The futures were doing very well, up almost 1% until CNBC put together the tag-team guest spot of Mohamed El-Erian, the notorious bond pusher from Pimpco and "Doctor Doom" himself – Nouriel Roubini in a classic bear and bigger bear face-off that was timed right into the EU’s lunch hour. Roubini’s new book is called "Crisis Economics" and there’s nothing like a crisis to chase people into the loving arms of PIMCO, where El-Erian gets the fees. It’s odd that there’s not even a simple disclosure statement from El-Erian to guide viewers like: "You know, I do well when the market does bad."
This same gloom and doom tag-team was touring America in September of 2008 (see "Roubini, El-Erian – ‘Things are Getting Worse‘") and we’re up about 20% since then but, to be fair, things did get worse first. The boys teamed up again this February (12th) and their predicition of an additonal 20% drop off the February lows (also brought to you by the fear-mongers at CNBC) was completely wrong at the time but the boys dusted themselves off and took this show on the road again as noted in this May 28th article pairing the two’s depressing outlook.
Things were getting better yesterday until Moody’s (the company Buffett owns a large stake in but has nothing to do with according to his testimony) downgraded Greece in the afternoon – something that was not at all unexpected but was treated as market-moving information on a slow news day. Does CNBC push doom and gloom for ratings or are they trying to help their bosses at GE water down the financial regulation bill by making it seem like the average investor is against it or are they just trying to keep Cramer and the Fast Money team from looking clueless? This is why we used to have LAWS that kept our news sources "fair and balanced" - the moment a news provider takes a side with one of their high profile shows or personalities – they then have a vested interest in MAKING the prediction come true – how can that not color their future editorial positions?
As I said last week, Dr. Doom doesn’t have to be in on a conspiracy – He’s Doctor Doom! The media loves him because he is predictable tool and he is…
As if TheStreet.com didn’t already have enough troubles with the SEC investigating their accounting, another Street veteran Doug Kass joins the pile fools who have tried to make prophetic claims regarding the stock market. (Nouriel Roubini is still my favorite.)
On August 26, 2009, Kass authoritatively proclaimed, “Markets top during times of enthusiasm. I believe that the markets are now overshooting to the upside and that the U.S. stock market has likely peaked for the year.”
We set our bounce levels way back on Jan 25th and just yesterday I posted up the WEAK BOUNCE levels we need to see before taking our bullish betting to the next level but we have only skimmed along our lines, finishing yesterday at Dow 10,296 (down by 2), S&P 1,103 (down by 2), Nasdaq 2,190 (down by 10), NYSE 7,001 (up by 1) and RUT 614 (down by 6). This may be seem like some pretty amazing targeting 10 days in advance but, actually, we could have predicted this move last year as it’s nothing more than the same 5% Rule levels we’ve been using since the middle of last year.
That is why, we are not in the least bit impressed by close. Close, as they say, is no cigar! Don’t forget those are the natrural dead-cat type bounce levels off the drop from the top that we are trained to IGNORE as they are meaningless in the grand scheme of things. What is meaningful is when they we retake those levels and that means we found a true floor at 5% (see weekend chart) NOT taking back AND holding our retrace levels means we are very likely to see phase 2 of our leg down and hit 10% drop levels of Dow 9,630, S&P 1,035, Nasdaq 2,088, NYSE 6,660 and Russell 585 so we will now become much more concerned by failure or those lower levels (10,058 on the Dow etc) which MUST HOLD.
We’re not there yet, we MAY be consolidating along the 5% lines and that would be good, but unnerving. We have our disaster hedges in place and we got our commodity rally so we can on some oil puts (what a joke at $77.50 already with yet another inventory build to be announced today) and perhaps even some gold puts as we test $1,130 (GLL $9 puts have very little premium at .90). Our favorite hedge of the moment is once again EDZ, who are back to $5.50 thanks to a nice move up in Asia today. March $5 puts can be sold for .45 and that’s a very nice way to collect premium as EDZ has to fall 20% before you even owe the putter a nickel but the July $4/6 bull call spread at .85 pays $2 (up 135%) should emerging markets falter…
“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini said in a Jan. 30 Bloomberg Television interview following a U.S. Commerce Department report that showed economic expansion of 5.7 percent in the fourth quarter. “I think we are in trouble.”
Roubini said more than half of the growth was related to a replenishing of depleted inventories and that consumption was reliant on monetary and fiscal stimulus. As these forces ebb, the rate will slow to 1.5 percent in the second half of 2010.
No really? We’ve embedded $500 billion in annual transfer payments of various forms over the last 18 months. That’s about 3% of GDP, or more than the "advance" GDP number says that personal consumption expanded (2.2%)
In other words, but for the additions to transfer payments over what was present before we went into this mess consumption would be printing a solid negative number – still.
Summers said that the "statistical recovery" won’t mask "a human recession."
Human recession Larry? Is that like the "mental recession" that John McCain’s favored economic wonk proclaimed during the campaign?
Never mind our "good friend" President Obama, who is proposing a $3.8 trillion budget today. In a break with the usual "optimistic" view compared to the CBO, he’s predicting that the deficit this year will total $1.8 trillion, or almost 50% of the total federal spending – and that’s with more than $800 billion in higher taxes (which have a near-zero chance of actually passing Congress in an election year!)
The President claims to be enacting a "spending freeze" and claims that it is "everything but security and defense." In typical Washington form this is a lie – education and R&D (everywhere) are getting a 6% increase. This, while inflation is currently running at a statistical zero, and on the back of the last year’s budget which amounted to a "ratchet up" game played with the voters.
This is the same game, by the way, that was played with the states and their so-called "Federal Help"…
Debt-O, debt-uh-oh
Interest come and we need another loan
Debt-O, debt-uh-oh
Interest come and we need another loan
Work our lives just to lose our homes
Interest come and we need another loan
Stack default swaps till they come undone
Interest come and we need another loan
Come on Economists, tell us some more BS
Interest come and we need another loan
Come on Economists, tell us some more BS
Interest come and we need another loan
6%, 7% – it’s a credit crunch
Interest come and we need another loan
6%, 7% – it’s a credit crunch
Interest come and we need another loan
Debt-O, debt-uh-oh
Interest come and we need another loan
Debt-O, debt-uh-oh
When interest comes we’ll need another loan
It was the best of times (with the IMF predicting 3.9% Global growth) and the worst of times (with Roubini saying we’re all doomed) at Davos this week as the men who rule the world gathered to divide the spoils over card games while vying with each other for podium and TV time so they could talk their various books from the safety of the Swiss mountains. Davos, a tiny village perched on a mountain with just two main streets, lacks the protests of other Global gatherings. During the annual meeting, the town is taken hostage by thousands of police. “Anyone who looks like a protester can be thrown off the train,” says Marco Leutholz, head of the local Socialist party (and that train often overlooks steep cliffs!). Sir Howard Davies (director of the LSE) writes:
The mood is certainly better than last year, when the world was ending, but it is worse than at the beginning of last week. Alessandro Profumo of Unicredit acutely observed that Davos is likely to accentuate whatever mood you arrived in, rather as alcohol does, I guess. So those who arrived nervous about the economic prospects are leaving even more jittery. If you arrived feeling pessimistic, you will leave somewhere between suicidal and homicidal.
The market background has not helped. Anxiety about Greece has grown over the past three days. In the circumstances, it was strange to see both the Greek prime minister and his finance minister here. Maybe the subtext was to show that there can be no crisis if they are munching muesli in the mountains, but though some may have been reassured, more people asked who was at home minding the taverna.
Jobless numbers are on the upswing as temporary holiday hiring is being trimmed faster than census jobs can pick up the slack. We had a big build in inventories in Q4 as clearly manufacturers were overly optimistic and a sharp rise in commodity prices during the quarter didn’t help much either. We get the official report at 10am today and the most optimistic expectations have us down about 10% from last month’s 20.4 reading so we can expect today’s report to move the market one way or the other.
Not to worry though because, as Jonathan Weil points out in Bloomberg today, "the fix is in" on Wall Street as the 10-member Financial Crisis Inquiry Commission has been given 11 months and $8M to examine the causes of the financial crisis, including Fannie Mae’s 2008 meltdown and the near-deaths of at least 10 other major financial institutions, including Lehman Brothers Holdings Inc., American International Group Inc. and Citigroup. The statute that created the commission says its report specifically must tackle the role of regulators, monetary policy, accounting practices, tax policy, fraud, capital requirements, credit raters, executive pay, derivatives and short selling — plus a dozen other required areas of study.
Wow, that’s a lot of ground to cover! To put in perspective what a joke this is, Weil points out that when Fannie Mae hired former U.S. Senator Warren Rudman in 2004 to investigate how its accounting practices had gone awry, his law firm’s final report took 17 months to complete and cost the company more than $60 Million. $60M in 2004 to investigate ONE firm over 17 months and Congress has allocated $8M over 11 months to investigate a DOZEN firms as well as get an overview of the entire financial system. What are the odds the commission can conduct all these investigations by mid-December and do a thorough job? About zero, which clearly was Congress’s intent all along. If this is a joke, it’s a bad one and it’s on US!
This is why we’re bullish on the markets (or the market manipulators, at least) - fundamentals don’t matter! The banksters have taken control of government and are flat out laughing at us, the citizens of the US (and the world) as we cry "foul" and try to reign in the madness. This is not just a…
"And now we’re back where we started,
Here we go round again.
Day after day I get up and I say
I better do it again.
Where are all the people going?
Round and round till we reach the end.
One day leading to another,
Get up, go out, do it again." – Kinks
That’s right, we often talk about various market scams but there is no bigger scam in the world than options expiration day when all the stocks are herded back to prices that benefit the largest number of SELLERS of options while the buyers of options can only stare in shock as momentum shifts and trend-lines break and stock after stock magically settles into a value that wipes out the most possible premium. There is something in options called the "Max Pain Theory" that says that stocks will always settle at the strike where the most puts and calls expire worthless but I think that’s a self-fulfilling prophesy as options activity tends to center around the strike as it moves so of course the strike is surrounded by the most options.
What isn’t a theory is what we can observe happening time and again. This is why, at PSW, we primarily SELL options, not buy them. Buying options is gambling, selling options is a business! I often point out to members that options is the game in the world where you can be the "house" with no disadvantage. In Las Vegas, you can bet with the house but they still have an edge but in options, there is no edge and day’s like this remind us why selling options beats buying them – not EVERY time but certainly OVER time.
Our last option expiration day was June 19th and I will give you today’s levels to watch because they are the levels of June 19th: Dow 8,540, S&P 921, Nasdaq 1,827, NYSE 5,934 and Russell 512. All the markets have to do to take out the calls sold that day for a nickel or a dime is to hit those levels at some time today. Of course, anything within 2.5% of those numbers is fine to as you can roll the calls you sold to the next month at no cost, collecting another premium for another month. This is the centerpiece of our Buy/Write strategy,…
Nouriel Roubini proclaimed that oil prices ran "too high, too soon" when they doubled in just three months.
The run up in oil in the past few months has been driven by a weakened dollar and a belief that recovery is just around the corner. The dollar has been gaining the past few days and the price of oil has slipped. Roubini sees deflation and pressure on the dollar in the next two years, which could lead to the price of oil sliding.
As for the economic recovery? Don’t bet on it says Roubini. If it happens by year end it will be weak. There’s even a chance for a double-dip recession, which means the whole thing comes crashing down once again and the predictions of $85 oil go out the window.
The biggest bond fund manager on the planet likely had a bad day today and judging by his comments during the following Bloomberg TV interview, he is not too impressed with the current Fed head, who is "driving in a fog," or the front-runner to fill Ben's shoes, Yellen "is a Siamese twin in terms of policy... [preferring someone] who would emphasize Main Street as well as Wall Street - which has been the emphasis for the past three or four years." The mistake the Fed is making, Gross explains, "is blaming lower growth on fiscal austerity and expects towards the e...
MU - Micron Technology, Inc. – Options traders appear to be snapping up out of the money call options on Micron Technology this morning ahead of the company’s third-quarter earnings report after the closing bell today. Shares in the name kicked off the trading session in rally mode, rising as much as 2.6% to a six-year high of $14.11 in the early going, but have since turned negative to stand 0.15% lower on the day at $13.73 as of 11:10 a.m. ET. Micron’s shares are up roughly 130% since this time last year. July expiry call optio...
I've saved about three dozen atrociously allocated retirement portfolios in the last few years where gold holdings out-weighed productive assets (like stocks and bonds) by 2-to-1 or more. I've taken accounts away from every single hyper-inflationist and deflationist celebrity doomer you can name. I consider it my sacred duty to rescue investors from the revival tents and carnival midways whenever possible. But I can't save them all.
Let's get an update on the end-of-the-world trade that so many still have on, here's a GLD : SPY ratio chart over the last two years:
With nothing of international significance to predetermine US market direction, the trade from the opening bell was one of marking time in advance of the June FOMC press release at 2 PM and more importantly Chairman Bernanke's hour-long press conference at 2:30. Prior to 2 PM the S&P 500 traded in a narrow negative range and hit its intraday high at 2:01 PM, up 0.04%, Then began a three-stage selloff. The first was a brief knee-jerk sell when the Fed summary was released, one that was essentially reversed a few minutes later. The second started about 15-minutes into Bernanke's press conference, again one that was partially reversed. The third selloff came during the final 30 minutes with no reversal. The index closed down 1.39%, a microscopic 0.02 points off its in...
No change to the statement as expected and Ben is speaking now. Basically he is dovish – one takeaway which I mentioned quite a few months ago but he reiterated today. The 6.5% unemployment rate is a threshold NOT a trigger. What that means is if inflation is benign when 6.5% unemployment returns, the Fed will be in no rush to raise interest rates. i.e. the goalposts are soft, nor hard. The market rallied on that… but it's not new news really.
Also the majority of members do not anticipate selling MBS off the balance sheet – this is part and parcel with the view that the balance sheet will not...
To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...
Finisar Corporation (NASDAQ: FNSR), a global technology leader for subsystems and components for fiber optic communications, today announced financial results for its fourth quarter and fiscal year ended April 28, 2013.
COMMENTARY
"I am pleased to report fiscal fourth quarter revenues of $243.4 million, which is $5.1 million, or 2.1%, greater than the prior quarter. Our growth in revenues came primarily from sales of 10G and 100G Ethernet transceivers and transponders for datacom applications. Our favorable product mix in the quarter enabled us to achieve gross margin and earnings per diluted share that exceeded our guidance range," said Jerry Rawls, Finisar's executive Chairman of the Board.
"During the quarter, we continued to invest significantly in techn...
The market responded well today to good economic news and to the positive and somewhat surprising response to the election of a moderate Iranian President. Some moderation in Turkey didn’t hurt either, and overnight positive markets in Asia and Europe gave bullish investors enough encouragement to buy equities broadly.
This drove all three major domestic indices up about 1% before a late small selloff left the S&P 500 Index up nearly 1% and the Nasdaq and Dow Jones Industrial Average both up well over 0.5%. We think it likely this week that the market will challenge highs set in late May.
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Click here for the latest Stock World Weekly. Sign in with your PSW user name and password, or sign up for a free trial. There's an interesting option trade on LULU presented in the newsletter this week.
Trivia on lululemon via Paul Price, article found in NYTimes.
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This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
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By Craigzooka
I am going to share with you how I manage my IRA and the power of reducing your cost basis. My goal each year is a 20% return in my IRA. Sometimes I make it and sometimes I don't, but I believe that all of my success is due to reducing my cost basis. To illustrate the power of reducing your cost basis here are some trades we did last year. These trades are taken from an educational portfolio we ran in a paper-trading account for a little more than a year.
We bought RIG on 5/15/2012 for $44.13, sold it on 1/18/2013 for $46 but booked a profit of $1,154.
We bought MT on 1/4/2012 for $19.24, sold it on 12/21/2012 for $15 but booked a profit of $454.
We bought CHK on 1/27/2012 for $21.93, sold it on 10/19/2012 for $18 b...
Stock market posts another record setting week, but the big news came after Friday’s close.
Courtesy of NASA
The stock market put on another record setting show with the Dow Jones Industrial Average (NYSEARCA:DIA) closing at a record high 15,118 and the S&P 500 (NYSEARCA:SPY) closing at 1633.70, another all time closing high.
For the week, the Dow Jones Industrial Average (NYSEARCA:DIA) gained 1%, the S&P 500 (NYSEARCA:SPY) climbed 1.2%, the Nasdaq Composite (NYSEARCA:...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Well, well, well....it is good to know that there are others in the scientific arena who believed that YMI Bioscience's data (cough - Gilead) is a better drug than Incyte's Jakafi. Now, the definitive data are still unknown, but there was enough evidence from a Phase 2 trial to take a small risk for a huge reward. So, let's forget about Apple (AAPL), and do nothing but biotechs from now until Congress passes universal health care coverage for prescriptions....and drive the prices down so that research and development is no longer feasible to conduct in the US. Even Seattle Genetics (SGEN) has been on a tear as of late...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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As I said last week, Dr. Doom doesn’t have to be in on a conspiracy – He’s Doctor Doom! The media loves him because he is predictable tool and he is…
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As if TheStreet.com didn’t already have enough troubles with the SEC investigating their accounting, another Street veteran Doug Kass joins the pile fools who have tried to make prophetic claims regarding the stock market. (Nouriel Roubini is still my favorite.)
So close but yet so far!
The mood is certainly better than last year, when the world was ending, but it is worse than at the beginning of last week. Alessandro Profumo of Unicredit acutely observed that Davos is likely to accentuate whatever mood you arrived in, rather as alcohol does, I guess. So those who arrived nervous about the economic prospects are leaving even more jittery. If you arrived feeling pessimistic, you will leave somewhere between suicidal and homicidal.
After what looked like a good recovery, there are signs that 
"
What isn’t a theory is what we can observe happening time and again. This is why, at PSW, we primarily SELL options, not buy them. Buying options is gambling, selling options is a business! I often point out to members that options is the game in the world where you can be the "house" with no disadvantage. In Las Vegas, you can bet with the house but they still have an edge but in options, there is no edge and day’s like this remind us why selling options beats buying them – not EVERY time but certainly OVER time. 
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(