium Chart) – We got 813 back and now we need 8,259 on the NYSE to confirm we're back on track.  Dow 13,000 or S&P 3,000 should be good enough for us as well.  It's messy but it's certainly bullish.  

    MSFT/JMM – Just be aware that the only time the do reliably go down is when they are 10% over their 200 dma (like they are now).  If something happens that causes AAPL, MSFT and IBM to sell off – the indexes can lose 20% so fast your head will spin.  

    Plug-in/Kwan – Thanks.  My loss was comments today but I still wouldn't mind protecting my posts.  My computer just went nutty right before I was going to hit submit.  I wasted 1/2 hour trying to save the text but it was gone.  Too bad because I was very insightful..  ;)  

    Palladium Card/Burr – I already worry when I give my black card to waiters in foreign countries and they disappear for 10 minutes – how can you part with one that's actually made of gold?  I've never actually seen one, surprised it's been out for 3 years and no one I know has whipped one out…

    Dollar testing 79.50 – indexes and commodities performing as we expected so far but just 14M on the Dow at 10 is super-lame volume so can be very quickly reversed. 

  33. lflantheman

    stj…..the video demonstrated a rising stock price intraday, which I've not seen yet today.  I'm really hoping for an AAPL pullback today.  I'm thinking about how to play next week's EVENT.   I don't think holding long calls into this iPad announcement is the safest thing to be doing.  I'm considering selling weekly puts, perhaps in combination with some weekly bull call spreads.  If AAPL would come down today we could get into these nicely.  But cash right now seems safest.  It's Friday, the markets are weak, and AAPL seems weak at the moment. 

  34. stjeanluc

    I will be switching to a new format this weekend that will emphasize more the potential gains and how to pick exits as it is almost impossible for Phil or I to pick the ideal exit. So I'll be listing various target prices and indicate if they have been reached or not. It will be more educational we think as everybody's pain and greed threshold can get exercised! Which doesn't mean that it will be hands-off, but definitely less stressful. I'll try to post a sample spreadsheet this weekend for feedback.

  35. shadowfax

    Phil
    There is a new type of bug that gets into your internet program and I also have lost lots of work. 407 people and I have reported it. Sorry that is all I know and you can't open explorer or safari to delete it.

  36. scottmi

    NDAA – good article from Naomi Wolf on this tragedy.

  37. Phil

    FAS Money – March $85 calls now $8.60 and hopefully we get a sell-off next week but the roll is crap so let's go to March $87 calls, now $8.30 so we'll spend .50 to roll up $2.  Since we expect a sell-off next week and we bought ourselves a $1.50 cushion, let's buy bck the March $79 puts and keep that slot open for now.

    IWM Money – $58.78 on TNA means those short calls should be safe but let's put a stop at .25 in this crazy market.  I think we'd better sell a March $60 call for $2.50 just to make sure we collect some money in case we get a big drop and, if we go up, those can be rolled to 2x whatever next week.  

    $5KP – If TSL doesn't pick up next week, we'll have to move on.  Germany did keep solar subsidies higher than expected but no reaction from TSL really.  DMND is on track with 2 weeks left, we don't have a good reason to ditch it.  

    $25KP:  Oddly enough, I'm happy with the mix now.  Let's DD on GMCR $65 puts at $1.20.  I still think they crash if they can't break back over $70 but I don't have confidence to roll yet (only $1 to go to $67.50s but too close to expiration).  

  38. stjeanluc

    Dollar S1 / Phil – Sorry, I was reading from my 2020 dollar extrapolation chart! I have S1 for the Dow at 54,250 that day.

  39. pentaxon

    Don’t stop me now, I’m having such a good time…
    http://www.pentaxon.com/psw/spy_worldcurrency.html
    Phil: maybe we don’t have to go all the way back to 1931, I think 1987 will do it, as after a little crash inflation will do it’s magic job…

  40. jabobeast

    WHY CANT EDZ EVER GO UP???
     
    FU EDZ!!!

  41. diamond

    Phil – Trader chatter picks up that Green Mountain Coffee Roasters (GMCR +0.8%) could be in line to be added to the S&P 500 Index in March.  -- Seeking Alpha

  42. stjeanluc

    FAS Money – Rolling the FAS Mar1 85 calls (now 9.70) to the Mar 87 Calls (now 8.90). Buying back the 79 puts (now 0.51)

  43. stjeanluc

    IWM Money – Putting a stop at 0.25 on the TNA Mar1 61 Calls (now 0.15) and selling 1 TNA Mar 60 calls (now 2.70)

  44. shadowfax

    Phil
    I think the bug came through an Adobe Flash update. I uninstalled the flash player and restored system to before the problem. Fixed it!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  45. stjeanluc

    Yodi, looks like the FAS 92 calls still roll nicely to next week's 94! Or the Mar 97.

  46. stjeanluc

    EDZ is up 0.5% today Jabo….

  47. zeroxzero

    What do Palladium or Black AMEX cards do that green ones don't?  I've always had a green one, and never noticed a deficiency.

  48. lolobear

    I just bought April 77.50 calls on SINA.  Phil, any thougts on these? 

  49. yodi

    stjeanluc
    You on the ball rolled with a credit of .10

  50. yodi

    stjeanluc
     
    Sold only 1/2 the apples kept the rest for breakfast ??

  51. bobhu

    AAPL $270 guy is on CNBC again…lol

  52. stjeanluc

    SINA / Lolo – I see a resistance line around 77.50 for SINA and you are buying OTM calls with $5.00 of premium hoping that SINA is above $82.00 in 49 days. If you are bullish on them, why not sell the Apr 70 puts for $4.50. The 60 puts seem even safer and can be sold for over $1.50 against $6.00 or Reg-T margin. 

  53. kustomz

    Wow guy on CNBC HATES AAPL…

    Gold looks like it wants to run

  54. stjeanluc

    So much for sideline money…

  55. Phil

    At the open: Dow -0.08% to 12970. S&P -0.09% to 1373. Nasdaq -0.08% to 2986.6.

    Treasurys: 30-year +0.28%. 10-yr +0.11%. 5-yr +0.06%.

    Commodities: Crude -0.85% to $107.92. Gold -0.63% to $1711.35.

    Currencies: Euro -0.68% vs. dollar. Yen +0.64%. Pound +0.52%.

    10:00 AM On the hour: Dow -0.22%. 10-yr +0.26%. Euro -0.87% vs. dollar. Crude -1.39% to $107.33. Gold -0.61% to $1711.75. 

    Market preview: Wall Street looks headed for a weaker start, with the S&P -0.3%, reacting to weak European economic data. Crude oil futures are backing off yesterday's spike after reports of a Saudi pipeline explosion were said to be false. Sara Lee +4% after getting the nod for its coffee and tea spinoff. No major economic data scheduled for release. 

    5-year scorecard of investment returns on financial assets across the globe shows the top performers are precious metals and Brent crude. Not doing quite as well, but also solidly positive, are the sovereign obligations of the U.S., U.K., and Germany; something curious about that.

    ISM New York Report on Business: 63.1, up from January's 60.1. It's the fastest expansion for NYC business activity in 11 months.  Unfortunately, we topped out last April and fell 10%.

    Japanese January core CPI -0.1% Y/Y vs. -0.1% in December and -0.2% expected, with the decline being the fourth in a row. "The data reconfirm Japan’s deflation is deeply rooted," says JP Morgan economist Masamichi Adachi. "The Bank of Japan will probably have to act more aggressively going forward.

    Canadian real GDP rose 0.4% in Q4 (1% previous). An on annualized basis, the gain was 1.8% (4.2% previous). Both numbers are roughly inline with estimates. The loonie marginally cuts earlier losses against the greenback, now buying $1.0127.

    German retail sales unexpectedly slide 1.6% in January (+0.1% previous) against expectations for a gain of 0.5%. Sales rose 1.6% Y/Y. The euro -0.6% to $1.3235, with today's decline beginning right around the time of weak print.

    EU January PPI +0.7% M/M, higher than the +0.5% consensus and a notable jump from last month's -0.2%. On a Y/Y basis, PPI +3.7%, higher than the +3.5% consensus and down from +4.3% prior.

    Spanish unemployment keeps climbing, with jobless claims reaching 4.7M in February, a 2.4% increase from January and a sharp 9.6% jump from Feb. 2011. Meanwhile, EU officials insist Spain willget no leeway on its 4.4% budget target before May, but sources say Spain, due to outline its 2012 plan today, is working with a deficit target of 5.3-5.5%. 

    EU Finance Chiefs Give Greece $58Bn But Stock Fears Of Default After Delaying Bail-Out Decision.

    The official statement released as the EU summit breaks up contains the usual pablum "welcoming the progress" made on the Greek situation. Of most interest: "Euro area Heads of State … recall their determination to do whatever is necessary … and their readiness to act accordingly." For 2 years, many have questioned the commitment to EMU. Can anyone do so now?

    Germany will decide this month on whether to allow a boost in the European bailout fund – the so-called firewall – says finmin Schaeuble. Parliament is likely to approve the higher amount, he says, putting to rest theater of the last 2 weeks that Germany was ready to scuttle the Greek bailout over this issue.

    Twenty-five of 27 EU leaders sign the new EU fiscal treaty - ominously titled Treaty on stability, co-ordination and governance in the economic and monetary union - at today's summit. Left out were the U.K. and the Czech Republic. The treaty now goes to the various parliaments for their approval.

    ECB President Draghi has reportedly told EU leaders – congratulating themselves for turning the corner on the debt crisis – not to get complacent and not to expect another liquidity gusher from the central bank. "We've got 3 years to reform, otherwise things are going to get very complicated," says an official describing Draghi's remarks.

    Commercial banks parked a record €777B with the ECBovernight, getting a paltry 0.25% on the money and highlighting the continued lack of trust between European banks.

    U.S. Commercial Paper Falls to Lowest Level Since January 2011, Fed SaysThe market for corporate borrowing through U.S. commercial paper declined to the lowest level in more than a year as investors shunned short-term IOUs from financial institutions on investor concern that Europe’s fiscal strains will taint bank balance sheets globally

    Flush with LTRO funds, Italian banks are buying Italian debt, mostly from foreigners who continue to unload it. "I wouldn't know what to tell the shareholders if we increased our holdings," says the treasurer of one of Europe's largest lenders. "The LTRO cannot solve (this) problem," says JPMorgan's Pavan Wadhwa, who expects spiking yields by year's end.

    "Did you spot the clause in your bond documents that said that you were buying the subordinate tranche of the government bond market," asks Jim Leaviss, who says this new age of central banks owning so much sovereign debt means private holders of same have been knocked a notch down the claim chain; unintended consequences to follow.

    The aggregate current account deficit of the PIIGS has fallen to 4.3% of GDP at 2011 Q3's end vs. 10.9% in 2008 Q2, writes Simon Nixon, welcoming the rebalancing as headlines suggest only bad news. Some of the fall is due to collapsing economies (imports down), but a rise in Spanish exports shows companies adapting, and not just by slashing wages.

    In the Middle Of The Euro Crisis, These 12 EU Countries Sunk Even Further Into DebtDespite the fact that European countries have bailed out Greece and Ireland, and countries like Hungary were facing harsh criticism for not reducing their GDP to debt ratios, new data from Eurostat (pdf) shows that of the 27 countries in Europe, 21 had a higher ratio in the third Quarter of 2011 than the year before. The ratio also increased in both the euro area and the EU27 , compared with the third quarter of 2010. What chance do they have now?

    Spain will miss its 2012 budget deficit goal, says PM Rajoy, speaking in Brussels following the EU summit. He estimates the deficit/GDP ratio coming in at 5.8% vs. the 4.4% promised, even as EU leaders say it better not. The country also sees 2012 GDP growth of -1.7%, just a slight revision from the previous +2.3%.

    Japan's government will appoint two members to BoJ's nine-member board in the coming weeks, with a group of lawmakers pushing for replacements that will favor doubling the central bank's inflation target and stepping up asset purchases. The five-year terms of board members Seiji Nakamura and Hidetoshi Kamezaki end on April 4. 

    China's big 4 banks agree to measures to assist property developers and first-time home buyers, according to the PBOC. The ease is expected to be directed at low-margin and relatively cheaper projects in keeping with government policy to boost supply of affordable housing. Property stocks jumped 2.15% in Shangahi. TAO+26.6% YTD. 

    Standing firm on its decision not to relax property curbs, Beijing will "absolutely" not allow local authorities to "sing a different tune" on property control policies, reports the Shanghai Securities News, the newspaper associated with state-run Xinhua news agency.

    The shipping industry is going to face a "crisis" year in 2012, warns Andrew Broomhead, CFO of Hong Kong's largest operator of dry-bulk vessels Pacific Basin. The industry must grapple with a lack of funding, an oversupply of ships and freight rates so poor that the Baltic Dry Index is already -56% YTD.

    There's enough spare capacity to make up for any Iranian oil that's excluded from the markets because of sanctions, U.S. Energy Secretary Steven Chu said yesterday. That's despite EIA data that show it would be a close run thing. President Obama has until the end of the month to make a final determination on whether Chu is correct.

    Iron ore prices continue to climb, prices up more than 22% since October as supply growth slows down amid postponements of new mines and expansions. "The wall of additional iron-ore supply that investors have been fearing is going to be late," says an asset manager. VALE +19.5%BHP +9.4%RIO +17% YTD.

  56. Phil


    FU EDZ!
      A number of Chinese Internet stocks are spiking higher today, following a rally for the Shanghaiexchange. SINA +8.5%YOKU+5.3%RENN +8.6%TUDO +2.5%SOHU +4.6%.  PWRD +2.5%. (earlier)

    BRIC Investors Losing as State Companies Forgo Earnings Amid Slower Growth. Investors in the biggest state- controlled companies are being punished with the lowest valuations in six years by emerging-market leaders putting public services ahead of shareholder profits as economies slow.

    More on Yelp's IPO: As the company goes public, debate rages over its valuation, which now stands near $1.5B. Bulls point torapid growth, a giant user base, and popular mobile apps, while bears stress the company's sizable losses and competitive threats. Yelp's high sales & marketing expenses, and its rocky relationship with Google, are often cited as concerns. (S-1 filing)

    How Yelp's Business Works.

    Here's why GMCR turned up:  Trader chatter picks up that Green Mountain Coffee Roasters (GMCR +0.8%) could be in line to be added to the S&P 500 Index in March.

    More on the S&P 500 Index component guessing game (previous): Green Mountain Coffee Roasters is #1 on Barclays' list of top 5 potential new additions to the S&P 500 Index in March. Rounding out the tally of leading candidates (in order of likelihood): Monster Beverage (MNST +0.9%), Kansas City Southern (KSU-0.4%), Fossil (FOSL -1.0%), Ametek (AME +0.1%)

    Alcoa (AA -0.4%) opens lower after Nomura tags the stock at Neutral. AA and the aluminum industry face "structural challengesthat will take time to work through," the firm says, restraining margins "well below mid-cycle levels" as forex pressures, rising energy and labor costs, and declining volumes prevent any recovery in aluminum prices until later in 2012.

    Analysts at Maxim Group line up a Buy rating on Boeing (BA) on the strength of the prospects for its aerospace division. The firm's price target of $90 would provide welcome relief for investors of BA after seeing relatively subdued returns of +2.4% YTD and +3.9% over 52-weeks. Shares -0.1% premarket. 

    Though Tim Cook has downplayed Apple's (AAPL) content ambitions, the company wants to launch a streaming TV service by Christmas, says the New York Post. However, like others, the paper claims Apple is struggling to line up content providers, who aren't keen on Apple's insistence on an a la carte pricing. It's also claimed cable providers are balking at Apple's attempts to replace traditional set-tops with its own devices. (yesterday)

    The conventional wisdom is that next week's Apple (AAPL) product launch event will be all about the iPad 3, but Jefferies' Peter Misek is looking for "one or two surprises." Piqued by the "see and touch" reference, he thinks an iPad 3 with an HD screen, quad-core A6 processor and LTE modem is "almost certain," plus a possible upgrade of the Apple TV set-top box and even an iTV.

  57. stjeanluc

    This seemed to be an interesting concept…

    http://www.thetrader.se/2012/02/29/nassim-taleb%E2%80%99s-big-idea-transforming-debt-into-equity/

    The only solution is to transform debt into equity across all sectors, in an organised and systematic way. Instead of sending hate mail to near-insolvent homeowners, banks should reach out to borrowers and offer lower interest payments in exchange for equity. Instead of debt becoming “binary” – in default or not – it could take smoothly-varying prices and banks would not need to wait for foreclosures to take action. Banks would turn from “hopers”, hiding risks from themselves, into agents more engaged in economic activity. Hidden risks become visible; hopers become doers.

    Not sure how that play in the destruction game that most are playing profitably now…

  58. kramer36350

    Brazil declares new ‘currency war’
    http://www.ft.com/cms/s/0/76d1d4d0-63d0-11e1-8762-00144feabdc0.html#axzz1nyVcxUCA

  59. stjeanluc

    Spain news / Phil - The country also sees 2012 GDP growth of -1.7%, just a slight revision from the previous +2.3%.

    I project my income this year at $50,000, a slight revision from previous $500,000! LOL

  60. jthoma

    stjeanluc- sorry to hear of the miss- I may inadvertently miss this year also- LOL!

  61. diamond

    Phil – Non Sequitur :-)

  62. Weasle

    10AM swoon again?  Would that be 3 days in a row now?

  63. Burrben

    Phil, 
    If you don't mind, a question about the WMT trade you posted yesterday in answer to my 200K question.
    I understand buying the spread, since the 55 strike is below the 200dma, and probably a "safe" line in case of a market pullback.  If WMT is over 55, I stand to collect 15K, or 17.5% on a 85.5K investment.  This seems like a good trade and percentage return to me.  I like it..  But it looks like you are considering this a "bonus", where I would consider this a good core.  
     
    I'm wary though of selling a call so close to the stock price since we are in a technical "bull" market and all the shorts have just taken a beating.  I was wondering why you chose to sell calls instead of selling puts to finance the trade?  Selling calls seems a little too bearish to me, but what do I know…   
    The Trade:
    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.  

  64. stjeanluc

    Good one Diamond

    1bee0cf03f08012f2fd000163e41dd5b?width=900

  65. kustomz

    Man these guys must all be on the same page or there is an algo that controls everything 

    /ES check one minute chart 10:36 and 10:59 same exact volume and exactly the same level from top to bottom.

  66. kinkistyle

    Speaking of MSFT, check out this awesome new prototype of a "see-through" monitor desktop that is manipulated in the air a la "Minority Report".  So cool:
     
    http://thecreatorsproject.com/blog/microsoft-unveils-futuristic-see-through-3d-desktop-of-tomorrow

  67. scottmi

    Fake News Friday – Alien moon base spotted by China's Chang'e-2 orbiter? We report, you decide.

  68. deano

    Die oil – die die die!

  69. exec

    FWIW………..HS Dent has been bombarding anyone unfortunate enough to be on their mailing list with warnings that the market will be correcting/crashing in the very near future.
     
    This might be worth noting if he hadn't predicted the exact same thing in the spring of 2009 only to follow up with a "never mind" in the fall of 2010. 
     
    No biggy….his prediction only caused his loyal followers to miss the 5000 point rally.

  70. Phil

    New Bug/Shadow – I think mine was just because I leave my computer on all the time running 30 or more windows and, once in a while, it needs a memory flush.  

    Tragedy/Scott – It sure will be if we ever elect the wrong guy as President.  

    LOL StJ! 

    Thansk Pentax:  

    SPY in world currency

    SPY in world currency

    GMCR/Diamond – Yeah, I see that but that just explains why they bounced back  Doesn't change the fact that they suck.  

    Amex/ZZ – The black is good if you travel a lot (so is Platinum), lots of fight and hotel upgrades.  Black concierge very good at getting tickets (top dollar) or reservations for whatever you need – even on very short notice.  Pre Google and pre OPEN it was a much bigger deal as I could just call them on my phone and get almost anything done for me.  Now, I find it faster to do most things myself and only use them for travel and very hard to get things.  Still, my daughter's IPod broke and they got her a new one right away, they had an international phone delivered to me when my cruise ship stopped at the next port, my friend got badly injured skiing in Switzerland and they covered everything and I've been to a lot of very cool events so I wouldn't give it up.   Oh, also nice to be able to just charge a car…

    SINA/Lolo – I'm always wary of Chinese stocks.  Do you really know what their financials are or what they are doing day to day?  So it's just a blind bet, right?  

    Individual investors/StJ – Funny as we had the same chart for institutional investors last week which means it's just trade bots now.  PS – That interesting concept on housing was much like mine, which could have avoided the whole crash if they'd have listened to me an April of 2008 ("How to Solve the Housing Crisis Tomorrow").  That's also part of the plan I presented to Timmy and his Treasury pals a year later. 

    LOL Diamond.  

    WMT/Burr – It's like our money trades.  The main idea is to sell $4,000 worth of premium per month, something that shouldn't be hard to do with WMT options.  Selling in the money calls the first month is a reflection of my short-term target and, of course, you have a huge cushion to roll on as you gain $15,000 ($1.50 per contract) if WMT goes up.  You have to have faith in the process of selling premium and rolling and, of course, you can't be one of the CNBC sheeple who think that stocks go up because they are going up and should continue to go up because they went up in the past and down, what is down?  The REASON I like WMT is BECAUSE they are boring and big and won't get bought out or added to the S&P or pretty much anything so they are a nice rang-bound stock to sell calls against.   Those April $57.50s are $1.77 today and the June $60s are $1.03 so, even if you give back .74 on the roll, you still have $1.03 in your pocket on the short June $60s and they roll up to the Sept $62.50s at .90 and those to the Jan $65s at .92.  If you think WMT is going on a 10% run faster than you can roll – then put your money in a money market fund or, if you want to gamble, just buy WMT calls or the bull spread but that's not "safe" as you have no hedge.  You asked me for what I thought would be almost as safe as a money market but gave a nice return – this risks just $68,000 of your $200,000 in a well-hedged spread and has the potential to make you $40-60K.  If you want to just gamble – there's 10 trade ideas above for playing a bull market.  

    Same Page/Kustomz – Same subroutine is more like it.  

    Desktop/Kinki – Oh I definitely need that!  

    Moon base/Scott – That's just the Gingrich campaign HQ. 

    $107.20!  

  71. yodi

    Phil TZA I am still holding a Mar. Vertical long 19c bought for 1.90 now 1.10 and sold the Mar 23c for .85 now .22
    Thinking of rolling the long call further out and let the caller expire and possible sell an other caller to finance what you think. Thanks

  72. zeroxzero

    Thanks for Amex comment.  Separately:  Do we like SIRI?  WSJ writes that, for tax reasons, Malone would be betting off spinning it off in a public offering than buying more of it.

  73. Burrben

    JRW  - King Cobra?  When you post stuff using that name, do you mean Cobra's market site?  
    Also, would you kindly post some of the other good sites you use for information?   Finding quality info online is so hard to do!

  74. Burrben

    Phil / WMT  -  Awesome, thank you!  The last thing I want to do is gamble.

  75. lolobear

    lflan – aapl swing back hard.  Anything to perk us up till the announcement next week?

  76. rainman

    Wheee!

  77. JRW III

    Burrben / Cobra

    Yes, he's a good analyst, as is Pug and Spring_heel Jack !!
     

  78. kustomz

    rain dont jinx it man! Let the markets weaken @ least +1% before we start the  $%#(#s :-)

  79. cwan120

    Wow!  Even Phil joined Jabo to FU EDZ!  I hope that's a good contrarian indicator.  :)

  80. stjeanluc

    Oil has touched S1 at 106.52…. That's down $2 since 9:00 AM!

  81. Pharmboy

    GTHP – still in my 1/4 position.  Buying a little more. 

  82. Pharmboy

    VIX is still relatively passive in this.  Controlled sell off, but what is new as there is no one in this market but them anyway!  (Oh, and us).  VRTX holding up well, as is PLX.  I continue to accumulate in small doses (did he just whisper doses?)….

    Hey Phil – I don't see red anymore….so please dont post in red, there are a bunch of words missing from several of your posts….

  83. stjeanluc

    Half of Phil's news earlier was in red Pharm…

  84. sagemm1

    Phil/USO?
     
     
    I am long the MAR 40.5p which I rolled yesterday from the MAR 39p for .32, now looks decent with the roll and today's action I am still down about 40% . Do you think it is worth it to roll to the APR 39 for around.25?
     
    There are a couple of thoughts Iran's election are today, perhaps the rhetoric dies down along with oil prices quickly or do you think it would be better to give another 35 days and give up the 1.50 in strike?

  85. sagemm1

    11:58 AM The use of food stamps rose 0.5% in December, with a record 46.514M Americans now receiving the aid for a total government outlay of $6.22B for the month. It's an economic measure that continues to get plenty of traction from GOP candidates.
     
    Those GOP guys?…why should we feed those lazy bastards…let them eat cake, oh that was already tried…and was very ineffective, right?

  86. shadowfax

    Phil
    One at atime every week update and clean up, well worth the effor twhile you use your other 5 computers. Stop burnout before it gets started!

  87. samz3700

    Wow – JRW – nailed the lines today – 81.26 before we cratered to 80.76 –  On the 3 minute chart at 11:39 – last trade 81.26 before iwm went over the cliff.
    Stopped following JRW not because he is wrong but cannot for the life of me get the system down. Too frustrating to see "another 6% day" -
    Nice Job

  88. Ottomatic

    Someone must have yelled fire in the oil pit. 

  89. l4real

    Scotmi/ Alien base
    Good one!
    I also hear they are checking into another alleged Alien base disguised as a small brown mass circling around Uranus! ……………………..ha!

  90. kustomz

    79.80,  80.46,  80.76,  81.06,  81.26,  81.41,  81.69,  82.00,  82.41,  82.66,  82.86  and  83.12

    sitting on 80.46..loooong way down to 79.80,

  91. samz3700

    Euro seems to have bounced off support at 131.90.

  92. Pharmboy

    XRT only down 1c.  Just not right.

  93. 1020

    We must be near a top….
     
    http://firstread.msnbc.msn.com/_news/2012/03/02/10561783-boehner-calls-limbaugh-remarks-inappropriate
     
    In rhetoric, that is….

  94. 8800

    Phil,
    With all the averages down proportionally more than XRT, what are your feelings on near term future of Mar XRT puts? DD, roll?
    Thanks

  95. Canuck

    Phil/TLT
    thanks for the heads up on TLT yesterday, and your note on the $116-123 trading range last weekend.
    Picked up next week's $115c at $1.45 yesterday, sold this am at $2.50. 

  96. morxlntway

    Pharm? You mentioned MRX a couple days ago and they are a bit lower today. Did you have a specific trade on them or are you accumulating?
    thanks

  97. sagemm1

    NFLX is holding xrt up

  98. Springheel Jack

    I posted this chart this morning showing the interesting setup on Dow & Tran:


    You can see I've marked in the wedges on both that have formed as they have diverged in the last five weeks. Now let's consider what has happened to those today. On the Dow that rising wedge has broken down:


    On TRAN we've seen a reversal at wedge resistance and both the wedge lower trendline and the H&S are targeting the 4900 area:


    This really is the best looking technical setup for a retracement that we have seen so far  in this seemingly endless move up. One last chart to consider here is from my twitter bud Gann360, showing the length of previous moves up since March 2009 without a 3% retracement. The last 4 lasted between 50 and 56 days and the move up was 51 days old as of yesterday:


    Click on any chart for a larger screencast version. 

  99. morxlntway

    anyone familiar with NIHD? Is it time to buy or stay away?

  100. kevinb63v

    Phil,
      I sold Mar $53 XRT Calls as part of fixing some BBY sold puts. I can't see why retail is so strong in this economy, so I was wondering what would you recommend?

  101. JRW III

    Nothing dramatic, just setting up for a good auction week next week !!

     

  102. scottmi

    YRCW/Phil - you like them to get in here or should the last suckers bail out?

  103. Pharmboy

    SHJ – nice charts…

  104. ricpar

    Gingrich has cancelled his moon project because he realizes the potential competition caused by the large supply of green cheese was hurting his chances in the Wisconsin Primary. By doing so he upgraded his chances from none to slim to slim  to none. CNBC announced a likely rise in cheese futures.
    Kramer said "that's why I have been saying buy green cheese and sell Space X stock short". But he said "If Gingrich wins Wisconsin  we reverse our bets as he will reinstate his space manonthemoon program. We then reverse our bets again because the polls show the happy cows in CA don't want competition from green cheese either".

  105. Pharmboy

    AMRN dropping like a rock.  Will resell some puts by EOD.

  106. kustomz

    Hey Pharm this ones for you

    http://www.youtube.com/watch?v=S0UkdHzUOHI
     

  107. Pharmboy

    Kust – thanks.  I needed that.  And about 1000 SPX points more.  Then I will be even!

  108. stjeanluc

    25KP / Phil – I imagine that if oil keeps going down we might want to look at taking some positions off the table – SCO and USO.  We are $1 off from Wednesday low when we had nice profits!

  109. mrmocha

    jmm1951 / MSFT – Your approach is fine, I bought MSFT early last year and sold puts and calls each month on swings for a decent gain.  But I closed the position in December (great timing, eh?) expecting a market downdraft.  It's a bit of a boring game but will likely pay off for you.  On a big dip like Phil describes, just sell a bunch of long-term puts and wait it out…

  110. stjeanluc

    Speaking of the 25KP, the second batch of TZA calls we got at $1.40 are up 62% to $2.27. We should at least set stops!

  111. stjeanluc

    Might have rolled that FAS too soon Yodi… Although you can still make good money on next week's calls!

  112. rainman

    Springheel Jack — Thanks for the chart post!

  113. kustomz

    RUT very weak, much weaker than AUD..likely to see a bounce here

  114. chasw

    JRW
    Is this the moment to switch bullish?

  115. yodi

    stjeanluc
    I am not to much worried about the 94c looking good already but still holding a 85/89 Mar bull call spread which could be losing steam next week??

  116. Weasle

    JRW,
    Wow, you posted pivots for IWM are spot on!  It's been a big help to me for choosing when to get in/out.  Thanks.

  117. mrmocha

    Lflan - did you see Kimble's chart – AAPL heading to $840!

  118. Springheel Jack

    Thanks :-)

    It would be nice to see some retracement. Equities have been dull lately for analyst specialising in reversals, though everything else has been performing well for those. 

  119. zeroxzero

    SCO:  I added continuously to what was ultimately a large SCO position when oil was at $101.  It's look sweet at the moment.   At what point should I take profits and abandon my fantasy of this puppy heading for $74?

  120. Phil

    Euro really getting trashed, heading to $1.32.  

    TZA/Yodi – That's exactly right, with just 2 weeks to go, you'll suffer in those March calls.  Looks like it costs $1 to buy a month and you'll probably get that back when it's time to sell some April calls if you choose to. 

    SIRI/ZZ – With all these car sales, they should be doing great.  The problem for me is I was pounding the table on them non-stop at .11 and even when they dipped back to 90, I still like them but to say they are a good deal at $2.28 just goes against my grain.  You can sell the Jan $2.50 puts for .47 and buy the $1.50/2.50 bull call spread for .60 for net .13 on the $1 spread – that's an entry I can live with as your break-even at $1.93 and a nice .87 profit at $2.50 (669%).  

    You're welcome Burr – I'd love to see how that one goes.  

    No red/Pharm – Gotta take off the rose-colored glasses.  

    USO/Sage – It's not USO's fault you are still down.  They were .40 yesterday and are .80 today so shame on you if you blow today's gain.  Would I roll to April $39 for .25?  Sure, I still think oil goes back below $100 so that should give you about .50 on those calls – as long as that's going to be enough for you – otherwise, not worth the risk.  

    Speaking of USO, our $25KP April $40 puts are $1.50 and I wish we did DD yesterday but we were too full – however, we do not look a gift horse in the mouth and we will be happy to lighten up into the weekend, back to 20, which will be more flexible to roll or DD later so let's just keep an eye on it and plan to do that by the day's end or for no less than $1.40 (.15 trailing from $1.60).  

    Record food stamps/Sage – That's perfect because now we can save huge amounts of money by cutting them!  

    Weekly update/Shadow – I can't buy a new computer that often.  8)  

    XRT/Pharm – Crazy

    XRT WEEKLY

    Boehner/1020 – Wow, there's actually one Republican who thinks it's wrong to call a woman a slut because she testifies in Congress pro-contraception?  That party really is growing up!  

    XRT/$25KP, 8800 – If we don't get a correction next week, we're going to roll them.  I have conviction on that one.  

    TLT/Canuck – But bear in mind that really at about $118.50 we're pretty much done.  It's more like I'm happy to be bullish at $116 for 2% and bearish at $123 for 2% but in between ($118.50 – $120.50) is very dangerous.   You played it just right.  

    Divergence/Jack – Really?  Damn, I am so trying to get bullish!  8-)  

    XRT/Kevin – It's a Rawhide Play (rollin', rollin', rollin').  The only thing is it's good discipline to pick up at least $1 in strike every month so the April $54s are $5.70 and XRT is at $59.28 so the $53s are WORTH (not priced at) $6.28 so it's going to cost you about .60 to roll them up $1 and that's what you want to offer.  The logic to this is, even if they keep going up, you lose 40% less than you would have.  Also, since you don't want to sell offsetting XRT puts (rotten prices and we expect a drop), you can sell a WMT April $57.50 put for .73 to pay for the roll.  

    Nothing drastic/JRW – I don't know, I still think we hit that 750 line on the RUT this month.  

    YRCW/Scott – Nice chance to get back in as we do like them under $10 but I think waiting the weekend is a good idea.  

    Hey Kustomz – This one's for you!  

    Also I will admit that I had to keep that video on because I actually like that song…

    Profits/$25KP, StJ – Yes, good point like $106 seems like a good spot to get out of 20 USO $40 puts at $1.55 but I still have faith in the SCOs and would be happy to roll them.   Same goes for TZA at the 800 line and that's what I'm talking about yesterday as $2.27 is back to even on our net so OF COURSE we take 1/2 back off the table – that's why we double down, to reduce our basis so not taking advantage of it when it works is just stupid.  

  121. mrmocha

    Pharm - 'And about 1000 SPX points more.  Then I will be even!'  ROFL – you and me both, except I need EDZ at 20 as well to get to max gain (after three successive rolls of my sold DEC puts…)

  122. stardawg

    covered my TZA position.  not interested in holding over the weekend, plus a nice pop today….so hard not to be greedy……

  123. Phil

    By the way, 800 is a fabulous line to play today's IWM $80 calls, now .32 for a bounce.  Very tight stop at the RUT 800, IWM $80 line.  

  124. JRW III

    This is what happens when ECB funds are used to buy U.S. T-bills !!  (instead of Euro-businesses)


  125. JRW III

    chasw / Bullish

    No, that's Phil  8-)

     

    Really, we may retest this low, but I think IWM 79.80 holds today so anywhere in here should be O.K. (for the day only)
     

  126. mrmocha

    Phil / TBT – I know we all tried to play this one too early but someday it's going ballistic and perhaps it's finding a floor here?  If a person wanted to start scaling in on a multi-year roadmap, would you suggest selling the JAN 19 P for 2.50 and using some of the money to buy leap calls?  The downside is owning some at 16.50 at New Years and doing another round?  I've done some reading and TBT doesn't have much decay for an ultra so it seems to make an acceptible candidate for a long-term project.

  127. scottmi

    Oldskool/Phil – well if you are going to start dropping vids like Manilo, i have to counter with this way cool retro-tech boombox! I might just have to build one myself (with my 11 year old, as a school science project of couse!) ;-)

  128. stjeanluc

    25KP / Phil – OK. We have now halved our TZA and USO holdings and cut our losses on these 2.

  129. sagemm1

    Phil
     
    Thanks for the GMCR trade in at 1.13 out at 1.36…just like you scripted 20% on a day trade …I'll take it!

  130. Springheel Jack

    Phil – that Dow / TRAN divergence is actually the sort of divergence I'd expect to only see at a very major top, though for many reasons that seems most unlikely here. 

    If we see SPX fall below 1292.66 I might look again at that, but that seems a long long way away at the moment. 

  131. Gingbaum

    Phil,
    I bought a TZA mar 18 Call for 4.05
    I sold a TZA Mar 21 Call for 1.14
    I sold a TZA Apr 17 Put for 1.276
    I wasn't online to be able to double down on the Mar 18 calls.  How would you suggest rolling these if at all?

    Thanks

  132. mrmocha

    SLW - bought some calls here, it bounced perfectly off of its uptrend line at 37.  For the bold only…

  133. Phil

    SCO/ZZ – Into the weekend, I'd scale out as something could blow up. Once I take an initial position and something moves against me, all I want to focus on is lowering the basis and getting back to even. If I luck out and it blows past even and turns profitable so fast I don't have time to lighten up, that's fine but, the other 95 times out of 100, I am just thrilled to lighten back up and live to trade another day.

    Good man Strawdog – especially when you see us falling to a big line like 800, crazy to be greedy there. If we break back below, then you can just go back and make a momentum trade.

    TBT/Mr.M – It's no good because the Fed seriously defends TLT $116 and then TBT decays (and I seriously question your definition of "not much decay") – it's simply a bad ETF to trade. If you think the Fed is going to fail, then you are better off just shorting TLT but I sure wouldn't do that into next week's auctions.

    LOL Scott – if that's "old school" to you, you are a lot younger than I am as my old boombox was a transistor radio.

    Thanks StJ.

    GMCR/$25KP, Sage – Great example, I missed that one but that's the same thing, we doubled down on 10 at $1.48 to 20 at $1.32 so of course we should have ditched 10 at $1.36! That is the entire point to doubling down.

    Transports/Jack – I wonder how much of that is the shippers, who are getting killed on tanker rates. Of course high oil is putting a damper on Transport fun as well but I think the Transports are giving us a more honest view of the economy than the indexes are.  We'll see which one curves towards the other first.  

  134. kustomz

    Hey Kustomz – This one's for you!  Barry sucks the testosterone out of my body, just caught myself twisting my hair around my finger..

    Come on TNA 80.82

     

  135. stjeanluc

    SLW / MrM – Why not sell puts then. There is pretty good support around 35 and the Apr 35 can be sold for about $1 against $5 of margin. Seems like a pretty high percentage play. And they roll to the 28 in September which is another strong line.

  136. yodi

    Phil Thanks on TZA confirms my idea

  137. mrmocha

    Phil / TBT – thanks.  Got some decay information from this SA article on TBT: "…working from its all-time high on 6/2/08, TBT hit 75 when on that day the 30-year yield hit 4.73%. On this past Friday, TBT's low was 18.85 while the low that day for the bond yield was 3.05%. So over that period of time (over 3.5 years) TBT was down 74.7%. Meanwhile, the bond yield was down 35.5% which doubles to 71%, so the tracking error over those almost 3.6 years totaled 3.7%."

  138. mrmocha

    StJ / SLW – Would love to but my margin is tied up in VXX and EDZ puts since Christmas, have been rolling and rolling and eating up margin…

  139. chasw

    JRW,
    Do you foresee further RUT down next week?

  140. newbie

    TZA/RUT
    I own one lot of TZA I bought at $18.42 on Feb 16. I had a Stop at $17.77, which today I raised to $18.76. Including commission both ways, if I get Stopped at that level I will be exactly break even. I am very comfortable with that lot right now, and with the price it is at right now ($19.95 or so). I plan to hold it for a while yet. If Phil thinks we'll see RUT 750 within a month, I will be extremo happy.
    I have a second lot from Jan 23rd at $21.87, which I am just letting sit there for the moment.
    I  know the trend is your friend and all that, but I want to have my TZA in place for that day soon when things start going down, and hopefully they do so quickly. I'd like to see one (or two or three) of those good old -300 point days, any time now.
    I'm probably the smallest of the "small time" here, but we all gotta start someplace, right?

  141. yodi

    Phil or any one AGNC anounce div 3/5/12 1.25 and earnings 4/25/12 is this not putting the cart in front of the horse???

  142. newbie

    chasw
    apparently i hit my send button 5 seconds after you did

  143. Phil

    TZA/Ging – You don't usually want to DD with a spread, you just want to roll your calls longer and deeper each month until you are right (or broke).  You're right where you should be rolling (50% loss) and  the March $18s are $2.20 and the April $16s are $4.20 so you pay $2 to buy $2 of intrinsic value and a month of time.  When the March caller expires, your net is $3.64 and then you can sell something for $1.64 (like the April $21s, now $1.79) and then you are back in a $5 spread for net $2 vs your original $1.64 for the $3 spread and you've dropped your strike $2.  That's why I love these trades – even when they go against you they're not so bad – but too many people wait too long to adjust them.  

    Those IWM calls topped out at .40, which is disappointing and now .35 and you certainly don't want to take a loss on them.  Keep in mind we had a premise IWM would go up, it did but not much so we were wrong and should be thrilled to get a nickel on the trade.  Maybe another opportunity later – maybe not but always nice to have cash and not lose than watch an option decay to nothing at the close.  

    "Barry sucks the testosterone out of my body"/Kustomz – Not that there's anything wrong with that!  

  144. lflantheman

    AAPL  portfolio:  I have sold to open 10   next weekly  Mar. 9  545 puts for $9.00 each.

  145. JRW III

    chasw / Next week

    That's why I'm in cash on the weekends !!  8-)
     

  146. zeroxzero

    Thanks.  I reflexively took a third of the position off at what turned out to be the high so far, with oil below 1600.  I'll focus on getting my money back.

  147. ricpar

    Phil, Think I Am being too conservative with small bets and grabbing profits probably to soon. Seeing the value of being patient.
    Have for GS
    +2 Jan 2014  $80 Calls cost $43.94 now $47 up 7%+ $606.99
    -2 Jan  2014 $110 Calls Received $24.14 now $26.55 down 9% -$427
    -2 Jan 2014 $90 puts Received $11.45 now $10.25 up 10% +$230
    Looking good with two years for the paint to dry with lots of premium and am learning by watching.
    Thinking of upping my bet. Would it be wise to double up. (Risk diluting the profits so far.) or to be patient and wait for the market to correct or do something else?

     

  148. Pharmboy

    Same old song and dance…..gimme a f'in break.  Up, really?

  149. Pharmboy

    Don't you want to just blast this in the halls of Congress…..

  150. lflantheman

    Reasoning for the above trade:  1.  We have lots of margin in the portfolio now.  2.   Stock continues to trend upward.   3.   iPad event next week.   4.  Selling premium is better than purchasing it.    For these reasons I've changed my strategy a bit for the coming week.  I believe we will be able to collect most of this premium by next Wednesday, after which we will likely cash out during the iPad event.  If the stock moves in the wrong direction then we will simply roll forward, as we have plenty of margin left.  Even if this trade comes in at only 50% profitability next week, that's still about 5% gain in a week on the margined money. 

  151. dpastramas

    Next time i'll play the DIA for a pop, easier to manipulate. The IWM didnt even blink

  152. stjeanluc

    Is there room to run…

    http://www.bespokeinvest.com/thinkbig/2012/3/2/sp-500-sector-pe-ratios.html

    Earnings have been strong since early 2011, as evidenced by the contracting P/E ratios of the S&P 500 and its cyclical sectors.  Now that the market has broken out, will we finally start to see some P/E expansion again? 

    P/E ratios have compressed almost across the board since last April highs. But some sectors might be reaching their tops! And we should compare forward P/E as well but I don't have the data.

  153. JRW III
  154. stjeanluc

    SLW / MrM – Makes sense… Sorry about your other VXX and EDZ!

  155. kustomz

    IBM the move didnt work and if we dont get a short squeeze in the EUR later this afternoon we may close @ the lows.

    CNBC touting turbos as being more fuel efficient, not the case if you have a lead foot since boost adds air and more air means more fuel.

    Im close to closing TNA pos here..Im shocked they cant squeeze the EUR and oil closing on the weak side of the days range

  156. ongba

    Lflan,
     
    Why a naked put sale instead of a bull put spread on AAPL weekly, ie 545/490 currently at $8.80 and giving a max risk of $5000?
     
    thanks, 

  157. mrmocha

    AMZN - squeezing into one of those really tight wedgies, but will it break out up or down?

  158. Burrben

    This is to replace all the bags with paper manuals, charts, etc.  Seems like this could be the 1st step in a big potential military deployment of Ipads.   Wonder why they didn't wait for Ipad3 to really make a news announcement?
     
    Air Force Gives $9 Million Award for as Many as 18,000 IPads
    http://www.bloomberg.com/news/2012-03-02/air-force-grants-9-million-award-for-as-many-as-18-000-ipad2s.html

  159. mrmocha

    Burrben - I did some tech consulting for the military, they don't like to risk on the latest tech, they like seasoned stuff with bugs and hacks discovered and documented…

  160. kustomz

     OUT closed done..

  161. cwan120

    UNG / Phil & All: Yesterday, I read discussions on UNG.  Someone (pentaxon?) pointed out that UNG has a hefty decay.  No wonder my short puts are losing money!  So, I am thinking of closing out that short puts at a loss, and perhaps sell calls or something like that to take advantage that hefty decay.  What do you think?
     
    Meanwhile, I'll go long Nat Gas by going long on CHK.

  162. JRW III

    Since I'm bored, a poll question for the board:

     

    The U.S. Treasury issues funds to the IMF which loans it to the ECB, which in turn loans it to member banks in Europe, which surprisingly choose to buy U.S. T-Bills, which fund the deficit caused by the IMF contribution.

    How is this different than sleeping with your sister?   8-)

  163. shadowfax

    Phil
    I was saying download updates from Microsoft, Apple, anti-virus, etc., run the diagnostics, run clean disc, erase cookies, and defragment every week. Maintain not replace, do one at a time, or like I do 3 at once while reading hardcopy anything while they run. They run like new every Monday!!!! Sorry I sounded like buying new,

  164. Pharmboy

    Big put volume in XOP.

  165. lflantheman

    ongba…..Nothing wrong with that trade, in my opinion.   Maybe slightly harder to adjust, but nothing wrong with it.

  166. Pharmboy

    No no no JRW…that is a Pyramid…but some call it a Ponzi scheme…plain and simple. 

  167. lflantheman

    JRW….No money changes hands with the latter.    :)

  168. kustomz

    Sleeping with your sister is legal in some of the southern states?

     

  169. lflantheman

    Off to the slopes!    Have a good weekend all!

  170. Weasle

    Wow, stepped away for lunch and the DJIA shot up from 12,940--you think they'll shove it back to their little perch at 12,980 by eod?!

  171. Phil

    You're welcome Yodi!  

    TBT/Mr.M – If you look at the 5-year chart and note the period from July to Oct (when we were playing it), you'll note that TBT performed much worse than expected.  I agree that over the long haul it tracks well because it will outperform if TLT drops sharply due to the compounding of daily gain so, over time, it tends to even out but the fact that it can go through nasty periods and the fact that the Fed is clearly manipulating TLT makes this a poor bet.  Feel free to play it but we've all been MUCH happier switching to TLT for our bets.  

    TZA/Newbie – Don't fool yourself, you have an average entry and your first priority should  be getting back to even.  Assuming you average out at $20, you should be happy to either lighten up now or just sell 1/2 the March $20 calls for $1.05 to knock the basis of all your TZAs down to $19.50 and THEN you can set a realistic stop on the other half at $19.50 so you would just be left with the covered half if things go against you and money on the side to double down if TZA runs down again.  Keep in mind that $1 for the March $20s is 5% for 2 weeks.   Do you usually make 5% in two weeks (120% a year)?  If not, then statistically that will improve your overall portfolio performance.  

    AGNC/Yodi – They always do dividends, doesn't need to be part of earnings and usually isn't with steady payers.  I love those guys (not that there's anything wrong with that)!  

    Patience/Rip – No one ever went broke taking a profit.  Rule of thumb for short-term options is if you are up 50% with more than 2 weeks to go, you take it off the table.  If you are up 70% in the 2nd week before, you take it off the table and if you are up 85% in the last week (expiration week) then you take it off the table – UNLESS you are over 90% sure they will expire worthless (or 100% in the money on spreads).  If they are year options, change weeks to months and if they are two-year options, then I'd say 6 months and 3 months instead of 2 weeks and one week.  Mainly (and see Income Portfolio for these strategies) with a spread like that you are either on track or off track.  Your spread is net $8.35 on a $30 spread and it's now  $10.20 so up over 20% but not 50% and even if you go up 50% early, probably because GS is over $150, then you end up being 90% certain you'll expire 100% in the money, right.  So don't look at the numbers – they don't matter much.  The only thing to watch is where GS is trending for the next two years and I'd say, as long as they hold the 200 dma at $110, you're fine.  I am not a fan on doubling up when it's more expensive to do so, better to improve your position on a dip if you have to (and if you still have faith).  Always keep an eye on your rolls like the 2014 $80 calls can be rolled down to the $65 calls for $12.50.  That's not very exciting but, if it goes to $10 – it gets more interesting, right? 

    Good AAPL plan Lflan! 

    Trailing p/e's/StJ – Notice Tech is not a big bargain anymore, nor are staples and Telecom.  Financials are my favorite bet and I like the industrial materials like AA and X as a play on inflation AND a rebound in manufacturing (especially cars).  Energy I just don't believe in – they are only cheap as long as oil is expensive.

    IPads/Burr – I think the ability to distribute information through Apps is huge for that type of application.  I wonder if the troops will be allowed to play Angry Birds?  

    UNG/Cwan – Horrible decay on those.  That's why we like CHK. 

    How different/JRW – Because your sister probably won't default on you in the end.  

    I knew what you meant Shadow but my theory is, if the computer gets slow or buggy, I get a new one.  Actually Tina messes around with mine once in a while, usually when I'm away for a weekend so I don't pace around behind her while she's working.  Her nickname is "High Tech Tina" so I don't even bother to touch computers other than to use them anymore.  

    Have fun Lflan – where is there snow? 

  172. Burrben

    OT question on small business loan
    Since it's a little slow, I think I'm going to make a small 3-5K investment/loan to a food business here that is looking to expand, and is already selling out of food each night.  I was just wondering what % return I should request if it's a loan, or what % of the profits should I expect if we do a investment.  I have very little experience with SMB loans.  Remember this is Nicaragua, so it's not like I don't fully expect to lose 100% of the investment.  It's more of tip-toeing into the local market.  
    I'd rather have a large upside, rather than just a 20% return or something….if it matters…..

  173. JRW III

    Phil / Right answer !!  ROFL !!

  174. emunster

    PHIL ! Awesome pic of Eddie Munster the other day thanks!…. As I mentioned I am in the DEEP end of the POOL but trying to learn as fast as I can. I love the WMT trade discussed w BURR, but I am thinking on a smaller scale maybe 25 contracts vs 100. I have no income so any income would be GREAT. Where I am confused is I think I understand the BCS, if the holder of the $55 comes calling I can exercise my $45's and make 10 points. Where I am lost is with the addtitional april calls for monthly income, i mean cant Mr April $57.50 call away the stock from me too? at Anytime until expiration. I know your very busy. Any insight is greatly appreciated.  Hope this question is not too stupid! Hate to even ask a question!! Thanks

  175. Pharmboy

    BTU being taken out, beaten, pulped, compacted, and now burned.  Much like what they harvest from the earth.

  176. rpme

    Phil, would you not expect more of a decline with the dollar movement?

  177. Pharmboy

    Trying to buy Mar $5 calls for 5c on CRIS. 

     

    AMRN – selling April $7 Puts for 60c. 1/2 round.

  178. dclark41

    I grew up in Alabama. Only wish I had a sister. :)

  179. Burrben

    emunster / WMT
    I'm still gun-shy to sell calls.  I understand the rolling philosophy, but it's hard to roll out of the way of this market.  For example, the WMT Apr 57.5 Calls are now $1.95, or up 17% since the open.  I'm going to do research this weekend and come back to the trade on monday.  I can't get the spread filled for 8.50 either, the ask is 8.85.

  180. Pharmboy

    USO calendar – Next weeks 41.5 calls sell, buy mar 41.5 calls for .26c debit.. 

  181. Phil

    11:53 AM European shares close mixed in quiet trade following today's summit of EU leaders. Stoxx 50 -0.1%, Germany -0.4%, France flat, Italy +0.5%, Spain +0.1%, U.K. -0.4%. The euro continues to slide, -0.9% to $1.3194, and off more than 2% from midweek – just about the time folks were getting bullish on the currency again. Go figure.

    12:00 PM On the hour: Dow -0.21%. 10-yr +0.44%. Euro -0.85% vs. dollar. Crude -2.04% to $106.63. Gold -0.57% to $1712.45.

    1:00 PM On the hour: Dow -0.39%. 10-yr +0.41%. Euro -0.88% vs. dollar. Crude -2.53% to $106.08. Gold -0.72% to $1709.75.

    2:00 PM On the hour: Dow -0.14%. 10-yr +0.41%. Euro -0.85% vs. dollar. Crude -1.9% to $106.78. Gold -0.47% to $1714.15.

    Four dollar gasoline isn't an issue, but $5 is, says St. Louis Fed chief James Bullard in an interview on Canadian TV. As for Europe, he says the probability of a serious meltdown has fallen as the inflationary risk from the ECB's rapidly expanding balance sheet has risen.

    The most expensive fuel? Oil by a mile as this chart of crude, natural gas, and coal priced in dollars/MMBtu makes clear.

    Chesapeake Energy (CHK -0.7%) takes to social media to promote (tweet) an editorial from the NY Times' Joe Nocera insupport of fracking. In the piece, Nocera takes a rather non-partisan approach of pointing out that some companies (not all) are employing technology to minimize leaks and taking other steps to drill for natural gas in a responsible fashion.

    Disappointing data on durable goods and manufacturing prompts BofA to reduce its estimate for Q1 U.S. GDP growth to 1.8% from 2.2%. Recession risk rises in H2, BofA says, on the back of rising gasoline prices, a coming ramp up in foreclosures, the end of the peak in the auto recovery, and no further weather-induced bump. "If the upside surprise element slows, [it] could present a drag on risk assets."

    The use of food stamps rose 0.5% in December, with a record 46.514M Americans now receiving the aid for a total government outlay of $6.22B for the month. It's an economic measure that continues to get plenty of traction from GOP candidates.

    The stock market is surging but many chastened investors just don't care, as individual investors have pulled $8.3B out of U.S. stock funds YTD and sunk almost $10.6B into bond funds. If the little guys decide to dive in, they have a lot of dry powder to drive the market higher, S&P's Sam Stovall says, but it will be difficult for the rally to continue much longer if they don't.

    It's not just the PIIGS as eurocrats turn their austerity gaze to the Netherlands, which sees its deficit coming in at 4.5% of GDP, well above the 3% target (that the EU is really serious about this time around). PM Mark Rutte says he'll do what he can, but sees little room for maneuver. 

    Ireland may not be ready to fully return to the markets for funding in 2013, says the IMF, although it expects the country to raise a bit of short-term money this year. The agency sees GDP growth of just 0.5% this year, below the government forecast of 1.3%.

    Up 1.4% last night, Chinese shares logged their 7th consecutive weekly gain, the longest streak since summer 2009. The National People's Congress begins it annual meeting next week, and hopes are high policies targeting increased consumption will be adapted. FXI +15.3% YTD.

    Should Elpida's bankruptcy lead to 25% of its manufacturing capacity going offline, the average selling price (ASP) for DRAM will rise 15% in 2012, estimates IHS. Without any capacity reduction, ASPs will only rise 8.5% following a massive decline in 2011. Micron (MUrallied this week following Elpida's bankruptcy filing.

    Sears (SHLD) says that it will sell 3 stores to Canada's Cadillac Fairview for $172.3M as the once-mighty retailer continues to look for spare change under the couch cushions. Shares are up 4.3%(naturally), as they continue their shorts-destroying 127% YTD runup.

    Houston American Energy (HUSA +5.1%) gains onpositive comments out of Canaccord, saying the company plugged the lower portion of its Tamandua wellbore, with tests of additional zones to proceed shortly. The firm believes the well is not a failure and is cautiously optimistic that it may turn out to be a discovery in further testing. It reiterates a Speculative Buy with a $25 price target.

    "What on earth are you thinking?," asks Henry Blodget to those buying Yelp (YELP +64.3%) at ~$25/share. Yelp's growth rate, while high, is below that of Groupon and LinkedIn, and unlike those companies, it's also posting huge losses. Moreover, Yelp is trading at nearly 20x its 2011 revenue (other digital media names trade at 3x-8x), and it needs to keep a giant sales force on staff to bring in ad deals. (more

    More evidence of strong pent-up iPad 3 (AAPL) demand: An InMobi survey of North American mobile web users finds 29% saying they plan to buy the iPad 3; 54% of these respondents claim they don't currently own a tablet. Interestingly, of the 56% of respondents willing to consider other tablets, nearly twice as many would consider buying a Samsung tablet than the Kindle Fire (AMZN). (ChangeWave survey)

    Three lunchtime reads:

    1) Kass: Why I'm net short

    2) How debt-ridden housing holds back U.S. recovery

    3) Equity multiples and interest rates: Is the current risk premium sufficient?

  182. kustomz

    Burrben, is this a loan or an investment? Whats the risk and collateral? Profits will fluctuate and you need to trust the person reporting. A loan @ a fixed rate would lock your return. Remember if things go south as an investor you'd feel obligated to invest more. If you make it a loan and business goes well then you could always become an investor to further expand in the future.

  183. yodi

    Burrben
    Talking from over 20 years of experience in Mexico I have lost on semi or non secured loans over 100K. You need a full size bird in the hand because the latino mentality is very different. the only loans which I have called highly successfull are loans on jewelery and gold If they return the money its fine if not it is also fine. I have small business people how loan money on a regular basis charging 8% PM With the cash they have in hand they buy their goods for a much better price and they return the money after two three or 4 month. The loans run from 1K to 10K. hope this helps do not get fooled even if they deposit their mother do not trust it!!!!!!

  184. Burrben

    kustomz /  It could be either depending on how involved I want to be.  I think I'd rather an investment since I do think the business and the area has large upside.  It would also be fun to walk into a small place that I'm a investor in and participate.  But if he just wants a loan of 5K for 6mo, what rate should I charge him?  15%?
     
    yodi / Maybe we could talk off line since it sounds like you have exactly the experience I need, especially with the latin culture.  My email is skdoyle1@gmail.com.  I don't quite understand what you mean by "full size bird in hand".  Also this loan/investment will be to a gringo/hawian who ran a successful bar until the Nica landlord pulled it out from under his feet.

  185. yodi

    Burrben
    PS One fellow deposited a strechlimo 35K all document were 100% falsified After 3 years I sold the limo to someone else for 25K without interest over 2 years payment loss 10K.
    One owner of a great Computer comp. Borrowed 35K from me, paid a depsosit to Chevrolet and Ford for the great surburbans anf ripped off an other bank for 50K dissapeared to Argentinia, Have a worrant of his arrest hanging on my toilet just reminding me not to lend money to me mother.

  186. Phil

    Loan/Burr – That's always tricky, especially if you do business there.  I'd write a 10% loan but get a percentage of the business (that should be uncomfortable for them) if it's not paid back promptly but then the question is – what are you going to do with a minority share of the business anyway?   Is it a proper business with stock and partners and LLC agreements or is it just some guy selling food?  If so – then it's really like a loan to a family member and you're just being nice as you will be lucky to get your money back.  

    Calls/EM – If you sell a $57.50 call for $2 then you are, effectively, short the stock at net $59.50.  WMT is currently $59.19 so if the caller demands the stock from you at $57.50, he must give you $57.50 in cash and you get to keep his $2 from the original call and then you have to buy WMT stock to cover so NO ONE is going to do that while there is even a nickel of premium in the calls and, if they do, you are no worse off than you would have been anyway.   This is an experience thing, you won't realize what a minor inconvenience and assignment is until it happens to you and then you say "Oh, was that it?"  

    BTU/Pharm – See news item above, everything is cheap BUT oil.  That makes not one tiny bit of sense.  

    Decline/Rpme – Not into a weekend.  They are keeping it under 79.50 so the bulls are still in control but there will be hell to pay next week if the Euro keeps diving.  

    WMT/Burr – Yes but your long spread is .50 more in the money.  You compare apples to oranges when you go by the % change of the front-month.  If you don't believe me, paper trade it for a year and then you'll know for next time. 

    Wow, what a pump we're getting into the close.   Not helping oil, copper or gold (so total BS)but – WOW!  

  187. mrmocha

    Phil – "Up 1.4% last night, Chinese shares logged their 7th consecutive weekly gain, the longest streak since summer 2009."  While I'm rather proud of how I can crash AAPL with a single buy, I'm more proud of how going big on EDZ in December has helped an entire nation 8) .

  188. yodi

    Burrben
    Happy to help will be out for the rest of the day but meanwhile drop a line to yodiet@live.com  Possible we could be talking afterwards via Skype call sign yodiet

  189. mrmocha

    Jabo / CMG – still on the same pattern I documented last week – higher at close than at 10:30.  Easy play for selling puts each day at 10:30.

  190. stjeanluc

    That pump job deflated quite quickly….

  191. stjeanluc

    And the 0.50 line wins again on the oil lines – almost on the nose at S1 (106.52)

  192. Phil

    LOL Mr M!  They should build a statue of you at the HK Ex.  

    Ah, I thought that rally was BS.  Notice how it looks just like yesterday's oil spike on the Dow.  

    Dow volume just 67M with 15 mins to go – very lame if they can't hold it up.  

  193. mrmocha

    CMG - and on the above play, note that it now tapers off at the end of each day so I no longer do MOC orders I put in a stop at 3pm and close manually if it doesn't hit by close.

  194. stjeanluc

    Speaking of Dow volume, I am using the portfolio spreadsheet for Phil market lines. It's on the Lines tab. I have added a volume row where I grab the volume stats from Google Finance. The market close is also picked live (I believe with 20 minutes delay).

  195. stjeanluc

    And it looks like the RUT was not able to hold that 5% line today… 

  196. kustomz

    Burrben, I've completed a few HML the past 3 years. They range from 8% to 13%. I take into account collateral being used (LTV) and duration of the loan.

    Sounds to me like you want to be a partner and your more interested in enjoying your investment than making a return on the loan. I say have fun with it and go with your heart if the 5k is a trivial amount to you.

  197. Inkarri1982

    ZH reporting another oil pipeline explosion in Yemen

  198. dpastramas

    MENA CITES INTERIOR MINISTER ON YEMEN PIPELINE EXPLOSION
     
    i wouldnt be surprised if one african interior minister has heavily long on crude options/futures/ETFs 

  199. lflantheman

    AAPL portfolio:  Bought to open 20  April 525 calls at 35.70

  200. stjeanluc

    Apparently the oil market is taking this one in stride… maybe GS was not warned in advance of the fake news!

  201. stjeanluc

    The weekly FAS 93 calls still have 0.30 of premium with 1 minute to go….

  202. Burrben

    Thanks everyone, have a great weekend.  Thanks for the trades on AAPL, WMT, etc etc, and all the advice.  Sorry I was "the annoying guy" today.
     I'm off to the beach (no surf)

  203. stjeanluc

    Actually, a 93 straddle had $0.45 of premium still with 2 minutes to go. Unreal… I have to remember that!

  204. stjeanluc

    Portfolio spreadsheet changes coming this weekend!

    Have a good weekend everybody!

  205. kustomz

    HA, TNA closed close to where I sold it. Feeling savvy.

    Great weekend to all!

  206. Phil

    Very good article from Dave Fry on ECH (Chile) and copper.  

    Volume is great idea StJ.

    Today's Dow volume finishing at SUPER LAME 93M.  We have opening 15 minutes bigger than that!  

    Enjoying investment/Burr – Kustomz has a good point.  If it's a restaurant and you lend them $5K and you eat $50 meals there every week for free – then a good deal for you even if you don't get paid back.  Be careful though, I know a lot of restaurants in NJ who went that way and half their tables end up being free some nights as various people they owe money to come in with their friends trying to get "paid back".  It becomes like a Ponzi scheme after a while where they have to borrow more money to keep feeding the first guys they borrowed from.  

    Explosion/Ink – Now it's like the boy who cried wolf – if there's a real explosion, people won't believe it right away.  Although now that they've seen how much money can be made, we could have an explosion a day until we get to $200.  

    Have a good weekend everyone! 

  207. jmm1951

    Food stamps
     
    Food stamps these days are not actually stamps,. but are debit cards with a patriotic red/white/blue picture on them and pre-programed to disallow purchases of delicatessen, cooked foods, alcoholic beverages, and pet food.
    .
    I'm not sure whose payment technology food stamps use for the cards, but the increase in usage could explain why MA stock has been on a roll recently. Food stamps is clearly a growth industry and ripe for privatization. We may soon see gold food stamps cards for status conscious paupers and auctions of food stamps, as they seem to good to just give away. One potentially useful loophole is that they may be used for the purchase of seeds, so I can see agribusiness getting into food stamps in a big way.
     
    Attempts have been made to ban the purchase of soda drinks with food stamps, but happily lobbyists for the soft drink industry have persuaded  Congress of the benefits of carbonated sugar drinks, a wise and humane decision as otherwise many food stampers would be giving their children unhealthy tap water to drink.
     
    Meanwhile, who benefits  from food stamps? I believe Walmart is a prime beneficiary of the billions of dollars of food stamps issued annually, though I am not sure whether their  employees are allowed  to double dip by using their employee discounts together with food stamps. Other beneficiaries are gas stations. Although many food stamp recipients don't have cars, trailer parks are often conveniently located within walking or cycling distance of gas station grocery stores where they can  purchase a variety of nutritious foods such as Frito-Lay potato chips, Snicker bars,  and diet Coca-Cola. In a food stamps economy, the wise investor will consider WMT, BP, and Coke.
     
    [Excerpt from upcoming Seeking Alpha article.]

  208. jmm1951

    Coal
     
    In Germany during World War II and today on a large scale in South Africa, gasoline was/is made from coal by a chemical process. If current trends continue, it may be that refineries will be converting cheap coal into gasoline for cars, while expensive oil is converted into fertilizers to grow corn that can be converted into ethanol and mixed with the gasoline coal to produce a clean, efficient, cost effective alternative to the bicycle.

  209. deano

    Sold some APR BTU 32 puts for $1.49 to finance BTU Sept 29/33 BCS. Net .8 on the $4 spread, BTU 52 week low is 30.6

  210. Inkarri1982

    Hello All – Asking for a little help…going to NYC next month for three days and wondering if anyone can please give me any tips on places to see, eat, etc.  Thank you and have a nice weekend all!

  211. rpme

    Gasoline prices have climbed every day for the last 35 straight!

  212. Inkarri1982

    I filled up on the cheap stuff yesterday at $4.29/gallon near downtown LA.  It is at least 20 cents more per gallon in other areas of LA.

  213. samz3700

    FYI – Volume on IWM at 61 M was above three month average of 49 M

  214. zeroxzero

    Ah, JRW, a little late for your question, but I would say it's different in that it's a lot less likely to be productive in the end,

  215. zeroxzero

    Burrben, you've already gotten some solid advice on your potential investment.  I'd take kustomz "trivial pursuit" approach and wouldn't put up the money if you expect to get it back.  I would make it a perpetual loan  with interest payable in good dining and leave it at that.  I've heard worse stories than the above — people getting capped to avoid repayment — and I have spent the last seven years in a country where that has happened [that I know of] more than once.  Be friendly and supportive, but leave biz to the locals, or the crazy gringos who think, usually wrongly, that they can compete with them.  MXF and EWZ are for guys like us.

  216. mrmocha

    CMG - ouch, Bespoke says they are going to just keep going up and up!

  217. Canuck

    Inkarri1982/NYC
     
    I was just there two weeks ago.  I had a bit of a pizza blog on here as I was searching for the best slice in NYC as it was my first trip there.  Amazing museums (Museum of Modern Art, Museum of Natural History, Guggenheim), Peasant was a great restaurant in Little Italy, Lombardi's pizza was good but I am sure there is better,  Boathouse in Central Park is a nice setting, but I did not try the food.  Bring walking shoes as to get a good feel for the neighborhoods it is good to walk around them.  Several others members here suggested restaurants that I did not get a chance to try – Saluggis,  Jean Claude Cafe/bar ( 137 Sullivan St), Di Fara's pizza,
    A lot of this will depend on what neighborhood you are staying in and how much you want to travel.  I am sure if you post where you are staying you might get some better results from members… my two cents worth.

  218. emunster

    PHIL, THANK YOU, the picture is getting much clearer. So taking a step farther, I would then close out that trade while their was still a little premium, and roll to another, month, and this would be a perputual thing, what a nice paycheck!. So how much money would I need to have in my account at TOS to margin in order to have a trade like this with 25 contracts, along the 25/25 contracts on the BCS you originally mentioned. Doing the math, if I was called away at that number even though the caller would be paying me, my inital outlay is a good size number (to me). So I am trying to zero in on my expenses (margin expense, and cash tied up for margin), as I may have to reduce the number down from 25, again (for me) the goal is to obtain some income so any income for me is huge. I wish I had found this site a long time ago, this education is PRICELESS! Thanks. EM

  219. jmm1951

    Walmart trade
     
    I must be a dummy, but I don't get this one at all. Why would you get a $15,000 bonus if WMT finished over $60? You would get it at $55 as far as I can see.
     
    Why not a)  just buy the January $45 as a stock substitute and then sell the monthly calendar bull calls spreads for income? This requires no margin and basically your profit comes from declining option premium plus any upside from the stock.
    As Phils says, WMT is ideal, because it isn't going anywhere.
     
    OK, I am just a newbie and maybe the math makes more sense and gets greater leverage Phil's way.

  220. Burrben

    All / Loan Advice
    Thanks to all the advice and experience.  For me it's just a *fun* little investment where I do think it had large % upside, but on a small amount $ (3K/mo sales out of a friends house).  But it's just a small food stand that's selling out every night and does about a 65% profit on the food (wraps and rice bowls).  I'm going to offer him an investment for a piece of the business.  It's a great time to do this since he had a very successful bar/rest up and running, and then the landlord wanted to triple his rent, so he said f*ck it and moved on (but took a bath doing so).  So in a way it's a *ground* floor opportunity.  Maybe we could expand, open a small place, who knows.  I've lost WAY more betting on OIL and FAS, so what the hell.  Get's me out of the house!
    PS: Funny thing in Nicaragua, is that no one profits from booze.  It's sold almost at cost, so you need to profit on food.  Plus it's still a "backpacker/surfer" town, so there isn't big money here except maybe the holidays.

  221. Burrben

    Interesting look at this Market Meridian Theory.  It get's interesting at 0:45.  Looks like some of JRW's charts, and also supports the view that we are running up against resistance.  
     
    …"Meridian Market Theory" which basically posits that the market over the last 40 years has traversed one central trendline, with stocks alternating which side of the meridian they sit upon.
     
    http://www.marketanthropology.com/2012/02/video-update.html

  222. kustomz

    Burrben, I find it interesting that algos, bots, HFT programs are responsible for trading today and unless they figured out how to mimic human behavior they are merely tracing moves from past history. I would note though they do screen headlines.
    Thanks for the link!

     

  223. stjeanluc

  224. stjeanluc

    I have to admit that I was surprised by the comparison:

    http://tpmdc.talkingpointsmemo.com/2012/03/charts-is-it-morning—-or-dawn—-in-america-charts.php?ref=fpb

    So Reagan spent almost as much as Obama but taxed much more! What gives. So much for the GOP wanting to go back to the Reagan times. They'll have to tell us what taxes they want raised! I would be willing to look for 1% of GDP in spending cuts if they give us 3% of GDP in tax increase. And so much for their plan to limit spending to 20% of GDP – they have never done it when they were in power.

  225. Phil

    This view does not look very encouraging – especially if that Dollar breaks over the 200 dma:

  226. stjeanluc

    How to cut healthcare costs:

  227. Phil

    Food stamps/JMM – That's a JPM racket.  

     

    J.P. Morgan's Food Stamp Monopoly: The More Americans That Fall Into Poverty The More Money Jamie Dimon Makes

    Interesting title because that was true in the 1900s as well!  My favorite picture of old JP is his chauffeur holding him back from beating a poor man (maybe a reporter) with a stick for some offense:

    Morgan is a fantastic example of a Conservative asshole who becomes wealthy and decides poor people don't try hard enough so they don't deserve anything when the fact of the matter is he was crippled by rheumatic fever when he was 15 so his wealthy parents sent him to a clinic in the Azores where he was rehabilitated and then it was off to schools in Switzerland and Germany and he gets his first job at 20 working in his father's bank where he went on to become a Civil War profiteer and made his initial fortune screwing the Government that he came to despise.  Oh yeah, and he paid $300 have someone serve in his place as a soldier in the war.  So the same version of this guy with poor parents would have been a 15 year-old cripple, maybe his life would have turned out differently?  

  228. pstas

    Phil- $ over 200 DMA- I think you meant the 50.
    Question- is that your observation or premise? i.e., rising $? if so, what is the catalyst? Technical vs. EUR or something else?

  229. barfinger

    Phil, can you put on another hat and answer me this? I am buying a house with cash (at least for now). Why would I need title insurance? The property has only been owned by the original developer, and the title search revealed no defects. I suppose the bank would require title insurance if I borrowed some of the purchase price, but I can't see why I would need to have it on the equity portion.
     
    Thanks in advance.

  230. pstas

    Ah, title insurance. I recall wasting several hours of my life which I will never get back, actually reading one of these policies. I arrived at the conclusion that the policy will cover anything which goes wrong unless anything goes wrong which the title company deems is not their fault which is anything that goes wrong.

  231. barfinger

    LOL@pstas: I quit after reading the "executive summary", and I simply couldn't imagine there was much risk in pretty clearcut residential properties. One of the covered risks is "forgery and impersonation". I wonder if somehow, you could get into it if there was robosigning of a previous mortgage? Now there's irony for you :)

  232. Phil

    ROFL on that cartoon StJ!  

    Ethanol/JMM – Not actually an efficient fuel.  Our global energy policy is madness.  Very simply we need to push battery technology, electric cars and solar power.  The sun hits the earth, on land, with 5,000 times more energy than we use in a year (400 quads of Btu).  We currently can do a 50% conversion so 2,500 times so we need to put solar panels on 1/2,500th of our land to get all the energy we need.  Don't think of it globally, just think of how that applies to your town and how much of your town would need to be set aside (and I favor just using the roofs of all homes and buildings and designing future construction to always take best advantage of solar) and you'll realize it's not a big deal at all (although figure US uses 5x global average so 1/500th – still not much).  The only issues we have are storage and those can be resolved for a lot less than $3.5Tn we spend on oil alone each year globally.  It's completely insane that we don't just tax oil 10% and put $350Bn a year into alternate energy research.  Had anyone listened to Al Gore, we'd be 20 years into that program already and Kennedy got us from the Earth to the moon in just 10 years.  We have the way, but not the will…

    Oh wait, I remember now – Al Gore WAS elected to solve this problem but the Republican-packed Supreme Court appointed Bush President instead and then suddenly we were attacked by people from the middle east and America went into a state of emergency and terrorism replaced the energy crisis and fixing SS and Medicare as our top national priorities.  

    NYC/Ink – Would be good to know what you WANT to do.  Also, with family or without, where you're staying etc.  

    Gas/Rpme – Fell from $3.38 Thursday back to $3.28 yesterday but, in general, that's up from $2.70 on Jan 1st (21%).  We did top out at $3.42 last May (holiday weekend, of course) on a run from $2.40 last Jan 2010 so 42% has been accomplished once and we only had a small collapse in the S&P from 1,370 to 1,258 last summer – before we recovered to 1,356 and THEN fell to 1,074 in October but hey, ancient history, right.  Now we're up 30% from October so 5% a month on average is pretty good!

    Bespoke/Mr. M – Shame on those guys.  How does this happen every time – we have a rally, then the pundits start with that crap that "if it's going higher then it must be going even higher" and, before you know it, we have a new bubble and then it pops and ends in disaster – again..

    Margin/EM – Well in Burr's example, he had $200K and was only using $68,000 of it so PLENTY of cash for margin.  TOS would treat the short calls in that set-up like naked shorts and my non-PM system says selling 25 WMT April $57 puts costs $29K of margin but it all depends on how they treat your own account.  Also, a very important safeguard in only using 1/2 of your cash or less on the bull call spread (before you sell calls to offset) because, if the stock goes up sharply and the calls get away from you, you are able to add another bull spread or just some long calls and roll the callers to a 2x position if necessary.  I cannot emphasize enough the value of paper-trading or trading very small amount for a few months to get used to these strategies and how they perform under various market conditions before making a big commitment.  Like all spreads, you may have to endure wild fluctuations is PRICE (not VALUE) as the VIX goes up and down or the stock goes up and down. 

    WMT/JMM – See above.  Yes, you make $15K on the long spread on anything over $55 to but my point was that if the caller is in the money at $60, you have $15,000 of coverage.  The Jan $45s are $14.15 with a delta of .94, so you propose spending $141,500 instead of $86,000 and covering just $17,500 (12% vs 20%) of it for a downside in order to save $29,000 of margin?  Not only that but now you DON'T make $15K on the long position unless WMT ends up at $74 (up 25%).  Boy, you must really HATE margin but, no thanks…

    Investment/Burr – I certainly believe in backing good people.  Building a relationship with top-notch entrepreneur has value on it's own.  Maybe down the road, you two need to look at a deal where you buy some commercial property with a slot available for a good restaurant and your primary investment is the deposit on the property and starting the restaurant and you use the cash flow from the new restaurant your friend runs plus the other tenants to pay the mortgage and then you have a 50/50 partnership in a restaurant and you're building equity in a property and your friend has a restaurant where he knows the landlord won't screw him over.  That will get you out of the house!  

    Meridian/Burr – I would be happy to buy into that and be gung-ho bullish if we'd just have a friggin' correction.  It's only the lack of a pullback and consolidation that really bothers me.  Long-term, I'm very bullish – if only because I believe inflation will push earnings up year after year and stock prices along with them.  

    Dollar/Pstas – You're right, that's just the 50.  Forgot they had shorter indicators on that chart.  I think Europe is simply printing more money than we are.  Without offsetting $1Tn money prints by the BOJ and the Fed, how can the Euro maintain it's value against them?  Figure the Dollar is 60% of all currency and the Euro about 22% and the Yen 7%, Pound 4% and all the rest an inconsequential amount so what happens to the Euro when they dilute by $1Tn and we do nothing?  In reality, we'd have print $3Tn to offset.  Ignoring currency in use though and looking at GDP, I'd say an equal amount of stimulus/money printing on our part would do the trick.  

    Title Insurance/Barf – I bought a condo with cash to avoid title insurance on the same logic.  The insurance covers a proper transfer, paid up taxes, lack of liens, judgements or assessments against the property than may not have been disclosed.  In reality, there is less than a 0.3% claim ratio nationally on title insurance and that includes low-income properties, foreclosures etc.  It's probably one of the biggest scams in real estate and, in fact, 80% of the insurance you pay goes to the agent, not the actual underwriter – that's upside down from the model of most insurance and an indication of how badly they overcharge for it.  HOWEVER I will say that my own house, which had been subdivided 40 years ago from a larger plot that had been owned by the same family for 100 years before that had a MASSIVE title defect, which we uncovered before we closed only because I used the best people in the business.  As it turned out, in the last subdivision, the people who built our home did not take into account the 10-foot easement the town had to build sewers way down the street at the beginning of the adjacent property (we don't have a street-front, just a long driveway) so our house is built touching what should be the end of our neighbors property – which is illegal.  That made the house unsellable in the very least and our neighbor actually could demand that our home be removed.  Tina was miserable as we really wanted the house and the only way to resolve it was to have our neighbor sign over 10×100 feet of his property to us.  FORTUNATELY, our neighbor was the same old Italian guy who had originally owned the larger lot and saw the whole thing as a mistake and he took the hit and gave up 10% of his own property to us.  Had his house been left to someone else or even his children, I very much doubt it could have been resolved without a lot of money changing hands.  There were 3 prior title policies issues since that subdivision and none of them caught it, nor did the town surveyors catch it when they approved the plans for our house.  So there is a legitimate reason for title insurance but, like many insurances, if you can afford the consequences of losing then the odds are in your favor.  Also, you can't only insure what you borrow, even if just 10%, the whole home must be insured – it's quite the racket.  

    Title/Pstas – Actually, they are not too bad about paying out on things that were clearly missed.  Judges have little pity on title insurers and they don't want to piss off the regulators on their ridiculously profitable little scam.  Payout ratios are so low that if they don't hand out some checks, they may get investigated by Congress to find out what the Hell they actually do (which is pretty much nothing but extract capital from home-buyers).  It's not so much that you need insurance – yes there should be insurance of some sort, the real scam is that they insure the same property over and over and over again for the same rates and that is ridiculous – especially in a new condo, like the one I got, where the title covering the builder had no possibility of being clouded by the time I bought my new unit.  On a home, I would always get the insurance as the 1/30,000 chance that I take a $100,000+ hit is worth paying $1,500 (as part of the mortgage) to avoid.  

    Robosigning/Barf – The US just gave the Banksters a free ride on that one with their BS settlement.  

  233. emunster

    Phil, thank you again. I feel like I am being a pain but every question gets answered and then I have another question. I am mostly liquid at this point, and I was able to calculate the margin ( after reading your answer lol), and I am doing many PAPER trades also.I do have some trades that my previous FIN Advisors put me in that I need to figure out how to work out of or just cut them now. So, I am thinking this type of trade maybe good for me. But just like you mentioned I need to have extra powder, for other BCS and also do some of the other trades in the virturals. Hope you enjoy the weekend. Trying to keep my questions to the min. THANKS EM

  234. Phil

    Don't worry, weekends are the best time to annoy me.  

    8-) 

  235. Pharmboy

    All – now that Elliot is no longer working at PSW Weekly, I am going to try and help Ilene as much as possible.  Here are this weeks picks for those that may not read it:

    Seattle Genetics (SGEN) – a stock ($18.08 current price) that we have played on many occasions here, and all with a profit, I like going back and paying them again. The company is involved in monoclonal antibodies tagged with a chemotherapeutic drug.  This aids in reducing the side effects of the chemotherapeutic, and helping increasing its potency for the 'target' cancer.  I like buying the stock in here and selling the September $17.5 calls and puts for at total of $6.  The bid/ask on the calls and puts are wide, but this should get filled.  This would give you a basis of $12.08 if called away in September (a 33% gain), or if it is put to you the cost basis would be reduced to $14.79.

    Protalix (PLX) – FDA review is in May, and I like the prospects of them getting a thumbs up.  I have owned shares in PLX for a very long time, and their technology is sound.  Pfizer will help PLX sell their main enzyme replacement therapy, Taliglucerase alfa (this enzyme is part of the reason Sanofi bought Genzyme).  PLX has a proprietary manufacturing technology which will give them an edge on pricing and thus garnering market share.  With Pfizer's sales force behind them, I like PLX's chances.  The technology is also transferable to many other disease treatments, so this is a long term holding in my portfolio.  To play the FDA, I like the May $5/7.5 bull call spread for 80c (buy the $5 calls, sell the $7.5 calls), and sell the April $5 puts for 40c.  IF the April $5 puts expire worthless, the bull call spread price cost basis is reduced to 40c.  That means the maximum loss of 40c, or a maximum payout of $2.10.

    Guided Therapeutics (GTHP) – The company was a stock trade about six months ago knowning that an FDA decision was looming.  PSW members rode it up to 1.20 and some sold all, others sold 1/2 of their position -then the FDA sent the company a non-approvable letter.   I like them again for a new entry or re-buying the original position back as as the EU and Asian communities will give them the green light, and they can start selling the machines (Canada already gave the company the OK).  The company has a non-invasive device for the detection of endometrial cancer.  The company is a long term speculative buy and hold.  Sell at least 1/2 if it gets back to the highs of $1.40.

    For the dividend plays, I like BMY and MRK.  Each company has very good pipelines, pays a nice dividend, and should be part of any dividend paying portfolio.  For these types of plays, we use the buy write methodology as noted for SGEN above.  For BMY, I like buying the stock and selling the January 2014 $32 calls and puts for $8.  For MRK, I like buying the stock and selling the January 2014 $35 calls and puts for $9.10. (MRKs options are priced in $5 increments, where BMYs are in $1 increments).

    Also, the generic prescription market is only going to grow in the coming years.  There are many companies in this space, and consolidation of the industry is going to happen.  TEVA is a major player, but I think focusing on smaller players that serve a niche in the space are the way to go.  HSP and WCRX are two companies we have in our biotech portfolio.  For HSP, I like selling the August 2013 $30 puts for $1.35.  HSP had some manufacturing problems, but those should be solved in the coming months, hence to lower put sale just in case the have a set back.  This would give a good position for us to get into the stock.  I would get more aggressive if the announce things are solved, and that is something to consider as as speculative investment (e.g., buying the January 2013 $35/40 bull call spread for $1.95.  This is ALL premium, as the current stock price is $34.96, but it makes a nice upside play for HSP ans selling the puts reduces the cost to 60c).  WCRX is a smaller company that focuses on women's health.  Once flying high, the company has had a few setbacks on revenue due to Actonel's and the other Bisphosphonates (e.g., Fosamax) potential links to bone fractures. The company's overall cash flows remain in good shape, and I like them for a small play buy buying the stock and selling the October $17 calls and $16 puts for $4 or better.

  236. Pharmboy

    Some others that I will start an initial entry on this week:

    GHDX – remember GXDX? How about Roche trying to buy ILMN?  Well, this company is'a molecular diagnostics company, focuses on the development and global commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions. The company offers Oncotype DX breast cancer test, which is used for early stage breast cancer patients to predict the likelihood of breast cancer recurrence and the likelihood of chemotherapy benefit. It also provides Oncotype DX colon cancer test, which is used to predict the likelihood of colon cancer recurrence in patients with stage II disease.'  Selling the Sept $25 Puts for $1.50, buying the $25/30 BCS for $2.40 or better.  I like the put sale more than the BCS, but thought I would put it out there as a more speculative purchase.  If they pull back, then I would start the DD on the puts and buy the full BCS.

    Life Tech – well, they have a new device that is supposedly better than ILMN.  I am disappointed that I missed the dip, b'c I would have bought in droves, but here we are.  I like buying the $40/45 BCS, selling the $40 puts for a $1.45 net on the $5 spread.  BCS is ITM.

     

    Good weekend all.

  237. diamond

    Mike Luckovich: Gas prices :-)

  238. Laddoo

    Inkarri1982/NYC
     
    I suggest you go back in member chat to Canuck's  February 14th, 2012 at 4:05 pm post asking about the best pizza in NYC.  Going forward in chat for a few days, you'll find all sorts of recommendations (including Phil's) regarding what to see and do (and eat…not just pizza) in NYC.  Makes my mouth water to reread them…have fun!

  239. emunster

    PHIL, LOL thanks. Ok one more dumb question thank god for the weekends, getting my best education on a Saturday (LMAO). On the part of the stock movingly sharply up and the calls get away and adding another BCS or just some long calls ( i understand those comments), Can you please explain rolling the callers to a 2X postion. I get rolling, that would be closing out a postion and opening an new one with moving later in time, but is 2X a couple of expirations date out into the future? Thanks. EM.

  240. yodi

    Investment/Burr
     
    Phil, this can only be the thinking of a gringo. I must say you need to paper trade first. I have only my experience from Mexico and indirect from Costa Rico, My conclusion is Nicaragua can only be worse. Business in Mexico, I could write a book about it, actually I did start one until my laptop was stolen out of my car. The title was My life between pigs. Regret it was from a German type of view. Published they might have exported me from Mexico. If I read some of you guys dreams, I can only say the grass always looks greener on the other side of the fence. Even in South Africa, 15 years experience yes I did make money but it is and was like balancing on a high wire.
    Your idea was some what like setting up a corporation dealing in stocks and property as I understand it correctly. We have many bright and capable guys possible girls on this site, every one has some experience in a specific field. The main starter is to put some money together to get the ball rolling. But it would be better to operate in countries where you know the turf, not like chasing butterflies in latin America. My strong advice for anyone looking to live south of the border. RENT REPEAT RENT A PLACE. possible buy some motorized undercarriage to do the shopping and get an internet connection and participate in what we are doing. 
    But do not and I repeat DO NOT  involve yourself in any type of venture. Believe me I am speaking from experience.
    It might look difficult to do business in the US but boy try it here. I can only smile about Burr 200K idea where he is so worried he would lose it in the market. I was not joking when I said play black and red in LV because if you do not follow the money trial to the south 100% you do have a good chance of losing it all. 
    That is enough from my soap box today see you on Monday God will.

  241. yodi

    Moving money around.
    Experience is what counts. Preparing myself for an extended trip to Europe I decided to wire transfer some funds from my US trading acc to My bank in Europe. One question in the questionnaire was very amusing. WHAT DO YOU WANT THE MONEY FOR? Interesting you can not even decide what to do with your own money anymore. I entered, going to buy two new wives. And here one for you Phil. putting lots of bills in your suitcase coming from Latin America, makes you look like a drug dealer, but having a KG or two of gold chains on you neck and arm is normal, you get some good cash for it in Europe no questions asked.

  242. zeroxzero

    Ahmadijedad was crushed in the Iranian elections by Khamenei and the clerics.  More social control, more religious radicalism, but probably not much change in nuclear or oil policies.  But Ahmadi-nejad is president until 2013, with little support — even his sister, Parvin, couldn't win a parliamentary seat this weekend.  I would guess that the rhetoric will, if anything, escalate, but that power is too diffused between the president and parliament to follow it up with a concrete plan of action.  Israel would be way stupid to attack Iran at this point, since it would not eliminate the nuclear program and would be about the only thing that could unite the Iranian leadership — and Israel would know that.  On the other hand, Iran might actually increase its threatening noises, so oil could go anywhere from here, or nowhere, on this news.  It's awfully expensive, I must say.

  243. zeroxzero

    On reflection, perhaps I could go long head scarves.

  244. zeroxzero

    George Friedman [Stratfor] on Europe — quite good, (and free) -- http://www.youtube.com/watch?v=vSyB2ESpQiQ&elq=cfbada99c73c4e2281402aaa2ad05fbb

  245. barfinger

    Phil, thanks so much for your comments on title insurance. It always smelled bad to me, but I never had the option of paying cash so it was never meaningful.
     
    I must say that since I have been a member of PSW (3 years, more or less exactly) I have come to be suspicious of many things I never thought much about previously. Education never stops, no matter how old one gets.

  246. pstas

    http://econintersect.com/b2evolution/blog1.php/2012/03/01/week-ending-25february2012-rail-volumes-continue-to-contract

    Week Ending 25February2012: Rail Volumes Continue to Contract
    The Association of American Railroads (AAR) today reported a decline in weekly rail traffic for the week ending February 25, 2012, with U.S. railroads originating 281,644 carloads, down 5 percent compared with the same week last year. Intermodal volume for the week totaled 214,402 trailers and containers, down 2.8 percent compared with the same week last year.

  247. jromeha

    Pharm- when will you nibble on ARNA again? I’m debating on whether to sdouble down or not. Seems like they should at least go up to 2.50ish by the time their review happens….

  248. Phil

    Good morning!

    See, if I make a big enough deal about something, after a while other people begin to catch on:

    The immediate effects of completing the Keystone pipeline may be surprising and counterintuitive: It could increase domestic oil prices, raise prices at the pump, and the oil wouldn't even stay in the U.S. It would go directly from Canada to refineries in the Gulf region en route to export in Latin America and Europe; the U.S. would be used as little more than a transit corridor.

  249. stjeanluc

    Let's see if that gets picked up by Fox News Phil….

  250. Phil

    Very nice study Pharm, thanks!

    Pizza, ect/Laddoo – Someone should pull those for the Wiki.  It does come up often enough.  Maybe we need a general travel section where local Members give their best tourism tips for visitors.  

    Rolling/EM – A 2x roll is selling short, for example, 25 $57.50 calls and then the stock finishes at $59.50 but you don't think it will go over $60 so rather than roll your $2 caller to the next month $2.50 $57.50 caller, you roll the 25 $2 calls to 50 $1 $60 calls.  It doesn't have to be exactly 2x, the idea is just to do a cash-even roll to a higher strike by adding more short calls.  If you also add a new offsetting long bull call spread to cover, there is little additional danger to that strategy.  

    Gringo/Yodi – Ah, well there was the presumption that you "locals" know how to navigate the legal BS in those Central American nut-houses you choose to live in.  Would I do it?  Certainly not from here!  This is why people live in the US and pay those nasty taxes to the big bad Government – because they enforce property rights and contracts!  That let's us invest and grow our money without having to worry about it being stolen from us at each stage of the transaction and what allows us to leave the house without a contingent of armed guards and sure, we may need a bigger retirement fund – but we save so much money on the kidnapping fund.  As to transfers, there are much better ways – if you are ever in NY, we can get together and I can tell you a few.  

    Iran/ZZ – Now the focus will shift to who the likely President will be in 2013.  The new Parliament comes in in June and I can't imagine an attack until we at least hear what they have to say.  For Iran, it would be an excellent time to extend an olive branch – it's even possible for them to impeach Ahmadinedjad now so he doesn't really have the option of cranking up the rhetoric between now and then unless he wants to hang himself, HOWEVER, he may start a war on the assumption that he can convince people not to change horses during one – that's still a possibility but only stays with him through June.  

    Of course this whole election was a joke as the two actual opposition leaders have been in jail since last year and weren't on the ballot.  So it's like us going to the polls in November and getting to choose either Romney or Santorum because Obama's off the ticket and the Dems didn't have anyone brave enough to oppose the Reps.  That, of course, can't happen in this country – until 2016 anyway…

    Default/Kustomz – It's not a default unless the people who issue the CDS's say it is.  

    Thanks Barf – as long as you learn something, right? 

    Speaking of elections: 

    Vladimir Putin is expected to regain Russia's Presidency in today's election despite major protests against his rule over the past few months. While critics have questioned the legitimacy of the vote, Russian markets have risen in anticipation of an end to any small uncertainty that may have deterred investors.

  251. Phil

    This was cool:

    <a href='http://www.bing.com/videos/browse?mkt=en-us&#038;vid=e8c6cf5d-981b-432a-b444-d27f9c128024&#038;from=&#038;src=v5:embed::' target='_new' title='Swimming With Rattlesnakes' rel="nofollow">Video: Swimming With Rattlesnakes</a>

  252. Pharmboy

    All – can we get feedback on the newsletter for its appearance/layout now vs. past letters?  Do you like one vs. the other?  Would the newsletter trade cycles be better as longer term ones like the income portfolio?  Thx.

  253. acobra65

    Alice/Phil
    Even Andy Card, Bush's former Press Secretary couldn't save his cousin Alice (Susan Lindauer – CIA Asset) from the Wonderland of the federal government and the intent and operation of the Patriot Act.  Google (You Tube) "Susan Lindauer" about her self published book "Extreme Prejudice" (appears mainstream news and publishers don't believe her story is newsworthy) and view her Seattle talk to Vets For Peace…. the information covered is very disturbing, if credible…… This link was provided by a Zerohedge viewer in a comment section……

  254. acobra65

    Phil/Newsletter
    Tried to log in tothe weekly newsletter….. am directed to message…."problem with sites security certificate"….. ???  

  255. Pharmboy

    acobra – I had it as well.  Click 'OK' and add it to the exceptions.  You should not see that again.

  256. yodi

    Phil, I did have a giggle on the south of the border, I do have though a few advantage that is having a Mexican wife and a German passport. 
    That brings me to Transfer.I assume  You do have a different passport, which has certain advantages and disadvantages,
    But I am never to old to learn. However I have a fear of coming to NY. The last time I was there same odd 30 years ago I landed from a long overnight flight and at the hotel the luggage man took my belongings and brought them up to the room. Having not a chance to change big bills I had only US coins in my pocket and gave it to him. After I came back from having a meal, I noticed that all the coins I had given to him were thrown in front of my door with a note "you need them more than I do". That is when I first thought things were going to well in the big USA. 
    Surely it can not be as confidential that we could not discuss the matter via skype. 
    I did have some more thought on your business idea, which from my side still needs some fine tuning but in rough I will present it to you and the members for further commentary to see what some might think of it.  

  257. yodi

    Talking about tipping. I noticed lately that we do have an overflow of waiters in our shop, changing their 1$ bills for pesos, as it has become more difficult to change US bills with just about having to present your dead grandmother's birth certificate . Phil I am referring  to the 1$ bills not the 5 ten and twenties, does that tell you anything?

  258. Pharmboy

    Here is the link to the SWW Newsletter Trades.  I think it shows that most are longer term.  I am updating the ones out of date.

  259. stjeanluc

    Phil, I have tried to create a new format for the $25KP portfolio. It now shows potential price targets for our positions and I have used color to show if the targets were reached at any point in the holding time. This allows us to see if we missed any opportunity to get out and will also let the members decide when to get out with a profit (or a loss). 

    A good example of a missed opportunity is the GMCR 65 puts which were showing a double at one point and is now negative. So anyone with alerts setup could have gotten out with a nice profit. Same thing with the DIA puts which at one point showed a 25% profit. On the other hand, the sold GLL puts were at -50% at one point and are now showing a profit, but I guess not as important on sold puts as they can be rolled. But this could also show when you want to DD or roll. The BCS are shown as a percentage of their potential value – not the profits.

    This is not ideal, but unless we are ready to handhold everybody on every position, I don't think that there is an ideal format. Using this spreadsheet, members can set alerts in their platform for the levels that they are comfortable with in profits and losses. And set stop loss orders once we get to a certain level. This table doesn't show P&L as people will get out at different times.

    Let me know what you think as I am opened to suggestion to replace the current system.

  260. Pharmboy

    StJ – I like it and I think it drives home a point , but I think with all the numbers in there it makes things very 'busy'.  We need to decide what type of trade it is, day, swing, intermediate or long term.  If people are showing a profit, they need to consider taking it off the table.  JRW's targets are even shorter, but most that Phil notes are day or swing trades.  If they are buy writes, those fall into intermediate to longs.  Just my two cents.

  261. jerconn

    Pharm, I assume we should use this forum for feedback on SWW, since I didn't see any options for feedback on the emails that were sent out.  My feedback is the following:  Personally I get enough economic background from Phil's daily articles and various comments and quotes that come thru the daily Chat.  I find the economic background interesting to say the least but since I have no background in economics I don't always understand the material. But I think more important than that is I joined PSW to broaden my trading/investment skills and I would prefer to see SWW dedicated to that rather than to macro economic issues.  What I appreciate the most from SWW has been the rehash of various trades suggested by yourself and/or Phil, in which we get to see what trades were suggested and why they either worked or did not work.  I also enjoy the various market prognostications.  During the week in chat, I regularly copy and paste several of Phil's more general comments on how to manage spreads, when to roll and that kind of thing, because for me that is the most educational.  So, I would also like to see a collection of such explanations in the SWW.  That would mean reviewing chat each week and culling the most educational remarks that occur – they tend to occur randomly when someone asks a question and Phil or whoever then answers and it occurs to him to wax educational on the subject – my suggestion is to use SWW as the forum for collecting such gems.  Right now I think we have gone on the premise that they are somehow collected in the Wiki, but I never see any reference to that, so using SWW for that purpose might be a good idea.
    Having said all that, I can also live with the current style of SWW, who knows maybe it will turn me into a macro economist. But what I really need is to manage my own micro economy…

  262. stjeanluc

    Barry has some interesting questions about sovereign debt CDS:

    http://www.ritholtz.com/blog/2012/03/what-are-repercussions-if-cds-hedging-fails/

     

    Again, I wonder loud: Why would one want to own something that has a payout determination made by this group of fucktards objective, ethical, unbiased committee members?

    All of which raises a few issues in my mind: I do not know the answers to these questions, but they sure are intriguing:

    1) Why would anyone ever buy a CDS? Do they have true intrinsic value, will they pay off like a futures contract or option? Or, must you pursue their payout via some combination of lobbying, litigation and persuasion?

    2) If the answer to the prior question is “No to CDS,” then does this mean that sovereign debtcannot be hedged?

    3) If that is the case, why would anyone buy any sovereign debt other than the very strongest nations? Outside of the US, China, Germany, and perhaps Switzerland, why would anyone purchase any other Sovereign debt? What do questions about hedging mean for debt issuance?

    4) Which raises yet another question: If middling sovereign debt is downgraded by buyers, will these countries be forced to break out the printing presses? Might that add further pressure for the softening of the EU zone? the weaker countries be forced out of the EU zone?

    5) Are we then going to see Drachmas, Lire and other forgotten currencies?

    6) What does this mean for hyperinflation?

    7) Lastly, what sort of a frenzy will the Gold Bugs be whipped up into?  Will they simply turn their enthusiasm into a yellow metal jihad? Are we going to see adverts in the WSJ and FT urging us toBuy Motherfucking Gold?

    I do not know the answers to there queries, but they sure are fun to think about . . .

  263. stjeanluc

    Spreadsheet / Pharm – It might be difficult to classify all these trades, but in the 25KP none will be buy/write. I could run some stats in the current spreadsheet, but I would be shocked if the average holding time is more than 15 days. I would say there is mixture of intermediate and swing trades in there.

    I agree, all the numbers make it busy, but I am not sure how else I could show that. I could not display the prices and use only colors, but then how do we know what the targets are. Like I said, not ideal but at this moment I don't have a better idea. Maybe that will come with some feedback!

  264. jerconn

    Yodi – a note you might appreciate from a guy who didn't like NY thirty years ago but now enjoys traveling there once a year or so…NYC is not what it was thirty years ago and I mean that in the positive sense.  I think it is much improved.  I also remember issues with tipping…for example when you wanted a trolley in the airport you had to slip a fiver to a random attendent who a gathered them all together for himself.  And the taxi from the airport regularly put two customers in the car, driving first one and then the other to their respective destinations, at the same price as if each took a taxi independently.  I even remember a magazine article wherein a construction exec described how he had to pay a "worker" fifty bucks to go up a construction elevator to check out the project.  It was chaos, but I no longer experience that in NY.  The trolleys are $2 with cash or a credit card, taxis are expensive but organized, things seem to operate in a civilized manner.  I think that all occurred when Giuliani was mayor.  Anyway, I recommend not hesitating if you have to visit the big apple there are worse things you could do in this lifetime and you might even enjoy it…

  265. Pharmboy

    Jerconn – thx. I agree on the learning factor of trades – but in my 'marketing' of those that I show the newsletter to , these readers (of a weekly) are not going to be interested in what trades we did during the week – the trade is typically over.  I think a weekly should include tidbits from the daily writings, as well as from a few chat items, but most should be macro items.  It should then have specific trades outlined -  that are out in time (intermediate to income portfolio types).  I also want to keep track of those trades like we do in chat for those that enter them, as it shows how well we are doing in real time. Many services claim hundreds if not thousands of percent gains on trades, and those sites do not include their losses on other trades – believe me, I have joined a few of them.  That is not real world.
     

    It is a work in progress now….And to all – this is the place to comment on SWW.  Again, thx for your input, it is important to us.

  266. jerconn

    Pharm – I don't mean that we should just repeat the trades that were already suggested in Chat.  I mean that since the trades are already over and done with, let's have a look at them and evaluate them, why either successful or not…that's what I meant.  But of course if the majority are not looking for that then you have to cater to the majority…

  267. stjeanluc

    Portfolio spreadsheet / Pharm and Phil – Another solution to track the $25KP trades would require a little more work from Phil when setting up the trade but would make it easier to track. By specifying a time limit (optional as options expire anyway), a profit target and a kill or DD target, we could then track it more accurately. It doesn't have to involve a great deal of work and we could use codes that I could flesh out. For example:

    $25KP – Buying 10 DIA Mar 128 Puts at $1.00 (PT 25 / DD 25 / K 50)

    This would mean that we take profits at $1.25, DD at $0.75 and kill the trade at $0.50. Phil doesn't have to calculate the targets, it's done in the spreadsheet and then I can set alerts based on that. We can always adjust these as we move along (for example, a big sell-off could yield a double but then we know to setup a stop loss at the original target), but at least it gives us some guidelines. In any case, I like having targets when I setup a trade to begin with. It doesn't look complicated.

  268. yodi

    jerconn thanks NY it shows you times get harder now a days

  269. Pharmboy

    jerconn – gotcha.  Thx – ur input is appreciated.

  270. stjeanluc

    For member interested in strangles in stock having weekly options I have created a new spreadsheet with a volatility study. It can be accessed at:

    https://docs.google.com/spreadsheet/ccc?key=0Asgfso25VaEPdHdfTDV3VzE2ZVItSWNiZ2xXM0FFM0E

    You might need to copy the link in your browser for the link to work as sometimes clicking on it doesn't work.

    Here is a screenshot with an explanation:

    I indicate the ticker, the date for the quote, the volume and the average volume over the last 50 days.

    The Vola 5, Vola 10, Vola 50 and Vola 100 indicate the average weekly percentage change (up or down) for the specific stock. For example, with AA, over the last 5 weeks you could have expected a 2.46% change either up or down. Over the last 100 weeks that percent change is 3.74%. I have added columns to calculate the prices reflected by these possible changes. Once again, for example, you could expect AA to vary between $9.99 and $10.49 next week.

    These values are given for information only and don't represent possible trades. But they can help make a decision on the value of the options.

  271. zeroxzero

    Jerconn:  So what's up with NYC gypsy cabs at the airport?  There are signs everywhere saying "Don't take a ride from a non-taxi."  But you can't look up to read one of them sign without bumping into some guy asking if you need "a car."  It's not like the police would need to go undercover to find them.  This isn't new; this has been going on a really long time.  I took one — once.  He couldn't figure out where New Jersey was [headed for Newark airport].  It could be eliminated in 30 days, no problem.  I only wonder why there aren't an equal number of guys selling crack and loose joints in the taxi waiting line — but there aren't.  It doesn't add up, since they could eliminate the problem for with less money and effort than printing all the warning signs.  What's going on, J?

  272. Pharmboy

    StJ – nice…..

  273. stjeanluc

    Thanks Pharm! I plan on posting the same study with monthly moves for the S&P 500 and most traded ETF. But not today…

  274. neverworkagain

    StJ:  Nice strangle spreadsheet!  I'm going to take a detailed look. Much appreciated!

  275. jerconn

    zero – I know it's true those guys approach you but if you just ignore them and proceed to the taxi line nobody bothers you in my experience.  I guess the cops just don't care about those guys and they do care about guys peddling coke and whatever…whereas before you had trouble getting an honest taxi driver at all…

  276. Canuck

    Stjeanluc/25k,
    good work, nice spreadsheet – provides a great framework to analyze trades, and as you said, let each person use their own risk/reward to decide when to exit – and also take some pressure off of Phil.

  277. zeroxzero

    At least Phil's not the only bear in town:  Excerpt: "Are you buying this rally? Insiders aren't.
    The S&P 500 is up 25% since its October low, recently hitting its highest level since before the financial crisis. Yet the people running America's listed companies are selling shares at the fastest pace since last May, according to TrimTabs Investment Research. Company insiders sold $6.8 billion of their companies' shares in February. And for every $13 of selling, there was just $1 of buying."
    http://online.wsj.com/article/SB10001424052970204571404577257723464331672.html?mod=djemheard_t&_nocache=1330893815150&user=welcome&mg=id-wsj

  278. stjeanluc

    Great graphic about the cost of healthcare in the US as compared to other countries:

    http://www.washingtonpost.com/wp-srv/special/business/high-cost-of-medical-procedures-in-the-us/

    It's dynamic, but here is a screenshot. The US is in red. In blue are Germany, France, Spain and Switzerland. The grey ones are Argentina, Chile, Canada and India. Not sure why a day in hospital in the US is 4x more than in Switzerland….

  279. deano

    Pharm – on SWW – I agree that it should be a place of longer term trades, as so many day trades are no longer relevant that it becomes just a historical summary. Also I agree with jerconn's comment that there should be a review of a trade's approach or an educational element. Maybe something like a strategy corner where Phil, or someone else, explains how/why something was rolled, DD, or closed & why, or why one trade was set up as artificial or with the underlying. If I understand correctly the audience for SWW is more broad, so a little more explanation on basics may be appropriate.
    If the purpose of the newsletter is for preparation of the upcoming week – then the econoday calendar should be always included, with the potential it has for effects on the market.
    Thanks for all you guys do – you are a big part of what makes PSW valuable to me.

  280. crussell14

    Pharm
    what are your thoughts on PDLI? Thanks

  281. Phil

    China's February services PMI slides to 48.4 from 52.9 previously, reports the CFLP, attributing the fall to the business lull following January's Spring Festival holidays. The sub-index of new orders fell to 46.1 from 48.5.  - So the holiday wasn't in February but they're blaming the LULL AFTER the holiday.  

    Disturbing/Acobra – So is "The Fox Effect" a new book by David Brock, who wrote "Blinded by the Right: The Conscience of an Ex-Conservative."  

    Security/Acobra – They seem to know about it, there's something they have to file to get it approved but it's not insecure, just not certified secure.  

    Ideas/Yodi – Yes it is that confidential, I probably shouldn't have mentioned it in the first place – very high-end stuff, not for many people and certainly not for publication or dissemination. As to tipping, you were cheap and the guy let you know it – stupid of him to leave a note as he could have gotten fired but you check into a $300 a night room (his entire week's salary) and give the guy change – what do you expect him to do?   Maybe Mexican coins have more metal value than $1 bills…

    Chart/StJ – That is very nice.  I love that kind of study and simple, basic rule should be set a stop at the bottom of your bracket every time you take a new one but I'd go 20%'s on the long end and maybe eliminate down 100% as dead is dead anyway.  Would it be possible to bold the box or outline the box the trade is currently in?  Anyway, that's totally great, I love it!

    SWW/Jerconn – Yes, thanks for the notes.  Ilene's taking the opportunity to try some new things while we look for a new writer for SWW (and if anyone is interested – let me know).  Please keep in mind though that the idea is to sell newsletters, not to archive the week or whatever so it would be more constructive to know what people are looking for in a weekly newsletter (that they would pay for).  

    Barry's questions/StJ – Well #s 4-6 are exactly my point in being short TLT and being long hyperinflation – there's almost no way this doesn't all blow up in people's faces.  Unfortunately, I was a bit early with my call as I can't believe people buy US debt either!  I noted Barry leaves out Japan, on purpose I'm sure.  I've always said that CDS's could never be paid and therefore all debt is mispriced to the actual risk and, once people actually realize this, the easy money train will come to a very abrupt halt.  

    Oops, dinner time.  

  282. emunster

    Phil  ONCE AGAIN THANK YOU!. My light bulb just got a little brighter. I am now at 35W LOL. This place is fantastic. I  have learn more in one month than in the last 25 yrs of trading. Everyone, StJeanLuc, Pharmboy, Iflantheman, Etc etc. Much appreciated.

  283. stjeanluc

    Spreadsheet / Phil – I'll clean it up based on your instructions and add some highlighting for stops and current positions.

  284. jmm1951

    stjean/health care costs
     
    Interesting. I know when I worked in Bermuda in the 80s I was surprised that the cost per night in a hospital bed was only about one third of the cost of a hospital bed in the US. Surprising because wages of health care professionals were considerably higher in Bermuda than in the US at the time (I think they still are.) Bermuda had (probably still has) mandatory insurance with employment that covered 100% of hospitalization with no copayments etc. and the insurance was not very expensive. The government covered costs for those who did not have insurance via an "indigent fund." The system seemed to work.

  285. yodi

    Phil Tipping ect At does day  I would not even have dreamed  off to check in to a 300 a night hotel. I remember checking in to a hotel in Austria and at does days the SA rand paid 4 DM so for me everything looked cheap in Europa. We checked in to a Hotel in Austria paying 120 DM and I never forget my late Father saying to me D for that money I rather sleep in the car.  

  286. yodi

    PSW business plan.
    As we have seen and discussed on various occasions before, many of our members have the urge to set up a new type of business machine, working independent from their trading and daily live. Picking up from Phil’s idea I have developed a plan to bring the idea a bit closer to reality. Following your individual commentaries on the PSW site, I can see many members are blessed with a somewhat special gift and knowledge, which could contribute to this new venture.
    I take it most of us are on this site to improve our skill in making money, based on Phil’s Knowledge as well as the knowledge and support of many other members.
    Yes some of us just starting and coming with for the ride, hoping to develop their knowledge and skills overnight.
    Yes some members have a hard time of learning, lost their money or a great deal there off, in the hope to hit the jackpot tomorrow, even left our membership.
    Yes and there are others who are just spies, in one or the other way, which interpretation I leave for each one of you to analyze.
    My plan is to set up a business operation, working out of the box like  view and thinking of the USA,  joining with members who having the knowledge and even members with a more passive participation, to form a group, possible developing the operation in the line with Phil’s thinking.
    It is not my intention to disclose the principals of this operation on a public website. Knowledge I have accumulated over many years of my life, which could very well fit in to the base idea of Phil and will make this business very successful.
    The other day I saw a long list of members registering in one or the other way to Phil’s idea.
    The base idea of my plan is to set up a successful business.
    To succeed we need four things.
    1.       The principal business plan and it’s set up, to give an international advantage
    2.       Each participating member needs to put his/her money where their mouth is, receiving a business or better share participation in relation to the money invested
    3.       A group of knowledgeable members, directly contributing to the running of the operation. The actual ears and eyes of the business, working on an exclusive and a member restricted website, set up only for this business operation.
    4.       A small group of members surrounding Phil to make the final decision in the final move of decision making.
     The principal idea is to set up a similar operation like the big shots have, legal but using all the loopholes which are available and needed to make money, giving a regular return to members participating.
    Why I am suggesting all this. I run my ship by myself. Having learned and learning on the way. I cannot complain. Yes sometimes I lose and have to give money back. Even that some members have as their first rule DO NOT LOSE MONEY. But especially if you are on your own, you will not have the force of a team. I would like to set up a team, working and having many eyes and ears, avoiding many potholes you can not see by yourself.
    If Phil permits I will discuss my plans with him on a one by one basis, and if he agrees we set up a future members meeting.
    To exclude any nose pickers we will set up an Obama type principal Tickets for dinner charge of 10,000.00 per head. Somewhat a nonrefundable fee, however the payment will be accredited to your share value being a percentage of what you are investing in the new venture.
    At this meeting you do not have to decide if you join or not, it is only a question of how much you are going to invest.
    Travel, accommodation and dinners are for your account and not out of the 10K.
    Minimum startup participation expected to be somewhat 20,000.00 depending on the number of members.
    I am looking at a minimum of 25 members
    Two things we expect from this venture
     A) a steady quarterly return in cash, relevant to your participation, paid out anywhere in the world.
    B) a capital gain of your share’s value.
    Your commends are welcome.
     

  287. barfinger

    Jeanluc: another great effort, thanks. I suggest the "freeze panes" option so the cols and row labels are fixed. Is that now the new list of the weekly optionables? I notice no SPX, but of course that's different. For those who don't play these already, I think its a nice tool and it is theoretically possible to discover mispricing. On the other hand, the prices of the options often direct me to the right strikes. When you strangle something, you don't claim to know anything, you are just playing the odds.
     
    General: I have made an embarrassing amount of money in a "soft strangle" of TLT. I short some call north of 120, and short some puts south of 117. Ever since I lost my shirt shorting only calls this summer, this has been magical. It is not systematic and not always on. The rolls are painless and come up frequently. In fact, we ought to turn JRW  on to this for daytrading? (shouldn't he be JR from Dallas?) And while I think of it JR, do you have the tech to trade at sea?
     
    Phil: on healthcare: what is the source of your cost data? Of course you realize that there are charges for services, and only the uninsured actually are asked (and that's a LOL on everybody) to pay charges. I had a recent procedure in Florida, and the charges were 10x what Medicare allowed, and regular insurance has the same deal in force.
     
    Oh, and Phil: My agent negotiated the cost of the title insurance to the other side since I didn't have a loan. The SELLER has to pay it. This system should be reviewed by honest government operatives because it is a scam. Of course, there are no honest rulemakers, only honest clerks.

  288. scotbraze

    Phil,
     
    I was reviewing the BRK.B trade mentioned in last weekends 'Weekend Reading' article.  I am not sure if i am understanding some of the math. Here was the trade suggestion.
     
    Berkshire/Pstas – Seems like a better buy than the S&P to me.  I think they have a 10% pop in them if the markets keep going.  You can sell the 2014 $70 puts for $5 and buy the June $75s for $6.80 with no offset and it's $1.80 of premium that should be mostly paid for by the decay on the $70s over 6 months (assuming Berkshire holds $80) and you get most of any move up with a .80 delta.  As long as you stop out the longs at $3, the only risk is owning BRK.B for less than net $72.

     
    I am not sure how the $72 figure was arrived at.  If we stop out of the longs at $3, that would be a $3.80 loss on the calls.  If we Sell the $70 puts for $5, wouldn't our risk be owning BRK.B at around (70-5+3.80=) 68.80?  What am I missing?
     
    thanks in advance :)
     
    scot.

  289. scotbraze

    Phil / StJ
     
    I just wanted to thank both of you again for doing the $5kp portfolio.  If there is anything that i can do to help with that, please let me know.  
     
    Just FYI, I had gotten out of all TLT trades prior to this week, and was able to get a fill on the suggested 116/117 BCS @ $0.49.  I will post asking for advice if things are looking iffy.  I will be looking to sell the first opportunity that $.95 is available.
     
    Thanks again and please let me know how i can help keep the $5kp going.  
     
    scot.

  290. barfinger

    The issue with TLT is that it is totally dependent on government action, or maybe only government spin. Perhaps it makes sense long term to believe that interest rates have to rise (and TLT goes down) and then, that short term, the government cant allow rates to rise because they have these inconvenient auctions every so often…. (and TLT spins higher).
     
    There is no fundamental basis to play TLT up or down in the short term, hence the trading strangle. And, my GOD they are weekly. If the earth moves, all bets are off, but otherwise I like the soft strangle.

  291. barfinger

    yodi, here in SW Florida, Germans are famous for low tipping. I'm sure it's a cultural thing, and not simply cheap Euro bastards as my waiting friends like to say. You just have to understand the system in US restaurants. The owners pay wait staff next to nothing, and expect they will be tipped 15% to 20+%. I have not been to Germany, but I suspect it is different there. Just saying.

  292. stjeanluc

    Weeklies / Barfinger – I used the list from the CBOE web site so if any symbol is missing it is their fault.

    I have to check to see if it is possible to freeze panes with Google docs.

  293. barfinger

    OH, and my vote regarding those maintaining portfolios: Post the entry, and if known, the goal. Exit is the total responsibility of the member.
     
    If an exit signal is recognized by the trade boss, it should be posted. If I miss it, or don't agree, its on me.

  294. pstas

    Barfinger- how do you define a soft strangle?

  295. kinkistyle

    tipping/Barf: Its a great way to avoid paying taxes.

  296. Cap

    Hello everyone.

    For my man Phil, here is yet another example of a broken system and public employyee compensation that is out of control and amounts to simply hosing taxpayers.

    From the LA Times:

    Approaching retirement, Ventura County Chief Executive Marty Robinson was earning $228,000 a year.

    To boost her pension, which would be based on her final salary, Robinson cashed out nearly $34,000 in unused vacation pay, an $11,000 bonus for having earned a graduate degree and more than $24,000 in extra pension benefits the county owed her.By the time she walked out the door last year, her pension was calculated at $272,000 a year — for life.

    Robinson, 62, is among a group of public employees who have increased their retirement paychecks by adding such things as vacation time, educational incentives, car allowances and bonuses to their final salaries.

    Such “salary spiking” was banned in 1993 by CalPERS, the state’s largest public employee retirement system, to help control spiraling costs. But 20 of California’s 58 counties — including Los Angeles, Ventura, Orange and San Diego — do not participate in CalPERS and their employees may legally continue to spike their salaries.

  297. barfinger

    Cap: Are you trying to demonstrate what most people already understand? Salary spiking is probably a topic on public employee forums nationwide. Hey, if the system allows you, why not scalp? The taxpayer is the sucker at the table.
     
    Pstas: I regularly and firmly strangle SPX every week. With TLT, I write one side or the other if it moves that way. I am presently short more puts than calls.

  298. scottmi

    ICE Commentary – interesting short vids from ICE re weekly outlook for Futures and Currency trading..

  299. Phil

    Targets/StJ – I think it would be easier to just have a comment line after each trade or pair as all those "targets" depend on what happens between when we place the bet and when the stock goes up or down.  Essentially you are violating the Microwave Oven Theory by slapping targets on at the beginning AND OUR TARGET IS ALWAYS 20% – anything more than that is a happy accident.  

    Gypsies (tramps and thieves)/ZZ – They are mostly limo and town-car drivers who had one-ways to the airport and are trying to fill a seat for the trip back.  The cops can't tell them from guys who are legitimately picking people up and most of those guys know a cop when they see one, even undercover.  I think it's the TLC that prints the signs, not the NYPD, who have better things to do than worry about gypsy cabs.  

    Futures down about 0.25% so far.  

    You're welcome EM – Just remember, 100-watts is no longer legal so your upside is limited.  

    Thanks StJ! 

    Hotels/Yodi – That's why I love owning rental property.  People pay you those ridiculous prices.  

    Interesting business plan Yodi.  Similar in ways to what BBBW is doing and there will be more to discuss with Members next week and I'll make sure you are in the loop too.  

    Cost data/Barf – That wasn't my chart.  That's part of the problem, as you say, the uninsured get whacked for prices no insurance company would pay.  Good for you on the insurance!  

    BRK.B/Scott – You collect $5 and you spend $6.80 so net $1.80 spent.  If you stop out the longs at $3, you put $3 back in your pocket and now you have a net credit of $1.20 on the short puts, right?  That's net $68.80 if put to you so yes, you're right and I have no idea where I mixed that up but I assume I did $3-$5 and forgot the rest and then added when I should have subtracted but, on the whole, it's a much better trade idea than I thought!  Thanks for offer on $5KP but I think we may have a better way now.  

    Spiking/Cap – Sounds like what any Bankster does to boost his own bonus.  If those are the rules, then I guess she can play the game and it's up to the Counties to change their comp policies.  This is not a complicated issue.  

    Bed time for me, Futures look weak so far.  

    Monday's economic calendar:

    10:00 Factory Orders

    10:00 ISM Non-Manufacturing Index

  300. zeroxzero

    Barf: Europeans tip considerably less than Americans.  I can say that having been a U.S. waiter and having lived many years in Europe.  I suspect it's because waiters are paid more, and being one is more of a long-term profession, in Europe than in the U.S.  Europeans tip about 10%;  In the U.S., 15% doesn't even get a thank you.  
     
    In Miami Beach, I was surprised to see 15% added to the bill automatically, with an additional blank "tip" space below the first tip with text that recommended another 15%. I asked the maitre'd what was up, he said that they paid very low wages in restaurants, that Europeans and South Americans would often leave 10% or even nothing, and the restaurants had changed the bill format by automatically adding 15% to the bill [not for over six people -- for any number] and then putting a blank "tip" space below the printed total recommending more.  I kind of prefer the Euro system, rather than having to make judgments on the ethics of leaving less than 15% compounded so waiters can feed their children.

  301. angelcur

    the great news is that few of these individuals nationwide will see these 'spiked' benefits..i think that in NY state alone their are thousands of these creeps 'making' more that 200k a year in pension payouts..what kind of system allows this much less structures such crap…

  302. yodi

    barfinger
     Tipping the word for "to insure prompt service" I will report to you in 14 days as I will be in Germany to plan my summer vacation a three month RV tour through part of Europe, my every ten year vacation. In Germany tips and gratitude's  in general are included in your bill, so if you should not know, one would ask the question why still pay more. However I feel why do American restaurants and hotel services do not pay an ecceptable wage to the employee so they do not have to incrodge on to the customer. Yes I have lived  in FL. long enough and I always felt a 10% increase to the already charged food bill was good enough. If your employer does not pay you enough why would you depend on other people to pay your wages? It looks like the US restaurant is just defrauding the customer by showing one price and than you "obligated" to voluntary pay 25% more. I have never been tipped as an Engineer. 

  303. yodi

    Business Plan Phil, as I said before there are interesting advantages which can not be discussed here.

  304. yodi

    Phil, AGNC I have been called upon on Saturday. Did not want to buy back the Jan14 caller on Friday. We do have this stock in the Granny portfolio. Question is, by looking at the questionable future of div payments, would you recommend to buy them back after the dip? Strangely TOS did not advised me via email just slammed the cash credit to my accounts.

  305. yodi

    XRT even that I am run the Mar 53 caller on 0 premium, looks like no one wants this stock!!!!!!

  306. Phil

    Good morning!  Had a nice dip at 3am as Asia was down all morning and finished at lows and that got the EU off in a bad mood, now down about 1%.

    Dollar 79.55, oil $106.09 (was below $105.50!), gold $1,697, silver $34.20, copper $3.87, nat gas $2.41, gasoline $3.27. 

    On the whole, our indexes are holding up well so far so watch the Dollar.  If they can get it below 79.50 – the bad news won't matter – again.  

    I will be on TV later (BNN) at 3pm so I'll be leaving about 1:30 this afternoon.  

    6:10 AM Overseas: Japan -0.8%. Hong Kong -1.4%. China -0.6%. India -1.6%. London -0.4%. Paris -0.9%. Frankfurt -1.1%.

    Not only is further stimulus off the table, but the Fed is likely to emerge from next week's policy meeting with a slightly more upbeatview of the economy, reports Jon Hilsenrath. The fast decline in unemployment has taken Fed officials by surprise, and it could mean more underlying strength in the economy than other data would indicate. 

    China lowers its GDP target to 7.5% from the 8% goal that's been in place since 2005. Speaking at the annual meeting of the National People’s Congress, Premier Wen Jiabao adds the nation needs to shift to a more sustainable and efficient economic model, indicating China will cut its reliance on exports and capital spending in favor of increased consumption.

    China's commodity needs have peaked, says Credit Suisse, arguing the China-driven commodity super-cycle has ended as the country shifts its focus to domestic consumption. China's "golden age" has ended for infrastructure, housing and exports, and China's demand for steel per percentage point of GDP growth will likely fall to less than 40M tons by 2020 vs. 71M tons in 2011.

    Eurozone PMI fell to 49.3 in February from 50.4, below a preliminary estimate of 49.7 and indicating contraction in private-sector business activity. Markit expects a 0.1% regional contraction in Q1, but "perhaps more worryingly, the ongoing steep declines signaled by the weak surveys for Italy and Spain suggest that a return to growth for these countries still looks to be a long way off."

    The U.K. expects to narrowly avoid a new recession, but a growing chorus of voices is calling for U.K. finmin George Osborne tointroduce fresh stimulus measures in his March 21 budget. The British Chambers of Commerce warns "the chancellor must pull out the stops" in the face of "serious" economic challenges.

    What protesters?  Russia's blue-chip Micex index +0.6% after Vladimir Putin claims an unsurprisingly overwhelming victory in the presidential election. While the opposition plans a mass rally in Moscow and the poll drew charges of vote-rigging – Putin won 99.7% of the vote in Chechnya – the market hopes for stability, and political and economic reform.

    Iraq is assessing offers from BP (BP), Schlumberger (SLB) and other international companies to upgrade and increase output at the Kirkuk oil field in the north of the country, as output has fallen in recent years.

    PetroChina's (PTR) losses from processing crude last year were larger than expected, and the "losses are widening," says Chairman Jiang Jiemin. “We can’t see a turnaround in the situation. It’s larger” than the 50B yuan ($7.9B) loss suffered last year.

    Not at all surprising if sentiment turns at this stage of the campaign as GOP Obama Economy-Bashing shifts into high gear.  Whether or not the Emperor has any clothes – the GOP will scream that he's naked, right?  

    Here's the reality:

  307. jmm1951

    Tipping

    I hate the tipping system, because I never know the right amount to pay, and it varies between countries. For example the waiter/waitress may annoy the shit out of me, yet being trying hard to do what he/she has been taught to do, or the food may be crap, but the waiter/waitress very hard working. Then again,  if the restaurant is quiet, the waiter/waitress may have little to do except serve me, or if the restaurant is busy, they may be overloaded. The waitress may be cute or charming, or she may have no personal attributes at all. I don't really see why a person's pay should depend on the whim of customers, especially since some customers may be quite unreasonable. And what about the self-service buffet? Does one give 15-20% to the person who brings a drink to the table? Or anything?
     
    When I lived in Bermuda it was standard to add 15% to all restaurant bills for service, and this seems like a reasonable thing, although some tourists complained that they didn't want to pay 15% when the service was substandard.
     
    The tipping system could be part of the reason why so many Americans prefer to eat in fast food restaurants, even though the food is awful. It helps to avoid the dilemma of whether to pay a generous tip because one wants to be liked by the wait staff or impress a date, or to pay less and run the gauntlet of angry stares on departure with the implication that one will not return to this restaurant within range of human memory.
    I am sure everyone would like to be a generous 20% or 25%  tipper and loved by all the restaurant staff and get all the love and the best tables, but what if tipping is already stretching the financial resources of the tipper? How many people would skip the starter, steer their dates to the cheaper dishes and the most economical wine so as to afford a decent tip, or perhaps spend less on their children's birthday presents to cover the cost of a year of generous tipping?
     
    Many businesses in the US, like phone companies and airlines, have no problem itemizing bills to break out taxes and government fees, while others don't. When you buy gasoline the total price including state and local taxes is posted in the street and that is what is charged to your credit or debit card. I would prefer restaurants to just include the cost of table service and taxes in the price shown on the menu, then everyone would know where they stood. If diners then wanted to give servers something extra for good service, then they could do so on a voluntary basis.

  308. jmm1951

    Tips on cruising or cruising for tips?
     
    I have only ever once been on a cruise ship. It was a quick 3-day cruise from Fort Lauderdale to Cozumel (and back) some years ago.  Apparently the custom is that passengers pay a generous one-time tip to their table server at dinner on the last night. My table included a honeymooning couple who did not show up for dinner on the last night. The table for 10 had two conspicuously empty places. The waiter's face looked ashy. I have no idea whether the honeymooners were overcome by the call of marital duties, or whether they were just cheap, or whether they just could not afford to pay a tip to the waiter, or a combination of all. Bad scene all round as one knows the wait staff mostly have families on shore whose food and drink depends on remittances.

  309. Phil

    AGNC/Yodi – Today is ex-dividend day and they should be cheaper this morning if the market stays low so you'll do well by buying them back on the dip if you want to stay with them.  I'm only worried that a reclassification of dividends for taxation will throw REITs like AGNC quickly out of favor and they will sell off, which will be silly as I still like making 16%, even if I am going to get taxed on it so I consider that a buying opportunity if it comes.  AGNC, by the way, AFTER paying dividends last year, had $1.2Bn of net cash flow against their $7Bn market cap.  

    As to Tips – Very fair in theory as people pay what they can afford (and what the waiter deserves for performance) but, in practice, tipping less than 15% in the US is "cheap".  As a good tipper, I am beloved by waiters in most places I visit regularly and that sometimes works to my advantage so is a worthwhile habit, especially as I have frequent business dinners where having a motivated, attentive waiter is a good thing.  Very few people tip the sushi chef in a Japanese restaurant but I find that one pays for itself as I not only get the best, biggest cuts of fish but they also make free dishes for us (a Japanese custom, actually) to sample at the sushi bar.  And, of course, tipping the Maitre D' not only gets you nice tables but (very important in NY), lets you walk right into a popular restaurant at 8pm and get a table without a reservation.  

    As a former waiter, maybe I'm too nice but it's one of those simple things you can do in your life to give other people a nice day wherever you go and what is it really – I'm going out for a $200 meal and rather than tip $30, I tip $50 (but only if the service is actually good, of course).  If the $20 is going to break me, I shouldn't be having a $200 meal in the first place.  

    Buffet/JMM – 10%.  My tips vary depending on service but the waiter would never know as the chance of me tipping less than 15% is so slim, they pretty much have to poison the food so when I leave 15%, only I know I didn't like the service.  I am certainly not advocating tipping 25% or 20% if you are struggling, that's silly and certainly not expected by most wait-staff, who frankly don't even complain when they get 10% if they feel the people who give it to them can't afford more. I'm talking about people who can afford it – per my above example.  If I spend an extra $20 and I eat out 150 times a year, that's $3,000 it costs me to be generous.  I give to other charities, I spend more than $3,000 on other things – what's so horrible about spending it to make people I come directly in contact with a little bit happier every day?   

    Wow, Newt is totally delusional on TV.  Says he's regaining his momentum and will be coming back and surprising people! 

  310. barfinger

    Phil: those employment charts are both correct and it is the combination of the two that tells the story – and that is less obvious. A good example of political points being made with true, but incomplete facts.

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