Guest View
User: Pass: | become a member


Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Non-Farm Friday – To Work or Not to Work, That is the Economic Question

We're waiting on the Jobs Report.  

I don't think it's going to matter, whether or not we employed more or less than the expected 200,000 new people in December doesn't matter as much as what we had to pay them.  Hourly earnings are, so far, up 0.2% for the year and the average work-week for "employed" people is 34.5 hours and that's GOOD news for Corporation, who are spending 15% less per worker than they did in 2005.  

Now, you may wonder how the workers feel about that but, if you do, then you are some kind of LIBERAL and you have to leave right now because this is a stock newsletter and we should care no more about the feeling of labor as we do about the feelings of a barrel of oil – the second biggest cost for our beloved Corporate Masters.  

Of course, there are some Corporations that do own oil, and they do care about the price of each and every barrel they own, but there are no Corporations who own people (not legally, anyway) - so f*ck them, right?  

Our current trickle down economic policy guarantees us a steady supply of cheap labor.  Labor costs were, in fact, rising in 2007 but "accidentally" wrecking the economy wiped out over 9M jobs and, at an average of 100,000 jobs a month added since Obama took over in Jan, 2009, we've now added back 5M of them – leaving plenty of people still scrambling for work – so many, in fact, that Congress wisely decided that they are just lazy and cut off their unemployment benefits.  

And, the best part is, we've replaced all those nasty high-paying jobs with cool low-paying jobs – leading to record corporate proifts – Yay Capitalism!!!

8:30 Update:  And here's the number - just 74,000 jobs added, a 63% miss from what Economorons were estimating and the lowest positive figure since 1978.  Will that tank the market?  Hardly – because it means the Fed will have an excuse to give us MORE FREE MONEY!!!  Again, we're buying stocks, we're capitalists, we don't give a crap if 126,000 people couldn't find jobs – just more people we can threaten to replace our current employees with should they dare to ask for a raise.  

Despite the fact that we're not hiring any actual people, Unemployment dropped from 7% to 6.7% aided in large party by a drop in the Labor Force Participation Rate to 62.8%, the lowest rate of participation since the recession of the 70s, wiping out 40 years of progress.  And a whopping 7.8M people who are "employed" are employed in part-time jobs only because there was no full-time work available – that's called "working part-time for economic reasons" with that reason being your employer would rather put the money in his pocket than yours.  

Best news of all, hourly earnings for ALL the people who are employed dropped 50%, to an annualized 1.2% gain over last year from the previous 2.4% as more and more people are forced to take lower and lower wage jobs as Congress cuts their unemployment insurance (by the way, it's called insurance because you PAY for it while you are working).  

Although this is great news for Corporate America, I already put out a note to our Members to short the Russell at 1,160 because the ADP report showed strong jobs and the market went up.  Clearly, it went up under false pretenses, so we can expect at least a little bit of a re-adjustment.  In fact, despite the markte being "flat" yesterday, we still pulled off another big win in our Member Chat on the same TZA trade we did on Tuesday, going back to the well at 10:11 yesterday for and taking a 350% and running at 11:09 – not bad for an hour's work if you can't play the Futures.  

This is not going to be a day to play the markets (other than fun trades like those two), this is more of a watch and wait day to see how this jobs data is interpreted and our very, very cashy position let's us sit back and relax – there will be plenty of good opportunities (like SHLD, CLF and AA already) to pick up good companies cheap during earnings season.

Have a great weekend, 

- Phil

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!

  1. stjeanluc

    Oil Lines

    R3 – 94.87
    R2 – 93.9
    R1 – 93.18
    PP – 92.21
    S1 – 91.49
    S2 – 90.52
    S3 – 89.89

    Yesterday's high and low – 92.93 / 91.24

  2. Razi.Mohammed

    Phil,

    Would have been nice to take the ride down to 16355 and then back up again.

  3. advill

    Good morning:

     

    Pharmboy/ TNXP     from $5 to $17 in 3 weeks….what is going on?

  4. phil

    Good morning!  

    Good background for Rein and Shadow's discussion yesterday:  

    That was a hell of a nalp in the Nas, from 3,575 in Futures to 3,537 and now back to 3,556.  RUT dove to 1,152 briefly and Dow dove a quick 100+ before going back to green.  Markets are UNPLAYABLE today.  Oil over $93, gold $1,240 (as the Fed's back in play) and the Dollar, of course, dove (80.91) but the Nikkei still isn't happy because it's hard to give a car loan to a person who doesn't have a job.  

    TLT popped to 104 before calming down – that's a very expensive report!  

    Ride/Razi – I'm old, I don't have those kind of reflexes anymore…

  5. 1020

    Good Morning!

  6. phil

    Another good chance to short the RUT at 1,160 with tight stops and out if S&P tops 1,840 or Dow tops 16,450 but Dollar coming back (80.925) so could get a move down again.  

  7. neverworkagain

    SHLD / Kinki:  I think you nailed it with reference to Eddie being paid in SHLD stock on Feb 1st. What I continue to find odd is the fact that MOST analysts and commentators (ie. Cramer just 5 minutes ago) talk just about SHLD's disappointing sales numbers. Either we (those who own SHLD in some way) are idiots for playing with something in such a brutal death spiral, OR this is the most ignored valuation creation story since Berkshire. Given Eddie is playing the long game, it makes sense that he doesn't want or need to play his cards too early. The only risk to an equity holder is if you think Eddie isn't in control, and they could face credit problems. I think that could only happen if we slide into recession.

  8. phil

    SHLD seems to be holding the line at $35, will be good premium to sell at the open but lots of bashing and bankruptcy talk can take them lower.  Cramer down on them as well.  

    LOL – Cramer can't let it go!  

    No, I was reading the Economist.Takes forever RT : Come on Jim, I'm up before you again? I even did a review featuring

    I think I can drive him crazy next week by making a few extra 3am posts – remind me.  

    WTF of the morning:  This deal they stop but GOOG gets to buy and hire everyone on the planet?  

    • A Northern California federal district court has ruled in favor of a DOJ suit (initially filed a year ago) opposing Bazaarvoice's (BVacquisition of rival online review/social media engagement  platform PowerReviews on antitrust grounds. (PR)
    • Bazaarvoice says it won't decide whether to appeal until after "the Court concludes the remedy phase of the litigation." Remedy proceedings start on Jan. 22.
    • Bazaardvoice closed its acquisition of PowerReviews in June 2012. The company paid $31M in cash and issued 8M shares/options.

    SHLD looks like you can get the 2015 $30/45 bull call spread for $6 – 10 of those in the Income Portfolo.   We can worry about put sales later.  

  9. Pharmboy

    TNXP – their lead drug is TNX-102 SL (SL = sublingual), or better knonw as Flexeril (Cyclobenzaprine).  It is being investigated for the treatment of Fibromyalgia as well as 'sleep'.  Why did they pop?  Who knows, but many of these specialty pharmaceuticals are rebranding older drugs.  TNXP's drug reduces both dose and frequency for nightime FM and PTSD. 

  10. phil

    On SHLD, the 2016 $30 puts are $8 and they don't even have puts lower than that.  I don't want them yet but it means we'll probably be able to sell $25 puts for $5 or $6 to cover that spread when they print them.  

    Beware the data:  

    • China's trade surplus dropped to $25.6B in December from $33.8B in November and missed consensus of $31.15B.
    • Export growth slowed to 4.3% from 12.7% and vs forecasts of 4.9%, due to a high comparison base a year earlier and a crack-down on speculation disguised as export transactions.
    • Imports rose 8.3% vs 5.3%, with estimates also 5.3%.
    • "Exports weakened dramatically, but were close to the consensus," says economist Dariusz Kowalczyk. "The data is positive for China and Asia sentiment as it alleviates concerns that China is slowing too sharply."
    • Kowalczyk also says that domestic demand is not as soft as had been feared. "The Chinese economy – while decelerating – is unlikely to see a sharp slowdown," he says.
    • Exports for 2013 rose 7.9% to $2.21T, imports 7.3% to $1.95T and total trade 7.6%. China expects the growth to continue this year. The full-year trade surplus was $259.75B, the third-largest ever.

    They throw a lot of numbers around but the bottom line is it's $2.21Tn in Imports and $1.95Tn in exports and they are talking about $10Bn variations up and down (+/-0.5%).  We import about $3Tn and export about $2Tn.  About 1/3 of our imports ($700Bn) are from China.  China used to import about 20% less than they exported as recently as 2010 – this is a huge change but artificially prompted by MASSIVE stimulus driving domestic investment and consumption.  

    $92.50 on oil again. 

  11. phil

    RUT below 1,155 – that's our new stop (/TF). 

  12. dclark41

    Phil

    Any chance you'd want to DD on those VLO puts in the STP?

  13. stjeanluc

  14. phil

    Another tap at 1,160 on /TF. If they are going to keep pouring, we'll keep drinking!

  15. shadowfax

    pharm and others Flexeril

    This is how that drug effected 2 people who tried it once each. Stopped digestion of food and all the goes down from there. Never again. Interesting if you mean administered under the skin as that might make it tolerable for those that can stand a poke.

  16. shadowfax

    Should have looked up sublingual  first, under the tongue to get in blood stream, similar idea to avoid digestive track.

  17. drcraig

    Pharm – Nothing exciting about repackaged flexeril. 99% of patients I give it to say it just makes them sleepy. I haven't heard any complaints about GI symptoms that shadow is referring to. Now what amazes me is a product like Amrix. Who the hell would want to be sleepy all day? Hmm.. junkies with nothing to do but pop pills all day and visit doctors? 

  18. Pharmboy

    drcraig – good, my thoughts as well – the the SL is a lower dose…that does get into the bloodstream at the same 'levels' as oral.  Amrix is Flexeril is Fexmid.  What do you practice? It is always good to have a Doc to bounce my ideas off of.

    CNAT, GALT and ICPT are all running again today.  Amazing.  NASH is a big market, but GALT is an IV drug, ICPT is oral…so someone is wrong, and I would short both….not really, but I want to.  ICPT's drug has some AEs that may hinder its development.

  19. shadowfax

    dcraig

    Sleepy, maybe they didn't notice they were constipated or that was normal for them. New package does avoid those sorts of things, must have been a reason.

  20. silentstorm44

    UUP really dropped.

  21. drcraig

    Pharm – interventional pain, but I used to do a lot of med management. Plus I review for WC, so I'm very familiar with all aspects of med management for pain and disability. I'm working on building my own IRO. Time to diversify out of direct patient care!

  22. sagemm1

    Any interest as YRC plummets?

  23. sagemm1

    er YRCW

  24. edro00

    Phil – TSLA BCS

    +5 2015 100C@34.24 now ~53

    -5 130C@25.00 now ~36

    The 100C is showing about 10K profit I'd like to capture, what is your suggestion?

    Thanks

  25. Pharmboy

    TRIN is way up…so they are selling, but the VIX is not moving…..very interesting how they do this….!!!

    For those not familiar with TRIN (also called the ARMS index):  An Arms Index value above one is bearish, a value below one is bullish and a value of one indicates a balanced market. Traders look not only at the value of the index, but also at how it changes throughout the day. Traders look for extremes in the index value for signs that the market may soon change directions. The Arm's Index was invented by Richard W. Arms, Jr. in 1967.

  26. phil

    TSLA taking a dive.  SCTY following. 

    Amazingly, XRT doesn't believe SHLD's crappy Christmas is part of our plane of reality.  

    VLO/DC – We're winding down the STP and sticking with long-term plays from now on so, no, I wouldn't press VLO but I do still like the idea into earnings, though I seem to be alone in thinking they disappoint. 

    STP – As I just said, per yesterday's conversation, we're cashing it out and sticking with Long-Term Portfolios going forward.  We'll still make short-term plays, but it's not possible to monitor them enough to include them in a portfolio.   As we do have a short-term Portfolio for the Seminars, we'll be using that for "trades that are not long-term".

    Speaking of other Portfolios, we always forget about the Butterflies – does anyone follow them?  

    They are exactly as boring as they are supposed to be, making 11.8% in 3 months but, of course, we're only using about 3% of our buying power (ordinary margin) to make those returns, so it really is a good thing to practice if people are interested.  

    YRCW/Sage – They go in and out of favor and this time it's a breakdown with the teamsters but I think they'll work it out.  I'd let them test the 50 dma at $11.75 and see if it holds into Monday – there's a big gap down from there to the lows if it fails. 

    TSLA/Edro – I'd take the $53 cash and buy 10 2016 $130/190 bull call spread at $20 ($40) and roll the short $130s ($36) to 2x the short June $150s ($18.50) so you put about $14 in your pocket, which is about what you get for cashing the BCS now, but you are left with a free shot at the short $150s with $60 of upside protection.  

  27. Investwizard

    Pharm/Trin~ Good morning! Are you using NYSE TRIN with ticker $TRIN in TOS? Thanks for the explanation of Trin!

  28. drcraig

    I used to watch TRIN very closely in relation to trading. The one principle I managed to pull out of it was TRIN>1, the market behaves poorly, apparent reversals fail to become trends. TRIN<1, the market behaves well, reversals become trends. Take that with the tiniest grain of salt you can.

  29. shadowfax

    dcraig

    I remembered correctly about you. I am a rare type since you were gone I had 3 spinal operations that all worked and I decided pain was the lessor of the other evils. Intoxication, even sleepy aren't for me. I don't even take over the counter. You must have been a saint to deal with that field and good luck in the new work.

  30. Pharmboy

    Invest – yes.  And Yes to DrC as well.  >1 works until it doesn't.  <1 is an up market.

  31. edro00

    Butterflys – yes, I'm following – great teaching tool

  32. Investwizard

    Thanks, Pharm & DrC.

  33. Jbur

    SHLD/Phil: I have the Jan15 40/55 Bull Call for $5.10 (discussed 12/18/13), and Jan16 40 puts sold for $11.50.  Am am inclined to just leave the puts alone; but the BCS is now out of position. Although I am worried about the position do you have suggestions on  how could I improve it. 

  34. Jbur

    Correction: NOT WORRIED

  35. BertII

    Pharm/EXEL

    Have shares at 4.50 cost basis sold jan 14 6 calls for .50 let them get exerciser or roll to may or Aug

    Thx

  36. phil

    Below 1,155 on the RUT again (/TF) means that's our stop line again.   Yawn – $500 here, $500 there…

  37. txchili

    Phil

    Thanks for considering the comments about the ST and LT portfolios. After reading all the PSW basics about buy/writes, portfolio allocation, fundamental investing, and patience, I’m glad that the ST plays are going to be just that, ST plays for those who want to play them. You certainly have the ability to see ST situations that are interesting for some. PSW education section suggests using a maximum of 10% of a portfolio on ST plays like these and I think a lot of new members miss that rule. I know it is difficult to find many LT situations at these high valuations and cash is king while patiently waiting for good opportunities.  So currently we cannot spend 90% of the time on the site looking at LT plays and 10% ST, but that would fit with the basic premise of PSW strategy. Many of the best investors understand that there are times when the market does not fit their investment premises and it is best to sit out. That does present a problem for keeping discussions open and interesting however. 

  38. mecho

    Phil, want some advice.  I sold Jan calls for about 28 cents each, on BBBY way out of the money, at $72.50, but since the stock gapped down to $70, they are now in the money.

    They don't have premium in them.  One option is to wait for bounce, which is relying on pure delta.  The other is to move to a position with more theta in it.  Your advice?

  39. rookie

    Phil// AAPL deteriorating before the earnings.  Does it mean that they are likely to disappoint?  I know you had suggested few BCS on aapl.  Is this a good time to buy them/add to existing positions/hold.

    Thanks

  40. phil

    Dollar dove to 80.62 and now 80.76.  Not helping oil ($92.15) but gold seems happy ($1,244).   Of course a 0.5% drop in the Dollar means the markets would be worse if not for it.  

    I just did the math on last year's AAPL trade of the year and it's already $83.35, up 495%.  The TSLA trade was up even more, 735% but only if you weren't foolish enough to sell April calls after the March calls expired.  Good for BNN viewers, who stuck with the initial trade!  The "conservative" trade of the year was CIM and the special dividend drove them to net a 42.8% profit.  Once again – boring is not so bad…

     

    In 2012 our "One Trade" was BAC and that one made over 50% – maybe we should just stick to those (this year is AAPL again) and not even bother with the other nonsense!  wink

    TRIN/DrC – I used to watch that stuff and those salt grains started piling up.  

    SHLD/Jbur – I think I'd invest $3 to roll the calls down to the $33s so you net $8.10 but you're $7 in the money.  No reason to panic on short puts that are just $3 in the money when you sold them for $11.50 (and they are only $13.80 now).  You COULD roll them to 1.5x the $30 puts ($8.30) a bit less than even but mostly I like the simple roll down to widen your spread for now.   Good example of what I said yesterday – those long trades still can make quick money but, when they go against you – you have tons of time to adjust.  

    Thanks TX.  Don't worry, we won't be bored – it's not like I'll stop having ideas.

    BBBY/Mecho – That's why I hate that strategy, you get burned once and it wipes out a dozen gains.  Don't forget, Rule #1 (and we only have 2) is "ALWAYS Sell into the Initial Excitement" – so, with BBBY, you want to find a way to SELL some premium on this drop.  Your short $72.50s are $3 and the May $67.50 puts are $2.75 so you can do a nearly even roll to those and then you have time to see if they do bounce back and, even if they don't, you've dropped your strike by $5.  

    AAPL/Rookie – Often as not a head-fake.  Samsung spooked a lot of people who don't understand AAPL's model is different.  It's a good time to buy if you are going to stick with them and intend to buy more if they have poor earnings.  If you are going to stop out on a move against you – then it's a coin flip and, with a weak market, you are better off waiting. 

  41. dclark41

    Phil/STP
    I hope you don't stop all short term trades. They are a great learning experience--for most of us. One has to learn not to participate in every trade and to get a grip on their own level of risk. The volume of trades a short term portfolio requires provides example after example of what can go right and wrong, and how to fix it using a variety of trades in a variety of different sectors. I am not sure those lessons are possible if this turns into a site strictly about making winning long-term trades.

    Your site is real-not hype. Sometimes you need to adjust. And sometimes it takes longer than expected. And sometimes you are just wrong. Even the best struggle at times. This is hard work and no one should think that there exists any site, or strategy that wins all the time.

    Perhaps less short term trades (a smaller STP), less momo trades,  and a greater concentration on finding stocks that are right for long-term portfolio. But to exclude the short term trading completely removes, what I think, are important examples and instruction of what to do when things go wrong. They are invaluable lessons that can be applied to any trade.

    Regardless of what you do, I still appreciate the time and effort you provide the members of this site.

  42. phil

    We're not going to eliminate them, as you can see from any trade review, we average 25 trade ideas per week – some short-term and some long-term – all we're going to do is stop over-empasizing a very smalL number of short-term ones.   The bottom line is I cant is there and stare at the trades – as I'm doing my job, so, like anyone who doesn't have time to stare at a monitor with my finger on the sell button – I shouldn't be making "official" short term trades! even if I do think its a good idea.    So don't worry, the ideas will be there just the same, but I'm dont want people to have the impression that StJ or I are actively managing short-term positions.  

  43. shadowfax

    Phil

    I like dcraig's summation more than any other so far. On and off black and white miss most of what is good. I will remind that a huge reason I stopped trying to trade the ideas was I am not a jack of all trades in many ways. Someday my hopes are to do forget it trades but for now a couple keeps it interesting and I do comment on a couple more out of my reach. There is beauty is KISS.

  44. Jbur

    SHLD/Phil: $7.00 improvement in position for $2.92 (executed) was a great idea. Thanks Phil.

  45. 8800

    Phil,

    Thx for the SHLD hand-holding (mine and others). I appreciate that Fast Eddie is smart and has a plan, just not sure it includes us equity owners outside his inner circle. Lots of interesting arguments on both sides on SA of varying quality, etc. Interesting times indeed, as the Chinese say.

  46. rookie

    Phil// With the elimination of the STP, is it possible to start a 25kp for rookies like me?  This will give us a chance to take smaller steps and learn from the mistakes/etc and move forward with confidence.  Would like to hear your thoughts on this.  Thanks

  47. drcraig

    I've become convinced the only things that matter to short term trading is simply supply and demand, support and resistance. Indicators are mostly a distraction. Looking for volume in relation to support/resistance will tell you about supply and demand. The big guys need to load and unload, and volume is their signature. For example, on today's IWM, we saw big volume spikes whenever we approached 14.50, or around 15.10. Watch the price action following the volume spike. Price slowly reverses on much lower volume. The big boys already made their move. The action around 10:03 and 11:30 was most dramatic, but the little reversals followed this pattern as well. 

  48. albo

    ICPT – Unbelievable !

    How would you like to have had some Jan 75 calls ?

  49. scottmi

    ICPT – where is the money coming from and how much is it really?

  50. albo

    Dunno.  Never seen anything like it.

  51. drcraig

    Notice the volume coming in as we approach a resistance zone on IWM. At this point I would expect a reversal. Where it goes, nobody knows. 

  52. shadowfax

    dcraig

    Indicators are as sure as stop loss orders for short term trade losses. I am convinced the only way is very old, watching the real time ticker, changing patterns become clear after a while. It is supply and demand as you say after all. S&R lines are too easy the bots will eat you up they do the math part.

  53. wombat

    Phil // SHLD
    Sorry if you've already answered – late to the party. I skimmed Jburs situation but it's a bit different. I've been holding the 'original trade for SHLD from last years Income port. 
    Jan15 $50-60 Bull Call spread
    Jan15 $45 short puts ( $7.05 ) now $15 just went in the money

    I was thinking adding your suggested spread ( $30-45 ) and DD on the $45 short puts to average down my cost.
    Appreciate your thoughts 

  54. scottmi

    SNDK – interesting to view the company profile data as provided in TOS. Shows that the selling price of their primary businesses, SSD drives and Flash memory, are dropping from $0.34 to $0.07 and $.029 to avg of $0.04 per GB (respectively) over next few years. Better make it up in volume….!

  55. scottmi

    SNDK – oops. that flash price should be $0.29 to $0.04

  56. drcraig

    Shadow 

    I don't like hard stops for that reason. With futures they're kind of necessary unless you have complete faith in your internet connection! 

  57. shadowfax

    scottmi SNDK

    Don't have TOS and I assume they didn't give reason but the price will not only drop but products may go away if the new memory takes hold. Processing could be thousands of times faster with the same processors. Less heat and way less power consumed.

  58. 490union

    Phil    Any suggestions on a Macau gambling ETF that covers that region and industry.THAX

  59. sagemm1

    scottmi how do you get a profile on TOS?

  60. scottmi

    ILMN – new high ground, exceeded fib 161.8% extensions (retracing over previous 2011 peak). No ceiling in sight.

  61. scottmi

    Sage – not all companies have them, but look on the "add simulated trades" page (also on trade tab) over in top right corner. "Company Profile"

  62. sagemm1

    Thanks got it!

  63. Pharmboy

    Don'tcha love biotechs and irrational exhuberance? 

  64. Pharmboy

    ILMN signed a deal with Quest Diagnostics.

    ECYT is up $3…..damn, only had the STO puts…..

    IRWD is getting there.  Yeah!

    SGEN….zoom zoom, out a bit too soon!

  65. scottmi

    RNBWX – sounds familiar:   … Under normal market conditions, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in a portfolio of common stocks, preferred stocks and options (primarily covered calls, cash covered put options and long puts) on those common and preferred stocks. The adviser refers to this strategy as a "buy-write" strategy because, with respect to calls, it buys the underlying security and then writes an option on the security.

  66. phil

    Jack of all trades/Shadow – That's a good an important point.  Not all types of trading suit everyone, the most important thing is to find the kind of thing you are comfortable with and understand well and get good a that before you move on to something else. 

    SHLD/Jbur – You're welcome, That's just Buffett's "being greedy when others are fearful" model. 

    SHLD/8800 – Yes, I love how certain people are on both sides of the line just hours after the numbers come out.

    Speaking of lines – there goes $104 on TLT!  

    $25KP/Rookie – Those are fun, so yes but, of course, a conservative $25KP should be the Butterfly Portfolio.  I'll keep an eye out for small trade ideas.  

    Support/DrC – Sure, it's great to identify a channel and play it until it breaks.  

    ICPT/Albo, Scott – Wow, good thing they didn't have options or my puts would be toast.  Another 300K shares traded already today, now $9Bn in market cap.  Funny thing is, if you owned them for $75 Wednesday and took the money and ran at $250 yesterday, you'd feel like an idiot today at $500.  The float is only 10M of 19M outstanding.  There were 500,000 shares short as of 12/13 – imagine how screwed those guys are with a $215M loss!   Check out FBIOX, who own 1.3M shares of ICPT (their largest shareholder), that $9Bn fund is up 8% this week because of them.  

    ROFL – And the market reverses yet again.  It's getting comical.  

    SHLD/Wombat – There's a reason we cashed that thing.  Situation is about the same as JBur, you need to invest in a roll down.  The 2015 $50s are $4.20 and the 2016 $40s are $10.20 so that costs $6.  The short 2015 $60 calls are $2.75 and the short 2016 $55 calls are $6.10 so + $3.35 and the short 2015 $45 puts are $12 and the short 2016 $40 puts are $15, so + $3 and you actually get a 0.35 net credit for re-positioning to the 2016 $40/55 bull call spread with the short $40 puts – not the worst outcome.  The trick to these things is to take quick action and reposition while the premiums (that you are selling) are still high to reposition for a longer-term bounce.  

    SNDK/Scott – Moore's law is the arch enemy of all chip companies.  Of course, you have to consider that, at CES, your toothbrushes and combs now "need" memory and other chips so volume it will be!  

    In fact, check out this onesie that monitors your baby.  I would have loved this for Maddie, who was a premie and had to be watched carefully.  

    Macau/490 – There's BJK, it's got all the usual suspects but, to me, they're a bit pricey.  

    ILMN/Scott – At least they have a reason:  Illumina to Provide Next-Generation Sequencing (NGS) Technologies to Quest DiagnosticsBusiness Wire(Thu, Jan 9)

    And what Pharm said.  

    Good strategy, Scott.. 

  67. phil

    First $25KP trade is 5 YRCW April $10/15 bull call spreads at $2.10 ($1,050).  It's a bet that they resolve their labor issues and refinance their debt (contingent on the labor) by Feb.  Stop at $1.10 for a $500 risk against a $1,450 potential upside.  

  68. phil

    Speaking of getting rich slowly, from early morning post, in case people missed it: 

    By the way, Craig has set up a database so we can gather info from people who are interested in our Build a Berkshire Workshop Project – we're sending out Accredited Investor Forms this weekend and should have things rolling in 2 weeks so please make sure you are on the list if you want to participate:

    http://better-berkshire.appspot.com/

  69. Investwizard

    Biotech is fun. I suggest newbies shouldn’t get too exciting and commit too much capitals to it. You never know when it would throw you an ‘Aria’ type of curve ball. Anyways, my bio portfolio is profitable. :)

  70. scottmi

    /ZC – corn just made a big move on USDA forecast cut..

  71. shadowfax

    Shaping up as another day of going no where. The good news is this is likely the last, now that was posted and Monday will go the same way to?

  72. drcraig

    Shadow – Looks like an effort to pin to 115. Odd for a weekly expiration. Volume appears on either side of any start to a trend. 

  73. phil

    Cool article on the difficulty of going bionic from BBC Futures, which is often a good read.  

    Biotech/Invest – Like shooting fish in a barrel.  But so were most of those picks from 2010, was so obvious at the time and now it's really hitting the fan with Obamacare coming on-line.  

    Corn/Scott – Maybe good for DBA finally.  

    • The intersection of technology and the automobile industry was on full display this week at the Consumer Electronics Show where a record number of automakers presented.
    • Though the sneak peek at the new gadgetry and the evolution of on-board systems was quite impressive, there's a bit of backlash building on privacy issues.
    • As more mobile devices connect to cars, and Google's Open Automototive Alliance and GM's OnStar system evolve, hyper-local marketing could take off. It's a gray area with few legal precedents, note privacy advocates.
    • A Ford exec probably got a little too fired up at CES earlier this week with this comment: "We know everyone who breaks the law, we know when you're doing it. We have GPS in your car, so we know what you're doing."

    Good note from Barry:

    Even if you had perfect knowledge of the employment situation, understanding the impact is a challenge. Indeed, the weak employment gains this past cycle have not hurt the bull rally in stocks. It has taken quite a long time for many investors to understand that reduced labor costs, greater productivity and ever-increasing efficiency has led to higher earnings. The basic assumptions about “good” or “bad” job reports may not be accurate relative to what equities do over time.

    Last, a relentless emphasis on what just happened — the recency effect — causes you to place a disproportionate emphasis on this month’s NFP. You do it again and again like clockwork every month, more or less ignoring the long data series for the high of the latest single data point. As I mentioned earlier this week, it behooves investors to consider the context of each data point in a series, looking at them as if they were a film, and not a photograph.

    As to this month’s NFP: Maybe it was the weather. Maybe it's noise. Perhaps it’s the end of the expansion and a recession begins . . . Now.

    The problem is you have no idea which of these are true, and you probably cannot even put a decent probabilistic expectation on any of the above. Hence, we are left with merely another data report in a very long series, most of the time, of very little utility.

  74. kinkistyle

    SHLD/Phil:  For the Income Portfolio play, the 2015 30/45 spreads are going for $6.30 while the 2016 spreads are going for $5.60 at the moment.  Since the longer-term spreads are cheaper did you mean to take the 2016 options?

  75. terrapin22

    go Gold!!!  

  76. silentstorm44

    Having problems with Options Express.

  77. Jbur

    Not sure what's going on below the surface, but there's a lot of movement and volume in /ZN and /ZB, both up over 1 point. Big movement in gold as well….. some serious repositioning taking place me thinks.

  78. craigzooka

    If for any reason you cant sign up at better-berkshire.appspot.com, leave a message here and we can send a message to the email you have associated with your PSW account.

  79. BertII

    Pharm / EXEL

    Whats your feeling on EXEL I have sock  a 4.50 and 6.00 jan 14 calls sold at .50 think they are 1 and done or roll calls nice premium in Aug  7 and 8 strikes

  80. shadowfax

    Phil Barry makes good points. I do think that if the jobs numbers are adjusted it will be up but not to expectations, 1.3 million without any income, and weak holiday sales which is the consumer buying binge of the year, the three will result in many missed earnings, slower production, decreased orders, and that will effect stock prices. It takes three sticks to be out and that is three strikes against higher stock prices.

    This has nothing to do with fed taper on or off and we all know that is the stock gospel word.

  81. yodi

    Hi Craig just send message to email thks

  82. reinharden

    On a drive by as I take 5 minutes to respond to one thing:

    Phil, you said:
    "We have twice as many children living in poverty as the rest of the OECD – I'm not even going to get into this as there's really no point in having a discussion with someone who doesn't feel that needs to be addressed."

    Phil, love you though I do, you're being an idiot.  Because I disagree with you on a particular thing (the impact that raising the minimum wage will have on "poverty"), I must therefore be evil ("not care about poverty").

    The OECD study you cite uses a "relative poverty level".  If you only raise the minimum wage, other wages climb in response, and the relative levels are unchanged.  Spend some time reading something as simple as <http://en.wikipedia.org/wiki/Poverty_in_the_United_States&gt; and you'll quickly discover that "poverty" is not a simple metric.

    I'm an engineer at heart.  One measures (and achieves) success by having clear, concrete, measurable, and attainable goals.

    Your goal, apparently, is simply to raise the minimum wage, declare success, and move on.  I'd actually like to do something about poverty and suffering.

    My entire professional career has been dedicated to the concept that the Internet will enable better communications, better education, and that knowledge will help lift people from poverty.  If for no other reason than the fact that my family now lives in Searcy County, Arkansas — the 58th poorest county in the *country* by median household income.

    Anyway, I disagree with the means, not the motive.

    ?Now, while you sit here on your thrown pontificating about my lack of desire to address poverty, I'm leaving for my 3 PM meeting to try and convince the Congressional Research Service that there's such a thing as a "digital divide" and that we'd better enable the youth in urban DC to lift themselves from poverty if they had access to technology before they get to high school.  I could be wrong about my approach.  But I'm not going to stop trying.

    reinharden

  83. shadowfax

    craig I can't sign up 3rd try. Maybe can't do more than input but really want to know what happens this time around.

  84. Pharmboy

    EXEL/bert…..let it go.  Do a BCS to reduce the losses JIC.

    Barry:  It has taken quite a long time for many investors to understand that reduced labor costs, greater productivity and ever-increasing efficiency has led to higher earnings. The basic assumptions about “good” or “bad” job reports may not be accurate relative to what equities do over time.

    Um, and reduce your float by 20% which also improves earnings.  Come on….many S&P/DOW companies raised debt levels to buy back shares.  When you pay 1.67% on 7 yr loan, then why not.

  85. livingfull

    CORN   MA on the chart is just below $.4.30…….we need a break out above….and then hold….very close!

  86. johnO

    Craig – Better-Berkshire.appspot.com

    I like info as well.  Could tell if my registration took.

  87. shadowfax

    reinharden poverty

    Neither Phil or myself have ever indicated simplicity unless you take the distribution of income is not fair. The profit corporations are gathering must go to more than the CEO and a few managers. All wage earners must get a much bigger chunk that now only goes to the top. Then why do we have regressive taxes in this country and why are the top getting most of the subsidies. It is a very big problem and unaddressed the 1930s will revisit.

  88. BertII

    THX  PHARM

    actually worked it back to a 150.00 profit if I let them pull it next week

  89. scottmi

    SHLD/Kinki – I put in an order for the 2015 spread at $6 and it filled with a dip.

  90. albo

    Had a few shares of MNKD, at a loss, I might add.  Sold them yesterday at $7.15.  Just bought'em back at $6.06 and sold the May 7 calls for $1.76.  Isn't that slick ?  Will probably lose my you-know-what.

  91. livingfull

    Panama Canal Expansion…….trouble in paradise.  Will affect macro trade routes……worth watching what solutions surface.   Money and engineering are not the only issue.  The new locks will not be operated with "Mules" …the little trains that pull the ships into the locks.  The new locks will require tugboats to control the ship's position while the locks fill and empty.  Very very difficult to execute and the reason Mules were chosen instead of tugs in 1914.

    http://www.maritime-executive.com/article/Panama-Canal-Refuses-to-Pay-1B-More-for-Expansion-Work-2014-01-09/

  92. Pharmboy

    Bert – EXEL – I would buy the Aug 7-9 BCS and sell some short puts along the way, in small amounts to pay for these.  Data are due out 'this year', so most likely in Feb or June.  Calls are active in Feb and Aug, so …. be wary and protect your profit.

  93. phil

    TSLA upgrading wall adaptors after that garage fire that had "nothing to do with their wall adaptor."  Their credibility is shot because Musk keeps making these reflexive, absolute statements whenever they have a problem.  The next incident will likely give them a nasty shock.

    • Tesla Motors (TSLA -3%) says it will upgrade wall charger adapter units to current customers in order to provide another layer of protection against fires related to the charging process.
    • The new charger will have an automatic shut-off in the case of over-heating.
    • Shares of Tesla are skittish today with the fire issue teed up again despite the automaker providing what might be considered a remedy.

    SHLD/Kinki – I actually wanted the 2015s because, if they spike back like they did in early 2012, the 2016s won't be able to take advantage of it the way 2015s will.  If not, we can always roll the long calls back.  

    Gold touched $1,249.  That puts ABX over $18 again.  

    Options Express/Silent – I used to find they would crash right before the market.  

    Thanks Craig. 

    Strikes/Shadow – I'm trying to remain objective into earnings.  

    Evil/Rein – Did I say that?  No, I didn't, so not a fair characterization.  I think you are WRONG to pick holes in studies and defend the actions of Wal-Mart, of all the unholy things in the World, when there are HUNDREDS of studies, statistics, etc that clearly show that income disparity in the US and poverty in the US is more akin to a 3rd World banana republic than the other OECD nations.  The very wiki entry you site says 16% of the US population live in poverty, including 20% of the children.  20%, to be clear – is one out of 5.  

    Poverty, is not having $22,000 for an average family of 3 in America and if you want to talk about "relative poverty" first spend a year with your family living on $22,000 in the United States and then tell me how well off you are compared to other poor people!  Minimum wage is $7.50 for an average of 35 hours a week, that's $13,125 a year less 20% Federal and State taxes is $10,500 – that means that even if both parents work (and leave their child unattended or in the magical free day care or after-school program) – they are still in poverty!  

    At least, when we had slaves, the masters had to feed, shelter and clothe them.  In fact, the masters used to also provide job training and english lessons – luxury compared to what a minimum wage worker endures in America, as they have to go into debt to get a college education and then can end up in a job that doesn't pay them enough to cover their basic expenses while the interest piles up on them.    So, again, all I'm saying is THAT is a serious problem and "there's really no point in having a discussion with someone who doesn't feel that needs to be addressed."

    They seem determined to print a pretty picture for Friday's close.  

    By the way, our 313M population is growing at 0.7%, which is 2.2M people a year so any month we DON'T ADD 200,000 jobs means there are more unemployed people.  We haven't added more than 200,000 jobs since 2007!  

  94. advill

    Apple in H.K today:

    http://tech.fortune.cnn.com/2014/01/10/apple-china-red-sale/

  95. albo

    A/D line a lot stronger than the averages would suggest.

  96. shadowfax

    At this point I agree not worth discussing. I tried very hard to show more to it but the WMT state runs like a plow horse. Blinders to keep labor in line.

  97. advill

    Rein/Phil/ Poverty;

     

    I live in a strange way, part of the year in McAllen TX. which is one of the poorest or perhaps the poorest county in U.S, and rest of the year in Europe in Spain, Barcelona, I can understand the perverse effect of excessive protection of the State to people (Europe) and can´t understand the opposite in U.S. where a broken leg could mean  that you declare bankrupt (as is quite common in McAllen).

    U.S salaries as a whole part of the economy are quite lower than rest of OECD  real 1st. world countries (except Mexico, Turkey etc), you can´t have a economy base in consumption if salaries are not at least 15% total economy, exporting and keeping salaries low is a temporal solution, is non sustainable, and I´m not touching minimum yet which in U.S is the lowest of advanced economies.

  98. shadowfax

    advill

    The 1930s proved trickle up dose exist, some very rich people went broke, and very very few survived with their wealth. This country is determined to repeat history and reinharden thinks he will be one of the last winners in the game. Somehow I hope he doesn't exit like gel. Debate is good!

  99. pwright72

    phil re: YCRW bull call spread for $25KP I notice can sell Feb 2014 20 calls at about $1.00, so $5 between the top of the BCS and this short call, can make $1000 in income by Feb if you own 10, what do you think?

    Thanks

  100. Pharmboy

    Most likely the next leg up, so going long on SPY.  Feb 186s.  Staring with 5 contracts.

  101. Pharmboy

    For 18c, the SPY Jan 184/185/186 butterfly is a nice one ….

  102. shadowfax

    The downward channel has not been broken.

  103. mrmocha

    ISRG – wow!  Wish I had more of that one…

  104. zeroxzero

    advill:  Interesting juxtaposition of residences. I don't suppose you get much of a chance to practice your Catala in McAllen. I spent 8 years in Sarria before moving, 7 years ago, to a place poorer than your Texas domicile.  It is a bit of a head twister.

  105. shadowfax

    zeroxzero

    Poverty is all over America and in unexpected places. You were in SLC, drive south from city center, nothing like the temple on the hill.

  106. phil

    Panama/Living – Talk about penny-wise and pound foolish!  

    LOL Advill – who was it here who said Chinese people won't be buying AAPL products:

    411057743755

    McAllen/Advill – Yikes, not by choice, I imagine…

    YRCW/Pwright – While it is amazingly unlikely that they will get back to $20 in such a short order, it's not a risk you'd take in a small portfolio (even if not precluded by margin).  If you want to be aggressive, I'd risk 5, not 10 (to 5 of the long spreads) and I'd stop out 2 at $1.50 and 2 at $2 – just in case.  

    SPY/Pharm – On the whole, we're just stuck back at the same top over and over this week.  Maybe we're consolidating for a breakout but I still would rather see proof first.  

    ISRG/MrM – That's why I always pick them when they are down.  I wonder if Seeking Alpha will call as much attention to this article as they do to the ones that people get right?

    BTW – Albo made a great call on them just yesterday in Optrader's chat – nice job Albo!  My last one was from 12/10:

    • Our other new trade idea from the weekend post (so far, still not finished, but still playable) was 10 SSO March $92/97 bull call spreads at $3.20 ($3,200) offset by the sale of 5 ISRG April $300 puts, now $5, for a $2,500 credit for a net of $700 and an upside potential of $3,300 (471% on cash).  

    SSO is now $101.70 and the spread is net $4 ($4,000) and the short ISRGs are $2.40 ($1,200) for net $2,800 – up 300% already.  

    Dow didn't quite make it green but the rest are up nicely – what a show!!!  

    Have a great weekend, 

    - Phil

  107. Winston

    Rookie/ The Terribly Irresponsible (but delicious) 25k portfolio

    Sell Mar 14 PCLN 925 put for $5.20

    Sell Mar 14 AAPL 605 call for $5.05

    Sell Mar 14 TSLA 120 put for $4.85

    Sell May 14 BA 150 call for $3.55 (at $150 BA is betting on Airbus going bankrupt) 

    Sell Jul 14 AMZN 525 call for $3.50

    Sell Jan 15 AAPL 335 put for $3.35

    About $25k for 10 contracts of each. You are the casino. You make your target cash the moment all trades have filled.

    Questions that need to be asked:

    Margin
    Temperament
    Patience
    Zen master

    Above competencies required.

    When I started writing this post my tongue was firmly in my cheek. No longer. Check current prices of the above stocks and the margin of error – certainly worth contemplating. The put/call/put/call combination means you would be the unluckiest being alive if all the trades went against you.

  108. phil

    LOL Winston – you're on your own with that one!  

  109. yodi

    Phil I like that remark have a nice week end

    LOL Winston – you're on your own with that one! 

  110. Winston

    Phil/Making money – there is no pleasing some people. So let's try this one. The one trade, remember you heard it here first $25k portfolio:

    Sell the Jul 14 ABX 17/21 strangle for $2.36. 100 contracts gets you $23,600.

  111. palotay

    Phil – Just saw your butterfly portfolio comment.  Wanted to say that I'm following it, and boring is good.  Please keep focusing on it.  Thx

  112. mrmocha

    PAL - we were discussing earlier this week, but this article paints a very negative picture of the financial state, be careful.

  113. reinharden

    Since I saw it mentioned above; naw, I'm not going anywhere.

    But it's frustrating to have people ascribe other motivations to one simply because one disagrees with something they've said (evil seemed a reasonable shorthand for my alleged attempts to bring American children to Somalia's standards of living) .  And, as I said, I had (unpaid) things to do today that actually focus on helping address some of the problems.

    For what it's worth, hours spent answering questions for staff at the Congressional Research Service is often just as frustrating — lots of them have their own agendas and work hard to only consider data that supports it.

    But, to return to "relative poverty".  Does anyone really believe that in 2012 California was "the poorest state in the nation" with 23.5% living below the poverty line?  And that Californians are worse off than every industrialized country in the world except Romania?  Or, perhaps, is there a problem with the metric?

    Also, the 2011 metric said California had a poverty rate of 16.3%  The metric was changed.  And in 2012, 50% more people were below the new-improved poverty line.  Did California change that drastically that year?  [Reality is usually in the middle -- the old metric probably under-measured and the new metric probably over measures, but that's just my opinion...]

    Poverty is a problem.  But, unlike pornography ("I'll know it when I see it"), to defeat it systemically, you need to understand what you're trying to defeat.

    California's poverty numbers are cloudy.  Napa is the second "poorest" county in the state (behind Los Angeles county which is probably much closer to reality).

    Personally, I'd also argue that the Earned Income Tax Credit is a more effective mechanism for fighting poverty than simply raising the minimum wage.  I'll also reiterate my perspective that to make a minimum wage effective it should be raised to its previous 1968 high buying power of $10.whatever and it should be indexed to inflation (and the BLS shouldn't lie about inflation).

    But none of that matters — 'cause I've tossed the babies over to Somalia.

    reinharden

    PS: And I would argue that there is a moral imperative for the human species to attempt to reduce suffering and starvation around the world, not just at home.  But we can talk about "food security" as a metric some other time.

  114. jfawcett

    SHLD – WOW!

  115. jfawcett

    SHLD – I have a minimal entry on a JAN16 30 Short Put.  Let's see if SHLD can make it to 30 which is the 2011 lows.

  116. wombat

    Winston //
    Thanks – some of those are interesting. I found the PCLN and AMZN just not worth the margin ( don't know how you'd do it on a 25K )
    I particularly like the ABX strangle, but wanted to clarify – you're writing about selling a strangle ( short strangle ) In this case selling the 21 calls and selling the 17 ? ABX is due for a run this year IMHO. Also – why July ?

  117. Pharmboy

    Picture says it all…..zoom zoom. QE forever.  WE ARE JAPAN!

  118. Winston

    Wombat/ABX – yes, selling the July strangle – 17 puts/21 calls. Why July? I realise a certain percentage (don't ask me how much) of my trading decisions are based on intuition. You know that moment when you sit in front of the screen, see something that kind of jumps out, perhaps for no particular reason, and you realise it was your left brain/right brain subconscious receptors coming together far beyond your ability to rationalize it (intelligent people often refer to it as 'stupidity' :) . I am in a period where the split of good/bad decisions is about 50/50. So I think with enough wiggle room and compensation in the form of sold premium with the July series of strikes, I can allow for some initial weakness after I put on the trade, some upwards momentum, pause for breath around  $20, sell in May effect, and slow grind to in the early summer months to July expiration. I know it sounds crazy, but it seems to have evolved into an element of my trading/investing style. This approach means I never have to be constrained by the need to be right. No need to be defensive – and that kind of frees up my mind to contemplate all kinds of possibilities. Of course, the majority of my thought process when it comes to options trading are shaped by the ideas and exchanges on this board. A rich source. That is why I love it when people come with their own ideas, challenge and be challenged by Phil and others on the board, stir up the mix, and give myself a load of time to reflect. It ain't broke yet, so I don't need to fix it. It will break, as all patterns do, but hopefully I have the maturity to go for a trading style change when necessary.

  119. stjeanluc

    Full court press from the Fed next week!

  120. stjeanluc

    Finally cleared that p-bar on the Russell. Hopefully the NYSE is next because it's messing our chart.

    In any case, still in a plateau here.

  121. stjeanluc

    Good article on gold from Barry:

    http://www.bloomberg.com/news/2014-01-07/10-reasons-the-gold-bugs-lost-their-shirts.html

    Money quote:

    Gold is marketed through a combination of fear and dishonesty. (As opposed to various equity products, which are marketed through a combination of hope and dishonesty).

  122. stjeanluc

    Sometimes the simplest system works best:

    http://systematicrelativestrength.com/2014/01/09/price-persistence-at-asset-class-level/

    While even academics now acknowledge the existence of a “price persistence” effect at the stock and industry group level, it is less well known that the phenomenon exists at the broad asset class level.  We’ve examined a few simple approaches in which allocation decisions are based purely on the prior year’s total return performance of seven asset classes: Large Caps, Small Caps, Foreign Stocks, REITs, Commodities, Gold and U.S. Treasury Bonds.  Contrarians might be surprised to learn that a turnaround strategy of buying last year’s laggards (the #5, #6 and #7 performers), has been a consistently poor approach for the last 40 years.  Meanwhile, a naive, momentum-surfing strategy of buying last year’s #1 or #2 performer (or both) has soundly beaten the S&P 500 since 1973.  (We suspect these results are especially humbling to those who spend the rest of the year building and monitoring elaborate tools that track valuations, the economic cycle, investor sentiment, etc.)

  123. qcmike

    stjeanluc 
    January 11th, 2014 at 10:31 am | Permalink | Tweet thisIgnore this user

    Sometimes the simplest system works best:

    Interesting do you know what were the # 1 and 2 classes for 2013?

    Thanks

  124. qcmike

    Recall: 2014 Chevrolet Silverado, GMC Sierra for engine fires

    http://editorial.autos.msn.com/blogs/post--recall-2014-chevrolet-silverado-gmc-sierra-for-engine-fires?icid=autos_5158

  125. stjeanluc

    Here you go qcmike:

    http://www.bespokeinvest.com/thinkbig/2013/12/31/2013-asset-class-performance.html

    Not perfect, but good enough I would think. Looks like Small Caps took #1. And since Gold, Treasuries, Commodities and Foreign Stocks didn't do so well, that leave Large Caps as #2. So I guess US Equities would still be the way to go in 2014. 

    BTW, the study mentions that this works by sector as well so Consumer Discretionary and Health care might narrow the choices even more.

  126. stjeanluc

    You have to love the New Yorker… 

  127. reinharden

    I'll reiterate my earlier question:

    Does anyone have any thoughts on the Santander Consumer USA IPO?

     

    I ask partially because, if one desired to get shares at the IPO price, I think one would almost certainly be able to do so through Loyal3.com — which was given a 2% allocation of the $1.5 billion IPO.

    Loyal3.com is limiting people to a maximum of $10k.  Which means that if everyone got the full $10k, they'd only have enough for 3,000 people.  But I'm not sure how many people would be taking advantage of it.  Neither Loyal3 nor Santander Consumer USA are exactly amongst the most famous companies in the world.

    reinharden

  128. wombat

    Winston // ABX
    I think that was the best explanation of cognitive balancing I have ever heard. I don't call it 'stupidity' but instinct, subconsciously built by years and years of input, 99% of which you haven't even processed yet. There is a very interesting book that I recall "The Theory of Love' and it makes a clear distinction between implicit and explicit memory. Explicit being what you can consciously recall at will, and the remainder 'implicit', that which is in the background but untethered to any particular 'nets'.
    Anywho, they did a very interesting experiment here at UCSF where they give three groups ( one a control ) reams of data every morning and had them predict the weather for the following week. They complained because it was 'impossible to interpret', yet each week they would get better and better simply by letting the brain absorb what it was looking at. They were making implicit decisions.
    The problem with that in the market for me, is I am too implicit and need more discipline around mechanics. I've lost most of my money on things that to me were so logical they were laughable and they would go the complete opposite way. In hindsight there are many other forces at work that I haven't had any exposure.
    I also find the board a touchstone, particularly Phils advice when I get in a hole. I follow about 40% of the trades and often take my own route by what you've just described ( and saved myself some real headaches honestly ) For example, I placed 3 of your trades simply because I thought they were clear.

    Phil // For example
    Thanks for the help on SHLD. I know you cashed ou ton this but this was in my LTP. I never though it would drop this low and I got a really good price on the short puts ( $15 ) so I was by no means worried. It got to a point where it just wasn't worth waiting around for the cash. I applied your roll-down because I believe the valuation, but why would Lampert want to trash the retail numbers to dish off the property. A functional retial outlet seems a lot more attractive than abandoned stores, unless you think its a pure REIT play.
    Anyway, been really busy with the kids and the wife got a new job so it looks like were stain in SF for a while. She's two degrees from Hillary – should be interesting. She makes the money and I lose it : >

  129. wombat

    PSW // BTU
    Germany ranks 5th in world GDP and is one of the world’s largest energy consumers. A few years ago Germany vowed to "go green" and even went so far to start shutting down their nuclear power plants. Their stated goal is to be 100% "green". Nearly 1/3rd of Germany’s electrical power had came from nuclear plants. After Fukushima in 2011, Germany has been shutting down those plants. 
    The first big milestone was promised to be 35% green by 2020. By 2011 Germans had cut nuclear power in half, and by 2022 they plan to shut down all the nuclear production.
    They’ve begun a large scale buildout of solar power, in a country that does not have a sunny climate.
    The politicians are promising citizens Germany will have a renewable energy competitive advantage, as the rest of the world has been too slow in adopting green technologies.
    Keep in mind all of this was done for one reason – to reduce CO2 emissions. So far the price of electricity in Germany has skyrocketed. Citizens are getting angry over their energy bills.
    It’s cold in Germany. In fact there’s been no "global warming" in Germany. The 25 year temperature trend has been cooling.
    For Germans the quality of life has been decreasing because it’s getting colder and keeping warm has been getting more expensive – very expensive.
    Germans are paying some of the highest electrical bills in the world. About the only places paying more are undeveloped nations like Tonga or Solomon Islands.
    Germans pay about 3x more than Americans. If you live in American think about the impact of your energy bill tripling.
    Due to the drop in nuclear power, Germany has to burn more coal. Coal is replacing nuclear. This has been causing an increase in CO2 emissions, the exact opposite of what the Germans intended.
    We saw this exact thing in America. The anti-nuclear movement of the '70s had the unintended consequence of increasing the use of coal.
    Burning coal in Germany is at it’s highest level since 1990.
    Coal now provides nearly half of their power, and it’s continuing to grow.
    The dramatic rise in the use of coal is directly related to their "go green" policy and most of all by shutting down nuclear power production.
    The results of going green is more CO2 and much more expensive energy (lowering the quality of life).
    Last month, wind and solar production in Germany stopped. It completely shut down! One million solar panels and 23,000 wind turbines were dead, due to the weather. And it’s not like you would expect in a world that’s suppose to be facing global warming. 
    Instead of sunny days, Germany was faced with high fog that blanketed the country. To make up for this they have to fall back to coal, gas, and nuclear. For one week last month 95% of their electricity came from these "bad" sources.
    Coal is increasing around the world. The big user is China. They’re sitting on a huge stock pile of coal, and have every intention of burning it.
    China is already the largest source of CO2 emissions. China is a rapidly growing economy, and needs more energy. This is different from countries like Germany or the USA, where we are not growing. Our energy needs is a question of replacing one form for another.
    China isn’t replacing energy sources – they’re growing. They need more, much more. They’re going to be using more coal than perhaps the entire world combined.
    Meanwhile American’s have actually been reducing CO2 output, but the environmentalists hate that too. The reason we’re lower is because our electrical power has been switching from coal to natural gas. We get that gas from fracking.
    By cutting nuclear power in half, the International Energy Agency has predicted a 30% global increase in CO2.
    For those concerned about rising CO2 levels, we’re moving in the wrong direction even faster now. Nuclear plants are being replaced with coal.
    Global demand for energy is rising much faster than renewable energies can provide. Anyone that is serious about lowering CO2 emissions must conclude we need more nuclear power.
    By the end of this decade, coal is expected to be the world's dominate source of energy – oil. Despite more than $2 trillion of investments in "green" energies, there’s been no reduction in CO2 emissions. There’s frankly no chance we’ll reduce CO2, unless we increase fracking and go nuclear.
    invest in bottle water ? Go KO ?

     

  130. kinkistyle

    shld/wombat: lampert gets paid in SHLD shares based on price, so the theory is he tanks the price before payday every year in order to accumulate shares before he decides to liquidate the retail business

  131. wombat

    kinki // ya
    thats what i don't understand – i knew that he gets paid in like 70% of SHLD shares, so why would he want to tank the company ? Is it just irrelevant to him in lieu of the real estate value ?

  132. kinkistyle

    wombat: lord knows…  The bond price seem to be holding steady and sentiment is incredibly crappy.  Eddie might genuinely want to try and give a shot at turning this around before throwing it in and mining the R.E. value.

  133. kinkistyle

    wombat:  Oh BTW he gets paid $4.5M worth of shares based on the price on Feb.1.  So basically the lower the price, the more shares he gets.  I don't think he's tanking the company (it was already tanking) more than he'd like the share price to tank so he can accumulate at or under what he perceives to be the book value.

    I can't really believe there's anybody left in the shares who still thinks a turnaround is possible is left in the stock.  I think its just us strong hands who think Lampert isn't insane.

  134. jfawcett

    YRCW – Just an opinion…  That falling knife dropped right through support at 14 and only stopped and bounced off the 50dma at 12.  Big support at 8.  This trucking company is in trouble with their teamsters and debt issues.  Quick look at the bid/ask (1.00/16.90) tells me no participation.  EPS: -13, Estimates for next year are greater than a -10 EPS.  Seems like this stock is one to stay away from.  Obviously better trades and long term investments out there than this trucking company.   BTW…  I write this as I walk through my own analysis… just trying to learn to do that on everything I look at.

  135. qcmike

    stjeanluc 

     

    Thanks

  136. yodi

    ~~MY take on Winston’s ABX trade. The first multi trade I guess Phil commented on.
    In principal the Jul14 17/21 (p/c) credit strangle could have some Flaws.  First the sale of 100 options could be suicide. Why? there is never a 100% sure trade.!!!  Second in one year 2013 the stock traded between 35 and 13 dollars. So being  at 18 now it could go anywhere.  Six month out is a long way to hang!!!!
    But give Winston some credit. So for a gambler like myself I would say sell 3x or 5x max. the 16/22 strangles for a credit of 1.74 gives me a credit of 826.00 with a present PM margin of 473.00 or 174%.  Not putting all your eggs in one basket you look for 10 different trades with other stocks and it will look like a 8K return per month.
    Further looking at ABX going below 15$ would be acceptable to be assigned but not a 100 options!
    Going over 22 call could be covered by a BCS if you do not have the same already in place.

  137. Pharmboy

    All:  My new post. 

    Have a great Sunday.

    - Pharm

  138. phil

    Hey guys! 

    Went skiing for the weekend, got back later than I thought. 

    Looks like Futures opening flattish so far but gold zoomed up to $1,250 with Dollar back below 81 at 80.71 -about the same as Friday's lows. 

    Big Chart far from conclusive but it is bullish still.  Over 1,850 on S&P is going to be very bullish and we'll have to think more about the Dow catching up then the others getting pulled down.  Transports popped last week, so the Dow could follow them – we just need some good earnings.  

    Santander/Rein – It looks like they are raising $1.5Bn and giving themselves and $8.5Bn valuation.  They mostly do auto loans and are 65% owned by SAN, which isn't a negative except they may eventually sell some to raise cash.  They locked up a preferred lender status for Chrysler but I don't think that includes Mercedes.  I don't think it's an unfair valuation (at $22-25) but I wouldn't chase it as auto loans are still risky and this stock can really get hammered if we have another crisis.   If you can get the pre-price allocation and flip it on the early pop – why not? 

    SHLD/Wombat – I think Lambert wants to kill Sears before he carves it up so it won't make him look like the bad man who destroyed an American Icon. 

    BTU/Wombat – It depends how seriously our leaders are taking CO2 issues.  China is moving to limit coal, more so because their local pollution is out of control vs. their concern for the planet.  Clearly from the way BTU and others in the sector (KOL) are getting hammered, there are very few who share the turnaround view but, if I were going to play it, BTU would be my choice.   I think $17.50 is a good floor and you can play them not to die with the 2016 $15 short puts at $2.75 and the $15/22 bull call spread is $2.80 so it's net .05 on the $7 spread.  I wouldn't risk much but it's a fun bet with a lot of return potential.  

    Tanking/Wombat – In theory, he drops the stock price so he gets 125,000 shares at $35 instead of 69,000 shares at $65 for compensation.  It is a bit coincidental in timing and pathetic that his contract is written in Dollars instead of shares, which would align his interests with the shareholders.  

    YRCW/Jfaw – It's just a negotiation.  See the other 5 times YRCW tanked ahead of debt refinancing or labor negotiations…  Maybe this time is different, maybe not but I was sad they were getting away over $20 and this is a nice chance to take another poke at them. 

    Thanks Pharm, great post as always.  

  139. drcraig

    This week's action has ingrained an important lesson- trade what you see, not what you think. 

    Now having said that, when you compare a daily chart of the S&P and TLT, we see stock prices rising in the face of money flowing into bonds. That would seem to portend a big pullback, no? The informed money is betting on poor earnings by jumping into bonds. On the other hand, poor earnings might convince the fed to reverse course on the taper, thus keeping asset prices on track higher. What an effed up manipulated market this is!

  140. phil

    Sent from Bloomberg for iPad

    Watch this video at http://bloomberg.com/share/video/1lUvgMHqQpWtFeD$esBWJg

    El-Erian: Jobs Report Puzzling, Worrisome, Shocker
    Jan. 10: Mohamed El-Erian, CEO and co-CIO at Pimco, examines the December U.S. jobs report on Bloomberg Television’s “In The Loop.”

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  141. phil

    From Bloomberg, Jan 12, 2014, 4:00:00 PM

    Hedge funds cut their bullish
    commodity wagers by the most in seven weeks before prices
    dropped to an eight-month low on signs of surplus supply and
    slowing economic growth in China.

    To read the entire article, go to http://www.bloomberg.com/news/2014-01-12/bullish-bets-fell-most-in-seven-weeks-before-slump-commodities.html
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  142. dclark41

    Phil/ skiing

    Where did you go and how was the snow?  Planning Breckenridge in early March.

  143. zeroxzero

    Given the year-on-year bullishness of equity markets, both members and moderator on this site have asked where the marginal buyer can be found as these levels.  It seems that, theoretically and arithmetically, there is still reason for hope: 

     

    ""As early as 1950, Enrico Fermi asked "Where is everybody? – the Fermi-Hart paradox. He noted that there are many suns billions of years older than ours, that life should have evolved on planets around those suns, and that – if interstellar travel is possible – aliens should have developed it billions of years ago, should have colonized the galaxy within a million years or so and hence we should be hip deep in interstellar travelers. So where are they?."

  144. jfawcett

    LULU — Lower guidance.  Let's see sub 50.

  145. phil

    Good morning!

    Down about 0.25% at the open but oil tumbling below $92 at the moment.  

    Skiing/DC  - Was at Hunter, very slushy as it got too warm and rained.   Haven't been out west this year.  I will say I like Keystone better than Breckenridge over there.  And Vail, of course (worth a drive from that area for a change of pace day of skiing).  

    Fermi/ZZ – Unfortunately, the probable answer to that paradox is that very few civilizations survive that long and, even if there were millions of them, between interstellar distances and the size of the universe, a civilization would have to last for 100,000 years to be even a noticeable blip and it still could have risen and fallen long before we ever crawled out of the sea (perhaps a long time ago, in a Galaxy far, far away…). 

    LULU/Jfaw – I doubt they hit $50 but back to $55 no problem, that was our target from 12/20 and the entry I like is the short 2016 $50 puts, which were $7.50 on Friday and should hit $10 on a nice dip.  

  146. scottmi

    Brief shipping report for last week. Says avg daily time charter rates down 48% in the week

    http://m.blubrry.com/shipping/

  147. phil

    So, what's going on in this universe? 

    India had a nice day, up 1.8% and that helped all of Asia, though they ended up mixed.  Nikkei up 0.2% (but /NKD down 1.5%!), Hang Seng up 0.2%, Shanghai down 0.2%, Singapore down 0.25%. 

    China Peer-to-Peer Loan Sites Fail as Fraud Climbs, Xinhua Says. Some Chinese peer-to-peer lending websites collapsed last year and others may need restructuring in 2014 to curb fraud in an industry that has grown rapidly with little regulatory oversight, Xinhua News Agency said. About 800 such online operations emerged in China just last year with outstanding loans of 26.8 billion yuan ($4.4 billion), Xinhua reported, citing industry data from Wangdaizhijia.com, China’s biggest peer-to-peer lending site. Meanwhile, 74 websites were either shut down or their users were unable to withdraw cash, according to the report. ?

    China's Peer-To-Peer Lending Bubble Bursts As Up To 90% Of Companies Expected To Default.

    Beijing Tourists Drop on Global Economy, Pollution. Tourists visiting the Chinese capital dropped "sharply" because of a weak global economy, strong yuan and the city's pollution problems, citing a Beijing Tourism Development Commission report. Jan.-Nov. visitors declined -10.3% y/y to 4.2m, the newspaper said.

     

    Rebar Falls as Steelmaker Cuts Prices on Weaker Demand.

    Fed-Fueled Inflation May Cost India’s Congress, Ex-Minister Says. Indian Prime Minister Manmohan Singh’s ruling party would lose a national election if it were held today because of voter anger over the highest inflation in Asia, a former member of his cabinet said. “On inflation I have no defense to offer — none,” Aiyar, a lawmaker and senior party member, said in a Jan. 9 interview at his New Delhi home. “If there were an election today, we would do very badly.”

    Thailand Is Heading Towards A Civil War.

    Zegna Sees Luxury Revenue Growth Under Pressure Until Mid-2014Ermenegildo Zegna said he expects revenue growth at the namesake luxury goods maker will remain under pressure for at least another six months as demand moderates in China and the yen’s weakness persists.

    FXE WEEKLYEurope opened up half a point but faded to barely positive into lunch.  Only FTSE actually red but the trend is no one's friend over there. 

    There Are Much Bigger Problems In Turkey That Could Derail Its Alliance With America.

    Basel Regulators Ease Leverage-Ratio Rule for BanksGlobal regulators diluted a planned debt limit for banks amid warnings that the measure would penalize low-risk financial activities and curtail lending. The measure, known as a leverage ratio, was adjusted after “thoroughly analyzing bank data,” the Basel Committee on Banking Supervision said in a statement following a meeting of regulators in Basel, Switzerland, yesterday. The group also modified a liquidity rule to make it easier to count a certain type of central bank loan against regulatory standards.

    Bond Rally Gives Italy Free Pass Skirting Reforms: Euro CreditEurope’s periphery-nation bond rally is giving Italy a free pass, raising concern that the pressure for reforms will dissipate

    RUT WEEKLYOur Futures are still down about 0.35% now.  Still, the VIX finished Friday at 12.14 so no worry there, though TLT jammed up to 104.40, which is panic compared to where we were.  Strange days indeed….

    Fed Seen Sticking to Gradual Tapering Plan After Payrolls MissThe Federal Reserve will stick to its plan for a gradual reduction in bond purchases, economists said after a government report showed that U.S. employment rose at the slowest pace in three years in December. The Fed will reduce purchases by $10 billion at each of the next six meetings this year before ending the program in October, according to the median forecasts of 42 economists in a Bloomberg survey.

    Volatility could come back big-time—here's why. (video) "There's definitely a different tone in the market this year as compared to last year," Peter Boockvar, chief market analyst at the Lindsey Group, said Friday. "We got a disappointing jobs number, but people still think the Fed is going to taper, despite an uneven recovery."

    Did Goldman(GS) Just Kill The Music? – "The S&P500 Is Now Overvalued By Almost Any Measure".

    "All Yours Janet": JPM Warns Fed About Using "Arguably Flawed Statistics".

    From Non-GAAP To Non-Sense: David Stockman Slams The "Earnings Ex-Items" Smoke-Screen.

     

    5 Things To Ponder: Markets, Valuations & Investing.

    People Not In Labor Force Soar To Record 91.8 Million; Participation Rate Plunges To 1978 Levels. (graph)

    Meet "Smart Restaurant": The Minimum-Wage-Crushing, Burger-Flipping Robot.  The “labor savings allow a restaurant to spend approximately twice as much on high quality ingredients and the gourmet cooking techniques make the ingredients taste that much better.” Hear that?  Without all those cumbersome human workers, your hamburger will be twice as good. For the same cost.

    Bonds Captivate $16 Trillion of Pensions Seen Unloading Equities. Bond buyers stung by the first losses in more than a decade can look to pension funds from companies such as Ford Motor Co. (F) for a measure of redemption. “Companies are now getting on the bandwagon,” Ford Treasurer Neil Schloss said in a Jan. 9 telephone interview from the company’s headquarters in Dearborn, Michigan. U.S. pensions, which control $16 trillion, shifted out of equities and into bonds in the third quarter at the fastest rate since 2008, latest data compiled by the Federal Reserve show.

    The Great Buyback Surge Is Over: Corporations Are Once Again Net Sellers Of Shares.

    US subprime car loans return with a bangSales of risky pools of securities backed by car loans are accelerating at the start of 2014 as investors snatch up the higher-yielding bonds that were popular in the build-up to the financial crisis. This week alone, about $2bn in deals that bundle car loans made to subprime borrowers have hit the US debt capital markets, following a 20 per cent jump last year to $21.5bn. Demand for the securities is forecast to increase further in 2014, helping push sales to the $25bn mark, according to Deutsche Bank estimates.

    HFT Scourge Exposed (Again): Options Quote Spam At The Open Has Quadrupled In 3 Years.

    America's Big Bank Earnings Announcements Will Be Highlighted By Tumbling Revenue.

    ‘Impeachment’? Dems escalate NJ bridge probe, while some defend Christie. Democrats sharpened their swords Sunday over the New Jersey bridge scandal, with one state lawmaker suggesting impeachment is an option for Gov. Chris Christie — even as other prominent politicos said they were inclined to believe the governor's side of the story.

    Tesla envy?  RECALL: General Motors Identifies 370,000 Trucks As Possible Fire Risk.

    Neiman Marcus to Target Data Breaches Imperil U.S. RetailersNeiman Marcus Group Ltd. said yesterday that some unauthorized purchases may have been made with customer cards, the second retailer after Target Corp. (TGT) to be struck by hackers during the important holiday season

    The Cops Really Could Use Data From Your Car's GPS To Convict You Of A Crime.

    US Issues Terrorism Warning For Winter Olympics.

  148. phil

    Shipping/Scott – May be normal after holiday rush but does seem precipitous.  

  149. jasu1

    Phil, 

    Japan was closed last night……but /NKD down from 15895 to 15670 this morning…..is this just futures manipulation or something about the yen getting stronger? Caught on the wrong side going long

  150. phil

    Japan/Jasu – Ah, I didn't realize they were close.  Then it's "normal" as the Yen got stronger (lack of downward manipulation, most likely), which drops the Nikkei.   As you know, we keep shorting the Nikkei at 16,300 and, like oil, I'm waiting for a big drop one day as it's very difficult to sustain such a weak Yen and the Nikkei is way ahead of reality at this price.  

Dashboard

 Sector Performances (Today)

 Thermal Imaging