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Monday Market Mayhem – China Stumbles, Futures Tumble

Wheeeeeee!

I do so love it when a plan comes together.  I also love it when we can make $500 per contract on Nikkei shorts (/NKD) early in the morning, which makes it all worthwhile to get out of bed early.  I was sure enough about the /NKD to tweet that note from Member Chat out – to make sure no one missed it.  I also tweeted an out note at 6:15 but now it's 7:18 and we're shorting the Nikkei again, this time below the 13,300 line with very tight stops above

No I'm not fickle – that's just the way we play the Futures – very quick ins and outs using major support lines for on/off switches, which is simple enough, but ONLY when other indicators AND the macros dictate the move.  By taking ALL those additional factors into account, we can be right 60% of the time or more and that, combined with disciplined position management strategies – can pay for many, many Egg McMuffins.  

Of course, long-term macros hold up for us too as we called a bit of an early top on March 27th (when we thought we'd get an EOQ drop-off) and my Tweet from that morning's early Member Chat was shorting /NKD at 12,500 and shorting oil at $96 (/CL).  That Nikkei move was ultimately good for $1,000 per contract while oil bottomed out this morning at $88.23 – good for a gain of $7,770 per current contract!  We actually missed this last leg down but we caught the first one, of course. 

We also got a nice dip in Natural gas this morning (same Tweet) and caught a ride there from $4.27 to $4.25, which doesn't sound exciting but Nat Gas (/NG) Futures pay $100 per penny, per contract – so not too shabby and can continue to be played bearish below that line. 

We're not expecting a big correction – just A correction and we'd be thrilled to see a 5% pullback that holds up.  We won't be so thrilled to see every little dip reversed – as it has been all month – as it makes us suspicious that it's fake and we may see a sharper downturn after April options expirations (Friday).  

So far, the US markets have been running away from the slowdown that's been hitting the Global markets all year.  Of course, that was our investing premise this fall – that US equities would be the best place to park your money this year and we went as far as to favor the Russell, as those companies average less than 25% of their business outside the US vs. over 50% for S&P companies. 

But now, as you can see from this chart (as well as all the recent data), the Global markets are into a serious downturn and we've become concerned that the US can't simply ignore all the bad news for the rest of the year.  Expectations for earnings are fairly high and I don't think we'll be seeing too many beats – especially from early reporters – perhaps we'll have more luck when the small caps begin reporting at the end of the month.  

Meanwhle, we went over our Big Chart this weekend and discussed our expected pull-back levels.  Jfawcett asked if I thought we'd get a 20-40% pullback (of the run-up) and my response was:

Pullback/Jfaw – I hope not 20-40% (off the top line).  No, the Fed isn't going away and neither is the BOJ – ESPECIALLY if we have a crash.  

I just think the rally is ahead of itself and we're due for a pullback to a more realistic level.  I'd call 1,350 a pre-QE3 base on the S&P and QE3 is good for 20% and that's 1,620 and a 20% retrace from that is 1,566 and a 40% retrace is 1,512 so those are our test lines on a pullback.  If we hold a weak retrace (1,566) then we're still bullish and good for another 10% over 1,620 (to 1,782), which is essentially what Goldman is projecting and that makes sense with the BOJ added to the mix – just not in a straight line.  

We have gotten ourselves a bit bearish and, maybe, too bearish as the markets have gone up and up without a pullback.  To that end, I put up "5 Trade Ideas that can Make 500% in an Up Market" as we need so UPSIDE heges – in case we're positioned too bearish and the markes do break on through to the other side (something we've been waiting for since March 12th).  

Back on March 12th, the Dow was at 14,447 and the S&P was 1,556.  The Nasdaq was 3,253, the NYSE was 9,082 and the Russell was 943.  Where did the Russell finish on Friday?  943.  

So clearly, we have not broken on through to anything in the past month – despite all the interim excitement.  The Dow has caught up a bit (up 2.9%) and that's healthy, as it was seriously lagging and the S&P managed to gain 22 points (1.4%), the Nasdaq added 31 (1%), NYSE put on 106 (1.2%) and a goose-egg for the Russell.  

We know the Dow is meaningless and I analyzed the Dow on March 7th and we decided 15,000 was our max for this earnings period – even if all goes well.  This is why we decided to focus on Dow shorts with that index up testing 14,900 ahead of earnings – the rewards to the downside have begun to outweigh what we believe are the risks.  Heading back to 14,440 is our immediate concern and we'd be happy to BUYBUYBUY back at 14,040, which is where we feel a major correction could take us.  We would have been pleased with the April dip back to 14,440 but it reversed too quickly (same day on low volume) for a proper test. 

8:30 Update:  Nat Gas Futures just hit $4.20, that's up $700 per bearish contract since my morning tweet and I just tweeted out a note not to be greedy on that one (should be obvious).  Meanwhile, I don't know what's bouncing the Futures other than a dip in the Dollar (82.25) and the news that DISH is offering to buy S for $7 but the offer is 33% DISH stock, which is up 20% since the Fall and, ordinarily, I'd advise Sprint to tell Dish to shove it but Sprint has lost $10Bn in the past 3 years with $4.3Bn of that last year and $1.3Bn last quarter so my advice to Sprint in this case is that it's better than a well-deserved bullet to the brain and my advice to DISH shareholder is – RUN AWAY!!!!

DISH does not make enough money (under $3Bn in last 3 years and only $636Bn last year) to stop the gaping, gushing, bleeding of S and Dish does have $7Bn in cash, which is nice, but they already have $11Bn in debt and S has another $24Bn in debt and another $7Bn of cash so now we have $14Bn in cash, less the $12Bn they are offering to buy out Sprint shareholders and a combined $35Bn in debt with a combined operation that lost $3.7Bn last year.  The whole combined company only has 70,000 employees so, unless they make an average of $53,000 each and you can cut 100% of them and still run the company – there's not going to be an easy path to profits here.  

We went over the news (mostly bad) in Member Chat so I won't re-hash it here.  Jeff Kennedy is running a great TA Series over in Chart School, check that out if you are a fan of the squgglies and – let's be careful out there!  


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  1. stjeanluc

    Oil Lines

    R3 – 95.59
    R2 – 95.45
    R1 – 92.55
    PP – 91.41
    S1 – 89.51
    S2 – 88.37
    S3 – 86.47

    Friday's high and low – 93.31 / 90.27

  2. stjeanluc

    I wonder if CNBC will have Jim Rodgers and Marc Faber this morning to talk about commodities…
    And how about John Paulson – I am sure he had trouble sleeping last night:

    John Paulson, famed for making billions ahead of the financial crash, is taking heavy losses on his gold holdings. According to Bloomberg, Paulson's gold fund is down 28% as of March 31st. As of the latest reporting period, Paulson hedge funds hold 21.8 million shares in the SPDR Gold Shares ETF (GLD), worth a massive $3.1 billion as of Friday's closing price of $143.95. Whether or not Paulson decides to cut his losses or double down could have a major impact on the future price of gold.

    I guess another one hit wonder….

  3. phil

    Wow – Nat gas just blew through $4.20 after failing at $4.26!    Unfortunately, I was busy writing morning post…

  4. stjeanluc

    BTW, Sunday's episode of GoT was "hands down" the best one so far this season!

  5. terrapin22

    stjeanluc –  GoT was a great one.  next week looks even better!

  6. phil

    See, the "boring" shows set the stage for the action – I never complain about HBO's pacing, those guys are brilliant.  

  7. dawnr

    Phil—prefer french side and spend much time there including bikini beach strip.  But owning 2 bedroom ground floor beachfront share on any side makes life very good indeed.
     
    Opes:  Silver key technical level is $23-22.  Has not been there in a couple of years and a 'back up the truck' level.  With that said, wait for some bottoming action…SLV trades about $1 under this.  Silver can easily and quickly bounce to $30 region and aggressively $34. With such a quick slide I am curious what inevitable margin calls will do to metals next.
     
    Lets see if the US markets can bitch slap Asia and Europe overnight reaction once again today!
    '…Baron Rothschild, an 18th century British nobleman and member of the Rothschild banking family, said "Buy when there's blood in the streets, even if the blood is your own." …'

  8. dawnr

    Gold-If 1400 breaks next levels
    $1360-1357
    $1328-1324
     
    Silver breaking $26 this morning was a key breakdown also

  9. stjeanluc

    Actually I think that the problem is somewhat with the books. GRR Martin even said it in an interview that the middle section of the story (I guess where we are now on book 3 of 5 – to be 7) was long.

    But still, I am watching the show with my daughter with the HD projector and the scenery doesn't get old….

    On the other "hand", there was an article this weekend about another show that I like – "Justified" and the writer was making an argument that it's better than GoT and Mad Men. Probably not in the production value, but still, the dialog is very good and the acting is excellent. I used to love Mad Men, but it's losing steam right now. Don's adventures are getting a bit tiresome. We'll see if that gather some steam later in the season.

    Sorry about another "hand" pun after last night's episode! 

  10. BertII

    GOT did the cut that guys hand off the TV in the hotel I'm staying in was to dark to see what happened

  11. stjeanluc

    You have to wonder though about these individual investors who listen to gold peddlers on Rush and the Fox gang and bought at $1800. They are watching their investments lose 20% in the face of one of the best equity market of all time. Maybe we correct on the equities side as well, but some of these guys are going to panic and sell unless we see some recovery quickly. Another leg down could generate more down legs! 

  12. stjeanluc

    No GoT spoiler here Bertl   :-)

  13. stjeanluc

    Timely comments on Friday:

    http://www.philstockworld.com/2013/04/12/friday-facts-find-futures-falling/#comment-3081691

    I would not rush into ABX just yet. At least wait until gold finds some footing. It could get quite ugly of gold would to go back to 1400 or so. I am not good at catching knives.

  14. 1020

    Good Morning!

  15. scotbraze

    Phil – typo in the post on Nikkie – just to give you the heads up.

  16. jabobeast

    FU GOLD!!!!!!!!!!!!!!!!!!!!!!

  17. dawnr

    "There are a lot of people throwing up their hands. Throwing positions overboard. Panic is everywhere," Gartman said in a "Squawk Box" interview on Monday. "I've never seen anything like this. I mean it."

    Also Paulson's gold fund must be suffering a serious hurting…

     

  18. stjeanluc

  19. stjeanluc

    Paulson / Dawn – See my post above (8:04) – 22 Millions shares of GLD will be painful!

  20. stjeanluc

    9 more days to earnings and they better be good now!

  21. rustle123

    Gold is close to being a very nice play to the upside on a short term basis.

  22. Pharmboy

    Miners are back to the lows of the lows of the low.   I would have thought they were banks……

    I saw that GS is selling all of its 'warehouses'. Guess the commodity business is not as good as thought.

  23. stjeanluc

  24. stjeanluc

    On Friday we rolled the ABX put from the 25KPA but not the one from the 25KPM. 

  25. dawnr

    STJ oops sorry did not see…I think he is a stubborn bastard who will stamp his feet continuing to say he is right! Egos and all.  ;-)

  26. stjeanluc

    GOOG reports on Thursday and we have a GOOG 775/800 strangles that expires on Friday!

  27. stjeanluc

    I am not updating the MoMo portfolio until I hear from lflan again. All the positions are basically dead now.

  28. 1020

    FCX needs to hold 29-30 or… GERONIMO!……..

  29. dclark41

    …and AMZN is up!

  30. rustle123

    so is NFLX on a ridiculously reasoned upgrade with PT of 250

  31. phil

    Good morning! (officially)

    Markets very strong in the face of a lot of nasty stuff – very 2008 the way we just completely ignore bad news – I doubt it will last.

    Dollar just 82.25 – up would be bad.  Euro $1.31 – not likely to go over, Pound $1.534, 98 Yen line not crossing and that's bad for /NKD again (13,350).  

    Oil rejected harshly off $90 and back below $89.50, below $88.50 is really bad for them, Gold barely holding $1,400, silver $23.60, copper $3.23, nat gas back to $4.24 and leave it alone now as it's mid-range, gasoline flew up to $2.80 but that was silly and back to $2.775 now – also mid-range. 

    It's all about earnings this week but plenty of nervous Nellies heading for the exits.  

    ABX friggin' $20 – that is SO disconnected from reality it's amazing.  If gold goes down to $1,200 will they pay you to take shares of ABX?  

    At the open: Dow -0.43% to 14801. S&P -0.58% to 1580. Nasdaq -0.53% to 3278.

    Treasurys: 30-year +0.05%. 10-yr -0.05%. 5-yr -0.02%.

    Commodities: Crude -2.16% to $89.63. Gold -6.38% to $1405.55.

    Currencies: Euro -0.16% vs. dollar. Yen -0.42%. Pound +0.13%.

    10:00 AM On the hour: Dow -0.45%. 10-yr -0.06%. Euro -0.20% vs. dollar. Crude -2.37% to $89.44. Gold -6.58% to $1402.65.

    Market preview: Stock futures are lower after disappointing China growth data sparked a selloff in global commodities. S&P futures -0.4%; European markets are broadly lower. Gold futures-5.4% to $1420/oz., on top of Friday's 4% loss. WTI crude -1.7% to $89.70. Copper -3%. On the bright side, Citi +3% after beating estimates, and Sprint +15% after Dish's $25B offerStill ahead: NAHB housing index.

    Apr. Empire State Survey: Manufacturing -6 to 3.05 vs. +7.50 expected, +9.24 prior.

    NAHB Housing Market Index: -2 to 42, vs. consensus of 45; 44.0 in Mar. 

    Almost as much as the Fed is putting in:  Feb. Treasury International Capital: Net foreign inflow of long-term U.S. securities were $53.6B, with net inflows by private foreign investors of $44.4B and net inflows by foreign official institutions at $9.2B. Taking into account both foreign and U.S. securities, the net foreign purchases of long-term securities were -$17.8B. Foreigners increased their holdings of U.S. T-bills by $14.0B.

    "There is no uncontroversial way to define the term structure of the risk-free rate" in the eurozone, says Mario Draghi, seemingly explaining why the ECB has not and will not undertake QE. What unconventional actions the ECB has taken, he explains, are not "to help banks that are failing," but to ensure monetary policy reaches all parts of the eurozone.

    Underperforming today as commodities (DBC -1.7%) take a beating is Canada, the TSX -1.5%. Also seeing little love is the loonie (FXC -0.6%). The move in the MSCI Canada Index ETF (EWC-2.4%) reflects both the loss in shares and the currency. EWC is now off 5% YTD, trailing the S&P 500 by 1500 basis points.

    Citigroup (C): Q1 EPS of $1.29 beats by $0.13. Revenue of $20.8B beats by $0.65B. Shares +1.5% AH. (PR)  More on Citigroup (C) Q1 earnings: Excluding DVA (which hurt this time around), revenues grew 3% Y/Y. Loan loss reserve release of $652M ($0.21 of EPS) was down 44% Y/Y. Allowance for loan losses of $23.7B is 3.7% of total loans, down from $29B and 4.5% at 2012's end. Operating expenses down 2% Y/Y, reflecting lower legal costs. Tangible book value/share of $52.35, up 3% Y/Y. Basel Tier 1 Common Ratio of 11.8%. Shares +1.8% premarket. (PR)

    M&T Bank (MTB): Q1 EPS of $2.06 beats by $0.08. (PR)

    Charles Schwab (SCHW): Q1 EPS of $0.15 misses by $0.01. Revenue of $1.29B beats by $0.02B. (PR)

    The dive in commodities and selling in equities is generating a bid for Treasurys, the 10-year yield falling 3 bps to a YTD low of 1.69%. The long bond yield falls 2 bps to 2.89%. After a big selloff to start 2013, TLT - up 0.35% premarket – is in the green for the year. Treasury bears – for now – are foiled again: TBT -1% premarket, -4.1%

    Miners continue to be attacked:  Freeport McMoRan (FCX) is downgraded to Sell from Neutral with a $25 price target, down from $35, at Citigroup, which cuts estimates for 2014 copper pricing by 13% and warns FCX is likely to have minimal free cash flow over the next two years. Mining shares are broadly lower premarket following China's slowing GDP growth and commodity selloff; FCX -4.1%.

    A larger focus by McDonald's (MCD -0.5%) on its value proposition to consumers could pressure the entire QSR sector, according to Dow Jones Newswire's Annie Gasparro. What to watch: The restaurant operator reports earning on Friday in what could be a tipping point for the sector if the restaurant's moves have paid a heavy toll on margins. (video)

    Chipotle (CMG +2.1%) opens up trading higher after Webush upgrades shares to Outperform from Neutral and takes its price target up by 25% to $400. The firm thinks catering is a winner for the restaurant operator and pricing will be strong in H2. 

    The first case of the H7N9 bird virus in Beijing involved contact between a 7-year child and a chicken, according to China Daily. The development could be yet another worry for Yum Brands (YUM) in China with the demand for chicken being curtailed by panic over the epidemic.

    More on J.C. Penney's (JCP) credit line draw ( previous ): The post-Ron Johnson moves by the retailer indicate the retailer is sticking with an "all-in" bet on its planned home goods section. How to pay for it all? The company says it will continue to explore additional capital raising alternatives with the assistance of its financial advisors. JCP -1.5% premarket.  - Now, people go "all in" because they know for a FACT that they've won or, because they are so screwed, that they have noting to lose in a last-ditch effort before they are completely out of the game – which do you think this is?

    Biotechs rise in early trading as the death toll from the new avian flu strain jumps to 13. Sinovac (SVA) is preparing immunizations and can manufacture 30-40M doses annually, according to Bloomberg. Meanwhile, investors continue to bet BioCryst's (BCRX) peramavir could have a role to play. Premarket moves: SVA +9.6%, BCRX +7.4%NVAX +5% 

    OncoGenex: A Cancer Biotech Worth Betting On 

  32. Turning1

    Phil Good morning,
    You said: TZA – Let's roll May $38 call ($2.05) to May $36 call ($2.95) and, if that drops back to $2, we'll DD.  Also you said , do the TZA May38/44 BCS. Do you want to do both?

  33. phil


    Box office roundup: 1) Universal Studios (
    CMCSA) seesOblivion score a $61.1M overseas after opening in 7.4K locations, boding well for the U.S. debut of the film on Friday. 2) The Croodskeeps pulling in +$10M weekends and is now up over the $142M mark for Dreamworks Animation (DWA). 3) Oz: The Great and Powerful pushes over the $471M mark in global box office sales for Disney (DIS) to quietly make the film a rousing success for the company's studio.

    IMAX (IMAXstrikes a deal with Cinepolis in Mexico to open up five new theaters. The two companies are partnering in both Mexico and Brazil to bring the IMAX format to high-growth areas.

    BTIG's Richard Greenfield, bane of Facebook and Pandorabulls, has started coverage on Netflix (NFLX +2.6%) with a Buy and $250 PT. Greenfield expects Netflix's value proposition and original content to "drive better than expected subscriber growth and moderate churn." He also declares Netflix's content expenses to be "sufficiently high," leading to operating leverage for future revenue growth. Wouldn't it have been better to make this thesis 3 months ago? (Goldman) (Evercore)

    Gee, ya think?  Did Dish Network (DISH) bite off too much to chew with its $25.5B bid for Sprint? Investors looking for a quick return will have to wait years as any sort of makeover from the pay-TV business model to a new national LTE network will take years to roll out. Early market verdict:  DISH -2.0% premarket.

    Sprint (S+15.6%, Clearwire (CLWR-2.8%, Dish Network (DISH-1.7%, and DirecTV (DTV-1.1%, as the Street mulls the implications of Dish's $25.5B offer for Sprint (S). Dish, which has been looking for a partner for its 4G spectrum, claims a merger will result in $13B in cost/capex synergies, and yield a company with 20% EBITDA growth. Dish would fund the $17.3B cash portion of the deal using $8.2B in existing cash + debt, and foresees debt ratings of B1/B+. Sprint shareholders would own 32% of the company. No one ever accused Charlie Ergen of thinking small. (offer letter) (Dish fact sheet) (Clearwire spectrum offer) (Dish/Clearwire)

    Ready for a Surface watch? Asian supply-chain contacts tell the WSJ Microsoft (MSFT) is also "working on designs for a touch-enabled watch device," albeit while cautioning it isn't clear if the company will commercialize a product. Google and Samsung have already reportedly joined Apple in launching smart watch projects. The watch industry's size and margins could have much to do with the apparent surge in R&D efforts from tech giants.


  34. scottmi

    Gold Guy/1020 – he's a deflationist, and i can follow that. but he loses me with:
    "The market is usually right and the market cannot be manipulated. All those who believe in market manipulation just don't understand how big markets are and how impossible it is for any one firm or central bank to manipulation them."

  35. 1020

    scottmi – Yeah, though I do believe "It takes a village"  when it comes to "Big Markets"

  36. yodi

    Weekly pigeon of IOC looking good 77.5 c sold Friday for 1.77 now .89 better than AAP any day

  37. albo

    BAC following C up this morning.  Earnings Wednesday before.

  38. 8800

    Phil,
    In constructing a hedge against a drop in MLPs, the 3x inverse is ERY (very low vol/OI) which has had a 1 yr high of 84 and a 2 yr high spike high of 168 (now 36). Any other hedge vehicles? If not, which ERY strikes would you suggest? Oct/Jan?  35/55, 40/60? Sell 1/14 $30 puts  to offset?
    Thanks in advance

  39. stjeanluc

    IOC / Yodi – Better than gold…. Thanks again for pointing out that guy!

  40. albo

    Quick turnaround on GOOG.

  41. phil

    Divergence/Rpme – How about "month-long string of bad news often leads to poor earnings which then leads to negative equity returns"?  My way puts you about a month ahead of chart-watchers (and I wish we still had those damned IWM puts!).

    Paulson/StJ – Man, that guy's been having NO luck at all since 2009.

    Game of Thrones – No spoilers!  Some of us have Tivo, you know….

    French side/Dawn – But casinos only on the Dutch side – what's a person to do?   I'm likely to head over there this fall if I can work it in.  

    NFLX over $180 again.  AAPL $425 – I wonder when they'll cross?  

    Justified/StJ – Damn, I do not have time for more shows so I hope it's not good.  Never watched Mad Men.  Now some Davinci show is coming on and I love him so I might watch that but then Broadwalk Empire and True Blood will start up again…  I should take TV shows on my trips I guess but I never feel like watching TV when I'm on vacation – too many cool things to see, not to mention books to read…  I meant to watch some on the plane but I ended up watching Endgame, which only had one season but it's a good series.  

    Gold/StJ – I don't think the little guys are much of a factor.  It's not that easy to dump gold coins because IT'S NOT A REAL CURRENCY.  I really think BitCoin did a lot of psychological damage to gold traders – like a slap in face.  Now gold is racing BitCoins down. 

    Nikkei/Scott – Thanks. My spell checker has suddenly stopped working in Chrome – don't know why.  

    $1,390 gold! 

    FAS Money – What is holding XLF up? 

    $25KPA – We need to move that GOOG play before Thursday.  Too dangerous to play earnings.  

    TZA/Turning – Both in what context?  I'd say position as well as possible as it's a position worth being in (as you can see from today's dip).  

    Gold guy/Scott, 1020 – Wow, does he really think that?  

     

    Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. - Archimedes

    ERY/8800 – I don't watch it so I can't speak to their decay or correlation effectiveness, nor do I know if their holding constitute a good mix, nor do I know whether or not you can get reasonalb entries and exits on ERY options as it seems very thinly traded.  Nor do I think it's a good idea to chase an up 7.5% move this morning.  That being said, to hedge MLPs with ERY (which is only 28% energy anyway),  I suppose I'd go for the July $38/48 bull call spread for $2 and then, if it falls hard, you could collect $2 for the $25s (now .25) or perhaps there is an MLP you would like to buy if it got cheaper and you can sell puts in that?  

    Lots of bottom-fishing going on but the tide is taking most things lower.  I think headliners are being pumped up to prevent indexes from collapsing – covering the Big Boys heading for the exits.  

    Dow volume just 29M at 10:42 – not very meaningful.  

     

  42. nicha

    Hello All!

  43. yodi

    stjeanluc
    Gold, at least it does not rust but I see many people throwing rotten apples over board!!!!

  44. phil

    Let's take $4 and run on TZA calls in both $25KPs – we can always get back in but, any lower and our DIAs kick in anyway.  

  45. 1020

    Phil – You don't think the Fed alone, is responsible for our 5 month market move….do you?

  46. kustomz

    The folks selling commodities are buying stocks.. 8-)

  47. phil

    AAPL $430s can be bought back for $3.15 – let's do that in $25KP and AAPL Money as it's not worth risking a bounce.  

  48. jromeha

    I have my gold buy at 1350

  49. phil

    VIX still under 13 – no panic at all.  TLT at 122.13 – a little panic there but nothing thrilling.  

    Oil $88.13, gold $1,373, silver $23.23, copper $3.24, nat gas $4.175, gasoline $2.75 (and not at all being reflected at the pumps around me!).  

  50. phil

    $1,365 on gold – that's 10% for the day!  

  51. stjeanluc

    Looks like gold is aiming for $1300 now!

    John Paulson has been moved to suicide watch!

  52. stjeanluc

    So much for correlation between gold prices and miners:

    Obviously other factors are in play…

  53. stjeanluc

    Krugman on Europe again:

    http://krugman.blogs.nytimes.com/2013/04/15/europe-in-brief/

     

    And European officials remain in deep denial about the fundamentals of the situation. They continue to define the problem as one of fiscal profligacy, which is only part of the story even for Greece, and none of the story elsewhere. They keep declaring success for austerity and internal devaluation, using any excuse at hand: a spurious surge in measured Irish productivity becomes evidence that internal devaluation is working, the decline in bond yields following ECB intervention is proclaimed as a vindication of austerity.

    So that’s where we are. And it’s hard to envisage a happy ending.

  54. stjeanluc

    And Krugman on gold – on a rampage:

    http://krugman.blogs.nytimes.com/2013/04/15/gold-does-not-glitter/

     

    But Joe is, I think, deluding himself if he imagines that this will make any difference. After all, the inflationista view of the world has been repeatedly, devastatingly wrong on many fronts — interest rates, inflation, the effects of austerity. Has anyone other than Narayana Kocherlakota (who deserves big props for intellectual flexibility) actually changed his or her mind in response?

    In fact, by and large the goldbug response to each failed prediction has been to claim that evil government officials are hiding the truth. Interest rates are low? That’s because the Fed is suppressing them. How can it do that, year after year, without causing runaway inflation? Oh, actually we have runaway inflation, but the BLS is faking the numbers (and independent measures, like the Billion Prices Index, are part of the plot).

    Sure enough, the response of many goldbugs to the latest events has been to cry conspiracy.

    Maybe, just maybe, the gold crash will finally bring intellectual capitulation. But I wouldn’t bet on it.

  55. 8800

    Phil,
    Thanks for the MLP thgts. Really like the vehicle were it not for the tax consequences, MLPs are a true buy and hold and an ideal candidate for hedging were there a more hedging-friendly vehicle. ERY is very thinly traded (as evidenced by the pop last 2 days) with wide spreads so clearly not ideal. Interestingly, there is a fair correlation betw AMZ (alerian index) and SPY (with .AMZ outperforming since 1/09) which might present an opportunity. Thanks again.

  56. wombat

    AGQ down 23%

  57. 1020

    I think I may start shopping for Christmas….  :)

  58. yodi

    Looks like AMZN -.11 and NFLX up even 7.65, GOOG -.88 are better shows today

  59. yodi

    Pharm still remember your words on PETS " people always take care of their pets" up .23 cents today.
    Are we really betting on the wrong horses????

  60. Opesbridge

    MLPs / 8800
    I hold a lot of directly-owned MLPs.  I also own MLPL (2X leveraged ETN) for an IRA account.  I do not think about hedging them.  I think domestic energy transportation is a growth industry in the U.S. for years to come.
    If you are in a position to do so, just be happy that you will be reinvesting the high MLP dividends at even higher rates as the MLPs drop in price.
    I agree with Phil — maybe make a bit of money back selling puts on MLPs you want to own, or own more of.  If you want to get fancy (and I would not), you could short a basket of 5 or 6 of the largest market cap MLPs and the basket will have a high correlation to the MLP ETFs and ETNs.
    Ron

  61. 1020

    Bob Pissani – "The Women of India could save gold"….. :)

  62. kustomz

    UK FTSE -0.6%
    German DAX -0.5%
    French CAC -0.6%
    Spain IBEX -0.8%
    Italy MIB -1.0%

    Not too bad, anywhere from -1 to .5% for Europe.

  63. nicha

    Phil – I have a buy write on MT for 2015. Bought at $17, sold $17 C for 3.35 now 1 and sold $17 P for 3.7 now 6.5. What should I roll to? Thanks. 

  64. rainman

    Stock Screeners — Anyone know of a stock screener that can look for longer term lows than 52wk? Several industries closing in on and/or failing 2009 lows. There's blood in the water.

  65. scottmi

    JNJ/phil – earnings this week. Do you want to stick with the hedge puts through this?

  66. jromeha

    http://news.yahoo.com/six-strangled-one-decapitated-mexican-resort-cancun-010430975.html
     
    yodi, isn't this your neck of the woods? Stay safe dude! 

  67. yodi

    CAT May backratio 85/95  Making bit to buy back the 4 95 callers for .05 present .08 cents if you like to pay comission

  68. 8800

    Opesbridge/Ron.
    Thanks for weighing in on my MLP thread. I have used sht puts in place of buy orders and, consistent with your thgts on the growth nature of domestic energy, have yet to be assigned. I have also used a few CEFs to avoid K1 related tax sales. I appreciate the rationale underlying your perspective re not hedging MLPs. Looking for a hedge to MLPs may be more of a reflex given the not insignificant alerian index drops in Feb and Oct of 2012.
    Thanks

  69. sundevils

    Income portfolio/phil
    thanks…also, what kind of a floor do you see on oil over the next couple of months?

  70. Pharmboy

    Yodi – I am not.  See the end of Friday's post.  Gold is in them animals…and I plan to give it to them!

  71. Pharmboy

    POMO big money settles tomorrow.  We should go up.  I am going to buy short dated calls JIC.

  72. phil

    Nice, Tepper made $2.2Bn last year.  Now that's a goal to shoot for!

    Poor Ackman ony made $330M – I don't know how he can drag himself out of bed every day for those wages ($1M per day..).  8)

    Market legging down now – so much for being cautious and taking bearish profits.  

    NFLX back under $180.  AAPL not so bad yet ($424).  

    Commodities seem to have bottomed with the indexes catching up on reality. 

    Fed Alone/1020 – No I don't think it's JUST the Fed but the S&P was at 1,350 around Thanksgiving and maybe 1,485 (up 10%) for this year would have been fair without QE.  So we're up well over that but QE costs $10Bn per point per year or $1Bnish per month so $85Bn gives you 1,570 and, apply it monthly and you can keep it up every month until you stop and figure the BOJ is somewhate counteractive as the weak Yen fights the weak Dollar but it's still good for another 30 points, at least and then that's 1,600 but that's it – without earnings to justify more – this is the limit of QE's ability to push things higher and, of course, any negatives now come off the top. 

    Miners/StJ – They've been underpriced for years and now ridiculously so – unless the whole time you thought gold was a bubble and will be back to $250 down the line, which would then mean those miners (and ETFs) become the ultimate bag-holders for gold.  It's possible. 

    Krugman/StJ – Dead right, the ECB is like a Fox News team – ignoring any evidence that doesn't support their claims and puffing up anything that does to ridiculous extemes.  The German people don't have a pathological fear of inflation – it's just that Germany is completely controlled by Banksters, who hold all those bonds and want their money back – at all human cost!  

    You're welcome 8800. 

    AGQ May $30s at $1 are kind of tempting.  They were $5 last week so you can think of it as risk $1, reward $4.

    IWM $91.20 – I could cry! 

    Europe not so bad at the close but I guess they were holding us up with their rampant optimism?  

    MT/Nicha – That whole sector collapsed.  You are in for net $9.95/13.48 with the stock at $11.83 so you're not actually in much trouble.  You can't roll to a longer year and it's probably not a good time to sell short calls and, if you are assigned by your putter – it's net $10.50 so let hime pay you $1.30 in premium and then you can sell new puts.  So nothing really to do here unless you feel brave enough to buy back the caller for $1 and the logic there is, if things get worse, you can sell the $10 calls ($3.50) and pick up $2.50 and use that to roll the $17 puts ($6.50) to the $13 puts ($3.60) for $1.10 out of pocket and then you'd be in the spread for net $11.05/12.03 if you are that nervous.  Of course, hopefully it goes back up before then and you just re-sell something for about $2.50 like the $15s and then you drop your basis another net $1.50 to $8.45/12.73, which isn't so bad with 20 months to go. 

    Blood screens/Rain – Seems like something you should be able to program into one of the paid screeners.  Might be asking a bit much of a free program though as it's the historical data that costs money. 

    JNJ/Scott- Sure, it was an earnings play – the market dropping is just a bonus. 

    Safe/Jrom – Who's to say it's Yodi that's not the one to watch out for?   Didn't have any incidents while he was on vacation in Europe but now that he's back – heads are rolling again.  8)

  73. nicha

    Pharm – I have short Apr $35 calls on SGEN against long Sep $30's. Should I roll the short calls now or wait till Friday? Thanks. 

  74. Pharmboy

    Nicha – buy them back for a nickel, why hold the bag.

  75. Pharmboy

    SGEN – we have sold may 30s.

  76. dclark41

    Phil
    That VIX trade is near even with only 2 days left. Seems like a take it run situation.

  77. stjeanluc

    Stock Screen / Rain and Phil – I had one spreadsheet that I had shared last October:

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

    I calculated how far we were from both highs and low and added some fundamental quotes as well. 

    But I need to update it with current prices. I had trouble with the EOD quotes providers in my charting software but I'll try tonight with my regular quote provider.

  78. 1020

    Phil – "heads are rolling again"….. glad to miss Atlantic City…. ;)

  79. phil

    I think I fixed the spelling checker!  

    Transports down around 3%.  

    Oil/Sun – Oil isn't worth much.  Without the constant NYMEX pumping, $70 is a more than fair price.  Add $5 for any legitimate fears of supply disruption and that's where we should be and subtract $2.50 for each month of surplus inventory over 6 months and that's where they really get in trouble as we have 700Mb in the SPR and 400Mb in commercial storage in the US but we're only using about 18Mb or 540Mb/month.  But it's not a 2-month supply because we produce over 9mb domestically and import 9Mb but 5Mb is from Canada and Mexico and it's not very likely we'll be at war with them and Venezuela is 1Mb and OPEC is 2Mb and "others" are 1Mbd.  Even if you call all 4Mbd "at risk" of a total cut-off, that's only 120Mb/month so 1,100Mb of storage is a 9-month supply of imports and 6 months is plenty of time, during war, to curtail consumption and put other measures in place so we have PLENTY of oil and more comes in every day.  In fact, our commercial storage is almost full at 400Mb so we're getting to the point where, if domestic production increases further – we'll be saying to OPEC or the "others" (mostly OPEC) "Sorry but we don't want anymore oil."  

    Anyway, so I don't think oil is likely to go below $80 unless the economy is in serious free-fall and it's going to be very bouncy at $85 or $88.50 for now, no matter what.  If demand doesn't pick up over the holiday weekend – that's the next nasty leg down for oil and gasoline.  

    CLF $17.93.  

    VIX/$25KP, DC – Good point, I forgot they close early.  Let's roll our VIX $12 calls ($2.10) to the May $14 calls ($1.70) and see if the $15s (.30) expire worthless.  That would put us in the May $14s for net $1.16 and then we can sell something for $1 and be left with a free May spread (the $17s are $1 at the moment).  

     Cool StJ, thanks.  

  80. mrmocha

    PGNX - for traders of Pharm's recos, my NOV 7/9 BCS just filled for .20.  His official reco was the AUG 7 C for .20, but I went a little further out in time.

  81. jromeha

    Phil- true! Better watch myself!!! I just was having a little fun since I remember debating him on Mexico being "safe" a couple of years back. 

  82. mrmocha

    NAK at 2.50 today, good day to nibble on some more if you're accumulating it.

  83. rainman

    StJ — Thanks, that'll make for a good start!

  84. phil

    IndexTodayApril 5th

    • Dow – 14,688 – 14,436
    • S&P – 1,565 – 1,540
    • Nas – 3,238 – 3,174
    • NYSE – 9,024 – 8,920
    • RUT – 913 – 912!!!
    • Trans – 5,950 – 5,915 
    • SOX – 426 – 414 

    We're not in any major trouble until those levels begin to fail but watch the RUT closely as a leading indicator.  A RUT bounce here would be encouraging as we need to find some kind of bottom channel technical types can hang their hats on. 

    The VIX topped out at 1,560 that day but only on the opening spike down.  The day before (Thursday), 14.80 was the top of the VIX, right where we are now.  

    Similarly TLT topped out at 123.45 (not kidding) and now 122.68.  Oil dove then too, from $98 to $92 that Friday and this run we're down from $94.50 to $88.50 so far and $89.33 was where we held the lows in March so that's what oil bulls will look for for technical comfort.  

    Gold fell from $1,600 to $1,540 but that's nothing like the current collapse from $1,580 to $1,355.  

    So overall, it seems like the indexes COULD fall much further but, if we DON'T fall much further – then it's actually a good sign of strength.  

  85. wombat

    X $15/22  /$13 put buy / write // filled at net .40 

  86. angelcur

    dprk gives rok ultimatum to apologize for all hostile acts

  87. terrapin22

    PSW Investment Conference at Harrah's Resort in Atlantic City April 27-29 – 2 weeks from today we will be trading the markets live with Phil from our conference room at the Harrah's.  I looked into what is going on in AC that wkend.  Rihanna is doing her show on that Friday 26th at Revel.  Romeo Santos (Taj Mahal) and Sara Evans (Harrahs) also playing that night.   Grateful Dead fans should take note that Further is playing on Sat. night at AC Boardwalk Hall.  And last but not least Pat Benatar is playing Sat night at House of Blues.  Oh and Sarah Silverman is doing her comedy thing on Sat. night at Borgota.  Email me if interested (in the conference). thegeneral91@gmail.com

  88. albo

    GDX & ABX may be forming hammer formations today.  Phil, I know you're not a technician, but as you know, hammer formations can be good indicators of a turn.  On the other hand, ABX was, in retrospect, a sell when it closed below support on April 2nd.  Even if one had waited until the next day for confirmation, a technician would have sold it the next day.
    Technical patterns don't always play out, but this one sure did.

  89. Rms5114

    Phil,
    I  have aapl J14  Cs in the red and I need to roll out to J15.  Not sure of option wash sale rules, any caution needed here?

  90. albo

    GDX, more so, at the moment.

  91. nicha

    terra/AC -is it too late to join now?

  92. terrapin22

    Nicha – not at all.  there is no sign-up deadline as of yet.  send me an email and we can get you set up.  

  93. rainman

    SPX finding support at the 2007 high of 1565.

  94. edro00

    Rms5114
    Yup – it's a wash sale

  95. terrapin22

    Here's the link to the Atlantic City calendar of events.   Carmen as presented by the AC Ballet also is on that Sat.
     http://www.atlanticcitynj.com/visit/calendar_events.aspx

  96. yodi

    Safe/Jrom
    Back from the round up. Well I can not make any money in this type of market. But do not worry will be back in Europe in May so things will cool down again ( 8

  97. edro00

    Rms5114
    If the wash sale is a problem, roll to QQQs for 30 days

  98. mrmocha

    I'm no TA genius so maybe dawnr wants to chip in here, but on the daily it looks to me like SLW and TNA downtrend resistance lines are flipping to support lines so I'm playing these two for a bounce.

  99. rpme

    It seems the Inflationistas are giving up the fight, TIPS and Gold.

  100. phil

    12:38 PM The S&P (SPY) and Dow (DIA) have continued to notch record highs, but small caps (IWM -3%) – which led the way higher for much of the year – rolled over a few weeks ago and are falling especially sharply today. Technicians fret.

    Gold isn't the only inflation hedge losing fans as funds owning TIPS have seen 3 straight months of outflows, according to Morningstar, the first such streak since 2008. At current levels, 5-year TIPS (TIP) would break even only if inflation rises more than 2.18% annually. "We just don't see (it)," says formerly bullish strategist Dan Heckman, whose fund has been a seller of late.

    The Brown/Vitter bill being rolled out in Congress is essentially Armageddon to the TBTF banks, says Goldman, seeing it as mandating another $1.1T in equity for the banking system. Banks would need 12 years of earnings to build this amount organically, though the bill would give just 5 – say goodbye to lending. Break up the banks? BACCJPM, and WFC all have multiple divisions with more than $400M in assets – the level at which the bill gets tough on lenders.

    Reducing the drag on earnings from Citi Holdings remains a key focus, says Citigroup (C +2.5%) CEO Mike Corbat on theearnings call, noting the unit's toxic assets were cut 29% Y/Y to $149B (presentation slides). Citi Holdings posted a loss of $788M in Q1 vs. $1.1B a year ago (Citicorp net income was $4.8B in Q1). Legal costs alone at Citi Holdings were $644M in Q1 vs. just $66M for the rest of the bank. (earnings supplement)

    Told you I didn't like any of the Builders:  Homebuilders are taking a hit today on the back of weaker-than-expected housing dataXHB -2.7%KBH -4.7%TOL -4.5%DHI-4.3%PHM -4.1%HOV -3.7%LEN -3.2%BZH -3.3%.

    More on NAHB: Demand isn't the issue. The slide in confidence instead reflects concerns over rising costs for building materials and "frustration over being unable to respond to the rising demand for new homes" – what your grandfather might have called "high-class worries." The XHB -2.5%+39% Y/Y.

    It's not as bad as gold, but crude oil is taking a beating too as weaker-than-anticipated economic reports from China deepen demand worries. Goldman Sachs says it has closed its long position in Brent crude with a loss of ~15%, worried prices will come under more pressure as European refining capacity comes back online after routine maintenance. WTI -2.9% to $88.59, Brent -2.6% to $100.45.

    Alaska lawmakers on Sunday gave final approval to a bill backed by top North Slope producers Conoco (COP), BP and Exxon (XOM) to slash state oil production taxes, doing away with a methodology that increases tax rates as oil prices rise. Supporters say the cut will set the stage for future growth as Alaska tries to reverse declining oil output; critics say it will severely damage the state's finances.

    Many have said Cyprus is behind the rout in gold. In fact on Friday, the governor of the Central Bank of Cyprus said the government seemed committed to selling state gold without consulting with the central bank. From Gartman:  "We shall stand by our comments of late last week that if the Bank of Cyprus and/or the Treasury there is being forced to sell gold, then the other countries in trouble shall be forced to do the same. If Cyprus is forced to sell gold, then Portugal shall be too, otherwise the discrimination against Cyprus shall be wholly unwarranted and utterly unfair. And if Portugal is forced to sell, then how can Italy avoid the same fate… or Greece for that matter."

    Or: Maybe it’s no coincidence gold’s massive selloff is taking place on the same day U.S. tax returns are due, Marketfield's Michael Shaoul surmises, pointing to the need to raise cash to pay substantial capital gains due at tax filing. If sellers waited until the last day, it might have sparked selling pressure to plunge through key support at $1520; at that point, "a substantial wave of panicky selling was always likely to take place." 

    Barrick Gold (ABX -11.2%) is downgraded to Neutral at J.P. Morgan, which says ABX "has been most exposed to capital spending overruns and is still in growth mode while investors have changed." Gold's pullback adds to uncertainties from the shutdown of the Chilean side of its Pascua-Lama project and demands from the Dominican Republic for a bigger share of early cash flow from its PV project.

    It was difficult enough to maintain a profitable mine when the price of gold was relatively stable; with gold plummeting, there’s likely even more pain ahead. Citi’s Johann Steyn, who covers South African gold miners, downgrades his target price and earnings outlook for the entire sector, and cuts Harmony Gold (HMY -8.2%) to Sell. For what it's worth, he calls Gold Fields (GFI -3.2%) his favorite.

    "OK, so I made a bad call at the Barron's roundtable,"tweets Bill Gross. "I would still buy gold here. World reflating." After a morning bounce, gold has returned to the session low at $1,388/oz.GLD -6.7%. 

    Heavily indebted Mechel (MTL -5.8%) is in talks with several major mining companies in Asia, including China's Baosteel, for the sale of a minority stake in its mining unit, its CFO says. MTL has said it wants to refocus on its mining business and sell many of its other non-core assets in an effort to raise ~$4B. (also)

    And this is why  we don't chase:  Disappointing Chinese GDP data helps fuel a rout in solar stocks (TAN -3.8%). A broader selloff in risk assets isn't helping either. Suntech (STP -21.1%) is the biggest loser, as the Buffett rumor rally officially comes to an end. JASO -11.8%LDK -10.7%YGE -8%.WFR -7.9%GTAT -5.9%SOL -8.2%TSL -6.9%SPWR -5.1%

    JKS-8.5%DQ -5.2%YGE -8%. 

    tough day for the trucking sector with Swift Transportation (SWFT -8.1%) leading the downward fall. The gloom is tied to a reading of the Internet Truckstop's Market Demand Index which showed a 21% sequential fall in demand for trucks. Decliners: J.B Hunt Transportation (JBHT-1.8%, Celadon Group(CGI-4.2%, Marten Transport (MRTN-3.8%, Heartland Express (HTLD-1.1%, Knight Transportation (KNX-1.4%.

    United Rentals (URI -8.8%) fall off sharply and appears to be another casualty of a soft reading of the Internet Truckstop's Market Demand Index. Shares are at their lowest levels since late January.

    Ford (F -2.4%thinks it can double its market share in China over the next three years as new products hit the nation. The automaker thinks the new Kuga sports utility vehicle, EcoSport compact SUV, and Mondeo mid-size sedan will help take it to 6% of the Chinese passenger car market by 2016. 

    General Motors (GM -1.3%) is sitting on a gold mine with its OnStar unit, according to analysis from Citi. The unit is worth $5B to $7B with the automaker planning to roll out 4G LT technology next year. What to watch: The OnStar system has become more compatible with other technologies making a spinoff a possibility if the company chooses to take that route. 

    Tesla Motors (TSLA -1.8%) CEO Elon Musk says he willtake cases against auto dealer groups to federal court if the automaker fails to win approval at the state level to sell directly to the public through retail stores. So far, Tesla has had good results in the courtroom on the issue.

    Shares of Caterpillar (CAT -2.7%) and Joy Global (JOY-2.7%) take a hit from weak China GDP numbers for the January-March quarter. The economiy grew "just" 7.7% from a year earlier, less than forecasts calling for growth of 8%, while industrial production in April slowed to 8.9%, the weakest in more than a year.

  101. Burrben

    Phil / Miners
    Apologies, I haven't been able to read through all the weekend commentary, I've been trying to buy a house here in FL.  Wow, the run around!  Anyway, is this the opportunity to add to gold miner positions?  I'm just going to list my positions and maybe you could take a look?  I have till 4pm, so I'll start working through the Fri – Mon comments too.  I'm trying to look at this as a opportunity to buy cheaper and actually not panic!  Thanks as always.
    -5 Jan15 ABX 25P at 3.39 now 8.08
    +5 Jan15 ABX 25C at 6.05 now 2.35
    (for some reason I don't have a short call here)
     
    -10 Jan14 CLF 23P at 3.20 now 7.65
     
    -10 Jan15 GDX 35P at 3.60 now 8.70
    +10 Jan15 GDX 35C at 13.62 now 3.40
    -10 Jan15 GDX 45C at 8.24 now 1.40
     
    +1000 HMY at 6.58 now 5.08
    -10 Jan14 5C at 1.84 now 0.85
    -10 Jan14 8P at 1.89 now 3.00

  102. phil


    LVMH Moet Hennessy Louis Vuitton (
    LVMHF.PKreports a healthy 6% climb in revenue to €6.95B ($9.1B) during the first quarter to match the estimates of analysts. Strong sales inside the company's selective retailing division and a surprise bounce in wine and spirits sales helped to offset a slow period for Prada.

    The LVMH read-through to luxury stocks: The LVMH report is consistent with the latest batch of retail sales data from China which indicates solid growth is still out there – but just not at the frothy levels of years past. An important trend to watch is that demand in Europe is getting considerable support from the steady string of tourists pouring in from China which magnifies the impact that Chinese consumers have on the sector.

    Count Saks (SKS -4.6%) among the day's laggards asJPMorgan downgrades the shares to Neutral from Overweight. Analyst Matthew Boss says a rising tax burden on the company's key demographic could "potentially delay" H2 wealth effect driven spending. Additionally, the retailer "faces its toughest 2-year compare in 5+ years in Q2" and will be forced to cope with "rising gross margin headwinds." Price target reiterated at $12.

    Shares of Lululemon (LULU +2.4%) buck a weak tape to trade higher as reports come in that the retailer is getting its production issues solved. Though the mishap with yoga pants that were deemed too sheer was costly, the general consensus from analysts is that the brand will keep its loyal base of adherents.

    BioCryst (BCRX +5%) moves up again today, adding to last week's gains as the number of bird flu cases in China continues to increase. Recent reports now have the death toll at 14, with 61 confirmed cases. The stock has climbed nearly 21% in the past week, after China moved to expedite approval of it's anti-flu drug, Permavir, after six new cases of the H7N9 virus were diagnosed.

    Myriad Genetics (MYGN +2.7%) spikes into positive territory after Reuters says U.S. Supreme Court Justices "indicate a reluctance to issue [a] broad ruling" regarding contentious gene patenting. (Earlier: Court to hear arguments in gene patent case)

    Heard in the Myriad Genetics (MYGN +5.5%) Supreme Court case: Justice Scalia asks why a company would incur huge development costs if it is prohibited from patenting discoveries; Sotomayor, Breyer, and Kennedy ask if middle ground is possible wherein patents are allowed on cDNA but not an "isolated DNA"; Myriad's lawyers asked to consider if middle ground would grant "sufficient protection for innovation and research." (Bloomberg)

    VMware (VMW +0.3%) trades slightly higher on a down day, and manages to lift parent EMC (EMC +0.3%) in the process, after UBS says its Q1 checks indicate license revenue (a major concernfollowing the company's light Q1/2013 guidance). The firm maintains a Buy and $115 PT. VMware reports after the close on April 23, and EMC the following morning.

    Verizon Wireless (VZVOD) was the company that offered $1B-$1.5B for some of Clearwire's (CLWR -2.8%) spectrum, the WSJreports. Meanwhile, Dish (DISH -6.4%) says it hasn't formally withdrawn its $3.30/share offer for Clearwire, but would honor Sprint's (S +14.9%) $2.97/share offer. Naturally, Dish touts the potential of a Sprint merger to enable triple/quad-play bundles – a recent Consumer Reports survey drove highlighted their popularity. CEO Charlie Ergenalso talks up the implications of soaring mobile data usage, and compares Dish's strategy to a Seinfeld episode where everything comes together in the last 2 minutes.

    Sprint (S +13.3%) confirms it has received Dish Network's (DISH -5.7%merger offer, and says it will evaluate it. Today's decline in Dish shares lowers the value of the equity portion of the offer by about $450M, resulting in a total deal value of $25.15B (an 8% premium to SoftBank's (SFTBF.PK) offer). (PR) (more on Dish/Sprint)

    MetroPCS (PCS -3.6%) and Leap Wireless (LEAP -2.5%) slump in the wake of Dish Network's $25.5B offer for Sprint. The offer, which comes shortly after Bloomberg reported Dish had proposed a tie-up with T-Mobile USA (DTEGY.PK), removes T-Mobile/MetroPCS as an M&A target (for now, at least), and lowers the odds of an offer for Leap. Should a Dish/Sprint merger happen, it would also potentially create a tougher rival for the low-end carriers, though Sprint/SoftBank would arguably do the same.

    America Movil (AMX -2.7%) slides after Bernstein launches coverage with an Underperform and $16.50 PT. Over the weekend,Bloomberg observed Carlos Slim might try to make lemonade out of lemons by using Mexico's proposed telecom reform legislation (a negative for AMX's mobile ops) to expand into pay-TV services, and thereby take on local giant Grupo Televisa (TV). 

    The E.C. has accepted Google's (GOOG -0.5%)  proposed search result concessions, two sources tell the NYT. Google will have to make users "clearly aware" of links to Google services (aspreviously reported), particularly for topic-specific (i.e. vertical) searches, and will also occasionally have to link to rival search engines. But the search giant will avoid paying fines (provided it makes good on its promises), and won't have to tweak its core PageRank algoithm.

    AT&T (T) might be getting Samsung's (SSNLF.PK) Galaxy S IV a month before Verizon (VZ): a Staples training sheet leaked to Engadget indicates an April 26 launch date for Samsung's new flagship device for AT&T, a May 1 launch date for T-Mobile USA, and a May 30 launch date for Verizon. AT&T will start taking pre-orders for the S IV tomorrow; from all indications, international pre-order activityhas been quite strong. (previous)

    Is Apple (AAPL -1.7%) starting to see a brain drain in the post-Jobs era? "There is a growing level of dissatisfaction among Apple executives and employees, and a greater willingness to explore leaving," one VC tells BI. Another says his firm is seeing a lot more resumes from Apple employees, and attributes this both to the impact leadership changes have had on Apple's culture, and the higher pay offered by startups. A month ago, John Gruber warned Apple is at risk of losing top talent, and called it "the single biggest problem that Apple faces."

    Three lunchtime reads:
    1) Japan gets calls from U.S. to Europe not to drive down yen
    2) Stockmania
    3) I've never seen anything like this: Gartman
     

  103. stjeanluc

    Highs and lows 2009 / Rain and Phil – OK, it seems to be working now:

     

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

    There is a new sheet called High-Lows 2009 April 15, 2013.

    It's up to date with today's price and the highs and lows of 2009. I have the stocks from the S&P500 there so not all of them. 

     
  104. rustle123

    It's days like this that I sit back, relax and say, ahhh nice.

  105. yodi

    Burrben
    Looks to me today a bit of panic selling. Actually just placed a bit for HMY. Best to do carry on with your house buying and leave the market do his run. Just down 200 pts.

  106. angelcur

      nkorea to start military actions immediately-kcna

  107. angelcur

    MSB CAME IN WHEN THAT NEWS CAME OUT HAHA

  108. Pharmboy

    I see the home builders is not Phil's favorite…..um…I think he was mistaken identity…it was me!  Oh, I forgot, we are ONE!

  109. wombat

    wow. AGQ $35 puts just filled @ $16

  110. angelcur

    explosion at boston marathon

  111. mrmocha

    Speaking of home builders, HOV at the magic $5 mark.

  112. phil

    AC/Terra – I can't believe that's just a week from Thursday for me.  

    Hammers/Albo – I call it the ridiculously under-valued formation.  

    AAPL/Rms – I am not an accountant, so I stay away from opinions on that subject.  I also have no idea what strike you have or what you paid so couldn't tell you what a good roll might be but Jan $450 puts, for example, are $67 but that's net $383 and AAPL is at $422 so $39 of premium and you WISH you get assigned AAPL and your putter gives up the premium.  Even the Jan $500 calls, at $103, have $24 of premium still in them so no real sense in rolling when you have to pay $24 in premium to do it.  The Jan $500s can be rolled even to the 2015 $455 puts and then you're right back near the money but no need to rush if there is still premium in the Jan puts.  

    Carmen/Terra – I hate it when they ruin a perfectly good opera by having a bunch of people dance on top of the orchestra.  

    Supports/MrM – I see a lot of "support" forming.  Hopefully it's more than just bounces. 

    Miners/Burr – If you are not already in some, then now is a fantastic time to initiate a small position.  ABX and CLF are my favorite plays but I wouldn't add new ones too quickly until we're sure we have a proper bottom.  As above, we're miles over where we were on 4/5 in all but the RUT but people are already freaking out – as if they have no memory at all of 4/5 happening (a whole week ago).  On your positions, not having that short call on ABX turns out to be very expensive.  ABX is at $20 so, of course, you don't want to give the putter $8 for the $25s – that would be silly.  If he puts it to you, he forfeits the $3 and THEN you can "roll".  As to the calls, you can still do what you should have done and sell the $25s to another sucker for $2.20 and use that money to roll down to the $18s ($4.60) for $2.40 and then you're in a $7 spread and in the money by $2 – well worth the .20 you spend on the adjustment.  CLF is low on premium and the 2015 $20 puts are $6.80 so cost you .75 to roll down $3 and put the putter 50% into premium again.  GDX is already 2015 so not a lot you can do with it.  Plenty of premium in the $35 puts (net $26.30) so nothing to do there with GDX at $29.22.  On the spread, you can pick up $1.80 rolling the short $45s to the $35s and roll your $35s down to the $25s for $4 so net $2.20 to roll your spread down $10 (and $4.18 in the money) and then you can sell a few front-month calls to get your $2.20 back over time.  HMY is at $5 and your buy/write is net $2.85/5.43 so nothing to do there and no 2015 to roll to anyway.  

    Very nice StJ – hopefully someone has time to pull out a few names.  

    Nice/Rustle – It's really nice to have a whole board full of people who were totally expecting this pullback.  I'm getting notes from a few other places where people are freaking out and "shocked" by this drop.  I guess anyone listening to Cramer's week-long pump-fest last week would be surprised, that's for sure.  

    PCLN $714 – ROFL!  

    NoKo/Angel – Really?  Not hearing it anywhere else.  It's Kim's Bday – he should be lovin', not fighting.   Actually it looks like some kind of terrorist thing at the Boston Marathon – that's NOT GOOD!

    One/Pharm – That's right Pharm, I'll be needing the brain tonight – I have a meeting…

    AGQ/Wombat – Well, it's at $24.50 so not too outrageous. 

    $5/MrM – I'm not sure anything is "magic" at the moment. 

  113. phil

    IWM just failed $90!  A day earlier and we could have been so happy…

  114. stjeanluc

    The line chart is going to be ugly tonight! Both Russell and NYSE have now failed their 50 DMA. In the Russell case, not even close – it's down almost 4% now. The Russell is also starting to make lower highs and lower lows…

  115. Jbur

    IWM/Phil: Cry about it is right. If this pull back had happened on Friday we would be up about 22K. Jeesh!

  116. stjeanluc

    List / Phil – Here is something to get you started. The top 50 companies that the furthest away from their 4 years high:

    And the 50 closest to their highs:

  117. rpme

    Explosions at boston marathon finish line.

  118. dclark41

    We seem to have been early on IWM and TZA.

  119. phil

    Two explosions from inside the hotel that was at the finish line in Boston apparently.  

    NBC says 20 seconds apart.  They say that's a trick to injure people who rush to help.  

    This is no small thing – this is blood folks.  If this picture is real, they are downplaying it:

  120. craigzooka

    This drop came just in time!!  I am going to wait two more weeks and we may have a relaunch of the IRA Portfolio tracked by a TOS paper trading account, instead of my crappy google docs spreadsheet, at PSW Atlantic City!

  121. Jbur

    Wasn't BDC supposed to be in the marathon? Has anyone heard from him?

  122. dclark41

    Jbur
    You are right. Hope he is OK!

  123. Pharmboy

    Ugly Charts StJ….I think they are a think of beauty. Too bad it won't last.

  124. phil

    Dow volume 87M looks like we'll close at lows but still 25M to go.  

    Hard to say what's going to happen here but no lines are holding up at all.  1,550 on S&P would be very bad cross.

    If we were going to recover – it ain't going to happen now.

    3 dead so far.  

  125. angelcur

    MADARIN HOTEL ANOTHER DEVICE FOUND UNCONFiRMED REPORTS OF DEVICE AT JFK LIBRARY

  126. angelcur

    lenox hotel evacuated

  127. phil

    List/StJ – Thanks.  

    BDC- Yes, he did say he was running today.  Would be unbelievably bad luck to be crossing right when the explosion happened – I only saw one runner go down, mostly people on sidewalk seem to be hurt.  

    Major tragedy.  Hard to imagine anyone wanting to buy anything on Wall Street at the moment.  Volume is crawling.   Still, the fact that the sell buttons aren't being punched is a bullish sign that we might hold up here (or at least we're near the bottom). 

    Panic all around it seems.  

    These two give you an idea of the placing and range of bomb:

  128. Pharmboy

    All those guns out there really helped stop that one, no?

  129. jromeha

    Wow, f$cking pricks, took the day off to go watch the marathon.

  130. rainman

    Guess we should have background checks on diesel fuel and fertilizer.

  131. yshenhar

    A video of one explosion in Boston

  132. wombat

    any word on BDC ? >>>>>> Jezzus. Welcome back to Amerika.

  133. phil

    Gold not spiking, oil not spiking – very strange. 

    Dollar just laying around ($82.45) not much action anywhere else.  

    FAS Money:  Wow, XLF was $18.10 for a minute, now $18.15 with FAS at $54.06 ($54.67 is our FAS Money target so about $18.25).  Let's not take chances and shut down the short FAS $54.67 calls at .90 - it's a very nice profit and there's no sense in risking it as we never intended to have this much open. 

    We can flip and sell 5 FAS Friday $56 calls for .50 and 5 FAS $50 puts for .50 

  134. rainman

    Nasty close!

  135. jromeha

    Pharm- there aren't hardly any guns in MA. Most gun restrictive state in union. 

  136. Pharmboy

    On Friday, Caitlin, that does the most active options on PSW front page noted that someone bought a boatload of XLF puts, Apr 18 for 6c……lookie ookie where they are now!

    Don't tell me about coincidence.

  137. albo

    No hammers on GDX & ABX today.
    AAPL stayed barely above the yrly low.
    Pharm -Your comment on guns irrelevant to this tragedy.

  138. angelcur

    what we moc orders like in mil and nte today can you tell?

  139. Pharmboy

    XLF - Financial Select Sector SPDR ETF – Shares in the XLF are in negative territory this morning, down 0.90% at $18.39 as of 11:10 a.m. ET, amid broad-based declines in U.S. stocks spurred by an unexpected 0.4% decline in March retail sales and other soft economic data points. The price of the underlying fund is also being pressured by declines in JPMorgan Chase & Co. and Wells Fargo & Co. following first-quarter earnings reports from those companies prior to the opening bell. JPMorgan and Wells Fargo combined represent roughly 16% of the total holdings of the XLF. Big prints in short-dated XLF put options in the early going this morning suggests one trader is positioning for shares to extend losses in the near term. It looks like the strategist purchased 100,000 puts at the April 19 ’13 $18 strike for a premium of $0.06 per contract. The position starts making money if the price of the underlying declines 2.4% from the current level to breach the effective breakeven price of $17.94 by expiration next week. Put options on the XLF are far more active than calls, with the put/call ratio above 13.0 as of the time of this writing. Five of the top ten holdings in the XLF report quarterly earnings next week, including Citigroup, Bank of America, Goldman Sachs, U.S. Bancorp and American Express.

  140. phil

    Now rumors of fire at Kennedy library sending markets to closing lows.  

    Looks like volume shot up to 156M at the close – half the day's volume in last minute.  Was mostly flat to the close and 900 held on the RUT and Dow finished at 14,599 – could have been a lot worse but depends what they determine the cause to be.  Airlines, travel, etc could take big hits tomorrow. 

    XLF still selling off after hours.  $18.05 now. 

  141. phil

    Indexes still in robotic lock-step.  

    Dow – 1.8%, S&P -2.3%, Nas -2.38%, NYSE -2.55%, RUT -3.78%, SOX -2.53%, Trans -3.81% (not sure how much came after bombing, maybe about 0.5%).  Finishing at the lows, near the 2.5% lines, with no bounce and some indexes going through is a pretty strong indication that we're heading for a 5% correction.  Most likely 1.25% tomorrow and 0.67 the next day takes us to about the -4% line for a test.  With this news though, could get much worse if Asia takes it badly and then Europe and we could gap down in the AM. 

    In fact, there go the Futures – RUT below the 900 line (/TF) and can be played short there but very tight stops above.  

  142. rustle123

    This can't be good for the market tomorrow.

  143. angelcur

    sorry folks that got in to the wrong box! apologies

  144. stjeanluc

    As expected, the Big Chart is not pretty:

    Not sure why the volume candles didn't show up for the Dow and SPX, but look at the NYSE volume candle – the biggest volume since the last expiration day. 50 DMA are behind us on both the NYSE and Russell. 

  145. stjeanluc

    BTW, for those keeping track, the old Income Portfolio (started last June) is being seriously hit by these mining stocks as well as the steel producers. AAPL not helping either…. We have hedges, but nothing that could help stocks being cut in half!

  146. dawnr

    wowza…been sleeping under a nice grassy umbrella at beach and missed all the action today!  Phil, …I gather you were not too bearish at all last week and very responsible to lead us members to drink the hedge kool aid. VIX up 43%!
     
    I can't get into Trade Station on my laptop due to some version conflict I can not seem to correct so can not look at silver stocks someone wanted me to check.  sorry.  If silver holds the $22-23 level I mentioned this morning that is a very good sign for the silver stocks as well (IMO) (generally my trading book was to the short side so gonna let this play out.) 
     
    I did have to nibble some more at ABX today with a break even now under $20.  Worst case I hold it until Bernake leaves in 2014 and the fed changes their QE infinity tune.
     
    FWIW on metals and miners divergence…I have been trading these a while and one thing I have observed is the miners have a tendency to follow the stocks DOWN like a risk off trade more so than the gold itself. 

  147. phil

    Boston found multiple bombs and apparently one did go off at the Kennedy Library 

    They've shut down cell service to prevent remote detonation.  

    Sounds coordinated and terrorist to me.  

  148. stjeanluc

    Gold and miners / Dawn – It looks to me like the correlation between the metals and miners is really tenuous. I would be really curious to look for factors that impact the valuation of these mining companies. Proven reserves is one thing, but there is probably a limit on what can be mined every year without actually impacting the value of the commodity. I suspect that these guy could increase the output, but then again, gold is not used that much, it would be stored so that would impact the price of gold negatively. Proven reserves are important in the sense that they tell us about the possible longevity of the operation – someone who mines 2 millions ounces with a 50 million ounce reserve is good for 25 years until they find more. 

    My guess is that like every other businesses these guys are just valued (maybe wrongly) based on fundamental numbers like earnings, debt, earning growth, book value and sales growth. I know using fundamentals is quaint. And obviously when the price of gold goes down, earning, growth and sales are impacted. More study needed.

  149. stjeanluc

    Terrorism / Phil – April 15, Patriot day in Boston… Makes you think a little bit.

    Too many whack jobs out there!

  150. dawnr

    STJ-Miners have a lot of macro-political risks (e.g. what we saw with ABX, I saw it with GG last year) and mining costs have been rising as % of what they produce.  If I can find one of the older articles I read on the 'why's' I will post it here.
     
    Washington and NYC have beefed up their defenses.  Keep looking for more news but eerily not much posted. 

  151. stjeanluc

    Barry's take on gold:

    http://www.ritholtz.com/blog/2013/04/what-are-golds-fundamentals/

     

    We looked at Gold as a trading vehicle in the past, and identified the many ways it is different than assets like equities or bonds. Back in 2011, we noted that Gold is a trade, not a religion. During that presentation at the Agora conference in Vancouver, we discussed how commodities spike and collapse versus how equities roll over and break trend lines.

    History shows Gold trades differently than equities. Why? It comes back to those fundamentals.

    It has none.

    This is not to sat gold is not affected by Macro issues. But that is very different than saying Gld has a fundamental value, an intrinsic worth. It does not. That led to this heretical advice: Gold is not, and can never be, an investment. It has no true intrinsic value, no cash flow, no earnings, no coupon. no yield. What people call fundamentals are nothing more than broad macro analysis (and how have your macro funds done lately?). Gold is the ultimate greater fool trade, with many of its owners part of a collective belief theory rife with cognitive errors and bias.

    I do not want to engage in Goldenfreude — the delight in gold bugs’ collective pain — but I am compelled to point out how basic flaws in their belief system has led them to this place where they are today.

    Gold does trade technically, and is especially driven by the collective belief system of the crowd. When that falter, well, you know what happens . . .

  152. stjeanluc

    Miners/ Dawn – That's true especially since these guys don't really operate in the most democratic environment all the time!

    But still, I think that in the long run it comes down to fundamental valuation and obviously people think that they have better places for their money now.

  153. stjeanluc

    And this guy makes some good arguments:

    http://qz.com/74432/gold-collapse-why-now/

     

    ETF-ization of gold. Outflows from gold exchange-traded funds, some of the largest holders of the metal, have increased and still have a long way to run, which could add tremendous downward pressure to prices. Here’s a chart Goldman Sachs analysts used to make this point.

    Of course, the ETF argument is a bit circular. Outflows have picked up because sentiment has turned sour, not the other way around. But circular logic is what makes the financial markets go round—and in this case, down. That negative feedback loop is clearly entrenched in gold, which means the bugs should run for cover.

  154. Rms5114

    Phil,
    I need to roll Aapl J14. $490  Cs (basis$80) out to J15,    there is not much left to work with but what would be the best play. 
    Thanks

  155. zeroxzero

    o n a plane all day, very sorry for the tragedy in Boston.  Let's hope the toll is less than it presently seems.  And I fervently hope this has nothing to do with N. Korea, which seems a long shot, but that's one crazy little boy over there.  Careful, all!!

  156. biodieselchris

    I'm OK! I finished in 2:41 (about 12:41 PM local time). My wife and I met up and made it back to the hotel before we heard the news.
     
    It has been a very sad and tragic day.

  157. jabobeast

    Phil—you said on costs (usually $600-$800 an ounce)
    does it really only cost $600-$800?
     
    If so, why aren't people using this as an opportunity to load up in the miners? I was scared yesterday when I asked. Today was even worse than I feared. I am trying to get a handle on how low GDX and ABX could drop? Especially, if gold keeps dropping.
     
    I know you are probably sick of the hand holding, but I really would appreciate your opinion and analysis as always.
    Looks like I was way to early with the miners and probably not patient enough with piecing into the trade. Sucks.

  158. scottmi

    Gold/Jabo – people are using this as an opportunity to load up. Who takes the other side of the sales? Of the several people i know who have and hold gold physical gold, none are panicing or selling. For those i know, including myself who have some miners, been initiating and adding last week, friday and today. we may be experiencing a deflationary vibe with commodities, but the macro picture is still 85B from the fed and now 45B from japan, per month, of 'new money" as well as whatever the Pound, Euro, and Yuan do. If miners go down another 15% or 20%, add another tranche.  It's the biggest sale around right now…   

  159. Pharmboy

    BDC – good that you are safe! 

  160. stjeanluc

    Gold mining / Jabo – Unfortunately, the costs are higher than that:

    http://goldnews.bullionvault.com/gold-mining-062820123

    The number you mention are back to 2011:

    But gold CEOs are now talking about much higher numbers:

    These numbers are through 2011. And prices are still surging in 2012. Just take a look at what the CEOs of a couple of the top Gold Mining companies have said about costs over the past few months: 



    Mark Cutifani, CEO of AngloGold Ashanti: "If you want to go on a total cost basis, we're running at about $1200. The industry average is probably around $1250 an ounce."



    Steve Letwin, CEO of Iamgold: "It's going to be difficult for anybody to produce gold at less than $1200 an ounce."

     

    This month, I spoke with gold expert John Doody, editor of the excellent Gold Stock Analyst newsletter. He's been writing about gold stocks for more than three decades – and is one of the smartest analysts in the industry. He told me most gold companies are now paying more than $1000 to produce an ounce gold.



    The costs have risen significantly over the past six months because companies have to dig deeper to find high-grade gold deposits. In many cases, that means digging more than one mile into the ground. In addition, costs associated with almost everything I mentioned above have moved higher over the past year.

    A guy has articles on SA where he mentions that ABX costs are around $1300 an ounce:

    http://seekingalpha.com/article/1225891-what-it-really-costs-to-mine-gold-the-barrick-gold-edition

     

    The first thing that stands out is that production costs of gold are rising on a per-ounce basis, even when removing write-downs. In Q4FY11, it cost ABX $1253 to produce an ounce of gold equivalent, while in Q4FY12, it cost $1318 to produce that same equivalent ounce, which is a 5% rise in costs on a quarterly year-over-year basis. This rise in costs is also evident on the annual basis, where it rose from $1101 in 2011 to $1277 in 2012 — around a 15% increase in the cost per ounce.

    Investors should also expect costs to continue to rise, as evidenced by the fact that 4Q costs were higher than the yearly average, which suggests costs are still rising. Since the 4Q costs were also in excess of $1300 per oz, investors should not be surprised if FY13 costs average more than $1300 per ounce for ABX, which goes along with management's prediction of rising total costs for FY13 from the year-end report.

    There are probably many other numbers around but apparently gold mining is getting a lot more expensive.

  161. deano

    The final leg down?
     
    CME Hikes Gold, Silver Margins By 18.5%
    http://www.zerohedge.com/news/2013-04-15/cme-hikes-gold-silver-margins-185

  162. stjeanluc

    Margin / Deano – And right on cue gold loses another $30. Wait until tomorrow when people start looking at their margin! Silver getting hit as well. And cooper… Tomorrow should be interesting.

  163. stjeanluc

    Look at the T&S tape on the gold futures now on TOS. Looks like trading during normal market hours (today was really heavy)…  almost 13,000 contracts traded this hour which is what trades at 10:00 AM on a regular day. Compare to 1000 for oil and 7900 for the S&P. Frenzy…

  164. albo

    STJ – Excellent points on the gold miners.  They remind me of all the companies that have real estate on their books at cost, but it is actually worth a lot more.  Quite a few stocks trade below the current value of their real estate. 

  165. stjeanluc

    Talking about lows and highs of 2009 – with gold, a 50% retracement between the lows of 2009 and the highs of 2011 is at about 1290 and we could get there tomorrow. Stunning! Bitcoin-like….

  166. albo

    That said, I believe given the magnitude of the sell off that gold bottoms and rallies sharply in the next couple of days.  Whether it is the ultimate bottom, only time will tell.

  167. jabobeast

    I hope we hit the bottom soon. I never liked gold and now I am a stupid goldbug! Feel like the biggest moron.
    Taylor's take'
    http://www.planbeconomics.com/2013/04/gold-close-to-buying-opportunity-john.html

  168. dclark41

    BDC
    Glad to hear you are ok. Nice time.  How old are you?  This is not your first, correct?

  169. scottmi

    Gold production costs – what may also be a factor: the companies rotate to mine the more costly sources when price is high.. and preserve the $600/oz ores for when the gold price may come down again. ABX for example, they still have all those reserves, and are not mining all of them all at once. may well be focusing on getting more from the higher cost reserves as can do so and still make profit margin.

  170. zeroxzero

    I don't know why gold is falling off a cliff.  I will venture a guess, however.  Perhaps it is because there is not enough private demand for goods and services to create inflation, because those relatively few potential consumers whom managed to hang on to some capital during this six-years-and-counting recession are in no hurry to spend it.  And those same capital-owners are observing that interest rates might continue to fall, and in fact go negative, due to the fact that banks are simply too frightened to lend.  There is little reason to think that this mindset will change quickly.
     
    Fearful bankers notwithstanding, I perceive that there is actual lending demand, but the rub is that, in practical terms, there is very little "supply."   Money is cheap because bankers would rather keep their jobs than risk a non-performing loan. I personally tried to get a construction loan to build a house in a very bank-favored area, and almost literally had to talk to bankers hiding under their desks quaking with fear.  The fact that I had a healthy multiple of what I was trying to borrow in cash or cash equivalents did little to alleviate the pallor induced by asking for a loan.   To repeat, I have no clue why gold is plummeting, but neither do I see anything even remotely resembling runaway inflation on any horizon.  Maybe that's what's going on.
     

  171. jfawcett

    Big Charts / Phil – Not that it is important but my question last night was do expect a 20-40% retracement of the latest 20% move (1350 – 1600)  which would be 140 points which puts the SPX around 1460 or a 20% retrace to 1530.  From your post this morning it looks like you are expecting the latter, a 20% retrace of the latest 20% advance.  See my question.  It is  important that I understand the 5% rule and the retrace levels.  Thanks.

  172. jfawcett

    GLD / SLV / ABX /etc…  I am waiting for the technicals to show me when to initiate a DD.  i.e., a 5dma pointing up.  I may miss part of the move but…  Just glad I used that same logic when discussing buying back the caller on the ABX buy/write a few days ago.

  173. wombat

    Ross Norman of Sharps Pixley, a London Bullion brokerage:

    The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot. The selling took gold to the technically very important level of $1540 which was not only the low of 2012, it was also seen by many as the level which confirmed the ongoing bull run which dates back to 2000. In many traders minds it stood as a formidable support level… the line in the sand.
    Two hours later the initial selling, rumored to have been routed through Merrill Lynch's floor team, by a rather more significant blast when the floor was hit by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market – it had the hallmarks of a concerted 'short sale', which by driving prices sharply lower in a display of 'shock & awe' – would seek to gain further momentum by prompting others to also sell as their positions as they hit their maximum acceptable losses or so-called 'stopped-out' in market parlance – probably hidden the unimpeachable (?) $1540 level.
    The selling was timed for optimal impact with New York at its most liquid, while key overseas gold markets including London were open and able feel the impact. The estimated 400 tonne of gold futures selling in total equates to 15% of annual gold mine production – too much for the market to readily absorb, especially with sentiment weak following gold's non performance in the wake of Japanese QE, a nuclear threat from North Korea and weakening US economic data. The assault to the short side was essentially saying "you are long… and wrong."

  174. wombat

    sorry – forgot the source – really smart article

  175. jfawcett

    Big Charts – The 7.5% (SPX) run from 1485 (Late Feb) to 1597.  40% retrace of that run is to 1552, just where we closed today.  That is, a strong retrace which bodes well for continued selling pressure.

  176. jfawcett

    And I writ ethe above, futures is up 0.5%.  Lots of volatility.

  177. bdonnelly713

    My concern with the Boston event is that no one has claimed any responsibility…which makes me think it might be part of a larger plan that still hasn't been played out 

  178. phil

    SPY 5 MINUTEGood morning! 

    Wow, what a strong market.  All recovering already, up about half a point so far. 

    Half a point is a weak bounce off a 2.5% drop so not too impressed until we're back over 1% (40% of 2.5% drops) but it's a good sign considering we had nice volume yesterday – especially if we have good volume in the morning and head up.  

    Very neat Nasdaq move right to that 50 DMA and the NYSE overshot by a bit and the S&P didn't even get there (1,540) and the Dow barely failed 14,500 and the poor RUT needs to get over 928 and then the band's back together.  

    Dollar at 82.47, oil $88.50 (up from $86 at the lows), gold $1,378 seems to be attracting interest (up 1.25% but 2% is weak bounce), silver flying back to $23.45 (from $22 floor), copper $3.27, nat gas $4.15 and gasoline $2.75.  

    I think the RUT might have sold harder than the rest because they're rebalancing at the end of the month so maybe people took advantage yesterday to dump out of the probably losers and now they can scoop up the new entries at low prices to balance their funds.  We won't call it a conspiracy, just a coincidental action that involved several funds…

    .SPX WEEKLYNo clues as to the terrorist thing, which is strange.  They had enough cameras around, hopefully they figure it out.  Still, very encouraging when markets don't give up the ghost after something like this.  Europe opened down almost 1% but now down about 0.4% – and they had a lot of catching up to do.  I think the bombing somewhat shifted the global narrative to "US Markets Fell 2.5% because Bombs Blew Up in Boston" as the time-frame could be fudged to people who woke up and saw all the news at once.  So they think they are bottom-fishing to an overreaction to minor terrorism (unfortunately, most of the World is used to this stuff). 

    Oh cool, and IRobot commercial!  Good timing as it features their bomb bots.  Why is IRBT not in our income portfolio?  Someone asked me which stock was most likely to be the next $1,000 stock and that was my choice (1/24).   I talk about them so often I guess I just assume everyone has it but now I realize we have no official trades.  Oh, I see, they were late entries in the old Income Portfolio (2/7) and we never transferred them:

    IRBT/Yodi – Right on the 50 dma at $20.25 and you can now sell Sept $17.50 puts for $1.50 so I have to do 20 of those in the Income Portfolio because it's just silly not to.   TOS says ordinary net margin is $1.67 to make $1.50 in 7 months – what's not to like?

    IRBT way up at $24.55 now despite sequestration (as they have a strong consumer mix and bomb-bots are police bots too).  I had a rundown on them in that same post.  So let's keep our eye on them this earnings (4/23) and maybe we'll have another opportunity to get in a bit closer to $20.  

    At the close: Dow -1.77% to 14603. S&P -2.29% to 1552. Nasdaq -2.38% to 3216.

    Treasurys: 30-year +0.51%. 10-yr +0.12%. 5-yr +0.04%.

    Commodities: Crude -3.48% to $88.42. Gold -9.61% to $1357.05.

    Currencies: Euro -0.6% vs. dollar. Yen -1.6%. Pound +0.37%.

    Market recap: Stocks closed at session lows, with the Dow down 265 and the S&P plunging 2.3%, after economic data from China triggered a selloff in commodities and exacerbated by the blast in Boston. All key sectors fell, but materials and energy led the losers. Gold prices plunged 9.3% to a two-year low, capping the sharpest two-day loss in a generation; oil fell nearly 3%. Treasurys rose; 10-year yields dipped below 1.7%.

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:30 Consumer Price Index

    8:30 Housing Starts

    8:55 Redbook Chain Store Sales

    9:15 Industrial Production

    12:00 PM Fed's Duke speaks at American Banking Association 

    1:00 PM Fed's Kocherlakota: ''Improving the Outlook with Better Monetary Policy' 

    3:00 PM Janet Yellen discussion on Monetary Policy

    6:00 AM Overseas: Japan -0.41%. Hong Kong -0.46%. China+0.59%. India +2.05%. London -0.48%. Paris -0.49%. Frankfurt-0.35%.

     

    Notable earnings before Tuesday’s open: AMTDBLK,CMAGSGWWJNJKONTRSUSBWWW

    Notable earnings after Tuesday’s close: CSXIBKRINTCLLTCURIYHOO 

    Calling recent stock market action a "buying stampede" unlike anything he's seen in more than 50 years of watching markets, Jeff Saut says the investors he talks to believe the rally is "artificially induced" and is set up for a crash. The big picture: QE remains, profits have risen along with stocks, the Advance/decline line has broken out to new highs – "there is nothing in the 'tea leaves' suggesting a repeat of double-digit declines" seen in the past 3 springs.

    China increased its holdings of U.S. Treasuries by $8.7B in February according to the Treasury Department. Meanwhile. Japan unloaded $6.8B of U.S. government debt, bringing its stash to $1.097T, a one year low. Analysts attributed some of the selling by the Japanese to positioning ahead of the BOJ's monumental easing campaign. China's holdings sat at a 15-month high going into March.

    The Office of National Statistics in the U.K. reports inflation for March came in 2.8%, the same as February's mark and in-line with the expectations of analysts. The central bank sees inflation nearing 3% later this year with food price increases and higher energy costs kicking in.

    Labour to Demand U.K. Bankers Are Licensed Like Doctors. Britain’s opposition Labour Party is seeking legislation to license bankers so that they are subjected to similar checks as lawyers or doctors. Labour will propose amendments to the Financial Service (Banking Reform) Bill that will be debated in the House of Commons in London later today. It will also press for greater immunity for whistle-blowers who reveal bad behavior in the industry, the creation of a Financial Crime Unit in the Serious Fraud Office, and greater protection for consumers who buy gift vouchers when companies become insolvent. “A proper licensing system would ensure that a higher standard of qualification, training, competence — and behavior — could be applied.” Chris Leslie, who speaks for the party on Treasury affairs, said in an e-mailed statement. “It would also ensure that there could be proper sanctions imposed if licenses are breached.”

    EXCLUSIVE-U.S. regulator to fault JPMorgan over Madoff accounts.

    The Italian government's decision to repay €40B in arrears of the more than €100B owed to its corporate sector may help revitalize the economy, but it will also mean raising the amount of debt the country's Treasury will have to issue in 2013 by €20B. The good news: demand was strong for a new retail bond issue aimed at tapping "household savings," as Italy raised €9B Monday.

    Italian judges order more than €1.8B ($2.4B) of assets seized as part of a probe into the dealing of Banca Monte dei Paschi. The funds seized include commissions earned by the Milan branch of Nomura International. Prosecutors say they will continue their investigation over the risky derivatives trade carried out by previous management at the Italian bank.

    Blasts Across Iraq Leave Dozens DeadMore than 25 bombings across Iraq left at least 61 people dead on Monday, adding uncertainty and instability ahead of the first elections since U.S. troops left the country in December 2011.

    Five More Undetonated Bombs Found In Boston; Death Toll Rises To 3.

    Venezuela opposition demands vote recount, protests flareHundreds of protesters clashed with police in the Venezuelan capital on Monday after opposition presidential candidate Henrique Capriles called for demonstrations to demand a recount of votes from Sunday's election to replace the late Hugo Chavez.

    Moody's affirms China ratings at Aa3; outlook stable from positive. Moody's Investors Service on Tuesday affirmed China's government's bond rating of Aa3 and changed the outlook to stable from positive."Progress has been less than anticipated in the process of both reducing latent risks by making local government contingent liabilities more transparent and in reining in rapid credit growth; therefore, some of the upward pressure on the Aa3 rating has eased," it said.

    China Has Chosen Not to Chase Faster Growth. China intentionally adjusted its policies and money supply and chose not to chase "super high" growth, according to a commentary by reporter Xu Shaofeng. Large cash injections into a slowing economic slows may add inflationary pressure, the commentary said.

    Soros likens China trusts to subprimeChina has a narrow window to prevent its shadow banking system from imploding in a manner similar to US subprime mortgages, says George Soros.

    Hong Kong expert warns new bird flu virus could become a pandemic

    Despite the explosion in AUM at mortgage REITs, they remain relatively small holders of mortgages in a market dominated by banks, the GSEs, the Fed, and others, according to an mREIT "primer" from Two Harbors (TWO). The company's non-agency MBS holdings have a net interest spread of 6.9%, allowing the overall portfolio a 2.9% margin even as agency spreads sink south of 2%.

    In response to the spike in volatility, CME Group (CME) says it's raising collateral requirements for trading in benchmark gold, silver and other precious metals futures contracts, effective at the close of business Tuesday. Margins to trade Comex 100-troy ounce gold futures will be increased by 19%, silver will increase 18%, palladium14% and platinum by 19%. Natural-gas futures will also increase 5.6%as well.

    The decline in gold prices could be an opportunity for bulls, quips MBF Clearing commodities trader Mark Fisher. "If you're a long-term believer in gold, then you should love this, what's going on, because it's going to give you a chance to buy a significant position at a much cheaper price." The operative two words in that sentence however, are "long-term." "If you're a short-term speculator, good luck." (Video).

    Felix Salmon hopes gold "will continue to fall, that goldbugs will look increasingly silly, and that as a result Americans with savings will conclude that the best thing to do with those savings is to put them to work in a productive manner" – out of fear-based assets like gold, Treasurys and cash and into greed-based assets like stocks and bank loans so more money flows through the economy.

    "This may be the correction gold needs," Jim Rogers says, but it hasn't dropped enough yet for him to be a buyer. Rogers sees four factors behind gold's selloff: India hiked its gold import tax rate by 50% to 6% at the start of the year, curbing demand; Cyprus possibly needing to sell gold to pay its debts; chart analysis; and Bitcoin's collapse, "since most of them also own gold."

    Hedge Fund Billionaires John Paulson And David Einhorn Lost $640M In Gold Market Collapse. The gold bloodbath that hit the market over the past two trading sessions has definitely caused a dent in the portfolio of billionaire hedge fund managers. John Paulson and David Einhorn suffered combined losses of more than $640 million since Friday, according to their latest SEC filings, with the bulk concentrated in the former’s massive position in the SPDR Gold ETF.  Einhorn’s Greenlight took a big hit on its holdings of the gold miners ETF. 

    China's Ministry of Commerce is expected to announce this week that it has cleared the $30B takeover of Xstrata (XSRAF.PK) by Glencore International (GLCNF.PK). The development means the last major obstacle for the mining concerns will be out of the way. The combined company will boast revenue of almost $250B this year, according to analysts.

  179. phil


    The list of 
    52-week lows reached today is littered with miners and resource names: ABXACIAGAKSANVAUAUQAUY,CDECLFCVEEGOEXKEXXIFCXFNVFSTGFIGG,

    GOLDHLHMYIAGIPIKGCMHRMTMTLNEMNFXNG,NGDNOGPAASPWERGLDRICSA

    SANDSGYSSRISVM,TCKTGBTRQWLTWTIX.

    Is Green Mountain Coffee Roasters (GMCR -4.4%) gaining enough market share to compensate for lower K-cup prices? That's the question that could be answered when the company reports earning on May 8 and also has importance in evaluating the next couple of quarters. Sector watch: The company -  along with peers (KRFTSJMPEETDNKN) – received a bit of a jolt when Starbucks dropped the pricing on its 12-ounce bagged coffee by a dollar to $8.99.

    Chinese LED firms are sitting on CNY5B ($807M) worth of inventory, and attempts to unload it could lead prices to dive in Q3, Digitimes reports. As Cree (CREEcan vouch, pricing has been bolstered this year by healthy LED lighting and TV demand, but 2H pricing visibility remains limited. Separately, Osram is launching a 40W-replacement LED bulb in Germany that will cost less than €10 ($13.05). Cree recently announced it would sell a 40W-replacement bulb through Home Depot for $9.97 in the U.S.; 60W-replacements will go for $12.97 and $13.97. 

    Amazon (AMZN -1.5%) roundup: 1) Baird forecasts $10B in 2016 revenue for Amazon Web Services, which is believed to have pulled in ~$2B last year. Bernstein thinks AWS could generate $20B by 2020, and values the business at $24B (a less gaudy valuation than Oppenheimer's, and roughly on par with Macquarie's). 2) Amazon haslaunched a site aimed at customers aged 50 and older, replete with a digital Coupons section. 3) Amazon will reportedly start taking Kindle e-reader pre-orders in China tomorrow, putting it in competition with Dangdang (DANG) and other local vendors.

    "Facebook Home (FB) is a play for the international market," argues AllThingsD's Mike Isaac, making the case the UI's poorly-received U.S. launch – 3 days in, Home still has a rating of 2.3/5 starson Google Play – is less important than its reception in emerging markets where the smartphone will be the primary means of accessing the Web for many users (and where Facebook has has plenty of mobile-only users). In these places, Home's integrated messaging services (with VoIP services perhaps in the cards) could prove crucial to competing against upstarts such as WhatsApp.

    Facebook (FB) is talking with Apple (AAPL) and Microsoft (MSFT) about bringing Home to iOS and Windows Phone, says Facebook exec Adam Mosseri, while adding nothing has been finalized. Unlike Google with Android, Apple and Microsoft have been reluctant to let third parties heavily modify the UIs for their mobile OS'. Mosseri seems well-aware of this, suggesting Home as it exists on Android might not arrive on iOS. "We could also just bring some of the design values to the iOS app … Or we could build just the lock screen." (earlier)


  180. Burrben

    Phil, any futures shorts/longs today?  

  181. phil

    I don't like the pre-market gains at the moment as the Dollar is down to 82.28 and no response past that initial 0.4%.  As with yesterday – we won't know until the volume comes in but 0.5% is only a weak bounce and that's not good if it's all we manage in early "recovery."  

    /NKD way back at 13,400 so that, as usual, makes a good short with a tight stop above the line if we can't take those 0.5% lines.  Yen is just under 98 and, if it stays under – that's a good sign for shorting the Nikkei.  

  182. phil

    1,550 is a good place to go LONG on /ES with tight stops, that line will either hold or it won't.  

  183. phil

    Old Income Portfolio/StJ – That's why I called for a cash out while we were ahead!  When you're up 22% like that in such a short time, it becomes silly to hedge the positions trying to protect the 22% gains that are bound to correct.  The only real way to protect ill-gotten gains like that is to get to cash – then the market can't take it away from you.  Once in cash, you can PATIENTLY establish new positions, like the 30 we have in the new Income Portfolio, that have barely taken a hit.  

    One thing we need to stress more is that there is no shame in getting back to cash once in a while.  Cash is a perfectly valid place to keep your money – especially if you aren't sure which way things are going.  How often does a whole week go buy where we don't find some exciting opportunity to buy something cheap?  You can't do that if you insist on holding onto everything you buy…

    Miners/StJ – As noted above, there are all sorts of wild estimates about how much it costs to extract gold, etc.  Of course, most of it is nonsense.  ABX, for example, has a pretty steady 50% gross profit so figure $800 but that includes ALL their expenses to get gold to the point of sale, not just extraction.  Then they have their SG&A, like any company and whatever other nonsense but it's clearly not possible for them to be paying $1,300 an ounce to extract – it's silly and anyone who thinks about the math for more than a second can see that.  Also, that's a blended cost of their mines and some are cheaper than others – the beauty of a big company like ABX is they can mine more cheap gold when gold is cheap to keep their margins up.  Last year they bought $7Bn worth of new stuff so bad compas (but they only lost $700M on $14.5Bn in sales).  In 2011, they made $4.5Bn (net of taxes) on $14.2Bn in sales – that's pretty good!  Gold was about $1,500 on average in 2011 but here's the cool part – in 2010, gold was only $1,250 and they only sold $11Bn worth but they STILL made $3.6Bn!  That's 33% net profit – better than AAPL.  Oops, bad comparison as AAPL has an even lower p/e than ABX…  8)

    I don't know, man, if no one else wants these stocks, then Warren and I are happy to buy them…

    Seinfeld is at Caesar's Las Vegas Sept 6 & 7 - I got a pre-sale code of CPJS13 if anyone wants.  Might be a one-time use so only if you actually want to go please! 

    Gold ETFs/StJ – That, to me, is the biggest potential danger gold faces.  On top of that, ABX has $2Bn of gold in inventory (1.3M ounces) and figure the other miners probably have 10M more.  Usually, that's smart as ABX can sell inventory gold rather than mine it when conditions are unfavorable to keep cash flow going but can be a balance sheet problem in a big crash like this.  

    Overall, I still think this whole materials crash is coordinated into Q1 earnings so all the metals seem weak and the companies are forced to give cautious guidance and downgraded outlooks and that will give the big boys a lot of time to accumulate them at bargain prices so, when inflation hits, it will be GS, JPM, et al who own the controlling interest in companies like ABX, when their 140M ounces of gold are selling for over $2,000 an ounce.  That's how the game is played folks….

    Look at Glencore – taking over Xstrata for $30Bn to become a $250Bn/year commodities giant but not even public – just a bunch of top 1%'ers taking over the global supplies while the sheeple stampede out of the markets.  

  184. phil

    AAPL/Rms – Jan $490s are just $19.50 now, that's a whopping loss for a naked call.  I'd go for the 2015 $400/450 bull call spread for $19.50 and that pays +$30.50 if AAPL gets to $450 so that's 1/2 your money back and you can go for the DD and then you can get even if you can be fancy and sell the $350 puts for $44.50 and that plus a full gain on the spread gets back your $60 plus a tip.

    Good to hear you're alright BDC – pays to be quick.  Sorry tragedy marred your day – I'm sure you worked very hard to get there, you deserve your moment.

    By the way, did anyone notice Dawn predicted "blood on the streets" at 8:54 am yesterday?  Creepy…

    GDX/Jabob – Whenever you play with commodities – you should always be prepared to DD at 50% off and DD again at 50% more off and then wait 10 years.  If you always go in with that attitude, you'll do fine unless they physically remove people from the planet.  

    Amazing how we can't get a straight story about the bombs.  Now CNBC says there were only 2 – I could have sworn Boston's Mayor said whatever happened at the JFK library was a bomb too but maybe he just thought it was at the time..

    Good strategy Scott.  

    Miners/StJ – Well, if $1,300 an ounce was the cost of producing gold and gold is now $1,400 an ounce – then we can assume gold production will halt and create a shortage, right?  It's not like oil, it's not hard to re-start a mine – you just stop sending guys down for a while (and stop paying them) and open it back up when it's worth it.  With oil you lose pressure and stuff – not mines – although they do have equipment costs you don't want to idle for too long – it's nothing like what you need for oil or gas drilling. 

    Margins/Deano – That should squeeze out all the weak hands.  

    Now we're hitting strong bounces (1%).  

  185. tshroyer

    I was hoping somebody can help me on this issue.  If I have a put option that expires on Friday, when is the latest someone can assign that option to me? I had a SLV 25 Put that expired last Friday.  We were trading above the strike at the close on Friday.  i thought I was in the clear, only to find out I was Put the stock at 25.  Not a happy camper.

  186. phil

    Gold/Jabob – I don't like it either but, a few years from now, when inflation is 8% a year, we'll be loving it.  

    S&P up 6 ($300 per contract), Nikkei up 15 ($75 per contract loss if you didn't stop out over 13,400 – not a bad pair trade!  

    Good thoughts ZZ. 

    Retrace/Jfaw – Yes, I realized I misinterpreted the question, you were looking at it right, it's 20-40% of the move (and that's what we got).  

    Norman/Wombat – Seems to agree with me – the whole thing was orchestrated and fake.  Amazing what these people get away with…

    Responsibility/Bdon – I think I'd follow the money on that one and maybe question a few Wall Street people who made a killing on yesterday's crash.  The whole thing could not have been timed more perfectly and, don't forget, Dawn called it in the morning, telling us to buy when there was blood on the streets (actually Dawn was just quoting Rothschild, but strange coincidence nonetheless) – turns out, that was the exact bottom…

    SLV/Tshroyer – They closed Friday at $25.28 – it doesn't make sense that those were assigned to you.  I would certainly complain to the broker and get a clarification on their policy (and maybe get a new broker if that is their policy).  

    Oops, time to work!

  187. jomptien

    Phil/TZA,
    I took your advice and bought back my 44 short calls 2 days ago on the May 38/44 BCS. Great call and made a nice day for me. Now would you sell them back to make the spread? Also same with the June DIA puts @ 144- sell something to make a spread? Thanks

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