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World Bank Wednesday – Global GDP Outlook Cut By 10%

SPX WEEKLYThe World Bank has downgraded the Global Economy.

According to today's report, the Global Economy will slow to a 3% growth rate, down 10% from the previously projected 3.4% calculated in June.  That's a pretty alarming rate of decline in the 2nd half of the year, don't you think?  The report adds to signs of a growing disparity between the U.S. and other major economies while tempering any optimism that a plunge in oil prices will boost output. Risks to the global recovery are “significant and tilted to the downside,” with dangers including a spike in financial volatility, intensifying geopolitical tensions and prolonged stagnation in the euro region or Japan.  

“The global economy today is much larger than what it used to be, so it’s a case of a larger train being pulled by a single engine, the American one,” World Bank Chief Economist Kaushik Basu told reporters on a conference call. “This does not make for a rosy outlook for the world.”

The bank sees average oil prices falling 32 percent this year, a decline that’s historically associated with a boost to global GDP of about 0.5 percent. Yet the impact on growth may be smaller in 2015 and 2016 because of other headwinds including weak confidence that encourages saving rather than spending, and a “significant” income shift from oil-producing countries to those that are net consumers, the World Bank said.

In other words, all those things we have been telling you to worry about were actually things you should have been worried about.  As I mentioned to you in Friday Morning's post, we added back $13,000 worth of TZA (ultra-short Russell) spreads in expectations of negative economic news this week.  Those spreads have a $17,000 upside (130%) if the Russell fails to hold 1,170, which is right where we bounced off yesterday (the -2.5% line).  

SPY  5  MINUTEWe'll see if that line holds up today, as well as our two remaining Strong Bounce Lines (see yesterday's post for predictions that came true) of Dow 17,460 and Nasdaq 4,656.  As we noted yesterday morning, we expected to have a pop up at the open followed by the failure of our strong bounce lines (in fact, that was the title!) and that's just what happened.

This morning we're getting disappointing earnings from WFC and JPM (we're short) and that's not likely to be supportive of those bounce lines – despite the shot in the arm that was given to the likelihood of QE from the ECB this morning. 

As usual, our Natural Gas Futures (/NG) line at $2.825 paid off and those who stuck with the program yesterday were rewarded with a fantastic run back to $3 for a $1,750 per contract win.  We also did very well on our oil longs (/CL) and added another $1,000 this morning as we took a bullish position at $45 but are now out at $46 – plenty of money for our Egg McMuffins.  Another good one today should be Monday's TSLA trade, which was very timely as they are already collapsing.  

From our Live Member Chat Room at 10:43 am:

TSLA/Lunar – I don't like the option prices so not too keen but, if I were going to short it, I'd take the 5 of the June $220/200 bear put spreads for $12 ($6,000) and sell 2 of the Feb $180 puts for $5 ($1,000) and see how things go.  Most likely, the Febs expire before earnings and, if TLSA is up, you can still get good money selling a few more March puts (the $170 puts are currently $5) so it's net $5K on $10K worth of spreads that are on the money if all goes well through Feb expirations.  

This morning we got news that TSLA's China sales are disappointing (as we expected) and that the the company is not likely to be profitable until 2020, which may still be sooner than AMZN but disappointing to TSLA believers nonetheless.  Call me old-fashioned but I like to invest in stocks that actually make money.  In fact, just yesterday, in our Live Webinar, we reviewed our Buy List (Members Only) and found a couple of dozen great investment ideas for 2015.  

One stock I can tell you free readers about is one that's coming off our buy list after 5 years as it's no longer cheap (but we still love it) and that's TASR, our Stock of the Decade, which we've been buying since it was $5.  What's kicked them into high gear recently is their AXON Body Cameras for police, which TASR has been pushing for 2 years but suddenly have come into focus with all these issues of police voilence.  

A lot of departments have been ordering lately and that is just a bonus to our usual TASR buying premise that has already led us to 400% gains.  Of course, TASR would not have been our Stock of the Decade pick if we "only" expected it to go up 400%, this is on the way to a 10-bagger at $55 for us and that's still a nice gain from a $25 entry if you are late to the party.  

As I said though, it's off our Buy List for now as it's ahead of schedule, though we're perfectly happy with the spread we have on them in our Long-Term Portfolio, which is 10 of the 2016 $13/20 bull call spreads at $2,000 against which we sold 10 of the 2016 $13 puts for $2,000 for a net $400 credit.  If TASR manages to hold $20 until next January, we will net back $7,400 against our $400 credit for a gain of 1,850% in 18 months – now you can see why we love them so much!  

This is just another example of the core strategy we discussed in "How to Make $100,000 In 12 Months Trading Stocks, Options and Futures" this weekend and part of our "How to Get Rich Slowly" educational theme at PSW for 2015.  When we entered that TASR trade, last June (10th), the stock had just had disappointing earnings and dropped from $20 to $14 but, since it was on our Buy List and we KNEW we liked them at that price – we were able to pull the trigger on a fine discount.  

There will be many fine discounts presented to us during earnings season and, fortunately, we have plenty of cash on the sidelines to deploy as well as a bunch of short positions that seem likely to pay off given these crappy Financial Reports, struggling Retail Sales and, of course, 10% downgrade to the Global GDP.  There's nothing better than a nice sell-off, when you are prepared for it.  

This is going to be fun!  

 


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  1. From Briefing.com this morning(apologies if this is old news already posted)

    7:30 am TASER announces multiple large orders of it's AXON body-worn video cameras and EVIDENCE.com solution (TASR) : Co announced that the 1200+ systems included in the orders were received in 4Q14 and shipped in either 4Q14 or 1Q15. 


  2. Oil Lines

    R3 – 49.34
    R2 – 48.06
    R1 – 46.75
    PP – 45.47
    S1 – 44.16
    S2 – 42.88
    S3 – 41.57

    45.50 was resistance earlier and now seems to be support. S3 at its lowest level in a long while.


  3. Phil- If anyone needed to add new hedges in anticipation of a further drop and missed your previous calls o felt they didn't have enough (not me of course, just looking out for others) which ones or which new ones would you advise them to add to protect a long term portfolio? 


  4. Good Morning!


  5. From Bloomberg, Jan 14, 2015, 8:34:24 AM

    U.S. stock-index futures fell, indicating the Standard & Poor’s Index may drop for a fourth day, as a deepening commodities rout and an unexpected decline in American retail sales spurred concern that global growth is slowing.

    To read the entire article, go to http://bloom.bg/1AZW9Y8

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


  6. From Bloomberg, Jan 14, 2015, 8:00:00 AM


    In a February 2009 letter to shareholders of his Berkshire Hathaway Inc., Warren Buffett wrote, “I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong.” Photographer: Chris Goodney/Bloomberg

    The last time oil plunged below $50 a barrel, Warren Buffett issued a mea culpa. He had purchased billions of dollars of ConocoPhillips stock near its peak in 2008 and then watched the energy producer’s shares tumble along with crude prices as the recession deepened.

    To read the entire article, go to http://bloom.bg/1B0Jap1

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


  7. From Bloomberg, Jan 14, 2015, 7:53:09 AM

     Jan. 14 — JPMorgan Chase & Co., the biggest U.S. bank, said fourth-quarter profit fell 6.6 percent, as the sale of a commodities unit pushed fixed-income revenue lower. Bloomberg’s Olivia Sterns reports.

    JPMorgan Chase & Co. (JPM), the biggest U.S. bank, said fourth-quarter profit fell 6.6 percent as fixed-income trading revenue dropped 23 percent and legal costs were about twice as high as some analysts estimated.

    To read the entire article, go to http://bloom.bg/1B0vlXN

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


  8. From Bloomberg, Jan 14, 2015, 5:00:00 AM

    Some winters, the snowman cometh.

    To read the entire article, go to http://bloom.bg/1B07g3p

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


  9. From Bloomberg, Jan 14, 2015, 8:30:01 AM

    Retail sales in the U.S. slumped in December by the most in almost a year, reflecting a broad-based retreat that will probably prompt economists to cut growth forecasts.

    To read the entire article, go to http://bloom.bg/151cONa

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


  10. Not a bad week to have bought DIA puts near high yesterday and TSLA 200 puts on Monday.


  11. today's puts might be NFLX which was reiterated as a buy I believe for the third time since they missed earnings last quarter by Nicolaus Stifel who probably have the worst record on the street.  They must be getting pretty desperate. 

    Also loved watching an analyst defending his 320 target on TSLA who said they wouldn't show profits until 2020 and that's only if you believe the demand will be as high for the car as Musk says which I don't.


  12. Rustle123 – Great trades !  Much more bang for the buck by owning puts rather than selling OTM calls.


  13. Rustle One thing I learned all these great prophets are just as good as any monkey with a dart board.


  14. Good morning! 

    Turns out I won't be here tomorrow morning – I have a meeting I can't get out of.  Should be back by lunch and I will have a post up pre-market.  

    Hopefully tomorrow won't be as exciting as today.  What matters today is getting back over those strong bounce lines but 3 of 5 under is bearish especially when one of the ones over is the Dow.  

    • Dow 17,280 (weak) and 17,460 (strong)
    • S&P 2,006 (weak) and 2,027 (strong)
    • Nasdaq 4,608 (weak) and 4,656 (strong) 
    • NYSE 10,560 (weak) and 10,670 (strong) 
    • Russell 1,172.50 (weak) and 1,185 (strong)

    Maybe jumping the gun but that's what it seems like pre-market with 15 mins to go. 

    Oil is holding up surprisingly well but the Dollar dropped to 92 (down 0.6%) and it will likely hold that line and bounce back and that will pressure oil ($45.85), gold ($1,242.50) and silver ($16.98) though copper held $2.50 so far after spiking to $2.425 so maybe that was a blow-off bottom.  /NG is $3.08 and /RB is $1.265.

    On the whole, not a good time to play – we need to watch and see what happens (and read more news, of course).  

    Hedges/Craigs – When you are caught with your pants down, best thing to do is short the laggard.  As of yesterday's close, the RUT was still holding up better than most, which is why we were favoring the aggressive TZA Feb $11s in the STP:

    Another strategy is to find something inside and index, like the Dow, that should be lower but is holding up well.  Yesterday, for example, in the Webinar, we talked about XOM puts, since they haven't given up all that much ground.  It's an exceptionally good hedge if you are long on oil/energy bets too.  The XOM April $80 puts are just $1.32 and the $87.50 puts are $3.70 so 100% gain on a 10% drop in XOM. 


  15. @albo

    On TSLA, I did selll the 215 calls for this week to pay for the puts.


  16. monkeys/Yodi

    They are factually worse.


  17. Phil – What position has the portfolio's short JPM and WFC as you mentioned in the morning post.


  18. Rustle123 – Then you have a double win going. :-)


  19. TSLA down to $184 already – I hope Yodi didn't sell too many puts!  

    I like my new official graphic for TSLA, very fitting.  We'll see how well this is going now (projections from early '13):

    Nice calls by Rustle, by the way! 


  20. dumped TSLA puts at 13 at open.  No reason to be greedy


  21. and out of DIA puts at 4.30, not worth a reversal


  22. meant chance of reversal


  23. Phil

    Good morning.

    Not withstanding the interest rate environment and the money printing presses, does it feel like Sept. 2008?


  24. Nice trades Rustle


  25. TSLA Thanks for the concern. The day I published the 250/150 play it was some where around 13.35 credit you can buy it back today for some 12.50.

    But your big blue IBM is trading under 154 and my Jan 15 155 put is now ITM hope they still make it to 155 by Friday. 


  26. Nice move for oil! It would be nice to get over yesterday's high around 46.80 and get over that 10 DMA for the first time in 2 weeks.


  27. Tza @ 11? I have the 13's??? No matter how much I stay vigilant this happens to me & I write everything down on any trades recommended. Unbelievable. Two steps forward, one step back just when I think I'm finally getting this whole scene.


  28. Looks like general merchandise, gas stations, clothing, electronics, and sporting goods-music-books were the lead weights of the retail report.  Bad news for department stores; expected results for gas stations.

    http://www.census.gov/retail/marts/www/marts_current.pdf


  29. Time to add some more F Jan 17 13/17 BCS @1.67 and sell some Jan17 P for 1.66 Good deal for 1 cent!!!


  30. IRBT, Phil?

    Or too early in this declining market…


  31. just bought 30 DIA 175 calls @.77.  Figure worth the chance of reversal.  Especially after Nasdaq is coming back.


  32. He Phil did you say on TSLA 184 or 194 you will not get a good man's spin down 8) Your bear put still looking good!


  33. Pirate TZA is only an insurance policy be prepared to lose money!!!!


  34. and out of DIA calls at .94, this is fun


  35. Yodi:

    Did you get filled at $1.67 on F 13/17 BCS?


  36. DC mine filled at 1.68 


  37. Yodi/F

     

    Well, that didn't last long! Can't get close to that.


  38. DC put filled at 1.66


  39. Crazy market sometimes you have to be fast. Thought it looked good and I closed it.


  40. Yodi:

    I have the puts already from a while back.  Was waiting to do a BCS.


  41. Sometimes on a pull back it is good to just do the call and put and wait for the caller a bit. 


  42. Turns out the results for December were expected.  Holiday sales for Nov. & Dec. rose 4% over LY results

    https://nrf.com/news/retail-holiday-sales-increase-4-percent

    Total holiday retail sales, which include November and December sales, increased 4 percent to $616.1 billion, which was in line with NRF’s projected forecast of 4.1 percent growth. In addition, non-store holiday sales, which is an indicator of online and e-commerce sales, grew 6.8 percent to $101.9 billion.


  43. Monkey/Yodi – Damn, you stumbled upon my secret trading strategy! 

    JPM/Burr – We ended up short on them in the Butterfly Portfolio and on FAS, of course, in the STP, not WFC specifically, just the Financials as they climbed too high.  

    That's the beauty of our system, it forces us to go short when the things we're tracking get to the top of their ranges, we didn't even have to make a conscious decision – just rolling along our originally bullish positions until they become short positions in the high end of the range.    

    The trick is getting people not to panic out of positions (and locking in their losses) when we do get to the top or bottom of a range.

    Speaking of which, oil back to $46.50, I hope we won't be here next year with you asking me why you never get to make trades like the one that went up $30,000 per contract on /CL or 70% gains on USO, RIG, BHI, etc.  

    TSLA/Rustle – Good call, still a lot of Muskovites out there.  

    2008/Maya – No (or we would have dumped the LTP) because, in 2008, we had a housing bubble and we had an oil bubble and we had a banking bubble and all were based on false expectations of unsustainable prices.  This is 7 years later and, even at 3% annual growth (normal for the planet), we should be 23% higher than we were then. As I've often said, it's not like another 700M people weren't born.  Even at the global average per capita GDP of $8,000, that's still $5.6Tn more added to the Global economy since then.

    So let's say the market was 40% overbought in 2008, now it would only be 20% overbought at the same levels.  The distribution among the specific sectors and stocks may change but, overall, the broad market is just a reflection of the Global economy which means it's EXTREMELY unlikely that we'll have more than a 20% correction and even that would take a proper negative event to get us that low.  

    TSLA/Yodi – Just kidding, I think you'll be fine, just that I figured those short $150 puts would be looking scary at the open.  

    Oil topping out into inventory, still around $46.50 – will be interesting. 

    TZA/Pirate – I'm not sure what that's about.  We had some TZA APRIL $13s that we cashed out on the 6th at $2.20 and we added the TZA Feb $11/14 spread for $1.30 in the STP on the 7th and then we bought back the $14s the next day for 0.65 so our net on the $11s is $1.95 and they are now $2.15.  

    Retail/DC – Don't forget Nov was strong.  To some extent, people just shopped early.  Will need to see how the overall numbers pan out.  XRT holding up very well so far.  

    F/Yodi – Always a good time for them at this price. 

    IRBT/Maya – This is a good spot for a long-term play.  Let's say you don't mind owning $15,000 worth (500 shares) so you start by selling 2 2017 $28 puts for $6 for a net $22 entry on 200 and you can leave it at that as the margin is just $600 to collect $1,200 or you can use that $1,200 to buy the $28/33 bull call spread for $3 for net $1.80 on the $5 spread that's $3 in the money (177% upside potential).  Nothing wrong with that on our Stock of the Century. 

    If it goes down from here, then you should be THRILLED to use the uncommitted $9,000 of buying power to roll the calls lower and maybe DD on the puts and then you'll be committed to 400 shares at a net below $20 on the put side.  If you aren't going to be THRILLED to own 400 shares of IRBT below $20 – why on Earth would you be buying 200 shares when they are over $30?  

    That's how you should think about every stock purchase and, if you are doubling down, the same logic applies – if you aren't VERY WILLING to buy more of a stock if it gets even cheaper – STOP BUYING IT NOW! 

    Retail/DC – Thanks for the update, as we expected, not all that bad.  


  44. Yodi/F

    I'll wait for a better entry.  The way this market goes, I certainly will get another chance.


  45. Huge Build in oil again!  +5.4Mb, gasoline up 3.2Mb and Distillates up 2.9Mb – WTF – people seem to have cut back drastically, even at these prices.  

    /CL is $45.95 and a nice short now as long as it's under $46.


  46. iRobot  was downgraded at J.P. Morgan to underweight from neutral. Twelve-month price target is $34. Company is facing increased competition and macro headwinds, J.P. Morgan said.


  47. Phil – FCX starting to look interesting below 19 ?


  48. Here we go again with oil prices being artificially held up by "them" again. Must be too many little traders betting short at 46 so the price is being driven up to flush . A horrible inventory report should have sent prics plummeting, but after the initial drop they went right back to where they had been prior to the report. Has to be massive manipulation and I am betting that eventually market forces will win out and the price will drop again perhaps into the low 40's now once the flushing is done. It sure could make a guy crazy playing against these huge manipulators on a regular basis. 


  49. Looking at the inventory report, we had 527Kb/d less refinery inputs (because they have builds) and imports kicked up by 636Kb/d so that's net 8Mb extra barrels for the week pushed into oil inventories.  So not quite as dire as it sounds on the surface but the real problem seems to be demand for refined product.  

    Commercial Inventories are at 387.8M, the highest reading in 80 years according to the EIA but I can't imagine that, 80 years ago, we somehow had more than that.  That's in addition to our full to the brim SPR which means we have never had less dependence on foreign oil than we do now.  With just 7.5Mb/d of imports and 1.1Bb in storage, we can last 146 days with no imports but, of course, only about 1.5Mb of those imports come from outside North and South America so, from our perspective, OPEC can go screw themselves.  

    FCX/Albo – They appeal to me because they will probably survive so, like IRBT above, I like the idea of scaling into them at this level.  They bottomed out at $12 in 2009 and now, $18.77 is acting like we're heading that way again.  The good news for them is they have diversified since 2009 and are now just 57% copper and 10% gold.  The bad news is they are 25.4% oil and gas – SUCKERS!!! 

    So, it's a LONG-TERM turnaround play and their earnings will suck (Jan 20 something) and their outlook will suck so you might want to wait but I see 2017 $15 puts for $3.20 for a net $11.80 entry already and that can be paired with the $15/20 bull call spread at $2 for a net $1.20 credit ($13.20 entry) as your worst case.  That's not bad for a 1x entry.  


  50. Albo I hope you did notice GILD close to 100 again 


  51. KBH – From Briefing :  They still have it as a buy.

    KB Home target lowered to $20 from $26 at MKM Partners; Buy  (13.76 -0.10)

    MKM Partners lowers their KBH tgt to $20 from $26 noting they believe that some of yesterday's reaction was overdone as it implies a valuation well below book value. Firm is also lowering FY15 EPS est to $0.74 from $1.93 to account for lower ests for most major operating metrics. Establishing a GAAP tax rate of 38% after the DTA reversal accounts for roughly $0.46 of EPS adjustment. Firm is also establishing a FY16 EPS est of $1.06.

     


  52. Yodi – I did notice that.  As I mentioned, I still have the spread.  Not anxious to buy any long call outright in this market. ;-)


  53. Oil/Craigs – The oil is currently being manipulated down, not up.  I don't know how I can be more clear that $45 oil is not sustainable.  Yes, it can go lower but that's because Retail Traders are morons who don't do research and can't do math and don't understand basic business fundamentals so they can be manipulated by pundits who have BA degrees in journalism but present themselves as World Authorities on Energy Markets.  

    The people who are saying $35 oil and $20 oil now are as idiotic (even the SAME idiots) as the ones who said $150 and $200 last summer.  Is it really possible that there is no "correct" price for a commodity, that anything goes if you follow the trend?  That's like saying a guy who's blood pressure went from 120 to 160 in the last 12 months will be over 200 next year and 220 the year after that.  You KNOW that's not possible because he'd be dead and you KNOW that if it dropped from 120 to 100 that it wouldn't be 60 in two years, because he'd also be dead.   

    The only reason you think oil can be $150 or $35 is because you don't understand the mechanics of it, because you don't have the experience in the markets the way you do with blood pressure readings and because, unlike medicine, "experts" on oil don't have any problem making wild predictions that are outside the realm of possibility.   Even worse, they suffer no consequences from giving you completely false and misleading information.  In fact, their WILLINGNESS to make these ridiculous statements is precisely WHY they are rewarded with exposure in the first place.  

    THAT is what is manipulated in the system – they want you to panic out at the bottom and to panic in at the top so the people who pay them to misinform you can buy low and sell high.  

    KBH/Albo – Thanks for reminder, we talked about them yesterday.  Great opportunity to establish a long-term position.  

    2017 $13 puts can be sold for $2.60 and you can buy the $10/15 bull call spread for $2.70 for net 0.10 on the $5 spread that's $3.65 in the money and TOS says just $1,350 in margin for 10 of those with the $4,900 potential upside makes this a very efficient play.  


  54. Hard to believe on Nov 11th that RIG traded over $30.  Not just a falling knife, but a dagger !


  55. What a ride Europe is having today:

    • Germany Calls on EU to Be Firm on Budgets

      The German government called on Brussels to preserve the credibility and reliability of the European Union’s budget pact, insisting that promised structural reforms are implemented before deficit-reduction targets can be relaxed.


  56. Greetings all! 

    The replay from yesterday's webinar is up on our YouTube Channel here:

    http://youtu.be/3JuDQVtQT7g

    Or you can download it from webex for later viewing here: http://bit.ly/011315Replay


  57. Phil good to adjust FAS 105C and 95P in STP?


  58. Meant to say good day with FAS down 5


  59. phil, you think too late to buy natural gas below $3.  it's a very impressive move to 3.15


  60. Phil- I understand that in the long term these prices are not sustainable. I am talking about right now this moment and oil wants to drop right now due to the report and all that stuff, so I am saying that today right now it is being held up to flush out all the retail traders betting short right now. I would be paranoid enough to say that almost every time I buy back short positions in a situation like this, the price pops down as soon as my position is cleared. Almost every single time, Same thing applies the other way. When I sell a contract, the price jumps to make m think I made a mistake.


  61. today is opex for Feb contract options on ?CLg5 contract

    Tomm tos will show CLh5  contract  which is about .50 higher


  62. My man Tilman Fertitta is on Bloomberg this hour.  If they have a replay, it's worth watching as they had a lot of good topics and then a good minimum wage discussion with him and Nick Hanauer too.  

    RIG/Albo – Well, I'm sick of banging the table on them.  I'm certainly not going to try to convince you to buy what I consider to be one of the best deals in the market at $15ish.  

    7 Reasons Income Investors Should Consider Transocean

    Transocean is top pick at Zephirin Group

    Transocean's Dividend Will Not Be Suspended In Q1 2015

    A Complete Guide To Transocean

    After all, if they are lower in PRICE, they must be bad, right?  Doesn't matter what the FACTS of their actual operations are…

    FAS/Options – Yep, that's my afternoon plan (all adjustments on the Weds before expirations).  

    Nat gas/Lunar – You mean when I was pounding the table on them 30 cents ago, you didn't want them and now that they have gained 10%, you want to chase them?  I still like UNG long-term to about $20 ($3.50ish) but I wouldn't chase /NG into a warming trend next week.  

    Right now/Craigs – Well my definition of right now is this week, not this minute.  Very simply, off that inventory, I called a short at $46 – the fact that oil spiked higher didn't change my call.  As I say often enough, I like to scale into Futures positions BECAUSE they tend to move against you when you enter them.  

    That's not paranoia, THEY ARE OUT TO GET YOU!   As soon as you initiate a position a Bot goes into action trying to flush you out.  There are tens of thousands of trades every hour where people enter a contract like /CL, which is $10 per penny, and put a $50 or $100 stop on the trade.  That gives the bots an opportunity to make millions every day just pushing people out of positions – so they do.  

    The same goes for flushes ahead of big moves, you can call the false reaction to inventory a flush up, getting ride of the shorts before the real reaction (disappointment) sets in.   We don't care what the flush does because we KNOW how to read an inventory report and we KNOW oil should be lower off that data so down becomes the short-term direction until the next data point (nat gas tomorrow).  

    But that action is on a micro time-frame in an overall environment where oil is very oversold so we'll get some support at $45.75 and stronger at $45.50 and expect a nice bounce at $45, which means we'll be very happy to just take a quick $250 at $45.75 and then see what happens next.  

    Thanks Bert.  


  63. Wish I bought back those DIA puts.


  64. RIG – Phil, I didn't aim that comment at you.  Unfortunately, I was in the stock before you even mentioned it.  Also unfortunately I broke one of my rules and averaged down rather than stopping out.  Certainly not your fault. :-)


  65. Phil,

    AA after earnings is down to 14.9, a small position say 10 contracts 2017 10P  for about a buck; does that meet a Phil "sniff test" ? Thank you as always….KBH 10c /15c/13p filled almost instantaneously at .05 DR.


  66. Phil / JPM Butterfly

    What would you recommend on the short sides of the JPM butterfly? Do you still recommend the March $60 calls (now about $0.80) and $57.50 puts (now about $2.92)? I only have the longs since yesterday I bought back the shorts.

    Thanks


  67. FU RIG!!!

    FU CLF!!!

    FU ABX!!!

    FU BTU!!!

    FU IRBT!!!

    FU BHI!!!

    Did I forget any other POS stocks???


  68. RUT having hard time breaking below 1170. It bounces every time time it approaches. IF IT BREAKS BELOW EXPECT TZA to break strongly above $13.


  69. Hey Jabo I have some limit orders on ABX and RIG at lower prices so keep on cheering them on.


  70. Lookee Lookee…somebody rented a rebel to light a fire under /CL  - 45.65 to 46.25??? just like that


  71. TWTR – just bot TWTR in kids accts, covered with March $45 call for a net $37.85/per share.

    A LOT of March $43 calls also trading today but I think can power right past that and want to let expire and/or roll again at the $45 level. Also, not very much more premium for the $43s.

    I think TWTR may get back to $60 this year. More adoptions in business. Even TDAmeritrade added TWTR link to their stock pages just TODAY (see "Social" tab) and they are getting a better handle on monetizing their user data. Earnings are going to start growing, and faster, imho.

    Stop will be a close under $35.  This is just below recent "swing low" lowest close, below a technical support level, and below a 'round number' psychological level. If it goes under $35, I will consider my premise that TWTR is going forward toward $60 to be…premature.

    If for some reason it goes below 33.30 I may start shorting it in my trading acct.


  72. wombat has your hedgehog approach continued working for you .

    tom


  73. phil, trying to understand the move in natural gas.  isn't there supposed to be an oversupply which is what's responsible for the two year lows in gas prices.  what justifies a 10% move up this morning? or is 10% within the normal fluctuation?  is this manipulation?


  74. RIG/Albo – No worries, I just don't want people bailing on it because it USED to be higher.  It's $15 now and maybe it will be $5 but if we buy 500 at $14.62 and sell the 2017 $15 calls for $4.30 and the $10 puts for $3.20 we net in for $7.12/8.56, which is already half price on 600.  So we're allocating an initial $8,560 to a position and using $3,560 in cash and, if called away at $10, we collect $5,000 for a $1,440 profit (40%) plus the current $3 dividend would be a $1,500 bonus (42%) EACH YEAR if it sticks. 

    If RIG drops 66% to $5, we end up with 1,000 shares at $8.56 and then we sell (using PBR's 2017 pricing for approximation) 2017 $5 calls for $2 and the $4 puts for 0.80 and then we drop our basis to $5.76/4.88 (not including dividends collected) with a commitment to own up to 2,000 shares at $4.88 for $9,760, barely anything more than our 1x commitment.  

    If it then drops to $2.50, we sell 2021 $2.50 puts and calls for $1.30 and our net drops to $3.58/3.04 (still not counting dividends) so our worst case then becomes owning 4,000 shares of RIG at $3.04 ($12,160).

    So, in short, you should be THRILLED that you entered RIG at $30 and they went to $15 where you get to trigger your 2x entry and HOPEFULLY they go to $7.50 or less where you can double down again.  Otherwise, worst case, it goes up and you end up called away at $10 for a nice profit.  THAT is how you need to enter all your positions so you don't end up like Jabob sitting in the corner in your straight-jacket cursing out all your positions.  wink

    AA/Jasu – Sure, those are my favorites – we liked the earnings just fine but they disappointed (mostly on FX issues we were already prepared for).  

    As above, it's all about scaling in to materials stocks because we are in an economic downturn and they might get much cheaper but, if you have a plan to keep buying down 66% from here, as with the above RIG play, then who cares if this is the perfect entry?  What matters is that you like the premiums now and can create an attractive entry.  

    With AA, you can sell 10 of the 2017 $10 puts for $1 and buy the $13/17 bull call spread for $1.70 and then you are in for net 0.70 on the $4 spread that's $2 in the money at the moment.  The upside on that play is $3.30 (471%) and TOS asks just $700 in margin to make up to $3,300 on 10 spreads, so very efficient.  

    The worst-case is you get assigned 1,000 at net $10.70 ($10,700) and, if you then plan to sell $10 puts and calls for $3 and drop your net to $7.70/8.85, then why worry at all if they fall 30% more?  When you are a serious, LONG-TERM investor, then YOU control these trades.  When your timeframe is weeks or months, then you are at the mercy of the random short-term movements.  No wonder Jabob is babbling…

    JPM/Akad – If I ever catch up on questions, I'll be getting to those next.  

    1,170/Den – Would be big trouble if it didn't find some support there.  What does today's "hard time" look like on the weekly chart?

    RUT WEEKLY

    Oil/Jasu – And right back down.  Tomorrow morning I'll be bullish again into Nat gas inventories, which should give us a nice pull.  

    TWTR/Scott – Will be great if they figure out how to monetize it – still up in the air though. 

    Nat gas/Lunar – The same wells that are being shut down for oil are shutting down for gas.  Don't forget nat gas is a by-product of oil drilling.  In some cases, it's burned off at the well because it's simply not worth capturing and transporting.  This spike is based on the assumption we get a nice draw in inventories tomorrow because it was very cold last week.  It's a very cazy thinly traded market – which is why I usually stay miles away from it unless it's way too cheap (below $3) or way too expensive (above $4.50) in which case I like to play it to move back to the middle.  


  75. babbling? No.

    I just don't share your excitement about having to add to positions as they circle around the toilet bowl, I guess.

    You could be right in the long run (I hope) but I am allowed to be annoyed when I see these dogs drop 50-75% in such a short time period.

    You don't have to be labeled a short term investor because you get annoyed when some of your longs get clobbered.

    Give me a break Phil.. GTAT,CLF,ABX,RIG, and some of the others have been the worst of the worst even if they do happen to eventually work.

    You are brilliant and we appreciate your tireless hard work.

    We don't expect you to always be perfect in your timing or calls. Or at least I don't.


  76. Caesars is filing tmrow.  


  77. Phil,

    Does this mean we see an express lift off around 2:15P/2:30P, or am I whistling in the dark? I am asking you to look in your crystal ball….see I have a little faith!


  78. Phil,

    What we have Fed speak today!!


  79. RIG hasn't been this low since December 1995!


  80. Phil — A long time ago, I believe said that you wouldn't short TLT until it got into the 135 range.  So, we're almost there.  Any views?


  81. NKE – lost it's swoosh?


  82. Esco – shorting TLT!!  I have not heard that one in a long, long time lol.  i recall losing some money on that trade.  


  83. STP up $15,000 since Friday – isn't this an easy game?  LTP down $13,000, so we're up $2,000 overall.  I know it seems boring but $2,000 a week is $100,000 a year – exactly what we're aiming for and without all the drama.  

    $25,000 Portfolio Review ($25KP):  Not off to a good start as our GMCRs wiped us out for a big loss and our two bullish oil plays aren't performing yet (Julys).  Hopefully we'll find some good earnings trades to make it up:

    Butterfly Portfolio Review:  Lots of work to do on this one as we head into expirations but I guess having to work one day in 30 is the price you pay for 20% returns blush:Good thing we stuck to our guns and mostly just rolled along at the tops.  

    • DIS – I'm comfortable with these.  
    • WMT – No point in risking these, let's buy them back for 0.30.
    • BTU – We're below target but it's March and look how ahead our long puts are.  Let's just see how these play out.
    • DIS – Still high in our range and we already sold the March $92.50 calls so we're simply going to buy back the Jan $85 calls on Friday for the loss (stop at $9.50 still in effect).  The short puts will expire worthless (and, if not, we'll more than make it up on the short calls) and we can sell the April $87.50 puts for $2 to balance it out.  
    • JPM – This position was adjusted yesterday.
    • OIH – Very bad that we never sold calls.  Since we did sell the April $43 puts, now $11, we may as well sell the July $30 calls for $4.40 and simply roll them when they run out of premium.  Whether it goes up or down, we'll be $4.40 better off, which is $4,400 against our long investment of $11,400 and 18 more months to sell.  
    • TXN – Got away to the upside but bad tech news (so far) makes me want to stay on the short side.  We'll roll the Jan $46 calls ($6.70) to the April $48 calls ($5.20) for no more than $1.10 since there's still a lot of premium in the Jans.  We can also sell the April $47 puts for $1 so the net of the roll will be about 0.50 – not bad for being off by 17%.
    • UNG – We nailed this one as it was a different kind of play, really an artificial buy/write where we're selling monthly calls.  The short Jan $19 calls will expire worthless so we pocket $650 against our net $1,400 credit long position (46% since 12/22)  and now we sell 10 of the Feb $18s for 0.60 for another $600.  These are only 1/2 sales and, if we do this 24 times, we'll collect $14,400 (at $600) against the "risk" of owning 2,000 shares of UNG at net $14.30 ($28,600).  Of course, if UNG is over $15 in 2017, then ALL the money we collect along the way is simply profit PLUS whatever we make on the spread.  
    • VLO – What a crazy ride on these!  Now it's below our range.  Let's buy back the Jan $45 calls for 0.36 since you never know and we'll sell the March $45 calls for $2.65 and we'll roll the Jan $47.50 puts ($3.75) out to the March $45 puts ($3.90) for a small credit.  
    • WMT – We're going to let the short $86 calls run out of premium but the Jan $80 calls ($6.80) have no premium so we may as well roll them to the Feb $82.50 calls ($5.15) for $1.65 and we can sell the Feb $85 puts for $1.35.  Why Feb?  Because earnings are on the 19th, AFTER expirations, so we get another good chance to sell more premium next month.  

    I love this portfolio, so relaxing.  Actually it goes up and down in PRICE by 10% in a week, especially when the VIX is volatile because we sell so much premium in here.  But, when it comes to adjust – there's hardly ever anything to worry about. 


  84. Beige book came out while I was working.  

    Federal Reserve officials are reporting concerns over the impact falling oil prices will have on an improving economy, according to the central bank's latest "Beige Book" report.

    The economic review, which the Fed releases eight times a year, reflected hopes for better growth but noted several problem areas.

    Oil prices were seen as a boon to consumers but a problem for energy companies, with the Dallas Fed reporting that Texas energy firms were projecting hiring freezes and layoffs to accompany a 15 percent to 40 percent decline in demand.

    In the Kansas City region, drilling activity and capital expenditures were forecast lower, with some firms reporting difficulty obtaining credit.

    Read More Gundlach: Oil threatens 'true collapse' in hiring

    At the Atlanta Fed, there were reports of high oil inventory levels across the Gulf Coast.

    "Reports from the twelve Federal Reserve Districts suggest that national economic activity continued to expand during the reporting period of mid-November through late December, with most Districts reporting a 'modest' or "moderate" pace of growth," the report stated. "In contrast, the Kansas City District reported only slight growth in December. However, most of their contacts, along with those of several other Districts, expect somewhat faster growth over the coming months."

    Aside from the energy sector, the Fed report noted sluggish holiday spending in the New York district, a fear confirmed in Wednesday's retail sales report showing an unexpected 0.9 percent decline for December. Broadly speaking, the report described consumer spending increases as "modest" despite a boost from sharply lower energy prices that have pushed prices at the pump to below $2 a gallon in some areas.

    On the positive side, the report noted that faster growth remains the expectation as payrolls grow and credit demand increases.

    The Fed has kept its short-term interest rate target near zero for the past six year, since the financial crisis hit the economy in 2008. Market participants expect at least a modest hike later in the year, though the Fed has insisted its moves will be data-dependent.

    That data paints a mixed picture. Amid the hopes for growth the Fed noted "largely flat" residential sales and construction while "demand for energy-related products and services weakened somewhat, while the output of energy-related products increased."

    Payrolls grew "moderately" while wage pressures were "limited to workers with specialized technical skills," according to the report.

    Stock market prices edged higher after the report was released though remaining in strong selloff mode for the day.


  85. Didn't post that yesterday, but JOLTS numbers were good this month:

    http://www.bespokeinvest.com/thinkbig/2015/1/13/jolts-job-openings-still-growing-quits-give-up-some-gains.html

    If only wages could also keep up!

    The JOLTS survey for November saw some mixed trends.  Total job openings and the job openings rate edged to new highs – indicating strong demand for labor – but quits did not accelerate.  The trend higher in quits is still positive, but unless quits accelerate it will be hard to see further acceleration in wage gains as measured by average hourly wages or average weekly wages.  It's also important that layoffs declined and have remained in an anchored range.  Overall, the November JOLTS report was indicative of a positive trend in labor markets, but not indicative that the inflection point in wage trends has arrrived.


  86. Tarrapin — yes, it's been a long time…and we're not supposed to even mention TBT…oops!


  87. here is some oil manipulation for opex for you

    47 call went from .02 to .62 in 10 minutes


  88. RIG/Phil:  So my average price on RIG a little over $30.00/share. I just sold a grouping of the Jan17 15 puts for almost $6.00… I love lowering my cost basis, besides, I believe RIG will be a $50.00 + in the future, whether it's 1 year or 5 years from now. 

    Like I think you said a few years ago about some company (I don't remember which) "If you are not going to buy at this price, when will you buy?"


  89. Interesting charts about spending:

    http://www.motherjones.com/kevin-drum/2015/01/non-chart-day-wheres-austerity

    It looks like we had our own little bout of austerity after the stimulus package. I wonder where the economy would be if we had maintained the spending trend of the last 10 years!

    Same with this chart:

    If we had maintained the trend set during the Bush years, spending per person would be around $22K now. That could be a big difference in the economy.


  90. Excitement/Jabob – True.  I like buying things when they are cheap.  To me, that's the most exciting play in the market. Once I have them, I like to hold them for years and years and years.  You are free to be annoyed and, in fact, it's helpful because your complaints remind me when it's time to buy.  It's not about timing – this is what I am trying to get through to people.  It's about PLANNING to buy stocks in increments on the way down because – if that isn't your plan – then you should sure as shit be planning to stop out of them LONG before you are sitting there cursing them out.   Either you ABSOLUTELY intend to double down on a stock when it's down 50% AND double down again when it's down another 50% or you should ABSOLUTELY be getting out of the stock when it's down 20% – end of story.  

    So yes, GTAT went BK and that's bad but CLF went from $20 to $7.50 and we did double down around $10 and we intend to double down again at $5. ABX hasn't even hit our DD point yet since we started at $15.90 and it's only $10.22 and RIG is right now at our DD point off $35 and we'd be THRILLED to DD again at $7.50 to make RIG a major holding at that price.  That's how the value investing game is played – we also do shorter-term momentum trading – but none of these trades have EVER been in our Short-Term Portfolio and playing them with a short-term mindset is foolish.  

    CZR/Terra – I STILL can't figure out what they are doing.  

    Stick save/Jasu – Why should today be different?  It doesn't matter if we head up, what matters is whether or not we take back our bounce levels.  

    Fed speak/Jasu – Just the BBook, I think. 

    TLT/Esco – Good point.  This is about as high as I thought we'd get but a tough trade with Draghi at bat next week.  I think waiting is smart here but the June $120 puts are only $1.25 and the $110 puts are 0.25 so figure if you buy the $120 puts, even if TLT spikes up $10, then you make that roll up for $1 and you're in the $130 puts for net $2.25ish (now $4.50) so it's a great way to initiate a position.   In fact, let's get 10 of those for the STP.  If they do badly, THEN we'll want to add some to the $25KP while we roll the STP.  As noted above – top of the range is when we get in.

    No TBT!!! *666*

    RIG/Jbur – I hope you sold calls too.  If I had straight shares at $30, I'd sell the $15 puts for $6 and the $20 calls for $3 as that brings you to net $21/18 and, even if the dividend is cut in half, you are down to $18/16.50 by Jan 2017.  If they don't end up cutting the dividend, the stock won't go down and you'll be at $15/15 and, of course, you just roll the puts and calls for the next cycle or, if they go up too high, you are called away at $20.  

    Trend/StJ – We'd also be another $2Tn in debt.  Not sure if that would have been worth it.  I just wish the $12Tn we did spend went to creating jobs and infrastructure instead of lining the pockets of rich folks.  

    Wow, speaking of sticks – slamming back up and check out oil at $49!  Let's see, I believe I was banging the table at $44.50 just yesterday and up $4,500 per contract already – not bad but remember, we're going for $30,000.  

    This market is just soooo silly. 


  91. what's jamming up oil? We know rent-a-rebels went out of business when oil collapsed, so is this a real supply/demand realization or what?


  92. trying to write some 85 puts on SCO for 2.90 for next week.  Only got filled on 19.


  93. From way back on Monday's post:

    This is just a scam – a con that is being played on energy investors that is giving us fantastic opportunities to buy companies like BHI ($56.47), RIG ($15.83), XCO ($1.90), TOT ($48.64), etc – as well as actual oil ($47 on /CL), natural gas ($2.825 on /NG) and gasoline ($1.30 on /RB) for some fantastic LONG-TERM gains.  

    We were just going over some trade ideas from last year, when GS was telling people oil would be $150 per barrel and chasing the sheeple INTO it at $103.50 and it did, in fact, get to $107.68 in June but we remained relentlessly short the whole time and, ultimately, the position we called a short on on Dec 15th, 2014 (2 short oil Futures at $103.50 for $9,000 in margin) gained $110,580 (1,228%) as of Friday's close.  So now, to summarize, I'm saying I like oil long for the next 12 months.

    Remember, I can only tell you what is going to happen and how to make money trading off this information – that is the extent of my powers - the rest is up to you.  Keep in mind that two oil contracts shorted at $103.50 were down $4,180 each ($9,360, down 100% on margin)when oil topped out at $107.68 in June, so this kind of trading is not for the feint of heart.  As we discussed in last week's Live Webinar, however, we have techniques that help us ride out the waves – and make even more money along the way, profiting from the volatility.  

    We don't know for sure that this is a bottom, things may go lower from here but, if they do, we will want to buy more, not less.  With many stocks still trading at all-time highs (GMCR, for example!), now is an excellent time to take some winners off the table and make some long-term investments on beaten-down materials plays.  We have some on our Buy List (Members Only) and we'll discuss some in Tuesday Live Webinar at 1pm (Members Only).

    /RB shot out like a cannon to $1.35. 

    What/BDC – It doesn't have to be anything.   That's what I was saying before.  $45 is FUNDAMENTALLY too low so it's very easy for oil to go up and hard for it to go down and moves like this are why I do not like to play both sides of a Futures trade.  I like to play low oil bullish and wait for the pullbacks and go long again and vs vs when it's high.  


  94. Phil/oil – totally agree (though I play UCO and not futures, but same strategy)

    Bitcoin 180! Wow, meltdown! My pet theory is the market was really hoping for some "Apple Pay" integration event to occur, and, well, AAPL went with their own "Pay." Apple Pay adds $50B in market cap to AAPL IMO alone. Maybe more. It's huge for them to be getting into finance, an order of magnitude more so than their genius move to have a credit card with every iTunes (and therefore, apps) account. 


  95. UCO – we saw a head fake two day spike on Dec 15/16 when trading around 11-12. I doubt UCO goes to 5 but I never thought it would be under 8 either.


  96. Phil – Thank you for your priceless comments on RIG.  So now I'm thrilled that I was in at $30 ?  Er, how does that go again ? 8-)


  97. RIG – lots of buyers after its 14.50 low today. i'm happy with my additions at 14.59!


  98. good timing on RIG I think my basis is 16.50


  99. Phil,  I have 4 sold JAN 2015 SLB $90 puts from when they were much higher (net $88.80). Would you roll to 2017?


  100. Phil--good point. thx!


  101. wonder how much oil GS went long on the day they said it was going to 43?


  102. Rustle: at least $1B in capital


  103. GDX – gold up today, miners lose again.


  104. Hi Phil. Any ideas for a copper short?   Think it still has a way to go.


  105. I need a large brokerage firm so I can manipulate currencies too as well as every other security.


  106. meant commodities, but they manipulate currencies also.


  107. Phil- CNBC is saying that this late spike is due to an option expiration tomorrow which they say typically causes a spike up right before. Which options are expiring tomorrow ? Doesn't that usually occur on a Friday? Perhaps I have it wrong and it is some contract expiration, but do you know what they are talking about so I can be better informed going forward and know about this kind of thing. I was lucky not to have been caught with a bunch of shorts. Ifit had been yesterday, I would have gotten killed, so I want to make sure I don't make that mistake.


  108. I wonder why Pd lost 40 points today? It's a very functional metal used in industry. Pd is somewhat esoteric compared to say copper, so maybe a 5% fall doesn't mean much, but it is used in catalytic converters to a great extent, so if the demand is down the demand for automobile CC's may be falling.


  109. MCP  -  The greatest
    4 year pump and dump ever IMHO.


  110. Nevermind my question, since I now see that the options for Feb oil contracts expire today. In your experience Phil, does the price usually spike up like this when the options expire? Is there any behavior that generally happens the day after? Anything we can use to make money around this event?


  111. Bitcoin/BDC – Like all currencies, once people lose faith, it's just worthless paper or, in this case, worthless code.  

    LOL Albo – you're almost there…  cheeky

    RIG/Scott – Might just be us buying.  

    SLB/Kevin – I like them down here ($78) if that's the question so if you sold $4 Jan $90 puts, they are now $12 and, as long as you REALLY want to own SLB eventually, then you can roll them out to the 2017 $75 puts at $12 and either you make your money later than you thought or you get in for $70(ish), another 10% cushion down from here.  If you owned them now at $78, you could sell 2017 $75 calls for $13 and the $60 puts for $5 and drop your net to $60/60.  If we assume that would be the case in 2017, then SLB could drop another 20% and it's really not a big deal.  

    You're welcome Jabob.  

    GS/Rustle – Certainly seemed like a scam when I was ranting about it on Monday.  

    GDX/Scott – Very strange but that's why I hate these guys.  Do you know how many crap miners are in this index?  

    ABX no better but just completely idiotic move.  

    Copper/Taihu – I certainly wouldn't get on the short side here.  $2.50 should be a solid floor and, if not, then maybe $2 but $2 would be as silly as $2 Nat Gas or $45 oil.  

    Manipulation/Rustle – You can do pretty well with a TOS account.  

    Expirations/Craigs – I don't know what they mean.  Again, this is why I don't take bets opposite what I consider the main long-term trend. If it moves against you and you can't roll with conviction,. that's when you tend to get hit with huge losses.  

    Palladium/BDC – It's just bots selling industrial metals because copper hit a tripping point.  It's like the way CLF sells off whenever coal is downgraded.  

    MCP/Silent – That party's over:

    Oil/Craigs – It is not my understanding that Feb oil contracts expire today.  It is 3 business days before the 25th, which is still 11 days from today.  Makes no sense.  And no, there's no general behavior into expirations except the contract rolls, which we like to keep our eye on.  


  112. SDRL and RIG puts are very good prices.  (ie With oil trading in the $40's RIG is at $15ish and the 2017 $10 puts are $3.20.)  What's not to like about that?


  113. Oh, I take it back, TOS does say that /CLG5 (Feb contracts) have 0 days to expiration.  I still don't see how and look at the strip, it makes no sense:

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Jan'15

    -

    -

    -
    56.91 * 17:28
    Dec 19


    -


    -

    -

    -

    -
    Call Put
    Feb'15 46.16 48.91 45.01 48.16 15:28
    Jan 14

    48.48
    2.59 423072 45.89 158294 Call Put
    Mar'15 46.77 49.39 45.65 48.63 15:28
    Jan 14

    48.96
    2.45 240206 46.51 426914 Call Put
    Apr'15 47.36 50.03 46.40 49.27 15:28
    Jan 14

    49.62
    2.38 58917 47.24 115003 Call Put
    May'15 48.24 50.55 47.28 49.95 15:28
    Jan 14

    50.36
    2.31 32656 48.05 55023 Call Put
    Jun'15 48.91 51.59 48.00 50.69 15:28
    Jan 14

    51.10
    2.23 68435 48.87 144034 Call Put
    Jul'15 49.69 52.02 48.80 51.34 15:28
    Jan 14

    51.80
    2.13 17778 49.67 52894 Call Put

    CME gives no indication that Feb contract is different:

    Trading in the current delivery month shall cease on the third business day prior to the twenty-fifth calendar day of the month preceding the delivery month. If the twenty-fifth calendar day of the month is a non-business day, trading shall cease on the third business day prior to the last business day preceding the twenty-fifth calendar day. In the event that the official Exchange holiday schedule changes subsequent to the listing of a Crude Oil futures, the originally listed expiration date shall remain in effect. In the event that the originally listed expiration day is declared a holiday, expiration will move to the business day immediately prior.

    Maybe the options on the Futures are expiring but certainly not the Futures contracts themselves.


  114. Phil,

    Holding the long UNG $15 2017 calls and noticed they dropped quite a bit today. How does this happen when UNG is rising? My short puts for the same date and price are doing well though…


  115. Wow, /NG at $3.30 now.  What a day! 

    UNG/Jake – I don't know but I'd ignore it.  Maybe something to do with the cost of rolling over the contract but more likely just the ridiculous bid/ask spread of $2.37/4.45 when the last sale on the $20s was $2.30 with a delta of 0.43 so yours should be at least $3.59.  UNG itself is up $1.72 today (10%) so it's your job to KNOW that the price your broker is showing you is BS.  


  116. This is from CME event calendar. So with that in mind in your experienc could this have been expected?

    Feb 2015

    LOG15

    24 Nov 2009
    14 Jan 2015

    14 Jan 2015


  117. RIG/phil – just us!? swinging 10 million shares in last 2 hr 45 minutes is pretty damn good for us I think! :-)


  118. didn't come out as expected. Feb 2015 is the contract, LOG15 is the code, then first trade and last trade and finally settle date.


  119. try again

    Contract Month

    Product Code

    First Trade
    Last Trade

    Settlement

    About This Report

    Feb 2015

    LOG15

    24 Nov 2009
    14 Jan 2015

    14 Jan 2015


  120. If you want to have fun manipulating your contracts, put in an offer for one at $2.50, then $2.75 and then $3 and magically your broker will decide the contract you have are worth $3, even though you won't get a fill on your new offer.  

    Expected/Craigs – What would be expected?  Could have gone either way but we were betting up so God bless them for any excuse.  

    RIG/Scott – Peanuts.  


  121. Oh well it wont paste as it shows.


  122. Nice stick but still down for the day as we grind lower – it's not constructive but tomorrow is another day.  


  123. Worthy of note:  SLCA has been moving in very close relation with oil since the  Nov. OPEC meeting.  Today it is up about $2 following oil's advance.


  124. I'm guessing I'm the last guy on the board to hear this.  But here it is, just in case: [Times of London] 

    "Good afternoon. A massive programme of bond-buying by the European Central Bank was given the green light this morning, paving the way for it to spend hundreds of billions of euros to fight deflation.
    Government bond purchases were "compatible in principle" with EU treaties under certain strict conditions, an adviser to the European Court of Justice said.  Not surprisingly the euro fell after the court opinion was published, as traders took the view that the ECB could push ahead with its plans without much constraint."
     


  125. Phil,

    Thanks to your steadying reasoning I held my Jan 2017 UNG bcs and long oil options (which are finally green)--thanks


  126. From Bloomberg, Jan 14, 2015, 4:33:59 PM


    Jan. 14 — BlackBerry rose the most in more than a decade after Reuters reported that Samsung recently proposed acquiring the Canadian company for as much as $7.5 billion. Bloomberg’s Trish Regan, Scarlet Fu and Cory Johnson have more on “Street Smart.” (Source: Bloomberg)

    (Corrects second paragraph to specify $15.49 as the high end of the range, instead of $15.59.)

    To read the entire article, go to http://bloom.bg/1u4TD0P

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


  127. From Bloomberg, Jan 14, 2015, 3:11:15 PM

    The price of bitcoin has plummeted 32 percent in two days, as the virtual currency’s volatility threatens to undermine its ability to gain mainstream use.

    To read the entire article, go to http://bloom.bg/153l4Mt

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


  128. From Bloomberg, Jan 14, 2015, 4:31:53 PM


    Jan. 13 — Tesla Motors Inc. Chief Executive Officer Elon Musk talks about prospects for electric vehicles and transportation, the timing of the release of Tesla’s Model X and the electric automaker’s sales in China. Musk speaks with Automotive News Publisher and Editor Jason Stein at the Automotive News World Congress in Detroit. (Source: Bloomberg)

    Tesla Motors Inc. (TSLA) tumbled the most in more than two months after Chief Executive Officer Elon Musk cited slowing sales in China amid charging concerns and said the electric-car maker won’t become profitable until 2020, when annual deliveries reach 500,000.

    To read the entire article, go to http://bloom.bg/151B8OQ

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


  129. From Bloomberg, Jan 14, 2015, 4:15:12 PM

     Chipotle Mexican Grill Inc. is protecting its image as a socially responsible company, part of its appeal to younger customers who also seek healthier options and higher-quality ingredients. Photographer: Craig Warga/Bloomberg

    Chipotle Mexican Grill Inc. (CMG) halted pork sales at about one-third of its approximately 1,700 U.S. restaurants after discovering violations of its pig-housing policies at a supplier.

    To read the entire article, go to http://bloom.bg/1B1EEH1

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


  130. From Bloomberg, Jan 14, 2015, 3:26:41 PM

    Natural gas futures jumped the most in 11 months as a blast of arctic weather predicted to swoop into the U.S. signaled stronger demand after a mild December.

    To read the entire article, go to http://bloom.bg/1B17Nlt

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


  131. From Bloomberg, Jan 14, 2015, 3:10:50 PM


    Caesars Entertainment Corp.’s Caesars Palace casino stands in Las Vegas, Nevada. Photographer: Jacob Kepler/Bloomberg

    Caesars Entertainment Corp. (CZR) will put its main operating unit into bankruptcy tomorrow in Chicago, setting up a showdown with dissident creditors who filed their own case two days ago.

    To read the entire article, go to http://bloom.bg/1yc4kAd

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


  132. From Bloomberg, Jan 14, 2015, 4:40:40 PM

    Canadian stocks fell a fourth day, posting the longest slide in six weeks, as consumer shares declined and metal miners plunged after copper slid to a three-year low.

    To read the entire article, go to http://bloom.bg/1523kkH

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


  133. From Bloomberg, Jan 14, 2015, 4:16:27 PM


    Jan. 14 — The U.S. economy continued to expand from mid-November through late December, bolstered by higher consumer spending and expanded manufacturing in most places as prices “increased slightly” on balance, according to the Federal Reserve’s Beige Book report. Peter Cook reports on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

    A Federal Reserve survey showed most regions saw “modest” or “moderate” economic growth driven by gains in consumer spending, while the energy-rich Dallas district slowed as oil prices plunged.

    To read the entire article, go to http://bloom.bg/1zdbbch

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


  134. From Bloomberg, Jan 14, 2015, 3:37:34 PM

    Lower Manhattan office rents rose to a record in 2014 as a space shortage in neighborhoods to the north drove tenants to area with the borough’s lowest leasing costs.

    To read the entire article, go to http://bloom.bg/1zdB3os

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


  135. From Bloomberg, Jan 14, 2015, 10:03:54 AM

     Jeffrey Gundlach, co-founder of Doubleline Capital LP, sees U.S. economic growth falling short of economists expectations this year as falling oil prices hurt investment and hiring in the energy industry. Photographer: Chris Goodney/Bloomberg

    Jeffrey Gundlach’s DoubleLine Capital plans to start its first fund dedicated to finance projects such as bridges, roads and tunnels.

    To read the entire article, go to http://bloom.bg/1B1B5k2

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


  136. From Bloomberg, Jan 14, 2015, 7:11:11 AM


    Buyers are scrambling for products making technological advances, such as immunotherapy, a new form of cancer treatment that harnesses the body’s immune system to fight the disease. Source: BSIP/UIG via Getty Images

    After being overshadowed last year by the boom in big pharmaceutical mergers, biotechnology deals are kicking off 2015.

    To read the entire article, go to http://bloom.bg/1xY3jK6

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


  137. From Bloomberg, Jan 14, 2015, 4:20:07 AM

     Jan. 13 (Bloomberg) — The “clearest trade” for 2015 is that the dollar continues to appreciate, says Andrew Wilson, Goldman Sachs Asset Management’s EMEA chief executive officer. He also discusses European Central Bank policy, Treasury yields and the impact of oil’s plunge with Jonathan Ferro on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Woodside Holdings Investment Management, a Singapore-based family office, has almost all of its cash in U.S. dollars as it expects the euro, pound and yen to extend their slides to multi-year lows.

    To read the entire article, go to http://bloom.bg/1C59tai

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


  138. Watch this video at http://bloom.bg/14YeuH9

    Cheaper Oil Is Double-Edged Sword for U.S.: Chovanec

    Jan. 14 — Silvercrest Asset Management’s Patrick Chovanec discusses the performance of U.S. equities and the World Bank’s growth outlook with Bloomberg’s Angie Lau on “First Up.” (Source: Bloomberg)

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


  139. From Bloomberg, Jan 14, 2015, 4:24:44 PM


    Jan. 14 — Bloomberg’s Julie Hyman and Scarlet Fu update the latest retail sales report and market news on “In The Loop.” (Source: Bloomberg)

    U.S. holiday sales rose 4 percent from a year earlier, marking the biggest increase since 2011, even amid signs of a consumer-spending slowdown in December, according to the National Retail Federation.

    To read the entire article, go to http://bloom.bg/151zo8h

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


  140. From Bloomberg, Jan 14, 2015, 3:35:32 AM

    Mario Draghi signaled that the European Central Bank is ready to buy government bonds to revive euro-area inflation, according to German newspaper Die Zeit.

    To read the entire article, go to http://bloom.bg/1DFaLx4

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


  141. From Bloomberg, Jan 14, 2015, 11:29:46 AM

     Olli Rehn, a Finn who became EU economy chief three months before Greece was forced to request emergency aid from the euro area and the International Monetary Fund in April 2010, said the next Greek government will have limited scope to loosen the fiscal-austerity and market-opening conditions that have underpinned the rescue. Photographer: Andrew Harrer/Bloomberg

    Greece is unlikely to win any writedown on debt owed to the euro area and should instead focus on possible relief in the form of longer repayment periods, said Olli Rehn, who helped avert a Greek exit from the European single currency at the height of the financial crisis.

    To read the entire article, go to http://bloom.bg/1yc5z2c

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


  142. From Bloomberg, Jan 14, 2015, 11:05:23 AM

    Russia will unseal its $88 billion Reserve Fund and use it to acquire rubles, the government’s latest effort to stem the country’s worst currency crisis in almost 17 years and limit its effects on the ailing economy.

    To read the entire article, go to http://bloom.bg/151flH3

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


  143. From Bloomberg, Jan 14, 2015, 3:00:13 PM

    No, the economy didn’t get scrooged last month.

    To read the entire article, go to http://bloom.bg/1AfAcz0

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


  144. MCP is a dog with fleas. One of my worst picks. Moving on…..


  145. If this is the way that option expiration days work with oil, I have to mark them down on my calendar!


  146. My way of Evaluating BCS "Tree planted positions". One of our members asked earlier on re. a Jan15 90 short put position of SLB. Phil somewhat solved the 12$ ITM position by doing some fancy rolling.

    Due to the general drop in oil many of my normal good positions somehow connected to the oil industry have suffered somewhat temporary damage to my holdings. 

    I am lucky enough to hold the Jan15 60 putter so at 78.42 I do not worry to much. But looking at the date I sold that put on 12/18/12 for 7.75. That shows you what a far out sold putter can bring for you if you patient.

    Now I hold SLB Jan16 BCS 80/92.50 for 16.94/10.28 at present the call has quite dropped to 7.82 and the caller to 3.67 which is just a fantasy premium still to be paid for a 92.5 caller. Now where do I stand here as to the value of my position 12 month to go? I say OK they still going to pay me 7.82 for my 80 call and I have received 10.28 for my 92.5 caller. So if I would, and I don't , close the position now, I would have received 18.10 so still 1.16 more than were my cost at purchase. I could start rolling the Jan16 call to Jan 17 say to 70 call. But it would cost me in the regent of 7.73 still way to high for a 10$ down and one more year out. By rolling I like to look at a 10 $ up or in this case down, not to pay more than 5$. I could obviously sell 1/2 90 Jan17 callers for about 7$ reducing my rolling cost to 4.23. But here on my guts feeling, SLB should recover with the rise in oil in the not to distant future, and I would possible face the 1/2 sold naked callers. 

    So in the above case still have not lost anything I leave the position as is.

    I hope I did not bore you with my thoughts on this matter, but this is the way I look at My position on a Leap BCS.  


  147. Phil / Oil and gas move – so was this all due to Putin today?  could be reversed quickly.  what's your take?

    http://www.zerohedge.com/news/2015-01-14/russia-cuts-ukraine-gas-supply-6-european-countries


  148. CL  options expire 3 day before the contracts roll over, and they pin the options just like the pin AAPL options

    Those options expired today

    TOS wants futures contracts to be rolled by jan 19th

    When options expire TOS rolls /CL to next months contract which happens to be /CLH5

    You can still trade CLG5 until Monday but volume in this contract will decline as people roll forward


  149. ST J /Oil contract expiration

    Yes every expiration day the price is extremely volatile  thing previous 2 months all the action was in downward direction



  150. yodi / bcs – Never bored reading your thought process on specific plays. As I'm still learning, this is exactly the kind of information I'm looking for. Keep it coming!


  151. What a crazy day in oil world. Lucky to come out with a nice profit after a quick recovery at 8PM from a dramatic pop at 6:45PM!  I won't ever get caught by surprise when options expire again. Next one is Feb. 17, so keep an eye on it. Also just saw the news story about arctic cold coming next week, so that probably helped in the quick rise.


  152. Phil

    I have a few ABX Jan 2015$20 puts that I sold for $5, now about $10.

    DD to the 2016 puts for even, or do,you have something better you can do with them?


  153. I have mentioned OPK a few times and today when the market was so far down, OPK was up! Todays news was a $3M award from NIH to develop a quick test for Lyme disease using their Claros system. I do believe this is a company on the brink of being a major player in the biotech world having sold another product to Pfizer for $500M recently. Very very speculative, but it has paid off nicely for anyone who got in when I first mentioned it at $8 just a couple of months ago. Major league CEO with a proven track record who buys shares on the open market daily for the last few years. Closed today at $10.30 Hoping to see it reach $15 soon when a couple of other items in their pipeline hit. 


  154. Good morning and holy cow!  

    Oil hit $50 just after midnight, /NG topped out at $3.37, gasoline at $1.385 and the markets spiked up almost 1%.  India cut their reserve rates 0.25% – a total surprise.  Also, positive notes from China and /NKD is up from 16,600 yesterday to 17,200 just now (and I like /NKD short on that line with tight stops above):

    Japan Stocks Higher

    Stocks in Japan rebounded from a near one-month low Thursday, as global growth worries eased and the U.S. dollar edged higher.

    Surprise!! Japanese Stocks Surge After Machinery Orders Crash 14.6% – Worst In 5 Years

    China Adds 3.5 Million Investors as Funds Exit: Chart of the DayChinese brokerages welcomed more individual investors the past six weeks than any similar period in seven years. Those 3.5 million new customers are being greeted by some fund managers on the way to the exits.

    China's Credit Growth Surges; Shadow Banking Stages a ComebackChina’s shadow banking industry staged a comeback in December as equity investors and local governments contributed to a surge in credit, underscoring challenges for a central bank trying to revive growth without exacerbating risks. Aggregate financing was 1.69 trillion yuan ($273 billion), the People’s Bank of China said in Beijing today, topping the 1.2 trillion yuan median estimate in a Bloomberg survey. While new yuan loans missed economists’ forecasts, shadow lending rose to the highest in monthly records that began in 2012?

    China Loan Growth Slows

    China posted weaker-than-expected loan growth in December, but record bank-credit growth for all of 2014 showed Beijing’s determination to prop up its slowing economy.

    BAML: Dr. Copper Is Shouting 'Sell' Chinese Stocks

    Bank of Korea Lowers Growth Forecast

    South Korea’s central bank cut its growth and inflation outlooks for the year, as weak domestic demand weighs on Asia’s fourth-largest economy.

    Europe's imperial court is a threat to all our democraciesThe European Court of Justice has this time departed a long way from the rule of the law, even by its own elastic standardsThe European Court of Justice has declared legal supremacy over the sovereign state of Germany, and therefore of Britain, France, Denmark and Poland as well. The ECJ's advocate-general has not only brushed aside the careful findings of the German constitutional court on a matter of highest importance, he has gone so far as to claim that Germany is obliged to submit to the final decision. "We cannot possibly accept this and they know it," said one German jurist close to the case.

    German Politician Sees Conflict Over EU Court Bond Ruling. Klaus-Peter Willsch, economics adviser for Germany's CSU/CDU parliamentary faction, says European Court of Justice ruling on European Central Bank's bond-buying plan may provoke a legal conflict with the Federal Constitutional Court, citing interview. The Karlsruhe-based constitutional court designated the OMT program as incompatible with existing law and the European court ruling can't simply wipe away those concerns. Two institutions heading into a legal conflict unless the ECJ plausibly explains why their ruling isn't contrary to European law. Says a rift has opened up in Europe over the ECB's crisis management strategy. ECB monetary, financial and economic policies have become entangled in a Gordian knot.

    German Industry Official Warns of 'Artificial' Inflation. Martin Wansleben, managing director of the DIHK national industry and trade chambers, says that low inflation in 2014 and decline in oil prices will result in a real wage gain of EU5b. European Central Bank's bond purchase program will lead to contrived rise in inflation rates. ECB needs to be cautious about increasing inflation at any cost, he said.

    More signs we have broken the backs of consumers:  Lottery Sales Are Collapsing

    2014's "Robust" Jobs Market Produced No Wages, And Now No Spending

    BlackBerry denies talking with Samsung about buyout offer (updated)

    • In response to Reuters' report, BlackBerry (NASDAQ:BBRYsays it "has not engaged in discussions with Samsung (OTC:SSNLF) with respect to any possible offer to purchase BlackBerry."
    • BBRY -11.2% AH. Shares are still up 15% from yesterday's close.
    • Update: The Globe and Mail reports BlackBerry has "shunned a handful of takeover overtures in recent months as its board of directors and largest investor continues to support a restructuring strategy that they expect will deliver greater shareholder value than current acquisition offers."

    Biggest day for oil in more than two years

    • A $3 move higher in the last hour has WTI crude oil ahead by almost 6% on the session and above $48 per barrel. There's no particular news behind the move, just a heavily oversold asset burning a few greedy shorts.
    • Earlier, the EIA reported an unexpected big increase in crude inventories. When the bears couldn't take oil any lower on the news, it likely rang a bell to start buying.
    • Previously: EIA Petroleum Inventories (Jan. 14)
    • USO +3.6%

    Markets Turmoiled But Crude 'Buying Panic' Lifted Stocks "Off The Lows"

    If at first you don't succeed…  Goldman Sachs(GS) Warn Oil Prices May "Undershoot" $39

    Global Gold Demand Seen Rising 15% by HSBC on Asia-to-ETP Buying. Gold demand will rebound in 2015 as bullion consumption in Asia increases and investors return to exchange-traded products backed by the metal, according to HSBC Securities (USA) Inc. Global demand may rise 15 percent to 4,127 metric tons this year, analysts James Steel and Howard Wen wrote in a report dated Jan. 14. Consumption reached a record 4,582.3 tons in 2011, when prices climbed to a peak of $1,921.17 an ounce, according to data from the World Gold Council.

    Nowhere to Hide for Miners as Copper Joins Commodity RoutCopper’s plunge is leaving the world’s largest mining companies with nowhere left to hide from the rout engulfing commodities and increasing pressure on them to cut spending and dividends. Copper fell as much as 8.7 percent yesterday in London, triggering a selloff in mining equities including BHP Billiton Ltd. (BHP), Glencore Plc (GLEN) and Rio Tinto Plc. (RIO) The metal is down 12 percent on the London Metal Exchange this year amid concern about a slowdown in China, the biggest consumer of metals.

    Iron Ore Forecasts Cut by UBS on Supply Growth and Oil Rout. Iron ore will extend losses as the biggest producers expand low-cost supply and demand growth stays weak, according to UBS Group AG, which cut price forecasts and listed the commodity as its least-favored metal. Miners’ shares fell, with Fortescue Metals Group Ltd. (FMG) down 17 percent this week. Cheaper energy prices are lowering the cost of mining and shipping metals including iron ore, according to the bank, which forecast a rising global glut. The raw material will average $66 a metric ton this year, 22 percent less than previously forecast, and $65 in 2016, down 21 percent, it said. Surging low-cost supplies from BHP Billiton Ltd. (BHP), Rio Tinto Group and Vale SA are outpacing demand growth in China, spurring a 47 percent plunge in prices last year. UBS’s price-forecast cuts follow similar reductions yesterday from Citigroup Inc., which cited rising supplies and cheaper oil. Among projects set to start output this year amid the bear market is the A$10 billion ($8.2 billion) Roy Hill mine in Australia’s Pilbara.

    RadioShack Prepares Bankruptcy FilingStruggling Electronics Chain, in Talks with Lenders, Could File as Soon as Next Month. RadioShack Corp. is preparing to file for bankruptcy protection as early as next month, people familiar with the matter said, following a sputtering turnaround effort that left the electronics chain short on cash.

     

    SPY DAILY

    INDU WEEKLY

    NDX WEEKLY

    VIX WEEKLY

    I'm not convinced that this sudden surge in the Futures is warranted but too scary to short it at the moment (other than the /NKD play).  


  155. UNG/Nols – Good job staying the course.  

    Oil/Terra – Totally insane and irrational at the moment BUT the one thing I do know for sure (and I don't know how I can be more clear on this than I was on Monday) is that $45 is TOO LOW.  It's not about Putin or China, or Japan or Saudi Arabia – THIS IS MATH!!!  It costs a global average of $70 to pull 90Mbd out of the ground.  At $55, about 20Mbd of production is operating in the red.  

    We can allow for falling production costs, the shuttering of unprofitable wells, a pullback in E&P spending (which will lead to shortages down the road), declining wages and asset write-offs to lower the costs by about 20%, to $55 but probably on 10% less production (eliminating the most expensive 10%).  Since tankers arrive about 3 weeks after they leave the production port, if we assume that failing $70 around Thanksgiving was probably ignored into Christmas but there was no way to ignore this month and within 30 days we will begin to see the effects.  

    Meanwhile, traders haven't got that kind of time-frame and wildly react to day to day news while professional manipulators like GS and their pet media hounds chase retailers out of perfectly good positions while they load up the truck with cheap oil and cheap energy stocks.  This is how the game is played and this is how the game has always been played yet – no matter how many times I explain this to people and no matter how many times I am right – people still think this time is different!  

    Oil Options/Bert – This happens every month and there has not been a predictable pattern to it.  Today there was a huge short squeeze but mostly caused by people piling in on Goldman's call on Monday getting massively burned in short order.  Even people here were buying short options on oil, despite my objections to shorting oil at these levels, so you can imagine what must have been going on at the bandwagon sites.  

    Big Chart – 2.5% drops mean 1% strong bounce lines can be drawn for the day.  It doesn't change the longer-term weak and strong bounce lines but, just a quick idea of what would constitute a strong move for today only (at least a 1% move back up) – anything less than that is just a pause for the bear move (paws?).  

    Notice how everyone pretty much bounced off one of our support lines – so this is to be expected, as is a nice bounce in oil, which fell from $90 to $45 so call a bounce $9 to $54 and $18 to $63 off the macro move though the bigger picture is $100 to $50 so above $50 we'd look for $60 (weak) and $70.  That means $54-63 is the zone we'll expect to consolidate in and, as you can see – the 50 dma is right at $63 – marking the likely top of that range. 

    Forecasts/Craigs – No actual change from Accu-Weather.  They are reacting to a very short-range cold snap and, after this weekend, it will be another week before it's cold anywhere this country so an interesting time to play /NG as we can probably flip short if they hit $3.50 – we'll keep an eye on it.  

    ABX/Maya – Well, I'd wait until all the premium is gone as ABX is $10.40 so $9.60 is the right price, why pay even 0.20 to roll it when you could just take the assignment and be no worse off?  The 2017 $15 puts are $5.75 so you can roll to less than 2x of those even and, since you sold the originals for $5, you net $2.50ish on the $15s and you end up owning 2x for $12.50 – not a terrible fate.  

    If you don't want to make a 2x move, you could take the assignment, sell the same $15 puts and the $10 calls for $2.75 and your basis would be $20 – $5 (original collected) – $5.75 (new puts) – $2.75 = $6.50 and being called away at $10 would be a nice $3.50 profit (53%) despite the 50% drop.  Of course ABX would have to be over $15 but, if not over $15 but over $10, you net in for $11.50 anyway as you made $3.50 on the first 1x and, of course, worst case would be owning 2x at $8.25.

    This is THE MOST IMPORTANT THING I WANT PEOPLE TO LEARN THIS YEAR – If you enter positions scaling in with 1x (out of 4x positions), you will be able to EASILY adjust to 50% drops in your underlying securities.  When you combine this with a nice, sensible, Get Rich Slowly strategy – you can accumulate massive amounts of wealth and ride out even the most volatile markets.  

    In the above ABX play, Maya sold the $20 puts for $5.  THAT is the way we initiate a trade and the reason why is because, even after ABX drops 50%, Maya can commit just a little bit more capital (2x at $8.25 vs 1x at $15) to be PROFITABLE at $10 – 50% below the original strike.  

    OPK/Craigs – Great call but, as I said at the time, I like the idea of diagnostic companies but I know nothing about them, so I simply don't play.  That certainly doesn't mean we don't LOVE hearing about these things – congrats and thanks!  

    I have a highly speculative trade for the group. I have been following Opko (OPK) for 3-4 years and bought in at $4 then sold when it spiked to over $12 a while back. Got back in when it dipped back under $8 in the spring I think. Today they announced a deal with Pfizer on one of their many promising pipeline items that brings $295 mil in revenue with another $275 if they meet regulatory approvals. The chairman is Dr. Philip Frost who has made a career of building and selling companies that made fortunes for investors. He has been buying shares in the open market on a daily basis, so I have to believe he is planning to do it again. He is very old and this is extremely risky, but I wouldn't bet against but his guy, as so many short sellers are doing.

    Oil back to $48 already – $47.50 must hold for them.  Indexes off their highs, now up 0.6%.  /NKD 17,165. 


  156. Phil- I saw a report in WSJ that says the forecasts are being reversed for late January, so be careful on that. Here is the first paragraph of what I read

     

    GAS MARKETS

    Natural Gas Surges to January High on Colder Weather Forecasts

    Move Demonstrates How Powerful a Force Winter Can Be at Boosting Market

    By 

    TIMOTHY PUKO

    Jan. 14, 2015 3:17 p.m. ET

    0 COMMENTS

    Natural-gas prices surged to their highest one-day percentage gain in 11 months as weather forecasts showed colder-than-expected temperatures toward the end of January.

    Gas has rallied for two days, pushing its strongest day of gains and back-to-back gains, by percentage, since mid-February. Futures are up nearly 16% since Monday’s close.

    The move demonstrates how powerful a force winter can still be at boosting the market, analysts and traders said. Record production, tepid demand from a mild December and predictions for a warmer-than-normal late January had led to a massive selloff, dropping prices by more than a third since November. But the late-January forecasts are reversing course, boosting expectations for gas demand to heat homes.


  157. oops, meant to add this

    A relaxed Pacific Jetstream is looking more likely for the last week of the month, increasing the chance for an arctic blast to hit the country, Weather Services International in Andover, Mass., said in its morning update. It probably won’t be extreme enough to set any record-low temperatures, though, said Phil Vida, lead forecaster at MDA Weather Services. In the major markets for gas-heating demand, Chicago looks like it will have the coldest spell, about 5-degrees-Fahernheit below normal, according to MDA’s forecast.

    The swing does change the overall look for January, making the whole month colder than average, meteorologists said. It adds to a cold start to the month that sent demand for natural gas as high as 129 billion cubic feet a day, its fifth highest since 2005, according to the U.S. Energy Information Administration. About half of all U.S. homes use gas for heat, making winter the common peak for prices.


  158. Thanks Craig's, we'll have to see then.  


  159. From Bloomberg, Jan 15, 2015, 3:47:14 AM

     Jan. 15 — David Bloom, London-based head of currency strategy at HSBC Group Plc, talks about the dollar, the yen and the euro. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    The World Economic Forum has long been something of a coming-out party for emerging economies, with developing countries dispatching politicians and executives to the Swiss resort of Davos to drum up interest. This year, the big magnet for investment looks to be an older player on the global stage: the United States.

    To read the entire article, go to http://bloom.bg/1yjMQ3l

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


  160. From Bloomberg, Jan 15, 2015, 3:44:07 AM


    Low inflation and global worries prompted India’s rate cut.

    After months of preaching monetary discipline to fend off inflation, Raghuram Rajan shocked India today by unexpectedly slashing the benchmark repurchase rate to 7.75 percent from 8 percent. Close observers shouldn’t have been surprised. India’s central banker, who famously predicted the 2008 global crisis, warned in an op-ed just yesterday that several of the world’s major economies were “flirting with deflation,” with dire implications for emerging markets like his. The threat of global “secular stagnation” — combined with lower prices in India — no doubt prompted him to act.

    To read the entire article, go to http://bv.ms/1ykn6nu

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


  161. From Bloomberg, Jan 15, 2015, 3:10:11 AM

    European stocks advanced, rebounding from yesterday’s drop, as investors weighed company earnings results.

    To read the entire article, go to http://bloom.bg/1AhLG4M

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


  162. From Bloomberg, Jan 14, 2015, 4:36:18 PM

    The U.S. consumer, that dynamo of the global economy, just took a step back.

    To read the entire article, go to http://bloom.bg/154FCo1

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


  163. From Bloomberg, Jan 15, 2015, 3:14:07 AM


    Signage is displayed next to a fountain outside of Caesars Palace in Las Vegas, Nevada, U.S. Photographer: Jacob Kepler/Bloomberg

    Caesars Entertainment Corp., the U.S. casino company, put its main operating unit into bankruptcy in Chicago today, setting up a showdown with dissident creditors who filed a competing case in Delaware.

    To read the entire article, go to http://bloom.bg/1AhH4fb

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


  164. From Bloomberg, Jan 15, 2015, 2:10:25 AM

     Jan. 12 — Axel Weber, chairman of UBS AG, talks about the outlook for Federal Reserve and European Central Bank policy, and China’s economy and stocks. Weber speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    China’s stock market swelled $1.8 trillion in value in six months as trading volumes hit records. The Shanghai Composite Index jumped 3.5 percent today for a gain of more than 60 percent since mid-July. Should the bull market be sustained, analysts see at least six implications for finance and the economy.

    To read the entire article, go to http://bloom.bg/154fBoG

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


  165. From Bloomberg, Jan 14, 2015, 10:00:44 PM

     Tadashi Yanai, chairman of Fast Retailing Co., is betting on sales outside Japan to fuel growth as domestic demand is damped by stagnant economic growth and a declining population. Photographer: Yuriko Nakao/Bloomberg

    Fast Retailing Co. (9983), Asia’s biggest clothing seller, said it would improve working conditions at two factories operated by suppliers in China after an advocacy group published a report highlighting abuses.

    To read the entire article, go to http://bloom.bg/1KLArdi

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


  166. From Bloomberg, Jan 15, 2015, 3:19:28 AM

     Jan. 15 — Kelvin Tay, a money manager at UBS Wealth Management in Singapore, talks about Asian stocks, currencies and bonds. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Stocks rose around the world, with U.S. equity-index futures signaling the first gain in five days, while copper led a rally in industrial metals. Bonds retreated with Japan’s yen, and oil retreated.

    To read the entire article, go to http://bloom.bg/1zeeWOE

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


  167. From Bloomberg, Jan 14, 2015, 7:14:26 PM


    The BlackBerry Ltd. Classic mobile device is displayed at press conference during the 2015 Consumer Electronics Show (CES) in Las Vegas, Nevada, U.S., on Jan. 7, 2015. Photographer: David Paul Morris/Bloomberg

    What’s Blackberry Ltd. really worth? That old question’s back again.

    To read the entire article, go to http://bloom.bg/153S6Mv

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


  168. From Bloomberg, Jan 14, 2015, 7:01:00 PM

     A man enjoys the winter sunshine in the gardens of Hampton Court Palace in west London, on Dec. 28, 2014. Photographer: Andrew Cowie/AFP via Getty Images

    Europe’s attempt to revive its carbon market is being thwarted by a lack of pollution.

    To read the entire article, go to http://bloom.bg/1KLIyqt

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


  169. From Bloomberg, Jan 15, 2015, 3:43:23 AM

     Jan. 15 — Kelvin Tay, a money manager at UBS Wealth Management in Singapore, talks about Asian stocks, currencies and bonds. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Asian stocks headed for the biggest gain in seven weeks after Japanese exporters surged as the yen weakened against the dollar. Chinese shares rallied as credit data fueled speculation the government will support growth.

    To read the entire article, go to http://bloom.bg/1KLoCDW

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


  170. From Bloomberg, Jan 15, 2015, 2:45:45 AM

    China’s stocks rallied the most in a week as faster-than-estimated credit growth spurred speculation authorities are taking steps to support economic expansion.

    To read the entire article, go to http://bloom.bg/1KLFoTn

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


  171. From Bloomberg, Jan 15, 2015, 3:39:40 AM

    An interest rate for overnight loans on the Shanghai Stock Exchange jumped the most in seven weeks as investors borrowed cash to subscribe for new share sales.

    To read the entire article, go to http://bloom.bg/1KLPgN9

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


  172. Watch this video at http://bloom.bg/151l2VF

    30-Year Treasury Yield Falls to Record Low

    Jan. 14 — Treasury 30-year bonds yields fell to a record-low 2.42 percent as the collapse in oil and commodity prices fueled speculation the global economy may fall into a deflationary spiral and stifle growth. Bloomberg’s Scarlet Fu reports on “In The Loop.” (Source: Bloomberg)

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


  173. Watch this video at http://bloom.bg/1yfWhkh

    Tesco Rating Cut to Junk by S&P, Outlook Stable

    Jan. 14 — Tesco PLC saw its credit rating cut to junk by Standard & Poor’s following last week’s downgrade by Moody’s Investors Service. Bloomberg’s Olivia Sterns reports on “Bloomberg Surveillance.”

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


  174. From Bloomberg, Jan 15, 2015, 3:17:02 AM

    China’s central bank has changed the way it calculates banks’ loan-to-deposit ratios by including interbank deposits and lending for the first time, the Shanghai Securities News reported.

    To read the entire article, go to http://bloom.bg/155rNFT

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


  175. From Bloomberg, Jan 15, 2015, 2:38:53 AM

    Oil resumed its decline after the biggest gain since June 2012 as U.S. crude production increased, bolstering speculation a global supply glut that spurred last year’s price collapse may persist.

    To read the entire article, go to http://bloom.bg/154pxyB

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


  176. From Bloomberg, Jan 15, 2015, 1:41:32 AM

     A pedestrian carries shopping bags while walking on Spring Street in the SoHo neighborhood of New York. The steepest drop in retail sales in almost a year spurred some economists to lower their U.S. spending and growth forecasts, heightening concern over the global slowdown after the World Bank downgraded its prediction for the world economy this week. Photographer: Ron Antonelli/Bloomberg

    Japanese stocks rose for the first time in three days, with the Topix index gaining the most in a month, as the yen retreated from its strongest level this year.

    To read the entire article, go to http://bloom.bg/1u5hq0G

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


  177. Wow, 250 point negative swing in Dow futures based on Swiss bank decision to cut rates.  Uh oh.


  178. Wow, I went to back to sleep again because I thought things were going to be boring!  

    Round one of currency wars begin, I guess.  

    The Euro dropped 1%, the Yen gained 1%, which was fantastic for our /NKD 17,200 short, now 16,900 for a $1,500 per contract gain already!  

    The Dollar initially spiked to 93.3, then down to 91.5 and now back to 92.18, which is down just a bit from 92.50 where we ended up yesterday. Gold is up 1.5% at $1,252, silver $17.13, copper $2.54, nat gas $3.32 gasoline $1.32, oil $48.21  (did test $47.50) and Brent is at $47.50 (must hold).

    That was some CRAZY shit this morning!  

    We haven't talked about it in a long time but the Swiss have been supporting the Euro, keeping it from falling (as best they can) because they didn't want the Franc to get too strong.  The Franc to Euro just popped 20% (yes, in an hour) as they release the very expensive artificial cap they have kept on for years.  

    The Swiss National Bankhas intervened in markets since September 2011 to prevent the franc climbing too high, acquiring billions of euros in an effort to stop the common currency dropping below 1.20 to the franc.

    In the aftermath of the SNB’s shock move, the euro plunged as low as 0.93 francs.

    This is fantastic news for those of us with Swiss Bank Accounts – we just got a very nice pop to our CASH!!! this morning!  cheeky

    This move makes sense for the Swiss as any further easing by Draghi next week would have cost them hundreds of Billions of Dollars to keep propping up the Euro relative to their currency – a total waste of resources – especially when Draghi doesn't seem to have a limit to his generosity. 

    On the bright side, I'd say this indicates that the ECB will absolutely be making an easing move next week or the Swiss wouldn't have done this completely unannounced move the way they did.  The repercussions of this action will last longer than today.  There are currency funds that will take insane losses on this move – EUR/CHF has been at 1.20 so long we got bored looking at it more than a year ago.   

    The currency contracts trade at $1,100 per penny per contract and is currently halted at a 0.025 drop but spot pricing is showing 0.20 drops!  How would you like to wake up to that trade – especially when the number one strategy has been a short strangle around the 1.20 line, which has guaranteed a payoff for about 4 years?  This is when the SNB first intervened, when Greece first had troubles back in Sept, 2011 and they set a floor at 1.20 to the Euro:

    It's been that way ever since – until 4am this morning!  

    All the Swiss bonds out to 7 years have flipped negative as they are now priced in the World's strongest currency:

    Embedded image permalink

     

    Over two decades ago, George Soros took on the Bank of England, and won. Just before lunch local time, the Swiss National Bank took on virtually every single macro hedge fund, the vast majority of which were short the Swiss Franc and crushed them, when it announced, first, that it would go further into NIRP, pushing its interest rate on deposit balances even more negative from -0.25% to -0.75%, a move which in itself would have been unprecedented and, second,announcing that the 1.20 EURCHF floor it had instituted in September 2011, the day gold hit its all time nominal high, was no more.

    What happened next was truly shock and awe as algo after algo saw their EURCHF 1.1999 stops hit, and moments thereafter the EURCHF pair crashed to less then 0.75, margining out virtually every single long EURCHF position, before finally rebounding to a level just above 1.00, which is where it was trading just before the SNB instituted the currency floor over three years ago.

    This is F'ing CARNAGE!!!

    Swatch Group fell 15 percent at 1056 GMT, while Richemont CFR.VX was down 14 percent, underperforming a 9 percent drop in the Swiss market index .SSMI following the SNB's announcement. 

     

    "Absolutely shocking … For companies with international operations – translated earnings are going to be lower and if companies make products in Switzerland it is going to hurt margin. It is a terrible day for corporate Switzerland," Kepler Cheuvreux analyst Jon Cox said

     

    Major losses in euro-franc trades are causing panic selling and deleveraging across the board."

    CHRIS BEAUCHAMP, MARKET ANALYST AT IG

     

    "My initial reaction was that it is a sign the ECB is about to do something, which makes it odd that the reaction has been so negative across European stocks. However, it's not every day that a central bank pulls the rug out from underneath something in such a massive way, and clearly people are worried that there's something bigger afoot. This kind of event is the kind of thing that will trigger volatility. This is not a one day thing now."

    DARREN COURTNEY-COOK, HEAD OF TRADING AT CENTRAL MARKETS INVESTMENT MANAGEMENT

     


  179. You know, India did a surprise rate cut earlier too.  That's kind of scary when two Central Banks take emergency liquidity measures in the same day…  


  180. Very unfortunately, I have to be out the door at 8:30 this morning.  I should be back around lunchtime.  Of all the days…


  181. Good Morning—-wow the swiss franc —-incredible—


  182. Crude wants to test overnight highs 49.60