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Troubling Tuesday Morning

Citi wasn’t as bad as rumored!

Not exactly a rally cry but I think I’m safe with the $27.50 puts I sold.  The big question for the day is: "Is the market still in the mood to pretend that the core PPI is real and the real PPI can be ignored?"  That’s the magic that’s been holding the markets together, the ability of the American public to swallow being paid less than 3% for the money they save (passbook savings account, Social Security) while paying without complaint 6% on homes, 9% on cars and up to 21% on credit cards.

This is the basis of the mighty US financial system, which sucks up over 20% of the nation’s wealth each year in the form of fees and interest rates and has built an ecomomic house of cards on the myth that infintely rising commodity prices would be paid by leveraging every last asset the US consumer has in order to pay for them and pumping up those asset prices (homes, stocks) by flooding the markets with easy money, all the while pushing to enact Draconian bankruptcy laws to make sure they get their pound of flesh when it all hits the fan. 

What the banks didn’t plan on was that the fan would be hit so hard and so fast that "it" would fly all over the place and there simply isn’t enough money left to pay off all the loans that have been made and no amount of squeezing is going to get more blood from the 2.5M homeowners facing foreclosure this year.  Since the announcement of Paulson’s "Plan," over a month has passed and 200,000 more families have been tossed in the streets and another 7,000 families will join them at the end of yet another day where Washington talks loudly and doesn’t even bother to bring a stick.

These are sad economic realities and it remains to be seen whether the Fed will step up to the plate.  I said last week that Fed action needed to be taken by tomorrow before the markets turn down too far to be pulled back but inflation is out of control over in Europe and those banks face mandates that will not allow them to bail us out.  This complicates things for the Fed as another drop in rates will send the dollar to new lows and commodities to new highs – who exactly will that be helping?

8:30 update: Our own PPI just came in at 6.3% non-core, pretty much in-line with expectaions but retail sales are DOWN 0.4% vs. the up 0.1% expected, and Empire Manufacturing is flat at 9.03 vs. 13 expected.  These are really bad numbers folks, this was December!

Sadly we have to go back to looking for our bottoms to hold.  12,500 for the Dow, 1,400 for the S&P, 2,400 for the Nasdaq, 700 for the Russell and 9,300 for the NYSE.  Fortunately we kept our index puts in place yesterday and took advantage of the run-up to roll them higher.  They should pay off well in the morning and we’ll look to take them off as we hit levels, hoping for at least a small bounce

There was no bouncing in Asia this morning as markets there gave up significant ground, including India, who had been holding us up over there.  The Nikkei hit it’s lowest level in over 2 years and things will not be pretty if they can’t hold 14,000.  The Hang Seng doesn’t look quite as bad – YET but, at 630-points a day, they can catch up really fast!

Europe took our news very badly as well and markets there are down about 1.5% so far (9 am).  NOK announced they will move 2,300 German manufacturing jobs to Romania to save money so everyone has their own version of outsourced jobs.  While Bush is working to stop Iran from having nuclear technology, the French are bidding on who gets to build reactors in Saudi Arabia, where 19 of the 9/11 hijackers lived (none were from Iran or Iraq) - what a crazy world!

Oil continues to be the thorn in the side of the global economy but demand destruction continues apace as US consumption only grew 0.2% in 2007 and was offset by declines in the rest of the industrialized world causing total OECD consumption to drop 0.2%, the second year of declining use.  Developing nation consumption continued to rise but a lot of that is due to government fuel subsidies (over $250Bn last year) which won’t continue indefinitely.

Oil should take a big hit this morning and I still like SU puts.  The Jan $110s at $5.80 have almost no premium and can be played as a momentum trade as we watch for a break below $103.50, but you have to keep tight 10% stops on or you can get burned.  The $100 puts at .45 are a fun gamble if you can be happy with .65 as it flashes downOlI also has potential to tumble and $70 puts are .55 but note that these are very dangerous bets and should be treated as pure gambles.

If you are not already covered to the downside, I don’t think I would recommend chasing the indexes down as I do expect (hope?) them to hold our floor.  Once we get below that, we’re going to have to make some very hard choices but, thanks to a weak FXI yesterday, we put some key covers in place.  Unlike last week, I won’t be so keen to roll down here as I’m not anxious to commit more capital until we put in a solid floor.

Be very careful out there!


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  1. this is a 2 yr old who can locate nearly every country on the map:

  2. How is retail worse? How does a december holiday retail spending report come out worse than November… How is that freaking possible with Christmas and boxing day.

  3. Did anyone consider DBA? Not really seeing anythings that should take the heat of argo commodities, however the volume on this things has exploded since Jan 1st, RSI is above 80, ADX is over 60 and stock price is sticking closely to Donchian(50) channel, the JUL/FEB 37 calendar spread would pay for a roll down to 36, if we get a collapse the JUL/APR 37 would pay for a roll to 34. Or go naked with a stop-loss at $2, the risk is that the gap’s on this thing seem pretty drastic so a front-month would probably be safer.

    Here is a summary from ivolatilities newsletter:
    With the possibility that the Golden Fleece could refer to grain, we should now turn our attention to agricultural commodity prices.

    PowerShares DB Agriculture Fund (DBA) 36.45. The PowerShares DB Agriculture Fund (Fund) is based on the Deutsche Bank Liquid Commodity Index – OptimumYield Agriculture™ and managed by DBCommodity Services LLC. The Index is rules-based and composed of futures contracts on some of the most liquid and widely traded agricultural commodities – corn, wheat, soy beans and sugar. The index is intended to reflect the performance of the agricultural sector.

    With the passage of H.R.6, The Energy Independence and Security Act of 2007 on December 19, 2007 the US has linked agriculture prices to crude oil prices by mandating a sixfold increase in the production of biofuels, such as ethanol. The bill requires production to reach 36 billion gallons by 2022 from the current level of about 6 billion gallons.

    There is a well-defined upward sloping trend line off of the August 16, 2007 low at 24.58 passing just below 31.50 on December 17, 2007, the .45 dividend payment date.

    Last Friday the index jumped up to 36.45, an increase of 1.95 points producing a record 3.34% premium over its Net Asset Value of 35.27. In the past rises of this magnitude have been followed by selling and we expect to see the same over the next few days. In this past week call options volume rose fourfold with the current put/call ratio at a very low of just .1. With a current Historical Volatility of 21.79 and an Implied Volatility Index of 26.07, it now appears overbought.

  4. Phil,
    You’re probably tired of me asking about the start of the new 25KP, but I just remembered that I’m going to in the air on my way to KC, MO Friday morning (getting in at 9AM Central), so I’m going to miss the opening of the market and your posts in the morning.

    So will the 25KP be all cash at the END of Friday (and then staging into positions beginning on Tuesday)? Or, will entering positions begin Friday morning?

  5. DM: Conspiracy? lol :p

  6. UK very bad and got worse after US PPI/CPI/Retail

  7. Dendreon receives European patent covering Provenge
    By Michael Kitchen
    Last update: 7:08 a.m. EST Jan. 15, 2008
    Print RSS Disable Live Quotes
    NEW YORK (MarketWatch) — Dendreon Corp. (DNDN, , ) said Tuesday it has been granted a broad European patent covering the company’s lead product candidate Provenge, its investigational active cellular immunotherapy for the treatment of advanced prostate cancer. Dendreon stock rose almost 7% Monday to close at $6.46 per share.

  8. Phil,
    What is the strategy on INFY today (I did not get the fill on rolls /covers y’day).

  9. mrl14 – Tell me about it… Eh whatever.. I understand november’s retail was a spike higher, but that’s not too say December shouldn’t beat it… We did that survey thing on PSW.. people were shopping.

  10. Pre-market solar sector down 1-3%; FSLR -3%

  11. Morning all
    On a lighter note …I don’t see why you ‘re worried paying 21% on ccard debt when we pay that here as salestax

  12. Seriously guys, the truth is getting me so bearish. I think we may have to put in our uber-bottom right away and get us down to 11500 or lower to clear this all out. I may end up 100% in cash after today.

    The only thing out there that I like is EWT. The Taiwan EFT. They just had an election and had a sweeping change of political climate that looks like Taiwan is going pro-China. See, EVERYONE is on board the China miracle now. This broke a downtrend and it is near lows. One of the few foreign markets that looks like a good place for money right now.

  13. Andy

    DBA was a question I asked about last week. Phil had earlier mentioned MOO, but it ‘s options are pretty thinly traded. I have been buying some RJA monthly in a 401k, but again, not really an options play. I think DBA has some possibilities, but would like to hear other thoughts. Seems the ag stocks are already at some pretty crazy multiples.

  14. Henk – Because you’re based on simple interest, while credit cards are 21% y/y compounded daily.

  15. DBA- are not AG stocks! They are futures prices of Sugar, wheat, corn, soy..
    Much different than MOO

  16. QID $43s at $1.20 are good puts to grab if the Nas keeps going down but, so far, it’s not looking so bad (considering).

    IBM holding up well, INTC has fans, SNDK holding up, GRMN, WFR, YHOO, JASO – this is the leadership from 4-letter stocks we’re looking for!

  17. The PPI and Retail #’s look friendly for the big fat .50% basis cut. I am surprised that we are down.

    Come get your FREE MONEY! Says the Fed…

  18. POT-another upgrade this morning, nibbled at the open

  19. Any hope of infy turning around soon

  20. Optrader – Looking at JOYG.
    Any thoughts?

  21. Took some profits on GRMN, FSLR and FWLT puts but keeping most puts as covers.

  22. AAPL- 5MA at 177.21 on daily, sloping upwards

  23. JOYG-I think it was in one of the scans yesterday. That was probably the time to get in. Not chasing here, I have enough calls.

  24. Ebay turning ugly. GRMN flipped down fast, S&P right at 1,400…

    DBA – worth checking if we ever get a restful day. Commodity bubbles don’t survive recessions and if we don’t get off this track, this one’s going to be a doozy.

    $25KP – it’s not like we take a dozen positions on day one, they come one at a time and it’s doubful we’ll be taking anything ahead of the holiday weekend. Actually that only happened once because it was a great deal and was the first time we started the portfolio, we still have the old one for trades on this Friday.

    INFY – this is very bad but no change other than DD (for me) on the $40 calls at $1.40 if I can get it. Otherwise, we hope the US recovers today and rallies Asia into the end of the week. It’s very much up to Jobs and INTC now.

    Retail Survey – we did that survey in November, people apparently were shopping early due to early sales (remember more shoppers spending less per person?) so we almost could have seen this coming. Next year we’ll run 2 surveys.

    Solar is just way too sensitive to the price of oil, it’s just silly.

  25. Fed

    Seems like the consensus is the Fed won’t cut prior to their meeting given how close we are to the date and that if they did it would panic the market. Thoughts?

    I guess the time to cut would have been when Bernanke spoke.

  26. If AAPL announces WiMax, CLWR and S may jump?? Thoughts? CLWR is already jumping on a GOOG deal.

  27. There are lots of stocks down by large percentages. Stocks that had no news out. It looks like a bit of, not panic, but just large sellers on the open. I think we look a bit oversold, although I don’t have a reason to buy and I think that is what the markets are missing.

  28. EDU- ugly

  29. Bought some JoyG calls.

  30. Flim: Not sure if this is legit, but as I mentioned someone else owns and can fake anyones address. So who the fudge knows what is coming today! Although that ability to sync macs together using a wireless interface similar to bluetooth seems very interesting.

  31. fred/fed- totally, had they cut then, we’d b seeing everything thru rose tinted spectacles now

  32. NEM running still/again – sold $55 are +$2 ITM now.

  33. INFY chart (daily) is not so pretty:
    stuck on lower price channel (100 day), ADX is not showing a strong trend on this yet, MACD negative, SAR negative and MA’s for 5, 10, 20 and 50 blown.

  34. Fred, the Fed will have some more manipulated numbers for us tomorrow showing the CPI to be below consensus and will have ample justification for it’s .50% cut at the meeting. Not before! JMHO

  35. STT sold off on earnings this morning…

    Was about to say no reason for UPL down at 72.50… but the buyers agreed…

  36. CFC Apr/Jan $10 put spread – may as well put in for a roll to the Feb $10 puts for a .30 credit. At this point, we need .50 to get even and it looks like that’s as good as it will get for now. XXX

  37. Phil re:- QID $43s at $1.20 are good puts to grab if the Nas keeps going down but, so far, it’s not looking so bad (considering).

    Never could do double negatives. QID is a short fund isnt it – shouldnt we be buying calls ? or are you anticipating a bounce. (This could easily get me a ‘stupid person question’ award !!! )

  38. AAPL- seeing buying interest

  39. Should have listened to you Optrader !

  40. BillBigD

    Didn’t mean to suggest DBA were ag stocks – sorry if it came off that way. My reference was the commodities vs my perception of some pretty big multiples on the ag stocks.

  41. Phil, wld you double down on BUD here?

  42. MA has fans on every sell-off.

    Well ELN $25s did not work yesterday but I’m willing to toss them .35 for another try. This is just a win or lose gamble, BIIB is doing well and ELN was up in Europe before our market tanked.

  43. Well those puts from yesterday weren’t too bad…. I’m taking the rest of profits.. Might re-enter if there’s anything serious other than this sideways crap like yesterday again

  44. iPhone to Canada – hah not happening. The day Rogers caves on its data monopoly.

  45. dm- i saw the zeitgeist- i didn’t even feel like getting out of bed this am

    i’ve had the idea of chips being implanted along with vaccines for a while- we’ll

  46. SEM- All is cool, just didn’t want anyone to get confused.
    Fred- Another loss for Celts

  47. Solar slaughter!

  48. Albo, who knows? it could fly as well. Entries are the most difficult part of this job, but fortunately they don’t matter too much. You know where your stop is and what your risk is. In this kind of situation I like to buy 1/2 and let it test 5MA before buying second 1/2.

  49. AAPL- more buyers-

    keynote starts when? do we know?

    i think it’s 1230pm (EST)- i don’t know

  50. Re: Ag stocks.

    I understand that business is good chez POT, MOS, TRA, TNH, and so forth. That said, how much of a multiple is synthetic poop worth? On a GS upgrade last week they sold the sector off, and now they are selling it off on RBC raising the price target at POT to 195 from 155.
    Not sure I see the long side, as this would be vintage “Let the big boys out before tanking the sector”.

  51. SOld a little bit more GRMN and FSLR puts. I have 1/2 positions left now on those. These trends have been amazing.

  52. MWSF keynote times-

    The show kicks off at:
    07:00AM – Hawaii
    09:00AM – Pacific
    10:00AM – Mountain
    11:00AM – Central
    12:00PM – Eastern
    05:00PM – GMT / London
    06:00PM – Paris
    08:00PM – Moscow
    02:00AM – Tokyo (January 16th)

  53. GS getting hammered!

  54. Optrader – Thanks. I agree with you about scaling in.
    I bought less than a 1/2 position. Certainly didn’t make
    a good entry though.

  55. AAPL-trying to go green!

  56. AIG pulled back right to 5MA and holding? Add here or bail at end of day if breaks?

  57. xian
    Now that answers all questions. LOL

  58. Here is one of the many links that will keep updates during the keynote:

  59. FWLT-Die! Some charts are really getting ugly.

  60. Finally. I’m back. Hello to everyone again.

    Since everyone is going to make a big fuss about the AAPL keynote, here’s the outline that Steve has… this was leaked onto wikipedia.

    MacWorld January 2008 Keynote
    Rough Outline; draft 5

    Greetings! Welcome to Moscone Center
    Quick Overview: iPod/iTunes
    - iPod has been extremely profitable for us this holiday season
    - Sales figures, market share
    - Our new models are doing better than ever
    - 3 iPod games released last month accidentally (supposed to be for today)
    - Another new game today: Chess
    - iTunes doing extremely well (sales figures/market share)
    - Today: 30 indie labels releasing their entire catalogs in iTunes Plus
    - Many more to follow in the next few months

    - Best iPod ever
    - Sales figures, market share
    - Sales beyond our wildest dreams
    - Much more than the 1% market share we asked for in January
    - Starting today: 8GB $399, 16GB $499
    - Four times the memory as original iPhone for the same price
    - iPhone is coming to Japan in March with NTT DoCoMo
    - SDK is unveiled!

    iPhone/iPod Touch SDK
    - Apps and Widgets
    - Using Cocoa with Objective-C
    - Developers submit programs as source code, not executable
    - Specify iPhone or both iPhone/Touch (certain features iPhone only)
    - Set your own price: Apps $0-$6.99, Widgets $0-$2.99
    - Users buy/download in iTunes Wi-Fi Store / iTunes Store (Mac/PC)
    - Automatic updating wirelessly or docked

    - Demonstration of exporting from XCode 3 to iTunes Store
    - Submits source code to Apple for validation (make sure that people aren’t abusing the system, prevent malware and viruses)
    - If using microphone or GSM, iPhone only; otherwise, available for both iPhone and iPod Touch
    - Apps can be free or up to $6.99; Widgets free or up to $2.99
    - Developers recieve 70% of revenue for their products
    - Licensed under Apple Mobile Software License
    - Can download wirelessly from iTunes Wi-Fi Store or docked to computer from iTunes Store
    - Demonstration of wirelessly downloading (and running) the app submitted earlier
    - Apps and widgets can be rearranged on front screen; front screen scrolls to show all apps/widgets
    - Resubmit updated versions of apps; when added to store, iPhone/Touch will ask you to update it next time you use it (or next time you dock the iPhone/Touch)
    - Developers can get their hands on a beta version of the SDK tomorrow on ADC and start developing; final version due early February
    - iTunes 7.6 and iPhone/iPod Touch Software update 1.3 allowing for Apps mid-February

    Example apps/widgets
    - iChat (coming with 1.3 update) (AIM, Jabber/Google Talk)
    -- Quick demonstration
    - RSS Feed Reader (coming with 1.3 update) (read feeds online or off)
    - One of our partners made something cool: (scrobble tracks played on iPhone/touch wirelessly without syncing w/ computer)
    - Dictionary (coming with 1.3 update) (quickly look up words, translate, use wikipedia)
    -- Quick demonstration
    - Yellow/White Book (coming with 1.3 update) (search for contacts, add them to your address book directly from the app, will sync back with address book on your Mac/PC)
    - Sports Ticker (coming with 1.3 update) (choose your sports and teams, get updates on their progress)
    - Another partner: Twitter (update your Twitter on the fly, see your friends tweets)
    - Try these out on the show floor today

    - Sales are getting better and better every day
    - Hardware sales figures/market share
    - Leopard released October; doing spectacularly
    - Sales figures/market share
    - Selling extremely well; estimated to overtake Tiger in terms of marketshare by June if you only count the new Macs that come with it preinstalled; even quicker if you include boxed copies
    - 10.5.2 out today – many bug fixes, also addressing a lot of issues and complaints users had such as list view with stacks and certain HIG non-compliance issues

    New MacBooks!
    - What would MacWorld be without a new Mac? (sorry about last year)
    - Completely redesigned MacBook
    - Completely aluminum body like MacBook Pro
    - 13″ screen at 1440×900
    - Two colors: Black and Silver
    - Looks gorgeous at 0.8″ thin
    - A major feat of engineering – patents abound
    - DVD drive pops open on side when eject button is pressed
    - New on all notebooks and iMac: iSight HD (720p)
    - New backlit keyboard based on recent Apple Keyboard revisions (keys slightly lighter than that of laptop casing, colorwise)
    - New matching MagSafe cable (Aluminum ends, cord color matches that of keyboard)
    - New matching Apple Remote (slightly smaller with larger overall buttons)
    - Intel GMA X3100 graphics
    - 3 models
    - Completely phasing out the combo drive on all product lines today
    - BTO models can upgrade all the way to 2.6GHz/4GB Memory/320GB hard drive
    - 4.5 hours of battery life
    - Starting at $1199

    Product Refreshes
    - Refreshing Mac Pro and Mac mini today
    - Mac Pro now with Penryn!
    - Base model 2×2.8GHz dual-core/1GB/NVIDIA GeForce 7300 GT 256MB/250GB(1x250GB)/1x16x double-layer SuperDrive
    - Upgradeable to 2×3.2GHz quad-core/16GB/NVIDIA Quadro FX 4500 512MB/4TB(4x1TB)/2x16x double-layer SuperDrives
    - Starting at $2,499
    - Mac mini gets slight speed bumps and double-layer SuperDrive in all models
    - Base model 2.0GHz IC2D/1GB/100GB
    - BTO Upgradeable to 2.4GHz IC2D/4GB/320GB
    - Starting at $599

    One More Thing
    - Been brewing for a while
    - YouTube’s been in Apple TV and iPhone/iPod touch: now it’s in iTunes
    - Download YouTube videos straight to iTunes or from iPhone/iPod Touch for later offline viewing (sync back to computer)
    - Coming in iTunes 7.6 and iPhone/iPod Touch 1.3 updates

    Thanks for coming, and enjoy the expo!


  61. GS- i don’t get it? they r the only winner in this subprime game

    i guess past perormance is no guarantee of future results

  62. GOOG $650s at $7.30 are a rip off but if they come down to $6 they might make a fun play ahead of MacWorld.

    Markets are weakening in general and nothing looks very goood right now though, if we can’t retake levels it may be time to move a little more to cash.

    EDU/Whole FXI ugly! We could be heading for that China crash if this keeps up, that would be amazingly bad timing if it happens now.

    ISRG getting pounded, AXP way off (52 low), PTR getting smacked down, SU off nicely, SHLD giving up another 5%, VLO/TSO with the smackdown.

    AAPL goes green!

    NEM – oh well, there’s always the roll-up…

    QID – oops, I should NOT have said puts!!! I meant the $43 calls, which are shorts BUT it kind of does work both ways because I say they don’t break $44.50 today and turn down from there. If they break over $44.50 then the $44s might be a good play, the Feb $44s are $3 and you can sell against them when the mo stops.

    BUD – I would not DD today if the markets don’t come back. This is very bad so far. Rolling down and out (in time) is safer than a DD because you can then sell premiums while you wait for a bounce. Don’t try to get ahead, look for ways to get even.

  63. Well Apple, you wanted it? You got it! It is now completely up to you to save the entire stock market!

    Opt-My sentiments exactly. Very bad looking charts

  64. BBY puts-1/2 out. Another ugly chart but I see some support around here.

  65. GS – Should’ve went fully covered on the 200′s. Selling the 1/2 cover here pretty soon, up too much with little premium left. Don’t want to get caught on a Fed surprise anyway.

  66. The keynote’s a fake. new Mac Pro’s were released last week lol and wired has confirmed no dvd in the new macbook :)

  67. UK is turning into a nightmare. Main indices now down 2.4%. Thats about 1% extra since US opened.

  68. SLB – should’ve kept some of those dang puts…hindsight is 20/20 as usual.

  69. Airlines picking up on $90 oil and oil is truly tragic today at the 2.5% rule (through it already) but the dollar should support $90 unless Bush gets the Saudis to turn on the taps. Most likely is they listened to me last week when I said it’s up to OPEC to save the markets and they called Bush AFTER they decided to step in so he can look as if he did something. That will make him owe them BIG TIME!

    Taking out RIMM $96 putter here for $1.25 XXX Will resell lower if it stays bad but big volume on this drop so maybe a reverse.

  70. Most of the stocks I see, just gapped down to their major/critical support levels on the open, dropping a lot of stocks 3-5% with little to no support. Meaning if things get much worse, we’re headed to no man’s land. I guess we have to keep concentrate on the big charts and their support levels and try to keep just a small eye the little stock charts, hoping they hold.

  71. GS was pretty much the only winner in subprime but they will track the market sentiment. You didn’t expect them to rise when the rest of the market sees blood in the streets did you?

  72. Re-entered some puts, I don’t like this market.

  73. ENR – the only one green on my watchlist

  74. This action looks Dead cat…

  75. things look so bad

    if i was one of “them”, then today looks like a great day to smash the market down.

    nothing but bad news being read as more bad news- not the “acceptance” stage where bad news is bought b/c it’s been priced in.

    sooner or later, there’s gonna b a big move- sadly, i think it’s down

    who knows? maybe more data this week can b bought- but i doubt it.

    feeling scared of the markets

  76. Steveplace, if the above is correct, the only information that will matter is the sales numbers, that will make or break the day and it seems for the entire market… hmm going to cash after this I think

  77. S&P below 1400

  78. Greatest pain is 145 for AAPL Jan calls.

  79. On line with you guys, I expected to retest the lows of before but what scared me was how fast a lot of stocks dropped on the open with absolutely no resistance. We’re not even getting a bounce to short into. I’m usually very unemotional but this has me a bit on edge. I’m 85% cash so it’s not a big deal. I would just like a freaking bounce or something to show the market can still exhale and inhale instead of just die.


  81. GRMN-Testing $65, down from $125. Just amazing.

  82. DRYS off a cliff!

    AAPL back to negative on rumors that Jobs has nothing. I loved one guy’s idea of an IBook with a detachable screen you can use as a tablet..

    I’m tentatively following stop rules here, taking out some callers who I’m way up on but that’s a set-up to sell lower calls if I have to – in general this market sucks and I’m less than enthusiastic about adding money if I can avoid it.

    Finally Steve!

    TIF coming off the mats.

    QID broke up, that’s not good for Nas. That was a little pop over my target to $44.70, if they don’t turn back here, WE HAVE A PROBLEM!

  83. Opt. GRMN was just the greatest 5DMA trend example ever. Congrats.

  84. SPY’s under 139, that’s bad. Recession Recession.

  85. C – as expected Pandit threw in all the losses here and can blame it on Prince. 2008 is Pandit’s year. He is gathering in new capital. Anyone here thing that we can see a bottom forming soon out of the C carnage?

  86. I’m going to go out on a limb and just say it so Phil doesn’t have to in a moment. We have a problem. We have failed, at least today. This is going to be ugly…

    And I now know what you mean by America is dead DM. You weren’t attacking a society. I know and see exactly what you meant by that.

  87. AAPL max pain at 145!!!

    that’s too much, right?

    ditto on the sales #’s, maybe they can move the markets- at least move AAPL.

  88. SEM – Blackstone may give you a better return than citigroup over the long term. Try BX

  89. GOOG at $6 target for the brave and the foolish!

    BTU has overextended their bounds at $60, possibly due to the new coal ETF. I’m going for the Jan $60 puts for $1.30 in case people come to their senses.

  90. Fake Keynote: If you look at the comments on MacDaily News when the fake keynote was discovered you’ll see that there’s a lot of wrong specs for the hardware (and Jobs never gives specs during a keynote) and a bunch of other stuff that is wrong.

    In any case, in terms of sales
    Munster predicting 2.3M Macs sold, a 43% increase (NDP says 60%)
    Munster predicting 25-26 Ipods sold; the Street average is 24.7
    (from Apple Insider)
    don’t know what the expectations for Iphones are. Does anyone?

  91. Followed Phil on buying back RIMM, up 90% is was basically useless anymore anyway.

  92. Somebody, grab a cape. America needs a hero.

  93. JR--2.2 M iPhones

  94. Wow the Aussie is slamming…

  95. DM-Aussie? Are you talking about the Australian open?

  96. 10:1 Down volume to up volume, that’s not good at all!

  97. No no, though wouldn’t mind seeing that!…Aussie = AUS/USD, Cable = Pound / US, Euro = Eur/USD,

  98. It might be a good time to coin the phrase pink Tuesday. As Phil said before, Paris Hilton said pink is the new black…I know, I know, we have 60 pts before failure on the Dow and i’m a bit irrational at the moment. It’s still fun to talk about.

  99. Ah, gotcha DM!

  100. IAU/GLD vs NEM/GG/AUY – Fast Money guys keep pushing the commodity as a better investment than the the miners. Not one of them bozos even mentioned that with the miners, it is possible to pay a smaller tax rate by holding the shares for more than a year, yet with IAU/GLD, you pay the highest COLLECTOR rate regardless of how long you hold it. In addition, yesterday was the first time I’ve heard one of them bozos mention that the miners are now mostly unhedged. They’ve been blatantly incorrect up until yesterday telling their audience that miners are horrible investments because they are locked into selling gold at $300 an ounce. Where do they find these guys?

  101. phil- 10:1::down:up volume- isn’t that bottom selling usually?

  102. DM. AUD reached .93 in Sept 07. Was loving that

  103. Feels like another dead cat. We broke 138.5, need to find support 138 to be somewhat serious.

  104. Be careful, TOS says options quotes are down across all exchanges.

  105. tos saying options quotes down on all exchanges- that’s serious volume

    this kind of action is marking something- a big up move or down move

    what if fed comes out right now?

  106. NYSE TRIN > 2

  107. GRMN-yes, it has not closed above 5MA since the 27th of Dec, and that was when it was at $100. Since then it tested it many times but got rejected every time. Just following this very easy simple rule would have kept you in puts the whole time with a 35% drop in the stock.

  108. AUD – Feels good to be almost higher than the USD doesn’t it?… I think it might break 1:1… When the canadian did that I was so happy, not like it matters because all my funds are in USD hah!

  109. rmyadsk-Thanks! I just realized that my quotes weren’t updating. That’s really going to restore confidence!

  110. I’m getting a good options feed here..

  111. DM. Not sure about that. My Dad says the AUD and Aussie markets have been getting hurt aswell as of late…. Real Estate bubble burst, go figure!!!

  112. C – selling Feb $27.50 puts at $1.67. I agree with several comments summarized as this was a kitchen sink number by C that is being jumped on by “THEM” looking to force a retest of 12,500. It’s working well as the 10:1 decliners indicates no one wants to buy anything which means it’s probably a great time to by Feb calls but I’m not that brave although I am taking out many callers here (I’ve already rolled my guys down to this level last week).

    That’s just a gut call, if we break here you will hear an audible snap but I’ll recover if we can’t retake my morning bottom levels this afternoon and I’ll 1/2 cover by EOD no matter what.

  113. Phil,

    Down volume to up volume, while not good is one of the measures of capitulation.

  114. And DNDN is flying :)

  115. AAPL/opt- 5MA daily exit on a long is closing below 5MA or just trading below 5MA?

    i’ve read some of ur posts and it seems it’s a judgement call intraday, but a definite sell if the close is going to b below.

  116. That’s weird, the spy options are updating but the Q’s have been a dead stick for about 5 minutes now.

  117. VLO

    I think that was a bottom forced by the downgrades which made no sense to me.

  118. Xian, it is all explained in the rules. It is a close below 5MA (not only that but “significantly” below)

  119. AUY barely filled yesterday’s gap and turning back up.

  120. We’ve got less than 1 hour to go!!! Expect some flip flopping!! Apple is going to announce something amazing but it’ll be geeky and the fund managers will send the stock down to the 160 levels. That’s my prediction :) I’m long apple tho.

  121. opt- thanks

  122. That’s a very strong and valid point guys. When you start seeing a lot of downgrades on good companies, I think that is a forced bottom.

    Quotes are back up. Thanks again for that heads up!

  123. DNDN – figures, the one time in 3 months I don’t have a position, sold on the last pop and haven’t bought back yet.

  124. Fred, not sure that is a bottom, momentum is quite high yet, I would wait until we get a clear reversal signal.

  125. BG also barely closed a day gap before turning.

  126. The refreshing issue on Mac/Safari brought up yesterday night seems to have been resolved, so at least there’s some good news already today!!

  127. AAPL-coming back a little

  128. Phil,

    I have the Apr XOM 90 Puts. The Febs have about 2.5+ premium. Looks like it could be headed for more falling especially with an earnings miss.

    Any thoughts?

  129. GOOG – Got into the 650 gamble…now let’s have some fun

  130. I use my gps on my phone at verizon
    instead of buying a new garmin to replace the one I lost…

    How much are these cell phones hurting garmin?

  131. out of puts, this might be interesting.

  132. I think we are back to “short the bounces” unless INTC saves at least tech tonight. Any good suggestions for puts?

  133. crox intraday chart turning up ….

  134. Phil, Not sure what you think of C, but the 2010 25 strike call is down to $6.45 (ask), it’s certainly a very long bet, but there will be plenty of months to sell this against. I can’t fundamentally believe that C will say at this level for 2 years, so if we can make a $.5 per front month between now and then ( I am being ultra pessimistic), that is still $4 and with and as beta is positive we really need very little effort from C to recover the expense, thoughts?

  135. Xian,

    Do you subscribe to Realmoney? If so what does the Boeing article indicate? TIA if you get a chance. Titled “Turbulent Skies Ahead”

  136. 43% more macs sold. I read something about an accessory shortage for Macs and MacBooks, that indicates that Apple blew numbers out the door on the PC side.

    IPhones – I’m never in a room with 10 people where someone else doesn’t have one so that’s 15-20% of the white collar workforce which is about 30M so I’d say just over 5M as obviously it’s not out of reach of the lower classes either. The wildcared is Europe where they’ve had a few months now so we could get a nice upside kicker.

    Commodities are NOT as good as miners for a long-term hold. The holdings of the miners dwarfs any other value assigned to their operations on the way up and, on the way down, they have profits to fall back on.

    OXPS seems to be acting normally.

    QIDs ended up touching $45 before being harshly rejected…

  137. Crox,

    Still hanging where it gapped up on May 3rd to $35. We need the market to turn though and you’ll see a speedy recovery.

  138. ozzi997 – Are you suggesting global recession?

  139. CME with an epic sell-off. Feb $640s for $12.75, will maybe sell $630s for $4 if possible. XXX

  140. Opt-Everything, LOL! Actually, everything I was watching is at their critical point. I don’t have anything for you, yet.

    This does have a bit of a shakedown feel to it. I wouldn’t be surprised to see us bounce off of the lows. However, if we close down here, you better call Lassie because we have trouble at the mill.

  141. All I know is that the Aussie had a similar housing issues as the US, was in a 15% growth for like 10 years in a row

  142. JayZ is going to play Steve off the stage this year lol.

    2.6 million macs
    28 million ipods
    I’m also going with a 5million iphone range.

    This all seems good for Intel, no? Are the #’s still not big enough?

  143. Beware of the Deathline! But Parchesia is right, we’re a bit oversold at these levels, need a retrace…. We’re going lower though, You think SPY 139 is low.. Wait till you see SPY 90.

  144. IB crap out on anybody else?

  145. I see a lot of put buying, this isn’t good.

  146. FSLR-Going for $200?

  147. mrl4--those are high numbers for AAPL based on financial analyst reports I read. 2.6M is the highest one by RBC.

  148. XOM – I’m predicting oil hits $70 by March so XOM long puts look good to me but selling 1/2 the Feb $90 puts here is not a bad idea with inventory coming tomorrow. Those $3.50 puts were $2.70 yesterday (or this morning for that matter).

    Speaking of XOM – I’m done with my oil puts here. Hopefully they’ll rally and give us another entry tomorrow. XXX

  149. Thank you president Bush! RTN! I wasn’t even paying attention because I own stock as a long term pick but they’re up 1.5%. The only bright spot I can find today.

  150. Opt, CHL just broke down from a pennant it was forming on its daily chart. I think this puppy has plenty of room to run and might make for a decent put play on a bounce.

  151. Opt, what about COF, earnings are 1/23, chart (daily) shows a fairly decent momentum and the price is on lower price channel (100). COF must surely be one of the card issuers that will suffer. FEB 40 put is $2.65, I guess one can v.spread

  152. workdog3 – it broke down from it’s pendant, isn’t that a sell signal?

  153. Anyone think that given the country is now or soon will be in a moderate to severe recession with consumer discretionary spending dropping off a cliff, and with consumer credit drying up, will trump anything AAPL can come up with? I will hazard a guess that the only thing that can keep AAPL up is foward guidance. If they are immune to all of the above great; but why would they be?

    I am long and short AAPL but I do believe there is a lot of magical thinking going on about these guys

  154. UK Markets finished down 3%. If anyone is monitoring the mood for “capitulation” count me in !!!! :-(

  155. AAPL great company, bad environment.

  156. UK is the only surviving market thus far… China may pop after the Olympics, and we’ll all be running to the pound as the currency to peg.

  157. Demetrius Michael
    AAPL environment- Probably because it’s cultish around one leader.

    I was up at Google NYC campus last week. Great company, great environment.

  158. C said as of Dec. 31, it had a total of $37.3 billion in direct subprime mortgage exposure, down from $54.6 billion three months prior. To think that this is over and that they have thrown it all into this quarter may be a bit premature. Prime mortgages are now being defaulted on and commercial problems are just aroung the corner. That said, we do have the Plunge Protection Team. Maybee they will print enough cash to buy everything.8)

  159. C – I’m confused by your .50 a month = $4 in 2 year theory but, yes, I love Citi long time but, if any other stuff comes out, you may end up rolling down but you can sell the current $27.50s for .42 and the Febs for another $1 so I LOVE the ’10 $25s XXX

    Woo-Hoo on BTU!

  160. Joseph-That be the trillion scrill (dollar) question. Thought some ebonics would be nice there. I’m in the camp that the next couple quarters are going to be bad and then we’ll rebound fairly sharply due to the Fed aggresively cutting rates. However, I think we’ll only begin to rebound once the government steps in to save the homeowners. Speaking of which, did you guys know that CNN has labeled this as the “war on the middle class”. Even Jessie Jackson and many other prominant politicains are on the bandwagon. That (voting power) might trump the power of the financial compaines. We’ll see…

    I think Apple, unfortunately, although a BA company, is at the mercy of the overall markets due to the severity of the crisis, (I think it’s about the only thing you can get a decent bid on when selling) except when they report earnings and have announcements.

  161. AAPL-My strategy is to stay long at least during the beginning of macworld. if the stock is going to drop it will be at the end, after the last product has been introduced. Before the end, the risk is to the upside with some good numbers probably being released.

  162. Okay, wife and kid out the door. All caught up on comments. Totally agree, it is AAPL’s day. Either they are the scapegoat or the hero. Think I am going to go ahead and put in stop orders on all my stock at $170, because if it gets down there, it ain’t stopping until 150. Ehh, what a nauseous thought.

  163. COF-I have puts since last week. Keeping them for now.

  164. DM – tks – will take a look at BX. I do have a GS leap position that I plan to build further, so maybe I need to take a look at how far to carry the % of financials.

  165. There’s lots of good things with google, but their ad business is going to die. I’m glad they’re making money from other streams, but they have to nail something to continue the crazy growth. I think they’re one up on apple because they target big corporate as well, which doesn’t stop spending even when it’s dieing….

    And despite AAPL’s diverse product portfolio, it’s very consumer heavy — that may be problematic.

    If anything, we should stay away from the sector completely. :/… Stay away until some political leader wears a cape… That’ll be a good bottom signal for me.

  166. Optrader
    Any non-blog live feeds from Macworld?

  167. Demetrius Michael
    January 15th, 2008 at 11:27 am | Permalink
    workdog3 – it broke down from it’s pendant, isn’t that a sell signal?

    Yup. That’s why I said it would make for a nice put play on a bounce.

  168. C getting completely annihalated !

    For market to turn around, C needs to turn around + AAPL + INTC earnings.

  169. The market is way oversold here. I wonder what’s pushing the market down further.. It would be more effective if they traded it higher for a bit and then slammed it again.

  170. AAPL- just being killed

    …this is the end, beautiful friend- the end…

  171. Bought QQQQ, GRMN, & SMH Jan calls for day trade w/VERY tight stops.

  172. Selling does seem forced, but FXI is dancing on the cliff.

    Lets just hope that those numbers showing that AAPL was getting bought by big blocks and sold by little ones, holds up and that this has all been a setup for a giant AAPL turnover (to the upside).

    You have to say that GOOG is looking okay on a relative basis.

  173. Subprime exposure is the total of their loans, they’ve written off 50% of their loans. If they lose more than that (forclose on homes, homes down 50% in value) then it really doesn’t matter what stock you put your money in because we are DONE!

    The prime issue is another matter and yes, commercial loans will follow if the Government does nothing at all about the housing crisis but even if this administration is THAT stupid, we only have to put up with them for 11 months before the Dems do it for them.

    Stop spending money on the war, tax gas $1 per gallon and take that $500Bn and toss it into housing – problem solved in 12 months.

    Meanwhile, I’m toying with a progressive rebate/penalty system for cars that sets a baseline at 30 MPG and gives you $2.5K for buying a car that gets 35, $5K for 40 up to $10K for 50+ whith penalties going the other way at 25, 22.50, 20 and 15. With 16M cars sold a year the worst imbalance the government would have to shell out (assuming everyone bought a 50mpg car) would be $160Bn, less than my gas tax (which won’t affect you if you get a car with 30% better mileage). Again, this is a 12-month plan to radical change as shifting just 10% of our fleet into 20% better mileage saves 400,000 barrels a day of imports. What do you think the impact would be of 2.8Mb/week of extra oil in the first year?

  174. Oh sorry workdog3, didn’t realize. thanks. it looks like a good short play though!

  175. DM, AAPL is consumer reliant, that being true it also has a great presence in Europe, so lots and lots of Danish, Swedish, Norweigan kroners, Euro’s, Sterling, Swiss Francs rolling into the coffers everyday…

  176. Can I get a 138 on SPY? We’re here already, might as well enjoy the sights.

  177. oversold — according to the trusty T2108 indicator in TCNet, we’re not oversold yet. these last 5 days have just served to digest the drop at the start of the year.

  178. film/AAPL- where/when did u get that block volume data?

  179. Macworld-This is what I follow:


    And these guys seem to be doing some kind of video live blog. Not sure they will be able to broadcast once it has started though:

  180. I’m not sure if any of you follow the changewave. They did send out an email alert about the consumer spending drifting downwards. Here is the link that provides their survey results.

    Hope this helps.

  181. See you all after the keynote!!

  182. Andy – For sure, but there are some consumer problems in Europe too. Even if there weren’t, it’s growth has to outpace the US decline…

  183. Someone posted that info a few days ago, xian.

    I do think that Toby’s followers could be the reason for this, he does have a lot of lemmings. I can’t believe that Toby is picking a high to get his people out.

  184. SIGM-Watching this one closely for re-entry on calls (Got stopped-out on Friday while on the slopes). Maybe this was good enough of a test of 200MA.

  185. 6fingerman – On the daily I think we will go lower… But intraday we’ve been selling and buyers are no where to be found. Screw it. Short on!

  186. Opt. SIGM. Isn’t 5DMA pointing neg??

  187. AAPL- 175 is the line- it seems

  188. SIGM--yes ozzi, but very close to going up…

  189. SIGM-yes, but I don’t only trade 5MA. Most of the time I do but if for example I see a nice bounce on 200MA here and I can have a good stop just under it, then I will enter.

  190. SIGM – I would wait for a 42 break to confirm.

  191. Phil,

    MCD – How do you like them down here?

  192. Phil-

    What do you think of WYNN down here? and FSLR?

  193. Gold breaking down, that’s more like it. My NEM callers are going to get murdered, finally. $55 here we come!

  194. Phil – I like your thought process on the gas tax and mileage
    proposals. If you put a tax on gas as you propose, a very small
    incentive to buy the more fuel efficient vehicles would suffice.
    How about incentive/penalty program for the automakers?
    Also how about this:

  195. Tried a few sites, this one seems the best;

  196. hello everyone,
    i haven’t followed macworld before. does steve jobs make big announcements right at the start, or does it unfold over the course of the day?

  197. steves on stage

  198. I am on the Macworld blog. Seems overly trafficked. Anyone else have a good feed?

  199. BBD – do you like RIG here or any other services? Thanks!

  200. 5 million Leopard copies shipped in 3 months


  202. Windy, everyone is waiting for the “One More Thing” that always comes at the end. If that isn’t big enough, we are sunk.

  203. so, what’s happening at crackworld ?

  204. Cramer speak on Citibank:

    How do I get one of these CNBC “HISTORIAN” jobs?!?!?!

    As prices go up, I can certainly yell BUY, BUY, BUY, and when after earnings disappoint, I’ll DENY THE BUY, and yell SELL, SELL, SELL.

    I can do this too! Where do I sign up? Who is hiring?

  205. can somebopdy post the link of where to watch the speech?

  206. Thanks mrl14, that is a great feed.

  207. JBL- waiting for a little lower price? LOL

  208. thanks so much film!
    do you know how long he typically speaks for?

  209. CFC – Did people get filled on that roll? I woke up late and can’t get filled. Thanks.


  210. BWLD 52-week low.

    I agree with OPEC re speculators – Just change the rules on energy exchanges that contracts settle FOB at the end of the month with no rollovers and we drop $20 a barrel in 1 day.

    Guy on CNBC making a good point – don’t forget the first couple of guys turned down the job at C!

    QID is my only green stock on 3 screens I just looked at!

    AAPL – I read a good Freakonomics post once that mentioned it’s cheaper to buy an IPod and a joint than it is to go to a concert and the IPod lasts longer (you need more joints though). That’s how Apple can buck negative consumer trends, in the Depression people stopped going to theater and started going to movies in droves and they bought very expensive radios at home as it was, on the whole, cheaper than buying books…

    MCD – this is where I flipped and went long the other day.

    5M Leopard in 3 months, MS Office for Mac ’08 shipping…

  211. JOYG-Got some calls. Small position.

  212. 4 million iphones sold

  213. 4 mil Iphones sold

  214. has a very neat self-refreshing feature. shahir, I think AAPL is recording it now in 1080p and everybody will be able to download the video this afternoon, but no live video.

  215. 4M Iphones

  216. Green stocks- Phil you don’t watch VMW and PCLN anymore? LOL

  217. windy, this should run until 10:45am PST

  218. APOL just went Green!

  219. film,
    thanks. it’s nice keeping tabs all together. almost like we’re all there too.

  220. AMEX @ 43.38
    40 puts still 20/25

    40 puts for 20 !

  221. BBD – don’t forget FCL!!

  222. 1080p?! I mean, I like Jobs, good looking guy and all, but I don’t know if I want him poster sized…

  223. Techcrunch is also blogging the keynote live –

  224. Opt

    Why did you buy joyg? did u see something their?

  225. WYNN is good if oil comes down but it may take a long time with a dead consumer. FSLR I never liked but the $210s make a nice mo play right now.

    SPWR would be my solar choice and LDK is very cheap below $40.

    Albo – we don’t have time for small and sufficient – we need massive and overdone if we are to solve this problem before 10M homes in this country are boarded up and 20% of the RUT goes out of business. Oil is the number one crime against humanity with every $10 over $60 a barrel (and even that is a lot) costing global consumers $1Bn a day. Add refining costs, which jack a barrel of US oil up to $126 and you’re looking at $5Bn a day NOT being spent on homes or consumer goods. Even housing is suffering by taking $350Bn a year out of the hands of US consumers (and remmeber, that’s just what we are being charged in EXCESS of $60 NOT including the impact on commercial prices and oil based products).

    Wireless notebook backups are “in the air tonight” Yawn, as my daughter would say… Although $499 for a Terabyte backup for the whole house is excellent so they’ll probably sell a couple of million real fast.

    4M IPhones?!? Not good! I covered with the $170s and tight stops…

  226. AAPL- this is almost exactly the kind of trading that went on last yr b4 iphone- except we were about 100 points lower

  227. Grab your knickers!

  228. AAPL – is this the response saying: “Not enough!!!”?????

  229. This keynote is moving way to fast. Already on the 3rd thing…we definately are going to get a one more thing today!!

  230. I always wanted to say that… I’ll reserve that one for a better time… Though, 138′s in the sights!!

  231. Phil – 4m is great! Apple wanted to sell 10 million in 2008….we’re only in Jan and only need to sell 6 million more!!

    itunes movie rentals are here.

  232. I had all my stops in around 171, just scrambled to move them down to 169 and change, but I don’t think I can move them again, I will have to let them stop out even if it comes before the “One More Thing.”

  233. 4M not good?

  234. 9:38 am Every major studio is on board
    9:38 am Touchstone, Miramax, MGM, Lionsgate, Newline, FOx, WB, Disney, Paramount, Universal, Sony all on board
    9:37 am iTunes Movie Rentals

  235. Every major studio on board!! iTunes Movie Rentals.

  236. I am holding my options, letting stock stop out. This feels like a shakeout to me, so I have to hold strong.

    Is down?

  237. mrl14- i dig it- this is going to b the coolest laptop ever

    and we need a cheaper iphone model- like it’s no big whoopy

  238. That is VERY VERY good everybody. We may turn this corner. That is one big surprise.

  239. i’m holding as well

  240. macrumours is up, just don’t refresh the page:
    9:41 am Library titles: $2.99, New Releases: $3.99
    9:40 am Rules: 30 days to start watching. 24 hours to finish
    9:40 am Watch instantly (30 seconds with modern broadband)
    9:40 am Watch anywhere (Macs, PCs, all current iPods and iPhone
    9:39 am Over 1000 movies (available 30 days after DVD release)

  241. 9:42 am iTunes Movie Rentals launches today in the U.S. International will launch later this year. Software updates for iPods and iTunes will be forthcoming
    9:41 am Library titles: $2.99, New Releases: $3.99
    9:40 am Rules: 30 days to start watching. 24 hours to finish
    9:40 am Watch instantly (30 seconds with modern broadband)
    9:40 am Watch anywhere (Macs, PCs, all current iPods and iPhone
    9:39 am Over 1000 movies (available 30 days after DVD release)

  242. Here comes the new Apple TV!!

  243. new Apple TV

  244. CFC – no fill, we need a jump one way or the other.

    GOOG with a scary $640 test, Apple providing no support..

    Mac IMovie rental rules are the same as Tivo’s, must be a new standard… $2.99 or $3.99, 30 days of unlimited watching. Bad for NFLX I would think.

    Wow, if this keeps up I’ll be selling $165s!

  245. There we go. Finally DONE RIGHT!! Kudos to Apple

  246. I’m holding as well, but strictly speaking we should have sld and re-enter when a new trend is clear.. I’m in April so I have earnings to look forward to as well, still not comfortable with te current moves we are under $170

  247. lol the global economic indicator is now based on the # of iphones sold.

    It doesn’t matter if it beats AAPLs benchmarks, it has to beat everyone elses… From looking at the price, it didn’t.

  248. one more thing- please pull the laptop out of ur back pocket- PLEASE!

  249. Is this death to BBI and NFLX?

  250. Congrats to Apple, they’ve invented Tivo! Although I would kill for a terrabyte Tivo box!

  251. Appl- Looking at some more Leaps on selloff

  252. Andy, I’ll leave the Apple updates to you

  253. Market didn’t drop further when AAPL tanked.
    Think that’s a good sign.

  254. Phil – I don’t think it’s 30days unlimited watching. I think it’s 30 days to watch, but once you start it you have 24 hours to finish it

  255. buying back my AAPL 165 covers

  256. couldn’t take the uncertainty and covered AAPL when it broke through 172.

    we are all in this together, so much so that this site couldn’t refresh for quite a while. better now i think.

  257. Albo – the market doesn’t care about AAPL… this is a credit crunch sell off…

  258. AAPL – so…??? Dump them – it’s not enough?

  259. Look at EDU! OUCH

  260. AAPL-Buying more Leaps. This is stupid. Movie rentals look amazing. I am buying an Apple TV today.

  261. Look at EDU! OUCH Nobody wants to learn English

  262. Site was down for me, got a weird wordpress db connection error, anyway seems to be back to normal now..

  263. 9:59 am Music can be bought from within Apple TV

  264. Instant movie rental in HD, directly on my TV. Amazing. Buy buy my Netlflix’s subscription.

  265. AAPL- previous local low is 168.30

    the laptop guys, it’s a genie in a bottle

  266. Apple should have a “tablet”, to accompany the TV, with touch screen to quickly view trailers, etc. I think the TV could eventually be big.

  267. That is pretty cool:
    10:00 am The new Apple TV is a free software update.

    No new pruchase to get consumers to spend wit existing equipment

  268. $229. They are going to sell millions of those.

  269. hopefully, people at happy’s site are okay. think a lot of them piled into EDU yesterday. guess if they were quick enough, they could’ve more than made up for the initial loss by flipping and going for the puts this morning.

  270. Apple-AAPL: Bearish Pennant
    There is now an active bearish pennant on the Apple (AAPL) chart that has a downside objective to $145. The pattern would no longer be valid on a break back above $173. With the MacWorld keynote still in progress, anything can happen. It does not look like the trading masses are pleased so far but that could change if there is some double-secret super-sexy product waiting to be dropped. The problem? The rumor mill was already in hyper-drive before the event so something truly amazing beyond being able to rent “Blades of Glory” for $3.99 is going to have to happen. :theflyonthewall

  271. EDU – worth gambling on a retracement?

  272. Only disapointment is 30 days after DVD release. And this is why they are going to focus on

  273. CFC – no fill, we need a jump one way or the other.

    GOOG with a scary $640 test, Apple providing no support..

    Mac IMovie rental rules are the same as Tivo’s, must be a new standard… $2.99 or $3.99, 30 days of unlimited watching. Bad for NFLX I would think.

    Wow, if this keeps up I’ll be selling $165s!

    4M Iphones is great – I’m not selling my stock but it’s below expectations.

    30 days to watch, 1 day to finish. That is NOT as good as TIVO. My understanding with Tivo is it’s 2 devices for 30 days unlimited.

    Wow, SU cracked $100!

    Bought back the Apple $170 callers for a quick $2 ahead of one more thing (fingers crossed). XXX

  274. Got NFLX puts on macworld news…

  275. let’s get something nice now!

  276. This has to be the bottom. I always sell my stock at the bottom. :(

  277. Opt. And gotta watch it within 24hrs. Don’t like that. Netflix DVD’s arrive on my doorstep before they hit Blockbuster.

  278. Phil,
    Do you suggest stops on AAPL covers at this point? I covered mine at 4 (Jan 170s). In other words should I consider buying them back at a loss?

  279. I got wordpress error too. In case of emergency – go to the free site and in case of it being worse than that, use my last post on but my first preference is going to be to give this site 10 mins or so.

    Wow, that was good timing with that buy back on Apple!

  280. IV dropping on aapl.. jan170′s at 61% (were 70+)

  281. MacBook Air

  282. how long is this keynote, anyways? 2 hr? 1.5hr?

  283. closed all AAPL covers and hoping it runs

  284. Well I do like EDU down here but the option prices are irrational. You can go Apr $60s at $9.50 selling Jans on a bounce for $2.50+ and rolling to Feb $65s for another $3 or so on Friday, that’s a pretty good set-up on them. XXX

    CMAN – Apple covers are gone – it’s all up to Jobs now!

  285. 10:08 am “The World’s Thinnest Notebook”
    10:08 am As you know, Apple makes the best notebooks in the industry. Today, we are introducing a third kind of notebook. It’s called the MacBook Air
    10:08 am 4th thing: There’s something in the air

  286. Filmflam
    January 15th, 2008 at 12:24 pm | Permalink
    windy, this should run until 10:45am PST

  287. Watch it in 24 hours from when you started watching it. Does not bother me at all.

  288. D’oh – it’s just a thin notebook!

  289. 10:12 am MacBook Air is 0.16″ to 0.76″. The thickest part of the MacBook Air is thinner than the thinnest part of the Sony. It fits inside a envelope
    10:10 am We thought 3 lbs is a good target weight, but there was too much compromise with the other features
    10:10 am Most people think of Sony TZ series when they think of thin notebooks. Competition specs: 3 lbs, .8-1.2 inches, 11 or 12″ display, miniature keyboard, and slower processor.

  290. Oh wait, that’s not it. If this damn thing were live I’d pay $3.99 to watch it!

  291. I just bought more April $170s for $21

  292. This is not the one more thing…

  293. Multi touch trackpad!!!

  294. There is absolutely no reason why this stock is down. And I want this notebook too :)

  295. Well, only thing that can save me now is Windows apps running on it.

  296. Phil – me too (Appl April 170s for 20.90 :-) ) I cleared all other APPL out abou 1hr ago. Whats the best way to cover these ? (Jan 175s ?)

  297. Buyers coming back into the market, oil down $3 now.

    The fact that the world’s thinnest notebook by 1/2 is not “IT” is a good sign but Apple buyers are nervous again.

    We need a real catalyst here.

  298. Opt, I agree. This is all good news. Sucks that it isn’t moving the stock, but I do think there is nothing here worth selling it off on. There are great products and services. Screw you, market! :evil:

  299. 10:19 am Otellini: The processor is as thick as a nickle and as wide as a dime.
    10:18 am Apple asked Intel to shrink the Core 2 Duo. Intel shrunk the processor by 60%. Paul Otellini, CEO of Intel is taking the stage
    10:17 am 1.6 GHz Standard, 1.8 GHz Option — Intel Core 2 Duo
    10:16 am 80 GB hard disk standard, 64 GB SSD as an option. “they’re pricy, but they’re fast”
    10:15 am 1.8″ Hard Drive
    10:15 am How did we fit a Mac in here?
    10:15 am Move a window by double-tap and move. Rotate a photo by pivoting your index finger around your thumb. Of course, pinch-zoom.

  300. Cover is 1/2 the $65s if we head down from here but wait for one more thing…

  301. They are just killing all Jan calls, which was to be expected.

  302. How can you not be long on Intel if they can make this chip for Apple?

  303. 10:21 am A new feature on MacBook Air is called Remote Disc. When you go to the Finder, you’ll see in the left column all of the Macs and PCs in your vicinity, and can use the CD drive of any machine with Apple’s included software installed. You can use a PC to install Mac software wirelessly. Just as if you have a local optical drive.

  304. 5 hours battery

  305. $1799. nice!

  306. Wow, that’s a hell of a computer for $1,799 but I’m waiting for the tablet thank you…

  307. jobs needs to pull out a new iphone!

  308. You guys are worse then my kids “one more ride dad, really, just one more” :)

  309. Phil,

    What do you thnk of OI? Its a consumer play but it with all the beatings in the market it has held its ground. If I feel this will not fall below 42 anytime soon but do feel it will rally when the market does what is the best play on this? A bull put spread?

  310. OK, so that’s $1,799+$229 that I am going to spend today pre-ordering Apple’s stuff. I have a feeling I am not going to be the only one.

  311. I don’t think there will be anything more than that.

  312. One More thing. . . introducing the iKidney. . .

  313. I’m not gonna lie…

    I want one! Especially with the 64GB SSD option!!

    Awesome notebook. Even happier that it has a 13.3″ display, anything less would’ve been too small for me…

  314. one more thing

  315. Gosh is Apple seriously down $7 today? That’s pretty funny actually. One of the only companies in America actually doing something announcing several new products today and they are down 4%…

    That’s why I’m not buying this sell-off, it’s too indiscriminate. Seems like a bunch of idiots are just running out of the markets as if there are no good companies at all, that’s never the case, even in a depression there are simply things that do well (collection agencies)… Oil isn’t down anywhere near enough to reflect the downturn the market is looking for and copper sure hasn’t heard of a recession at $330 (up 50% from early ’06).

  316. Hi all. New to PSW and have been watching, reading for a while.
    Opt: Agree that AAPL appears to be manipulated with all this great news and still no rise in the stock. How much $$ would an institution(s) need to have to push this heavy volume stock around? And exactly how do they do it so they keep it trending the direction they want rather than it just being spot purchases below the bid that continue to drive the stock down? OK to answer after hours if this is a lengthy Q. Thanks.

  317. I am totally fine with my Leaps. Remember how happy we would have been to buy under $170 not long ago. And that was before movie rentals (huge) and macbook Air.

  318. Keynote is over?

  319. It’s done. No more things

  320. Opt—what strike AAPL leaps were you buying?tks

  321. GOOG and APPL both at LOD

  322. AAPL just about ready to break nearterm support. It’s up to earnings and especially guidance at point. Would love to see it hold 170+ in the meantime

  323. I have the 2009 200′s, covered with Jan $175′s

  324. Randy Newman??? WTF – He’s enough to tank even the best stock. Oh wait…He’s finished & AAPL is coming back

  325. randy newman? and how will u profit from this randy newman?

  326. More Goog at $4.50. I will kill Jobs at this point if there’s nothing!

  327. added to AAPL Apr 170s and covered 1/2 with Feb 165s

  328. Gosh…I love how all the Canadian media said the iPhone was coming. Did you really think Rogers is going to tank on its $200/month unlimited blackberry plan (with a 100mb soft cap ahahahaha)

  329. Phil,

    You can borrow my gun. Shows over

  330. added INTL Jan 09 22.50s and covered 1/2 with Feb 22.50s

  331. site updated :D

  332. OI – is that a Mac product? Then why would you bring it up??? Actually they are great but prospects for next year are iffy, I don’t know if I’d risk them in a recession.

    Jobs is such a jackass – 10 mins of Randy Newman is torture while waiting for his thing and he knows it…

  333. Seriously, no more “One More Thing”???

    THEY wanted to tank the stock. Damn them. Oh well, now I get to hold through earnings instead…

    Well, that was a bummer. Looks like no one can rescue this market.

  334. Phil,
    Where do you have your post on Just returned from there and could not find your post. (Can you give the link/page/path? Would like to know before I get the error again.

  335. AAPL – pucker your bungholes, boys… we’re going down

  336. AAPL makin new low for the year

  337. I’m getting an http unavailable on the macbook air page for apple canada. Must be sold out already lol.

  338. WTF? no more one more thing?!?!

  339. This is sick and overdone. And they are taking RIMM down with them.

  340. Whatever take AAPL down to $145…I’ll just buy more. Greatest company out there.

    What’s it trading at now?

  341. Well, I guess that 165 will be the new 172.

    So didn’t a couple of you guys do this exact same thing here on PSW last year (hype, defend, speculate, defend, cheer, buy, cheer, cheer) and watch the value of your AAPL position drop with its post-keynote IV ? Then drop more on BTRSTN ? Jeeze.

    I like their stuff a lot, but am glad I bailed Friday. After all, it’s trading for fun AND profit.

  342. AAPL- rolled to APRs and FEBs

    selling JAN 160 puts

  343. Crapola, nothing to short way done here. Arghghh.

    Tomorrow, GOOG can win the spectrum auction at a cost of $10Bn and then we can sell off on that, too. Then INTC can say that they accidentally solved cold fusion and room temperature super-conductors and we can sell off on that, too.

  344. Welcome Fortuno! It takes surprisingly little to move a stock around, even pretty big ones.

    I can’t believe he broke format like that! Whole market is giving up at this poiint – probably the best time to buy…

    I had to cover 2/3 my Aprils with the $165s, that was anticlimatic at best…

  345. phil, you’ve been waiting for a while for a notebook with a solid-state hd yes? (if memory serves me correctly from a year plus ago…)

  346. As James Carville so aptly put it “it’s the economy………………”

    It’s not AAPL, it’s a recession.

  347. INTC can move this

    also, when does AAPL report? after the close right? i just forget the day.

  348. They keep saying the time to buy is when you don’t want to well I’m there

  349. I don’t know what you guys were expecting, but I personally loving it. And I love the drop in the stock price as well. You can’t be complaining when the stock is moving up because you missed it and then complaining again when it goes down on good news. I am looking at long-term here and it is a steal at this price if you don’t panic. Time frame is all it is about.

  350. AAPL report after close 01/22 when the market comes back from teh 3 day weekend…

  351. Please compare AAPL to it’s Aug lows then look at C, GRMN, SMH, INTC, CSCO and many others compared to their Aug lows, and then thank your lucky stars that your AAPL is holding up as well as it has.

  352. optrader, you are right about timeframe, my next APPL buy will probably be Jan 09s haven’t decided which strike price, any suggestions?

  353. opt- i dig it, and pushed a tad into LEAP on AAPL

    i think 2nd half of the year is going to mad up- we just have to clean these excesses out

    C and it’s thing
    AAPL having expectations so high that these awesome $$$-making products don’t cut it

    what’s the PEG now?

  354. Well, could be a couple of bad days, but only play is to wait for the earnings and sell off on that. Can’t see buying more until we get to 150. The ABSOLUTE bottom is at around 135 for January or 142 in February. That will hit the long-term trend on a monthly logarithmic chart. That is when I will buy the Jan’10s. Until then, everything is a trade.

  355. FRE/FNM- these guys have been strong on all bad days i can remember for the last month or so.

    is this true, or am i selective with my memory here?

  356. Phil and others

    How about selling some AAPL Jul 08 or Jan 09 puts?

  357. The Apple TV announcement will kill startups in this space like Vudu:

  358. AAPL- the close is going to interesting- what’s new, i guess?

    these r turbulent times

    how about bernanke cutting rates tomorrow b4 the bell like in early SEP- but this time the real fed funds rate.

    that would smack of manipulation

  359. Well for now AAPL will need to do what it does, I am sticking to my APR 170′s waiting for 1/22 earnings. Now what would have been really nice was if Ben Bernake came on stage at macworld and said “Another thing, we are cutting by 0.5% today, you can now get your mortgage through iTunes”

  360. AAPL_ being bought like mad?

  361. can we get a Tom2oc’s KRD (key reversal day) again today.

  362. bought some Jan 09 200′s on that drop.

  363. Andy LOL- takings his queue from old greenspan- but more pizzazz!

  364. Not enough volume in AAPL to make this bounce convincing. Steve Jobs is giving an interview on CNBC Street Signs tonight, if I heard Erin right (I try to avoid 98.2 percent of what she says).

  365. Phil,
    It looks like we’re testing the levels you listed in your opening comments today.
    I’ve been daytrading QQQQ puts/calls based on premarket activity over the past week. Done okay, heck my Feb 45 Puts are up 40+% today (just sold them). But this is hardly a strategy. The market looks spooked and irrational to me – but fighting it is crazy.

  366. PBR broke its trendline today. Surprising, I was looking to go long that, but not now.

  367. erm, I know this is a bit of an APPL love in, but if you think the iPhone numbers for the US are a disappointment – it has absolutely tanked on this side of the Atlantic.

  368. GRMN touched long term uptrend support line today and appears to be holding (for now). Bought small position with hard stop just below low of day.

  369. SPWR- another ouch

  370. AAPL- looks like it’s being worked to the downside- very nice up/down action

  371. Jack- I thought I read that in England they were sellling only one a week. Something like that, does that even make sense?

  372. PER STORE Sorry

  373. Speaking of Brazil. Look at the chart for EWZ and for that matter FXI. Looks like those things are ready to break. Anyone else see any markets ready to collapse (not ours, of course) that’s obvious.

  374. Looks like Gold starts to drop today.
    Any opinion on buying puts for GDX?

  375. well film. Look how punished is being today Hindu INP

  376. WOW…logging on a little late today, and everything seems to be on sale!

  377. I had been looking for an India ETF. Guess I didn’t look too hard. That is a great short. I guess I will be going with a basket of ETF puts. Because if we break down another 10%, I can only imagine how these less liquid markets will be holding up. INP has no options though. Still think HDB is going to break, as well. Indian Bank.

  378. AAPL-Can we expect some upgrades on valuation? Would not be surprised to hear from Piper soon.

  379. the OI might not impact AAPL as much because the average daily volume is almost 80% of the OI for most strikes.
    Unlike most big techs such as INTC, MSFT, and CSCO which undoubtedly are impacted by the OI.

  380. Used that money to roll to Apr $165s of course!

    Done with Apple, moving on to GOOG disaster where I’m DD at $3.8 for $4.50 avg and getting the hell out on a wiggle

    Seeking Alpha – just put in Phil Davis and then click more by this author, that takes you to my page of articles. We’re not going there unless there is some prolonged crash.

    MacWorld last year – yes it was lame that the stock tanked after MacWold last year (and earnings didn’t help) but they fully recovered in April and flew in July which is why we started with the Apr/Jan spreads. We had to guard against something big but the only people really disappointed here are the 4 callers I’ve made more than 50% on while Aprils barely budged.

    I’m waiting for a notebook sized IPhone.. another year I guess…

    Selling Apple puts – tricky with earnings coming up but as long as you really want to own the stock down there.

    IPhone – If you look at it as 2M sold in the first month they you could think demand has tapered off fast with 4M total (and that includes Xmas) but looking at it objectively, it’s the most successful consumer product launch in history – that’s kind of important.

  381. WTF, India sensex down 2.5% and INP down 10%. Did it go ex-dividend today?

  382. Opt. YOu waiting for close below 5dma for JOYG

  383. Shorting GDX is way too dangerous in this financial environment. If a bank goes insolvent, gold goes to $1,200 fast.

    BA announces dreamliner delays! quick $2 drop. That’s a buy on the news I think but tough to buy anything here.

  384. MOn-Bought some puts

  385. I have EWT up $.03. Only thing green. What else you got?

  386. PHIL .. I’m with the INTC jans 09 uncovered right now .. are you going to protect for earnings or just go naked… I think it will pop but not too much and then probabilly will fall.. maybe just wait and play some short calls tomorrow, or perhaps buy some (jans 08) puts on a bounce and wait for tomorrow for a bullish put spread if it climbs and sell some calls if it falls ??? .. any thoughts

  387. Film, EMC is still positive, the crook picked it last night. Thinking of buying some puts.

  388. MOS, POT Cramer says Ag stocks can be revisited at lower prices-CNBC. Is it time to buy?

  389. BA

    Phil where did you see the story?

  390. As for INP – it is already trading at a premium compared to its “Intrinsic Value”. check out:

    Even at the current level – it is trading at a premium.
    Disclosure: I own INP in my long-term portfolio and hate it that INP doesn’t have options to trade! :(

  391. Opt,
    Piper (Gene Munster) released a research note Monday re: APPL (Mac sales up 43% year over year, earnings $1.73 per share on sales of $9.73B)

    Doesn’t look like Mr. Market cares (which is irrational). Heck everything on my screen is red except DNDN, HD and XMSR/SIRI..

  392. Phil,
    Would you get back into TSO l-puts at this point. Rejected my earlier offer. Should i wait for a sligjt retracement or do you thinks it’s down more tommorrow? VLO, COP Down,Down

  393. Now $640 is acting like upside resistance on GOOG, this is just frustrating at this point!

    Let’s see who is being bottom fished:

    BR, SEED, HD, OIH, VLO, FDX, IBM, LVS, WYNN (now may be a good time to go in), MRVL, TXN, YHOO… better than nothing I suppose.

  394. Opt, what is the stop on MON?

  395. I should send Jimmy a gift basket…just cleaned up on POT/MOS. You know -this fits my thesis about the big boys getting out -two down days on upgrades (them selling their positions into the new buyers) they call up Jim and say Okay! Let ‘er go!

  396. Anyone have an opinion on entering into a bull put spread (April 155-165s)?

  397. in APPL btw

  398. Nasdaq down 58, most probably we’ll see -90 by end of the day.

  399. Why is AAPL not down to 150 yet? when is it expected?

  400. BTW – 2 other “India Funds” that trade on the NYSE are:
    IIF – Morgan Stanley India Investment Fund, Inc.
    IFN – The India Fund

  401. Phil – do you think the market bounces from DOW 12500 or from NAS 2400 or it just keeps going lower?

  402. Finally 138 on SPY.

  403. FXI-Buying some puts.

  404. I waited ALL DAY for that number… Oh man.

  405. Bounce at 12500 or 2400? Nope, I think this market has had it!

  406. Jobs says entire China Mobile rumor was BS.

    INTC – by tomorrow you’ll have to sell the Feb calls to get any money. I’m leaving it naked but it’s not a big position for me, more sensible to 1/2 cover with Feb $22.50s.

    BA – heard it on CNBC

    Wow finishing at 12,500 would be so, so sad! If we gap below it tomorrow things will get very ugly. (as if they are not now)

    TSO – I wouldn’t play energy down tomorrow with inventories at 10:30

  407. below 12500 now

  408. AAPL broke below 166

    Phil – Do you think it would be worth buying AAPL calls into the close to capture short covering tomorrow AM?

  409. I still think we need the big panic before we bottom. Why is the VIX still sitting around 24?

  410. Call me crazy but I am buying more AAPL Leaps here. Will just be patient.

  411. I think you’re on target Opt…. But I didn;t think you like picking bottoms.. Have you converted???

  412. All you guys love AAPL and I think the sell off is overdone. Its now $35 from its peak. But there has to be a reason for this sell off. One comment I’d make is that the volume doesnt seem that high. Has there been any media comments to drive it down ?

  413. the bears will be searching for even slight bit of bad news in INTC report and will most likely kill it (even take it below 20 tomorrow).

    Long INTC stock, will buy more if it drops in the long term port.

  414. VIX not moving crazy – b/c the market isn’t moving VIOLENTLY down… just a nice smooth steady drop.

  415. Market resting at these levels is not at all a good sign, now we just drifted below 12,500 for a minute! BA is killing the Dow, XOM is killing the Dow, C is killing the Dow, JPM, AA… Only HD is not red:

    I think if we can’t hold 12,500 at the close there is no hope but holding it isn’t going to get me out there singing either.

  416. Optrader, the IV is still too high to go crazy buying leaps. I will start cherry picking a bit, but at this point, there is still 25 points of potential downside if we put in a climax bottom.

  417. total market meltdown. it’s all over. forget about 2008.

  418. DB-Take a look at the major indices if you need a reason that everyone is selling and no one is buying

  419. AAPL, RIMM new lows for the day

  420. It’s not that there are tons of sellers now. There are ZERO buyers, which we all know is not condusive to keeping prices stable…

  421. We need some real fear to get a bottom, otherwise it is just going to keep drifting down. CNBC needs to run a story that the sun isn’t coming up in the morning, that would put in a floor.

  422. DM, I hate picking bottoms, but for long-term plays you have to buy low. Anyway, that’s my strategy. For short-term I play the trend. Long-term I consider as value plays. And I will buy more if it keeps dropping.

  423. MSFT and CSCO low volume and not down much compared to nasdaq or NDX 100

  424. NFLX-bought some puts

  425. BA

    I have been out of the markets since last August. Made a hefty sum of money (thank you Phil), not comfortable getting back in but I must say a few names are becoming very attractive.

  426. Opt, I think this is the bottom, so you got my approval :D …. Hate it or not, you’ll like this one

  427. Opt – Are you actually considering to keep this long term though?… What’s your time frame?

  428. Apple calls into the close – it’s logical but risky. The only thing likely to save us at this point is Fed action tomorrow and I’ve been holding on much longer than I should today giving it a chance for tomorrow but I think we did that last week and Wednesday was a disaster.

    VIX 24 is ultra-disturbing. The VIX no longer cares if the Dow drops 300 points in a day, that means there is no fear of a rebound.

    I don’t know, on the whole I said 12,500 would be the bottom and here we are so I kind of have a macro view of things. Of course we could drop another couple of hundred on a spike down but this is just too strange coming on the heels of Bernanke saying “substantive action”. Oh well, out of Google even at least, tomorrow is another day!

  429. And lo and behold … there is a bounce! :)

  430. And there we go. A few buyers or finally a lack of sellers. Just when you guys thought we were dead. The cat isn’t dead until it falls off the cliff. He can still flirt with the edge!

  431. He’ll probably fall off tomorrow or Thursday, just like last week but at least this keeps me in suspense!

  432. Did you guys hear that CNBC promo for mad money tonite “Cramers talking tech. . . An overlooked gem that ready to bounce back. . . ” Any bets? I say SIGM.

  433. AAPL – looking to re-cover after the selloff. At this point better to sell the Jan or Feb?

  434. GOOG-not half bad

  435. Long-term: yes these are long-term or I would not buy 2009′s. I will sell calls against them though.

  436. I was chicken little and took my 15% on INTC calls…

  437. INTC held well?

  438. Oh … and one more thing …
    I have green close for you! :)

    Now that would have been one helluva “one more thing” gift from Steve! :)

  439. Bought it on Monday. Slipped today and coming back strong now.

  440. Phil,
    GOOG you just sold – was it Jan?

  441. OMG!!!

    You guys have to see this

  442. I’m seeing a lot of questions about the VIX. Remember, this is January expiration where leaps are expiring. It is this extra liquidity in the market that is keeping a lid on VIX. If we continue this downtrend next week, watch for a jump in the VIX.

  443. SIGM – As opt would say THE TREND IS DOWN.

  444. EGHT – defying the market and laws of gravity … what pesky lil chimp!

  445. out of INTC long but keeping the short naked. I’m all done catching knives for awhile

  446. Heya Kustomz – I agree it’s at least time to nose around with all these juicy lows.

    Whoever was buying already lost interest, just testing bottom I think – it’s a sensible place to do it if you’re scaling in but there wasn’t enough money joining in so they lost interest.

    GOOG – sold the calls I was messing around with as a day trade, got out even and happy with that after seeng them down 25% off the DD.

    Heart video – I know, this is why I love biotech, it’s the future for sure. You may cut back on food and fuel but when you need a heart, you’ll find the money!

    I would have thought RIMM would do well as there was nothing at MacWorld that looked threatening to their core market.

    10 minutes to Intel… Definitely Intel… AMD sucks…

  447. AAPL-Covered some leaps with Jan 175′s. That was a nice $4 bounce.

  448. Deceased feline behaviour from AAPL.

    Managed to scalp a quick 5% to offset some unpleasant action elsewhere today.

  449. AAPL

    Running to $170 for the close?

  450. Anyone betting naked on INTC?

  451. Well opt, even though I think that was the short term bottom for AAPL, I really don’t feel it’s worth keeping that long… Maybe I’m just too much of a front month player…. But if it gets right back to 1900-180.. I would be looking to dump again.

  452. Jeffrey-You’re no relation to this guy are you?

    What a weak bounce! This doesn’t look good but we’ll probably hold our levels. Meaning the cat will eventually fall off the cliff because he keeps playing too close to the ledge.

  453. EDU has been nice from 54.31, but it’s going to take more for me to recover from today.

  454. here we go!

  455. That was a horrible close!

  456. Well, I guess we have a new market paradigm (at least for AAPL) Sell the Rumor, Sell the News.

    Take care guys. I am not playing it, but lets hope that INTC either sparks a rally with a Fed boost, or they spark a major selloff. I will take either.

  457. GOOG – this is why we take the money back and run!

    OW! Pushed below 12,500 at the close!

    Check out how the FXI reacted to that little pump and dump…

  458. Well we better hope tomorrow morning’s numbers are better than expected or someone feels like bailing us out on the open. That was a very bad close! We are perking up in the AH though.

  459. OK Phil and gang, after a day like this we could all use some comic relief. The new Bush petrodollar coins are here. Watch it and get a laugh!

    Phil, 12,501.52 DJIA. Bottom?

  460. Thank you settlement!!!

  461. This prob means nothing, just an observation, but I see a lot more sellers waiting to sell INTC then buyers wanting to buy (AH of course, so it’s prob just crap).

  462. that was awesome!

    AAPL- i rolled to APR (medium size), JAN 09 (small size) & FEB (tiny)
    half covered each- except FEB that’s moreso

    DIA- we r so much closer to a bottom than we were 240 points ago!

    all we need is a little news and this market will rally like it’s no one’s business.

    then we may very well drop with extreme prejudice- again.

    stay nice- thanks phil and guys, the play by play feedback is killer!

  463. parchesia, I agree, when it sits on the edge it’s only a matter of time before it falls off. All too complacent after over 4 years of easy gains – very painful.

  464. Move over dentists, grab me a window and call me Geronimo. This market is definitely not for the buyers or prayers.

  465. OK that coin thing is very funny David!

    LOL Xian.

    Did I miss INTC? They took a quick dive to $22.25 but I’m seeing nothing concrete.

  466. QQQQs suddenly took a plunge at 4:14 pm

  467. INTEL now. REV – 10.7B. EPS 38C, GROSS MARGIN UP 58%

  468. According to CNBC, INTC missed both earnings and revenue

  469. HOLY INTC – I am seeing 20.80 and dropping on INTC

  470. here we go, INTC below 20 tomorrow

  471. consensus was 40c… down about $2.

  472. INTC 20.20

  473. That does not look good for market tomorrow.

  474. Big down open tomorrow, for sure. Anyone think otherwise?

  475. plus CPI in the morning… tomorrow could be a doozy!! :)

  476. Call Lassie! There’s trouble at the mill!

  477. I know AH doesn’t mean a whole lot but check out the drop..

  478. .02 miss! Revenue miss too! Holy cow…

    Guidning down on low end of range, wow, things are just bad.

    So much for Apple’s little comeback…

    That’s 10% of INTC so far, this will have major impact.

    APPL getting killed again, RIMM down, GOOG off, Dell, HPQ… oh forget it.. If the Fed doesn’t show up in the morning we may be paying to see 12,500 again on the upside!

  479. don’t think it is late, going to load on puts tomorrow. This market is done.

  480. INTC @ 19.83 AH

  481. well .. I was loaded tons of jan 08 20 puts at 0.08 .. they will profit something i guess

  482. INTC- holy cow!

  483. SANTA CLARA, Calif., Jan 15, 2008 (BUSINESS WIRE) — Intel Corporation today announced record fourth-quarter revenue of $10.7 billion, operating income of $3 billion, net income of $2.3 billion and earnings per share (EPS) of 38 cents. For 2007, operating income grew 45 percent, reflecting the company’s ongoing efficiency programs, with profits growing significantly faster than revenue. “2007 was a breakthrough year for innovation at Intel,” said Paul Otellini, Intel president and CEO. “We realized the benefits of our investments in new products and our efforts to drive efficiencies. Our customers embraced the Intel(R) Core(TM) microarchitecture, extending our competitive leadership and driving a significant gain in operating results. We enter 2008 with the best combination of products, silicon technology and manufacturing leadership in our history.”
    Q4 2007 vs. Q4 2006 vs. Q3 2007———————————————————————-Revenue $10.7 billion +10.5% +6%———————————————————————-Operating Income $3 billion +105% +42%———————————————————————-Net Income $2.3 billion +51% +27%———————————————————————-EPS 38 cents +46% +27%———————————————————————-Results for the fourth quarter of 2007 included the effects of restructuring and asset impairment charges that reduced operating income by $234 million and EPS by approximately 2.5 cents. Results for the fourth quarter of 2006 included the effects of restructuring and asset impairment charges that reduced operating income by $457 million as well as a divestiture gain recorded in “interest and other, net.” The charges and gain resulted in a net increase to EPS of approximately 1 cent.———————————————————————-For 2007, Intel achieved revenue of $38.3 billion, operating income of $8.2 billion, net income of $7 billion and EPS of $1.18. Intel generated more than $12 billion in cash from operations, paid record cash dividends of $2.6 billion and used $2.75 billion to repurchase 111 million shares of common stock.
    2007 vs. 2006———————————————————————-Revenue $38.3 billion +8%———————————————————————-Operating Income $8.2 billion +45%———————————————————————-Net Income $7 billion +38%———————————————————————-EPS $1.18 +37%———————————————————————-Financial Review — Record revenue of $10.7 billion was $88 million below the midpoint of expectations. Revenue for computing-related products was as expected while revenue for NAND memory was lower than expected, primarily due to lower average selling prices (ASPs). — Gross margin was 58.1 percent, up 6.9 points from the third quarter driven by higher unit volumes and lower unit costs, 45nm microprocessor qualification and lower 45nm start-up costs. Gross margin in the third quarter reflected the impact of a legal settlement. — Spending was in line with expectations. — Restructuring and asset impairment charges of $234 million were higher than the previous forecast of $130 million due to an impairment of NOR flash assets related to the proposed Numonyx transaction. Key Product Trends (Sequential) — Total microprocessor units set a record; the ASP was flat. — Chipset units set a record. — Total flash units were flat. Business Outlook Intel’s Business Outlook for the first quarter of 2008 does not include the potential impact of mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 14. Intel’s Business Outlook for the full year reflects the expectation that the Numonyx transaction will close during the first quarter. Q1 2008 Outlook — Revenue: Between $9.4 billion and $10 billion. — Gross margin: 56 percent plus or minus a couple of points. — Spending (R&D plus MG&A): Between $2.8 billion and $2.9 billion. — Restructuring and asset impairment charges: Approximately $100 million. — Net gains from equity investments and interest and other: Approximately $175 million. — Tax rate: Approximately 31 percent. — Depreciation: Approximately $1.1 billion. 2008 Outlook — Gross margin: 57 percent plus or minus a few points. — R&D: Approximately $5.9 billion. — MG&A: Approximately $5.5 billion. — Capital spending: $5.2 billion plus or minus $200 million. — Tax rate: Approximately 31 percent. — Depreciation: $4.4 billion plus or minus $100 million.

  484. to show you how much this sucks, 97mm shares of INTC traded into the close, but now it’s at 107… so 10mm capitulation in 10 min. Awesome.

  485. “The horror. The horror.”

  486. Wish you could buy/sell options after hours. Going to be a ruch tomorrow :-(

  487. rank xerox – you are going to be spitting silver dollars like a slot machine that hit the jackpot tomorrow. Cheers to you!

  488. didn’t the CEO say everything is COOL just last week. WTF was all that with a miss on both the revenue and EPS.

  489. The wheels are coming off the trolley for-real this time. Capitulation is starting

  490. just think if INTC didn’t have record revenues, earnings, etc.

  491. everyone and their mother is shorting all the stocks in AH :-)

  492. Yep, we’re totally screwed. “Substantive Action” HA! I don’t think Helicopter Ben can save us, his printing presses are already running 24/7!!! With his “Spend all you want, we’ll print more!” policy, you know this is going to end badly.

    This is awesome.
    Bush needs to do something similar with social security. If everyone had a debit card to access thier retirement so they could buybuybuy, maybe INTC could make the quarter.

  493. The trins closed really high. that should be good for a bounce but if not it could be going to the bottom.

  494. Sold my QQQQ Feb 45 puts this afternoon and bought them back at the 3:30 pop. Probably sell them again into tomorrow morning’s intial drop. Using 1/2 out @ +20%, another 1/4 out @ +25-30% and playing the last 1/4 on the 15 min chart.
    I don’t enjoy playing like this but can’t figure out anything else. (It’s been working okay for the past 1 1/2 weeks.

    Any ideas out there..

  495. i had to stick around for INTC:

    peoples’ this is good, this is the kind of thing that gives us a reversal day.

    traders puking all kinds of stock at all prices for the last 2 weeks.

    we’ll soon have more news that’ll b bearish -any financial reporting and economic data.

    if any of those bad data points get bought, then get ready.

    making my list and checking it twice- also thinking about the short game!

    stay nice- for reals!

  496. That coin thing was pretty funny. Isn’t it amazing how much good, free content shows up on the web. More and more every month. That is the future of TV right there.

    Hey didn’t GLD hear the fed was cutting rates??? Why is it looking so glum? I think it will start selling off in tandem with India’s stock market. Total global deflation. That’s the way of the world.

    Cough! Cough! Sorry, got some chips stuck in my portfolio. Looks like a 5% down day tomorrow kids. Oh wait, Fed cuts rates 15 minutes before the market opens, we are up 3%, and then all the way back down…

    Not lovin’ it these days. Where for art thou calmly trending markets?

  497. last thought-

    can max pain b showing 145 as an anomolous result due to heavy open interest at lower strikes from when they were purchased as LEAPS much lower?

  498. goog down another 10 AH to 628

  499. Did anyone pick up those QID $43s this morning? $4 if we hold here!

    Orion – hit and run is the way to go until we put in a proper bottom. We’ll find out tomorrow if we can hold 12,500.

    BIDU down to $310.

    Oh well, at least C came back so now I won’t have to own them.

  500. I know I have been saying this for a while now, but I think I just realized it for myself. Things are very bad out there in the world.

    Nothing to do tomorrow but look to buy more calls further out. Really, INTC’s earnings aren’t this bad. C’s were, but this ain’t so bad.

    Congrats on the INTC 20 puts. I would be sure to sell half of those at the open.

  501. Phil I didn’t buy the QID but I bought the DXD Feb 56 calls. It is a DOW ultrashort. Already have some QQQQ Feb 42 puts in case we go to long term support line.

  502. Goog down 12AH, AAPL almost 5, RIMM 2 and change, BIDU below 310…wow…

  503. Hey, guy on CNBC makes a good point about C. $124Bn of shareholder value lost is double what Enron lost.

  504. Film – I think it is hard to really see how bad it is when you live in LA where things are so much better then elsewhere. Always has been better there and always will be. At least that is my impression from having lived in OC for 5 years while in college.

  505. I dunno, this seems like more than a bit much, doesn’t it.

    Talking about INTC.

  506. I’m tempted to buy 1000 shares about here to see what happens.

  507. Hey guys, if you subscribe to the logic that we can’t put in a bottom until the average joe and jane change their 401K allocations, I don’t think we are there yet. We may have to print Dow down 400 points to make an impression.

    Maybe we finally get a VIX breakout to get this bottom in. All right, off to get a new keyboard, too many lunch chunks in this one.

  508. The Vix is going down after hours, down is the new up I think!

  509. I sincerely hope your accounts are doing ok these past few weeks. I see a lot of countertrend trading that can’t be paying off.

  510. Coined here first by Phil ” Down is the new Up!”

  511. Greg, that is a really good point. I know so many people in defense, too. I don’t know any homebuilders and people who work in retail, well, besides my family in Oregon. I KNOW my wife will never lose her job. And I know that if I don’t do anything stupid, I can keep making money on all these wild moves. It is really looking down my watchlist and seeing this that brings it home:





    Funny thing is that I have been laying out all the reasons that this would happen for far too long to not have taken any longer-term put positions. But, instead trading and treading to keep things afloat. And now, nothing to do but wait for the bounce or reversal and see if it is for real.

  512. OK, I’m a dumbass, I just realized that tech was off 2.5% yesterday and the nas finished down 2.5% today and when we finish at the 5% rule we EXPECT to head lower…

    Could have/should have made a killing on this one.

  513. Holy ball cheese Batman. It looks like helicopter Ben and the Plunge Protection team will be filling the tanks and drop bags tonight.

    Phil, in years past it was considered prudent to have 10% of ones portfolio in gold/gold stocks. I am only at about 1.5%. What % do you think is reasonable?

  514. Film – Nasty! Did you know…

    There are about 1707720 germs on your keyboard right now! That’s equivalent to the number of germs on 342 toilet seats.

  515. Andy – I think Radiohead already cornered the market on that:

  516. workdog3 – Can’t speak for others here but for the first time in almost 6 weeks my account is finally showing some progress and up ~20% for the month.

  517. Nice, design. What plays have you been putting on?

  518. No worrys, might have support around 12000 at last years lows, if not, the 200 day MA is only another 1000 points down.

  519. Design that’s wicked!!

  520. No way I am buying INTC here with that EPS miss. Might get in cheaper around 17 or less. I am not a fan of companies that miss.

    Is marketwatch dumb to put this headline?
    Intel earnings jump 51%, but disappoints investors.

    I guess they did not get the news that INTC missed by 2c.

    Will definitely buy puts on CY tomorrow has tons of room to fall with most chip stocks already down too much.

    Might also buy some leap puts on AMZN, this thing still has a forward P/E of 50.

  521. Did the intc ah trade for some beer money.

  522. Was the BA news for real ? Or just another rumor well timed on a big down day ?

  523. Phil,
    I have a question on shorting. I remember reading a comment you once wrote that when you want to short a hi flier, you wouldn’t just buy the put, i guess b/c of the premiums. You would buy a longer call and sell the shorter call. I assume that in markets like this with lots of downside momentum, you would just buy the puts. Or you still sticking with the first strategy?
    Also, I know it’s still early in all of this, but are you putting together a fish list for companies you would love to grab on the cheap? And what basket of stocks or indices would you look at to signal a turn? I think I played this as well as I could hope for in protecting my portfolio, but I feel really exposed to the upside.

  524. workdog3 – Just went through my account activity for Jan 08. I’ve been in/out of the following equities on both the long/short side at various times:


    Most of the trades were “hit and run” with a holding period between 2-4 days and were always well hedged. The only naked call I held was on ANDE and that was because I could not find a suitable hedge. I’ve kept a very close eye on my risk resigned myself to taking smaller profits in this environment.

  525. Anyone on here participating in the 10k portfolio starting Friday?

  526. Commercial construction (micro) trends.
    I work for an East Coast commercial construction company and have seen recent cutbacks in bank branch construction as well as a slight downturn in other retail work.

    The margins are getting thinner since many companies are getting rid of their in-house construction departments and bidding the work out to large construction mgmt firms (who know how to squeeze the last dollar out of subcontractors and have experienced legal teams to further intimidate). Some winning commercial bids in the metro areas are now around 4% profit where they used to be 6-8% just a year ago. Bottom line, more folks are bidding since there is less work.

    These observations are based solely on my observations and discussions with others in the field and only cover the East Coast, from Me to Va.

  527. I’m buying more and more protection DIA/QQQQ/QID but its not stoppping the rot, just slowing down the decay….. I have been selling underlying stocks and keeping the covers…. I have been reducing my longs.

    I’m down 4% since Christmas, dont know if thats good or bad. Feels bad. It would have been more but I’ve learned lessons while here. However one lesson I always follow is never to loose more than 1% of your total investment on a trade which is why my portfollio is shrinking.

    At this rate it’ll be empty just in time to fill up with the new 25K

    Here’s hoping – No pressure Phil :-) Looking forward to watching you start a portfollio from scratch in this environment.

  528. MDhamija,
    He’s starting a new 25k portfolio Friday, which I will be playing. I’m not sure about the 10k because that one is still new. If we continue down this week, there should be a lot of good opportunities soon. But before participating in anything, make sure you are ready. Know all the rules in the strategy section and in the K1 Project (including when to break them). I keep these posts as a reminder

  529. it figures I would go long too soon. I didn’t even have INTC 22.50 puts! And I’m the uber bear around here!!

    Something must be horribly wrong.

  530. that reminds me, I’m following the phil 25k this time around (Fri?). I was hoping to have $34k for some of my own picks as well, but it’s under $32k after today. Damn you AAPL and GOOG!

  531. For all you Appl longs ……………..

    Morgan Stanley

    Pullback Presents Buying Opportunity

    Our Apple thesis has long been that the company’s ability to extend its product portfolio will drive incremental revenue growth and margin expansion relative to consensus expectations. With today’s Mac World event, the company expanded its portfolio in two key areas. First the new Apple TV and movie rental iTunes offering creates a stand alone business that is PC/Mac-independent and moves Apple to the center of the digital living room. Second Macbook Air expands Apple’s notebook business at a time when Apple’s mind share is well ahead of market share.

    What’s Next : FQ1 Earnings. Apple confirmed 4 million iPhones and 5 million copies of Leopard shipped to date. While the iPhone figure is in-line with our expectations, Leopard sales point to another $50mm revenue or $0.04 EPS relative to our current December Q model. This along with strong Mac sales is likely to result in meaningful EPS upside when Apple reports January 22nd.

    Where We Differ: We continue to view consensus expectations for C2008 as conservative given trends in Apple’s core Mac business and the company’s ability to leverage component costs and its fixed cost store base. We model C08 EPS of $6/share to consensus forecast of $5.40.


    Key Points
    - Announced 4m iPhones to date implies 2.61m in Dec qtr (-v- Strret consensus off 2.26m)
    - Introduced MacBook Air. Will increase confidence that Apple will have sustained market share gains in 2008.
    - Continue to expect upside to Dec quarter and typical conservative in-line guidance.


    Positive announcements from MacWorld fail to impress investors, within a down market

    First Impression

    - 5M Leopard Sold bodes well for our 2.5m Q1 Mac forecast. 5m total Leopard shipments suggests 2.5m+ Macs sold Q1, in line with our recently raised forecast off proproetary data points. 19% of Mac install base upgraded to Leopard, suggesting 26m total Macs sold, up from 21M announced Q4

    - 4M iPhones Sold to Date Soundly Beat Expectations. 2.6m iPhones sold in FQ1 beat estimates for 2.2-2.4M (RBC at 1.7M) likely on stronger than expected holiday salews and Europe strength.

    - So What to Do With The Stock? Apple fell 6% as investors were underwhelmed, possibly on unrealistic iPhone speculation in the media and lack of “killer product” similar to’07 iPhone launch. but mostly general market pressure. However, Apple’s strong fundamentals remain unchanged, with Mac World announcements reinforcing our Out Perform thesis for (!) upside surprise in Mac momentum driving F08/09 revenue above consensus, (2) iPod/iTune dominance maintained (3) iPhone exceeding 10M goal by the end of calender 2008. We maintain our Bullish view going into Q1 results on the 22nd, with data points suggesting interim upside on Macs and long-term iPhone and MAc share gains

    4m iPhones To Date 2.61m in Dec. Qtr. Apple announced unit sales of 4m iPhones to date, which implies 2.60m in the Dec quarter (-v- street estimate of 2.26m). We expect further upside to unit numbers when Apple reports its Dec. qtr on Jan. 22 (Mac units of 2.3m -v- Street at 2.2 and iPod units of 25-26m -v- street at 24.7m

  532. Those analysts don’t sleep… Couldn’t wait till tomorrow eh? Had to get your rocks off eh Stanley?

  533. Phil hedge fund – here is your benchmark :

    3BN should be enough to be allowed to pick the colors for your flying car …

  534. Man, this sucks. I just had to say this.

    I’m making a short list – AMZN, HDB (yes, I agree FILM), FXI to start. Any others? I guess everything. Yes, of course! BIDU. Seeing as search in China is so obviously affected by a U.S. recession, BIDU will probably drop 40 tomorrow.

  535. last comment was sarcastic.

  536. Well, would you sleep if a stock you upgraded in the last month plummeted? Seems like general pain for market will drive aapl lower with it. You can’t blame them for crying out when the market’s last best hope went down in flames (and then intel, the last last best hope went down). Frankly, I cried out a little to as I watched it crash through one resistance point after another. and now after these reports 163 in AH. Tomorrow will be ugly.

  537. I think the mantra will be to sell the winners, basically everything that has gone up 70% in the past 1/2 year is going to get slaughtered. That’s everything solar starting with FSLR also STP, ASTI, JASO, LDK, SOLF, SPWR, STP, YGE, especially if the oils have a down day. WFR, the most secure solar and an SP500 member, has already been annihilated, and oil is being annihilated, so I think solars are the first to go, especially FSLR. Then also BIDU, eventually MOS and POT,the steels, also ISRG. Careful with your stops in case of a surprise FED rate cut, but if AAPL and INTC goes, everything is going, but be careful if too much blood is shed in the open, as there may be an intraday uptrend. But I may be overreacting. I’m going to be careful with the stops and the entry, but it seems like we are gearing up to a monumental down day. But maybe I’m just a Cassandra, but I’m scared bec. they sold gld today just to sell something!

  538. The Air looks pretty questionable to me. A sealed battery in a laptop – get a grip.

    A lot of people here seem to be fighting the market. I thought one of the rules was about “not trying to save the market”. The US is, beyond question, in recession. Sure maybe the Financials are the root cause but companies like Intel are bound to suffer, it doesn’t matter how fast the Core 2 Quad is …. As far as I can tell the economy is shot to hell and I’m amazed that so many here, usually a bastion of rational thinking, seem to believe an emergency Fed rate cut will rescue anything – it’ll pop the markets sure, but it’ll also hammer the dollar (even more); hurting foreign sentiment and dollar appetite, destroying the currency carries that have provided such vast amounts of liquidity.

  539. futures been relaxing to the upside – from -40.0 at the close to -30.0 now

    let’s not get excited?

  540. which futures are those .. Dow, S&P or Naz.

    -30 for Dow no biggie
    -30 for the others, a bit more serious.

    In any event, I think they are now shooting the leaders to scare the crap out of people.

    The Intel reaction is a joke. They put up very strong numbers and margins, record numbers, better than guidance and just a tad light on aggressive analyst whisper targets.

    For INTC to be at 19, after opening the month at 27, is ridiculous IMO.

    Same can be said about how AAPL and GOOG are fareing this month.

  541. frozen- that was NAZ e-minis

    at the close -40, now -29.75

    sellers going to sleep?

  542. Here is a perfect example of why we should ignore all of the various pundits that are trotted out before the cameras or in the media.

    From a newspaper article this morning about C, before C reported:

    “It wouldn’t surprise me to see a nice pop in the stock (C), especially if the writedown and news isn’t as bad as the purported $24 billion”, said analyst Peter Cohan of Peter A. Cohan & Associates.

    These guys are filler for articles and they don’t know any more than you or I as to how the market will react to partiular news or data point.

  543. nikkei- also, openned -340 or something – now -130, YAY!

    is this lowered expectations?

  544. MacBook Air (I just got finished looking at the keynote.)- the thing that worries me about the Air was that there was no live demo. When the Iphone came out, they didn’t even have the complete OS in there, but Jobs did a live demo. So, what does it say that there’s no live demo for the MacBook Air? Doesn’t make me bullish.

    But I think the keynote is a bit of disappointment from the market because there have been two narratives in place: (1) AAPL is the superior technology for individuals; (2) AAPL is the superior technology for individuals working in corporations. (1) is pretty much established. (2) seems to follow from 1, but not necessarily. The argument for (1) is clear and continuing, but I didn’t see much argument for (2), which would really move the stock. For instance, it would be easy for AAPL (or AT&T) to set up a service to disable IPhones at the request of business purchasers. The Iphone already has password protection, but not remote erase, like the Blackberry. Also, the Iphone would be much better if you could type on it when the keyboard was in the horizontal position. This is a silly complaint, but I’ve thought it and heard it from many. It would be better than a Blackberry from a typing perspective. These improvements, I think, would be more of a market mover than the SDK initiative. Maybe these things will come, but I’ve heard this complaints (from Phil too regarding typing horizontally) and they seem to be essential.

    Basically, the move in AAPL is now based upon “superior technology for the individual” and perhaps what WallStreet is looking for is “superior technology for corporations.” I think that Wall Steet is waiting for the second narrative to take hold, bec. the growth trajectory is difficult to continue without the second narrative.

    And there is weakness in the first narrative: For example, I have used AAPL products for 15 yrs (including editing a doc on FinalCutPro), but I’m happy with Netflix (although I may short it), bec. I have 4 movies at home for $20 a month and if I need to pay $3, I can go to the local shop and pay $3. In a month, I pay about $20 for about 12-16 movies, which is less than $2 a movie. So, I don’t get why I would want to pay $100+ upfront for AAPL to deliver me movies at $2.99, less than the $2 I pay for a movie from Netflix?

    Even if AppleTV takes hold, I think that we’re still waiting for Jobs to gain revenge against Gates. The consumer at home, the Ipod, and Itunes are a trojan horse(s).

    Also, one thing to consider is that there are more GBs or petrabytes delivered via mail, than delivered via the internet, on a daily basis, mostly because of Netflix. So, do I really think AAPL is going to overcome Netflix? Maybe. But if it does, what’s the traffic going to be like at 8-9pm EST?

    I have some uncertainty concerning these new initiatives and the lack of an assault against MSFT. AAPL has some reasons to launch the assault against MSFT (the ZFS file system, more cost effective for an enterprise bec. of MSFT licensing costs)--but that narrative doesn’t seem to have begin. The consumer narrative, given the softness of consumer spending, is not that compelling.

  545. Thanks Beth, Much apreciated

  546. JR – I think you’re missing the main point with Apple’s great success over the last 5 years. They’ve tried to get into the enterprise market, but have not been as successful because to ask a corporation to completely overhaul their systems is time consuming and expensive. What Apple has done is infiltrated the home. Every month another friend of mine buys a Mac and I bet everyone here will you the same thing. After that, they’re going to say, why isn’t my office on Mac and start pushing for a change. Microsoft is slowly losing the consumer market.

    It’s a generation thing. All college kids are on Macs. Let the old generation move on with the PC, while the new generation moves forward on the Mac. Apple is a long term growth play. 10+ years. Just hold, watch, and retire :)

  547. I think you guys are overly bearish on the market.

  548. Sure, I agree with you but here’s the problem: Netflix delivers more GBs or Petrabytes via email than the entire traffic of the internet: so in one day Netflix is pushing more Petrabytes than the entire Internet. That’s astounding! Now Apple says, we’re going to take over their business. Fine, greater market pentration for AAPL, but whoa, is AAPL going to more than double internet traffic, and do it at starting 7pm EST?, and ending 11pm EST? It’s a fine idea, but no one knows whether this is technically possible!! There is trouble ahead!! God forbid that AAPL is successful, and needs to push more than the entire daily internet traffic for one day in 3 hrs of that day--this is a big gamble!

    So, is this a good avenue to pursue the corporate? The conclusion is uncertain. I’m not saying I don’t love AAPL, (and the Powerbook G4 I’m typing on), I’m saying they are trying things that push the capacity of the internet: If they are unsuccessful, it’s not good; and if they are successful, is it possible to push the Netflix Petrabytes between 7-12pm EST? I dunno, the Internet has never been tested like that!! Never!!

  549. Correct the last post to state: Netflix pushes more Petrabytes per day via standard mail, than the entire Internet (worldwide) pushes per day.

  550. JR – I’m not too sure netflix can afford to email petabytes daily. Which is 10^15, (1000 terabyes, each terabyte at a 1000 gigabytes).

    If anything you should go to bed, get a good night sleep for tomorrow. Netflix isn’t exactly a model company that’s hard to beat. I’m sure with an internet connection and access to you could provide a more competitive business model.

  551. To use myself as an expample: I’ve pushed about 1 MB (max! this week), but I will probably watch 3 3-8GB films--that’s 20X on a bad week. Thats a big difference!

  552. It is time to go to sleep, but pushing video as compared to pushing music is a project that is at least one order of magnitude larger. Goodnight.

  553. JR – As a software guy, I disagree with most of your thesis above. Most of what you talk about might not take a tasked team more than a few weeks to get a production rollout of each individual feature you discussed.

    As IBM has clearly demonstrated, if you don’t sell an upgrade path, you don’t get a chance to sell again for a long while.

    I must really point out that from 12 to 30 percent of the Internet bandwidth is porn and a lot of that is video. So it’s pretty much tested EVERY DAY. Demand will continue to drive capacity. How many of you PSW readers have upgraded your digital camera at least twice ? Why ?

    With 86,000+ AKAM servers, strategically located near the point of consumption, there’s already at least one implementation of a serviceable model.

    This action in the AAPL trade surrounding MacWorld has very little – if anything – to do with their market-perceived value. Look at a monthly chart for last four years, as somebody here mentioned last week.

    Apple products are pretty fab, but as mrl14 sort of said, a CIO at an 20,000 seat corporation has very little incentive to move an large part of his PC-based hardware and software to the Apple platform for a long time. Frankly, Apple’s performance over the next few years doesn’t require penetration in that segment.

  554. Half of the bandwidth of the internet is taken up by Bittorrent. Maybe it is only 30%. But it is A LOT.

    I have netflix, I checked my account. I have a 3 movies at a time account. And I never have more than 4 rentals in a month. I am a perfect candidate to drop my netflix as I already have an Apple TV. (I don’t know why. I just buy one of everything they make.)

    What is great about iTunes Movie Rentals is that the rental income goes to the studios. Not Netflix. Not Blockbuster. The studios are going to get behind this business model which is good for aapl. And other companies, including Netflix, are going to come up with their own solutions as well. And that is good for AAPL. As that market expands, their products will undoubtedly be the best.


  555. Phil,

    I read this article regarding possibility of higher interest rates in the US:

    It sounds interesting, certainly supports drop in oil prices. I’d like to get your feedback/thoughts whenever you get a chance :)



  556. So people are awake at these times on PSW… and here I thought it was a myth.

  557. DM, only 11:40 here in Los Angeles. I’d say east coasters should be snoring right about now.

  558. Asia Markets : Wednesday, January 16, 2008

    (The following is from WSJ; please cross check with other sources to confirm.)



    Hong Kong*


    DJ Shanghai*






    Baltic Dry Index (BDI)
    -318 7336

    * at close
    Sources: Dow Jones, Reuters

  559. Asian Markets Sink on US Recession Fears
    Asian markets took a severe beating Wednesday on growing concern the U.S. economy would slump into a prolonged recession. Hong Kong’s Hang Seng ended 5.4 percent lower and Japan’s Nikkei index plunged over 3 percent. Even the best performing of the benchmark indexes, the Bombay Sensex, suffered a loss of 1.8 percent.

    Japan’s Nikkei 225 Average shed 3.35 percent, to close at a 26-month low. South Korea’s KOSPI dropped 2.4 percent to a five-month closing low, after dismal U.S. economic data and Citigroup’s record loss fueled U.S. recession fears, sending foreign investors rushing for the exits. Australia’s S&P/ASX 200 Index tumbled 2.5 percent, extending a run of declines to an eighth session and the longest in over seven years, as worries about U.S. consumer spending sent investors scurrying out of risky stocks. Hong Kong blue chips and China plays tumbled 5.4 percent in line with the selloff across Asia.

    China’s Shanghai Composite Index tumbled 2.8 percent, led by financial and property stocks, sparked by a selloff in global stock markets amid fears that the U.S. economy may slide into recession

    Selling Continues in Europe
    Investors in Europe could find little reason to buy at the open Wednesday after global markets took another drubbing and the markets braced for possibly more disappointing news from a major U.S. bank. J.P. Morgan will report results before the opening bell on Wall Street and investors are concerned the bank will announce further writedowns due to credit-related losses stemming from the subprime mortgage market.

    ASML reported a fourth-quarter profit that topped market expectations. But while the Dutch chip-equipment maker said it expects robust sales for the first half of the year, expectations on new machine orders were disappointing and shares tumbled more than 7 percent.

    And in the aerospace sector, EADS, owner of Airbus, is set to update the market on predictions for 2008 amid talk the plane maker may move some production into the dollar zone, sending shares lower by more than 5 percent. Separately, reports say that rival Boeing may be facing delays to production of its new 787 Dreamliner.

  560. Oil Drops Below $91 on Recession Fears, OPEC Hopes
    Oil slid below $91 on Wednesday to the lowest in over three weeks, ahead of a slate of oil industry data that could show more signs of possible weakening demand and as OPEC repeated its pledge to lift output if needed.

    U.S. light, sweet crude for February delivery [$90.81 -1.09 -1.19% ] fell to a low of $90.85 and was down on the day. It had tumbled by $2.30 on Tuesday on a surprise fall in U.S. retail sales in December and a record quarterly loss at the largest U.S. bank Citigroup.

    London Brent crude [$90.0 -0.82 -0.9% ] for February, which expires later on Wednesday, was down 85 cents to $90.13 a barrel, after falling to a low of $89.75 earlier.

    “I don’t see any bullish factor in the short term but stocks data and the IEA report are important data and this should be an important week. This time the IEA might be forced to cut because of the economic turmoil,” said Tetsu Emori of Japan’s Astmax Futures.

    Industry analysts expect U.S. crude inventories to have risen last week for the first time in nine weeks, calling for a 600,000-barrel rise as imports recovered. Distillates would increase by 1 million barrels, and gasoline by 2.5 million barrels, a Reuters poll showed. Traders will also watch for the International Energy Agency’s (IEA) monthly report to be released later in the day. The IEA, adviser to 27 industrialized countries, last month raised its global demand forecast for 2008 by 200,000 barrels per day (bpd) to 2.1 million bpd. OPEC Secretary-General Abdullah al-Badri reiterated on Wednesday that the producer group stood ready to raise production if justified by fundamentals, but that he did not consider world oil inventories to be low. OPEC officials have blamed the weak dollar, geopolitical concerns, a shortage of U.S. refining capacity and speculative trade for helping drive oil prices briefly above $100 a barrel early this month, though prices have since fallen back as traders focus on the growing risk of a U.S. recession U.S

    Oil prices are down more than 8 percent from their all-time peak of $100.09, as concern about a U.S. economic slowdown has outweighed tightening stockpile levels in major consumer nations. U.S. President George W. Bush, on a Middle East tour, earlier urged the kingdom to help tame soaring oil prices which threaten the U.S. economy.

    Dollar sinks to 2 1/2-year low vs yen
    The dollar sank to a 2 1/2- year low against the yen Wednesday in Asia as investors sold the greenback due to concerns over the U.S. economy and financial system. The dollar was trading at 105.98 yen at midafternoon Wednesday, down from 107.07 yen late Tuesday in New York and hitting the lowest levels since May 2005. The euro rose to US$1.4842 from US$1.4833.

    Weaker-than-expected numbers could prompt expectations for the U.S. Federal Reserve to cut interest rates by 75 basis points instead of 50, a move that would make it harder for the dollar to rebound, traders said.

    The euro slipped a little further against the dollar on Wednesday, but the U.S. currency reached a 2 1/2-year low against the Japanese yen amid persistent worries over the health of the American economy.

    The 15-nation euro bought US$1.4820 in morning European trading, compared with US$1.4833 in New York late Tuesday. The British pound slipped to US$1.9618 from US$1.9644.

    Gold falls as investors book profits after 3-week rally
    Gold fell and stayed below 900 usd on profit taking and on expectations for a sharp short-term correction as the metal has struck a series of record highs since late December. The precious metal gained around 15 pct since last month, up until yesterday when gold started to correct having made another historic high of 914.20 usd per ounce. High oil prices, dollar weakness and persistent economic instability has helped gold’s recent rally. At 9.49 am, spot gold was lower at 884.55 usd per ounce against 901.00 usd in late New York trade.

    While the dollar remains weak this morning, oil prices, another of gold’s main drivers, are extending their losses having fallen by 3 usd yesterday.

    On the physical side, gold demand from India, the world’s biggest jewellery market, is slowing drastically as seen by lower imports amid high prices. Gold scrap, meanwhile, has increased since late last year. “This steady flow of supply (of scrap), combined with slow buying — because many believe the price will correct lower, has seen gold imports to India plummet,” said De Wet at Standard Bank.

    Elsewhere, platinum slipped to 1,558 usd an ounce from 1,577 usd. Palladium was lower at 372 usd from 378 usd per ounce, while silver was down at 15.87 against 16.21 usd.

  561. Today is going to another interesting day. Look at Hong Kong, Japan and India. Even China. Is this what is called global meltdown? ouch

  562. Design – there are several billion germs inside you at any given moment, JUST GET OVER IT! 8-)

    CY shorting – They’re on my buy list, hopefully back at $25 but if they hold $27, I’ll be picking up the first round of ’10 $30s at $7.80 as you can sell the Feb $30s for $1.65 (20%), which would pay for most of the $2 roll down to the $25s if we go lower. XXX

    These are the kind of defensive plays we need to be getting into right now. If it comes back, great… If it doesn’t come back and the market drops 25%, great too!

    BA – there are no hard facts. AP ran an article saying:

    ” Boeing Co (NYSE:BA – News) is set to announce a further delay to its 787 Dreamliner, a source familiar with the situation said on Tuesday.”

    Could be a little Cramer-style fomenting or could be real, either way, if you’re a long-term investor – so what? Always be suspicious of anything that does not directly quote a company officer.

    As I’ve said a lot lately. Do not hold anything that you do not LOVE and love the positions you hold. That means if they go down, then you put money into them and roll them lower. Use the covers to offset the cost but make sure you are ready to make the commitment all the way to ridiculous levels (assume 33% drops when budgeting) and make sure you stand ready to move.

    You need to be excited that you can roll BA down $10 in position for $4 or less, you need to belive in your heart it is the right place to commit your capital for a year or more or DON’T BOTHER.

    I THINK we will bottom out this quarter and have a great summer but I may be wrong and it may be next summer before we come off the floor. If I’m wrong about that and it’s never, then I’ll meet you in Vermont where I’ll become a professional ski bum for the duration of the depression!

    So PLAN on the market not coming back his quarter. Don’t make any bets that require a quick comeback but don’t let yourself get buried by your callers if we do have a quick comeback. That means 3 month minimums between you and your caller (enough time to roll up out of trouble), which allows you to aggrssively follow a stock down without fear of a snap-back keeping you from doing the right thing and selling more calls.

    You need to look at EVERY SINGLE position you have and decide if you want to put the money into them to roll them down to whatever level is either just in or just out of the money (where you can sell calls to cover further rolls) as well as out to a strike month that gives you time to recover. Even if you do not INTEND to cover, at least leave yourself in position so that it is an option – I’m sure many January and February Apple players wish they had been in April yesterday!

    You can not and should not cover EVERYTHING as a Fed or Congressional boost could send us up a quick 500 points but you can’t let fear of gains stop you from sensibly protecting against losses. 1/2 covers are very useful in these cases so it makes more sense to cover BA with 1/2 the Feb $75s at $4.95 than with 100% the $80s at $2.30 because the $75s only have $2.86 of intrinsic value while higher calls will always have premium so it would take a massive jump up before you were not able to simply roll that caller into 2x a higher level with little or no money out of your pocket.

    Always look at the surrounding brackets to your position and think about what you will do if your caller gains or loses the value of the next bracket – it’s a great help to have a plan in advance when the market is going up or down 200 points!

  563. Shorting high flyers – that was the strategy for a generally bull market. I wouldn’t make a blanket statement about this one, it would depend on the stock and my short and long-term projections. Like ISRG I would still own the longs for fear of earnings shooting them much higher but with XOM, I think they may fall faster than calls could cover my roll (and I think they may head back to $60 for years).

    I think I mentioned that you could take the homebuilders index and lay the XLE on top of it and plot the future demise of that index pretty accurately.

    Down 4% since XMas – well it’s 4% worse than being in cash, the question is are you well positioned for a comeback or just treading water? It’s not all about just pulling losers at 1%, you need to have a downside balance so you have some winners when the market goes against you.

    Thinks about roulette. If you bet black and cap your losses at 1% and you get 10 reds in a row, you will be down to 90%. Even if you come right back with 10 blacks in a row, you will only get back to 99% as you came off a lower base. You are almost guaranteeing yourself a diminishing portfolio if you make uni-directional bets with “radomly selected” stops in a choppy market.

    Everyone needs to really think carefully about the strategies they are employing as the market of the last 5 years may not be the market of the next 5 years and strategies that may have worked well for you for ages may be absolute disasters as the market turns.

    Hedge fund – that is a crazy amount of money isn’t it?

    Higher rates – I think it’s unavoidable if the rest of the world doesn’t follow us into a recession, there’s no other way we will be able to get them to give us money.

  564. Wow, great post Phil. Definitely something that should, IMO, be in the K1 project.

    Even better, I understood all of it too! The learning curve is steep, but I seem to be getting it.

  565. That was for both of those posts (only read the first one originally, the second popped up after I posted).