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Will We Hold It Wednesday – S&P 1,440 Edition

Big two days to start the week!

Look how exciting the chart looks now – if only we can hold those 5% breakout lines on the S&P (1,440), NYSE (8,400) and Russell (840), then we can expect a little catch-up action from the Dow and the Nasdaq but, in order for the Nasdaq to catch up, AAPL must move up and that's still a bit questionable with all the negative chatter and year-end tax selling.  As I said to Members this morning:

Big Chart – Now we kind of do have that V-shaped recovery – especially on the RUT and NYSE.  That's the funny thing about technicals – they can "so obviously" predict disaster right before they are proven completely wrong.  Of course the same goes for predicting bull runs – so stay on your toes!  Very encouraging to be over 5% on S&P, NYSE and RUT – all our broad indexes.  Nas is held down by AAPL (for now) and Dow just lagging, as usual so a long play on the Dow could be fun as we look for them to re-test 13,600, at least.  Very easy bear indicators if any of our 3 indexes blow their 5% lines now. 

Of course we have a falling Dollar to thank for helping to goose the markets – as well as keeping commodities up despite a fundamentally bearish story.  As you can see from Chris Kimble's chart, the Dollar is off almost 2.5% from it's high in mid-November, corresponding to a roughly 6% move up in the S&P during the same period.  

Now the Dollar is testing a possible floor at 79 this morning and, if it can't break any lower than that, we may once again face rejection back at our 2012 highs.  We REALLY don't want to form a double top going into the new year – that can make for a very ugly January – especially if earnings are even a little bit light – so we're certainly not out of the woods yet and we're going to play it cashy and cautious into the holidays unless the Dollar drops below 78.50 on whatever nonsense they come up with to "fix" the Fiscal Cliff.  

We've already discussed our primary TZA hedge and now may be a good time to add a Mattress Play (see "The Stock Market Parachute") and we'll explore a few of those options in Member Chat, depending on what kind of movement we get from the Dow and the other indexes today.  While it's encouraging that our broader indices are all showing good breakouts over their 5% lines, it's problematic that AAPL is still holding down the Nasdaq and the Dow is straining just to get back to it's Must Hold line at 13,600 – even though other Global Industrials are picking up.  

Take the Nikkei, for example.  They hit 10,200 last night before falling back to 10,160.  That's up from 8,600 in November and that's a nifty 18% gain and we've already discussed a similar move in China as one of the main reasons we stayed bullish on our markets in the first place but now the US is seriously underperforming other global markets by 3.5-9% (see chart) so either we need to begin a serious catch-up rally or we're going to begin pulling them back to our level as we go over that fiscal cliff.  

All it will take is a bounce back in the Dollar to get the ball rolling and start to collapse commodities and equities so we're going to be watching the 79 line very carefully and we really can't afford to lose ground on the Euro ($1.33) or the Pound ($1.63) and we even need to see a bit of strength in the Yen, which is way up (lower) at 84.50 to the Dollar.  Oil is testing $89 this morning and that's a short we like (/CL) into inventories at 10:30 for a quick move lower.  Gold is super-weak at $1,668 and we need that to move up as well as silver to get off the floor at $31.32 – otherwise we're just not going to get that Dollar below the 79 line.  

2012 Fiscal Cliff © Jeff Koterba,Omaha World Herald, NE,2012,end,father time,tax,new year 2013,fiscal cliffEveryone wants a weak currency and now it's our turn because it's our market that's lagging and in need of assistance so it's time for the other Central Banks to give us a break and let the Dollar fall – at least through the end of the year – so we can at least have the illusion of a rising market.  Remember, as Fernando says, "it is better to look good than to feel good" and we need a marvelous finish to 2012 if we're going to avoid a pullback in 2013!

Greece is certainly looking marvelous this morning with yesterday's S&P upgrade being followed by an announcement that the ECB will begin accepting Greek Government Paper as collateral again and that is sending Greek markets up 3.6% this morning and the National Bank of Greece (NBG) is up 5.8% on the news.  Marvelous indeed!  

FDX did not look so good with a 2-cent miss against $1.39 in reported earnings but, on the conference call, they blamed Hurricane Sandy and said it shaved 11 cents off their earnings due to reduced shipment volumes and higher operating costs so they are being given a pass and their projected $6.45 per share for 2013 makes their $93 price tag a p/e of just 14.4, which is miles below UPS – at 22.24 currently.  

We had a nice earnings play on ORCL yesterday, in Member Chat, buying 4 long March $35 calls for .58 ($232) and selling 5 Jan $34 calls for .40 ($200) for net $32 and, as we expected, ORCL reported good but not great earnings and is right up to $33.86 pre-market – which would be perfect if they hold it.  It's hard to believe it's already earnings season again and we look forward to featuring many of these earnings plays in January (assuming the World doesn't end on Friday, of course).

Meanwhile, we'll watch the Dollar and our levels and see if Santa Clause is really coming to town or if we're going to be confirming a top in the markets.  It's still very much up to the boys in DC – God help us all!  


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  1. stjeanluc

    Oil Lines

    R3 – 89.69
    R2 – 89.16
    R1 – 88.74
    PP – 88.21
    S1 – 87.79
    S2 – 87.26
    S3 – 86.84

    Yesterday's high and low – 88.63 / 87.68
    Daily Fib lines – 89.21/88.88 and 87.45/87.31

    Inventories at 10:30 AM this morning.

  2. stjeanluc

    Quite a rally we have had:

    http://www.bespokeinvest.com/thinkbig/2012/12/18/542-of-sp-500-stocks-in-overbought-territory.html

    Following Tuesday's rally, 54.2% of stocks in the S&P 500 are overbought, while just 4.2% of the stocks in the index are oversold.  On a net basis, this works out to 50% of the stocks in the index, and it is the highest level in three months (9/19/12).  While 54.2% seems like a high pecentage of overbought stocks, in prior rallies this year, the percentage of overbought stocks in the S&P 500 got as high as 69% before the market retreated.

  3. stjeanluc

    And a lot of stocks making 52-week highs:

    http://www.bespokeinvest.com/thinkbig/2012/12/18/11-new-52-week-highs-today.html

  4. stjeanluc

    A good list of decisions that ended up killing economic growth in the world:

    http://qz.com/36281/the-seven-most-misguided-growth-killing-government-decisions-of-2012/

     

    1) Mario Draghi tricked Europe
    2) The US didn’t do anything meaningful on economic policy all year
    3) The EU didn’t write down Greek bonds
    4) The whole world didn’t do anything about climate change
    5) The United Kingdom kept austerity alive
    6) The Bank of Japan tolerated deflation
    7) Argentina fought with the world’s investors
    Oh, and then there’s the US fiscal cliff

  5. 1020

    Good Morning!

  6. aaronc

    Good Morning! Exceptional write up this morning Phil, lot's of things in play globally. A theme I'm hearing a lot lately is this notion of a weakening Yen and strengthening Japanese equity market as a probable intermediate trend. What do you think?

  7. diamond

    The Unequal State of America – Reuters

  8. Opesbridge

    Good Morning Everyone.

  9. Pharmboy

  10. jerconn

    Pharm – is it "down and out" for ONTY, or down but not yet out?  Worthwhile to buy at this less than $2 level?  Sell puts?

  11. stjeanluc

  12. stjeanluc

  13. stjeanluc

  14. stjeanluc

  15. stjeanluc

  16. Phil

    Good morning! 

    I have a lunch appointment at 11:30 and should be back around 1:30 today.  

    We're having our usual morning weakness but I'm very concerned with the Dollar facing a very bounceable floor at 79 at the same time as the Euro is testing a top at $1.33 and the Pound is testing $1.63 (both failing) – it's a recipe for disaster if they all end up turning at the same time.  

    We talked about a mattress play in the morning post and I like the DIA March $129 puts at $2.40, selling Jan $127 puts for .60 for net $1.80 on the $2 spread.  The idea is we think the Dow will drop but not too drastically and the short puts pay off some of the long premium and, of course, they are rollable if the Dow heads lower (the March $118 puts are .60) so it's good protection with a little bit of a hedge.  

    The more aggressive hedge would be our beloved TZA April $13/17 bull call spread at $1, selling the FCX May $28 puts for .98 for net .02 on the $4 spread.  Of course you can short a put on anything you REALLY want to buy on a pullback.  FCX  is currently $34 – so we're talking a 20% drop before you own it.  Of course, you can sell one AAPL 2015 $400 put for $52 and buy 50 bull spreads and still have a $2 credit to net into AAPL at $398 but it's a bit more fun if you pick something that doesn't tie up margin for such a long time horizon.  

    As I noted earlier, 1,440 must hold on the S&P, as should 8,400 on the NYSE and 840 on the Russell.  If ANY of those fail – it's a very good time to add these bearish hedges.  Also, watch that $530 line on AAPL – that also needs to hold up or we've got some serious trouble both in AAPL and the Nasdaq.  

    Oil just bottomed at $88.50 and that's a fine gain on /CL off our $89 entry and now we can expect it to rally back to $89 or maybe higher ahead of inventories.  They are expecting a draw this week after a terrible report last week but anything less than a net 5M decline is going to be a disappointment and we can get short again. 

    At the open: Dow +0.03% to 13356. S&P +0.08% to 1448. Nasdaq +0.19% to 3060.

    Treasurys: 30-year +0.26%. 10-yr +0.09%. 5-yr +0.05%.

    Commodities: Crude +0.14% to $88.52. Gold -0.24% to $1666.65.

    Currencies: Euro +0.46% vs. dollar. Yen +0.43%. Pound -0.17%.

    Market preview: U.S. stock futures join the global rally, which has been fueled by hopes of a deal to avert the fiscal cliff. The S&P benchmark is +0.9%. Adding to the good mood are positive earnings from Oracle and FedEx, whose shares +2.9% and +0.8%respectively. GM is +8.3% after it says it's repurchasing $5.5B worth of shares from the government, while Knight Capital is +7.2% onconfirmation that it's being bought by Getco. Later: EIA Petroleum Inventories

    Nov. Housing Starts: -3% to 861K vs. 865K expected and 888K (revised) in Oct. Permits 899K vs. 875K expected and 868K (revised) in Oct. 

    More on Housing Starts: Housing Starts of 861K (+21.6% Y/Y). The housing starts decline of 3% M/M was led by single-family component. Home builders are moderately optimistic about future sales as housing permits rose 3.6% M/M to 899K. (PR)

    Talk about exposed to a housing recovery (or a renewed slip), Bank of America's (BACstash of mortgages at least 6 months delinquent stands at $64B, 3.3% of all the housing loans it services. This compares to Citigroup's 1.1% level, and Ally, Wells Fargo, and JPMorgan each below 1%.

    Rocky Mountain Chocolate Factory (RMCFgains 17.3%premarket to $12.43 (halted at the moment) after receiving a buyout offer from PST Capital for $13.50/share.

    The Rocky Mountain Chocolate takeover story gets weird.RMCF says it previously received an offer letter from PST Capital – it was handwritten, and misspelled the name of the Rocky Mountain Chairman. The return address was to a law firm which, when contacted, says it does not represent PST. The Schedule TO filed with the SEC has its own oddities – including a mailbox/shipping store return address. Shares +8.6% premarket. (PR)

    beat on its bottom line and a boost in guidance is enough to lift shares of General Mills (GISup 1.8% in premarket trading. An interesting note to pull out from the company's earnings release is that the products listed as strong contributors to profits – Yoplait Greek Yogurt, Nature Valley protein bars, and Peanut Butter Multigrain Cheerios – all lean to the healthier side.

    Best Buy's (BBY) innovation team pushed management to explore opportunities with Amazon only to be issued an "edict" of no partnering with the company, according to a new report. Beyond the usual dose of Monday morning quarterbacking, the note could have some read-through to ongoing dissension amongst the ranks at Best Buy with turnaround specialist Hubert Joly calling the shots.

    Told you so!  Shares of Navistar (NAVfall 5.4% premarket after the company's FQ4 report disappoints. Slumping Department of Defense sales helped put a chill into the spines of investors.

    More on Navistar (NAV -4.8%FQ4: swings to attributableloss of $2.77B from a profit of $255M after taking a non-cash tax expense of $2B and incurring charges of over $250M for pre-existing warranty expenses, restructuring and non-conformance penalties. Truck ops lose $160M and engines $287M, while parts profit -13% to $76M.

    Cowen downgrades Smith & Wesson (SWHC) to Neutral from Outperform. SWHC +2% premarket, after falling close to 19% since the school shooting on Friday. 

    More on General Motors (GM): After the automaker buys back 200M shares from Uncle Sam, the government will still hold close to 300M shares but has a plan in place to sell off its entire stake within 15 months. GM +7.3% premarket to $27.30.

    Delphi Automotive (DLPH+4.4% premarket after S&P announces it will replace Titanium Metals (TIE) in the S&P 500 index after the close of trading Friday. TIE is in the process of being acquired by Precision Castparts.

    Sirius XM Radio (SIRI -0.2%) trades higher with word out that it found someone to call the shots for Mel Karmazin on an interim basis. An important backdrop for the company is where auto sales will come in at for December. Typically, the last week of the year is a big selling period, but the fiscal cliff paranoia adds a wildcard to the mix this year. 

    Stimuvax, a lung cancer vaccine that Germany's Merck (MKGAF.PK) has licensed from Oncothyreon (ONTY), failed to improve overall survival in a Phase III study. However, "notable treatment effects were observed in certain subgroups of patients." That's not enough to convince analysts: "Despite potential positive effects in subgroups, we consider the drug dead," says Deutsche Bank. Oncothyreon collapses 61%, while Merck is -2.9% in Frankfurt. (PR)

    Facebook (FB +1.6%) opens higher after Cantor raises its PT to $33 from $28, citing improved user engagement and monetization on mobile devices. "We view Facebook as a prime beneficiary of growth in mobile advertising/e-commerce and view its shares as an attractive play on this trend," the firm writes. eMarketer just significantly hiked its U.S. mobile ad forecasts for both Facebook and the market in general. 

  17. Pharmboy

    ONTY/jerconn – t'will be a long, long road.  Not interested at this time any more.  They failed, but phase 3 cancer is a tough nut, and risky, but 'could' have been rewarding.  They met the primary endpoints, but missed in the rest.  They 'might' eek out subgroups of people, but that will be a long time to understand the mechanisms.

  18. 1020

    It's good to have a backup…..
    http://finance.yahoo.com/news/republicans-put-squeeze-obama-fiscal-024431683.html
     
    Good Luck with that.

  19. 1020

    ….And that's why these "negotiations" will not end in a deal in 2012….

  20. Pharmboy

    FWIW…..every time we are up 2d in a row >1%…..times are good.

  21. stjeanluc

    Because there is no risk whatsoever in the market:

    http://www.businessweek.com/articles/2012-12-19/in-a-world-full-of-risk-why-are-investors-so-calm

    Leuthold’s monthly Risk Aversion Index, which bakes together various credit and swap spreads, commodity and currency prices, and relative asset returns to offer a broad gauge of skittishness, is at a record low going back to 1980. That span includes the Crash of ’87, the rolling emerging-market contagions of the 1990s, and the multiple human and financial calamities of the past decade.

  22. Phil

    I've got to run soon and will be back around 1-1:30.  

    Overbought/StJ – That's one of the things that's getting me worried.  Lack of oversold is what I've been noticing as we've had very few buying opportunities lately.  Decision list interesting.  

    Thanks Aaron.  I think the Yen story is playing out – it's not like you're ahead of that news as the Yen is down 7.5% since September already.  If you look at a long-term chart, $117.50 has held as the low on the Yen for 3 years so your bet is they are finally going to break below a very solid range – that's not one I like to jump on.  Similarly, the Nikkei has topped out around 10,200 twice since Jan 2011 and both times with very harsh declines so, again, you are betting a very solid top of the range will break.  Certainly I want to see more evidence before jumping on board this train. 

    Unequal/Diamond – I think focusing on what's happening in one small part of the country simply distracts from the larger point that this is a serious national problem that needs to be addressed and it is, in fact, only Government that is able to address it through redistribution as the "free market" is clearly designed to do just the opposite.  

    FAS Money – Disappointing on the short calls but FAS is, in fact, $120.99 so those $7.50 calls are 75% premium.  We'll just have to wait and see but if XLF stays at $16.50 through Jan – these will have been a near perfect sale as FAS should end up about $120 at that FAS level.  It is, in fact, tempting to sell more but if they solve the Fiscal Cliff – we may get another pop so we're better off not taking any big chances until we get to the other side of that one. 

    $25KPA – AAPL a bit disappointing but no pressing reason to worry yet.  

    $25KPM – Funny how it's now doing better as our QQQ play, as planned, is less volatile than the AAPL calls they replaced and right on track.  As QQQ is at $66.60 and we can collect $1 for the Jan $67 calls, it seems wasteful not to sell 10 (of 25) of those calls to collect $1,000 because, after all, our goal is to pay off those long $6,000 calls in 12 months.  

    AAPL Money – Well, it's just AAPL so we just wait and see what the APPL Gods do for us. 

    Reps/1020 – Getting desperate apparently. 

    2 days/Pharm – I'm sure we go up 2 days in a row more often than that and, since those are cherry-picked examples, I wouldn't put much faith in them. 

    Holy crap, oil jumped to $90 on inventories and net wasn't even that great (+100K).  Seems like an over-reaction to me but may be caused by January contracts rolling into February, which is the current /CL as the Jan holders (still 25,000 open as of yesterday) finally give up. 

    So, I do like shorting /CL at the $90 line with very tight stops above it and now we can play USO Jan $34 puts at $1.70, which only have .40 of premium with USO at $32.70 so pretty reasonable and let's grab 10 in both $25KPs. 

  23. tradinv1

    Phil,
    Do you like the Japanese automakers given Japan's move to devalue?  Other thoughts on the way to play this event?
    Thanks!

  24. Phil

    Japanese/Trad – Where were you when I was pounding the table on TM 50% ago?  Not very attractive at $90 as with the others as well (same reasons as I don't like Aaron's late Yen play above.  F is still very cheap and playable and, in case you haven't noticed, the Dollar is the currency that's collapsing at the moment.  

    F 2015 $10/15 bull call spreads are $2 and the $10 puts can be sold for $1.40 for a net .60 entry on the $5 spread that's $1.78 in the money.  1/2 Feb $12 calls can be sold for .48 to generate a little extra cash.  

    Gotta go – see you later! 

  25. Burrben

    AGNC instead of NLY?
    Interesting article.  I might add a little here.  Wondering if anyone thinks this is a bad move.  16.2% yield and didn't cut it's div like NLY just did.
    http://seekingalpha.com/article/1072071-american-capital-agency-maintained-its-dividend-unlike-annaly?source=email_rt_article_title&ifp=0

  26. yodi

    I like to hear your opinions on FB I know Phil said once He would be interested below 25.
    buy Jan14 23 c for 7.90
    sell Jan14 30 c for 4.50
    sell Jan14 23 p for 3.00
    and just for extra pay money sell Jan13 29 c for 1.00
    so .60 in you pocket at the start.
    Now FB is not a grandfather play last year we had a swing between 17.50 and 33.00
    So Winston what you think or any one for that matter

  27. yodi

    Burrben,
    AGNC and NLY
    I am holding both positions. The problem is not the div is the Tax hike people ar worried about and I feel we will see a temporary drop in most div paying stocks.

  28. jelutuck

    Burr/AGNC
    I did pretty well holding AGNC for the past year, but sold out when things started to get ugly for the MReits.  I still like AGNC but am selling puts to try to build a position lower than here.  I'm about to roll the Dec 31 to the Mar 29 with the goal of making around the dividend payment each quarter ($1.25).  If I can roll that a few times, I can maybe end up owning the stock for $25 or less (or I can keep selling puts, but if it gets cheaper, I'd be afraid of missing a rise if the mortgage market starts to normalize).   I also own TWO, which seems to have a more stable dividend and is investing in foreclosed homes, so they are a play on an improving housing market also.

  29. jelutuck

    Yodi, isn't it true that the dividends from the MReits are non-qualified and are already taxed at regular rates?  So any change to taxes on divs won't affect them.

  30. rpme

    Burr, I am in both as well and nymt, psec, arr, fwiw.

  31. Burrben

    PeterD / RUT
    Are you looking at any new strikes for Jan, or waiting to hear what happens with the cliff?

  32. yodi

    jelutuck
    Taxes I am not qualified to comment as I am German and living in Mexico. I get hammered with a tax on div at the same day NOW between 15 and 35% The 35 % is on Limited Partnership. I do think they try to get as much tax out of ever one, as they can!

  33. Burrben

    Re AGNC
    Thank you all for the information and advice!  I will take a look at the others this week.
    From what I understand, if a REIT pays out 90% to investors it doesn't have qualified status, which (if the div tax cut expires) would make these on a level playing field with other div stocks.

  34. yodi

    jelutuck
    TOW as well same problem looked at this play this morning again and put it aside due to the unsure CLIF!

  35. terrapin22

    Anybody familiar with MLPL?  looks like it has 11% yield but worried about decay.  ETRACS 2x Leveraged Long Alerian MLP Infrastructure ETN (MLPL)

  36. yodi

    Let us strip Phil's F play and please correct if my thinking is wrong.
    We will spend 2.95 on the long side and get 2.24 on the shorts not including the Feb 12 which you need to play on a monthly basis to make up extra money.
    Let us say F will be at 12 Jan15. For starters you out of pocket .71 today. F at 12 Jan15 will have aprox. a value of 1.84. So over two years you are making net 1.13. However if F runs up to 15 by Jan15 you can add an other 4.00 in your pocket!!

  37. yodi

    On thing should be added on F it has dropped from 18.55 to today 11.79 with a low of 8.88

  38. tradinv1

    Thanks Phil, the answer is working!  It is only one of several great ideas I have missed.  But there have been others I have caught, so se la vie (sp?)!!

  39. rustle123

    RUT index is now in overbought territory.  It's about a 72 RSI.  It did get as high as 80 RSI right before QE was announced when TNA was 67 then collapsed about 7 points immediately.

  40. rj_jarboe

    agnc/nly
    You can get exposure to both by using REM.

  41. Pharmboy

    CGEN – out of all of it……Why, b/c I am up a bunch, and I need to reduce.  Chart is turning.

  42. stjeanluc

    An interesting take into the road to mastery in trading:

    http://adamhgrimes.com/blog/the-road-to-mastery-2/

    Example:

    Novice trader. At this stage, traders are not trading to make money; they are trading for experience and to begin to deal with the emotional challenges of trading. One of the main signs of progress in this stage is that the trader will start lose money more slowly than before—still losing, but losing less often and less consistently.

    Experienced trader. It is difficult to imagine a trader becoming a true veteran without living through a complete bull/bear market cycle—about a decade in most cases. This trader has finally seen it all and has also become cognizant of the unknown and unknowable risks that accompany all market activity. It is possible for developing traders to gain much of this veteran trader’s knowledge through study at earlier stages of development, but there is no substitute for experience and seeing events unfold in the market in real time.

  43. jabobeast

    VIX flying

  44. Peter D

    Burrben,
    Yes, the market has rallied, and we're waiting for the December shorts to expire, so we're just enjoying a quiet holiday time until next week.  VIX goes up today and it would be good if they go up further next week, then we'll sell the Jan's.
     
    Stjeanluc,
    Is there a magic formula that you have for the Equity Curve for the portfolios?  Or you just have those balances available as you are updating the portfolios daily.  Thanks!

  45. zeroxzero

    Slow news day, so I'll post this, which was just sent to me:
     
     
    "The Carlyle Group's David Rubenstein, Blackstone Group's Stephen Schwarzman and Bridgewater Associates' Ray Dalio all agree that the burst of the interest rate bubble presents the next big investing opportunity. It's going to be tough to call, but three of the world's biggest investors agree that the next big money-making opportunity will be when interest rates rise from their historic lows and the bond bubble bursts. "The greatest fortune made in the next five years is probably going to be made by some group or individual who figures out when the interest rate market will turn," said billionaire David Rubenstein, co-founder of private equity firm Carlyle Group. But the hard part is timing that turn. "I don't know what will burst the interest rate bubble," he said during a conference Wednesday hosted by The New York Times' Dealbook."


    While Rubenstein didn't dare forecast when interest rate will begin to rise, fellow panelist Ray Dalio, founder of Bridgewater Associates, gave it a shot. Warning that "he who lives by the crystal ball is destined to eat ground glass," Dalio predicted that interest rates could begin to turn toward the end of 2013.
     
    "The Federal Reserve, which has had policies in place to keep interest rates low since late 2008, said Wednesday that it will begin to reverse its easing policies when the job market improves substantially, with the unemployment rate falling to 6.5%, or when inflation exceeds 2.5% a year."  While it's not imminent, Dalio said that biggest opportunity next year will come from shorting bond markets around the world."
     
     
    "Dalio also said there's a place for gold in the portfolio, and predicted that stocks and emerging market currencies will deliver stronger performances than bonds."
     
     
    "Meanwhile, Stephen Schwarzman, the founder and chief executive of private equity firm Blackstone Group, said he would move out of junk bonds, which come with fixed interest rates, into debt that offers floating rates, interest rates that would rise along with the market, including debt from highly leveraged banks"
     

  46. Pharmboy

    From Gann……

  47. jromeha

    Pharm- you're all out of CGEN or SGEN?

  48. Pharmboy

    Zero – agreed to when.  Japan has been doing it for 20 yrs….so, short away, I will steer clear of that one.  More money in bonds than stocks, and big money controls the move.  But, barring a catastrophic event, one gets their money back in bond issuers of their own currency.  Greece we are not…Japan, we are.  So, which bonds do we short?  I would start with sovereigns of the EU……

  49. Pharmboy

    Shhhh…..PGNX having a nice day.

  50. stjeanluc

    Equity Curve / Peter – No magic formula. I have all the balances going back to when we started all the portfolios. I'll plot yours over the holidays and update it as I update the FAS Money one. It's easier with yours because I update it only twice a week at most. 

  51. Pharmboy

    CGEN jro….C.  SGEN in March 25s and Dec 25 C & P (waiting)

  52. stjeanluc

    My quote for today:

    "I am certainly not an advocate for for frequent and untried changes in laws and constitutions. I think moderate imperfections had better be borne with; because, when once known, we accommodate ourselves to them, and find practical means of correcting their ill effects. But I know also, that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths disclosed, and manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times. We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors," - Thomas Jefferson .

  53. Pharmboy

    Speaking of SGEN – Up on the Dec puts, I think it would be wise to roll to the March 22.5…or STO the March and put a stop on the Dec Ps.

  54. Phil

    Running late but on the way back

  55. stjeanluc

    Bonds / Zero and Pharm – What incentives do the central banks have in raising interest rates? It's not like we are under a high inflation risk right now or that they have to cool down our economies. If nothing else, looking at incomes, its more the deflation risk that is the problem for our economies. We could low interest rates forever… or at least our investment lifetimes!

  56. stjeanluc

    Great set of charts:

    http://www.ritholtz.com/blog/2012/12/cash-rich-companies-subsidised/

    Ain't Kenyan socialism great?

  57. palotay

    Jefferson/StJ – I like this one too in the same vein:   
     
    “Some men look at constitutions with sanctimonious reverence, and deem them like the ark of the covenant, too sacred to be touched. They ascribe to the men of the preceding age a wisdom more than human, and suppose what they did to be beyond amendment…But I know also, that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths disclosed, and manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times.” –  Thomas Jefferson.
    Seems very relevant to all this 2nd amendment nonsense.  

  58. Phil

    I'm back.  

    Doesn't look like I missed much.  I guess Boehner failed to kill the markets but we're dangerously close to losing the S&P so we do need to be careful and AAPL is slipping at $530.

    Oil, on the other hand, seems determined to print $90 into the close (15 mins) and the VIX popped back to 17.  

  59. Inkarri19

    StJ – So, the divide between rich and poor growing….check.  Deficits as far as the eye can see…check. 

  60. Phil

    AGNC/Burr – We liked them just as much as NLY last year.  It's just that NLY came down more so we went with them this year but AGNC still a good one.  

    FB/Yodi – I was liking them a lot more at $18.  $25-30 is about the right price for them but that's assuming they don't have a set-back.  

    Good way to play AGNC, Jet.  If you get a cheap entry, then get in but, if not, collect the short put money instead of the dividend and be happy. And yes, I don't believe they are affected by tax changes, which is why the sector sell-off seemed overdone.  

    HLF a pyramid scheme – shocking!  I said that in May but the media didn't make a big fuss about it.  

    MLPL/Terra – Why not just buy 2x AMLP.  It's only $16 so it's cheaper than the 2x ETF tracking it and the options are more liquid and you don't have 2x fees and decay issues.  AMLP only has a 6% dividend but you can buy it for $16.09 and sell the July $15 calls for $1.25 and the $15 puts for .75 for net $14.09/14.54 so you collect your .25 in Feb and May (3.5%) and you make $1.41 if you are called away (10%) at $16 so the stock only has to stay even for you to make 26% annualized and you have a built-in 10% downside protection.  

    Working/Terra – Awful thing, really gets in the way.  Don't worry, will be plenty of good things to buy if we go off this cliff.  

    Experience/StJ – I agree.  No amount of theoretical study can prepare you for actually going through a cycle or two.  

    Damn, there goes the S&P so let's watch carefully.  The DIA March $129 puts are $2.67 and I'm thinking of adding some to the $25KPs (maybe 20) but hopefully we bounce back over shortly.  The USOs are already a downside play, of course.  

  61. jabobeast

    BPT getting crushed lately..royalty trust??..ouch!

  62. mjjwo9b

    HPQ:  Supercomputer Business article:  http://www.theregister.co.uk/2012/12/18/idc_hpc_systems_3q_2012/

  63. jophil

    Phil, 
    HOV,  a stock I had sold puts and got assigned a while back. Now at $6.05, is it time to write some calls to protect it or is it time to take profit and run? My average cost is about $4.00. please advice. thanks

  64. stjeanluc

    Good one too Palotay!

  65. stjeanluc

    Divide / lnk – If only corporations paid in taxes what they paid in the mid 90's (about 10-15% more) that would go a long way to solve our deficit problem. Corporate profits are 11% of GDP so $1.65Tn. Taking 10% more would be another $165Bn in taxes. No chump change!

  66. Phil

    Rates/ZZ – Certainly inevitable but when is the question.  I don't think it matters if you time it – once that dam breaks the flood will last for years.  Same with inflation – not a genie that will go back in the bottle once it gets out. 

    Gann chart/Phart – Almost a perfect call on the backtest – now we'll see if we can get to that $147 level or if we break $144. 

    I love how the GOP announces publicly that they intend to have a huge temper tantrum tomorrow and then list their demands of they'll be even angrier – what morons.  For one thing, it backs Obama into a corner where he pretty much can't give in to them. 

    Jefferson/StJ – Good one.  Too bad those who quote the founders have no actual idea what the founders really intended.  

    Now Pelosi spanking Boehner.   She can't believe he just threw that one to her.  

    Good charts, StJ.  Pretty obvious, wage slavery leads to better profits.  Not exactly a breakthrough concept – when we had actual slavery, Corporate Profits were fantastic.  GOP just getting us back to the good old days…

    Another good one Palotay.  That Jefferson was one quoteable guy!  He actually made a case for having every law expire after 19 years so each generation would be forced to rethink their constitution:  

    Every constitution, then, and every law, naturally expires at the end of nineteen years. If it be enforced longer, it is an act of force, and not of right. It may be said, that the succeeding generation exercising, in fact, the power of repeal, this leaves them as free as if the constitution or law had been expressly limited to nineteen years only. In the first place, this objection admits the right, in proposing an equivalent. But the power of repeal is not an equivalent. It might be, indeed, if every form of government were so perfectly contrived, that the will of the majority could always be obtained, fairly and without impediment. But this is true of no form. The people cannot assemble themselves; their representation is unequal and vicious. Various checks are opposed to every legislative proposition. Factions get possession of the public councils, bribery corrupts them, personal interests lead them astray from the general interests of their constituents; and other impediments arise, so as to prove to every practical man, that a law of limited duration is much more manageable than one which needs a repeal." --Thomas Jefferson to James Madison, 1789. ME 7:459, Papers 15:396

    Let us provide in our constitution for its revision at stated periods. What these periods should be nature herself indicates. By the European tables of mortality, of the adults living at any one moment of time, a majority will be dead in about nineteen years. At the end of that period, then, a new majority is come into place; or, in other words, a new generation. Each generation is as independent as the one preceding, as that was of all which had gone before. It has then, like them, a right to choose for itself the form of government it believes most promotive of its own happiness; consequently, to accommodate to the circumstances in which it finds itself that received from its predecessors; and it is for the peace and good of mankind that a solemn opportunity of doing this every nineteen or twenty years should be provided by the constitution, so that it may be handed on with periodical repairs from generation to generation to the end of time, if anything human can so long endure." --Thomas Jefferson to Samuel Kercheval, 1816. ME 15:42

    BPT/Jabob – That trust simply is depleting the oil field it has rights to and that means the future cash flow is winding down.  I don't know the exact numbers but I think it was down to less than a year 6 months ago and that started the great unwinding.  It will still throw off cash for a while but less and less and they don't explore and they haven't gotten new contracts so, eventually, they will just wind up and die so it's not a general trust thing – it's specific to them. 

    Supercomputers/MJJ – As I learned from my Cray shares 30 years ago – Supercomputers aren't all that profitable but it does give you good publicity so not a bad idea for HPQ to get the exposure with the other big boys.  

    HOV/Jophil – We had a little negative housing data but I'm not long-term bearish on HOV.  They may pull back and re-test $5 but, long-term, they should be heading to $10.  Of course, if you want to conservatively lock in profits, there's nothing wrong with selling 2015 $7 calls for $1.10 as that's net $8.10 and up 35% from here with 15% downside protection and no risk although I'd rather ditch the stock for $6.06 and buy the 2015 $4/7 bull call spread for $1.40 and sell the $5 puts for $1.60 so you're in the $3 spread that's $2 in the money for a .20 credit and your worst case is getting the stock put back to you at net $4.80 and you tie up 1/2 the cash and margin and still have a massive $3.20 upside if HOV just shrugs higher.  

    $165Bn/StJ – And, if we had collected that $165Bn for the last 20 years, we'd have $3Tn less debt now plus the interest on that $3Tn so more like $5Tn less total deficit if we had simply collected the proper Corporate taxes.  Why the Dems can't simply make this case is beyond me.  

  67. Pharmboy

    He wrote Phart….nice Pill…nice.

  68. Phil

    A little stick action very nice into the close.  If we're having a rally we need all bear moves to be punished.  

  69. jabobeast

    looks like a broken stick today?

  70. Phil

    That didn't last long.  Now anti-stick and S&P clearly failing so let's buy 20 DIA Feb (not March) $129 puts for $1.97 in both $25KPs and let's sell 3 next week AAPL next weekly $530 calls for $10.40 in the $25KPA as well as the AAPL Money Portfolio as we'll be happy for that $3,000 if we need to roll down again. 

  71. Phil

    Dow volume at 3:50 is 91M. 

    VIX at 17.33, TLT at $120.87.  Oil $89.77, gold $1,670, silver $31.17, copper $3.60, nat gas $3.33, gasoline $2.744.

    Dollar 79.33 is the only reason I'm not very bearish now as Dollar is pushing markets lower (but only a bit) and Euro still close at $1.324 and Pound at $1.625 but both failed their levels today.  

    Unfortunately, when this many tests line up at the same time – it's very difficult to get a good breakout as everything has to go right at once.  

    Still, not a fatal pullback unless we follow-through tomorrow.  

  72. Jbur

    Phil/Cray: Cray had a research facility about three miles from my home. And unfortunately Seymore died about two miles from here on a crazy dangerous Southbound entrance ramp onto I-25.
    Never got a chance to meet the man. Would have been interesting.

  73. Jbur

    Cray:http://www.ask.com/wiki/Seymour_Cray

  74. albo

    If WFR closes here, it'll be highest close since May.

  75. Phil

    Cray/Jbur – My Dad did some work with them in the 80s.  

    WFR/Albo – Up 100% from the lows.  Little bit of danger here.  

    All down action into the close.  Dow finishing at 149M. 

    Mostly a negative reaction to cliff talk so we'll see what happens as people digest it overnight. 

  76. albo

    Stj – Not to quibble, but I don't believe taking 10% more than 1.65 trillion gives you 1.65 billion.  Isn't a trillion 1,000 times a billion, not 100 ?  Whatever it is, these numbers are way too huge for my feeble mind to conceive. 

  77. albo

    Phil – Yeah I sold some.  Keeping about 1/3 of what I started with. 

  78. stjeanluc

    The answer is much clearer this way:

    http://qz.com/37989/the-world-bank-thinks-it-knows-why-kenya-isnt-growing-faster/

    A word cloud of responses to a World Bank SMS poll asking “What is the biggest barrier to good jobs in Kenya?”World Bank

  79. stjeanluc

    Billions and billions / Albo – $1.65 Tn is like $1650 billions. So 10% more in taxes of that would be $165 billions. I know we throw around trillions like we use to thousands now…

  80. Phil

    Instagram – Just heard some of my daughter's friends (10) warning her that Instagram is trying to use her for her pictures and she should cancel her account.  Interesting. 

    Trillions/Albo – Er, that's 1%, 10% is divide by 10.  

    Kenya/StJ – LOL, those word clouds can really get to the bottom of things…

    At the close: Dow -0.68% to 13261. S&P -0.76% to 1436. Nasdaq -0.33% to 3044.
    Treasurys: 30-year +0.26%. 10-yr +0.07%. 5-yr +0.04%.
    Commodities: Crude +1.57% to $89.78. Gold -0.02% to $1670.35.
    Currencies: Euro +0.09% vs. dollar. Yen +0.25%. Pound 0.%.

    The Treasury sells $29B in seven-year notes at 1.233%, slightly above earlier yield of 1.225%. Bid-to-cover ratio of 2.72, vs. a recent average of 2.75; indirect bidders take 39.9%, vs. a recent 37.6%. Direct bidders take 23.1%, vs. a recent 18.2%

    Market recap: Stocks finished sharply lower to end a two-day rally after Pres. Obama rejected a Republican budget proposal, a sour note as the clock ticks on fiscal cliff talks. Today's slide was set up by soft housing data after much of the market's recent confidence was built on the foundation of improved housing. Economic bellwether FedEx finished higher after its FQ2 report but gave up much of its early gains.

    More on Housing Starts: Up 25% Y/Y, we're just getting started, writes Bill McBride, noting this year's total of about 770K is less than half the average from 1959-2000. Last time McBride checked, residential investment and housing starts are the best leading indicators for the economy, and their improvement suggests no recession for the next couple of years.

    The index-makers at the Nasdaq are good at selling the bottom: The average one-year return of stocks getting kicked out of the Nasdaq 100 (QQQ) is more than 63%, according to Schaeffer's. "You buy low expectations, not low price," says Ryan Detrick. "Getting kicked out of the QQQ probably is a sign things can't get much worse." Full list of the 10 exiting on Monday.

    Bill Gross (BOND) is "lightening positions"

  81. stjeanluc

    NASDAQ 100 / Phil – Here is the complete list of the companies getting kicked out

    Apollo Group, Inc. (Nasdaq:APOL), Electronic Arts Inc. (Nasdaq:EA), Flextronics International Ltd. (Nasdaq:FLEX), Green Mountain Coffee Roasters, Inc. (Nasdaq:GMCR), Lam Research Corporation (Nasdaq:LRCX), Marvell Technology Group Ltd. (Nasdaq:MRVL), Netflix, Inc. (Nasdaq:NFLX), Research In Motion Limited (Nasdaq:RIMM), VeriSign, Inc. (Nasdaq:VRSN) and Warner Chilcott plc (Nasdaq:WCRX).

    Not certain that I see 63% return on many of these guys!

  82. stjeanluc

    NASDAQ 100 – For sh@t and giggles I'll track these guys getting kicked out in a portfolio that I will not post on a regular basis like the other but just for reference. 

  83. Phil

    Instagram – Just heard some of my daughter's friends (10) warning her that Instagram is trying to use her for her pictures and she should cancel her account.  Interesting. 

    Trillions/Albo – Er, that's 1%, 10% is divide by 10.  

    Kenya/StJ – LOL, those word clouds can really get to the bottom of things…

    At the close: Dow -0.68% to 13261. S&P -0.76% to 1436. Nasdaq -0.33% to 3044.
    Treasurys: 30-year +0.26%. 10-yr +0.07%. 5-yr +0.04%.
    Commodities: Crude +1.57% to $89.78. Gold -0.02% to $1670.35.
    Currencies: Euro +0.09% vs. dollar. Yen +0.25%. Pound 0.%.

    The Treasury sells $29B in seven-year notes at 1.233%, slightly above earlier yield of 1.225%. Bid-to-cover ratio of 2.72, vs. a recent average of 2.75; indirect bidders take 39.9%, vs. a recent 37.6%. Direct bidders take 23.1%, vs. a recent 18.2%

    Market recap: Stocks finished sharply lower to end a two-day rally after Pres. Obama rejected a Republican budget proposal, a sour note as the clock ticks on fiscal cliff talks. Today's slide was set up by soft housing data after much of the market's recent confidence was built on the foundation of improved housing. Economic bellwether FedEx finished higher after its FQ2 report but gave up much of its early gains.

    More on Housing Starts: Up 25% Y/Y, we're just getting started, writes Bill McBride, noting this year's total of about 770K is less than half the average from 1959-2000. Last time McBride checked, residential investment and housing starts are the best leading indicators for the economy, and their improvement suggests no recession for the next couple of years.

    The index-makers at the Nasdaq are good at selling the bottom: The average one-year return of stocks getting kicked out of the Nasdaq 100 (QQQ) is more than 63%, according to Schaeffer's. "You buy low expectations, not low price," says Ryan Detrick. "Getting kicked out of the QQQ probably is a sign things can't get much worse." Full list of the 10 exiting on Monday.

    Bill Gross (BOND) is "lightening positions" in MBS after they've been a big winner for his funds this year (interesting: the MBBhas actually declined since the Fed began QE∞). He's also cutting back on his holdings of corporate paper (LQD). Expecting the Fed to eventually produce higher inflation, he's added to his holdings of TIPS (TIP), while cutting back on non-inflation protected Treasurys.

    Morgan Stanley pulls the plug on John Paulson, its Wealth Management Division recommending clients sell 6 his funds after 2 years of horrid performance. Paulson is a major holder of GLD, and surely knew the liquidations were coming. Might this have something to do with the recent sell off in the metal, asks ZH.

    Fannie Mae and Freddie Mac may have lost more than $3Bas a result of Libor-rigging (UBS settlement earlier), according to an FHFA report, which urges the GSEs to sue the banks involved. The companies have begun exploring legal options. 

    Morgan Stanley is out with mostly positive calls on a slew of big-cap banks, with CJPMCOF, and STI their top picks. Downgraded to Neutral, however, are WFCUSB, and BBT.

    At just 9X 2012 earnings, Korea's stock market is among the cheapest on the planet, writes Kopin Tan, blaming it on outdated perceptions of a highly cyclical, export-dependent country. Korean companies have slashed debt, and an aging population might force Asia's stingiest firms to loosen up on dividends. EWY is the popular play, but it's heavily weighted to Samsung. More diversified (but less liquid) is FKO]. 

    Retail Geeks think it's more productive to compare gross profit margins for apparel retailers on a 2-3 year time time frame instead of getting lost in the noise of a Y/Y comparison. The longer view gives a clearer picture of which firms are able to re-capture lost merchandising margins from higher sourcing costs. After crunching the numbers, margin trends at Aeropostale (ARO), J.C. Penney (JCP), Children's Place (PLCE), and Urban Outfitters (URBN) look broken. On the flip side, Dick's Sporting Goods (DKS), Hibbett Sports (HBB), and Dillard's (DDS) show some promise. 

    ShopperTrak cuts its forecast for holiday sales in the U.S. to 2.5%, down from an earlier projection of 3.3% for the period. The data tracking group suggests the wind is out of the sail of retail since Black Friday. Retailers still hold out some hope that online shopping for December will beat estimates to narrow the gap, although that trend will favor mainly larger companies such as Amazon (AMZN-0.8%), Wal-Mart (WMT -0.4%), and Target (TGT -0.4%) – while leaving dollar stores (DGDLTRFDO) and electronics sellers (BBY,RSHCONN) pinched.

    THQ (THQI -58.7%) has resumed trading following news of its bankruptcy filing: shares have plunged to a mere $0.57. The debt-laden company says Chap. 11 filing is accompanied by a deal to sell "substantially all" of its operating assets to P-E firm Clearlake Capital for a total consideration of $60M (includes a $10M note for THQ's creditors). THQ has also obtained $37.5M in debtor-in-possession financing from Clearlake and Wells Fargo.

    Though they're not having as bad of a day as THQ, major game developers have been selling off today - EA -2.4%ATVI -2.3%,TTWO -4% - and so has GameStop (GME -1.2%). Growing political scrutiny of violent video games in the wake of the Connecticut shooting seems to be the culprit. Shooter Adam Lanza was apparently a fan of the Call of Duty series.

    Herbalife (HLF -11.9%) CEO Michael Johnson responds to Bill Ackman's accusation that the company is a 'pyramid scheme' countering that Ackman is improperly trying to manipulate Herbalife's stock and the SEC should take action. Johnson says company is a legitimate business with "millions of customers" and real business model. Ackman's short is about his own business model, not aboutHLF's. (video)

    Shares of Intuitive Surgical (ISRG -3.4%) get smacked by aCitron Research report that questions the stocks lofty valuation, and claims the stock is a one trick pony without any real edge and the company facing a host of lawsuits.

    Alcatel-Lucent (ALU +6.9%) finishes the day with another solid gain; shares are now up 35% since the struggling telecom equipment vendor announced its debt refinancing deal. The Fool's Rich Smith recently suggested investors remain cautious, given Alcatel burned $386.5M in cash in Q3 and pledged a patent portfolio estimated to be worth ~$6.5B as collateral (among other things) to secure its financing. (yesterday)

    Samsung (SSNLF.PK) will be "ready to ship" smartphone displays based on an "unbreakable" plastic substrate by the end of Q2, claims RBC's Doug Freedman after meeting with Asian supply chain contacts. Also, bendable displays are expected in 2H. These technologies aren't expected to go into the Galaxy S IV, generally seen launching in Q2, but could strengthen Samsung's position down the road, and also give a lift to flexible OLED developer Universal Display (PANL). (previous) 

    Frontier (FTR -3.5%) CFO Don Shassian will be stepping down on Feb. 26, after the filing of the company's year-end statements (presumably its 10-K). Replacing him is John Jureller, formerly the SVP of Finance for P-E firm General Atlantic, and before that, the CFO of WestPoint International.

     

  84. Phil


    JPMorgan's Mark Moskowitz tries to 
    put a positive spin on reports of iPhone order cuts (III), arguing they're due to improving production yields and suggest Apple's (AAPL -0.7%) gross margin could rebound to 40% – Apple guided for an FQ1 gross margin of 36% in October. However, Moskowitz does admit "there are indications the supply chain has seen 20% order cuts related to iPhone 5." He respectively sees 48M and 45M iPhone sales for FQ1 and FQ2. (yesterday)

    More on Apple: 1) The Oregonian reports several states arevying to host a chip plant believed to be meant for producing Apple's app processors. An Albany paper recently reported of New York's efforts. If the speculation is accurate, TSMC (TSM) will likely build the plant, with Apple perhaps contributing funds. 2) U.S. hosted e-mail firm Intermedia says its data indicates the iPhone accounts for 68% of smartphone activations among SMBs, evidence of its continued enterprise edge against Android and share gains against RIM.


  85. edro00

    I worked with Cray in the 60's developing software for the 6600/7600s.  Anyone else??

  86. albo

    Stj – You are right sir, to paraphrase senator Everett Dirksen in today's terms, "A trillion here and a trillion there, and pretty soon we're talking about real money."

  87. stjeanluc

    Cray / Edro00 – I wonder how the Cray's in the 60's compare to an iPhone today in computing power!

  88. stjeanluc

    Samsung / Phil – I wonder how that unbreakable plastic screen (see your story above) plays with GLW. Are we seeing the end of Gorilla glass?

  89. albo

    Gorilla glass not likely at an end altho Oled displays are making headway.  Have been in PANL for the past three years.  Didn't selll last year in the 50s.  What a dufus ! !   Incidentally, Sherwin Seligsohn founded both PANL & IDCC.

  90. stjeanluc

  91. jfawcett

    Gas Price – Vegas Update at COSTCO – 2.99.  Broke the $3.00 barrier with /cl at recent highs.  If this keeps up, that is a pretty good raise for the average Joe the plumber.

  92. zeroxzero

    "The correct formula is as follows: g=GM/r squared. G is the Newtonian gravitational constant, M=mass, and r=radius. So gravity is directly proportional to the mass of an object and is inversely proportional to the square of the distance from the center of the object to where the gravity is to be measured."  Since the mean distance from the center of the earth to the surface is  6,371.009 km, does that mean that one pound steel ball on the earth's surface would increase in "weight" as it approached the earth's center, and how would that be calculated?  Feel free to ignore this question, I just thought someone might know off the top of their head.  
     
    Or perhaps I should be asking whether there is any good reason to be interested in Nokia shares right now – it's high/low range in 2012 has been $.1.67/$5.87, it's now @ $4.85.

  93. rdn4evr

    Sorry ZZ you lost me at "g=GM/r squared" – My advice, don't buy anything till February.

  94. rdn4evr

    Wow, that's just really sad; take a look at a 3 month daily chart of AAPl.  Who woulda thunk?  They're still the only store in the mall with any customers buying anything.

  95. jfawcett

    Phil / SLV – Do you like silver at the 200 dma?  Sell Jan 14 30 PUT (SLV @30.11) for 3.20, net entry 26.80.

  96. Phil

    Good morning!

    Nasdaq list/StJ – Surprised to see NFLX on that list.  Apparently, the 100 is the list of the 100 largest stocks listed at the Nas so the outperformance of those getting kicked makes sense as the the ones that get kicked are simply the ones underperforming at the end of the year – so it's really just a list of recently weak stocks.  On the other hand, the things that replace them are whatever is recently hot.  Shows how reactionary these indexes are.  

     

    Additions

    • Analog Devices, Inc. (NASDAQ:ADI)

    • Catamaran Corp (NASDAQ:CTRX)
    • Discovery Communications Inc. (NASDAQ:DISCA) (NASDAQ:DISCA)
    • Equinix Inc (NASDAQ:EQIX)
    • Liberty Global Inc. (NASDAQ:LBTYA)  (NASDAQ:LBTYB)
    • Liberty Media Corp (Capital) (NASDAQ:LMCA)
    • Regeneron Pharmaceuticals Inc (NASDAQ:REGN)
    • SBA Communications Corporation (NASDAQ:SBAC)
    • Verisk Analytics, Inc. (NASDAQ:VRSK)
    • Western Digital Corp. (NASDAQ:WDC)

    Power/StJ – The Cray 1 had about 160 MIPS and (drum-roll please) 8 Meg of main memory and weighed about 5 tons.  As I'm sure you can imagine, a current IPhone has more power in sub-processors than that.  When you get to the 70s, you were up to about 40-50 MegaFlops and that's about where the IPhone is now but those computers also needed special rooms to house and cool them and cost (at the time) $5-10M.  One the whole, it was all predicted by Moore's Law – we're right on schedule and I can't wait to see what we get in another 40 years.  By extrapolation – everyone should be able to have their own personal Watson and the new supercomputers will be millions of times smarter than Watson – meaning they would literally know everything and probably be able to converse about it naturally.  Things are going to get interesting. 

    Unbreakable/StJ – Doesn't sound like what GLW is doing.  Depends on the specs vs Gorilla Glass and their new flexible glass – maybe it's the same thing and the word plastic is just semantics or maybe they are competing tech – we'll have to dig a bit deeper.  

    Big Chart – Not too much damage but we have to take back that 5% line on the S&P to be comfortable taking off hedges into the holiday weekend.  

    Gas/Jfaw – Would be nice if it stays down.  Wholesale gas price is $2.72 so not much profit for COST at that price.  Is it much cheaper than normal stations in town or is Vegas just cheap?

    Steel Balls/ZZ – But part of the mass of the Earth is in the mantle and crust so, as you approach the center of the earth from the surface you are not really moving closer to the mass of the earth and there must be some point at which you move to a point where the mass above you is greater than the mass below (matter of perspective at that point).

    NOK/ZZ – You have to believe they can turn it around and compete.  I got burned on MOT (and RIMM) so not a fan of half-dead phone companies.  Apparently, it's a rough business…

    AAPL/Rdn – Earnings will be a true time of reckoning for AAPL. 

    SLV/Jfaw – I like it for a flyer off the $31 line but not if they fail to hold it.  Looks like the 200 dma is actually $30.66 and that happens to be the exact spike low of early November so I'd take it seriously.  $30+ was also the breakout consolidation back in August so I think failing that line will be pretty bad for silver. 

  97. japarikh

    Phil,
     looking to sell weekly calls on AAPL to work down the cost of my long calls but it's been tough to figure out which strike to sell with the stock's seesaw movement. Any recs?

  98. Phil

    Dollar back down to 79.15 but bouncy around the 79 line.  Oil back to $89.96 after hitting $89.50 overnight.  Gold $1,669, silver we just noted was $31.16, copper weaker still at $3.57, nat gas $3.39 and rising and gasoline $2.73.  

    ICE is bidding for NYSE.  Absolute horror to let those crooks control anything.  

    Lots of Data around 10 today that could move markets.  GDP not exciting as it's the 3rd estimate for Q3 and isn't expected to move much off 2.7% but, when you think about it, 2.7% is not that bad.  

    Thursday's economic calendar:

    8:30 Initial Jobless Claims

    8:30 GDP Q3

    8:30 Corporate Profits

    9:45 Bloomberg Consumer Comfort Index

    10:00 Existing Home Sales

    10:00 Philly Fed Business Outlook

    10:00 Leading Indicators

    10:00 FHFA House Price Index

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    4:12 AM Moving in tandem with the ebb and flow of the fiscal cliff talks, which are stuck in neutral once again, European shares arebroadly lower. Asian stocks are mixed, with Japan falling more than most following a sharp rise yesterday and after the BOJ didn't raise its inflation target to 2% today despite saying it will increase bond purchases. Japan -1.2%, Hong Kong +0.2%, China +0.3%, India-0.1%. EU Stoxx 50 -0.1%, London -0.1%, Paris +0.3%, Frankfurt-0.1%, Milan -0.2%, Madrid -0.15%.

    6:00 AM Overseas: Japan -1.19%. Hong Kong +0.16%. China+0.28%. India -0.11%. London +0.09%. Paris -0.01%. Frankfurt-0.09%

    Notable earnings before Thursday’s open: CAGCCL,DFSDRIKBHKMXRAD

    Notable earnings after Thursday’s close: FCELMUNKE,RHTRIMMTIBX

    Visual History Of The S&P 500 (ETF Database)

    The House is due to vote today on John Boehner's "Plan B" budget – which would raise taxes on households earning over $1M a year – as part of the maneuvering over the fiscal cliff talks. President Obama has already said he'll veto the measures, while Administration officials have said that negotiations have hit a block. Still, anti-tax activist Grover Norquist has given his blessing to Plan B.

    Joe Biden and other cabinet members are due to meet with law-enforcement leaders today to discuss gun policy after President Obama yesterday pledged to tighten control following the school massacre last week and put the Vice President in charge of an effort to formulate new laws. Proposals could include bans on the sale of assault weapons and compulsory background checks on gun buyers.SWHC and RGR are among the tickers on watch at the moment.

    Catalonia's conservative Convergence & Union and Republican Left parties have agreed to form a coalition and hold a referendum in 2014 on independence from Spain. The surge of pro-independence sentiment has followed the country's economic crisis and increased the headaches for Spanish PM Mariano as he tries to impose budget discipline on the regions. Still, Rajoy probably has the power to prevent the referendum.

    Sluggish global economic recovery to be long-lasting: Chinese Vice Premier Wang. The sluggish global economic recovery is going to be long-lasting, Chinese Vice Premier Wang Qishan said on Wednesday. Wang said this in his opening remarks to the plenary session of the 23rd Session of China-U.S. Joint Commission on Commerce and Trade (JCCT), which he co-chaired with Acting U.S. Commerce Secretary Rebecca Blank and U.S. Trade Representative Ron Kirk. The global economy is still facing severe and complex challenges, and the only certainty among the uncertainties is that the sluggish global economic recovery would continue for a long time to come, Wang said.

    Banks See Biggest Returns Since ’03 as Employees Suffer (Bloomberg)

    KB Home (KBH): FQ4 EPS of $0.10 beats by $0.04. Revenue of $578M (+20% Y/Y) beats by $21M. (PR)

    More on KB Home (KBHFQ4: net income -45% Y/Y to $7.7M from $13.9M, due to extraordinary gains last year. Sales benefited from "better housing market conditions and increased demand for larger homes with more design options." Orders +4% to 1,557 units. Home deliveries +6%, average selling price +10% Q/Q to $270K, backlog +35% Y/Y to $618.6M, the highest FQ4 level since 2007. Expects housing demand to continue to strengthen. (PR)

    Tesla Motors (TSLAisn't likely to post a quarterly profit anytime soon, according to John Shinal. Despite a tweet from Elon Musk indicating a cash flow positive week earlier this month, the automaker's cash flow and Q3 loss of $111M tells a different story. The real test comes when Q4 numbers are reported, most likely in February.

    Owner of OpenTV sues Netflix(NFLX), alleging patent infringementSwitzerland-based Kudelski SA, owner of interactive television pioneer OpenTV, sued Netflix Inc on Wednesday, alleging that the company infringed on patents that cover technology underpinning the fast-growing Internet video sector. 

    France Telecom (FTE) is reportedly in talks to acquireAlcatel-Lucent's (ALU) undersea cable-laying unit, which could be worth €100-150M. A deal would be part of ALU's efforts to raise €1-1.5B by selling non-core assets. Meanwhile, French sovereign fund Fonds Strategique d'Investissement is thinking about purchasing a holding in the struggling telecom-equipment maker.

    The U.S. patent office rules that Apple's (AAPL) 'pinch-to-zoom' patent shouldn't have been granted, boosting Samsung (SSNLF.PK) in its attempt to overturn a $1.05B U.S. jury verdict against it in its global IP war with Apple. The patent was one of six that Samsung was ruled to have breached in the companies' summer trial and is the second of those six to have been preliminarily struck down.

    Wal-Mart selling Apple’s iPhone 5 at big discount (Reuters)

    Apple’s iPhone 5 as loss leader (Fortune)

    White House Said to Tell Business Groups Budget Talks StallObama administration officials told leaders of business and financial services groups that negotiations with House Speaker John Boehner have deteriorated in the past 24 hours, a person familiar with the meeting said. The officials told eight industry representatives at the White House that plans to vote on Boehner’s alternative proposal on taxes risk pushing the government past the deadline for spending cuts and tax increases to start, said the person, who asked for anonymity to discuss the private talks. 

  99. Phil

    AAPL/Japar – We sold 3 (of 10) of the next week $530s for $10.50 yesterday.  Those should, in theory, be easy enough to roll to 5 or 6 of the next weekly $560s if AAPL crosses higher (now $4.40) and then on to maybe a full cover (10) of the Jan $585s, which are now $4.80 and then our longs will be well in the money so that's our upside plan.  On the downside, if AAPL fails to hold $520, we'll sell 3 $520s and put tight stops on calls and then we can sell 3 more if they fail to hold $500 so we have the potential to cover up to $10,000 on the way down – hopefully, we won't need it.  

  100. rainman

    Phil / Instagram — I don't know about instagram or how their policy reads but the damage may have already been done. The  picutures already on their accounts may be subject to use whether they cancel their accounts or not.  People need to realize that the internet never forgets and they shouldn't be putting anything on the 'net that they don't want to becomepublic information. It's like telling a secret to a 4 year old.
     
    This Onion clip about sums it up: Report: Every Potential 2040 President Already Unelectable Due To Facebook :)

  101. rainman

    Comment awaiting moderation: Guess it's too early to talk about the 2040 elections ;)

  102. rainman

    Unreal: Video Games Targeted By Senate In Wake Of Sandy Hook Shooting  I guess the videogame lobbyists aren't paying as much as they should be and need boot in the ass. Evidently the makers of the psycotropic drugs all these shooters have been on are paying their 'fair' share and don't need to be looked at.

  103. rainman

    BTW here's a good look at the history of the psychotropic drug industry and how it operates: The Marketing of Madness: The Truth About Psychotropic Drugs

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