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Monday Market Meltdown – Global Wheeee Edition

Now THIS looks a little more realistic, doesn't it?

Last Monday we pointed out that the run-up, that was coming DESPITE a myriad of Fundamental negatives we were tracking, was essentially a load of crap aimed at bringing in more suckers before they pull the rug out from under the market.  To keep ourselves from getting sucked in by the hype, we drew some very simple lines across our mult-chart which were 50% retacements of the month's dip.  Not making those lines during last week's actions kept us from making poor decisions as the market hype continued all week.  My warning was:  

"How many times will the bulls be sucked in by the same empty promises?  How many times will they reach into their pockets and BUYBUYBUY the snake oil valuations sold by the Reverend James Cramer?

Tuesday I got a lot of sheeple angry by calling them sheeple for falling for Cramer and the rest of the Mainstream Media hype and we discussed a few of our hedges that were working already, like TZA, TLT and SQQQ as well as two that were still playable:  CAT May $95 puts at $1.10 – up just 15% from our initial entry and DXD May $12 calls at $1.35, up just 12% from when our Members got the Trade Idea.  Despite the market moving up, I reiterated my sell-off targets of Russell 775 and S&P 1,325.  

Wednesday we tried to find reasons to be bullish, presenting both sides but judgment was once again for the bears after weighing the evidence as I pointed out that the lack of economic improvement for the bottom 90% could not be ignored – something Nick Sarkozy just discovered this weekend.  In the morning post, I mentioned going back to the well and shorting oil again as it dared to reach for $104.50 again – another lovely pay-off last week and we caught it again this morning at $103.50 (/CL Futures) for a quick $500 per contract – so far.  

Thursday we were having great fun and we had a bullish spread on CHK at $17.20 that may still be playable this week as the market dips again.  We discussed our goal of re-shorting PCLN (back in the July $560 puts at $8.50) and we added a nice CMG spread in the morning post, selling the May $475 calls for $4.75 and buying the June $375 puts for $5 for net .25 on the spread.  As of Friday, the May calls were down to .60 and the June puts were $5.50 (still playable!) for net $4.90 – up 1,860% in just 48 hours.

SPY 5 MINUTEThat was a great finish to April's free samples and I hope a lot of people were able to profit from our ideas.  We're about full once again in Basic and Premium Member Chat and we'll be closing down admission for new Members next week until there is more room.  Friday went just as planned with a nice goose into the open that topped out around the EU close and then we had a nice little sell-off into the close.  

In Member chat we added a new SCO spread for May expirations as the April spread (which I gave out on BNN) of the April $29/33 bull call spread at $2.10, selling the $30 puts for $1.35 for net .75 finished at the full $4 – up 433% in 6 weeks.  We also had a chance to re-up our DIA puts as well as USO puts – even for our $5,000 Portfolio, where we also added a bullish bet on the Dollar with UUP May $22 calls at .17.  

All in all, it was a fantastic week of riding out a minor bullish bounce and, now that options expirations are over, we are back to the cold, harsh reality of the last week of April and things have certainly NOT improved over the weekend.  Our biggest fear in getting too bearish is Central Bank intervention but any weekend (like this one) where it doesn't happen – realizes the biggest fear for the bulls because without a constant flow of MORE FREE MONEY – what is their premise?  

This weekend, in Member Chat, we discussed On Balance Volume and how that indicator was cutting through the crap and giving us a very clear sell signal on the S&P.  As you can see from StJeanLuc's SPY chart and, as we discussed last week, the minor bounce in the S&P and other indices is only masking continued deterioration of the OBV indicator – giving us a clear signal of real internal market weakness.  As I said on Friday regarding the VIX's MACD indicator showing similar weakness:  

Do you see that MACD line on David Fry's VIX chart?  Do you really need 10,000 hours of TA training to figure out what's likely to happen in the near future?  Complacency is what's wrong with the markets – we are pricing companies to perfection and not discounting any kind of risk premium into our stock valuations.  Something is bound to happen – all we need to do is choose the form of the Destructor

This weekend Gozer takes the form of the French elections, in which Socialist Francois Hollande came in first, with 28.8% of the vote, beating incumbent Nick Sarkozy (26.1%) and a very strong finish by Marine Le Pen, who's National Front picked up a surprising (and scary) 20% of the vote.  “People are worried… because if [Hollande] beats Sarkozy, he’s going to look to renegotiate a lot of the treaties France has signed… The European problem hasn’t gone away,” said Piper's Andrew Sullivan

The economic data sure isn't saving us as HSBC's reading of China's PMI still came in at a contracting 49.1, up only slightly from March's 48.3.  France's PMI went the other way – into deeper contraction with April falling to 46.8 from 48.7 in March led by MASSIVE declines in service, from 50.1 to 46.4.  PMI services across the Eurozone fell from 49.2 to 47.9 while the Manufacturing PMI dropped into DEEP CONTRACTION at 46 vs. 47.7 in March prompting Markit's Chief Economist to say:  

The flash PMI signalled a faster rate of economic contraction in the Eurozone during April, extending what appears to be a double-dip recession into a third consecutive quarter.  Germany saw growth weaken to near-stagnation, while France saw a worryingly steep downturn.  The rate of decline also regained momentum in the periphery, which will inevitably raise concerns about the impact of deficit-fighting austerity measures.”

EWP WEEKLYMeanwhile, Spain's Central Bank says their economy contracted 0.4% in Q1 and down 0.5% from Q1 of last year, when the Global markets fell off a cliff over what a disaster Spain (and other EU countries were looking like).  Now things are clearly WORSE yet the S&P is up 10% – does it make sense to you because it sure doesn't to me?  

Also casting a shadow across Europe was news that the Netherlands will face an early general election (with more right-wing leadership) after budget talks, aimed at trying to meet European Union rules and keep its triple-A credit rating, fell apart on Saturday.  The right-wing Freedom Party reportedly walked out of three-party talks, saying EU budget demands were impossible to meet. Dutch Prime Minister Mark Rutte has reportedly resigned.  The Czech government is also collapsing – but no one seems to care..

There is a growing sense that it’s getting hard for force the austerity program through both referendums but more so local parliaments — this increases the tail-risk which one month ago had all but disappeared, and reforms are now even more on the back burner,” said Steen Jakobsen, chief economist at Saxo Bank.  “I remain extremely defensive as we move towards May 6th double referendum, and with no ‘salvation’ ahead we could see further losses,” he said, referring to the date of the second round of the French election along with a Greek election.

Mish summed up the situation in Australia this weekend with the very simple title: "Australia is Screwed," in which Ian Vettender notes: "Our retail malls, once proudly displaying two discounted sales a year, now are permanently emblazoned with discount banners, promising 30 per cent, 50 per cent or even more off the "regular" price.  Our banks are faced with the very same dilemma. Month after month, the Australian Bureau of Statistics unveils figures detailing a drop in lending for new housing and for business, falls to levels not seen in decades, sometimes of a magnitude never before recorded. No-one is borrowing."

Back home, Barron's polled the top money managers and found them to be a generally bullish bunch with 51% in that camp and only 14% on the bear side so whoever told you that there's a lot of money to come in from the sidelines has been lying to you – but what else is new?

Since the "bears", like us only expect a small correction before the Central Banksters step in and turn the money machines back on – the overwhelming bullishness pumps up the S&P another 6% by the end of the year.  Notice NOBODY wants to bet against the AAPLdaq and very few people are willing to bet against either Asia or Emerging Markets – truly this is 2007-2008 all over again and we have learned – NOTHING! 

Call girls are, at least, fast learners and the International Alliance of Professional Escorts has, in the wake of the Secret Service scandal, already downgraded the US's credit rating saying it's members : "should be aware that doing business with the government of the United States carries with it a significant risk.  We are urging our members to avoid conducting transactions with the United States and to focus on more reliable customers, like the International Monetary Fund,” the statement added."  Maybe NOW Congress will take some action — as their own action is being curtailed…

As a rule of thumb – if a hooker won't do business with someone – you shouldn't either – so look for TBills to shoot up as people run to the relative safety of play money because that Global demand story is coming apart at the seams despite all the "positive" Q1 earnings reports (more on that when I have time). 

Let's continue to be very careful out there! 


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  1. stjeanluc

    Oil lines are completely blown out this morning with the overnight move… I filtered the weekend action to get some possible lines:

    R3 – 106.61
    R2 – 105.64
    R1 – 104.84
    PP – 103.87
    S1 – 103.07
    S2 – 102.10
    S1 – 101.30

    S1 was in play all morning until about 7:30 AM. But once again, not very reliable lines with the geopolitical stuff in play this morning.

  2. stjeanluc

  3. stjeanluc

    So far, so bad with the economic calendar:

    French Business Climate Indicator – 95 (estimate 96 / last 98)
    German Manufacturing PMI – 46.3 (estimate 49 / last 48.4)
    German Service PMI – 52.6 (estimate 52.3 / last 52.1)
    Europe Manufacturing PMI - 46 (estimate 48.1 / last 47.7)
    Europe Service PMI - 47.4 (estimate 49.3 / last 49.2)

    Everything besides the German Service PMI is pointing toward a contraction. Even the Chinese HSBC Manufacturing PMI was below 50 at 49.1. 

  4. lflantheman

    Members:   I have been struggling with PSW website for the past several days with payment issues.   I may or may not get this worked out with them.  If I do, I'll start reposting at that time.  If I don't, well……………

  5. lionel

    StJean/
    I would like to take the time this morning to thank you for your early comments (oil lines/weekly calendar/ portfolio reports).
    Phil's website was/is amazing but your addition to the team make it even better.

  6. exec

    Phil/Sheeple

     
    It will be interesting if the BTFD'ers come in this morning.  It could get ugly though…..we're due for one of those 500 point down days.
     
    Incidentally, the "F" indicator has been very bearish.

  7. jasu1

    Exec,
    What is the "F" indicator…please elaborate

  8. jasu1

    Phil,
    WMT, like to sell a Jan 2013 $45PUT into the open… your thoughts appreciated as always

  9. stjeanluc

    Thanks Lionel!

  10. button

    Oil is dropping like a rock.  Should be a good day for the bears——-finally!

  11. Pharmboy

    PP for today:

  12. Pharmboy

    VRTX/pstas – earnings should be just fine.  Their compound remains best in class.  I am comfortable owning the sold puts, and the volatility helps!

  13. stjeanluc

    Felix's take on the Wal-Mart corruption scandal:

    http://blogs.reuters.com/felix-salmon/2012/04/21/what-does-the-walmex-corruption-scandal-mean-for-banco-walmart/

     

    If I were the Mexican banking authorities, then, I’d start asking some very pointed questions indeed in the wake of this news — and I might even start thinking about revoking Banco Walmart’s license entirely. Certainly there’s no indication at all that Wal-Mart cares about stamping out corruption in Mexico — quite the opposite. And if a foreign-owned bank is operating in your country, you want to be sure that its parent is particularly assiduous in such matters.

    I’ve historically supported the idea that Wal-mart should get a banking license: I think, in principle, that such a bank would provide healthy competition for existing banks, and that it would help to reduce the rolls of the unbanked. But in the wake of this news, the chances of Wal-Mart getting such a license are surely more remote than ever. And the Mexican authorities must be wondering whether US banking regulators didn’t have the right idea after all.

  14. exec

    Jasu,
     
    I own Ford and I noticed an interesting phenomenon where Ford seems to move ahead of the Market.  Even when day trading, Ford will move ahead of TNA or TZA.  Ford is usually one of the higher traded stocks so I'm thinking that there are people in the know that get in and out of it before the market moves.  It's not real scientific but it's been working and as Phil says……they're fun to watch until they stop working.
     
    Please don't confuse the "F" indicator with the other commonly used "F" indicator……aka….. the "F*CK" indicator.  That's the one where you're absolutely certain that you're going to score and at the last second something screwy happens like your wife or girlfriend wig out over some insignificant…..meaningless….trivial…comment that you happen to make, rendering the chances of scoring at 0% or less.  In those cases…..100% certainty that you're in for a down day on the market.

  15. jmm1951

    Three cheers for Francois Hollande. It must be a huge advantage to have a first or last name the same as your country, let alone incorporating another friendly country known for its cheese, as this will be popular with voters. (One thinks of Czech soccer goalkeeper Peter Cech as someone who was ordained in his fate to save his country time after time.). Imagine what a shoo-in any candidate in the US would be if he was called Ulysses S. Kraft and used the campaign slogan Send US to Washington.
    However it can now only be a matter of time before Hollande is accused of rape, a customary rite de passage in French politics. Hopefully if he ever comes to the US, he will hire some Mormon body guards as they have a reputation for keeping their zippers up when pants are falling.

  16. Pharmboy

    THIS is why we play biotechs: AstraZeneca (AZN) will buy Ardea Biosciences (RDEA) for $1.26B, giving it access to a new drug for treating gout patients. Net of the existing cash held by Ardea, the $32/share acquisition is valued at $1B and is a 54% premium to Ardea's Friday close.

     

    PLX is up 5%.  Come to Papa!

  17. jasu1

    Exec,
    Thanks….I did assume it was the latter…Interesting re: Ford….I'll keep an eye on this going forward.

  18. 1020

    Walmart scandal – CNBS has been all over this.
     
    Bribery in Mexico?  Really, who gives a rats azz?…..

  19. exec

    Good Grief,
     
    It's going to be a long negative election season.  I'm already tired of it.
     
    And so it starts

  20. stjeanluc

    The TNA calls are already good for some 70% profit, maybe we want to roll them down for additional premium!

  21. stjeanluc

    I guess we should have been more aggressive with the FAS calls!

  22. jasu1

    Phil,
    got assigned 1700 EDZ at 14.00. collected $2710 in premiums…..basis 12.72
    Please advise on a trade to maximize profits on this assignment…Thanks. advice, as always appreciated.

  23. newbie

    TZA
    Bought TZA at $20.13 Limit Order at 9:30am

  24. jasu1

    Phil 
    premium collected 2170.  Transposition error. basis still 12,72
    Thanks

  25. newt

    Good Morning-
    I have a TZA May 17/19 BCS net .74 based on a freebie I read before joining PSW.  When is the max profit attained? I am up 75%…..

  26. lolobear

    Phil, what's your thoughts on nflx and crocs?  Thanks.

  27. stjeanluc

  28. Phil

    Good morning!  

    Oil $102 – now that's the way to start a week.  Congrats to the early birds on that one – not even that early as we held $103 through 7:30.  

    Europe is down 2.5%ish and that, of course, is TERRIBLE so let's not look for bounces on our indexes for a while.  

    The Dollar is only at 79.60 – things can get really ugly if it breaks higher.  The Euro is at $1.313 and the Pound is right at the $1.61 line so two lines to watch closely and the Pound never used to be .30 over the Euro and may have a steep drop ahead of it if the Fed doesn't ease on Wednesday.  The Yen fell (got stronger) all the way back to 81 and the Nikkei does not like that one bit as it has now fallen over 200 points from Friday's close.  

    We can HOPE to hold 12,800 on the Dow and 1,360 on the S&P (Must Holds) but the Nas, NYSE and RUT have already failed and if we see any trouble at all in them getting back over – that's going to be a sign that the bears are getting a little more serious and the dip buyers are fading away as their losses mount.  

    Let's not assume anything as it's a big data week with tons of earnings and the Fed AND the GDP – so anything can happen in the next 5 days and probably will.  So far, our big, new information is that EU PMI was a disaster and it's not too likely Consumers will be more confident tomorrow but Home Sales SHOULD be better-looking and, if not – that's going to be a huge disappointment for the bulls BUT – if they are much better – then how can we expect the Fed to ease further?  Sort of a Catch-22 for the Markets this week…

    I have a whole other post of reading material to get to – once I catch up in chat, I'll tell you what else caught my eye this weekend.

    At the open: Dow -1.06% to 12892. S&P -1.09% to 1364. Nasdaq -0.24% to 3000.

    Treasurys: 30-year +0.57%. 10-yr +0.25%. 5-yr +0.11%.

    Commodities: Crude -1.63% to $102.19. Gold -0.79% to $1629.75.

    Currencies: Euro -0.64% vs. dollar. Yen -0.55%. Pound +0.12%.

    9:38 AM Europe sits at session lows – the Stoxx 50 -2.7% - as NY opens for trade. For a change, Spain isn't leading today's big selloff. Instead it's Germany, -3.1% (Spain -2.9%). The Spanish 10-year yield is up 1 bp to 5.97%. German 5-year paper hits a record low, the yield -5 bps to 0.62%

    Hated Treasurys continue a big 1-month rally, the yield on the 10-year dropping 5 bps to 1.91%, the lowest yield since early February. The long bond also falls 5 bps to 3.07%. Bunds also see a flow of safe-haven money, the 10-year off 5 bps to a near-record low of 1.66%. The 2-year Schatz drops back to the ghostly level of 0.10%.

    Market preview: Stocks look set to follow Europe and open lower, where weak economic figures and rising political uncertainty (I,II) are dampening the mood. S&P Benchmark futures -1%. At home, Kellog (-6.1%) is going all soggy after an earnings warning, while Wal-Mart is -4.6% following bribery allegations. Later: Netflix, Texas Instrument earnings

    The debt of the 17 euro nations climbed to 87.2% of GDP in 2011 from 85.3% previously, the highest level since the introduction of the currency. The overall budget deficit declined to 4.1% of GDP from 6.2% thanks to the implementation of austerity measures across the zone.

    The ECB can act in a "very forceful way" if needed, the bank's Ewald Nowotny tells CNBC, but now is not yet the time for another LTRO or assistance to Spain. Interest rates "are at a very low stage." Talk like this seems to encourage more selling of the periphery as markets seek out the ECB's "uncle" point.

    Dutch PM Rutte is expected to resign today, setting the stage for elections after this weekend's budget negotiation collapse. The Netherlands has its own property bubble clean-up and debt issues. "A failure on the part of a 'true core' country to adhere to the  (EU) compact's deficit limits will represent a powerful debasement of the treaty," writes Rabobank. 

    The beat rate is high so far this earnings season – 81% of S&P companies reporting have exceeded analysts' expectationsbut so is the earnings warning rate for Q2, with 83 negative warnings vs. 30 positive. "Nothing to panic about, but it should be used to check excess bullishness," Josh Brown writes. "On the earnings front, we've pushed margins to the limit and the market now understands this."

    "Run, don't walk," is John Hussman's advice to investors thinking about cutting speculative exposure. The "numerous hostile syndromes" facing equities: "near-panic insider selling, speculation in new issues, and broad divergences in market internals."

    China has long been Iran's top crude oil customer, taking more than 20% of its crude exports, but China has cut its Iranian crude imports in half Y/Y due to disputes over contract terms. Meanwhile, China has increased its oil purchases from Russia and Iran's Gulf Arab neighbors by between 79% and 50% Y/Y.

    Prices at the pump edge down according to AAA, thenational average at $3.858/gallon. Of more interest, the price a year ago was $3.86, making today the first day since 2009 when gasoline was cheaper on a Y/Y basis.

    "Market forces are driving a de facto return to the gold standard," argues Lew Spellman. In a world where good collateral is scarce, and what does exist yields close to zero, "gold is stepping up to the plate." All that's left is for regulatory recognition, which may be coming in the form of a Basel proposal to make gold a bank capital Tier 1 asset.

    Three Breakfast reads: 

    1) How Europe Could Sink Obama 

    2) U.S. Equities Remain Cheap Vs. Global Comps 

    3) General Electric: Regaining Iconic Stature

  29. stjeanluc

  30. sagemm1

    nice variance between the vix and vxx

  31. rustle123

    I love the smell of blood on Wall Street first thing on Monday.

  32. kustomz

    Long way to fall if AAPL disappoints…markets fragile and the big boys have been dumping. 1354 on /ES next important line

  33. jrod0725

    stjeanluc, unless I'm mistaken I think we only added 3 PCLN in the 25KP?

  34. newbie

    PCLN  down $22
     
    Where's Jabo?

  35. harip

    Phil,
    What is your opinion on buying longer term abx/gdx calls at these levels?
    thanks

  36. jmm1951

    WMT
     
    Sometimes you just need a bit of luck.
    My WMT short April $60 calls were looking very ropey last week after a sudden terrific surge in the stock midweek from around $59 to around $62. In spite of a rollover and 50% double down to the May $60s, things weren't looking good at all good. When the stock pulled back Thurday added some long April calls which made back a littel bit of the deficit, only to get stopped out on a trailing stop with the stock at $62.04. Upon which stock continued to surge towards the $62.50 option pin, finally reaching $62.40 at close of play Friday.
    Woe was me, until news of Walmart's bad behavior over the weekend suddenly gifted me thousands of dollars at the open and a chance to quickly sell into the frenzy.
    Learning from experience is valuable. Getting a mulligan is priceless.

  37. gucci

    Hi Iflan not here is anyone start any position on Appl today before earning . thx

  38. morxlntway

    Phil – TNA may 56/61 upside hedge. Decision time. Cover with more shorts?

  39. samz3700

    Anyone have JRWs lines from last week handy – this is starting to get fun

  40. shadowfax

    Lines
    77.66 77.95 78.59 79.10 79.29 79.52 79.84 80.08 80 33 80.54

  41. rustle123

    The first 40 seconds of this clip are really funny, how views change of our economy (from a Twilight Zone):
     
    http://www.youtube.com/watch?v=pvaQzTkOn1o

  42. shadowfax

    resistance at 80.12  and we broke trendline support 79 ish.

  43. kustomz

    What a save on /ES liquidity dried up for a few ticks looked like it was going to break to the downside..bulls believe this is a good spot to defend.

  44. stjeanluc

    Correct Jrod, thanks!

  45. jabobeast

    priceline.com Incorporated (NASDAQ: PCLN) Reiterated Outperform and raised target to $811 at Credit Suisse.
     
    FU credit suisse!!!!

  46. lolobear

    lflan.. with all that money you making on aapl, what sort of payment issues do you have??  :-)   j/k

  47. kustomz

    Shit was about to meet Mr. Fan second test of 1354 defended again, getting past 1358 then 1360 important levels to take back..if not delete the words "was about to" and hang on..

    Shadow whats your .02?

  48. iTrade

    DIA $127 – fetching $1.89
     
    Not a bad exit at nearly 100% return?
     
    Or should we wait a bit longer…

  49. kustomz

    itrade not looking promising, in the past we would bounce hard and quickly off support..taking a bit long here..

  50. samz3700

    thanks for the lines shadowfax

  51. Phil

    I love that data chart StJ!  

    Payments/Iflan – I told Greg to get right on it.  

    500 points/Exec – That would be nasty.  This sell-off is very bad as Asia is way behind the curve so, if we finish down 2% or more, then they will have a nasty open and Europe is already at the 2.5% Rule (big move for one day) and is likely to follow-through lower as well and, wouldn't you know it – we have note auctions this week – what a coincidence!  

    WMT/Jasu – As long as you REALLY want to own them for the net then yes, it's a good dip to take advantage of.  Much as we wish it would happen – no one is going to handcuff WMT and put them in jail.  They'll pay a fine and go on with their business – having learned better how not to get caught next time.  Overall though – they are not going to be exempt from a major market sell-off so be prepared for paper losses on the long puts and, if you don't fully intend to ride those out – it's a dangerous trade to make. 

    Oil at $102 is critical – it's bounced big off that line so far.  Dollar still 79.60. 

    Woops – just realized I had Bloomberg on – no wonder I was so relaxed this morning…

    1,360 on the button bounces for the S&P.  That's also right around 1.25%, which is a big one-day move for a major index and, of course, we expect that 0.25% bounce from there, back to about 1,365 so we'll watch those lines carefully for indications.  

    PCLN $689!  CMG $408!!!  LVS $56.60!!!  

    VIX back over 20.  

    Francois/JMM – That was my old theory of French politics – the guy with the most cartoon-like French name usually wins.  As to the Mormon body guard idea – Malcolm X tried that – didn't help.  

    America fail/Exec – Oh please!  These PACs are just murdering this country. 

    EDZ/Jasu – You don't really want to own 1,700 for $23,800, do you?  Just be thrilled you made money and keep a tight stop on them (now $14.11) and get back to cash at the end of the day.  You can simply go back into the May $14/17 bull call spread for .80 and sell the $13 puts for .65 for net .15 on the $3 spread so you are as good as if you still own the stock but you get it back for $1 less if it's assigned back to you – a built-in 7% hedge and you get your current profits off the table.  

    TZA/Newbie – Nice call!  

    TZA/Newt – You're going to have to wait until May expirations (25 days) to make that last .26 but it's a little early to flip the position.  You do have $3.70 on your calls and your caller is only $1.50 in the money so you could cash your calls and cover the caller with a June $19/24 bull call spread at $1.45 and then you take $2.25 off the table, which is more than your max – and you cover the short calls with the $5 long spread so you're safe up to $24 (20%) which is another 7% down in the RUT to 727 and you can stop out 1/4 of the short calls at 775 and another 1/4 at 750 and another 1/4 at 725 and you should be in good shape.  

    NFLX/Lolo- I think NFLX is worth $0 in the long run.  CROX I like, but not at $22 – I spent all of 2009 and 2010 pushing them but we got out when they hit $30 and then we liked them again at $15 last year.  You just need to be patient and wait for them to have a bad season. 

    Executive power/1020 – I was hoping they'd do that last year.  A bit late now but better late than never.  

    AAPL/Kustomz – Let's not forget the first step towards a major bounce could be AAPL earnings tomorrow night.  Or, on the other hand, a miss may be the beginning of the end.  

    ABX/Harip – I don't like GDX at all and ABX can go much lower but I REALLY like them at $30 so selling long puts that get us that low is appealing – like the 2014 $35 puts for $5.30 for a net $29.70 entry.  As I noted above on WMT – they still can go down further so if the put rising to $10 will make you sell it – then it's too risky but if you REALLY want to own ABX for $29.70 and if them falling to $20 would make you happy to DD, 

    Mulligan/JMM- Very nice. 

    AAPL/Gucci – Remind me later. 

    TNA/Morx – I'd wait, this could be a nasty break-down.  $56s are still $2.25 so good time to salvage the cash and spend $1.25 to roll them to June $57s ($3.50) so you have more time to recover.  

    TLT $118.50! 

    PCLN upgrade not helping much.  

    DIA/ITrade – I'm inclined to wait but 100% is a lot.  When in doubt, sell half seems to apply.  

  52. morxlntway

    FAS may 80 puts. Good for a new entry (short) at 1.65?

  53. Phil

    If we assume S&P 1,360 is defendable, then SPY weekly $133 calls at $3.55 have .40 of premium and make nice upside momentum plays to cover a bounce.  

    TNA weekly $55 calls are just .85 and way out of the money now but were $2.60 at the close so should do well on a bounce vs stopping out at .70.  Let's grab 20 of those in the $25KP with stops at .70 to cover the bounce.  If we're legging down below .70 – we can afford the $300 loss.  

  54. jasu1

    Phil,
    Out of EDZ at 14.12…..your trade makes more sense without the 24K commitment. Thanks

  55. shadowfax

    targets low side of 78 and 77.4 but this sell off has low volume if the dollar turns down?
    Last week I had great faith today gapped down with no volume at all.
    Maybe JRW will check in and give some words on that.

  56. Phil

    IWM Money – Let's buy back those April $26 calls for .60.  If TNA falls further – we'll just sell more of something else but no sense in waiting 5 more days for .60. 

    FAS Money – Same thing, let's buy back those May $105s, now $2.10 and see how things shake out.  

    $5KP – GLL is annoying and oil I'm tempted to cash but then we can't buy it again until tomorrow (day-trading rules) so let's ride it out.  DMND I'm tempted to DD on but let's see if we find a market bottom first.   

    $25KP – $16,494!  WOW!!!!  

    • DMND – Not too bad. 
    • XRT – Still too high. 
    • BBY – Pathetic
    • SCO – New and on track
    • SQQQ – Back on track
    • FAS – Looks good but need to sell some calls on a bounce. 
    • GLL – Tedious
    • CHK – They are green today! 
    • PCLN – I wish we had 5.  No wonder the net was bigger than I thought…  8(  

    Well, that was easy.  

  57. shadowfax

    Phil
    I think you made sense, the bill actions and that invisable hand that doesn't exist.

  58. morxlntway

    eary!!??  you don't remember the baseball bat? :)

  59. Phil

    FAS/Morx – I like selling the May $80 puts for $1.65.  That's about 5% down on XLF to $14.25, and $14.50 is about what we think would hold and $13.50 is where we BUYBUYBUY anyway. 

    EDZ/Jasu – Always good to see if you can pull cash off the table and leave yourself with a hedged obligation.  

    Volume/Shadow – Just 46M this morning (10:55) so certainly no capitulation here and very easy to reverse.  I imagine hope springs eternal into the Fed meeting (and the Bernanke speech) Weds.  

    Europe not improving with half hour to close.  FTSE down 2.06%, CAC down 2.74% and Germany down 3.4%.  

  60. dclark41

    stjean:
    I think you missed this trade in the 5k. I think it still exists.
    Phil
    April 20th, 2012 at 2:52 pm | PermalinkIgnore this user

    10 UUP May $22 calls at .17 in the $5KP. 

  61. Phil

    Man, why can't we be so lucky: 

     

    Dutch Prime Minister Resigns

    Dutch Prime Minister Mark Rutte and his cabinet have resigned after failing to reach agreement on reducing the country's budget to meet European guidelines, the Dutch government information service said.

    We need to have our Congress be held that accountable for balancing the budget.  

     

     

  62. Phil

    $25KP – Oops – forgot to make it clear that we take 1/2 the DIA puts off!  

  63. lunar

    well phil, you had mentioned taking a poke at aapl when $550'ish.   any play?

  64. lflantheman

    AAPL portfolio……………..In a word……………CASH

  65. rdn4evr

    Phil, XRT – Did anyone notice what happened to Temper-Pedic last week?  They beat but refused to up forward guidance and their stock tanked a quick $20 from $84 to $64.  I think that treatment is coming for a lot of retailers.

  66. 1020

    Phil/balancing  Tough to pin that on the republican majority. They have a plan to balance the budget.
     
    It's just what this country does not need…..

  67. kustomz

    Reuters) – Russia's MICEX-RTS exchange suspended trading on its main stock market section on Monday at 1156 GMT for one hour until the end of the main trading session, the exchange's spokesman said.
    The exchange, which calculates both Russia's benchmark indexes RTS and MICEX, said in a statement on its website that the trading was suspended due to "a problem in displaying orders and deals in the main stock market section."

  68. 1020

    Looks like must watch television…..
     
    http://video.pbs.org/video/2218309368

  69. lunar

    lflan, welcome back.

  70. Phil

    10:00 AM On the hour: Dow -1.16%. 10-yr +0.27%. Euro -0.60% vs. dollar. Crude -1.55% to $102.28. Gold -0.68% to $1631.55.

    11:00 AM On the hour: Dow -1.1%. 10-yr +0.3%. Euro -0.70% vs. dollar. Crude -1.66% to $102.16. Gold -0.73% to $1630.75.

    50% of New College Graduates Are Jobless or UnderemployedThe U.S. college class of 2012 is in for a rude welcome to the world of work. A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don't fully use their skills and knowledge.

    The data rolls in, writes Jon Hilsenrath previewing this week's FOMC meeting, some weak, some strong, but nothing to cause a shift in the Fed's January stance. Though staff inflation forecasts are edging higher, it's not enough for an earlier-than-expected rate hike. Further QE? "Those expecting a new bond buying program are likely to be disappointed too."

    Indicator Update: Will the Fed Disappoint the Market?

    After $14 Trillion Bailout, Global Recovery Still Uncertain. The amount of money thrown at rescuing the world economy since the Great Recession began is truly staggering, probably more than $14 trillion, and the financial spigots are still open.

    Does the Fed exacerbate income inequality? "The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power," Mark Spitznagel writes. "This coercive redistribution has been a far more egregious source of disparity than the president's presumption of tax unfairness… or deregulation." Even Paul Krugman isn't buying it.

    Here's a bullish sign for the economy: Wealthy Americans are more optimistic about the economy than any time in the last year, according to the March reading of the Mendelsohn Affluent Barometer. The Barometer studies the lifestyles and spending habits of today’s affluent Americans. 50% of respondents interviewed think they personally will be better off 12 months from now. That's a 12% jump since January and its highest reading in over a year.

    IMF chief Lagarde has shown her political chops, netting enough funds to bring the EU firewall north of $1T, but this onlyencourages elites in the EMU to persist imposing crushing austerity on Club Med (with France sliding into the group), writes Ambrose Evans-Pritchard. Hollande at least talks about challenging this "economic suicide" – whether he can pull it off is another question.

    Draghi's ECB Rejects Geithner-IMF Push for MeasuresEuropean Central Bank officials led by President Mario Draghi resisted calls from the International Monetary Fund and U.S. Treasury to do more to stem the debt crisis roiling the euro-area economy. As talks of global finance chiefs ended yesterday in Washington, euro-area central bankers from Draghi to Bundesbank President Jens Weidmann argued they have done enough by cutting interest rates and issuing more long-term bank loans. “None of the advice that the IMF is offering has been discussed by the Governing Council, in recent times at least,” Draghi said on April 20 while attending IMF meetings in Washington. Weidmann said in an interview that “the problems in Europe can’t be solved by monetary policy measures.” Officials in Europe and around the world are bickering about additional crisis-calming steps, as turmoil returns to the continent’s bond market amid concern that Spain may need a bailout. While Draghi says Spain and Italy need to agree further action, Prime Minister Mariano Rajoy’s government wants the ECB to reactivate its bond-buying program.

    Coene Says Further ECB Action for Spain Now Risks Credibility. European Central Bank Governing Council member Luc Coene said immediate further measures to quell financial turmoil in Spain risk stretching the credibility of the bank’s monetary policy. “We have done what we can do so far within our mandate and within the possibilities we have,” Coene told Bloomberg News in an interview yesterday in Washington. “The only thing we could do is overstretch ourselves and then we would even lose the credibility we have at that moment.” 

    The European Investment Bank hedges itself against Greek exit from the eurozone, inserting drachma clauses into loans it is granting the country's businesses. The bank says these clauses will now be included in all contracts with any country applying for a bailout.

    Europe's EFSF 'Firewall' Risk At 3 Month Highs, Accelerating At Fastest Rate In 6 Months

    Euro Banks Could Spark CrisisAccording to the IMF’s latest Global Financial Stability Report (GFSR), one of the most pressing threats facing the global economy and the international financial system is the possibility of massive, synchronised deleveraging at European banks.

    Germany and France threaten to undermine the whole of idea of European Union with their proposal to allow Schengen-zone countries to reintroduce border controls, writes Carsten Volkery. "Next to the (euro), free movement is probably the strongest symbol of European unity … it's what makes this abstract idea tangible in the first place."

    Here's A List Of The Pledges By Francois Hollande That Terrifies The Rest Of Europe.

    Ireland's 2011 underlying budget deficit for 2011 hits 9.4%, beating the EU target of 10.6%. You'll notice "underlying" in that first sentence – stripped out were "one-off" capital injections into the nation's banks, without which the deficit was 13.1%. Despite slowing growth, the government remains confident about hitting its 8.6% target for 2012. 

    IMF’s Chopra Says Risks for Ireland ‘High,’ Irish Times ReportsAjai Chopra, the International Monetary Fund’s mission head to Ireland, said that “risks” for the country remain “high” as household debt and economic uncertainty continue to weigh on demand, the Irish Times reported. If domestic demand doesn’t improve, and constrained export growth keeps Irish growth “stuck at about 0.5 percent,” Ireland’s debt will continue to rise, Chopra was reported as saying. The IMF has been pushing for “additional European support” for Ireland beyond existing arrangements, Chopra said, according to the report.

    As tipped earlier, Dutch PM Mark Rutte and his cabinet have resigned after budget talks broke down over the weekend. Elections may not come until the fall. EWN -2.7%.

    Spain Rules Out More Health Austerity Measures, Mato Tells ABC. Spain is ruling out the need for a second wave of austerity measures to reduce the country’s public health care costs, Health Minister Ana Mato said in an interview with the ABC newspaper. The Spanish health system’s “sustainability is guaranteed” after the latest measures approved by the Cabinet on April 20, Mato was quoted as saying, according to the paper.

    Accountability update: Former Iceland PM Geir Haarde is found guilty of negligence concerning the collapse of the country's banking system in 2008. He is cleared of 3 other charges and will face no punishment. He is the only politician on the planet to face charges in connection with the global financial crisis. 

    South Korean Central Bank Report Warns of Surge in Government DebtSouth Korea's government debt could surge above 100 percent of the country's annual gross domestic product by the year 2030 from just a little more than 34 percent now, the country's central bank said in a report released on Sunday

    Chinese banks are starved of capital following a massive lending spree and still needing to pay their largest shareholder (the gov't) big dividends. A decade after going public, the banks remain arms of the government, making loans when and where it suits officials, and incredibly reporting a troubled loan rate of just 1.15%. "There's an awful lot of money just going round and round … giving the appearance of strength when it's really not there," says Fraser Howie.

    China is likely to continue taking steps to allow the yuan to trade more freely following the recent widening of its exchange-rate band, Yi Gang, the Deputy Governor of the PBOC, said yesterday. "It's time to let the market more or less to decide the rate (while) reducing the intervention," Yi said without elaborating on the timing of such moves. 

    Behind a Chinese City's Growth, Heavy DebtBorrowing Fueled Chongqing's Infrastructure Projects, Highlighting National Problem of Reliance on Government Spending.

    CHOVANEC: China's Official Numbers Don't Match Up With The REAL Numbers. Early last week, I went on Bloomberg to talk about China’s latest economic figures, and boy did I kick up a hornet’s nest. In a nutshell, I said that I was finding it harder and harder to reconcile China’s official CPI, GDP, and PMI numbers with what I was seeing and hearing on the ground. In my Bloomberg remarks, I made three core assertions: That the reported decrease in China’s consumer inflation rate (CPI) does not seem to accord with my own daily experience of rising prices in China; That there is reason to suspect the Chinese economy may be growing substantially below China’s reported real GDP growth rate of 8.1% for Q1, and may actually be in contraction (negative growth); and That Chinese companies I have been talking to are seeing flat performance (near zero growth) in Q1, compared to last year.

    Whatever the Supreme Court verdict on Obamacare in June, some important elements of the law may still be implemented, with two-thirds of states on track to have public insurance exchanges in place by 2013. A decision to void the entire law, though, would make things more difficult, as it allows for federal subsidies.

    West Texas crude slips below $102/barrel, -1.8% to $101.98 as concerns about Europe, sluggish China data, and a weak start for U.S. stocks weigh negatively on prospects for oil demand. But while most commodities contend with concerted selling pressure, natural gas prices have pushed up sharply to $1.98 per MMBtu, a 2.6% gain. 

    A host of gambling-related companies report earnings this week with investors anxious to see if momentum in Macau and improving trends in the U.S. continued to percolate through the end of Q1. Another major topic for the sector is what to do about Las Vegas? Casino operators may tip their hand with their reports on if they plan to finish off projects on the Strip or keep resources centered on higher-growth markets and online ventures? On tap to report: LVSBYIBYD,IGT.

    Wal-Mart's (WMT -4.1%) Mexican subsidiary, Walmex (WMMVY.PK -15.8%) plummets in early trade in wake of the bribery story. Wal-Mart owns 69% of Walmex and it accounts for about 8% of company's overall profitWalmex controls about 62% of the Mexican food retail market with EPS growth this year expected around 39%.

    Supervalue (SVU +0.3%) sits as one of the few service stocks peeking its head out into positive territory after Jefferies raises up its price target to $8 from $6.50. Analysts with Jefferies see FY13 EPS coming in at $1.26 a share and FY14 at $1.34.

    Disney (DIS -0.5%) plans to start selling Starbucks (SBUX-1.9%) coffee at its array of theme parks in Florida and California. The company plan to integrate the Starbucks stores into the motif of individual properties. Financial terms of the arrangement were not disclosed, including if parents can expect to pay the Disney premium for a cup of Joe.

  71. Phil


    Chipotle's (
    CMG -1.5%) strong Q1 results (III) aren't blowing away SA author Robert Broens who warns that valuation is stretched. He notes the restaurant chain's international expansion plan will only add limited contributions in the short to medium term.

    First Solar (FSLR -7.1%) is cut to Sell with a $9 price target at Maxim Group, which believes the bull case for the stock "now rests solely on hope not reality." The firm had been optimistic about potential upside from new utility scale projects in emerging markets, but "capacity closures, competitive c-Si pricing, and performance degradation problems in high heat" now limit upside.

    Who knows whether Apple (AAPL) is over- or underpriced – different investors can come to different valuations – but after the week it's had (down 6% in three days, and 10% off its high), maybe you should look at paring that position (and considering how much Apple moves major indexes, you may own a lot more than you think).

  72. kustomz

    FXlive

    • UK FTSE -1.9%
    • German DAX -3.4%
    • French CAC -3% (lowest close of 2012)
    • Spain IBEX -2.9% (lowest since Nov)
    • Italy MIB -3.8%
  73. Phil

    Oh no – that wasn't much of a bounce at all!  

    I think take the money and run on those TNA calls (.95) in the $25KP as that bounce was lame.  Same goes for the SPY $133s, which also made a dime as we're not perking up on the EU Close.  (can always get back in if we turn).  

  74. 1020

    It's Settled!  Bob Pisani says due to the French vote, Austerity Fails!
     
    I feel better already….. :)

  75. stjeanluc

    Thanks Dclark… A little distracted this morning! Here is an updated position:

  76. Phil

    UUP/DC – Thanks for catching those. 

    Let's watch that 79.60 line on the Dollar – that needs to hold for the bears to stay in control. 

    AAPL/Lunar – Iflan likes cash and h knows his stuff however, I would have not minded selling the May $500 puts at $7.50, when AAPL was driving down before.  Now $6.50 and not as much fun – maybe later.  Risky, of course, with earnings ahead.  

    Retail/Rdn – A lot of pricing pressure as PPI outpaces CPI.  Consumers are out of money – that's just math.  It's not going to change until they get hired and/or salaries go up or energy prices go down.  Since nat gas is already almost free – it's all up to oil coming down or not to put another $50 a month in people's pockets.  If not, then we have to wait for WMT to give out raises…   ROFL – that's a good one!!!  

    Reps/1020 – Their "plans" terrify me.   Frontline show is going to be good. 

    Russia/Kustomz – Oh that does not sound good.   Thanks for EU update.  

    11:42 AM Europe closes sharply lower as weak economic data plants itself in the continent's growth engine, and the debt crisis claims another government (with another maybe on the way). Stoxx 50 -2.9%, Germany -3.4%, France -2.8%, Italy -3.7%, Spain -2.7%, U.K. -1.8%. Euro -0.3% to $1.3180.

    The White House releases a report predicting that President Obama's 2010 healthcare law will save Medicare over $200B through 2016, with beneficiaries to enjoy lower costs of $59.4B. 

  77. dclark41

    stjean:
    You deserve the assist. You do an awful lot. Thank you.

  78. dclark41

    Phil
    Was the UUP trade a straight gamble that the dollar would pop into the 80's? The trade doesn't pay much unless it does.

  79. dpastramas

    SBUX / Maybe you want to have a look at SBUX.  All of the MoMO market leaders are collapsing one by one (just looking at the technicals).  

  80. jasu1

    WMT doing it abroad…..called bribery;
    WMT doing it in the US…..called Lobbying.
    What is the difference……Lets get real!!!

  81. kustomz

    Financials show signs of short covering..volume once again off a cliff…2 hours since the low in /ES they need to punch through 1360 now..

  82. jromeha

    Pharm – Helluva a job on PLX! I sold 1/4 here. I first read your reco on PLX when it was in the high $4 range. It's up over 50% in less than a year. Again, well done!

  83. jabobeast

    Monday, April 23, 12:04 PM Shares of Priceline (PCLN -2.2%) dip below the $700 mark for the first time in a month, as a price target increase from Credit Suisse's Stephen Ju doesn't do much to alleviate selling pressure. The analyst raises up his PT on PCLN to $811 from $790.

  84. stjeanluc

    In view of the May expiration period that is starting today I have updated my volatility spreadsheet with monthly calculations based on Friday's prices:

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

    The monthly spreadsheet is Monthly Volatility 4-20-2012.

    I also posted a new weekly volatility study - Weekly Options 4-20-2012

    I have explained the system before but I can answer any questions and maybe one day will write a post about this spreadsheet.

  85. Pharmboy

    Oh, austerity and mission impossible.  Go PLX.

  86. stjeanluc

    Down year so far across the globe:

    http://www.bespokeinvest.com/thinkbig/2012/4/23/us-weak-but-holding-up-much-better.html

    Spain probably gets a 9.5 for excellent diving form!

  87. Pharmboy

    jro – thx.  Ur welcome.  Let's hope there is a bit more gas in the tank.  With Nestle buying the PFE unit for 11.9B, and PFE looking to unload the animal health as well, I think that makes PLX a good candidate to join PFE.  TEVA needs to wake up on that one as well. 

     

    SGEN and CRIS holding well in the sell off.  YMI did not fill last week at 1.69, they are 1.67 now.  I have an order in at 1.65.  So, I continue to accumulate.

  88. shadowfax

    stjean
    Spain 9.5 but Italy is the true cliff diver and should overtake spain in a week or so.

  89. Phil

    UUP/DC – Yes, I expected the Dollar to go up more, but not in one day. 

    SBUX/Dpast – But they are not really a Momo – there is a good, fundamental business there with lots of room for International growth.  The cost of opening a SBUX is less than 1/4 what it costs to open a CMG and they need 1/10th the business to be profitable.  It's apples and oranges – or $4 coffee and $8.50 burritos.  They may have run up a bit – but there are far better things to short. 

    Diving/StJ – Yes but Italy has the kind of dive profile that can cut through the water without making a splash…

  90. Lincoln

    Phil: AAPL
    Back 100 points or so ago I sold an AAPL Jan 13 600 call and a 425 put.  The caller has obviously been painful.  I have held off rolling to the Jan 14 700 would you suggest I do that now or add some sort of bcs as an alternative to cover that exposure?  TIA

  91. Peter D

    Whee, as VIX goes up, don't forget to sell short puts and/or bull put verticals that are 10-15% OTM for May and further out of the money for June!

  92. Pharmboy

    Look at that recovery in XCO………

  93. lolobear

    lflan – what's your take on NFLX?  Have you ever looked at them at all?

  94. newt

    TZA/Phil- Thanks.  I got greedy and took it off the table.  Can I reload for June w/ BCS as you rec'd above? And if so what Put to sell?

  95. shadowfax

    1st failure at trendline resistance.

  96. Phil

    Back to my weekend reading (in no particular order):

    The Most Surprising Chart Of Q1 Earnings Season So Far:

     

    9 Economic Indicators You Need To Start Following

     

    Me and this guy are totally on the same page:  Investing in the "Robopocalypse"It's sort of a running joke here at Economic Disconnect that I believe robots and machines will one day take over the world, and in the process subjugate and/or kill all of humanity. Granted it's a bit extreme. That said, perhaps there is a way to profit from the long road towards robotic domination, and if timing is just right one could make a killing (haha) before the end times are at hand.

    Billionaires Make Killing Amid China Murder Tale - It’s the rare scandal that involves murder, corruption, Harvard University and comparisons to Jacqueline Kennedy. The Bo Xilai kerfuffle now mesmerizing China offers all this and perhaps more: It could forever change an entire political system.

    A Power Struggle (To The Death) Within China's Power Elite - For those amongst you who like tales of drunken British businessmen, unexplained deaths, cyanide poisoning, swift autopsies, mysterious political figures, Lady Macbeth-type wives and police chiefs fleeing for their lives – read on.

    China’s Political Stability Questioned, while Deposit Withdrawals Accelerate - China’s central bank announced efforts to boost liquidity after seeing depositors pulled 1 trillion Yuan (HK$1.23 trillion) from mainland China’s four big state-owned banks in just two weeks.

    Demography: China’s Achilles heel

    Have the Rich Ever Paid a Fair Share of Taxes? (and Part 2) - Worse, the rich — or more accurately their accountants and lawyers — soon learned how to exploit the two separate, unrelated tax systems in order to postpone taxes, reduce them or escape them altogether. The personal-corporate income-tax interaction has been the great engine of complexity that has now resulted in a tax code that stretches to tens of thousands of pages.  No reform of the tax code can succeed unless these two taxes are integrated into a single system. Indeed, if they had been at the beginning, there would be no talk of a Buffett Rule today to get the rich to pay up. In fact, the Buffett Rule is purely an artifact of that larger failure, plus no little demagogy.

    Krugman on the Liquidity TrapPaul Krugman has argued that Japan is in a liquidity trap and that it can recover only if the central bank there follows a policy of "credible inflation." This paper argues that Krugman's proposal, which is similar to what Fisher proposed during the Depression, is based on a different interpretation of the liquidity trap from that proposed by Keynes. As a result, his policy recommendations can result in neither the elimination of the trap nor in Japan's economic recovery.

    14 Fantastic Insights From Wall Street's Sharpest Minds

    What The World's Biggest Companies Are Telling Us About The State Of The Economy

    The Entire US Economic Debate In One Massive Slide

     

    chart

    Morgan Stanley

    Here's A List Of The Pledges By Francois Hollande That Terrifies The Rest Of Europe

    Miami condo prices surge 46%, homes also post strong gains

    Could US natural gas run out of storage capacity? - This means that storage can accommodate combined US and Canadian average weekly injections of no greater than 61 bcf/week between now and the start on the next heating season, compared with 5-year average injections of 91 bcf/day.

    Climate Change Has Nothing to Do With Al Gore (Part 1): Paul Douglas

    There's Even More Pressure On Apple's Stock Thanks To Analysts Who Are Going Crazy With EPS Estimates

    Near death, explained – Neuroscience

    Best article of the weekend:  Facts – R.I.P. – 360 BC – 2012 ADTo the shock of most sentient beings, Facts died Wednesday, April 18, after a long battle for relevancy with the 24-hour news cycle, blogs and the Internet. Though few expected Facts to pull out of its years-long downward spiral, the official cause of death was from injuries suffered last week when Florida Republican Rep. Allen West steadfastly declared that as many as 81 of his fellow members of the U.S. House of Representatives are communists. Facts held on for several days after that assault — brought on without a scrap of evidence or reason — before expiring peacefully at its home in a high school physics book. Facts was 2,372.

  97. lflantheman

    AAPL plays I like:    I like the May 500 puts sales mentioned by Phil.    I like the January 13  600 calls and have gotten some in non-AAPL portfolio accounts.   But cash is good as well.  
    lolo /  NFLX    I think this is a poorly run company.  This means to me they are gjoing to be unpredictable.  And that confuses me, so I stay away.  

  98. dpastramas

    SBUX / Phil – Thanks for the heads up. i just had a look at the graph and it looked to me as a MoMo stock. Didnt know they have solid fundamentals. Closed the position just to be safe.

  99. lflantheman

    Speaking of MoMo, we will have to get moving on this 10k MoMo play stjeanluc and the rest of us discussed a couple of weeks ago.  But first, I want to see AAPL earnings through.  

  100. 1020

    Allen West is a hybrid of ignorance and lunacy….
     
    ….and a tea party fave….
     
    …and no, someone did not get up on the wrong side of bed…. ;)

  101. gucci

    Iflan is the jan 600 call for open new position today or just till after earning and see result first. thx

  102. Phil

    AAPL/Lincoln – It's risky coming into earnings but those $600 calls are $57.50 and it's 100% premium.  If they have earnings that pop them 10% – THEN they'll have $57.50 of intrinsic value but, otherwise, you are the sucker paying the premium.  Of course you are already about $45 better off than you were at the beginning of the month so – if you felt pain then – you should be thrilled to at least lighten up now and not put yourself in a position to get burned like that again by playing one of the most volatile stocks in the market where a 5% move in the stock can cost you $30,000.  You could buy the 2014 $650/760 bull call spread for $30 to cover against a disaster if that's how you want to stay in it.  

    TZA/Newt – At $1/45 for the $5 spread – it's already got a nice upside and I wouldn't look to sell a put right now unless the RUT pops higher and drops TZA and makes the short puts more attractive.  If TZA keeps going up (and the RUT down), then there are bound to be some nice, bullish offsetting short puts we'll be able to sell for .80 to $1.20 to knock down the price of the spread.  

    Momo/Dpast – As a rule of thumb, I consider a stock a Momo stock if the story of the stock drives it – as opposed to the Fundamentals.  So LVS is, WYNN isn't.  PCLN is, EXPE isn't.  LULU is not, UA is.  CMG is not really a Momo stock – just an overpriced franchise story that borders on Momo territory.  GMCR, SODA, GRPN – all Momo – there's no business there that remotely justifies the stories that drive the valuation.  

  103. Pharmboy

    Oil still holding strong….down, but looks like a bear flag on the /CL daily chart.  I will re-enter short at 39.25 or so (USO).

  104. cslanson2

    lflantheman
    If you were going to write the May $500 Puts would you also consider a loose strangle by also writing the $700 Call to juice the premium income? Margin is about the same since both ends can't fail.
    Thanks

  105. dpastramas

    MoMo / Phil – Got it thanks! Very helpful, actually StJ and Iflan were wondering how to define MoMo the other day.  

  106. qcmike

    Phil
    what  tza spread should we be in now  ?
    May  19 /25  ?
    thanks

  107. rustle123

    If I had to guess, I'm saying meltdown at the EOD.  The gap is just too huge between us and Europe today and was big before today.

  108. dpastramas

    BIDU / Check it out, was part of the put list, broke 50MA on heavy vol. Maybe you want to add here (as you can see i am training on charting today :-) )

  109. flipspiceland

    Florida Republican Rep. Allen West steadfastly declared that as many as 81 of his fellow members of the U.S. House of Representatives are communists. Facts held on for several days after that assault — brought on without a scrap of evidence or reason — before expiring peacefully at its home in a high school physics book. Facts was 2,372.
     
     
    "Any man who admits to nothing but that which can be plainly demonstrated may be certain of nothing but perishing quickly."    John Locke
    There is no doubt in my mind that there are many more 'communists' in CONgress than the few West calculated.
    Nearly ALL congresspeeps know that the only system that they can allow to work immediately and long term is one that "communizes" all risk. 
    That is why there aren't any calling for Eric Holder to investigate the "communizing" ALL the risk that Dick Fuld, Joe Cassano, and a couple dozen more of their accomplices in the Mortagage Fiasco of All Time, in the financial sytem, not only nationally but Globally.  
    When you can with not so much as a by your leave, Communize all the hundreds of trillions of losses that  the Investment banks accumulated AND STILL DO, you have no choice BUT to know that they are all communists.  West was only partially right.
    And the Sarc comment is protesting too much.

  110. Pharmboy

    Dpast – nice.  Huge hammer forming, so could retrace up to 5d MA then restart its descent.
     

  111. Pharmboy

    Also BIDU appears to have bounced right off the 200d MA.

  112. Pharmboy

    craigzoo – NG looks like a good candiate for the IRA.  buy 100 shares and sell the June 6 or 7 calls.  I woudl sell the 6s for an 8% gain, and protects to 6.  More agressively, the 7s.  Paulson just bought a 12% stake in them a week or so ago.

  113. dpastramas

    BIDU / Pharm – Hammer?? Oh well i just added some puts to double down my previous position. Hope hammer misses and there is no bounce.
     
    Also LVS it tagging the 50MA but the vol is average. Not really convinced  Anyone else can see any exotic technical patterns? Hammers drills shovels?

  114. shadowfax

    I have to agree with rustle123 and will add that the market opened at trendline resistance, failed at that line, now below S3, money flow out, and trend indicators point to about another .5 % lower. Is Cramer yelling BUY BUY BUY?

  115. Phil

    Volume still low at 73M at 1:39 but it's been lower.  Of course all the volume was early selling and light move up since does not indicate a proper reversal.  

    12:00 PM On the hour: Dow -1.07%. 10-yr +0.24%. Euro -0.68% vs. dollar. Crude -1.56% to $102.25. Gold -0.59% to $1633.15.

    1:00 PM On the hour: Dow -1.1%. 10-yr +0.23%. Euro -0.62% vs. dollar. Crude -1.36% to $102.47. Gold -0.61% to $1632.85.

    The Italian consumer confidence index plunges to 89 in April from 96.3 previously (and 96.2 expected). It's the lowest read for the series since it began in 1996. The drop looks to be a reversal of recent gains made amid optimism about the new government as the reality of its austerity program sets in.

    The trustees of Social Security and Medicare are today releasing their annual financial reports, which aren't expected to make pretty reading. The aging population and slowing economy are straining the long-term finances of the programs, both of which are on track for insolvency in the coming decades unless Congress acts.

    The "traditional engines" of growth are beginning to kick inand strengthen the U.S. recovery, says AllianceBernstein economist Joseph Carson. Over the past two quarters, key components normally associated with a sustainable rebound; employment, spending and sentiment, have all begun to move higher in unison. That, asserts Carson, points to "a real business cycle.”

    Stocks and the Economy, Singing Different Tunes (NYT)

    Upon Review, Jobs Picture Not So Pretty (Fox Business)

    Speaking in NYC, the ECB's Jens Weidmann argues against monetary policies such as bond purchases which obscure "market interest rates (that) are an important signal for governments … markets don't always get it right … (but) their signal is still the most powerful initiative we have."

    George Soros and the Bundesbank’s Patriotic Putsch (Telegraph)

    You Won’t BELIEVE How Bearish Investors Are On Treasuries (Business Insider)

    "Almost a 51st state, but with a much better currency and a much more prudent government and central bank," says David Rosenberg on growing client interest in investing in Canada. Rosenberg sees a series of rate hikes by the BoC while the Fed remains on hold – giving the country and the loonie an even greater yield advantage.

    Dow 30 companies are expected to increase their annual payouts by 8.4 Y/Y and by 2.2% Q/Q, and distribute $107B over the next year, a Dow Jones survey finds. Since the end of Q4, six Dow components have increased per-share dividends, including Cisco.

    With the foreclosure process stalled, JPMorgan (JPM) turned to short sales, using those on 61% of its delinquent mortgage liquidations in 2011. The result was a good one: the bank says the short sales resulted in an average 56% loan loss vs. 71% on REO sales.

    U.S. Steel (X -2.2%) and AK Steel (AKS -3%) are bothslated to report earnings tomorrow, and their numbers could shed some light on prospects for the sector, as well as the overall global economy this year. Analysts are expecting both companies to reverse heavy losses versus the year ago period, having languished for months after crashing hard last year on slack demand and weak pricing power.

    AstraZeneca's (AZN -1.8%) purchase of Ardea Biosciences (RDEA +51.5%) may be the first in a series of deals for the company. The drug developer is considering buying other late-stage assets outside its research and development focus on cancer, diabetes and gastrointestinal ailments, in an effort to counter looming generic competition.

    A dose of reality for gold bugs from Matthew Kidman, who cautions that gold morphed from a fear trade into a greed trade after prices continued to march higher post crisis. While bulls cite strong demand, "the reality is the supply of bullion far outstrips demand, [and] that is going to be the case well into the future."

    Comex Silver Inventory Watch – Heading Into May-July Delivery Period (Jesse’s Café Américain)

    Shares of Brinker International (EAT) rip a 8.8% gain after the firm's FQ3 report shows that Chili's and Maggiano's are starting tohold serve after seeing Panera and Chipotle grab market share over the last couple of years. The two chains were able to clock comparable-restaurant sales gains even after raising prices. 

    Shares of the The Cheesecake Factory ([[CAKE] +1.9%) shoot higher on above-average trading volume with the firm's Q1 report slated for release on Wednesday. A number of restaurants names are getting a little lift from sales numbers out from Brinker International tipping off that Chipotle and Panera's death grip on investment dollars in the sector could lighten up a bit. Gainers: PFCB+0.9%TXRH +1.2%DAVE +1.9%.

    DR Horton's (DHI) FQ2 earnings beat expectations - with the home builer's net profit jumping 46% to $40.6M – CEO Don Tomnitz proclaims the spring selling season to be in "full swing," and backlog rose 25% to $1.1B, yet shares are -2.3% having been up sharply earlier. But then it's a down day for a lot of stocks out there today.

    An inside peek at Sears Holdings (SHLD -2.2%) fromCrain's doesn't paint a pretty picture on the morale at the company. While a former CEO calls the firm's challenges "self-inflicted" and current execs fear a "bad Eddie day," a team-building exercise for employees asking them to write a mock Sears article as a WSJreporter would resulted in many of them turning in blank sheets or obituaries.

    Speaking of borderline Momos:  Buffalo Wild Wings (BWLD -1.1%) sets up nicely as a short squeeze with earnings due to be released on Tuesday, according to TheStreet's Roberto Pedone. He cites the low-float on BWLD compared to its high short interest – along with the restaurant chain's propensity to beat estimates and record double-digit revenue growth as drivers for a squeeze.

    Bounced Best Buy (BBY +1.8%) CEO Brian Dunn is reportedly in line for a severance package of up to $3.35M if the exec's departure is tagged as involuntary. The company has to carefully weigh the risk of litigation and ongoing negative publicity for not giving Dunn anything against shareholder outrage for paying him off to settle the matter. 

    Ex-Microsoft (MSFT) engineer Max Zachariades bashes his former employer as a company where "any original thinking was sacrificed at the altar of time-proven, common sense process," and excess bureaucracy and "meetings about meetings" are the norm. "[Microsoft] is becoming the McDonalds of computing," he proclaims. "Cheap, mass products, available everywhere. No nutrients, no ideas, no culture." Some are more positive. (also)

    Facebook (FB) has agreed to purchase a portion of the patents and patent applications Microsoft (MSFTacquired from AOLfor $550M in cash. Facebook will receive 650 of AOL's patents and applications through the deal, while Microsoft will hold onto 275, as well as license to the ones it's selling to Facebook. Microsoft paid $1.056B for AOL's portfolio, reportedly trumping a Facebook offer in the process.

  116. Phil


    Quick take on 
    Microsoft-Facebook: It's possible Microsoft, which owns a small stake in Facebook and also has an extensive technology/ad sales partnership, offered Facebook a sweetheart deal in order to stay on good terms. On the flip side, given Facebook will likely use the AOL patents to defend itself against Yahoo (YHOO), the deal could be another sign the Microsoft-Yahoo partnership is on the skids, and might just fully unravel.

    Shares of Priceline (PCLN -2.2%) dip below the $700 mark for the first time in a month, as a price target increase from Credit Suisse's Stephen Ju doesn't do much to alleviate selling pressure. The analyst raises up his PT on PCLN to $811 from $790.

    Barclays' checks with Chinese online ad agencies indicate "relatively cautious demand" for Q2, particularly for display ads. The firm sees this as a negative for Sina SINA -3.1%), and is also worried the company's investments in monetizing its Weibo microblogging service and appeasing government censors will lead to higher operating costs. (previous)

    Meet the Media Companies Lobbying Against Transparency (ProPublica)

    The Top Five Special Interest Groups Lobbying To Keep Marijuana Illegal  (Republic Report)

    BTIG's Walter Piecyk, who downgraded Apple (AAPL-0.6%) to Neutral 2 weeks ago on subsidy cut fears, argues today that cuts are already quietly occurring. As evidence, he points out AT&T (T), whose iPhone sales are heavily skewed towards upgrades, has stopped allowing iPhone users to obtain subsidized upgrades after just a year. In addition, Piecyk estimates Sprint sold just 1.4M iPhones in Q1, down from 1.8M in Q4. Apple reports after the close tomorrow. (also)

    Apple's (AAPL) bent on making its next iPhone the thinnest model ever, reports KGI Securities' Ming-Chi Kuo, with the company hoping to reduce thickness from 9.3mm to less than 8mm. Apple'sreported plans to use in-cell touch panels are expected to help its cause, as are plans to use a thinner battery and a metal back (the 4S has a glass back).

    Tracking Creation in Glen Rose: In the beginning, God created dinosaurs and humans, and they walked together in Texas (Texas Observer)

    Three lunchtime reads:
    1) Dividend growth rates: using the past to estimate the future
    2) Whalen: Why the big banks will eventually break up
    3) Congress and long-term unemployment

     

    Classic Barron's covers – as always, Caveat Emptor.

    November 2007 and April 2008:

    The Barron's poll of the time

     

    [portfolio]

    [Politics]

  117. Pharmboy

    Shadow – TRIN is at 1.85.

  118. Phil

    The Cost of Bad Buy/Sell Decisions

  119. Phil

    TZA/QC – Sure, May $19/25 is a good one.  It's $1.25 in the money at net $1.65.  

    Meltdown/Rustle – After that weak bounce failure – it seems likely.  Dollar down at 79.57 is the only thing helping at the moment. 

    BIDU/Dpast – See above news on China Internet Ad Dollars – that's bad for BIDU too.  

  120. Pharmboy

    2% of investors bullish on treasuries……well, now I know what I am shorting……nice find Phil.  Those that are short are going to get their arses handed to them.

  121. jasu1

    CNBC beating the drums on $100 oil by end of week……short sheeple ready to get your head handed to you?

  122. mrmocha

    Feels like the momos (AMZN, CMG, NFLX, PCLN) want to run and just waiting on AAPL…

  123. mrmocha

    If you want another momo to play, TIBX is trying to bounce after a nice drop…

  124. gucci

    Hi Phil would you add more Dia put EOD or wait till break 1360 on spx. thx

  125. Phil

    I thought you would like that, Pharm.  

    Looking a little bouncy here.

    Tuesday the 10th, we made pretty much the same lows and that Wednesday morning we gapped up to:  Dow 12,850 (that's where we held today – it was a bullish sign we missed), S&P 1,374, Nas 3,030 (huge damage done there), NYSE 7,950 (close) and RUT 797 – so let's watch those for recovery lines – keeping in mind the Dow never failed it so the Dow still is our best bear play if the others fail their tests as it's 70 points over already.

    Nas is biggest laggard so TQQQ May $103/110 bull call spread at $4 is a nice way to play bullish as they were over $110 on Friday.  You can sell and ISRG Jan $350 put for $4.40 to more than offset it (or to offset 2 of the spreads) and that's a 42% discount and almost Free Money on a PM account.  

    DIA/Gucci – Only if they move way up on a gap that's not deserved.  

    AAPL earnings play, buying weekly $575s for $20.75 and selling the May $590s for $22 for a net $1.25 credit on the $15 spread.  Idea is if AAPL hits, premium will wash out and you have a $15 advantage to the caller while if AAPL misses, then not much chance they get back to $590 by May expirations but you will end up with the naked short May $590s either way.   Fun for a light math play. 

    Other way to go long on AAPL is QQQQ  May $63/66 bull cal spread at $1.90, which is good for a 50% pop if the Qs move up just a bit.  If they sell off on poor AAPL earnings, then you can sell a put for $2 to cover or sell AAPL puts when they stop falling.  

  126. Phil

    EDZ May $13/16 bull call spread at $1 is a good way to play the anti-stick today.  Asia has some big catching up to do if we have a poor close.  Let's do 10 in the $25KP and 5 in the $5KP because I think this move up is BS.  

  127. Phil

    VIX still 19, TLT still $117.82 so I'm just not convinced all is well just because we have a low-volume index pop on no news.  

  128. jromeha

    Hey Phil – curious which you like better going into the close (playinig for the anti-stick), long /dx or short /YM?

  129. exec

    Phil/PACs

     
    You got that right.  They won't be happy until we're dead and buried.
     
    I see they pulled out their steady decline of the dollar card today to keep the markets from totally melting down.  The crash prevention crew are a cleaver bunch.

  130. stjeanluc

    Speaking of earnings, the average move for NFLX reporting tonight is 16%…  The weekly straddle seems to price in just about that right now so no real play on that.  A 80/130 weekly strangle on the other hand still pays over $1.50 and has over 20% protection on each side though. Almost tempting!

    Look at AAPL (reporting tomorrow), amazingly enough, the average post-earning move is 3.38% (I guess in a $500 stock, it's looks like a lot). The weekly straddle prices in a 7% move or twice the average move – I guess last quarter made an impression! There might be a play there for the courageous ones… The 510/640 weekly strangle still brings in over $4.50 with over 10% on each side. Scary to see where you have to go for protection.

    Once again, I am not advising these plays, this is just how you look at strangles for earnings. Very risky!

  131. Phil

    Close/Jrom – How about waiting until tomorrow?  I THINK we'll sell off but you can't predict short-term moves like that.  You have to let the market show you a level that's worth playing – not try to arbitrarily force on just because you have a yearning to make a bet – ESPECIALLY when you don't even have an opinion yourself!  

    Dollar/Exec – Very minor move in the buck except for, of course, that the Dollar should have been much stronger and was held down all day.  My UUP bet is based on the Fed not easing this week and that should be the straw that breaks the Euro's back.  

    16%/StJ – I'd play for NFLX NOT to do that.  You can sell the weekly $100 puts and calls for $16.30 and buy the June $110/125 bull call spread for $4.10 and the June $90/75 bear put spread for $3.60 and that puts you in for net $8.60 and it's a home run if NFLX flatlines or near enough that you have a cheap roll to May whatevers for the losing side while a big move won't hurt much unless it's more than $20 (20%) one way or the other.  

  132. button

    Phil,
    I got out of a lot of my short positions this morning for nice profits.  I am sitting on a fairly balanced portfolio now.  The candle being painted on the IWM & with momo stocks like CMG looks like we may be in for further upside tomorrow.  What are your thoughts – would you reload short positions now or wait to see how tomorrow plays out.  Thanks

  133. button

    Phil,
    Just saw your answer to Jrom so I am assuming the best play is to wait it out.

  134. dpastramas

    Its very impressive that the US markets are ignoring the fact that Europe is collapsing day by day..

  135. Phil

    FAS Money – Let's sell 1 May $100 call ($4.40) just so we're burning SOME premium.  

    IWM Money – Same deal with TNA, we can sell 1 May $54 call fro $3.50 to avoid boredom.  

  136. rustle123

    FB already having declining earnings.  Waiting for new cool site to put them into oblivion ala myspace

  137. Phil

    Reload or wait/Button – Wait.  This wasn't much of a bounce, was it?  It's OK to take a bearish flyer like EDZ that pays 3:1 if it hits but we commit to shorts at the top of a channel and longs at the bottom – in between, it's good to be patient (see big info-graphic above!).  

    And what I said to Jrom!  

    Ignoring/Dpast – Only the headliners are ignoring.  Overall, there is an EXODUS of cash:

  138. jromeha

    What a crock of sh!t! Guess the bots know something we dont. Who the hell would buy at the end of THIS day!?!

  139. Phil

    100M on the Dow at 3:50 – let's see how the last 10 mins go.  

  140. boltdude

    stjeanluc – regarding NFLX straddles versus strangles, I'm a bit confused; how does a strangle "pay $1.50 and have over 20% protection"?  Isn't a strangle a purchase of OTM calls and puts?  Could you clarify?

  141. jabobeast

    i wish they would have closed the market at 10 today!!!
     
    Oh well ;-)
     
    FU mr MoMo stick!!!

  142. Phil

    Crock/Jrom – There's always hope that The Bernank will come…

    That was a better close than I thought we'd have.  All up to the follow-through this evening.  I have to run to a meeting but will be back after dinner.  

    3:00 PM On the hour: Dow -0.93%. 10-yr +0.21%. Euro -0.55% vs. dollar. Crude -0.85% to $103. Gold -0.35% to $1637.05.

    "You think government statistics – which are wrong and late – would affect anything in my investment world," asks Jim Rogers. He pays little attention, but – with 40 to 50 percent of the world economy having elections this year – there will be plenty of good news released even "while the underlying reality continues to corrode and get worse."

    Despite April's bullishness, May's put/call ratio on the SPDR S&P 500 ETF (SPY -1.1%) appears to be waving a caution flag to stocks. Front-month puts are building up, and going back to 2010 this has been a bad sign for stocks. Right now the ratio stands at a very high reading of 3.09. Historically, when the ratio is high, more often than not you wind up with losses

    Where's the rally, asks Scotty Barber, who notes the BRICs – during periods when their central banks are cutting rates - outperform developed markets. Brazil's 75 point cut (with more to come) was the loudest move, but policy is easing in the others as well. As of yet there's been no rally in either absolute or relative terms.

    Despite higher tax receipts, Illinois' stack of unpaid bills rises, now totaling more than $9B, reports the state comptroller. A loss of federal funding and a decision to use cash instead of bond issuance to finance pension contributions are the culprits, she says. Through 2010, the state had the lowest-funded state pension in the country, at just 45.4% of obligations. 

    The SEC sues CalPERS' former CEO Fred Buenrostro and board member Alfred Villalobos, alleging a scheme where Villalobos acted as a "placement agent," securing deals from the pension fund for his PE clients in return for big fees. The two have previously been sued by the state of California.

    Shares of Rio Tinto (RIO -4.2%), already weakened by today's drop in metal prices and news of a contraction in Chinese manufacturing, are further impacted by claims of billionaire Gina Rinehart that RIO owes royalties to her company and partner for 12 years of production at two mines in Australia.

    The approval of Cheniere's (LNG) planned Sabine LNG export terminal cements the company as the sector's go-to play, but it could open the floodgates for other new exporting facilities. Sempra Energy (SREplans to develop a $6B terminal, and Energy Transfer (ETE) plans a major facility; Chicago Bridge & Iron (CBI), tops in LNG export/import terminal construction, is another way to play it.

    You can shear a sheep many times, but you can skin him only once. The actions of Chesapeake's (CHK +3.3%) Aubrey McClendon aren't Enron-esque, but the actions – and CHK's legalese reaction - are remarkable in their tone-deafness, Kid Dynamite writes. CHK needs to understand that shareholders feel they may be getting sheared, and may react by bailing before they get skinned.

    Go BA!  United Continental (UAL) says it's ended discussions with Airbus (EADSY.PK -5%) and is negotiating solely with Boeing (BA-1.3%) for a potential order of about 200 narrow-body jets. the airline had been in talks with both companies for over six months on the nearly $17B order. The move sounds logical from a maintenance standpoint, considering that 75% of UAL's fleet is already made up ofBA aircraft. 

    BE Aerospace (BEAV +2.1%) bucks the downtrend after itsQ1 results topped estimates. Net profit jumped 37% as margins were boosted on record sales, driven by its commercial aircraft and business jet segments. 

    Shares of YRC Worldwide (YRCW -6.4%) trade lower after the firm seeks to reduce covenants under a credit agreement to give it more financial flexibility.

    Citi's Deborah Weinswig says retailers worked through spring season inventory without using as many markdowns and clearance incentives as last year and saw strong sales in high-margin categories. Beyond her "enhanced buying opportunity" call on Wal-Mart (WMT -3.4%) emanating from the Mexico scandal-related selloff, she also raises up her EPS estimate for WMT in Q1 by a penny adding it to the list of firms with higher profit revisions that includes JWNKSSM, and TGT.

    They have GOT to be kidding – for this they want $100Bn?  Facebook (FB) reports Q1 revenue of $1.06B (up from $731M a year ago) with monthly active users jumping to 901M (from 845M at Q4's end), according to its amended S-1. As for the Instagram acquisition, it paid $300M in cash and about 23M shares. Assuming $1B for a dollar amount, it means Facebook expects its stock to price at about $30 each.  More from the Facebook (FBS-1: Q1 net income of $205M vs. $223M last year. Cost of revenue $277M in Q1 vs. $167M last year. Total Q1 cost and expenses $677M vs. $343M last year.

    One troubling datapoint from Facebook's (FBlatest S-1 is that ad revenue growth fell to 37% Y/Y. That's down sharply from the 69% rate posted for 2011, in spite of reports of improved monetization, and will add to fears Facebook isn't growing fast enough to warrant a $100B+ valuation. Payments revenue, which includes Facebook's 30% cut on Zynga (ZNGA -1.4%) virtual goods sales, rose 98% Y/Y, but made up less than 18% of sales. (more)

    Looking to fight off the FTC and also obtain favorable legislation in realms such as copyright law and net neutrality , Google (GOOG) is ramping its lobbying efforts. The company spent $5.03Mon lobbying in Q1, up from $3.68M in Q4 and just $1.48M in the year-ago period. Consumer Watchdog estimates Apple (AAPL) spent only $500K during the quarter, Facebook (FB) $650K, and Microsoft (MSFT) $1.7M. (previous)

  143. shadowfax

    BOTS waring to the end. The big guy shorted at close, a few medium guys after. FWIW

  144. Phil


    Apple (
    AAPL) might tap Intel (INTC) to be a chip foundry partner, speculates Jefferies' Robert Lea. Though Apple primarilyrelies on Samsung (SSNLF.PK) for chip production, and is expectedto use TSMC (TSM) to produce its A6 chip, Lea thinks TSMC's unwillingness to "dance to Apple's tune" provides an opening for "Chipzilla." Intel has been talking up its foundry ambitions, and has struck deals with a couple of small FPGA developers.

  145. Phil

    Yep, 40M in last 10 mins was 40% of the day at the end and it was pretty even between bulls and bears so a very indecisive overall.  

    NFLX with .08 loss, which is better than expected but still lame.  $95 so far, doesn't look like they'll fail $90 so good shape on the spread.  

  146. kustomz

    NFLX GO DOWN!!!
    Please be worse than expected TXN!!
     

  147. stjeanluc

    Oops… NFLX below $90 now! Tomorrow market mood will probably be key!

  148. sagemm1

    wow NFLX beats…and now getting beat down!

  149. Pharmboy

    What F'in idiot bought NFLX at 111……I love the smell of capitulation in the air…..

     

    Down USO, down.

  150. stjeanluc

    Strangle / Boltdude – You actually sell the strangle, not buy it! Buying a strangle ahead of earnings is the worst sucker play ever as volatility is pumped up then. The idea of selling the strangle is that there will be a volatility crush tomorrow morning and you'll be able to buy it back cheaper. That NFLX 80/130 strangle is in the money now, but it might be dicier in the morning. Obviously the legs can be rolled… For example, the weekly 80 put can be rolled to the May 70 puts now.

    Like I said, risky plays…

  151. exec

    Phil/Dollar

     
    You're right, the dollar didn't move much, however, it doesn't take much.  They play the same game over and over.  They pop the dollar either in pre-market or at the open to stimulate the sell off, then once the initial excitement wears off (and volume drops), they start to ratchet down the dollar in small increments.  That's usually enough to stop the selling.
     
    It really is amazing to watch how the market reacts to every tick of the dollar.

  152. lunar

    phil, on nflx, is it better to wait to the end of the week to totally burn off the premium of the short straddle and then roll the losing side?  the june spreads will probably hold their combined value till then. thx.

  153. sagemm1

    hopefully my NFLX deep OTM puts (becoming closer to ITM), finally pay off

  154. stjeanluc

  155. kustomz

    WTF really?!?
    Reuters) - Texas Instruments Inc posted a 60 percent decline in its quarterly profit but revenue was slightly ahead of analysts' expectations and the chip maker said a prolonged inventory related decline in demand had come to an end.
    The company, whose chips are used in products ranging from cellphones to industrial equipment, said profit fell to $265 million, or 22 cents per share, from $666 million, or 55 cents per share, in the year-ago quarter.
    Revenue fell 8 percent to $3.12 billion from $3.39 billion but was slightly ahead of the consensus Wall Street forecast for $3.06 billion, according to Thomson Reuters I/B/E/S. TI's own revenue target was $2.99 billion to $3.11 billion.

  156. jmm1951

    AMX is a useful little stock. I got interested in it a while ago during an investment tour of a low income barrio in the Dominican Republic, where even the humblest homes were not out of reach of wireless Internet and cellular services from the company's local subsidiary.
    I opened  an at-the-money bull call spread and it has moved steadily further into the money, even today, when not many stocks made headway, it was up 2.5%
    They are not very well known in the US, though their Straight Talk service is marketed by Walmart (WMT) a popular retail store (except in New York City). AMX's latest move is the iPhone--well not really, but they are now offering a naked SIM card that you can use with your own or out-of-contract iPhone for only $50 per month with unlimited calling, data, and texting. Add on another $5 a month for unlimited calling to landlines in Mexico or some other countries, and you have a pretty useful package much cheaper than AT&T.
    Of course humble AMX is hardly positioned to challenge behemoths like AT&T or Verizon but the owner, a Mr.Slim, is a smooth telephone operator and could shake a few fat cats off their mats.

  157. stjeanluc

    AMX / Jmm – Historically, this is a pretty volatile stock… Some wild swings back and forth. Not saying it's bad, but you have to hang on for the ride. 

  158. stjeanluc

    Commodity Snapshot:

    http://www.bespokeinvest.com/thinkbig/2012/4/23/bespokes-commodity-snapshot.html

    Some of them are getting oversold now!

  159. newbie

    TZA  /  my unparalled trading acuity
     
    my weekend thinking / analysis – "probably a very down week coming, finally a major rollover
     
    8:49   exec says "maybe -500 today"
     
    9:30  newbie buys TZA at the open at $20.13 (shares)
     
    10:00  I go to bed for the day (don't ask)
     
    10:30   Phil says "TZA / newbie – nice call!'
     
    5:00 pm    I get out of bed, check the quotes  to count my profits -  TZA closes at $19.94
     
    I loose 19 cents!
     
    Now THAT is how you trade!! 
     
    welcome to my world
     
    (but it will be $25 by Friday, right?)  anybody?  Bueller?  Bueller?…………….Bueller?

  160. newbie

    my unparalled trading acuity
     
    Part Two
     
    on second thought, maybe I'll just start following Jabo     :)

  161. morxlntway

    did anyone take notes on favorite news sites and tweeters? Or remember what days that chat was going on? I thought i copied for later viewing but can't seem to come up with it>
    thanks

  162. Kwan

    morx – this link?

  163. morxlntway

    thank you, kwan

  164. joemayo

    I copied this list of tweeters from the 18th
    http://www.optionstradingiq.com/top-25-traders-on-twitter/
    I havn't gone through each one yet.

  165. Pharmboy

    Anyone in the tech field:  Can you give a brief pro/con of Augme Technologies, Inc. (AUGT.OB)? R they worth $2?

      Also, I know I have asked before, but I have someone who works for this company and he swears up and down that it is going to 100 – Guidewire (GWRE).

     

    Thanks.

  166. strether

    Phil
    There is speculation of a 10% devaluation of the euro as a way to stimulate euorzone growth.
    If the US and UK went along with this, how do you think US markets would react?
    Thanks
    Strether

  167. newt

    EDZ and TQQQ-
    I missed these this afternoon.  Checked back in after a meeting with only 2 mins left on market open.  Will these be playable in the morning?
    Thanks.

  168. Phil

    Wow, NFLX really got stomped.  $85 at the moment. 

    Our Futures up a tick with Asia opening flattish.  Much better than expected.  

    NFLX/Lunar – It depends on the movement and what you have.  I'd say it's likely, if the overall market isn't falling too far, that NFLX recovers off the open tomorrow so you may want to play for the bounce.  They did beat and now they are lower than last earnings, where they gapped up to $110 from $91 – pretty inconsistent.  

    Big Chart makes life easy:  We're down 4 of 5 Must Holds – gotta get at least two back before we can even consider calling it a bounce.  

    TXN/Kustomz – Up 4% on that report – amazing.  

    AMX/JMM – Of course it's a good stock – why do you think Carlos Slim is the World's richest guy?  I love that IPhone idea – gotta be 100M of the older models floating around.  They should offer to buy them for $50 and then give them away to customers who buy the Sim card with a 2-year plan. 

    TZA/Newbie – That sucks, although they only topped out at $20.50 so not like you missed too much. 

    At the close: Dow -0.77% to 12929. S&P -0.83% to 1367. Nasdaq -1.01% to 2970.

    Treasurys: 30-year +0.46%. 10-yr +0.19%. 5-yr +0.1%.

    Commodities: Crude -0.79% to $103.06. Gold -0.23% to $1638.95.

    Currencies: Euro -0.48% vs. dollar. Yen -0.45%. Pound -0.06%.

    Market recap: Stocks joined the global selloff as weak PMI readings from Germany and France, plus political uncertainty inFrance and Holland, underscored worries about the region's debts. Yet stocks bounced off their worst levels, and energy stocks even poked through for gains despite a slip in crude oil prices. NYSE declining issues outnumbered advancers three to one.

    Notable earnings before Tuesday's open: AKSAPD,ARMHBHICECITCOHDLPHHSYITWJNSMHP

    MMM,NVSPCARPHPNRRAIRFSNVTTROWUTXWFTWUX

    Notable earnings after Tuesday's close: AAPLACEAFL,BIDUCBGCHRWEWFTIHTSITCJNPRLIFE

    NBRNFX,NSCQCORQEPRFMDTSSWIT

    Economic recovery sign… or not? Travel on all U.S. roads rose 1.8% Y/Y in February, the Department of Transportation estimates, with total travel for the month at 216.1B vehicle miles. But even with the third straight month of Y/Y gains, miles driven has remained below the previous peak for a record 51 months and counting. 

    Capital spending on equipment continues to heat up, according to the latest survey by the Equipment Leasing and Finance Association. Loans and leases for business equipment in the U.S. rose 9.7% in March Y/Y, capping off a nearly 17% increase in financing activity during Q1. Respondents said they leased $6.8B of new equipment in March, up from $6.2B a year ago.

    The Fund Flows Paradox (Investing Caffeine)

    Having already skewered Fed policy by taking it to the next absurd stage, Sheila Bair warns the gang that never saw the housing bubble that they've created a bond bubble. If the market wants to push rates up a bit, she says, the Fed ought to let it. The economy may even benefit as those on the housing sidelines see rates headed north and move into the market.

    Duration Risk: How the Fed is Creating the Next Financial Crisis (Institutional Risk Analyst

    Fiscal and monetary policy in a liquidity trap (FT.com)

    There's a "huge risk" the U.S. won’t take the necessary steps to fix its debt and deficit problems between the elections and the end of this year, former Fed Vice Chairman Donald Kohn says. The U.S. political system has become “soap opera-ized,” he says, with such a chasm between the political parties there is a real danger debt and deficits will continue to grow well into the future.

    Origins of the Indebted American Homeowner (Bloomberg)

    "There could be big headwinds for the U.K. economy over the next few months," writes Jim Leaviss, noting cable is up 7.25% since June on a trade-weighted basis. Such a move in the past was equivalent with 175 bps of monetary tightening, not exactly something a stagnant economy can take. "Should the BoE join nations like Switzerland … in actively selling their currency or talking it down?" FXB+3.8% YTD. 

  169. Phil


    Behind the massive growth
     of Chongqing (pop. 29M) when it was led by now-deposed Bo Xilai
     is a mountain of debt, totaling 100% of gross regional product(as opposed to 22% for the country as a whole). In the 3 years following Mr. Bo's 2007 arrival, the city's banks more than doubled their loan books. As with the rest China, much of the debt is backed by land, leaving finances vulnerable to a property slump.

    Weakening manufacturing in China and the eurozonespelled lower prices for copper, as the industrial metal fell 2% to settle at $3.626/pound for its lowest ending price since Jan. 11. Add diminished expectations for imminent QE from the Fed, and prices could continue to fall from here, TD Securities’ Bart Melek says.

    The DOJ has begun a criminal probe of Wal-Mart (WMT) for allegations of systemic bribery in Mexico, according to sources. The U.S. Foreign Corrupt Practices Act bans companies from bribing foreign officials to win business, and enforcement of such has been stepped up in recent years.

    New questions swirl around Aubrey McClendon's (CHK)borrowing $1.1B from stakes in company wells: Reuters reports he sold out of two company-controlled wells just as CHK was divesting those properties. Were the sales timed and structured to benefit McClendon's or CHK's interests? One analyst imagines a scenario where a financially strapped CEO might do a deal that's not the best price for the company. 

    Rejected!  ConocoPhillips spinoff Phillips 66 (PSXwill replaceSupervalu (SVU) in the S&P 500 index, with SVU moving to the S&P MidCap 400 after the close of trading April 30. The grocer's market cap is below $1.4B, "making it more representative of the mid cap market space," S&P Indices says. SVU -1.7% AH.

    Texas Instruments (TXN): Q1 EPS of $0.32 beats by $0.03. Revenue of $3.1B (-8% Y/Y) in-line. Shares +2.7% AH. (PR)

    More on Texas Instruments' Q1: TI expects Q2 revenue of $3.22B-$3.48B and EPS (exc. one-time charges) of $0.36-$0.44, compared with a consensus of $3.29B and $0.40. Analog sales fell only 1% Q/Q in spite of seasonality, which suggests TI is benefiting from synergies related to the National Semi acquisition. Wireless chip sales (previous) fell 48% Q/Q and 43% Y/Y – Nokia definitely played a role, but did Amazon as well? TXN +3.8% AH. (PR) (earnings call - 5:30 PM ET)

    More on Netflix's (NFLXQ1: The Q1 results aren't bad, but Q2 guidance is. Domestic streaming subs rose 1.7M Q/Q in Q1 to 23.4M (guidance was for 22.8M-23.6M), streaming margin up 220 bps to 13.2%. International subs rose 1.21M to 3.07M (2.5M-3.1M expected), business lost $103M. DVD subs fell 1.08M to 10.1M (1.2M-1.8M drop expected), margin fell 680 bps to 45.6%. Free cash flow was $2M. (PR - PDF)

    Netflix's Q2 guidance: The company sees domestic streaming subs rising to just 23.6M-24.2M in Q2, and international subs to just 3.45M-4M. DVD subs are seen falling to 8.95M-9.35M. Revenue of $873M-$895M is expected for Q2, below a consensus of $897.4M. EPS of -$0.10 to $0.14 is expected, above a consensus of -$0.17. NFLX -14.2% AH. (PR - PDF) (more)

    Citi's Mark Mahaney notes Netflix's (NFLXguidance for just 200K-800K Q2 domestic streaming net adds (blamed on "seasonality") falls below a Street estimate of 1.2M, and makes the company's guidance for 7M 2012 net adds look dubious. Also likely weighing on investors' minds is Reed Hastings' assertion (.pdf) that Netflix's Latin and U.K./Ireland ops will need more than 8 quarters to "reach sustained profits." NFLX -16.4% AH. Earnings call starts at 6PM ET (webcast).

    Reed Hastings raises eyebrows once again during Netflix'sQ1 earnings call (webcast), stating his company will try to emulate a cable network by emphasizing a small amount of exclusive content, rather than trying to build a broad library such as that offered by its DVD business. Hastings also says Netflix doesn't plan on offering tiered pricing over the near-term, but doesn't rule out the possibility over the long haul. NFLX -16.2% AH. (more

    An ITC judge rules Microsoft's (MSFT) Xbox consoles violate Motorola Mobility's (MMIGOOG) patents; the ruling is subject to commission review. An ITC ruling on whether Apple (AAPL) violated four Motorola patents has been delayed by a day. Unlike most other Android OEMs, Motorola has chosen to fight Microsoft's attempts to extract a large royalty on its Android shipments, leveraging its huge patent portfolio

    There's a fair amount of cautious commentary on Apple (AAPL) going into tomorrow's FQ2 report, and that might suggest expectations have fallen a bit. Like Walter Piecyk, BGC's Collin Gillis is reiterating a neutral stance, arguing Apple needs to report 35M iPhone sales to please investors, and will only report 33.5M. Gillis adds the price-sensitivity of emerging markets buyers, which has contributed to strong demand for low-end Android phones, will limit Apple's future growth. (Canaccord)

    Time to Cut Back on Apple? (WSJ)

  170. Phil

    Devaluation/Strether – Well if we don't ease to match Europe, that's effectively what will happen anyway.  I think we're at the point where if one nation prints money, the others print to match so no one gets the "edge" and, eventually, we'll get some really major hyper-inflation. 

    EDZ, TQQQ/Newt – Well one will be cheaper and one will be more expensive – we'll have to see which is which. 

  171. newt

    Thanks. Planning on oil tonight? I gotta eat.

  172. stjeanluc

    NFLX down 16% – that number looks familiar. Oh yes, the average post earning move as I posted this afternoon. So far it seems that history is repeating itself! We will see how that works out in the morning.

  173. lolobear

    Any of you subscribe to bullmarket.com?

  174. lolobear

    Is it worth subscribing to?

  175. mrmocha

    Pharm, I took a quick look at GWRE.  Their 10Q looks solid, lots of cash and growing revenues, including from services.  Their customer list is also impressive but likely just scratching the surface, so seems like lots of room for growth.  It's probably not a fast changing environment so with their platform investment complete they can probably ride on their software core for another decade, which should keep R&D reasonable, always a key for tech companies.  There was no mention of 'cloud' or 'hosted' on their site, my key question for your friend would be are they working towards a scaled down, hosted solution that would allow them to the second tier, smaller customers.  Earnings are growing but I would probably wait and buy them on a dip; they seem like a Berkshire type investment, not sexy, just buy and forget…

  176. mrmocha

    Pharm, re AUGT, that one doesn't float my boat. Look at their SG&A, it's 4x their sales, that's a bloodbath.  Also the barrier to entry in their field doesn't seem very high, and their insider and institutional ownership is almost nil; there's better dice rolls out there…

  177. Phil

    Good morning!  

    Our Futures up about 0.25% with China flat, Japan down 0.75% and India up 0.6%.  

    The Bank of Japan is likely to ease monetary policy on Friday, sources say, by increasing its ¥30T ($370B) asset purchase program by ¥5T or ¥10T. The bank may also extend the maturity of government bonds it buys to around three years from the current two years. 

    Europe is up about 1% on some improving news.  

    6:00 AM Overseas: Japan -0.8%. Hong Kong +0.3%. China flat. India +0.7%. London +0.6%. Paris +1.1%. Frankfurt +1.0%.

    The German government expects GDP growth of 0.6-0.9% this year, according to German daily Die Welt, and growth of 1.6-1.9% next year. The figures indicate some optimism, as the government's most recent forecast was for 0.7% growth this year and 1.6% next.

    French consumer confidence rose unexpectedly in April to its highest level in 17 months, but remains below its long-term average.

    Hollande Blames Europe’s Austerity Plan for Le Pen’s RiseFrancois Hollande, the winner of the first round of France’s elections, said Europe’s austerity drive fueled despair and created conditions for the record-high score for anti-euro National Front leader Marine Le Pen

    UBS' Swiss consumption indicator rose to 1.22 in March, a significant increase led by improved business in retail trade and record-high new car registrations. UBS says consumption may actually be stronger, as the indicator doesn't fully account for Switzerland's sustained high population growth.

    Spanish Banks Need Urgent Halt to Avert Crisis – Sweden's BorgEurope must deal urgently with Spain's banking problems, which hang like a dark cloud threatening global economic recovery, Sweden's Finance Minister Anders Borg said on Monday. Failure to recapitalize Spanish banks quickly could throw Madrid into a bailout program, even though its current fiscal situation is manageable, Borg told the Peterson Institute for International Economics.

    Our own news is not encouraging:  

    The reserves for the Social Security fund that pays disabled benefits will run out in 2016, two years sooner than previously forecast, a government report said yesterday. If the fund is combined with the larger retiree one, all the reserves would be used up by 2033, three years earlier than projected. Given that the can is so far away, what are the odds that Congress will act?

    Outside of the financials, the beats are concentrated in a few companies with the top five contributors – ORCL, AA, IBM, INTC and GOOG – accounting for about 50% the upside relative to consensus.

    Tuesday's economic calendar:

    FOMC meeting begins

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

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

    10:00 New Home Sales

    10:00 Consumer Confidence

    10:00 State Street Investor Confidence Index

    10:00 FHFA House Price Index

    10:00 Richmond Fed Mfg. 

    Housing data is anticipated to be a positive – as long as that doesn't disappoint we should be fine into the Confidence Reports and, of course, everyone is waiting for MORE FREE MONEY tomorrow.  

  178. Phil

    Oil $103 (/CL) is a short, of course.  Dow below 12,900 (/YM) is also a good shorting line and if RUT (/TF) 790 breaks, that's a good shorting spot too! 

    Dollar at 79.45 so below 79.40 is going to be bullish and over 79.50 will be bearish.  They did a great job of keeping a lid on the Dollar yesterday – can they make it two in a row? 

  179. Phil

    Eating/Newt – Usually not good to play oil late at night.  3am, maybe, 6am usually.  Between 6pm and 3am – the trading is so thin it's usually just you and the Bots and guess who tends to win that battle?

    16%/StJ – I'm starting to become a believer!  

  180. Phil

    Not getting our breakdowns – not a good time to play the futures until the Dollar breaks up or down. 

  181. Phil

    79.38 – Looks like the Dollar dives again to prop up the markets.  

  182. deano

    Pharm – agree with mocha on both fronts. I see a lot of business plans, and on AUGT, I think I've seen something like it many times. On GWRE, you've got consistent earnings and revenue growth, not explosive, but that's what I'd expect in their industry. Could be very nice over the long term and worth digging deeper. I've only seen one other plan of something like it for that industry.

  183. jmm1951

    Interesting that the U.S. Foreign Corrupt Practices Act bans companies from bribing foreign officials to win business and yet it is perfectly legal to do the same thing in the US.

  184. exec

    Phil/Dollar

     
    Yep…..it's a total damage control game they've been playing.  Given the lack of terrible news today, we're probably in for a low volume BOT controlled gainer day.  They'll most likely continue to drop the dollar to keep pushing it up and if they get the shorts on their heals again might close with a triple digit gain that the talking heads can hype.

  185. exec

    JMM/Bribe

     
    First thing you need to do is define Bribe.  This world is so backwards that the lawyers will argue that giving a foreign official huge sums of money in exchange for business is not a bribe and win.

  186. craigzooka

    I looked into NG and have some reservations, The negative earning and no dividend have me a little spooked. The options spread is also a little wider than I would like on such a cheap stock. Do you know anything else about them?

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