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Testy Tuesday – All Better or Just Bouncing?

Wow, what a Monday!

The Nasdaq and the Russell already hit our 2% bounce goals and the Dow needs another point with just half a point making the mark for the NYSE and the S&P – not bad for a day's work…  

EVERYONE is TALKING about bailouts and easing but, so far, no concrete action has been taken and we don't believe we can get more than a strong bounce (40% retrace of the drop) without ACTUAL stimulus coming through.  Those lines would be:

  • Dow – 12,750 (12,540 is 20% retrace/weak bounce)
  • S&P – 1,343 (1,319)
  • Nas – 2,900 (2,840
  • NYSE – 7,720 (7,560)
  • RUT – 780, (765)

As you can see from the Big Chart, the Nasdaq stopped dead at their -5% line at 2,850 so we'll be watching that one very closely and the S&P is just under its -2.5% line at 1,320 so those are our major goals for the day along with turning the Russell and the other weak bounce lines green.  Those are the 2% bounces we expected in yesterday's post but we certainly didn't expect them in one day!  

SPY DAILYWe had gone into the session expecting to flip more bearish after betting on the bounce Friday afternoon but it was a very strong day overall and none of our warnings (see Morning Alert) were tripped so we ended the day a little more bullish as we tweaked our FAS Money Portfolio even more bullish by uncovering our primary January bull call spread.  On the other hand, we left our bear hedges in place on the $25,000 Portfolio, so we're not ready to go all the way on our first bullish date.  

All three of my stock picks from this week's Stock World Weekly gave us the entries we were looking for and some nice gains yesterday as CHK opened at $14.25 and finished at $14.91 (up 4.6%), HPQ opened at $21.42 and jumped to $21.89 (up 2.1%) and XLF gave us our $13.77 entry but is still playable at $13.90 (up 1%) and, of course, our aggressive FAS Money move was to take advantage of the lagging XLF index.  

Of course the more fun way to play XLF would be our trade idea from yesterday's Member Chat, which was to sell the Jan $12 puts for .75 and buy the Jan $13/14 bull call spread for .59, which nets a .16 credit on the $1 spread so no cash committed (but about $1.20 in margin) and a potential $1.16 upside (725%) if XLF maintains $14 through Jan expirations and the worst case is you have XLF assigned to you at net $11.84, which is a 15% discount to the current price (see "How to buy Stocks for a 15-20% Discount" for more on this strategy). 

XLF WEEKLYXLF was, of course, one of our "Secret Santa's Inflation Hedges for 2011" and that one was the Jan 2012 $12/13 bull call spread for .80, selling the Jan 2012 $11 puts for .40 for a not too ambitious net .40, which yielded our expected 150% gain on cash in January – but not without giving us a good scare in the fall!

Notice on Dave Fry's XLF chart, we're HOPING (not a valid investing strategy) that the center channel of the last 3 years holds up and gives us a bullish signal – that's iffy at the moment and it's not going to happen without some proper intervention (see yesterday's discussion on the G8, etc.).  If we fail to hold that $13.50 line on XLF – we will be backing off that bullish position pretty quickly and then waiting PATIENTLY for the retest of $11.  

None of this stuff matters if we can't even complete our weak bounce levels and that won't matter if we can't move on and recapture our strong bounce levels and that won't even matter if we can't take back those "Must Hold" lines on the Big Chart but we already have plenty of bearish hedges – we're protecting those by playing for a bullish bounce but, if that bounce never comes – then game back on for the bears!  

We had hoped BBY's earnings would provide a turning point for the stock and the sector and they did report a 25% drop in Q1 earnings to .46 per $18 share but, stripping out costs tied to their restructuring, it's more like 72 cents per share (up 10.7%) on a 2% increase in revenues BUT, there was an extra week this year so let's call that in-line.  While BBY may be nothing to get too excited about – it's hardly the disaster that's baked into the price after dropping almost 50% since those Q1 2011 earnings last year.  

 “Best Buy is in a turnaround, and the strategic priorities we laid out at the beginning of the year are just the first phase of the changes to come,” said Mike Mikan, CEO (interim) of Best Buy. “We know we have to better adapt to the new realities of the marketplace, and we are creating a long-term plan designed to make Best Buy more relevant with customers and position the company for sustained, profitable returns in the years ahead. First quarter results were in-line with our expectations, and we are reaffirming our previously provided annual guidance for fiscal 2013.”

Those expectations are for $3.60 per $18 share (p/e ratio of 5) in earnings in addition to paying out a .64 annual dividend (now 3.5%).  We're already in BBY with short put positions in our $25KP but I have to say I'm really liking them this morning as the CC merely confirms what we expected but, surprisingly, the stock is not moving higher – yet, and makes a nice pre-market opportunity at $18.  There is a persistent myth that AMZN (we're short) will take over all retail and BBY and others are suffering but the same was said about catalog sales over 100 years ago – why hitch up the wagon and drive to the store when Sears or Wells Fargo will deliver it right to your door?  Silly humans – they never learn…

FXE WEEKLYIn other silly human activity – Europe.

Do I really need to elaborate on that?  Yes, they are still a disaster.  So much so that the OECD has cut their 2012 Eurozone GDP forecast to -0.1% – that's a recession folks!  Our forecast was RAISED from 2% to 2.4% and China (our manufacturing floor) was raised from 8.2% this year and 9.3% next year DESPITE China's attempts to keep a lid on growth.  Japan is +2% this year (after the weak quake year) but drops to 1.5% next year and the OECD warns that the global "recovery" is both "fragile and uneven."

Nothing to change my premise that US Equities remain the best place to put your money.  We're short on TBills (TLT) and we won't touch commodities due to weak global demand (oh and Iran is "fixed" and oil may dip below $90 very shortly) and we're very much "Cashy and Cautious" at the moment but, if we can hold our Futures lines (12,400, 1,300, 2,500 and 750) and get back to those strong bounce levels – we're going to want to dip deeper into our "Twice in a Lifetime" list and pick up some of these bullish laggards – like BBY and XLF because – come on – where the Hell else are you going to put your money if not US Equities?  


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  1. stjeanluc

  2. 1020

    Good Morning!

  3. jabobeast

    BBY—yuch!

  4. jabobeast

    FU BBY!!!

  5. stjeanluc

    MoMo Portfolio / lflan – Spreadsheet is ready and I'll track it as well. No problem!

  6. stjeanluc

    So much for early trading in BBY… Below $18 now. I guess the conf call is not going well.

  7. jabobeast

    how could they not expect it to fail??
    this is almost funny unless you owned the shares? crazy!
     
    http://www.marketwatch.com/story/morgan-stanley-cut-facebook-view-before-iporeport-2012-05-22?link=MW_latest_news

  8. lflantheman

    stjeanluc…….Yesterday's entry buys  were:   Bought to Open   5  AAPL October 550 calls  @  (average)  51.43 and Sold to Open 10  LULU May 25  67.50  puts @  1.11 each.  Thanks.   I bought AAPL yesterday for obvious reasons.  I sold the puts on LULU because it reports earnings early June and I believe will run up enough this week to allow the puts  to expire worthless on Friday.  Jabobeast gave me a list of his 6 most hated MoMos yesterday and other MoMos can be added to the list as we go.  We will play them either way it seems appropriate at the moment.  Sometimes long, sometimes short, sometimes sell premium or buy premium.  Whatever looks right.  We will try to grow this portfolio as rapidly as safely possible.  There is no margin outside of the portfolio itself.  Again, looking for specific members to 'get smart and up-to-date' on at least one of these MoMos and tell us when YOU think we go short or go long. 

  9. stjeanluc

    BBY coming back, but not very strong….

  10. stjeanluc

    Got them all yesterday lflan…  As long as you label you entry OK I will have no problems finding them. I have formatted the portfolio like the other big ones so that people can pick and choose their exit levels. I'll post the updated spreadsheet after the open in 40 minutes or so.

  11. Pharmboy

    PP for today:

  12. stjeanluc

    This morning econ numbers:

    Great Britain CPI (YoY) / 3.0% (3.1% expected)
    Great Britain CPI Core (YoY) / 2.1% (2.0% expected)
    Great Britain Retail Price Index (YoY) / 3.5% (3.4% expected)

    Clearly inflation is creeping up in Great  Britain. Even if they beat at 3%, it's above the usual inflation target from CBs around 2%.

    The OECD also released it's EC Economic Outlook:

     

    Activity has stagnated after contracting in end-2011 and unemployment is set to rise further, owing to weak confidence and difficult financial conditions related to the sovereign debt crisis. Provided that policy actions are sufficient to improve confidence, activity will begin gradually to recover in the second half of 2012, notwithstanding fiscal consolidation and private sector deleveraging. There will be a marked divergence between stronger growth in creditor countries and a weaker and delayed recovery in those with a large debt overhang. The large margin of spare capacity will moderate underlying inflationary pressures. The main risks centre on intensification of the debt crisis and the economic effects of high public and private indebtedness.



    Recent decisions have significantly increased the capacity of the firewall to address government funding problems. However, issues remain, including: how to rapidly marshall funds from diverse sources; how to address more protracted and large funding gaps; how to simultaneously address needs of governments and banks; and how to deal with disturbances in secondary markets. To support growth, monetary conditions should be further eased and bank balance sheets should be strengthened while avoiding excessive deleveraging. Substantial fiscal consolidation is needed, but each country’s response to the downturn should depend on the strength of its fiscal position. Abrupt fiscal adjustments should be avoided where growth disappoints. With scope for monetary and fiscal stimulus limited, reforms to labour market institutions, product market regulations and the tax system are needed to sustain growth and boost jobs.

    Better be careful there!

  13. 1020

    BBWHY?  
     
    ;)

  14. lancep50

    Explaining Facebook's IPO: The Greenshoe
    For those interested, I thought this was a good simple explanation of the unusual price movement in FB since IPO.
    http://www.forbes.com/sites/timworstall/2012/05/22/explaining-facebooks-ipo-the-greenshoe/

  15. yodi

    Iflan MOMO I have been playing IOC for quite a while now very well. However I always buy the stock on any play expensive yes but no sleepless nights selling always ITM calls against it. Obvious there are other ways to play but this one has worked well for me.

  16. lflantheman

    MoMo/  AAPL   ….    I will be selling October 650 calls this morning to cover the October 550 longs.   Converting to the spread will lower our cost basis for the calls, which are already profitable, and we can use the cash to make other plays.  yodi…..where do you stand right now on IOC?

  17. stjeanluc

    MoMo / lflan – What stocks will you be playing specifically so that we can keep an eye on – the list from Jabo yesterday?

    PCLN
    CMG
    AMZN
    LNKD
    LULU

    And of course AAPL. I would suggest NFLX as they have some good premium and do move like MoMos…

  18. yodi

    Phil AAPL read you comments on same yesterday. But I do not like to get in and out of a position every five minutes (slow planting Tree) Hold Jul 12 4x 525c pd 47.27 yesterday 50.75 possible better today against 3x Jul12 564 callers rec. 28. now 26.00 again will be higher today and 1x Jul12 600 caller sold for 30.18 yesterday 12.32. Would you hold position as is or roll.
    TIA

  19. lflantheman

    stjean.. ….   I'm going to do this AAPL trade at open, then be back.   I'll sell the Oct 650 calls then probably buy some July 575 calls.    

  20. stjeanluc

  21. lflantheman

    Sold to open 5  AAPL  Oct 650 calls for 20.25

  22. stjeanluc

  23. lflantheman

    Now we have a very nice spread on that for a cost of 31.18 which could come in nicely by October.  I will not manipulate that spread unless AAPL takes another drop. 

  24. stjeanluc

  25. lflantheman

    LULU acting well

  26. samz3700

    Phil -
    If you wanted to be long gold – what do you think of 
    Jan 13 150 – 160 bull call spread with selling Jan 13 140 put – for a slight net credit -
    buying a $10 spread that is 3+ in the money with the risk of buying gold at 140 –
    I think the ECB is going to print like hell and  if the dollar rallies a little more – don't mind getting put gold at 140 

  27. stjeanluc

  28. lflantheman

    MoMo/AAPL   June 570 calls 5 at 18.40

  29. Phil

    Good morning!  

    It's all about clearing those bounce hurdles and taking back the Must Hold lines – if we can't do that, then we're technically bearish again – no matter how cheap things may LOOK.  Our bounce lines are:  

     

    • Dow – 12,750 (12,540 is 20% retrace/weak bounce)
    • S&P – 1,343 (1,319)
    • Nas – 2,900 (2,840
    • NYSE – 7,720 (7,560)
    • RUT – 780, (765)

    Gotta clear the RUT, they stopped dead at the weak bounce and are just over at the open so now we look for the S&P to join at 1,319 but we really want to see 1,320 taken and held and all that is just a WEAK bounce that we expected for the week – not really a reason to get too bullish.  

    Cramer is pounding on that "BBY is the AMZN showroom theme."   BBY and AMZN both have $50Bn in revenues but BBY drops $1.2Bn to the bottom line and AMZN drops $130M – this is just total nonsense (and BBY's on-line sales popped 20% this Q too!).  I don't have the breakdown but obviously AMZN sells a lot more than electronics and media that BBY sells so they are not even direct competitors to that extent.  The story that AMZN will make retail obsolete has been going strong since 1999 but, so far, retail is still around – especially at the AAPL stores, which are probably hurting BBY more than AMZN.  

    Did AMZN make retail less profitable?  Sure they did, as did WMT and COST but that's the game and BBY put CC and other DIRECT competitors out of business the same way – to treat them like they are worthless ($6Bn) compared to AMZN ($98Bn) is plain stupid and f'ing Cramer knows better – he's just a lying manipulative POS pumping AMZN and killing BBY for his Hedge Fund buddies.  

    Asia was up 1%, even Japan on their ratings downgrade and Europe is up 1% so why should we be down?  As long as the Dollar stays under 81.50 (now 81.42), we should be OK. 

    FB $31 is NOT OK – this is going from funny to tragic very quickly but kudos to the Nas for holding up – so far. 

    Best cover for the day if the Nas fails to hold 2,850 is our old friends at SQQQ as we know to get out at Nas 2,850 and the best way to play them for momentum is to short the June $56 puts at $5.80 because THEY are paying YOU $3 in premium to be long on SQQQ and the delta is a very respectable .60 so you make about 10% against a 2% move in SQQQ, which is a 0.7% drop in the Nas (not even 1/2 of yesterday's gains).  This is a momentum play, not a hedge and the idea is to dump out at 2,850 or take that 10% off the table if it hits.  So it's a quick protection you should be HAPPY to lose .30 on once you feel more comfortable that the longs don't need protecting.  

    BBY disappointing at $18.34 but better than $17.50 yesterday.  They aren't going to beat the market if it's heading down but I bet they outperform if we head higher.  

    On the upside, I love the XLF play above and all of our Twice in a Lifetime short puts and the TLT puts.  

    We'll see how things play out but there's nothing in the news that makes me think we shouldn't gain another 1% with Europe today.  

  30. stjeanluc

  31. stjeanluc

    Missed that last trade lflan but I'll update the online spreadsheet. I'll post only once a day like the other portfolios.

  32. lflantheman

    stjeanluc….that's fine.   Now we should look for one of these MoMos that needs shorting, so we can get some balance in this portfolio.   I think LULU and AAPL look strong for the moment, but it would be nice to get a bit of balance, using the MoMos against each other. 

  33. lflantheman

    AMZN and NFLX both look weak today.

  34. stjeanluc

    MoMo / lflan – NFLX is weak now… Maybe sell some premium?

  35. angelcur

    Phil i agree completely and i ve been saying it since last summer the us is 'the cleanest shirt in the laundry'..i don't believe the contagion in europe or the ongoing fraud in china will decimate our economy..but rather offer a continued stark contrast in the difference between a corpse (europe) and a stage production (china)…
    Liking the gold sector more each day

  36. lflantheman

    NFLX…let me look at the call options.

  37. rustle123

    I love the correlation that the lower FB goes, the higher the market goes.

  38. lflantheman

    stj…how much cash in the MOMO port left to sell calls against?  Can you tell at a glance.?  If not , I can calculate. 

  39. Phil

    Don't forget, I'm leaving at 1 for my BNN appearance at 3:10.  I still haven't decided but I think I'll talk about BBY and XLF and maybe WFR.  

    MS/Jabob – They were smart to chase their big clients out of the FB IPO – that's the kind of deal you lose clients over.  

    AAPL getting tricky up 10% from $520 – be careful!  That would go for the Nas too so we really need to see AAPL get over $570 and up another $5 at least.  

    AAPL/Yodi – I agree with your premise but, July is soon and sometimes you need to pick your fruits when they are ripe, not based on the calendar.  You essentially have a 4/4/ bull call spread that's in the money and looks good, I'd buy back the $600 caller as you have a nice profit and then you have unlimited upside on one of your calls, which changes your profile more bullish with very little effort and, if AAPL fails to hold $560, you can always sell another $565 caller and then you have that spread and, if AAPL fails $550, then you can roll your 4 calls out before they devalue too much.  If you want to get more aggressive than that, why mess around with this spread when you can just add another higher, longer spread and wait for this one to pay you your full $40.  

    Everyone having trouble getting over/holding lines but not so bad as we assume there are still non-believers out there who are lightening up:  Dow 12,500, S&P 1,320, Nas 2,850, NYSE 7,600 and RUT 760 are all good to watch – so far so barely good!  Divergence between RUT and NYSE needs to be warched closely to see who pulls who.  

    GLD/Samz – That's a big IF!  You REALLY want to buy gold at $1,400?  What if it's $1,000, will you be HAPPY to DD and net in at $1,200 and wait for people to realize how shiny gold is?  I'd sell the 2014 $120 puts for $5.50 instead or, better yet, rather than collecting $550 against my obligation to buy 10 ounces of gold for $1,200 each, I'd rather collect $640 against an obligation to own 100 shares of ABX at $35 each (the short 2014 $35 puts) as that's collecting $640 against a $3,500 obligation vs collecting $550 against a $12,000 obligation.  See – SMART!  

    Gold/Angel – See above.  I do like selling those 2014 ABX puts.  

    FB/Rustle – All the idiots who sold everything else to buy FB are now scrambling to buy everything else back.  

  40. Inkarri1982

    Morning All – Home sales rose and prices rose 10%?  Where are these homes selling because I personally do not know anyone buying a home right now and those that have bought homes in the last year have actually seen their home prices decrease.  Those people at the NAR are funny. 

  41. lflantheman

    I don't think you can short FB right now, but the thought seems attractive. 

  42. aussie260

    Ink / Home prices – prices moving up off the bottom here in coastal Northern California (commuting distance to Silicon Valley).  Investors actively competing for REO / short sales and the first home buyers are moving back in…  Also lots of flipped fixed-up foreclosed homes.  We are active in this space.

  43. lflantheman

    LNKD up almost 8% this morning.

  44. rpme

    Phil, some people have been trying to short FB since the IPO and brokers are saying maybe tomorrow, is this normal?

  45. jabobeast

    rpme--i think it needs to trade for 30 days beforehand.. not 100% sure

  46. stjeanluc

    MoMo / lflan – I believe with the AAPL spreads and the LULU short puts that we tie up about $30K of Reg-T margin. People who have PM might tie up only 1/2 of that, it depends on brokers.

  47. jabobeast

    looks like i was wrong
     
    http://www.investopedia.com/ask/answers/05/062905.asp#axzz1vbpVfEZk

  48. lflantheman

    Well, I'm thinking we should wait till about EOD then sell some NFLX weekly calls.  The 72.50s or even the 75s for lesser money but more safely.    Europe is turning up at near closing.  I think the MOMOs continue up this afternoon. 

  49. sagemm1

    ink/ housing here in Portland, OR
     
    I have been astonsihed at not only the speed of things selling but that all of these houses are selling at asking price! I will add the caveat that where I see this most is right around 500k level close in to the city…I have heard the burbs are still, well the burbs

  50. 1020

    Phil/BBY  I feel the best thing BBY can do right now is cut all prices on everything, 10%
     
    It's in their best interest to creat a buzz that they can compete with anyone, especially on the web. (not to mention their site is cumbersome and boring)
     
    Suggested retail has no place in the fast moving space that BBY exists…..

  51. stjeanluc

    NFLX / lflan – 75 is at the high end of the volatility prediction for this week.

  52. 1020

    creat – create

  53. Phil

    Big improvements in Euro ($1.277) and Pound ($1.582) off the lows and the Yen is accomplishing it's mission at 79.92 – no need to look at EUR/CHF so all is well again and QE must be on the table somewhere as commodities are picking up and oil is holding $92.50, even though it logically should not.  

    JPM up 5% – Go XLF, GO!!! 

    At the open: Dow +0.03% to 12509. S&P +0.16% to 1318. Nasdaq +0.12% to 2851.

    Treasurys: 30-year -0.51%. 10-yr -0.19%. 5-yr -0.08%.

    Commodities: Crude -0.41% to $92.47. Gold -0.43% to $1581.85.

    Currencies: Euro -0.46% vs. dollar. Yen +0.71%. Pound +0.34%.

    10:00 AM On the hour: Dow -0.1%. 10-yr -0.25%. Euro -0.49% vs. dollar. Crude -0.69% to $92.22. Gold -0.54% to $1580.05

    Market preview: Stock futures are mixed and Europe is all green, with neither seeming to be particularly affected by Fitch'sdowngrade of Japan. S&P Benchmark +0.1%. Best Buy shot up over 8% following earnings but fell just as rapidly and is now just +0.2%. Facebook's (-3.3%) slide continues, while Express plummets 23%following a profit warning. Later: Richmond Fed Mfg., Existing Home Sales

    May. Richmond Fed Mfg. Survey: -10, to 4 (above 0 = growth). Shipments -18 to 0, new orders -12 to 1, jobs +6 to 16.

    Redbook Chain Store Sales: +2.7% Y/Y vs. +3.7% prior week. The cool and wet weather led to decline in apparel sales, lawn & garden sales, and sales of sporting goods.

     ICSC Retail Store Sales: -1.7% W/W, vs. -0.8% last week.+3.8% Y/Y, vs. +4.5% last week. The report notes little positive effect from favorable weather or from lower gas prices. 

    April Existing Home Sales: +3.4% to 4.62M vs. 4.66M expected, 4.47M prior (revised from 4.48M).

    More on Existing Home Sales: Seasonal supply at 6.6 months, up from previous level of a 6.2-month supply. The national median existing-home price for all housing types jumped 10.1% Y/Y to $177,400. Foreclosures and short sales sold at deep discounts accounted for 28% of monthly sales, down from 37% a year ago

    The Conference Board's April leading index for China rises 0.8%, matching March, and down from 1% in February. However, Andrew Polk from the Board isn't yet comfortable calling for a pick-up in growth in H2, instead wanting to see if recent easing policies start to filter through to the economy. Isn't that what the leading indicator is supposed to indicate?

    Half of all S&P 500 stocks now yield more than the 10-year Treasury note's record low 1.74%, according to Bespoke. There are 271 stocks in the S&P 500 with a greater yield than the 10-year Treasury; of the remaining 229 stocks in the index, 126 have a dividend yield less than the 10-year, while 103 pay no dividend at all.

    As of last Friday, Jeff Saut's key technical indicators were in historic negative territory. In past cases, he says, major market averages were higher a month later 92% of the time. "You can have cheap equity prices, or you can have good news, but you can't have both," says Joe Rosenberg. We currently have "bad news" and "cheap prices." Take advantage.

    Speaking to reporters on the release of an IMF report urging the U.K. to print more money, agency head Lagarde pretty much makes an outright call for eurobonds. Such "fiscal-liability sharing" remains staunchly opposed to by Berlin (with Austria adding supporttoday).

    It may not work, writes Jeremey Siegel, but the ECB's best hope of saving EMU is to trash the currency upon which it is built. A devalued euro will bring some relief to the periphery by boosting trade, while pumping a bit more inflation into the German economy – a small price to pay to save the union.

    Germany will tomorrow auction bonds with a zero couponfor the first time, underscoring its status as the ultimate safe haven despite the chaos that surrounds it. Germany plans to sell €5B ($6.41B) of two-year notes as investors seek merely "the return of capital rather than the return on capital." - Sounds like a bottom to me!

    Financial discipline, not the "nonsense" put forth by France's Hollande will resolve the EU debt crisis, says Austrian finmin Maria Fekter, clearly placing her country in the German camp as a power battle shapes up in the eurozone. "Growth financed by debt? Those are the recipes … (that) got us into this whole mess."

    The Hellenic Financial Stability Fund is reportedly scheduled to transfer €18B ($23B) of recapitalization money to Greek banks by Friday as part of the country's bailout. An FT report says the banks are being propped up by Greece's central bank.

    UN atomic inspectors and Iran reach agreement that will allow the IAEA to inspect suspected nuclear weapons sites, possibly opening the door to a deal to ease sanctions which could push crude oil prices down another $5/bbl or more. Iran's incentive: Its crude shipments are stalled, with ~40M bbls floating around in the Persian Gulf with nowhere to go

    The selloff in Chesapeake Energy (CHK +0.2%) creates abuying opportunity, Oppenheimer says while maintaining its Outperform rating and $28 price target. CHK is accelerating its liquids production growth and asset monetization, and the firm thinks its net asset value after pending asset sales is above its current share price.

    LNG holds great potential as a transport fuel,” Shell (RDS.A) believes, and its plan to spend $250M on a liquefied natural gas plant and a string of filling stations in Canada is the biggest single investment yet in making it happen. For now, LNG is mostly suitable for long-haul trucks with large gas tanks, but that's a big business; U.S. truckers spent ~$135B on fuel last year.

    Royal Dutch Shell (RDS.A) believes rising natural gas demand will underpin its future profits, even though oil pricing still accounts for 80% of its margins, CEO Peter Voser says. The long-term nat gas pricing outlook remains strong despite current low prices, Voser says, as Asian-Pacific customers increasingly switch from powering their industrial plants with oil to gas.

    The public launch of CKE Restaurants – owner of burger chains Carl's Jr. and Hardee's – doesn't appear set to pose an imminent threat to McDonald's (MCD +0.1%) due to the pile of challenges at the cash-strapped company. Funds from the IPO are already earmarked for paying off debt, instead of going to upgrade company-owned restaurants in near-desperate need of a facelift.

    Tesla Motors (TSLAannounces that it will begin deliveries of its Model S on June 22. The car marks an "all-in" bet by Tesla, with 90% of the company's revenue this year forecast to come from the sedan. Shares +4.3% premarket, helped in part by an initiation from Maxim Group at Buy.

    Shares of Express (EXPRnosedive 22.1% premarket after the company issues a lackluster Q1 report and strikes a downbeat tone for Q2. Sales growth is slipping at the company, while it also took on extra costs related to changing its mind over the location of its flagship NYC store.

  54. rpme

    Jabo, thanks for the info, Investopedia knows all…

  55. 8800

    Phil,
    Thanks again for the fancy option footwork re JPM yes'd. Prescient or fortunate, either way thanks.

  56. zeroxzero

    Bank dogs finally having their day – C, JPM, BAC, MS topping S&P 100.  Oil/commodities – Do nothing?  BIDU rising — money flowing out of FB?

  57. yodi

    TLSA  how about looking positive on the car production of this company
    B/S Jan13 32/36 for a cost of 2.20 and sell Jan13 22p for 3.00 

  58. zeroxzero

    Euro selling off.

  59. boltdude

    Entry ideas for BBY or wait?

  60. Phil

    Oh I screwed up and lost the end of the news – hopefully not too important as I don't have time to fix it!  

    It looks like I'll be talking about BBY, WFR and XLF on BNN this afternoon.  

    You're welcome 8800!  

    FB/ZZ – Money trapped in FB but money that was pulled expecting to go in FB is finding other places to go.  Europe rocketing into close, up nearly 2% if it holds up so we are lagging big-time.  

    TSLA/Yodi – First production run of a new car with zero defects is your bet?  No thanks.  I am tempted to buy a cheap long put on them – in case the car bursts into flame or the batteries die after 10,000 miles or something.  These guys don't have 20 different models and can ride out a recall – if this doesn't go perfectly, they could implode. 

    BBY/Bolt – A long-term play on BBY would be the Jan $18/21 bull call spread at $1.25, selling the Jan $14 puts for $1.10 for net .15 on the $3 spread that's .50 in the money at the moment ($18.50).  The risk is owning BBY at net $14.15, which is a 23% discount to the current price and a p/e of about 4 at that level.   

  61. gardling

    Phil,  what about selling CHK Jan 14 $5 or $8 puts for income ?

  62. yodi

    Phil TSLA how negative can you get. Their order book is full. But I play it as a crap shot and see what gives. I still can not understand that every one is fighting with hands and feet contra electric cars. If we had one in this stupid country I would buy one. 

  63. shadowfax

    Phil
    After doing too much other stuff I got on line and crunched IWM 77.03 to 74.5 and that was a turn on 33% bounce. We may be failing at that, huge resistance at the 77 level.

  64. stjeanluc

    Speaking of sell-off – look at the Japanese Yen. Down 0.8% today. That's big for a currency…

  65. Savi

    no yodi—not a stupid country—has problems but one of the best countries to live in

  66. shadowfax

    My NYC FB ringleader who didn't call and brag must be screening calls, most got in at $32. The group bought $10,000,000 of FB! That isn't chump change!

  67. jabobeast

    FU CMG!!!
     
    Chipotle May Be Fined After SEC Worker Probe, Miller Tabak Says
    Chipotle Mexican Grill Inc. (CMG) may incur legal fees or fines related to a U.S. Securities and Exchange Commission probe regarding work authorizations, said Stephen Anderson, an analyst at Miller Tabak & Co.
    Chipotle last week received a subpoena “requesting that we provide information regarding our compliance with employee work authorization requirements, our related public statements and other disclosures, and related information,” the Denver-based company said in a May 18 SEC filing.
    The SEC hasn’t informed Chipotle as to the focus of its investigation, Chris Arnold, a company spokesman, said in an e-mail. John Nester, an SEC spokesman, declined to comment.
    While the immigration investigation began in Minnesota in 2010, it has since spread to stores in Virginia and Washington, D.C. Last year, Chipotle said it was working with the U.S. Attorney’s office in Washington, in addition to U.S. Immigration and Customs Enforcement, to provide certain documents as part of a review.
    The 1,260-store burrito chain fired about 450 Minnesota workers who couldn’t confirm the validity of their work documents, according to a filing. The additional labor expenses hurt 2011 profit by about 8 cents a share, Anderson said.

  68. Phil

    CHK/Gard – I like it but it's way conservative.  Of course conservative isn't too bad when you can sell the $5 put for $1.25, that is just silly, isn't it?  TOS says I can sell 10, collect $1,220 and have $515 in net margin used – that's an amazing 236% back against margin in 19 months.  Maybe we should just do 500 of those in the $25KP and collect $61,000 and look like geniuses in Jan 2014 for doubling up! 

    TSLA/Yodi – I'm not negative, I love TSLA but I am POINTING OUT TO YOU the risk of betting on a company that essentially has everything riding on a single, complex product that has never been tested when there must be 20 or 30 massive recalls this year alone on existing models from 100 year-old auto companies.  So, I am pointing out – if not to you, who know better than I – to other people that betting on TSLA is betting that the company will be able to perfectly execute the production roll-out of a brand new automotive design on their first attempt.  Personally – it's not a bet I would make, nor would I buy the car in year one.  Maybe it will all go perfectly and TSLA will justify their 50x earnings forward valuation (5x industry standard) because not only will nothing go wrong with the car but they will meet and exceed all of their production goals and grow into their valuation.   

    IWM/Shadow – Tough to make a call at 11:30 EU close.  All sorts of strange things happen that don't end up meaning much. 

    Euro down to 1.2750 and they need to hold that as the Dollar is at 81.47.  Pound is $1.578 and the Yen is 79.96 so they are super-motivated to make 80 and that won't be good if they punch the Dollar over 81.50 but a rejection here would be good for the bulls again so let's hope the Swiss wake up and do their magic.  

    AAPL needs to push over $570 still, that's crippling the Nasdaq, as is SOX off 0.4%.  Would be a real shame to fall apart here. 

    FB coming back at bat at $33.50 – inverse correlation to the market may be intact.  

  69. kustomz

    UK FTSE +1.9%
    German DAX +1.7%
    French CAC +1.9%
    Spain IBEX +1.9%
    Italy MIB +3.4%

    Pretty good gains considering the mess.

  70. jophil

    Phil,
    I had bought MSFT Jan 2013 $20 call and sold May $32 call for net $11.50 for the purpose of generating monthly income. The May $32 call expired worthless. So I kept the $0.76. Since MSFT is now at $29.80. What a good strike or strategy to sell call for June? May be you can also tell us the strategy in general that you would use to  generate income when the stock moves down. thanks

  71. yodi

    Savi you got the wrong country possible I should have used the word corrupted 

  72. Burrben

    Has anyone started selling some of the TWIL puts?

  73. 8800

    Phil,
    I am in the mkt for a vacation hedge (2 wks ). Given that we are in the twilight zone betw weak & strong  bounces, which hedges would  you favor should we close (3/5 indices) below the 20% bounce levels ?
    Thanks

  74. rainman

    Broke above 81.50 on Mr $

  75. lionel

    Dumb and Dumber in Paris/
    Tsipras and Melenchon having now a joint meeting in Paris.
    European extreme leftists at their best.
    I love when a civil engineer and a Philosophy major expose their own version of financial markets theory.
    Marxists should definitively be put on the WWF endangered species list.

  76. lunar

    lflan, did you get stopped out of the june 570's or standing pat?

  77. jabobeast

    pcln at 666 again…

  78. zeroxzero

    Very funny, Lionel:  The dictatorship of the proletariat is undoubtedly the dominant force in international politics, as global income distribution clearly demonstrates.  

  79. oburlacu

    @jophil
    In my IRA portofolio I do sell covered alls as well, however I found that selling monthly (tough on paper show better results) is too volatile so I usually sell calls 3 months out. To enter a stock I use PSW technique(selling puts).
    I prefer owning the stock to deep ITM calls becasu DITM calls give you a sense of better leverage but same is true for risk, (people tend to buy more DITM calls that stock to generate better results and end up losing also more).
    Another relative safe technique I used for generating income was to buy DITM bull call spread (or sell the same put spread if the premium is better).
    For example: if you believe MSFT will stay above 22.5 by Jan 2013 you can buy the 20/22.5 call spread (or sell the 22.5/20 put spread) for .24. That is a 10.61% before commisions ROI. Not bad for a 7 month investement

     

  80. Phil

    Well, Dollar popped and the market dropped – that's a pretty simple formula.  Oil is a big drag too at $91.80 now but that's no reason to sell the market.  

    Big concern if we start losing our levels already – weak bounces may be the top but we need to give them a chance to hold.  1,320 on S&P would be nice to hold, as would RUT 760 and Dow 12,500.  

    Europe had a strong close and these shenanigans came right after – could be flushing bullish retail investors prior to a real move up but we should take a break of levels seriously if that happens.  

    MSFT/Jop – In general, you want to sell as much premium as you can feel comfortable with.  On this spread, you are so deep in the money, you can't be hurt to the upside other than regretting you sold the call in the first place.  If you think MSFT is too cheap to sell calls against at the moment (like we do in FAS Money and IWM Money), then you can wait it out or sell 1/2 the June $30s for .55 as they can easily be rolled up to July $31s (.59) or 2x of a higher strike where your $11.50 entry is safe.  The problem with your spread is you are too aggressive on the long end.  I'd buy the 2014 $30 calls for $3.55 and sell the $23 puts for $1.90 so I'm in the spread at net $1.65 and then I'd cover with the June $30s at .55 and drop my net to $1.10 with 18 months to roll.  That leaves plenty of money to DD my longs if I have to and worst case is I own MSFT for net $24.65, which is a lot less than the net $31.50 you paid so I have a $7 cushion on this spread for free and most of my money still on the sidelines with no worries at all about the caller getting away from me and I make the same monthly income you do with half the hassle.  

    Twice in a Lifetime/Burr – I sure hope so, I put that list up last week!  

    Hedges/8800 – I'm confused by your question.  Do you want hedges or are you closing hedges?  What are you protecting?  Cash is the best hedge in this silly market but I'm bullish until we fail supports as most of what I'm reading indicated there will be more stimulus shortly and, of course, there's nowhere else to put money. 

    Civil Engineering and Philosophy/Lionel – What, as if the career politicians and economists had all the answers?  This is what's wrong with government – too much of the latter and not enough of the former.  Government is SUPPOSED to be a guiding hand for INVESTING in the future of society.  They are SUPPOSED to look at the big picture and DEMAND that people sacrifice now (taxes) for the future (infrastructure).  It's been that way since writing was developed and it was decided that one of the guys should teach instead of hunt – it's how walls get built around castles and how canals are dug and railways are built.  What we have now is a perversion of Government run by short-sighted fools who don't give a crap about the betterment of the people but about how much they can grab for themselves before the people wise up and send them back to the private sector.  Yeah, let's make fun of the builders and the thinkers – THEY'RE the problem!  

  81. tommy1

    Nation, not country. A nation of blustering, posturing, pie-in-the-sky warmongering self important boorish boneheads. If anything our stock market today should show this. You look at it all the time, but it won't be on your charts.

  82. lflantheman

    lunar…..standing pat.

  83. morxlntway

    Phil – if you had the CHK June 15 calls in the 25K instead of the 5K, would you have added more or rolled?

  84. 1020

    Phil – I'm curious, can you think of anyone on the right, in the last 20 years, that you would consider a "visionary"?

  85. Phil

    Dow volume at 12:45 is 58M – very light. 

    11:00 AM On the hour: Dow +0.54%. 10-yr -0.27%. Euro -0.47% vs. dollar. Crude -0.22% to $92.66. Gold -0.07% to $1587.65.

    11:47 AM European markets close sharply higher, a rare breather from a 2-month 17% rout (for the broad index). Stoxx 50 +2%, Germany +1.6%, France +1.9% Italy +3.2%, Spain +2.1%, U.K.+1.9%. Euro -0.6% to $1.2743 as pressure is sure to come on the ECB to ease policy further.

    12:00 PM On the hour: Dow +0.39%. 10-yr -0.23%. Euro -0.65% vs. dollar. Crude -0.65% to $92.25. Gold -0.31% to $1583.75. 

    Today's rally killer:  12:06 PM "The bar … should remain high," says Atlanta Fed President Lockhart, responding to questions about further QE. "I would have to see a serious deterioration of the economy … "real layoffs, real job destruction," he adds, suggesting it's going to take more than a few weeks of falling stock prices to spur him on.

    On the other hand – MORE FREE MONEY ON DECK:  

    Despite the fiscal compact being "misguided and poorly conceived," it's clearly in Ireland's interest to vote for it, writes Megan Greene. Why? Because Ireland is going to need another bailout and can't draw funds from the ESM if it rejects the treaty. The treaty is moving forward with or without Ireland – voting "no" accomplishes nothing for the country.

    Chinese demand for copper is likely to improve in H2, the head of Xstrata's (XSRAF.PK) copper unit says, as the miner pledges to lift output by ~60% over three years even as rivals such as BHP andRIO have put the brakes on expansion. Recent data from China show its economy cooling faster than expected, prompting premier Wen Jiabao to call for new growth measures

    It's the citizens of Macau who may hit the jackpot as gaming operators such as Las Vegas Sands (LVS +1.9%) and Wynn Resorts (WYNN +0.6%) face a labor shortage on the thinly-populated island with rules in place that allow only local citizens to work certain key roles. The inevitable result for the casinos setting up shop for 28M visitors amid 2% local unemployment will be wages that spike higher.

    Global Hunter fires up Buy ratings on a number of shipping stocks including Diana Shipping (DSX +2.5%), DryShips (DRYS+9.5%), Safe Bulkers (SB +2.1%), and Baltic Trading (BALT +4.5%) – while starting Eagle Bulk Shipping (EGLE -0.9%), Excel Maritime (EXM -1.8%), Genco Shipping (GNK +1.1%) with below-keel Reduce ratings. While individual names in the sector tend to get tied up with momentum trading, the overriding theme has been a moderate bounce back off of a 25-year low in the Baltic Dry Index in February. Guggenheim Shipping ETF (SEA+8.1% YTD.

    Despite some individual names being taken out and shot, the consumer discretionary sector (XLY) continues a near year-long trend of outperforming the S&P, notes Bespoke. The weakest sectors – energy (XLE), industrials (XLI), materials (XLB) – suggest maybe slowing in China is driving macro more than events in Europe.

    Patriot Coal (PCX -28.6%) plunges and is pulling all coal stocks (KOL -1.8%) lower, due to a report the company has fielded informal pitches from bankruptcy advisorsLast week, PCX delayed a refinancing after disclosing a potential contract cancellation from a key customer. ACI -7%JRCC -6.3%ANR -5.1%BTU -3.8%WLT-3.5%CNX -2.3%

    Sterne Agee says concerns over commercial aerospace companies generating excess capacity are overblown, as Boeing's (BA +0.3%) backlog deferral rates are at trough levels and the growth of the global fleet shows no signs of a slowdown. The firm reiterates its Buy rating on the shares. 

    A bull on mortgage REITs, Dividend Master neverthelessunloads American Capital Agency (AGNC) and American Capital Mortgage (MTGE). AGNC's and MTGE's share prices tower by about 10% over their book values ($29.06 and $21.78 respectively, as of 3/31). Expect secondaries soon to "monetize the premium."

  86. kustomz

    $35 billion two-year notes.. should go well since Germany is planning on selling 0 coupons tomorrow.

  87. zeroxzero

    Your points are valid, Phil, but it is still funny to hear Marxist dialectics applied to capital markets.  Democracy works well if voters actually choose leaders, but not so well when global large caps are declared "citizens", dump millions into Superpacs anonymously and corrupt elected officials by ensuring that they lose elections, irrespective of their "popular mandate", if they lean even slightly towards more corporation taxation, repatriation of earnings kept offshore, or more regulation.  I  would maintain that "We have met the enemy…. and it isn't us."  While Marx was quite correct much of his critiques of capitalism, you will search his writings in vain for plausible alternatives.  There is nothing wrong with capitalism; there are a number of things very wrong with the current version of U.S. democracy.

  88. Phil


    Northern Dynasty (
    NAK -17.5%rips the EPA's draft Bristol Bay watershed assessment on the potential effects of mineral development in southwest Alaska as "rushed and inadequate." NAK owns 50% of the Pebble Partnership, which aims to develop a copper-gold-molybdenum project in Alaska.

    Facebook's (FB) precipitous decline yesterday tripped a circuit-breaker just 15 minutes after the open and triggered restrictions on shorting. The break will remain in place until the end of today's session. Finra data shows that 23.6M Facebook shares were shorted on Friday and 6.4M yesterday.

    Alcatel-Lucent (ALU +0.7%) has released its 7950 XRS line, its first products for a lucrative core router market currentlydominated by Cisco (CSCO) and Juniper (JNPR). The 7950 line offers very high densities and runs on Alcatel's hyped FP3 network processor, which can handle 400 Gbps transmission speeds. Carrier inertia and comfort with Cisco and Juniper's software will be major challenges for Alcatel, but Nomura is optimistic the company can carve a niche.

    Now that the merger is officialBloomberg BusinessWeekhas published a lengthy piece on Google's (GOOGplans for Motorola (MMI), and the background of new Motorola chief Dennis Woodside. Woodside promises not to ask for special treatment from the Android unit, but wants to use Google's resources towards goals such as improving battery life and camera image quality. It's added Google will be creating a new Motorola R&D lab focused on advanced technology projects. 

    Apple (AAPL) still has the world's most valuable brand, according to BrandZ's annual study, which estimates its value has risen 19% Y/Y to $182.9B. IBM is believed to have passed Google (GOOG) for the #2 spot thanks to a 15% increase, while McDonald's (MCD) is seen holding steady at #4 in spite of a 17% gain. Also in the top 10: Microsoft (MSFT), Coca-Cola (KO), Marlboro (PM), AT&T (T), Verizon (VZ), and China Mobile (CHL).

    Three lunchtime reads:

    1) Where are gold prices headed: flat, down or up?

    2) Smack! The BRICs hit a wall of their own making

    3) Fed pondering why inflation and deflation threats ebbed

  89. 8800

    Phil,
    Yes I am looking for ideas for hedges to protect longs while I am away from the mkts (2 wks). I thought a downward breach of the weak 20% bounce level would be a reasonable entry to put the hedges on. Understand your thgts re cash being the best hedge. Just personally more than a little skeptical that more stimulus is in the immediate future without a more significant drop in the mkts. It may be that using equity hedges (vs cash) at this juncture is trying to be too clever by half.
    Thanks

  90. Peter D

    Housing in the Southern California has been heating up, but only in desirable areas.  There are several major factors that I have observed:
    a) Interest rate at multi-year low, allowing people to afford more.  The buyers are fearing that mortgage rate would go up after Operations Twist, so they are hurry up to buy now.  Most buyers that I know are leveraging up, borrowing 80% of the house value, which is dangerous in some cases.  There are occasional cash buyers too, but only for great deals. 
    b) Stock market was up since October last year.  There is a correlation between stock market performance and housing activities.  People pulled money out of stock at a fast pace in the first quarter and they are putting money in housing.  The recent stock market correction may slow the activities in the next few months (housing data is a lagging indicator). 
    c) Foreclosure is still happening.  I do see silly cases such as the buyer bought for $1M in 2005, borrowed $950k with ballooning mortgage and minimal payments, then they took the home equity of another $500k in 2007, near the peak, and now the house is at $800k.  Wow, the owner walked away in a foreclosure with a bunch of money.  They didn't even bother to trash the house. 
    d) Remember the Obama first home buyer credit in 2010?  The price went up as buyer rushed in, then drop quickly after the stimulus. The low interest rate and stock market performance may have the same effect this time.
    e) Less desirable areas are sill not selling.  I see listings that are over 200 days old.  Eligible buyers are choosing the best location and best potential for appreciation.
    f) A bunch of folks must have read about inflation, inflation and inflation, here and elsewhere, so they are hedging themselves when they are able to.
     
    As for Northern California, the Facebook, Zynga, etc. money would have a huge effect in driving up the pricing.  Imaging dumping billions into a small area with limited housing supplies?  Boom, price goes up.  Look at Sacramento?  It's not going up as much, just the Bay Areas.

  91. Burrben

    Phil / TWIL List
    Yes, you put up the list, but STRONGLY cautioned that you prefer CASH in this market.  Therefore I wouldn't assume anyone has actually sold any puts until we hold our levels for a few days.  I like the list, just trying to get my timing right.  So , is it the right time? 
    You commented yesterday:
    I think if we can hold those Futures levels for a couple of days it's worth taking a stab at a couple. It's kind of the opposite of the long put list, where you want to start with a few that went the other way and then, when those begin to work out, you can see if there are laggers to make fresh horses out of.   
    and
     
    Again – our bullish premise if FB has a good IPO and rallies the markets but, a day later OR THE SAME DAY – Europe could blow to bits and nothing else will matter so cash, Cash, CASH! is the way to go.  

  92. Phil

    Gotta get going guys – see you later!  

    CHK/Morx – We did have them in the $25KP and we did both (added and rolled).  Now we're back to $15ish but, obviously, I saw each new low in CHK as an opportunity to improve the position.  Still, in the $25KP, there's a limit to how much you want to commit to one thing so we ended up with the 10 June $14 calls and we sold 6 puts to help pay for them – you can't do that in the $5KP so we just sit on the June $15s and hope they improve sooner than later.  

    Visionary/1020 – Sure, a lot of them are visionaries – but their vision is of a Hell on Earth they sell as a paradise to the suckers in the lower classes who buy their brand of BS.  Koch's are amazing visionaries, Newt was a visionary, Norquist is a visionary – even Santorum is a visionary in the same way Juan Torquemada was – just give him the authority and we'll purge this nation once and for all!  Lots of people are visionaries – it's not always a good vision!  

  93. lionel

    Phil/ It was a bit of humour.
    Now more seriously, Melenchon and Tsipras are no builders or thinkers.
    I would like to add that there is nothing glamorous or dreamy about Marxism. Please take into consideration that not everyone had the chance to grow up in a free capitalist country.
    Also being anti marxist doesn't make me automatically a supporter of corrupted capitalism or government representation failure as you wrote in your diatribe.
    I would also like to say that I do understand your point of view and having lived in the US long enough I do share your frustration about the political game there.
    But my comment was about extreme left wingers in Europe. And more precisely about France and Greece, where communist parties have always enjoyed a strong popular following.
    I apologize to have credited these two "career politicians" with way too much publicity than they deserve. (Carreer may be a bit of an exaggeration for Tsipras as he is just 38)

  94. kustomz

    Going long the market is the same as buying the EUR…silly market.

  95. lionel

    BBY/ Phil please dont forget to talk to the BNN people about BBY  :)

  96. lionel

    Kustomz/ I would say same as going short JPY against USD…80 and more to come

  97. Phil

    Good points ZZ – this is not a Democracy, it's silly to pretend that it is.  We are ruled by Corporations and puppet politicians who protect corporate interests while they squeeze the people dry – very much like the Matrix actually – just the illusion of choice to keep you playing the game.  

    Protection/8800 – I'd go with something simple like an SQQQ bull call spread, maybe the July $53/62 bull call spread for $2 and you can use the Twice in a Lifetime list to find a good hedge or just put a stop at $1 and you're risking $1 for $7 of insurance.  SQQQ was $57.60 yesterday so not hard to hit $62 if there's a problem so if you put $4K on the trade and risk $2K, you have $18K back if the Nas takes a bad turn.   Don't forget, you don't have to offset the whole thing – you can put a stop at $1 (down $2,000) and sell 5 CHK Jan $11 puts for $2.25 ($1,125) and then, unless CHK is a disaster, you lose just net $875 on the spread against a possible $17,025 gain if all goes well.  

    Housing/Peter – Good parts of Florida seem to be coming back too.  

    TWIL/Burr – CASH doesn't mean 100% cash.  I think we had a lengthy discussion about scaling in LIGHTLY.  It's certainly the right time if you can still get those prices to hit a few.  Twice in a Lifetime was pointing out that you had a once in a lifetime chance to get those prices during the panic in 2009 – it lasted for about 2 days.  Now we had it again last week and I'm sorry if my cautioning not to go gung-ho bullish on it was taken as not to go in at all.  As I have often said – if you are not going to buy low – when are you going to buy?  

    For those of you who missed it, the TWIL went out on 5/17 in the morning Alert and the commentary and trades at the time were:  

     

    The conspiracy theory is we are being flushed out of the market against the FB IPO which will hit $60 or better and rocket the Nasdaq 3% tomorrow, taking the rest of the indexes up about 2% and ripping the bears' faces off.  It's a very tough call and CASH IS KING because we don't need to guess that nonsense when we can make so much money just waiting for the trend to form and THEN taking a leveraged position.  

    If, for some reason, FB fails – it will be a catastrophe.  If Europe blows up – it will be a catastrophe that FB can't mitigate.  Even if tomorrow is good – do we really want to be bullish over the weekend?  So let's tread carefully and I feel better being in cash than being involved at this point.  

    NONETHELESS – I'm fairly confident we can hedge against another 20% drop in the market so let's say we have $100K to invest and we start by taking $5,000 and buying 20 SQQQ July $55/70 bull call spreads at $2.50.  That's $5K spent on protection and we put a stop at $1.25 ($2,500) and now we're covered against a 10% drop in the Nasdaq moving SQQQ 30% up to $70(ish) for $30,000 on the spread.  

    That means we can now deploy our remaining $95,000 and we are roughly 1/3 covered against losses so, as long as we stop at least some of our positions out with 20% losses – it should be pretty hard to hurt us.  

    So now that the Long Put List is dead (and we still like AXP, MA and V as downside plays if the S&P can't hold 1,320 and they are slow-movers, which is the whole point to the Long Put List – you catch a winner and move on to a fresh horse) so long live the Twice in a Lifetime List.  Keep in mind these are 1x entries on stocks we should be THRILLED to double down on AFTER they drop 20% or more.  

    • AA ($8.50) 2014 $8 puts can be sold for $1.50
    • ABX ($35.91) 2014 $30 puts can be sold for $4.50
    • ALU ($1.45) 2014 $2 puts can be sold for $1
    • BAC ($6.97) 2014 $7 puts can be sold for $1.75
    • BTU ($25) 2014 $20 puts can be sold for $4.10 – WOW! 
    • CCJ ($19.37) 2014 $17 puts can be sold for $3.30
    • CHK ($13.83) 2014 $13 puts can be sold for $5
    • CSCO ($16.70) 2014 $15 puts can be sold for $2.05
    • FTR ($3.20) 2014 $3.50 puts can be sold for $1.30
    • HMY ($8.88) 2014 $8 puts can be sold for $1.40
    • HOV ($1.83) 2014 $2 puts can be sold for $1 
    • HPQ ($22.04) 2014 $23 puts can be sold for $5
    • MT ($14.30) 2014 $15 puts can be sold for $5
    • JPM ($34.59) 2014 $30 puts can be sold for $5
    • OIH ($35.90) 2014 $30 puts can be sold for $4
    • SVU ($5.15) 2014 $5 puts can be sold for $1.85 
    • WFR ($2.05) 204 $3 puts can be sold for $1.40 
    • X ($22.25) 2014 $20 puts can be sold for $5.10 

    Keep in mind that once you have the spread, you are super-covered for the first $25K you spend, really for the first $50K if you plan to stop out with less than 50% losses.  But there is NO hurry as long as the S&P is below 1,320 as that's VERY BAD and likely to get VERY WORSE.  

    If the Dow breaks below 12,500 the DIA June $120 puts at $1.25 give you good bang for your buck so watch those.  

    Another nice hedge is TZA June $22/26 bull call spread at $1 and you can sell any of the above puts to pay for those!  

    It's looking ugly but the volume is light and this isn't all that bad for a panic so far.  If the Dow holds the line, I'll be encouraged but not really until the S&P is back over 1,320 and the RUT is over 775.  

    Again – our bullish premise if FB has a good IPO and rallies the markets but, a day later OR THE SAME DAY – Europe could blow to bits and nothing else will matter so cash, Cash, CASH! is the way to go. 

    There's no change to that – we're at 1,320 and some of those plays are still available and some aren't.  As I said, the way to begin was to cover first, and pick up a few long puts with 25% of the portfolio (if you are all cash to start, of course).  We're still in a weak bounce and we still may move much lower if we fail.  These are EARLY 1x entries that you should be thrilled to see drop another 20 or 40% so you can buy more even cheaper.  If that's not your attitude – then CASH IS KING!  

    Now I'm late! 

    Actually Burr, this is exactly what I said to you yesterday morning, isn't it?  

     

    Timing/Burr – Position Sizing and scaling in are the key.  The minute you set out to make a big win, you are damning yourself.  Big wins are accidents, little wins are a skill as are little losses.  I am too far ahead a lot of the time, it's tricky when you see fundamentals forming very clearly but it takes MSM and retail investors a long time to come around to the same viewpoint.  I've actually gotten better as now I'm only about 3 months ahead on most things!  The Long Put List is a great example of sticking with positions and rolling (as opposed to scaling in) until we become right.  By NOT attempting to make a big win over a short time, we ended up with almost all 20%+ wins on 19 positions in 2 months.  Now we've got a Twice in a Lifetime list and people are complaining that 2014 is such a long way away but the point is that if the market goes down another 40%, we'll be able to roll and DD and we'll have plenty of time to recover and, if the market recovers early, then we make our 20% and 40% profits and we're happy.  It all goes back to my favorite investing quote:

    The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich.”~ Charles Dow, 1901

    I think people mix up the more exciting $25KP, which is GAMBLING, with the $500,000 Income Portfolio, which is INVESTING and those are the proper proportions between investing and gambling.  As I mentioned last week, we cashed the Income Portfolio because we don't have the confidence that we can protect our main investment but we're leaving the $25KP etc. to gamble with but even then, only because the point is to teach adjusting positions – otherwise I would have cashed them too.  My other favorite investing quote comes from WOPR becasue, sometimes, "the only winning move is not to not to play."  

    It's fine to take some aggressive plays with a little bit of your cash because you CAN afford to stick with it when it goes against you without freaking out because you have significant money riding on short-term trades.  Once you start gambling with money you need – it's a very short walk to unaffordable losses and desperation…

  98. kustomz

    lio, we are yielding better and I think $ goes higher. Euro summit tom, should be lots of fun.

  99. threeputt

    Looking like a dead cat bounce at the moment!

  100. lionel

    Kustomz/ Especially after Japan's downgrade.
    Japan monetary policy meeting is ending tomorrow and that should lead to some Yentervention (Phil s word) and asset repurchasing.
    This is why I have positioned myself long USD/JPY through FXY puts and long Japanese equity via EWJ call spread and short puts
    Hope it works out well.

  101. palotay

    Can anyone comment on how to get margin with IRA money?  I recall someone saying that they had a lawyer/accountant setup some kind of entity that allowed them to use margin.  Does anyone remember how to do this?

  102. 1020

    Geez Phil, I guess I should have been more specific. How about a Visionary with a heart?….
     
    :)

  103. stjeanluc

    IRA / Palotay – If I recall it involves creating an LLC (or other type of corp) owned by the IRA account and then opening a trading account for that corp. Something like that. 

  104. angelcur

    i personally love tspiras he is just telling the euroghouls to stuff it; its not as thought the hellenic people benefited from the banking gorge that goldman and other i banks larded onto the greek backs..the irish and italians spanish will soon be setting charges under the iron heel of oppression as well..lionel where do you hail from?

  105. stjeanluc

  106. tommy1

    Tsipras. Now there is a man for you, even at "just 38." He's ORDINARY!

  107. lflantheman

    Phil….You might enjoy this story:     I went to the town offfice to pay my property taxes yesterday.  I asked to speak with the assessor.  I inquired as to whether I would be getting a reduction in my property taxes this year, as the bank evluated my property as worth 1/2 what it was 5 years ago.   She replied that she couldn't do that, because…..(doublespeak, doublespeak…..fill in any nonsensical phrases here).  Anyway, you get the picture.   They can raise taxes.  But lower them?    Well, that's quite another matter.   Truth is though, I don't care.  I've got 2 kids in the public schools and I don't mind forking over the cash.  

  108. lflantheman

    Me get big stick on Tuesday?     :)

  109. Inkarri1982

    Iflan – I was looking at my parent's property taxes(they live in Los Angeles) and noticed that their property taxes have actually been increasing every single year with no decreases at all and certainly none in the last five years.

  110. Peter D

    lflan/county tax,
    The county usually allows an appeal period for a reduction in assessed value.  You'll need to talk to the actual assessor themselves.  A few years back, they assessed my house at a value that higher than everyone else in the neighborhood, so I called them and said I didn't pay that much for the house.  They said price has since gone up, so I pulled out the Case Shiller index showing how it's been going down.  Wow, the county assessor hasn't seen the Case Shiller index!  After a few calls, they found an error in their model and reduced the assessed value. Actually, they have plenty of fudge factors that can be changed.  I'm happy to pay tax, just the fair share of it.

  111. bdonnelly713

    Phil, what are some of your favorite books on investing and options?

  112. lflantheman

    bdonnelly713….My favorite book is the one Phil hasn't written yet!

  113. jerconn

    Lflan – I suspect we get big stick end of this day, end with a bang!  Just the power of positive thinking…

  114. ccsincsd

    IRA/Options
    Stj. Very close. What we did. ( might be other structures ). Wife and I set up a LLC. Re- registered my two trading accounts to it. Then. Set up a “employee profit sharing plan-401k for the LLC. Ie, the LLC is the sponsor. Then consolodated our 3 self directed iRA’s into the Profit sharing plan. Now trade FT in both LLC accounts ( etrade and TDA ) and in the PSP ( TDA )
    Besides the normal benefits of the LLC, up to $109,000 per year of trading profits in the LLC accounts can be put into the PSP tax differed. I know of no other tax differed savings vehicle like that. Further, the PSP can invest in hard assets. It now owns 1 local rental property and a “rental condo” in Tahoe is its next purchase. Cost to set this up was about $2,500. Best thing I ever did.

  115. ccsincsd

    IRA/Palotay
    Stj. Very close. What we did. ( might be other structures ). Wife and I set up a LLC. Re- registered my two trading accounts to it. Then. Set up a “employee profit sharing plan-401k for the LLC. Ie, the LLC is the sponsor. Then consolodated our 3 self directed iRA’s into the Profit sharing plan. Now trade FT in both LLC accounts ( etrade and TDA ) and in the PSP ( TDA )
    Besides the normal benefits of the LLC, up to $109,000 per year of trading profits in the LLC accounts can be put into the PSP tax differed. I know of no other tax differed savings vehicle like that. Further, the PSP can invest in hard assets. It now owns 1 local rental property and a “rental condo” in Tahoe is its next purchase. Cost to set this up was about $2,500. Best thing I ever did.

  116. ccsincsd

    Sorry for double post.

  117. Peter D

    Inkarri,
    Your parents property tax increases every year is probably due to the Prop 13 effect.  They probably bought the house a long time ago, so Prop 13 prevents the assessed value to go up more than a certain amount.  Since the house assessed value is probably below the market value, it keeps going up every year, and so is the tax.  If the property was bought in 2005 to 2007, you may see a decrease in assessed value.
     
    OK, back to short strangles.  They are up nicely with VIX sliding further, so not much to do, but checking off 1 more day until June expiration.  Since next Monday is the Memorial day (one less trading day to June expiration), the OTM option's value will probably drop further this week.

  118. Peter D

    Oh no, /DX is up 0.41 to 81.64 – a Yellow or Red flag for the bulls!  They can drop /DX and have a stick, or a reverse stick may occur due to the rise in /DX, which could be more likely.  I'm not too worried either way as the short strangle positions have huge cushion on each side.

  119. rperi

    Does anyone have a direct link to Phil's segment on BNN today?

  120. rainman

    lflan / taxes — That's funny. My taxes have been going down without me asking and I don't have kids in the public schools.

  121. shadowfax

    IWM is in a desending chanel today and the decending support is 75.55 now, resistance has held since 10:00AM.

  122. kinkistyle

    LLC/ccsincd:  did the broker give you a hard time about "Professional" Fees for real-time quotes that are otherwise free for individual accounts?  I recently formed a LLC to pool the funds of several entities into a single fund in order to take advantage of increased Portfolio Margin and the folks at TD Ameritrade were giving me a difficult time because of the fees charged to investment professionals for real-time quotes (we're talking $200-$300 a month) because of their policies concerning LLC's.    I ended up going with Fidelity because they didn't bother me with that stuff. 
    But FINRA and SEC rules regarding LLC's and Investment Advisors are fairly strict and the laws are ambiguous — to say the least.

  123. lionel

    Angel/
    That is the exact  problem with Tsipras.
    Everybody loves him because he is AGAINST Eurocrats. But no ones seems to care one bit about what he is really standing for.
    But it is not enough to be just against an "austerity" measure. What is his solution?
    He has nothing except vague ideological beliefs. Please spend the time to read his political platform.
    You should take into account that most European countries do not support the bicameralist party solution adopted by  Anglosaxon countries ie. parties on the fringe do stand a chance to gain a representation in national and European chambers.
    That means that lots of European small party candidates are real politician amateurs. Now that I have just wrote that I am just having a Sarah Palin flashback …Ok it does apply on both side of the pond :)
    Seriously, I hope for Greece that June 17th will provide them with a coalition government that will work with Europe along the debt refinancing program.
    Greece will have plenty of opportunities to amend the program along the way. Why throwing away the opportunity to finance its debt at 4.5%?

  124. 1020

    Property tax – Lately, I had called the assessor in Newport, Oregon on the value(s) on some land we own.
    I asked why the taxes were going up while the value of the land was going down. The assessor explained that while the value of the land was going down in recent years, it had a very good move up from the time we had purchased.
    The assessor explained that the taxes could only be raised a maximum of 2% per year, so for the last 12 years, I have yet to pay tax based on the actual value of the land.
     
    Let's hope it stays that way….. :)

  125. stjeanluc

    Thanks ccs, very helpful…

  126. jasu1

    ccsinccd,
    your post is of great interest to me. Would like to communicate with you offsite, re your LLC set up. My email should you want to elaborate and educate me…..dufferin70@gmail.com.
    Thanks

  127. boltdude

    rperi – http://www.bloomberg.com/tv/  is live.  I presume Phil will be on there.

  128. stjeanluc

    Bruce Bartlett publishes some interesting numbers:

    http://economix.blogs.nytimes.com/2012/05/22/would-romney-be-another-bill-clinton-or-another-george-w-bush/

    The Clinton and Bush 43 administrations are almost perfect tests of starve-the-beast theory; the former raised taxes in 1993, while the latter signed into law seven different major tax cuts, according to a Treasury study. If there were any truth whatsoever to starving the beast, we should have seen a rise in spending during the Clinton years and a fall in spending during the Bush years. In fact, we had exactly the opposite results.

    But the record does not support the idea that tax cuts necessarily foster jobs or growth. (I think the Reagan tax cuts worked, because economic conditions were far different than today.)

  129. boltdude

    Peter D – which short strangles do you refer to above?

  130. shadowfax

    1020 taxes
    I just talked to a hospital administrator and said what I had said to my tax assor when she gave a similar excuse. In these times what you can charge is not what you should charge.

  131. ccsincsd

    Kinki/LLC
    Pro fees. You are spot on. Easy solution was I kept a regular account open with $10k. So I log into TOS with it. All my other accounts are linked and thus show in the upper left. I even just discovered in app settings that even though I log in with the individual account, TOS will open in my main LLC account. Stops me from making a trade in the individual account where I can’t differ profits.

    Jasu1. Will do. On a plane now. Might be a day or two.

  132. Peter D

    boltdude,
    We play SPX and RUT front month short strangles.  The short puts are usually 15% to 20% OTM and short calls are 8-12% OTM.

  133. jthoma

    very strange market today- dollar has not mattered much or the weakness in RUT

  134. shadowfax

    stjean
    The Reagan tax cuts worked because he reversed and ended up raising taxes because cuts didn't work. Bush and many today won't admit the truth and Bush didn't do the right thing like Reagan did.

  135. angelcur

    LIONEL I just don't see the downside for the average Greek..this might mean another serenade of 'Another Colonel or Another Papandreou" if you're poor and living two steps north of poverty and you know at a visceral level your government is going to be a pass through agent to the banks it's not a motivation to further lean toward the abyss. These cats don't herd as easily as the Gauls

  136. jasu1

    ccsincsd
    Thanks and no hurry

  137. kustomz

    lio, nice pop ;-)

  138. angelcur

     fb is a muppet disaster…i think ms could be in legal hot water
    cnbc just reported sec looking into ms..ha!
    "allegations if true are a matter of regulatory concern" ketchem

  139. shadowfax

    Reagan did a couple of good things and 1 bad which was not reversing on bank regulations, Bush didn't do anything good. Everyone probably thinks I'm total liberal, I voted for Reagan and against Bush. My problem is I can't forget anything but names.

  140. 1020

    Shadow, I agree. 
     
    The Assessor I spoke with, got me when he used the word "fair"…..
     
    I consider myself a pretty good negotiator, except when dealing with City Hall.  :)

  141. angelcur

    anyone has a sense of why Brazil got clocked today down 1.6%?

  142. mackey

    most tax assessing departments are sloppy or their information is incomplete. the first thing I would check is the info on your house or property that they used to derive your taxes. is the sq. footage correct? #of bathrooms, finished basement, lot size waterfront ft. usually this info is incorrect and will be the easiest avenue to reduce your taxes.

  143. Inkarri1982

    Angel – I believe the Brazilian FinMin lowered 2012 GDP from 4.5% to 4%.

  144. Canuck

    BNN – Phil's on after this commercial break.

  145. boltdude

    Peter D – sounds interesting, however, I must not be paying attention; are the short strangles part of a portfolio you manage?  Where/when are the trades posted?

  146. angelcur

    INK THANKS!  tHAT IS STILL HIGHER THAN ANALYSTS THINK SO ODD REACTION..MAYBE FACT THAT AG COMMODITIES POUNDED AND OIL DOWN?

  147. angelcur

    i am liking GDX at 41

  148. roberthjrfl

    Can anyone tell how the dollar is performing verses the other currencies?  Is it performing "normally" or is it behaving differently today?  We have had a large move up in the dollar but not a corresponding drop in the market.  I would have to think that "they" are propping the market up based on the move in the dollar.  Any thoughts are welcome….

  149. palotay

    Thanks StJ and CC.  Very helpful.

  150. doro165

    as housing is a topic today a realtor just sent me some interesting info on the Orlando market today.

    The overall median price of Orlando homes increased 10.48 percent over April 2011's median price of $105,000, to $116,000. In addition, the April 2012 overall median price is 0.87 percent higher than that recorded in March 2012 ($115,000).
    Find the rest of the article here

     
     
    Additionally you can find our most recent market stats here

  151. Inkarri1982

    Angel – If I remember correctly too, China has been turning away some of their tankers filled with commodities. I think there was a story that their super tankers were turned away not too long ago.

  152. kinkistyle

    currencies/robert: http://finviz.com/forex.ashx
     
    All currencies down against USD — including GOLD.

  153. etradingsignals

    Lflan,

    Are u planning of getting out of AAPL June's or do u plan to cover it?

  154. Pharmboy

    Well, doesn't look like I missed much…..I will be traveling tomorrow, so I will not be around.  I will try to get the PP up b'f I hit the road.  GLTA.

  155. lflantheman

    I'm keeping  all positions today in MoMo port, including AAPL

  156. Phil

    Who crashed the markets while I was on TV?

    That, my friends is a weak bounce and not a good sign if we don’t take it back tomorrow.

  157. shadowfax

    This drop hit the target and I am in cash again. We are at trendline support S1 and the 75.70 line.

  158. shadowfax

    Add the 50% fib line this should be the bottom.

  159. jerconn

    OH no, it's the anti-stick, PHil get back into the office!

  160. jthoma

    euro smashed!

  161. jthoma

    someone thinks tomorrow will not be a pretty summit

  162. lflantheman

    Where's the link…I want to watch Phil onscreen.  

  163. rpme

    Phil, I have noticed a trend. It seems the best indicator for a market drop is when you are away. Admit it, your the guy manipulating these markets.

  164. rainman

    rpme / Phil — He needs someone to hold that lever in the center while he's gone.

  165. morxlntway

    Anyone watch FGP? It was recommended to me. Looks like it would have been good a month ago.

  166. rainman

    WFR  $1.58! Did you talk about WFR Phil?

  167. Burrben

    Phil / TWIL List
    Ok, Phil, thanks.  I was going to start tiptoe'ing in, I was just a little gun shy to get longer since I'm waiting for the next bomb to drop on Europe.  One question though on the above post.  At point point you say to "stop out our losses at 20%", and in the other area, you say "we should be happy to DD at 20%".  How do you know which to do?  
     
    For anyone who wants the a current snapshot of where the TWIL list is now, here is a screencapture from my QuotePage.  The Notes are are Phil's original prices.  Looks like many of them are still avail.
    https://picasaweb.google.com/lh/photo/qKKFBTRoyRRibbJuaM0G4XNLJEdTq20IeksyP_kMH6Y

  168. rainman

    /DX 81.88!

  169. rperi

    WTF WFR? Down 10 1/2% on what?

  170. shadowfax

    Sumitteeersss
    Playing that, "Why do you keep hitting yourselfwith a hammer? Because it feels so good when I stop!"

  171. zeroxzero

    Jerconn:  Hope you didn't bet much!!

  172. boltdude

    Phil/Bloomberg TV – I've had it live online for the last 90 minutes, but didn't see you.  

  173. 1020

    CNBCFACEBOOKCNBCFACEBOOKCNBCFACEBOOKCNBCFACEBOOKCNBCFACEBOOK……..
     
     
    Who cares?

  174. zeroxzero

    "Merkel and French President Francois Hollande are heading toward confrontation over joint euro-area borrowing at a meeting of European Union leaders in Brussels tomorrow, after Hollande said “everything will be on the table” including euro bonds."  I am seriously locked and loaded on a short Euro offset to my U.S. long positions.  I'm betting against Germany drinking the Eurobond Kool-Aid.  But you never know.

  175. jthoma

    tried to buy some UUP calls for an over night trade- market maker did NOT want to be short!

  176. jerconn

    Zero – No, didn't bet much, don't have that much faith in my own powers of prophecy…but thanks for your concern…

  177. zeroxzero

    Boltdude:  It's BNN, a Canadian channel.  I can't access it live, maybe they'll post it later as they usually do.

  178. rperi

    It wasn't Bloomberg, it was Business News Network in Canada.  I never found a live feed on their site, which is http://www.bnn.ca

  179. jthoma

    perhaps they should change to name of Facebook to Facerip! :)

  180. zeroxzero

    Jerconn:  There actually was a stick that wiped out half the end of the day selloff on the DJIA.  Tricky market, lots of paranoia, and with good reason.

  181. 8800

    Phil,
    Thanks for the SQQQ vacation hedge thgt

  182. angelcur

     hoping this weakness carries through to the close and we get a lower opening tomorrow…. would set up a good trade from the long side heading into the end of the week.

  183. sparky123

    Jerconn, that last little stick must have been because of your happy thoughts!

  184. jerconn

    Zero, wow, more than half, that stick's gonna hit zero! (no pun intended…)

  185. shadowfax

    And a last minute stick save, the computers are haveing a great time playing war games.

  186. jerconn

    Now, that was Bot action if I ever saw it…hope someone bot into it…

  187. Phil

    Sounds like it was just a rumor about Greece exiting the euro

  188. rainman

    Can't believe they were able to post a postive close on the SPX and DJI.  That was an E ticket!

  189. peedlew99

    What a stick!

  190. Peter D

    boltdude,
    You can start by going to the yesterday post and search for my name to get to the various links in the Wiki.  We don't have a SPX or RUT short strangle portfolio, but we discuss the concept so that everyone can play on their own.  When we get into trouble, then post here for comments and possible adjustments.

  191. zeroxzero

    Phil:  Germany's not even willing to bail out its poorer states, Bremen and Saarland, encouraging "thrift" instead.  Anyone expecting Germany to underwrite Peripheral borrowing is kidding themselves.  At least, that's the premise of my massive Euro hedge.  But there's nothing sure nor pure in this world [Billy Idol].

  192. peedlew99

    Phil, anything to be made of the difference between the NYSE and the RUT?  I can't remember seeing such a big discrepancy with the broad markets flat.

  193. angelcur

    zero you are exactly right…

  194. jerconn

    Andy Zaky opened up Bullish Cross again in case anyone is interested…

  195. dpastramas

    Jerconn – what does that mean? is he bullish on AAPL?

  196. chasw

    Shadowfax,
    Your S1 appears different from that of Pharm above. Are you using a different method of calculation?

  197. jerconn

    Dpas: The whole site is dedicated to AAPL, have a look:  www.bullishcross.com   Yes I would say long term he is super bullish on AAPL, he thinks a lot of people will make fortunes on AAPL in the next few years.  Look like Lflan agrees…

  198. CaFords

    Phil's BNN clip

  199. crussell14

    Phil
    I have TNA June $48 call, paid $4.90, closed today about $3.30. Would you recommend holding as is or converting to a bull call spread? Thanks

  200. lmeiner

    http://www.dowjones.com/products/djfxtrader/articles/FormerGreekPMPapademosRiskOfGreeceLeavingEuroIsReal.asp
    Full Interview Greece's former prime minister Lucas Papademos
    I was hoping for a bit more of a bounce to 1330-1340 myself before possibly a new low but doesn't the use of these comments out of context seem like an attempt to shake people out of Euro/Stocks maybe something positive on the way for a short squeeze?
    Just a thought.

  201. lolobear

    jerconn – how do i subscribe?  still says not accepting subscribers.

  202. jerconn

    lol – maybe he didn't get around to actually doing what he needs to do on the site to open it up, I'll post a question there…

  203. jerconn

    Lol, just posted a question but also if you hit the subscribe button on his site, even tho it says it's closed, a sign up form comes up, I would just fill it out.  If they ask you for a reference, I'm "jerconn" over there like over here, please if they ask how you got to bullishcross, tell them thru me, who knows what kind of brownie points I'll get…

  204. lflantheman

    jerconn…..Yes, Andy Zaky is extremely bullish on AAPL right now, and he has been correct in the past.  I don't read him (rarely anyway) but I certainly agree with him.   I believe now is the time to buy.  My timing today on those June 570 calls sucked, but they represent only a small amount of my overall AAPL wager.  Our AAPL portfolio that we recently abandoned in favor of a more interesting MoMo portfolio increased from 50k to 287k in less than 6 months.   We could have done that with no other stock that I follow.  Now let's do it again!   And we will do it mostly with AAPL, king of the MoMos, along with some others just to make it fun.  Go long AAPL !!!  

  205. lolobear

    jerconn – yah i tried that but doesn't work wihtout a "promo code."

  206. Lincoln

    Phil:
    Forgive me for the length of this question and hopefully if I post it AH you will get a chance to respond when things are less frenetic.
    After two years of following , making mistakes and and learning I have now set up a portfolio on a scale I am comfortable with to generate the income I need.  My general position is still not bullish enough to be making big commitments to long positions I plan to make the bedrock of my investments.  I do have small tentative sold put positions on those but for the most part am putting my portfolio margin to work as follows; roughly 75% of margin is utilized in a ratio of 2x being essentially bearish sold calls against 1x bullish short puts on the stocks I really want to own.  The short calls are mainly on stocks I don’t like ie LULU, HOG,PCLN but also on some I just felt were too high in their range like LOW and M and won’t mind owning at some price.  While ABX, BTU, CHK IBM, INTC, CSCO, T are examples of the short puts as well  as some puts sold for balance  against the bigger short call positions.  I also like strangling  blue chips like MSFT and others since the range is easier to manage than a momo.  I further hedge against the short calls on momo’s with sold calls on TLT, since it seems unlikely those stocks can shoot higher while TLT stays over 120, no?
    So I now get the surfing analogy regarding balance and understand some positions I can ride to profits even while others will be going against me.  I feel like what I now have is one big strangle made up of stocks I don’t like, (sold calls) offset with stocks I do like, (short puts), and am feeling confident in dealing with the constant re-balancing  needed.  Many of the short call positions which went against me  from Jan to May and forced rolls out to Aug , Sept and Oct  have turned back in my favor and I am trying to decide what, if any,  adjustments to consider.  I hear you when you say to cut back on risk when the position moves in your favor faster than planned, but in my case I need to have at least half my margin at work with some mix of short and long positions.  I also hear you say when a position is on track and if you don’t have a better use for the margin than stay with it. My goal is 15-20% on margin annually and feel much more comfortable selling premium than making too many short term bets. . It’s funny that I’ve done a 180 from 2 years ago, I almost gag now when buying options and paying premium.
    Here is one example; (4)PCLN calls are Oct C760’s (also short a Jun 635 put). as of Tues morning $10,680 all premium, (but not all profit), with a margin requirement of $50,000,(5% of total margin used), so I look at that as 20% return on margin, over 5 months, with PCLN 15% out of the money on a strike that was very near the spikey top.  However if it does go back near 760 the margin required will be around $104,000 so 5 month return is more like 10%, assuming I didn’t adjust by perhaps selling another put or two, still better than a sharp stick in the eye.  It feels on track to me but am curious if you would adjust a position like this?
    As always TIA

  207. jerconn

    Lolo – okay I'll try to get some sort of response from them!  
    Iflan – Long live AAPL!  You play AAPL very differently than Zaky does but I'm trying to learn that also…you have to be very nimble for your plays, I don't know how you sell calls and then go off to do a surgery and then just come back…but it works!

  208. stjeanluc

    Zero / Germany – The frustrating part of the German policy is that they don't seem to understand that right now they are losing their export markets in Europe as countries are going to hell one after the other and after imposing austerity on themselves for more than 10 years, they don't have enough internal consumption to make up the slack. By stretching a lot, you could say that they are facing similar issues with China (being a big export economy) and sharing some demographic issues as well (aging population). The difference being that they have better political system and a much stronger middle class. But something is going to have to give…

  209. stjeanluc

    The RUT is technically below the 5% line being rounded up to 760…

  210. zeroxzero

    Iflan:  Boy have you cheered me up.  My aforementioned massive FXE short hedge is offset against an equally massive AAPL long position, done with options on both sides.  I have no burning insight, just trying to set up the best against the worst in uncertain times.  Since I don't know what I'm doing, the AAPLs are Oct & Jan 13, the FXEs are June, on the assumption that, given the Euro's recent trajectory, Merkel either writes the check or dumps the dreck.

  211. jthoma

    Phil- I just watched your interview-it was hilarious to me. You might as well be from another planet relative to the people they normally interview- they do NOT know what to do with you or what to say. Much like I imagine your Mother at times during your childhood. :) Good job! The show of our lifetime would be if they gave you a 1/2 hour segment on Cramer- the over under on how long it would take you to hit him would be 3 minutes and 22 seconds-LOL!

  212. zeroxzero

    Stj:  Germany will lose export volume in a Euro meltdown, but they will sacrifice fiscal integrity if they throw themselves on the sword of a bottomless Peripheral bailout.  Scylla & Charybdis: given German predilections, I'm betting stonewall.

  213. jthoma

    stjeanluc- your mention of China- the scariest thing I saw today was that China is the largest importer of cotton in the world- easy to imagine as many t-shirts needed to clothe everyone. Their importation of cotton is expected to be down 35% this year. I don't know if the cheap t-shirts here in the US will outweigh having to watch many shirtless Chinese people on television but it certainly gives one pause if this is a preliminary to the slow down of other imports for them- Europe will certainly not take up the slack and I do not see the American consumer being able to do so either. Could we actually see deflation on the horizon if something does not give?

  214. sparky123

    jthoma,
    Don't know for sure, but I would think that may be an effect of higher wages in China, and those T-shirt making jobs have gone elsewhere.

  215. kinkistyle

    Nice BNN appearance Phil. I like how they have the positions written out in graphics and nice colorful charts as visual aids now.  Very 20th century! ;)
    Also seems more relaxed and lighthearted than usual.  Maybe its because they are finally starting to understand what you are talking about now — or maybe its because they have you dangling midair over Columbus Square :)

  216. Inkarri19

    Nice interview Phil!  By the way, she got the website name wrong in the intro….

  217. sparky123

    Jthoma, It's more complicated than that. Total world stocks are at an all time high, but China has just concluded a buying program to build up their stocks of cotton. So you do have jobs going to Bangladesh, Vietnam, Cambodia, Myanmar, etc., but you also have Chinese stockpiling of cotton ending. The price will go down as the stockpiling is eliminated, and farmers who have risen to the occasion and planted extra cotton to sell at last years record prices have created somewhat of a global glut, but I'm not sure that is a sign of global deflation, rather an effect of the fear of inflation that led the Chinese to stockpile in the first place.

  218. jthoma

    Sparky- I agree on some fronts- China has consistanly stockpiled many commodities in an attempt to maintain control of their own destiny and to meet their own perceived growth. If in fact, they realize that controlling ones own economy is not as easy as in theory- and they slow more than anticipated while Europe fights it’s battles and slows- it could surely slow demand for commodities considerably. I also am one in the minority who believes our domestic economy is much weaker than we wish to admit. Having observed how things seem to spiral out of control when a black swan rears it’s head and finally causes people to take their head out of the sand- we generally go to the other extreme and panic causes us to overreact. Due to the fact it is an election year- it is a given there will be zero chance of anything other than can kicking for the rest of the calendar year. I fear that time frame may cause a deeper hole from which we may not be able to emerge without blood. If- big if- this were to occur- we could I believe see deflation for the 1st time in my lifetime. The table was set in 2008 with the housing collapse- and to this point- all the kings men and all their efforts at best have produced a very tepid recovery with consumers not having the where with all to create strong Confucius demand. Much rambling I know but I believe our position is VERY precarious!

  219. stjeanluc

    Jthoma and Sparky – With all this money swirling around, inflation seems like a risk, but at the same time with pressure on wages from unemployment everywhere, it's hard to imagine that companies would have that much pricing power lest they run out of customers – the top 1% are just that, 1% of the population so they can't replace the other 99%. I might be wrong, but one of the reason behind inflation seems to be commodities and that was driven by a) China stockpiling everything from copper to cotton apparently and b) a weak dollar. These 2 factors are slowly disappearing so that should be bearish for commodities and help kill inflation as well. 

    In any case, there are many, many factors at play and I have said before I am worried that CBs are now in a "bunker" mode because we are facing situations that they never modeled before. I agree with Jthoma, we are in a precarious situation.

  220. jthoma

    Sorry- consistent demand

  221. jthoma

    And to think as a child I used to laugh when my Grandmother would shake her head and exclaim , ” these are perilous times” truth of the adage- what goes around comes around! :)

  222. drmtv10

    After looking at DELL earnings today, my "hope" that the market is at bottom is shaky.  I have a small Jan 15/17.5 debit spread which I will need to roll once the dust settles but I am worried about HPQ, where I have almost a full position and need stock to stage a recovery to low 30s.  "Hope / Dreams" aside, Phil, your thoughts and price targets on dell / hpq appreciated.  
    Do you recommend closing all positions in both, follow the excitement on this board and simply invest in aapl!!

  223. sparky123

    jthoma,
    I agree that the strong demand has not materialized, nor will it. This is a balance sheet recession caused by a credit bubble bursting, and a very different animal from the ones that most of us have lived through. That being said, there are areas of the US that are growing higher than the 2 to 2 1/2% trend for specific reasons and areas that are lagging for other specific ones. When I look at what is generating jobs locally, I'm not sure how much Europe can damage our actual economy. It can destroy the global capital markets, but if you look at what is actually driving the 2% here, I'm not convinced that we in the US are living on the edge of anything. The housing market has been a huge drag on the US economy, and if it will just stabalize, which it appears to be doing that will be a huge plus. We may have a gut wrenching plunge in the stock market at some point over Europe, which is why I am 50% cash, but it could go either way, and the fact that the US retail investor has not come back to the market in droves may actually be good for our actual economy if Europe does crash the markets. The other side of the wishbone is that Germany when forced to choose, doesn't want to be branded with global economic armageddon. It looks to me like it's Germany and Austria on one side and the rest of the Keynesian planet on the other. I guess we'll find out tomorrow, or not.

  224. jthoma

    Sparky- you and I must be bored- lol- but unfortunately I cast my vote for tomorrow with much confidence- ” or not” !

  225. sparky123

    jthoma,
    It's a crapshoot, that's for sure.

  226. jfawcett

    ccsincsd / LLC – Would also be interested.  jerry@fawcettfam.com  TIA!

  227. jfawcett

    Phil / BNN – I am sure they are all out selling the $5 CHK puts!  Good interview!

  228. Phil

    Euro really failing now – $1.265.  Pound $1.575, still 79.96 Yen and EUR/CHF at $1.2009.  Dollar 81.945. 

    Oil $91.26, gold $1,558 (I knew we should have shorted it again), silver $27.78, copper $3.46, nat gas $2.69 and gasoline $2.93.

    No particular news that I see – seems to be still the twist on the  Papademos comment, which is silly because of course Greece is looking at that option – how is that news? 

    Heart/1020 – I thought you were talking about Republicans?  

    Property taxes/Lflan – The problem is, unlike the Feds, local governments do have to balance their budgets so they simply take their budget and divide it by the total valuation of the town and there's your tax rate.  For them, the reality is, if they lower you then that builds a case for the next guy and the next and then the town has to spend a few million (of your money) for a whole revaluation and then everyone's value comes down but, so what – they're just going to divide the budget by the lower assessments and raise the effective tax rates anyway.  I'm certainly not saying you shouldn't fight if you are being assessed unfairly relative to your neighbors but the real problem is the town doesn't do a good job of explaining how their budget works to the people and that leads to all these unnecessary confrontations.  

    Books/Bdonnelly – Yeah, I really do have to do that update with Gareth.  Try these (and someone please start a Wiki on this subject):  

    • Common Stocks and Uncommon Profits – Philip (no relation) Fisher
    • Reminiscences of a Stock Operator – Ed Lefevre
    • How to Make Money in Stock – Bill O'Neil 
    • Intermarket Analysis – John Murphy
    • Extraordinary Popular Delusions and the Madness of Crowds – Charles Mackay
    • The Right Stock at the Right Time – Larry Williams 
    • Alchemy of Finance – George Soros
    • Trade Your Way to Financial Freedom – Van Tharp 
    • Japanese Candlestick Charting Techniques – Steve Nison
    • The Psychology of Trading – Brett Steenbarger
    • Also, all the articles by Dr. Brett – Studying trading without studying the psychology of trading is kind of pointless…

    IRA structure/CCS – Also a good one for the Wiki.  Very nicely done!  Also, I have a 1Br at the Marriott Grand if you're interested.  

    Starve the beast/StJ – Part of the "Starve the beast" plan is to make government programs so big that they can no longer be sustained, getting people to turn against them and cut them. 

     

    "Starving the beast" is a fiscal-political strategy of American conservatives[1][2][3] to cut taxes in order to deprive the government of revenue in a deliberate effort to create a fiscal budget crisis that is intended to force the federal government to reduce spending (rather than restore tax levels). The short and medium term effect of the strategy has been increased United States public debt rather than reduced spending.

    The term "beast" refers to the government and the programs it funds, particularly social programs[4] such as welfare, Social Security, Medicare[3] and public schools; and does not usually refer to spending on military, law enforcement or prisons.

    The tax cuts and deficit spending of former US President George W. Bush's administration were attempts to "starve the beast." Bush said in 2001 "so we have the tax relief plan [...] that now provides a new kind—a fiscal straightjacket for Congress. And that's good for the taxpayers, and it's incredibly positive news if you're worried about a federal government that has been growing at a dramatic pace over the past eight years and it has been."[5] The tax cuts were extended by Pres. Barack Obama in what Obama stated was a "compromise" with congressional Republicans.

     

    A well-known proponent of the strategy is activist Grover Norquist. He has famously said, "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub."[20][21]

    Economist Paul Krugman summarized the strategy in February 2010: "Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit." He wrote that the "…beast is starving, as planned…" and that "Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs. And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan—and there isn’t any plan, except to regain power."[22]

    Brazil/Angel:

    Further steps to juice its economy, Brazil announces another $1B in tax cuts and the central bank frees up about $9B in reserves in exchange for banks allowing auto loans on better terms. Perhaps disappointed with the minor measures (GDP = $2.5T), the Bovespa continues to struggle, -2.1%

    Nice Forex group Kinki! 

    Manipulating/Rpme – It is a bit of a coincidence…

    FGP/Morx – Nice, boring business:

  229. nicha

    Book recommendations by Phil have been added to the Wiki.

  230. Phil

    What point/Burr – Well it depends how far into the scale you are.  If your plan was to buy more, then 20% down is your opportunity but, to be clear, you don't just mindlessly buy at 20% down.  The point is, if you are determined to buy more and you're down 20%, then you can afford to wait and see if it comes back or if it goes down another 20% and THEN you can buy more and have 2x at 20% off.  Also, it depends if your hedges are working and how your overall portfolio is doing.  We're starting a new Income Portfolio the weekend after this one – you'll see a lot of this stuff from scratch there.   That spreadsheet is interesting.  

    WFR/Rain – That stock just gets no love at all these days.  

    Nor does FB, it seems. 

    You're welcome 8,800 – and the timing was good.  Have a nice vacation.  

    Germany/ZZ – Well, they may be unwilling but they are not unable and you may be unwilling to shoot yourself in the foot but if the alternative is someone else shooting you in the head – I think you'll find a way.  That's the position Germany is now in.  I don't know why people think they can just let the EU fall apart or allow it to slip into a depression.  Germany may fear inflation but they're not to thrilled with reliving the 30s either.  

    NYSE & RUT/Peedle – The RUT does tend to move faster than the NYSE but this is unusual.  

    TNA/Crussell – We have 3 weeks but I wouldn't let it go over the weekend if we don't bounce.  

    LOL – Just watching my clip – had I known they had that background, I would have pretended to be flying!   I couldn't see their feed so I had no idea what was on screen.  I did hear them get the name wrong at the beginning and it threw me as I was deciding whether I should correct her or not but I figured she'd come around and she did.  We covered a lot of stuff in 10 minutes, didn't we?  

    Long thing/Lincoln – On the having half the margin at work.  That goes back to our fresh horses concept.  If you make too much on one position – look for a better one (one that has more potential) to replace it with.  So glad to hear we've developed an aversion to buying premium for you – that makes me very happy!  On the PCLN – Oct is a long way off and $760 is up almost  20% on a stock we think should be down 20% from here so no, I wouldn't adjust it.  Clearly any paper loss you have is the result of the higher VIX, and not PCLN moving higher and, of course, if PCLN does move higher – it's not very likely the VIX will remain high at the same time, right?  You adjust when you are really worried – 20% out of the money should not be really worried.  Also, the Oct $760 calls ($28) can be rolled even to the Jan $830s so there's another 10% cushion and those can be rolled to 2x the Jan $910s and that's another 10% and if you really think PCLN will gain 40% by Jan – then maybe you should be buying calls instead of selling them but, otherwise, RELAX!  If you have a plan for what you will do when a trade goes 20% and 40% against you and you can live with that plan – then it's a very rare trade that will cause you to worry….

    Big Chart – Nothing wrong with some healthy consolidation after a big move up – IF that's all it is!  The RUT held their line (ish) and that would be bullish but they gave it up in the Futures. 

    Half hour/Jthom – They want me to go to Toronto and shoot a whole segment one day, which I'll do eventually.  Doubt I'd want to waste it talking about Cramer though.  ;)  

    China/Jthom – Don't forget they import the cotton from here to make TShirts there that they send back to us.  And then you drop the shirts off at the laundry and who cleans them?  More Chinese people!  What a silly system!  

    BNN/Kinki – Yes, they seem to take my picks very seriously now.  I was more relaxed because that studio, at CNN HQ in the Time/Warner building was huge compared to the little booth they shove you in at the Nasdaq.  Much nicer place but the parking place there charged, and I am not kidding, $26 for me to park my car for 45 minutes…

    Thanks for noticing Ink.  First rule of PR – doesn't matter what they say as long as they spell your name right.  

    Perilous times/Jthom – The Chinese have a saying:  "May you live in interesting times."  It's a curse!  

    DELL/DrM – I gave up on them ages ago.  They are just floundering.  HPQ I think could be IBM in the long run – they just have to put all the pieces together but the trail and error of getting there is costing them and frustrating investors.  I don't expect much from them as the Global environment for anything that's not a smart phone or tablet really sucks.  All I really care about with HPQ is seeing progress in their services division as that's the key to their future growth and stability.  

    Thanks Jfaw!  

    Thank you Nicha!  One day, I have to learn how to work that thing…

  231. 1020

    Phil/heart   Yeah, it was a stupid question….. :)

  232. 1020

    ….and nice job on BNN today…

  233. neverworkagain

    Great chart.  This has got to be the best reason as to why QE3 will start soon (by the summer?):  S&P 500 vs. Intrade Odds for Obama win.  Obama needs the market higher!!  http://yfrog.com/nznqrmp

  234. zipla

    ccsincsd / LLC
    I’m guessing there is, and will continue to be, a lot of interest in this topic.
    So while I’d be really grateful if you could add me to the list of those who want info about the way you went about setting up the company and related trading account, it would be a great gift to the group here if you also put it in the wiki. Then we might have Scottmi, and the others who’ve done this, add to it — and the rest of us too as we followed in your footsteps.
    It’s something that’s been mentioned by Phil and others for a few months now but it’s never happened. Maybe now’s the time. It would be a great resource.
    omahony.mail at gmail.

  235. lionel

    Good morning.
    Does someone know the link of Phil's TV show on BNN last night?

  236. jromeha

    Phil – are we looking to go long /RB futures today after Oil inventories or THursday after NG inventories into the weekend?

  237. Phil

    Good morning!

    Not much change in the Futures so far but rejected from attempt to rally back and looking to test lines in the Futures again at 12,400, 1,300, 2,500 and 750, which are likely to hold or at least be bouncy and can be played bullish with tight stops and not if Dollar over 82, of course! 

    Asia was not good with Nikkei falling 2% on a rising Yen (79.52 on no action from BOJ and bigger deficit and worse Europe) and the Hang Seng dropped 1% and failed to hold 19,000 with the Shanghai down 0.4% and BSE failing 16,000, down 0.25% at 15,984.

    Dollar 81.85, Euro $1.266, Pound $1.573, 79.42 Yen to the Dollar and EUR/CHF 1.2009 but what the hell is the point if they are simply pegging to a tumbling Euro?  

    Oil $91.17, gold $1,557, silver $27.73, copper $3.44, nat gas $2.68 (Japan imports way up), gasoline $2.92 (VLO should be thrilled by this as the crack spread is now massive).

    Europe snapping back almost all of yesterday's gains with 1.25% losses now as everyone expecting disappointment from EU meeting today.  

    I hate to be an optimist but Dollar up 1% and markets not down 1% is actually a good headline.  

    Today is going to be rumors, rumors and more rumors as the EU meets about 1pm our time (EST) and not likely to decide anything until after our close.  

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    10:00 New Home Sales

    10:00 FHFA House Price Index

    10:30 EIA Petroleum Inventories

    1:00 PM Results of $35B, 5-Year Note Auction

    "Sell your house … yesterday," Gary Shilling tells Bloomberg. It will take 4 years, he says, to work off still-high inventories, during which time prices could fall another 20%. Turning to Facebook: "(It's) the end of the social media boom … reminds me of Pets.com."

    The Bank of Japan keeps its monetary policy unchanged, leaving rates in the 0-0.1% band and holding asset purchases steady at a total of ¥70T ($880B). Analysts expect an increase in asset purchases to come soon, either during a meeting next month ahead of Greek elections, or in July, when the bank gives its updated inflation forecast. 

    Japan's trade deficit widened to ¥520.3B ($6.5B) in April from a shortfall of ¥84.5B in March, as exports rose a less-than-expected 7.9%. Finmin Jun Azumi calls for the Bank of Japan to "take appropriate steps in a timely manner;" analysts believe BOJ may boost asset purchases in the coming months.

    Some blunt eurozone truths from Jin Liqun, chairman of CIC's supervisory board: Eurozone leaders have demonstrated a "lack of leadership" on the region's debt crisis, "too much time has been wasted on endless bargaining… for piecemail bailouts," and the core eurozone nations will have to "keep an eye out for possible copycats should the Greeks be allowed to escape from the crisis unscathed."

    More on the Papademos comments: In the full interview, it becomes clear the former PM isn't predicting a euro exit, but warning of nuclear winter in the event of an exit as a way to push Greeks into voting for the establishment parties. "There is no upside to a Greek departure from the euro."

    As concerns grows on the economic front, former Council of Economic Advisers Chairman Martin Feldstein says the dangers are all too real. We're stumbling along right now, Feldstein says, and the folks forecasting 3% growth are far too optimistic. "We'll be lucky if we have 2%." As for the "economic cliff" we're facing in 2013, if everything that's due to expire expires, it will in fact be an economic disaster. (video)

    This is the most slanted CBO I've ever seen!  The CBO warns about the "fiscal cliff," saying the U.S. economy would enter another recession in H1 2013 if planned tax increases and spending cuts are allowed to go into effect in January. CBO projects the economy would contract 1.3% in H1; if all the spending cuts and tax increases are removed, CBO says the economy would add 2M jobs in 2013 and U.S. GDP would grow 4.4%

    Booz survey of ~200 auto industry executives finds bullish views abound, as 94% of automaker execs and 92% of auto supplier execs say the sector is somewhat or much better off Y/Y. Profitable growth is seen, with 52% projecting revenue will rise 11% or more, and strong majorities expect Detroit's big three to hold or gain market share next year.

    Think housing will improve? Buy truckers, KeyBanc's Todd Fowler suggests. “All the freight required to build a new home has a very positive impact on trucking activity," he says, noting each new residence requires 5-8 truckloads to transport supplies such as lumber, roofing materials and interior furnishings. Fowler likes KNX,WERN and CGI, plus retailers HD and LOW

    Duh – that's the whole point!  The proposed Keystone XL pipeline would raise U.S. gasoline prices, according to the National Resources Defense Council: The pipeline would divert crude oil from the U.S. Midwest to Gulf Coast refineries geared to producing diesel fuel for export, which would reduce gasoline produced for U.S. consumers and raise production costs, making the fuel more expensive.

    Chesapeake (CHK +0.2%stands by its plan to expand its oil production, saying it will spend 90% of its planned $7B capital budget for 2013 on drilling in oil fields, including ~40% earmarked for the liquids-rich Eagle Ford shale formation. CHK still plans on spending 7% of capex on dry gas production despite depressed gas prices.

    During its FQ1 earnings call (webcast), Dell admits its 10% Y/Y drop in notebook sales had much to do with tablet cannibalization (more with consumers, but also among businesses). Dell also claims price competition (especially in emerging markets) hurt PC sales, and an inefficient sales structure affected enterprise sales. Also, it adds April was particularly weak, and some enterprises are delaying IT purchases. DELL -12% AH. HPQ -2.5%INTC -1.1%. (presentation - PDF).

    More on Dell's FQ1: No EPS guidance. Services only +4% Y/Y vs. FQ4's 12%. Public revenue -4%, large enterprises -3% (+5% in FQ4). Asia-Pac/Japan flat (+10% in FQ4), EMEA -1%, Americas -7%. Storage -8%, servers/networking +2%, desktops -1%,notebooks -10%, software/peripherals -7%. Gross margin was 21.3%, +20 bps Q/Q but -160 bps Y/Y. $324M spent to repurchase shares. Dell is the second enterprise IT giant to recently post weak results, after CiscoDELL -9% AH.

    Sony (SNE) and Samsung (SSNLF.PK) are trying to force retailers to rein in discounts on televisions, a move that could not only save profit margins at two of the world's largest TV makers but also help retail chains like Best Buy (BBY) and Target (TGT) remain competitive against online discounters.

    As Finra and the SEC investigate allegations that analystscut their Facebook (FB -8.9%) estimates ahead of its IPO and only shared the info with select clients, a source tells BI the estimates were cut because a Facebook exec told them to. Backing up this claim is a May 11 Bloomberg column in which sources claim Facebook is telling analysts its sales "may not meet their most optimistic projections."

    Massachusetts subpoenas Morgan Stanley over the Facebook IPO amid allegations about leaked negative viewsMS-1.4% AH.

    Renowned NYU finance prof. Aswath Damodaran assignsFacebook (FB -8.9%) a value of $29/share, a little below today's $31 closing price, based on a detailed valuation analysis. His assumptions: Facebook's annual revenue growth will average 40% over the next 5 years before slowing; its operating margin will fall from a sky-high 45.68% to 35%; and its cost of capital will be a relatively high 11.42% (to account for higher-than-normal risk). (Blodget's valuation)

  238. Phil

    Thanks 1020! 

    Stimulus/Never – But it's not up to him.  Congress has control so you might say that's a chart showing why there's no way we'll get stimulus no matter how badly it destroys the economy as long as the Reps feel it gives them a political advantage.  The only thing that may mitigate that is it's probably also the chart of any Congressperson getting re-elected plus Romney is such a tool, he'll probably lose no matter what they do.  Imagine running as a proud Bankster while the markets are failing and the average voter is getting collection notices every other day in the mail…

    BNN Interview/Lionel – Here.  

    Gasoline/Jrom – Not a good time for it with overall markets so weak.   Usually it's a no-brainer play but they've kept gas way pumped up while oil has plunged and demand is dead all around so it's a no play this time.  

  239. stjeanluc

    Got to run out and I might miss the open. But I'll post the portfolio updates as soon as I get in.

  240. lionel

    Thanks Phil/ Great performance. Hopefully Jim Cramer watched it too :)

  241. jomptien

    One party are idiots and the other are liers:
    http://www.youtube.com/watch?v=cPccsCwweHQ&feature=BFa&list=UU1yBKRuGpC1tSM73A0ZjYjQ

  242. Lincoln

    books: Adrift
    It's not investing but definitely explains to a great extent how our economy/deficit, has been shaped. Of course Rachel Maddow has a political viewpoint but this is really not political, (Clinton and Gore play their role in the move to privatization debacle),  but this book is really a great history of how we got where we are with our military, both from a tactical and an economic standpoint. She starts with Madison and there are many points in our history where decisions sent us "Adrift" from what the founders had envisioned for the country. 

  243. lolobear

    jerconn – any answer on the Andy Zaky forum? 

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