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Thrilling Thursday – Comedy or Tragedy?

Russell 8-0-0, Russell 8-0-0! Wherefore art thou Russell8-0-0?  Deny thy dollar and refuse to fall, or, if thou spike not, be but consolidating at resistance and I’ll happily Capitulate….

If it's good enough for fair Juliet, it's going to have to be good enough for us as the Russell finally makes it over our 800 target – the last barrier that was keeping us on the bearish side.  Above these lines – it's time to stop worrying and love the rally as we romanticize the deadly combination of QE2 the Obama tax cuts as: "A pair of star-crossed lovers take their life, whose misadventured piteous overthrows doth with their death bury their parents’ strife."

Of course Willie Shakespeare has nothing on Jimmy Cramer, who's pearls of wisdom are also sure to be repeated centuries from now.  Last night the Bard of Wall Street sang a veritable sonnet in praise of the stock market and foretold a tale of woe for anyone dumb enough to take profits into this rally:


We got the correction this morning, Dow fell 35 points…  Today's action was proof positive that you need to stop worrying and learn to love corrections…  What scares me, and what should scare you, is that if you sell your stocks here, you won't be able to get back in.  You should be worried about stocks getting away from you, because I think we can be on the verge of something big – something very positive.   FORGET the fact that stocks have run up a lot in the last 6 months.  For more than 10 years, this market has done nothing, THAT is the most important frame of reference…

What's changed?  We are finally starting to see big breakouts from a slew of breakouts from several large cap companies including: CAT, UTX, FCX, SWK, CBE, ETN, CSX, UNP and so many other big industrials.  Ladies and gentlemen, we have waited over a decade for this move and what do people want to do now that it has arrived?  They want to sell!  That's right, they want to sell.  That's right.  They want to dump the stocks (sell button sound effect) because they are up way too much short-term or because they think the moves are illusory or driven by short squeezes that will come to and end as soon as we run out of battered short sellers (machine gun sound effects).  

In fact, to me it seems like the conventional wisdom among the "punditocracy"  (note that anything with "ocracy" attached to it is now evil) is that, other than a few exceptions like maybe QCOM or NFLX, AAPL, AMZN, you shouldn't even bother with most stocks because they can't go up from here until they decline first and "consolidate" (sound effect "the house of pain").  

Note the old-time revival feeling as Cramer preaches to the retail investors.  You almost want to jump out of your seat and yell "Hellelujah – I see the light and it is carried on fiber-optic cables from GLW with CSCO routers!"  But Cramer isn't telling you to buy sensible companies like GLW ($18.98, forward p/e 10, way more cash than debt) or CSCO ($20.77, forward p/e 11, another great balance sheet) that we like to focus on, even in a runaway market.  Cramer is selling the snake oil, he is selling the hair tonic and he is selling the religion of "Buy High and Sell Higher," which makes him one of the most dangerous men in America.  

Cramer does make the bull case well and yes, we also believe global growth will heal all wounds but we have also learned that market values, like Shakespeare's fairies, are ethereal things that can be there one moment and disappear the next.  Cramer chides our caution about "whatever the negative story de jour happens to be" and tells us (and I am not making this up it's at 4:20) "maybe we can't see the positive forest through the data trees."  Whuck?  Never since Dorothy was told to "pay no attention to that man behind the curtain" has more BS advice been given to rural America.  

Wait, I'm sorry, I forgot the other time such bad advice was given to the American people.  It was, in fact, just 2 years ago when CNBC in general and Jim Cramer in very particular used the same line of BS reasoning to stampede the poor, innocent sheeple in for the slaughter, right at the top of the market.  As Jon Stewart famously pointed out: "If I had only followed CNBC's advice I would have a Million Dollars today — providing I had started with $100 Million Dollars."  

Really, take 10 minutes and watch the above two videos – it's the same nonsense we're hearing today:  "Ignore the naysayers, don't ignore the momentum, be afraid to miss out, ignore pockets of bad news, things are great in China…."  CNBC, like much of the Mainstream Media is there to get you to BUY things.  They want you to spend money and buy stocks from their advertisers – what do you expect them to say?  Jon Stewart gave Jim Cramer an entire show to make his case so I will let them retort and you can decide but this is the reason I often say – Be careful out there. 

This is not about being bearish, this is about being careful.  We were not careful enough in the crash, listening to the advice of Cramer and his fellow cartoon characters, who tell us to "Just Buy the F'ing Dips You F'ing Idiot" – because the key to pushing a sucker into a con is through greed and fear and that's a tune Cramer plays like a maestro, telling you there is a shining city on the hill while at the same time telling you that the last bus to get there is leaving the station and you'd better pay up to get on it.

This kind of advice doesn't even make sense.  If we're having the kind of rally where NFLX ($179.73, p/e 46, net tangible assets of $199M, market cap $10Bn) or AMZN ($187.42, p/e 53, NTA $4Bn, market cap $84Bn) are "cheap" then we are not missing any kind of bus by cashing in our profits here.  Yesterday I warned Members to do just that on plays from ourOctober 23rd Dividend plays and our Dec 11th Breakout Defense plays (but not our longer-term Dec 25th Secret Santa's Inflation Hedges) that are up ahead of schedule if we now fail ANY of our Breakout II levels (see Stock World Weekly for summary of levels).  

I know this makes me seem like a big stick in the mud but I am forced to be the voice of reason when the markets become unreasonable – even though voicing concerns during a rally costs me "ratings."  I have said this before, people love the cheerleaders, they want affirmation of their buying decisions, they want to feel good about their investments so they gravitate towards those who tell them what they want to hear.  It's human nature – and CNBC et al play off it to get ratings.  They don't care if the advice is good or bad – it makes the sponsors happy and it makes the viewers happy and, as 2008-9 has proven – there is no downside – no one except me seems to remember what a tragedy their last round of pom-pom waving caused.  

Above 11,500 on the Dow and 1,220 on the S&P we had our Breakout Defense plays and even on the Friday before (Dec 3rd) that, I had put up a couple of high-leverage upside plays to make sure no one would miss out on the Santa Claus Rally.  The first one was an FAS Apr $20/25 bull call spread at $2.70, selling the April $21 puts for $2.55 for net .15 on the $5 spread.  XLF is, of course, my play of the year(see Secret Santa post) and FAS is a derivative of that one and has since shot up to $30, putting the Apr $20/25 spread at $3.90 and dropping the $21 puts to .85 for net $3.05, up 2,033% on net cash committed in a month.  

Perhaps you can see why we don't fear a bull market – as long as we PRESERVE our cash – a monkey with a dartboard, even Cramer, can pick winners in an inflation-driven upside market.  Our other play was bullish on oil and commodities (I'll bet you can already guess how that went!) using DBC with a longer play.  There were two plays there.  One was very simply buying the Apr $27 calls for $1.  No margin is required and we were quite sure that inflation was taking commodities higher so we liked the rare (for us) naked position.  Those calls are already $1.55, up a nice 55% in their first month but that's the kind of play we kill if they fall back to 45%, despite Cramer's "advice" to HOLDHOLDHOLD.    

The other trade idea for DBC was the Jan 2012 $26/30 bull call spread at $1.40, selling the 2012 Jan $22 puts for $1.10 for net .30 on the $4 spread.  The $26/30 spread is just $1.60 but the $22 puts have fallen to .75 so a not so bad net gain on cash of 283% out of a potential 1,233% max gain so a bit ahead of schedule in our first month.  This is an example of a play we're more likely to let ride as we can ride out a correction buy why on earth would we let the 2,033% gain get away from us or the 55% gain on the straight call that has no hedges?  

We're not afraid of a rally – we simply aren't convinced enough that the forces that are driving stocks higher have the fundamental underpinnings to be sustained and we are almost POSITIVE that the market will in no way be able to stand up to any serious bad news (sovereign default, municipal default, bank default, terrorism) – none of which even Cramer can pretend are really off the table.  So we will continue to take our money and run and, frankly, this week we've been "Selling the F'ing Pops" as the Cramericans throw their cash into overpriced stocks that we think have an excellent chance of giving us big money on downside moves where we also will be taking the money and running.

We're not bullish or bearish – we're rangeish and, until proven otherwise (Russell 800 would be a start), we will continue to play this as the top of our range


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  1. Phil, your version of the balcony monologue is great.  very clever indeed!

  2. Phil, how to adjust AAPL Apr 320 short call with AAPL Jan 300 putter? The putter was sold at 8.90 to pay for a possible roll up of the caller. Given that it’s mostly useless now, I should probably sell a Feb putter at a higher strike (320?) and roll up the Apr 320 caller to a higher Apr strike (350?). What do you think? Thanks!

  3. Phil/800
    Well my bearish friend…….there is a blitzkrieg of POMO coming…..even without the support of Cramer and the rest of the paid propagandist…… it should be plenty of ammunition to blow past the the mark

  4. Interesting comments on the top 1% in The Economist: 

  5. stj – very good article.

  6.  NFLX – gets a sell from Gabelli
    CMG – gets a buy from Piper w/ 265 price target (yeah, good luck w/ that !)

  7. Hi all — I posed this question last week during a very quiet day, but I thought I’d ask again to what is probably a far larger audience now. I’m looking for help with asset management, very broadly defined – that is, someone with real insight and intelligence on everything from real estate to international taxation issues to equities to life insurance to options, and who would be able to provide holistic advice across all sorts of asset classes. As context, I’m a former securities analyst and hedge fund manager, so I have a decent handle on the world of finance. But I know that there’s a whole lot that I don’t know about personal finance, and I know that I don’t have the time or inclination to figure out the intricacies of what I don’t know. I’m not interested in a joker who’s looking to dump some sort of high-commission crap on me; or (not to sound cynical, but anyway) a shyster who thinks that I’ll be a buyer of his newly minted MBA/CFA/CFP-speak; or, really, someone who knows less than me.

    I’m guessing that these sorts of financial advisors exist, but I wouldn’t know where to look — and I’d detest the hit-or-miss (primarily miss, I’m thinking) process of finding someone good. Any leads/ideas much appreciated; offline at kmailings at gmail might be best. Many thanks in advance.

  8. Meh.   
    In the interest of objective accuracy in reporting, the sun does not rise.  The earth turns.
    As is the case with " Bush tax cuts" , and "Obama tax cuts". 
    Only the CONgress can raise or lower taxes— spend money or raise it.  A POTUS  can only veto a move by the CONgress. The power to say "no" is toothless on its face.  All credit or blame should go to those who passed or did not the legislation.
    It is disingenuous to put the blame or credit on an individual who is merely a figurehead, a puppet on a string.
    Short WOR at anything over 19.50

  9. It’s comical to watch the TNA premarket prices.  The move with every tick of the dollar.

  10. Futures = 1273.00
    overnight:  H = 1277.00, L =1270.50
    oil (.38), god  =>70
    10yr = (1.62),  30yr = (.33)%
    NET $ = (.63)%,  dx/y = +.10%

  11.  Cap/CMG, that’s okay.. it’ll work perfectly for my 9x short Jan 230 puts.. then once reality sets in, I will profit from my 9x Jun $220 short calls :D

  12.  Phil
    I have a spread on VXX, March 37/41, bought at  1.65 now 1.15.
    VXX seems to be worse than the VIX – any thoughts on that position? Do you see a better play on volatility increasing?

  13. C = 1275.36, F =1272.00
    10yr = (1.00),  30yr = +.11%
    VIX (.41)%
    oil(.69),  gold (2.40)

  14. Does anyone know or see any news on IL?  I thought the budget deadline was today.  (could be wrong might be tomorrow) 
    I have been watching, just want to see what excuse or story they will use.   I live in IN, but the news on IL has gotten very quiet the last few days.

  15. Dow down 9, did we just get the correction?

  16. Phil,
    Price of cabbage (main food staple) has doubled last six months in China. A folk song on the web laments if perhaps we (peasants, not ultra minority driving Mercedes) were not better off in the 80′s.
    The price of onions(again main food staple) in India has also doubled and some area are close to rioting.

  17. Phil,
    Have an AAPL spread position long (5xFeb 320 calls @17.47 plus 5xFeb310 calls @23.24) and short 10xJan 320 calls @ 10.90. When and how do I roll this position? Do I wait and see if AAPL settles @ 320 at expiry (and prior to earnings) or move to another position?

  18. Title sounds a bit dramatic but Vietnam’s amazing growth was all the rage not too long ago, just an example of what rising inflation does to what seemed to be a growing and healthy economy

    The government has flooded the market with cash in a bid to drive growth
    That includes government loan growth of 30%
    The result has been rising inflation, which is scaring citizens into the dollar

    Will The Default Of A Vietnamese State-Owned Company Be The Black Swan Of 2011?

    Read more:

  19. Good Morning Phil, 
    Going into tommorrow, are we putting on some covers of some kind to the DIA’s and QID’s or going naked?

  20. C = 1276.20, F =1272.00
    10yr = (1.12)%
    VIX = +1.12%
    NET $ (.05)%,  dx/y = +.02%, NET has been rising
    The $$$/Franc (.08)%, resting after its spikes higher the last 2 days.
    The $$$/Yuan = 0.00 has been flat all day, see if it moves at the 11:20-11:40 Europe close again, that is whan it has moved the last 2 days.

  21. Good morning Phil.
    I am looking at my MON plays Holding 7x Jan12 55p short sold for 9.19 now 3.85 2x April 55p short sold for 6.00 now .65 but sold Jan 11 5x 65c for 2.19 now 7.37. Even that I am still ahead of the game I have been rolling the short caller since MON was 48.00 but I never seem to get ahead of the caller. Today the stock is up 3.25 to 72.38 basically no more premium in the Jan 11 caller at 7.35. What would you do?? thanks

  22. POMO time knocking the market higher?

  23.  Good morning!  

    I think CNBC took down the video of Cramer last night – glad I got the quotes!   

    In case you didn’t get the message from the morning post, it’s still all about the RUT taking and holding that 800 mark and we wait patiently up on the balcony of our Breakout II levels waiting for Prince Russell to take our breath away, which is ironic as the play ends with Juliet drinks a potion which makes her breath shallow (like the ’08-09 drop) but then Romeo thinks she’s totally dead and kills himself (capitulation) and then Juliette wakes up (market recovery) only to find the bearish news of Romeo’s real death (consumers) and then kills herself (depression).  

    As they say, Shakespeare’s plays contain every plot that has ever been needed since!  

    Our watch levels remain:  Dow 11,600, S&P 1,260,Nasdaq 2,675, NYSE 7,935 and Russell 800  and I notice that we’re just about 10% up on the RUT from our old set but much less so on the others, which were: Dow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725.

    Are we asking too much of the Russell?  I don’t think so as they are right up at the levels we predicted they’d be with the rest of them – the RUT has a more aggressive trajectory so we expected more of them but now, everyone is running out of gas at about the same place – not really the spot to throw caution to the wind until we are properly over it.  

    The dollar is at 80.82 so, if anything, it’s holding the markets down.  I didn’t talk about news this morning because, obviously, news doesn’t matter – this is all about sentiment and momentum and the Big Boys are in a major putsch to shove all that money (ours) off the sidelines.  They are pulling out all the stops and pulling out all the big guns – anything they can say or do to get you to buy the stocks they are holding so they can take the money and run after gaining 50% in less than 2 years.

    As I said in the post, we made huge gains off our December trades (see Portfolio Tabs for all our major picks) on gains of less than 5% in most indexes.  If the markets are going to go up another 20% then those 2,000% returns on FAS hedges will look "cute" by comparison BUT YOU CAN’T MAKE THOSE PLAYS WITHOUT CASH!  So step one is to preserve our cash until we are once again sure, as we were sure in early Dec that breaking over our levels would likely take us higher.  

    Let’s protect our cash now and I promise we will find something to trade tomorrow.  They let you trade with cash, not regrets! 

    Monster Employment was down 4 points to 130 but all 28 Metro Markets showed positive annual growth – that’s pretty good!

    Initial Jobless Claims: +18K to 409K vs. 410K consensus. Continuing claims -47K to 4,103,000.

    So much for Wall Street advice: Analysts have released their top-rated stocks for 2011, but Brett Arends notices that investors might be better off buying the most hated. In each of the past two years, investors would have done better by investing in Thomson Reuters’ list of 10 stocks analysts liked least than in the 10 that were highest-rated.

    An expanding global economy should push oil prices above $100/barrel this year, which could lift shares of oil and gas companies by 25-30% and help double the price of coal stocks, BlackRock’s Daniel Rice says. The "holy grail" would be if scientists find a way to cut carbon emissions from burning coal – “It could mean billions and billions of profits" for coal companies. 

    December Retail Reports (Same Store Sales) have been disappointing but you won’t hear that on CNBC!  

    BJ +3.8% vs. +4.2%.
    BKE +6.1% vs. +3.5%.
    CATO flat vs. -0.5%.
    COST +6% vs. +6.1%.
    HOTT -1.7% vs. -2.4%.
    LTD +5% vs. +4.6%.
    SSI +1.9% vs. +1.5%. 

    ANF +15% vs. +10.1%.
    ARO -5% vs. -3.1%.
    AEO -11% vs. -1.8%.
    BONT +0.1% vs. +2.3%.
    DDS +7% vs. +2.4%.
    FRED +0.2% vs. +1.4%.
    GPS -8% vs. +2.4%.
    M +3.9% vs. +4.6%.

    JCP +3.7% vs. +3.9%.
    KSS +3.9% vs. +4.3%.
    JWN +8.4% vs. +3.9%.
    SKS +11.8% vs. +5%.
    SMRT -1.9% vs. +0.7%. 

    ROST +4% vs. -0.7%.
    TGT +0.9% vs. +3.9%.
    TJX +2% vs. -2.8%.
    WTSLA -2.1% vs. +2.9%.
    ZUMZ +9.2% vs. +11.2%. 

    Looks like we might have gotten out of those XRT puts early with 14 misses vs 11 beats!  

    I’d be a lot happier if the markets at least reacted to this news or if it was discussed instead of ignored but this is what scares me about this rally – it’s based on ignoring anything that isn’t bullish as if it can all be swept under the rug forever.  Any kind of good news is reason for a rally.  No news and we drift higher.  Bad news is good news because then we get QE3.  This is not investing – this is just betting that free money will continue to flow out of the Fed for the foreseeable future and that inflation will become everyone’s major investing decision.  

    I’m fine with that!  We can make a lot of money that way but, if that’s true – we have a very long way to go before we inflate our GDP back to 3 times our debt (currently even) so please indulge me while I remain on the cautious side just a little while longer.  

  24. Phil, 
    MON, I have the 2012 buy write (bought at 49 and sold the 50 Puts and Calls), up 75% in 6 months with 12 to go. Way ahead of schedule. Would you hold, make any adjustments or look for something else if we believe the commodity run will end sometime soon?

  25. Phil / HOV – I know you like this one.  Any of the other home builders worth a play?  Thx. 

  26. Interesting investment myth buster: inflation causing gold/silver price increase from Bob Precther (EW).
    Needs a grain of salt or two; his most recent market predictions have not come true YET?

  27. Phil--SONC buywrite--bought at 8.40 and sold march 7.5 puts and calls--any adjustments or leave it alone?

  28. Anybody else get the feeling markets pull back this afternoon

  29. kustomz / dow — "down 9, did we just get the correction"?  :)

  30. C = 1277.33, F =1273.25
    10yr =(1.36)%
    VIX +.53%
    The NET $ fell hard
    NET $ (1.12)%,  dx/y = +.38%

  31. kustomz- I have a weird feeling about the mkts since this morning and am thinking abt going to cash. I think Phil’s words are taking hold of my brain.

  32. Phil: you’ve gotten VXX questions and tears from members so frequently I guess you should have a banner at the top of PSW homepage that says… "NEVER, NEVER, EVER TRADE VXX"

  33. Phil / rut — asking too much of the rut? I’m pretty sure historical stats say small caps do well in Jan.

  34.  Video is back, they just added some commercials.  

    Dollar/Kinki – This is a more impressive rally if it holds as it’s with a stronger Dollar for a change.   Oil not so happy nor is copper with a .10 drop on the day ($4.34) or gold ($1,366).  

    Thanks Lunar.  

    Bad real estate news/StJ – Shhhhhhhhhhhhhhhh.  We’re not supposed to mention bad news!  

    AAPL/Ajay – Well, the Jan $300 short puts have done their job at .80 now so that’s $8 towards a roll of the Apr $320s, which are up to $29.50.  I’d buy back the putters and roll the callers to 2x the Feb $330s at $16.20 and buy 1x the Apr $370 calls at $8.10 as those are fee (paid by the puts) and AAPL has to go to $345 for you to owe the same $30 you owe now and you can always add 1x more calls if they head up and roll the callers to a vertical.  

    POMO/Exec – Yep, $34Bn in 4 days is kind of a lot.  I wonder if next month is going to be as aggressive?  We have a holiday weekend coming up too.  

    Economist/StJ – Thanks.  I was going to write about that this morning but Cramer was driving me crazy last night and before I knew it, it was 9:30… 

    NFLX/Cap – Heresy!  I saw that CMG and almost choked on my breakfast.  It’s working too, they are up to $330 again and now I’m warming back up to the short.  

    Adviser/Kiminsk – Actually Alan, who will be joining us as a writer this month is a CFA and a nice guy.  Ilene and Matt are setting up a box for him and he’ll be available in chat and his "Invest by Model" system will be available to Basic and Premium Members so it will be a good chance to get to know him and, if he’s not the right guy for you – I’m sure he can steer you to someone good.  

    Tax Cuts/Flips – Well I "blame" the guys who are in charge for raising the debt from $5Tn in 2000 to $15Tn in 2011.  As you say, they have the power to say "NO" and that’s what we elect them for.  It’s this lack of accountability that you are engaging in – the passing of the blame to an anonymous, constantly shifting body of professional politicians, that allows our "leaders" to destroy this country and then say dumb-ass things like "we’ll see how history remembers me" to justify the mistakes of the present.  

    NEXT WEEKLY QQQQ $56 puts are .53, about .40 in premium – not a bad deal and we can hold them over the weekend if the RUT isn’t over 800 (and kill them if it is).  

  35.  In case you can’t trade weeklies – the Jan $56 puts are not bad at .77 on the same logic

  36. For what is worth
    The ParSar trend indication for the dx/y was at 80.57 coming into the day, so breaking above that is supposed to indicate the start of a positive trend, and the end of the negative it had been in
    A key issue is that trend following indicators do not necessarily work well in rangebound markets.  But since the dollar affects all asset classes it is worth nothing.
    The confirms some of the ParSar flips to negative trend indications yesterday XLB, XLE, SLV/

  37. Cap, still short REE? :)

  38. kimisk……Given your background I’d say your a pretty smart guy.  You’re better off expending the time studying this and that, then doing the things you mentioned yourself.  Get anyone else deeply involved and, well, as the carnies say:  "You pays your money and you takes your chances."  

  39.  Shakespeare/Phil – Excellent analysis as usual with the right balance of erudition and wise ass humor. Have you considered Shakespeare’s use of comic characters for dramatic effect in his tragedies and that perhaps Cramer has been cast as the fool?
    On a more serious note, perhaps psychological denial is playing a part in all the happy talk we’re getting on the economy and markets right now. People are weary of bad news and anything that assaults their sense of American superiority.  Yes, we are the greatest nation ever, etc., but sometimes, occasionally we do have problems that need to be recognized and worked on.

  40. Wow, this is feeling like a Vix of 30!

  41. Phil/QID,
    I have a BCS April 10 bought at 3.48, now 1.44. Sold April 13 at 1.55, now .97. Also sold April 11 puts for 5.10, now 5.55. Any adjustments you recommend? Thanks

  42. Phil / Rosie   Todays Zero hedge post (top right) has Rosenberg fcting 4% growth Q1, big air pocket bust Q2 and 3, then recovery in 4th of big capex push before the 100% write offs expires.  He explains reasons well.  If you agree, combined with massive pomo ahead, seems likely they can pump the mkt much higher during 1st Q before the crash in Q2?  Could this be the way to play this ponzi?

  43. Oops looks like EUR/USD lost its 200 MA and is testing 1.30

  44. glad you’ve added a "nice guy". :)

  45. Wow look at HOV go! Good call Phil. I am just a little bit sad that I didn’t wait a day more to sell those 4.50 Feb callers. But then again I’ll be happy to get called away with a 17% in 2 months! 

  46.  QE2 and ObamaCuts, star crossed lovers indeed.
    These violent delights have violent ends
    And in their triumph die, like fire and powder,
    Which as they kiss consume.

  47.  Wow PCLN turned on a dime and gave back $10 in 30 minutes….

  48. Thanks reza99
    Inflation is so misunderstood and the politicians want it that way.  The definition of inflation is simple
    Inflation = the increase of a currency’s supply, it is printing and debasement
    The Result = higher prices and a lower standard of living
    The dirty secret of govts.  Politicians want us to believe that the higher prices are  the inflation.  They do not want us to realize that their policies and printing are actually the inflation.  They are the ones causing the higher prices.
    This should be taught to everyone.  Monetary Inflation = printing, higher prices is the result.
    In Keynesian economics there is no technical name for higher prices, that result form monetary inflation (printing), so politicians and govts for decades have been happy to perpetrate the myth
    Next will come the BS story, that since prices are rising, they will have to increase taxes since govt cost more.  So the daisy chain of wealth transfer goes.
    Just a personal side note.  I think this is still deflation and Big Ben is just playing the only trick he has to stop (postpone) collapse.  The Funny Money Hole Globally is just to large, but that is besides the point.

  49. Sadly, we are going to get the worst of everything.
    Deflation of assets, inflation on the cost of living (food and energy)  & higher taxes, no safe fixed income for revenue as Baby Boomers retire.  All of this on top of  the Internet Bubble, Housing Collapse, high unemployment and market-to make believe globally.

  50. "A key issue is that trend following indicators do not necessarily work well in rangebound markets.  But since the dollar affects all asset classes it is worth nothing."

    should read worth noting, not nothing

  51.  REE bubble popped

  52. Nobody on this blog is behaving, Dow has majorly corrected over 36 points, now but the             DIP!

  53. mike, stop it man! You’ve got me practically in the fetal position sucking on my thumb!

  54. Well said, Mike.

  55. Why did they put the t and y next to each other, not good for tremors in my left hand, I can’t be the only one. Everyone buy this 2nd major dip!

  56. Mike5885 – Sure.
    Inflation vs. deflation — Looks like the real world is offering some evidence of both which goes to confuse the issue, also depends on one’s time frame too.
    Now how does all this translate to short term trades w/a high probability of success? Making MONEY --That’s my Question.

  57. ok, I am done, I am bumming myself out too.  Just bugs me that they never teach the real definition of inflation.
    C = 1272.93, F =1268.75
    10yr = (1.62)%
    VIX +2.82

  58. PHil on OPEN, any adjustment on the 5 Jan 60 Sold Puts and 3 long Jun 55s? 

  59. Potus/Flip
    You are exactly correct regarding legislating, HOWEVER, leadership can be found in POTUS,,, example LBJ who was able to affect and impact legislation… for the bettter or worset depending on your "Religion".

  60. mike what are your numbers on the dollar vs euro and which is giving the clearer signal compared to other factors?

  61.  VXX/Yshen – It’s March so plenty of time to be right.  You can roll down to the $33s for $1.80 and roll the caller down to the $38s for $1 so net .80 to improve your position by $4, two of which are intrinsic and widen the spread by $1.  If you aren’t willing to do that – there’s no point in sticking with the spread at all, is there?

    IL/Mike – I heard they are meeting to discuss raising state taxes from 3 to 5% (makes up for Obama’s cut) and they already voted to cut back Medicaid so I guess the whole thing is a work in progress at the moment.  

    9/Kutomz – Yes, that was the dip, Cramer says BUYUBUYBUY as you may never get another chance at Dow 11,699!  8-)

    Food/High – I know, it’s a catastrophe and it amazes me how nobody seems to care.  Maybe it’s because I work with food charities so I know a lot of people who are heavily involved in this issue but it’s stunning to me how something as basic as the need for people to eat (and it’s eating to live, not eating to gorge like Americans do) is a "non-factor" in economic thinking on this side of the planet.  As I’ve said this week – one of the reasons I don’t see the markets heading higher is because there are 6Bn people on this planet who are literally out of money – that’s NOT a growth market.  All we’re doing is shuffling deck chairs on the Titanic at this point if the solution to the top 10%’s problems is to starve out the bottom 90%.

    AAPL/High – 1-month spreads like that are not big money makers unless you hit your mark.  You are in for net $9.45 and you owe the callers $18.40, which is about $1 loss so what should you do other than kill it?  You have earnings coming up and if you want to be gung-ho bullish you can roll the callers to Feb $330s and the best you can do is about even on the $320s and up $10 on the $310s so you risk losing $10 to make $5 best case.  I’d rather lose $1 now and be out of it.  I’m pretty sure earnings are the Tuesday before expiration – they may sell off and you can use $335 as a give-up point and hope for a pullback but you are so deep now that you lose as much as the callers so you have no protection.  You could also roll the callers up to 2x the Feb $330s ($16) and buy 2x the Apr $340s for $18.50 and that’s a better earnings spread but make sure you have the side cash and margin to roll that one along if they pop.  

    Vietnam/Kustomz – Isn’t that near China?  We don’t worry about things we can’t see out our window (like Russia).  

    Tomorow/Amatta – No, we are just screwed at this point.  I hope you find that comforting – sometimes, it’s good to accept it.  If NFP is a good excuse to break us up, we’ll try to adjust, of course but, on the whole, the 8:30 report is going to be do or die.  Hopefully, there will be some selling this afternoon and that may be a good time to pull the plug on the "better safe than sorry(er) premise."  

    Dollar at 81!  Very impressive for markets not to go down on that move.  Euro, on the other hand, is $1.30123 and they tapped $1.30054 earlier – this is catastrophic but CNBC thinks XBox 360 potential sales are the most important thing in the World this morning…..   

  62. reza99 asked the best question
    for today, I am happy to see the ParSar flip on the dx/y to a positive trend, whether that brings lower markets I do not know
    NET $ = (2.01)%,  dx/y = +.61%
    E/$ = (1.03)%

  63.  my parents have no misgivings that they will be working until they are 70. 
    It’s the new normal

  64. C = 1271.87, F =1268.00
    10yr = (1.78)%, 30yr = (.53)%
    VIX +2.76%
    oil (1.91)

  65. Phil,
    Do us like the weekly USO 38 calls again?

  66. We are seeing push back against the weak dollar( Brazil’s real fell as the central bank set reserve requirements on positions against the dollar held by local banks in a third attempt since October to stem a rally in the currency) and reality can be a real bitch (The euro dropped below the 200-day moving average versus the dollar as the European Union discussed spreading the cost of bank failures)

  67.  AIG, they are 60 now and were at 1500 before they blew up. So if they have a 42B market cap now does that mean they were at $1T before??
    That can’t be right. I love this stock though – sitting on May11-65 calls. Why fight the madness. I’m just running with it now I guess. Still have some TBT and hedges but why fight the New World Order? I’m just one guy with a lousy $80k to throw at it. The universe eats people like up in microseconds. 

  68. lol, guy on CNBC talking about Facebook charging subscription fee.  Is he on drug?  Myspace will love that idea.

  69. Dollar chart looking similar to J,F,M of this year, looks like it can move back up to 82 and I would be careful with TBT we can see a bounce in TLT back to 92.50

  70. Mike5885 – I missed your other later postings which essentially made the same points I made wrt in/de/flation, only better.

  71. Ladies and Gentlemen- get ready for super POMO week:
    The Treasury will sell $66B in T-notes and bonds next week: $32B in three-year notes on Tuesday, $21B in reopened 10-year notes on Wednesday, and $13B in reopened 30-year bonds on Thursday.

  72.  MON/Yodi – Well I like MON so it’s hard for me to get behind any short plays.  I’d cash out the short puts after such a nice run and wait out a correction but, as I said, I’m not in the least bearish on MON and I won’t be surprised if you don’t get one until $90.  You can’t just go selling calls and puts randomly against stocks in a volatile market or this is what ends up happening to you.  So you owe the Jan callers $7.37, which isn’t a big deal so why not try a 2x roll to the Apr $75s ($3.10) to try to burn off the profits of the caller and just make sure you cover by either buying July $75s ($5) or selling Apr $75 puts ($7.80) if they cross $72.50 as momentum plays above that line to keep you out of too much trouble.  

    POMO/Jabob – If the Euro fails $1.30, the Fed won’t be able to print money fast enough to keep the dollar down.  

    MON/Amatta – As I was just saying to Yodi, I really like those guys and you are right, they have given you all that’s worth taking at this point.  The 2012 $50 puts and calls are $25.25 and ANY 2013 combination is $27 or more so all you really have to do is think about what you are willing to roll to – perhaps the $55 puts at $7 and the $65 calls at $16, spending $2.25 to add $15 more upside without much more downside risk – and you can just keep an eye on the net price while the last of your shorts’ premium burns out.  That’s another 30% or so for the next year and, meanwhile, you are fantastically well protected so just make sure $3 for the roll doesn’t slip away from you and figure a $3 credit is the best you are going to do so that’s your "range" to roll out to 2013.  See how nice this is?  You can stay very conservative and still add a great deal of upside to your position in the next year.  

    HOV/Terra – Two builders just caught downgrades today.  I think one was PHM but HOV is staying strong.  I think TOL is the only other one I like but, on the whole, I like HOV the way I like ABX and VLO – why mess around when one is clearly better than the others?  

    Pretcher/Reza – Nice catch.  He’s very good:  


    Inflation occurred relentlessly from 1933 to 1970, yet gold and silver remained unchanged over the entire time. True, the government fixed the price. But markets are more powerful than any government, and if the market had wanted precious metals prices higher, it would have made them go higher. The government still fixes the price of gold. The official, legal price today is $42.22 per ounce. If you were to ship gold overseas, and it got lost, a domestic insurer would have to pay you only $42.22 per ounce to cover it. But investors in 1970 began forcing gold beyond the official price. They could just as well have done so anytime between 1933 and 1970, but they didn’t. Had you held gold for that period, you would have held the worst investment on the board. Investors in the stock market were making 20 times their money through capital gains alone and 30 times their money assuming a 4% (non-reinvested) dividend. Bond investors made nearly as much money through compound interest. Yet your investment — based on one-to-one, mechanical causality — was dead in the water.
    Inflation continued from 1970 to 1980, and gold and silver soared. Inflation was all in the news, so people credited inflation for making these prices rise. They also predicted that the rise would not stop, because inflation was not going to stop. They were right about the inflation part.
    Inflation continued from January 1980 to April 2001, too. But gold and silver lost 83% of their combined value during these 21 years, as shown in Figure 19.


    SONC/Savi – Oh that was a good one, wasn’t it?  They only go out to June so not much to be done at the moment, you need to wait for 2012 or (horrors) perhaps get called away with a nice, quick profit.  When we sold, options were super-attractive due to higher VIX – now they are not so the trade loses its appeal.   

    I swear our puts are holding up the Nasdaq!  

    My words/Nicha – Kind of like Mad Cow, right?  

    VXX/Jbur – I would but I think I picked a combo play that included VXX a few weeks ago.  8( 

    RUT/Rain – Well that’s why we expect them to make their mark.  As with my kids, I try to push the indexes to do their best but I also try to be realistic about what I should expect from them.  

    ParSar/Mike – OK, not to bust your chops but didn’t you just yesterday report that they were indicating a bearish trend?  I don’t put a lot of stock in technical indicators which shift daily like a weather vane (and most of them do).   Let me know if I’m not understanding something about them but that’s what I see.  

    Fools/Pak – We suffer many fools and Cramer is but one.  I think more appropriately we should remember that for all of us:

    All the world’s a stage,
    And all the men and women merely players;
    They have their exits and their entrances,
    And one man in his time plays many parts,

    You’re right about the psychology and it has been a while since I put up my favorite chart so, for all the New Members out there – this is one of the most useful charts in the investing world.  Before entering or exiting a position – you should always consider where you THINK we are on the chart as well as where we may ACTUALLY be if you step back and remove your feelings from the equation:  

  73. Phil, if I said it wrong yesterday I apologize
    the ParSars on the XLB, XLE and SLV flipped from positive trend indications to negative yesterday on the open
    then today, the dx/y ParSar by breaking the 80.57, moved from a negative trend, to a positive trend indication

  74. Tx--on SONC great trade

  75.  So last night, on my way home in the NYC subway, I saw an ad from HSBC in one of the trains that says "the amount of gold beneath the ocean could give EVERYONE on earth 100,000 Euros".. why wonder what is that for… and if it’s true 

  76. Phil / food — any food plays you do like? BG? SAFM maybe?

  77. Phil Anyone
    This is the third day that any tick up is met by flash sell programs. As I go back in time a moth not so, not even last week. You posted insider selling. What are your thoughts concerning the Euro zone and that other pullbacks have started with bad news there but not lately? Euro down, dollar up QE2 not working, why? Commodities falling, do the big boys all want cash? Trying to make sense, where is the money going?

  78.  Could a break out for Dollar put enough pressure on the market to cause a correction?
    If margin is as high as has been reported it does not seem like that much of a stretch.

  79. shadowfax / where — the money doesn’t have to be going anywhere. leverage might be decreasing.

  80. so we are seeing some confirmation of potentially something larger
    The Energy and Material ETF’s showing a bearish trend indication, while the dx/y gave a bullish indication today for the dollar
    The ParSar is a trend indicator and is very slow moving, so move happen rarely
    The main ones I watch are the ParSar for the S&P and the dx/y, those are the two that I am most interested in, the sector ETFs just happened to catch my eye yesterday
    so the dollar is showing positive
    The S&P is would give a negative trend indication on a break below 1261.63 today
    At heart I am a fundamentalist.  I only watch a few technical, in order of importance for me
    BIG Picture:  NYSE Bullish Percent::  tells me which way the wind is blowing offense or defense.  Currently X’s and offense at high levels
    Intermediate Time-frame:  The the ParSar’s on the S&P and the dollar
    On a short term basis I watch the Cash-Futures on the S&P, and the 21,50 and 200 Ma’s

  81. @Phil
    And it doesn’t help one whit that people like yourself—savvy, influential, and in possession of a blog that dispenses meaningful financial advice to allow the Senate (particularly the likes of McConnell, Frank, Dodd, and other senior members who enact these schemes and continue to hide behind a POTUS de jeure.
    The more people like you who Name the names that are shifting and continue ‘blaming’ the likes of the perpetrators of these frauds like Phil Gramm who tore down the wall between banks and Investment firms setting the stage for the most monstrous ripoff of the people since the Federal Income Tax withholding was enshrined the less people will use amnesia as an excuse to vote for their successors.
    The GM Buy/write has worked very well for Flips.

  82. I seen the strength in MSFT and decided to buy INTC instead (Kick) expecting it play along…I will sell at a small loss at 20.60 or 20.75 if the markets pick up

  83.  ravalos … CMG … perhaps you should take advantage – today – and roll your Jan 230 puts to June 180 or 185 puts.
    It will put you in a far better position than you are in today.

  84. I was in meetings all morning, what pulled the market down this morning.

  85.  Phil -
    Any advice for those of us who might be short – would you cover going into jobs report regardless of action at end of day?

  86. AIG/Biodiesel – The historical price is adjusted for dividends and splits. I find it trading in the low 70′s in mid 2007 which would give it a cap just under $200 billion. 

  87. rainman
    Who is delevraging, seems like the owners and controlers of the BOTS, that is what concerns me after 3 days.

  88.  Rainman … yes, I was still short REE, some calls … not enough !  and also MCP.
    covered most of ‘em today.

  89.  now we need to see the POS financials come down … all of ‘em from BAC to C to XLF to COF to AIG

  90. C = 1273.35, F =1270.00
    10yr = (2.24)%
    VIX +2.17%

  91. Mike:  can you explain how you are calculating  NET $                and    dx/y
    and what the heck is  ParSar

  92.  Gold/ravalos – Stands to reason that the forces creating gold have left many large deposits now covered by water. A chemistry professor spoke once about the vast amounts of minerals including gold floating in the oceans which would be highly valuable if they could extracted profitably.

  93. Cap
    By history the financials need to correct, FAS topped out at 30.43, then again POMO is not holding the dollar down. Why do you think financials may retreat?

  94. Pakdog:  the people who manufacture Goldschlagger have found a way to make suspended gold profitable!!

  95. And they are worth $50Bn:
    Facebook generated $200 million of net income in 2009, on $777 million of revenue. 

    This approximate revenue figure was known, but the net income figure was not. The 25% net profit margin implied by these figures is much higher than most people thought.

    Facebook’s revenue last year soared to ~$2 billion with $400 million of profit, according to DealBook. That’s a lower profit margin (20%), but it’s still plenty impressive. 
    NFLX and AMZN are cheap in comparison! 

  96. humvee4me / gold — hmmm, I wonder how much gold is in all the sold goldschlagger? Maybe we need to tell the sewage treatement plants how to increase their margins! :(

  97. exec – I have a bcs calculator that needs to be inspected :) . Can I email it to you? Thanks.

  98. Parabolic SAR
    the ParSar is a trend following indicator, you can google it find info, here is one summary
    stockcharts defintion

  99. rainman:  lol    then they can recycle the gold, and sell a "GREEN GOLDSCHLAGGER", it will cost more but will be earth friendly.

  100. that link did not work, go to chart schools tab,  then technical overlays

  101. Phil
    I watched Cramer on TV, the second time being last night. I have never bought or sold anything based on what he said.
    As an inpendent observer with no skin in the game, I thought he made a good point of returns on his recommendations like NFLX, CRM, SWKS, F and others I forget…all up 40-100% since his recommendations in July.
    even with the fall in these stocks in past two weeks, they are up a lot.
    So, what is the problem? (To me, he is simply too irritating to listen for mmore than 5 minutes)
    But if he did indeed achieve those returns, maybe we should all take turns listening to him and report on this site and take advantage of those rercommendations?
    Since I respect your knowledge, please explain what I have missed with above.

  102. C = 1272.11, F =1268.25
    10yr = (2.01)%
    VIX +2.47%

  103. Again IWM 79.15 is the pivot point of most significance today. The channel is downward with a inflection point at approximately 2 PM @ 79.15. Today also resembles 4/26/10 both RUT and S&P. Maybe Phil has a closing short play.

  104.  CAP/CMG, unless you think the markets or these MoMo stocks will break lower before Jan’s exp date, it’d be wise for me to keep the Jan short puts.. I don’t intend to keep short puts open during earnings! I would sell puts again IF CMG announces great numbers and the stock remains at these levels or higher (eventually it’ll come down to a more proper valuation, where my short calls will come in play).. that’s my premise.. 

  105.  QID/Jomp – Well the sale was net $1.90 so if you take the $1.44 off the table, you basically just have to worry about the $11 puts expiring worthless and they can be rolled but you are saying $5.55 for the QID Apr $11 puts?   I see .90 so let me know what’s up with that before we go any further.  

    Rosie/Tusca – That’s some pretty fine predicting there!  Clearly the market is pricing in and expecting huge Q1 growth and POMO runs through June.  I only expect a pullback between now (most likely after expiration) and April based on Europe or Munis blowing up.  If that doesn’t happen by April and we get another round of POMO and the tax cuts do their magic (and it’s not about the $2,000 the average family saves but the $2-10M the top 1% get and the $2-10Bn that Big Businesses get) and inflation takes hole – then what is there to be bearish about.  Once we achieve runaway inflation and it takes hold – the trick will be TRYING to stop it, not worrying about it stopping.  At that point we can just lever anything that’s inflationary and wait then cash out and wash, rinse and repeat.  Even better, on the other side of inflation is a fortune to be made on the put side as the Fed tries to go the other way.   THAT is a market we don’t want to miss out on!  

    HOV/Amatta – Never regret a good cover.  Think of it in terms of selling .25  5 times a year and that’s $1.25 back on $4 is 31% – if all your stocks went up 31% a year you’d be happy right?  So be a consistent seller and be happy instead of a gambler who’s trying to outguess every move and is as likely to end up with less as you are to make more. 

    Good one BDC! 

    Inflation/Mike – The problem is the kind of inflation we are pushing, which is top down, is a catastrophe for the working classes.  Their pay doesn’t keep up so they can buy less goods while the rich end up with tons of money and can buy more goods which raises the price of goods (in funny money) and makes them even less available for the lower classes.  The government measure the inflation in terms of the cost of Bill Gates’ 100,000 sq ft home and his $30M saving offsets a 10-cent increase in a dozen eggs for 300M people.  Bill Gates makes $5Bn this year and pays 17% tax ($850M) while 142,000 people make $35,000 each and pay 28% ($1.4Bn) but inflation raises Bills earnings by 20% to $6Bn while the 142,000 people it takes to match his salary make no additional money but their health care costs rise 30% and food is up 20% and fuel is up 30% and states like IL raise their state income tax by 2%, which is great for the rich because it’s a flat tax so Gates saves $1Bn with his lower Federal rate on $6Bn in earnings but then pays $120M in state tax, the same as the 142,000 workers have to pay on top of the $1.4Bn they pay in tax on their flat wages.  Yes, inflation is a wonderful thing for the rich, who, as the economist pointed out this morning – are not like you and I…. 

    Wow, CNBC FOREX analysis is worse than my daughter’s! (I’m training them to take over)  The fact that the AUD stopped falling for a day is their premise that the dollar is not really strong but only strong against the Euro.  Is it not possible for the idiots on TV to say "well we can’t rush to judgement based on 3 hours of trading"??

    Making money/Reza – It’s always tricky when you are at inflection points.  There is not "high probability" when it’s 50/50 which way things are heading.  Your highest probability of success is patience, which lets you hold onto 100% of your portfolio while you wait for a high-probability opportunity.  I’m sorry if it doesn’t sound exciting but it is true.  

    OPEN/Amatta – Well the Jan $60 puts are done for and I assume you mean the July $55 puts, which are now $4.25 so isn’t that a nice winner as is?  You can sell Feb $62.50 puts for $2.10 and spend that to roll up to the July $65 puts but I’d just go 3:3 as I’m pretty sure earnings will not hold them up.  If you want to be more aggressive, roll up the long puts and wait on selling others.  

    New normal/BDC – Yes but if 140M people work another 5 years, they displace 7M potential jobs for younger people so that doesn’t solve very much.  

    USO/Ash – Hmmm, dollar over 81 (now 81.18) nakes that too risky.  Euro down to $1.22979 by the way – Danger Will Robinson, Danger, DANGER!!!!  

  106.  Phil,
    Any advice on what I should do with my MOS?
    Long 400 shares at a net cost of $57.50 and short 2 Jan $67.5 Calls and 2 Jan $70 Calls.
    Given the run up in MOS, I am wondering how to improve my lie?

  107. Phil, yesterday, you posted to TxChili about his SLB play and how to get $62.10 off the table.  I follow it all except I don’t understand your reasoning on buying the 2013 $90 calls to cover the short 2011 $80 calls.  My question, why the calendar spread on that?  Or, why not just buy the 2012 calls instead, $3 cheaper.  Is it to give you as long as possible for the play to work or am I missing something? 
    Thanks for the amazing job of teaching me options, but this is the outer limits of what I understand.  I get the whole cashing $62.10, and the need to have the short calls covered by the long ones.  I just don’t understand the reasoning behind the 2013 vs 2012 on the covers.

  108. TOS, 
    I am being offered $1 flat per contract fees or $6 per transaction and .75 per contract. I am doing about 40 options trades a week of 7 contracts average and the total account size is 500K. This is better than what I am paying at Schwab, but not sure if I can squeeze something better from them?
    I appreciate any input… 

  109. wow the $$$/Yuan i +.62% now after sitting flat all
    NET $ = (1.12)%,  dx/y = +.58%
    The NET is just a crude attempt by me to see if the dx/y is telling the truth.  I watch the following relationships:
    dx/y. E/$,  E/Y,Y/$, $/Franc, $Yuan
    What I try to look for is both moving in the same direction.
    This is something I have only been watching on the currencies for a few only a few months (since Geither comments about the $, Euro and Yen not needing to fall)

  110. Mike:  Thanks,I read through the info on ParSar  (at least I now know its stands for Parabolic Stop And Reverse); it is a trailing indicator and useful an adjunct to a trailing stop.  It is only useful when stocks are trending.  So I guess that means it works until it doesn’t.
    So as I understand it, being a trailing indicator, I don’t understand how it can call a turn?

  111. Dive, dive – euro dips below $1.30! 

  112.  Very funny humvee

  113.  Shadow, its not that I think financials will retreat, I just think they are having quite a big move for no apparent or justifiable reason.
    AIG is a joke.  
    They have all had big moves; not convinced there is any fundamental reason other than massive rotation / short squeeze. 
    They are also keeping the market propped up while materials correct a bit.
    I don’t know what you mean "by history they need to correct".  We’ll see what happens I guess.

  114. Back to zippo volume.  Maybe if they ran a credible market there would be more participants.  Just a thought-
    djank1, that’s a schedule for what the Treasury is selling.  Not what the Fed is buying (POMO).  Careful..

  115.  Phil/ Stuck in Neutral
    I feel like an idiot, i set up hedges back in Aug planning to set up some long positions.  Then things moved up and I felt I would be chasing, did a poor job adjusting the hedges, putters lost premium so took them out.  My Jan 12 BCS while ITM seem very lame now.  While contemplating how to adjust things my head was starting to hurt, then I read your answer to Amatta this morning and had to laugh and felt better . "Tomorow/Amatta – No, we are just screwed at this point.  I hope you find that comforting – " sometimes not having an adjustment is a relief.  :)  Would love to have an idea what you’re thinking for positions over RUT 800.  

  116.  To each his own ravalos.  My concern is that CMG is technically weak.  A couple of upgrades this week saved it from breaking down, but its still below $230.
    Any correction in the market will take this to 210 or lower and if that happens by expiration, you will be hurt.
    You have a favorable roll you can take right now, so why not take it ? 
    Take advantage of the gift that the upgrade gave you.
    Surely you would rather be short the 180 puts vs 230 puts ?
    Those will be much easier to manage IF it breaks down big or we get a big market correction, especially given your 220 short calls.
    We each have no way of knowing what happens over the next 11 trading days.  
    Good luck with it .

  117. Mike: Thanks for the explanation:   do you give equal weight to each of the various currencies?

  118. Netflix Button Coming to Remote Controls
    Down today even w/this news out.
    Courtesy of WSJ

  119. on the ParSar, it is a way to know what the trend is, it can help you stay in a trend riding it, or alert you that a trend is ending and time to go the other way
    "The indicator is below prices when prices are rising and above prices when prices are falling. In this regard, the indicator stops and reverses when the price trend reverses and breaks above or below the indicator. "
    for example,  the XLB has been in a positive trend indication for many weeks, yesterday it broke the ParSar indicator point on the downside, flipping its trend indication to negative
    so the XLB’s  trend is deemed to have started a negative trend, with the indicator point above, now at 39.06, need to stay below
    again in range-bound markets, trend indicators may not work as well

  120. humvee4me
    yes I just do a simple equal weight to each currency to get a quick idea
    probably not accurate, but I have no way to following the weighting on the basket currencies, dx/y, Yuan and Franc
    I just want an idea if the dx/y and NET $ are heading in the same direction and the same time

  121. Mike:  thanks, makes sense

  122. Cap
    The run up has been excessive in price and time. I feel it is time to get out of financials until they make more sense. Funny free money is not forever.

  123. also in funny times, I am not sure anything matters :)

  124. Advisor/Kimisk,
    I’m not on the boards that much anymore because I’ve been working full-time for AXA Advisors.  If you are around NYC, I’d be happy to meet with you and explain how we do business and see if I can be helpful.   Life insurance, in particular, is something that people do not fully understand and which almost anyone can benefit from…basic protection is remarkably cheap these days and permanent insurance is one the best tax-advantaged accumulation vehicles around.
    I’ve made a conscious effort not to "pitch" on PSW, and this is the first time I’ve made a post like this and I hope Phil  will give me some latitude since you you specifically asked.   But if anyone would like sit down for a free financial checkup and learn about the financial planning services we offer, please contact me.    212-541-1913.

  125. Blew right past IWM 79.15 at 2 PM, will it hold?

  126. Phil:
    FAS (29.97) 29 Jan7 weeklies, 1.02.
    Is it worth the risk w/low premium?

  127.  Cap/CMG, I agree with your point.. thinking back a bit, the whole purpose of the Jan 230 short puts was to mitigate the relentless up move in CMG, but now that is has technically broken below both the 20SMA and 50SMA (well with the upgrade it’s now teetering around the 20SMA) and also the fact that it experienced a "mini death cross" when the 20sma broke below the 50sma, I should reconsider your suggestion. Indeed, I think 180 short puts would be easier to manage if CMG dissapoints.. if I’m already waiting a long time for the short calls I might as well include the short puts so I can improve my position. Thanks for your thoughts on this!

  128. Amatta/TOS --
    $6 plus .75 is a good rate…better than my rate there….who did you speak to?  I’d take that one.

  129. The Minyan dude’s (T. Harrison)  ’11 themes:
    "We’ve long offered that we would see “inflation in things we need and deflation in things we want” and 2010 demonstrated that in spades. I would remind investors that commodities never have been a longstanding safe haven and that could prove true again in 2011. If government spending reins are pulled in and the dollar rallies in kind, the last thing gold bugs might see is a rapidly approaching windshield."
    Interesting (to me at least)

  130. Bombs in Baltimore, dept of transportation 2 injured news still sketchy

  131. C = 1274.25, F =1270.50
    10yr = (1.84)%
    VIX +.94%

  132. State Capital as well, near Gov offices..Jeffery building

  133. TOS Futures commissions
    TOS charges me $3.50 comission per futures contract, this seems high.  Please let me know what you pay.
    TOS margin required on 1 /ES contract is $5625 ???  Is this correct??
    amatta – I am paying 0.85 per contract with no transaction fee for options.

  134. escohen5
    It depends on the volume and size of the account…. I am still negotiating with him so don’t mention I gave you the pricing. Phil actually gave me the

  135.  Good attitude BDC but don’t let AIG overstay it’s welcome.  

    $66Bn/DJank – That’s not all that much really.  They need at least $140Bn a month and, with the holdays, I’m kind of surprised they aren’t going for more.  Maybe they are worried about getting their rate after last month’s poor showing?

    ParSar/Mike – That’s what I thought but that’s what I mean too.  What good is an indicator that tells you to sell one morning and then buy the next – especially if it’s probably wrong both times? 

    SONC/Savi – You’re welcome, glad it worked.  

    HBC/Rav – That is a very strange thing. 

    Food/Rain – I think DF was unfairly killed but they are back to $9 already so congrats to all who went with them in the $7s.  You can still play them at $8.90 with the short 2013 $10 calls at $2 and the short 2012 $7.50 puts at $1.05 for a net $5.85/6.68 entry, which is lower than they crashed to if put to you and almost a double if called away and, most likely, the 2012 $7.50 puts can be rolled to the 2013 $5 puts.   Also I like CAKE, who just got an upgrade today and are starting to look like a Cramer stock although I think they are the real deal long-term so maybe watch to see if they miss.  BG is interesting but the low VIX makes them a tough play and SAFM is same as DF but you can do a better combo with Dean.  

    Oh no, Obama is appointing Daley as Chief of Staff?!?  Now that’s the Chicago way!  

    Where/Shadow – I wish I knew!  It’s like watching a magic trick on stage where they float a woman and pass hoops around her – you know it’s a trick but you can’t figure out how she’s floating there.   That’s what the market is like, every day they pull out some more hoops like upgrades, buybacks, mergers, data and they pass it over the market and it floats a little higher.  After a while, the audience gets bored and they have to take the girl down and show you a new trick – the question is, when?  

    Dollar/Samz – It’s one of many things that can topple the markets.  Essentially it’s choose and perish.  

    Perpetrators/Flips – Hey, I do what I can but then I get accused of being "too political" so I can’t win.  Good call on GM but don’t be greedy, especially into earnings (if any).  

    INTC/Kustomz – Still a good, solid, long-term hold.  They have a 3% dividend of 0.63 and you can buy them for $20.70 and sell the 2013 $15s for $6.20 and the $17.50 puts for $2.20 for net $11.90/14.70 plus about $2 in margin which makes that .63 dividend more like 4.5% and the upside is another 26% at $17.50 so anything less than a 15% drop in INTC over 2 years pays about 35% – all our trades should look like this!  

    CMG/Cap, Rav – Good idea Cap. 

    Down/Exec – Euro falling, dollar rising was the main story.  

    Short/Samz – No because expectations of jobs is now up around 400K, which would be double the real estimate and up about 400K from last month so hard to see how they get there.  ADP doesn’t do seasonal adjusting and the government does – it seems to me that, in December, that should work against the number unless they are fudging them again – which is not out of the question.  

    I like the new CNBC sponsor that lies to you over and over again saying that the Vienna Gold coins they are hawking are the World’s most popular.  Just put "most popular gold coin" in Google and you can see it’s not true even if you didn’t know the most popular (by a mile) was the American Eagle as the weight is guaranteed by the government and then there are Chinese Pandas and Canadian Maple Leafs – not Viennna commemorative coins.  Think about it, gold coins are (by volume of ads) CNBC’s main sponsor – do you even think it’s possible that that doesn’t influence their content and advice?  

  136. All good Phil on INTC the low volume drop didnt shake my resolve and I just got my 20.75

  137. NFLX recovering? down -0.5 so far.

  138. Phil
    I monitor CNBC through etrade pro, they cut the ads out thank you very much.

  139.  TOS/amatta – $1 per contract sounds pretty good unless you’ll be trading large numbers of contract per order. You compare that with $6 + 0.75 and it takes 24 contracts to equal out that $6 bump. So averaging 7 contract trades you’d be losing money.

  140. no Phil, I must not be explaining it right.  They did not change twice only once.
    each security can has its own ParSar indication of trend
    Yesterday, the XLB, SLV and XLE each gave their own indications that they were entering negative trend.  They each have their own indications, it just so happens that they all changed yesterday.  This was the first change of indication in many weeks.
    Then today, the ParSar trend for the Dollar switched  from negative to a positive trend indication.
    The ParSar on each security is its own event. 

  141. Amatta/TOS --
    Got it.  No mention.

  142. Get that VIX up to sell the Ps to the sucka’s……

  143. Looks like someone is really unloading TNA…just like last Tuesday…..

  144. FCX:  Weeee on the 119 puts  (half out now)

  145.  AMR was dropped from Orbitz and Expedia… big dispute with Sabre also… shares not budging much, although they were sharply lower.

  146. C = 1272.37, F =1268.50
    10yr = (1.78)%
    VIX +2.29%

  147.  mike, what kind of chart do you use the Par Sar in ?

  148.  and how do you use it to help you get long or short ?
    seems pretty similar to a trend line … how is it different ?

  149. jasu1
    That is what I have noticed but more so IWM is selling into every push, remember the RUT is our last non-breakout. I missed the 2PM Obama effect but Daley did little even with Cramer saying he is a stock guy. 78.80 is the next resistance and if that doesn’t hold i expect 77.90 by tomorrow. Sure miss JRW when he is on the move.

  150.  Facebook/StJ – Just a p/e of 250, not too surprising that GS’s HNW division said "no thanks" when offered the shares.  

    Goldschlagger/Rain – I used to be about 0.1 grams but that’s from college when gold was $300 and that was about $1s worth.  I wonder if they put $5 worth in now?  Doesn’t seem like they would…

    China/StJ – I heard people this weekend talking about the very great likelihood that China should be able to "engineer a soft landing" and they were actually saying it without realizing how sadly ironic that language is.  

    Stages of gold/Mike – Great article!  

    Portugal/Stj – Wow, over 7% on the 10-year!    Let’s go borrow some Yen and buy those…  

    Cramer/Maya – He picks 200 stocks a week, of course he can go back to a few and say "look how great they did."   My issue is there is no recognition of when it’s time to stop, no critical analysis of the market.  In a rally he looks like a genius but at a top or a downturn, his advice is the same and it’s a total disaster.  The only times I’ve heard him say sell is at the bottom of the crash when, again – his advice could not possibly have been worse.  I’m not going to try to convince you – watch him for more than two shows and you’ll catch on eventually.  

    Short play/Shadow – Still the QQQQ puts from above. 

    MOS/Mjj – Hmm, we can always spot a golfer…  They are really flying on this Australia thing, which is running it’s course, I think.  I’d take the stock off the table at $77.90 ($311.60), up about $20 and buy 1.5x (6) the 2012 $72.50 calls for $15 ($90).  Then you can roll the short callers, that are about $9.50 avg ($38) to 1.5x (6) of the March $75s at $7 ($42).  If you want, you can sell the 2012 $57.50 puts for $4.25 ($25.50) as the worst that can do to you is put you back in at net $53.25, which I’m sure you wouldn’t mind.   In the meantime, you take (100 times) $311.60 + $25.50 off the table spend $90 on the long calls and collect another $4 for rolling the callers so net $251.10 off the table or $62.77 per current share and your only obligation is to get back into 600 shares at net $53.25 and anything you keep from the 2012/March spread is gravy.  

    SLB/Hoss – Because I think oil is going down and SLB with it and the 2013s will hold their value better (especially if the VIX heads up) and clearly Tx likes the stock and he can roll those calls lower and get back into the stock long-term on a dip.  Also, tons of time to roll means he has little worry if the stock keeps going up.  Cheaper is not always better.  Don’t forget you have to pay those spreads to shift so why do that on a stock you like and, also, while the VIX is low, this is a GOOD time to buy long puts and calls, relatively.   Hope that helps!  

    TOS/Amatta – I don’t think they offer flat fees anymore (per transaction).  I prefer the flat fee per contract just because it’s easier to know what my costs are but $1 can get up there if you trade 40, 50 or 100 lots.  Still, it’s a penny per option in and out and not so horrible.  I would certainly go back to them after a month or two and demand .75 per contract or less if you are paying them over $1,000 a month.  

    Positions/Red – Nothing complicated.  It’s going to look a lot like our last 3 major buys that I mentioned in today’s post (all under the Portfolio tab).  Heck, what do you think I’ve been picking all week for upside plays?  We’re just bargain hunting in an overbought market and hoping that 20-40% annual gains are going to be enough to keep us ahead of the market.  Pair that with a few 1,000% plays for the big breakout and we can have some fun until they finally stop the music and everyone realized there is only one chair left to sit on…

    NFLX/Reza – So they are going to pay remote control companies to put NFLX on their boxes?  Are the cable and satellite companies going to do this or will it be through the TV’s?  What kind of web connectivity will the TV’s have?  Who will pay for customer service calls?  How will they know whether it’s a hardware issue or a NFLX issue?  I’d be selling too if the company I owned said this was their next big plan…

    LOL – Howard Stringer (SNY) trying to talk up 3D TV!  They must have millions of those piled up in the warehouse…

  151. Funny business going on in ES looks like it will get worse

  152. Cap
    normally I only watch the ParSar on is the S&P and the Dollar, and only every few days,  does not change very often.  I use the free ones on
    but it can be used on any security
    I will use it to drill down when I am in something, trying to ride the trend.   Or watching something for entry, example if I want a short, I will wait for it to stop going up first and then give a negative trend signal, then may enter on up days my short.
    The only reason I saw the changes on the XLB and XLE was because I have been watching the dollar and could see that  it was close to giving a positive trend indication
    so I started watching things, that would fall if the dollar rallied, so I just happened to be looking at the XLE and XLB

  153. Resistance at  IWM 78.8 is failing and with1929X180 HD resolution it shows continued programed selling.

  154. 1920 X 1080 resolution, my typing sucks!

  155.  ravalos; you are welcome; just trying to help you manage that difficult position you found yourself in.
    let me know what you end up doing.

  156.  FAS/Reza – Well not worth it because we are hoping for a pullback tomorrow but works if you are a "buy the f’ing dips" kind of person.  

    Harrison/Reza – That’s dead right.  Ultimately, you do need most commodities to be consumed and if the people are spending all their money on food and fuel, then eventually everything else suffers.  Speculators, unfortunately, can remain stupid for incredibly long periods of time because they are generally rich and have no concept that raising the price of a tank of gas to $100 means a significant number of people will simply choose not to drive.  

    Baltimore/Kustomz – Really, not a word on TV.  

    CNBC/Shadow – On high-def, they keep up tickers and news during ads so I put up with them.  Also, useful to know what specials they have coming up so you know what sectors they’ll be talking up all day.  

    ParSar/Mike – Hey, third time’s a charm – I get that!  

    FCX/Humvee – Nice.  That one was getting annoying.  

    AMR/Amatta – When did that happen?  You would think they’d retract back to $8.  

    China/MiniJ – Ordos is an old but very cool story.  I talked about it last year to warn China was overdone but nobody believes me.  I think the story here is, despite the embarrassment and despite China saying it was a temporary situation – it’s still just as empty.  

    Selling/Shadow – I agree, same pattern almost every day – up in the futures to print a good open and then sell to retail suckers (Cramericans) all day long.  

  157. DELL HPQ NVDA QCOM…getn some CES love

  158.  Mike thanks … is that a daily chart ?  an intraday chart ?   what time frame do you use and find most useful is my question.

  159. FAS/Phil – You’re hoping (expecting?) a drop in NFP numbers in Dec? large enough to put a (additional) dent in the bullish mood tomorrow, causing a sell-off?
    I’m a "know/use a f’ing bargain when you see one" kind of a person.
    You talked me out of it this time though; too risky.

  160. Phil
    Did you ever go to CES? I known CNBC is trying to shed good lite on high tech but after many shows i don’t remember seeing any cool backgrounds. Notice Maria is in front of a NBC background? Putting lipstick on a pig?

  161. Just as a comp to the CAKE investment (which I am considering entering) I wanted to ask if anybody has any experience with Bravo Brio Restaurants (BBRG).  They run the Bravo Cucina Italiana and Brio Tuscan Grill restaurants and are like an upscale Olive Garden or Italian Cheesecake Factory.   I read a lot of good reviews about them, but they have yet to open a store in the NYC area, so I haven’t had a chance to try them out.   I was thinking they’d be a good stock for the LT portfolio along the lines of CMG.   I’d appreciate any first hand info.  Thanks in Advance!

  162. Shadow/Resolution
    I’ve never seen that term before.  What is the resolution?

  163. IWM 74 Jan puts, 10,424 contracts today! What is that?

  164. kinki – Brio is not very good – always empty at scottsdale quarter which is a bad sign since this ground zero for senseless conspicuous consumption.

  165. Cap it is a daily chart that I use. (maybe have intraday and I just do not know about, I just use the free ones)
    The indication point gets updates on the open, then only changes if ti gets hit.  So indications are far and few between.

  166. Shadow is Maria the lipstick or the pig?

  167. Phil / Gold , Silver   Would you advise a position in DGZ and ZSL now, or are you concerned the PIIGS bond slide will still support precious metals at the same time as the US$?

  168.  CTFC to hold a vote next Thursday on derivative position limits, trying to limit speculation to 10% of any commodities position
    votes had failed a few times before
    also, nothing about the end user expemptions
    my guess, wallstreet has these gamed or bought and piad for, especially with Volcker leaving, not sheriff and Gensler is 18 yr Goldman alum

  169. Looks like GS and the boys saved all their free POMO powder for the stick save.

  170. I would love to be wrong and see derivatives get reigned in.  But not sure the SEC and CTFC could do it even if they wanted too.
    All of the lobby money globally is against this one

  171. Kiminsk -  You’ve had three good suggestions here already. I would point out that your mandate is almost all-inclusive: "I’m looking for help with asset management, very broadly defined – that is, someone with real insight and intelligence on everything from real estate to international taxation issues to equities to life insurance to options." My two cents is that these are highly specialized issues, and no one person, nor probably one firm, would be the "best in class" in each.  My own approach has been to find a good advisor compatible with my risk profile and investment preferences — you need to have thought those through yourself — who is well-versed in fund managers.  By discussing these on an ongoing basis, a good advisor can channel your investments to the best guys — for example, I’ve had good luck with Carmignac, Bestinver in Europe, M&G Global basics — I am not recommending them, simply pointing out that a well-informed advisor can direct you to the better people in each field. It costs somewhat more, but I’ve come out ahead quite consistently.  If anyone tells you they can do it all, I would be a little skeptical.  Note that in most cases, the better fund managers have higher minimum investments.  No surprise there.

  172. exec / resolution — the number of pixels on his monitor. 1920×1080 is HD 1080.

  173. exec
    It is the number of picstels (sp) or dots on a screen,1920X1080= 2,073,600 onthe screen, even 720X600 is only 432,000. 5 times as many dots = more detail.

  174. BBRG/jomama:  Thanks for the info.  I guess CAKE is the safer bet then.

  175. Slimy stick save no clues on tomorrow!

  176. kinki – I am looking for an entry for CAKE myself – they do a nice job of getting the "aspirational customer"  They get a person who really can’t afford to be their and sell up and give them a good experience.  They are like the "coach (coh)" of restaurants.

  177. Pretty good volume today…hmmm

  178. kustomz
    Volume forgot to watch that,Thanks!

  179.  Headlines flashing on earnings:
    SCHN – eps miss
    SABA – eps miss

  180. kinkistyle – we have eaten at Brios in charlotte a few times and think it is very good. more expensive than cheesecake, but worth it. Much better food and ambiance. fwiw

  181.  Phil, can you explain to me why the following strategy does not capture all the premium every month with little to no delta risk?
    -1 at the money /6e PUT
    -1 at the money /6e CALL
    then keep your delta zeroed out using 10,000 lot forex buys and sells?

  182.  Bombs/Kustomz – Probably someone pissed about being laid off or taxes, not terrorists. 

    NFP/Reza – They can’t drop, they were just 40M last month – if they drop it would be catastrophic.  I think ADP hyped up expectations to about 400K, which would be quite a change from last month and last Dec was – 100K and Dec ’08 was -700K so it just seems to me that "expecting" jobs to fly up to the May high, which was a one-time 12-year high that was due to census hiring only – is a bit of a stretch.  

    CES/Shadow – I used to go to every Comdex and then I went to CES a few times when they merged them but it’s too big with too much junk for me – like a giant flea market where you have to walk around for hours to find one cool thing.  I’ve never had much interest in looking at the major booths because I can just go to the web-site and see all those things, it’s the cool stuff by small vendors I love to discover and then I like walking around to get a feel for trends as it’s good to see what items get the floor space and what items people seem interested in but I got really put off as innovation trailed off the last few years and I haven’t been to the last 3 counting this one.   

    BBRG/Kinki – I have no clue but remind me as it’s definitely a sector I like to follow. 

    Silver and Gold/Tusca – If the EU cracks, there should be a knee-jerk into gold followed by a nice slide as the dollar gathers strength.  If Japan cracks – it’ll be all dollar and gold will slide and if the US cracks, gold goes up so, on the whole, I’m hoping it’s the EU that breaks and spikes gold one last time for a good short entry.  

    Well, so much for yesterday’s gains – all gone now except the Nas, which got a big push in the last few mins.  

    Volume/Kustomz – Not bad at 193M on Dow at finish.  It does seem to me that a lot of firepower went into holding these levels.  If NFP is bad (below 250K added) I think we go down hard in the morning.  FTSE had a 1.5% drop from lunch to close, blowing a 1% gain and finishing down 0.4%.  DAX gave up a strong open as did CAC so they will very likely freak out if the ADP report they all rallied on turns out to be negated by NFP.  

  183.  Premium/Craig – Sure you get all the premium but you risk being blown out on a big move.  

  184. jomama:  NYC needs more "family" restaurants that serve good, healthful foods with good service.  The proverbial "safe backup".   A place where you can bring kids and sit and hang out for an hour without pretentious waiters trying to hurry you out the door.    We have CPKI in NYC and I notice it always has good customer turnover, and to be honest, I would LOVE for CAKE to open up a shop here, because I would be there every other week.
    The ironic thing is, the money I will invest was meant for opening a restaurant of my own.  But with the outrageous rents, local government fees and taxes, payroll and compensation issues, I might as well gamble that money away in Atlantic City — it would certainly require less work.   Better for me to just invest that in a big-box restaurant like CMG or CAKE who have economies of scale, lobbyists and bargaining power over their employees, and sit back and collect on capital gains. 
    Thats the new "American Dream". 

  185. Hi, All,
    I’ve been busy at work, and can only check in once in a while.
    Just noticed that MSFT has gone up quite a bit in a mostly flat to slightly down market.
    Any news on MSFT?

  186. Bombs/Kustomz – Probably someone pissed about being laid off or taxes, not terrorists. You mean 99% of the American population not the 99% in the rest of the world

    Yea we know they stepped in at 11,667, 11,666 would have pointed the finger right at GS as our savior

  187. Phil,    1, Thanks for continuing to value to our subscriptions, by way of Sabrient, Income Trader and now Alan B’s Invest by Model.
    2.  You keep amazing me how many different ways you try to tell members how the market is overvalued.  Today its musical chairs and magic tricks.  I think its great.
    3.  CNBC and gold coins.  Two days ago , When CNBC talked about commodities all day, I was most impressed they sent a reporter all the way to a Colorado gold mine to play with some gold ingots.  Later that same day they almost convinced me to go out and buy sugar or SGG.  I had to remind myself that story was one long infomercial.

  188. kinki, agreed on all of the above.  My wife and I are interested in starting a buisiness – but after we do all of the math i just end up selling puts instead.
    Cheesecake factory has a good model – large portions @ a premium price with a decent experience.  my kids like it and even the pickiest eater can find one thing they like. 
    I think a good thai/vietnamese or indian franchise concept that can go in food courts would do really well.  kind of a good, nongreasy, healthy panda express.

  189. Thanks Phil, that explanation on SLB helps me alot.  I was thinking something along those lines, but just wasn’t sure.

  190.  Nasty!  

    From theAssociated Press: "Riots over rising food prices and chronic unemployment spiraled out from Algeria’s capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar!" Police helicopters circled over Algiers, and stores closed early. Security officers blocked off streets in the tense working-class neighborhood of Bab el-Oued, near the capital’s ancient Casbah, and areas outside the city were swept up in the rampages. The U.S. Embassy issued a warning to Americans in Algeria to "remain vigilant" and avoid crowds. Riots on Wednesday night in the neighborhood saw a police station, a Renault car dealership and other buildings set ablaze. Police with tear gas fired back at stone-throwing youths through the night." Algeria’s violence is unfortunately just the start. The big to keep an eye out on is rice. If the liquidity makes its way there, the Chinese soft landing may just become much, much harder.

    Terrifying article from a gold bug site but., I hate to say, not really much of a stretch to get tho their point:  

    The Fed’s perception, and that of its masters on Wall Street, is higher commodity prices reflect growth, not coming inflation and a flight to real assets. Inflation officially is 1.2% and the Fed wants it higher. The Fed knows inflation is 6-3/4% and by the end of 2011 it will be 14%. Government will only admit to 5-1/2% and that omits food and energy. If that is so, as they profess, why have government and the Fed for many years suppressed gold and silver prices? The answer, of course, is obvious both government and the Fed perpetually do not tell the truth. The illusion projected by these criminals is that they are saving America when in fact they were the ones who created this mess, and tell us that if we won’t allow them to do what they want they will destroy the system. These denizens of Wall Street, Washington and the Fed as you can see care little for the average America, who has to deal with inflation – some on fixed incomes, as their purchasing power is snatched away by these same people. Thus, the policy of credit and money creation continues unabated as the fed remains ensnared in a trap of its own making.

    We notice daily speeches and press conferences in Europe assuring people the euro will survive. European elitists are terrified because they know their creation, the euro, is finally going to fail. Europe is in denial, but that won’t change anything. The euro’s failure could well be the seminal movement that tips over the elitists’ apple cart, and leaves them with an irreparable mess. As we said many months ago when the European bailout of $1 trillion was proposed that in order to accomplish this they would need in excess of $3 trillion and that was before Belgium’s problems surfaced. Now the great fear is if the solvent countries continue the bailouts will they collapse as well? Could England and the US be far behind?


  191. BBRG/morxIntway:  Thanks.  It could very well be that they are still developing name recognition so there will be rough patches as they expand.  I might need to rent a zipcar and take a trip up into the countryside (upstate NY) to try them out.

  192. Off topic but maybe someone here knows: Typing into excel 2010 is resulting in chinese characters! Anyone know how I turn this off? I’m not coming up with the correct searchs on the INet I guess…

  193. NFP/Phil – OK, I may be dense but, you’re saying, the baked-in expectations are for overly optimistic monthly gain (after birth/death model adj.) close to the  numbers ADP reported which in your estimate are unlikely based on the 2 most prev. Dec numbers (historical precedence) and not anywhere near the May10 highs distorted by Census Bureau hirings.
    Hence, the disappointment by not meeting this unrealistic expectation would (could) result in a sell off?
    Perhaps right out of the gates??
    Do I get your reasoning? What have I missed?

  194. Patience/Phil – So your take on the market is that we’re at an inflection point: based on your indices’ various levels you post every AM. Hence, your suggestion to wait for a (lack of?) confirmation particularly RUT’s.
    "Making money/Reza – It’s always tricky when you are at inflection points.  There is not "high probability" when it’s 50/50 which way things are heading.  Your highest probability of success is patience, which lets you hold onto 100% of your portfolio while you wait for a high-probability opportunity.  I’m sorry if it doesn’t sound exciting but it is true."
    Let’s assume RUT had already punched through 800 (say 805); we’d treat 800 as support and would lay out the next fib levels (incl. retracements). Wouldn’t we still be facing the same question(s): would the market go up or down? Although we were working w/a slightly different set of numbers on the charts. Why would this scenario have different (better/worse?) odds of success?
    Let me know what am I missing if any.
    Thanks in advance

  195. rainman
    I had a problem with Chinese translation, don’t know what caused it but rebooting from CD fixed it. Back up filles first, for me it took formatting and reloading. I suspected a browser bug.

  196. Well, if anyone is interested IME (Input Method Editor) is responsible for inputting chinese on an english windows system. somehow mine got turned on and I have no idea how to turn it off. I had to use the big red button (anyone remember these?) to turn it off.

  197. Patience/Phill -II – Or are you referring to possibly pivoting points here?

  198. Thanks Shadow. I’m going to have to figure out the magic keystroke for the next time.

  199. Phil, have been busy lately and not that active on the board here, but I notice how you want to cite Cramer.  If CNBC pulls his show from their website, you can try to download the podcast from iTunes for free.

  200.  kinki – There is a Brio here in Las Vegas located in Town Square development and it is nicely appointed and comfortable.  However, I didn’t think the food was anything special from any other mildly upscale Italian place…but again, nice ambience.  As an active restaurant owner, I would highly advise to NOT do it.  There are so many things working against you, it is very difficult to succeed – even in a good economic environment.   I’ve done many things in my career: military jets, software programming, Harvard MBA, Partner at  Accenture, and so on.   But getting my restaurant/lounge to stable success was hands-down the most challenging project, especially here in Vegas (of course, I didn’t have prior restaurant experience unless you consider McD as a  After seven years, I’m kind of burnt out on it now and yes, it was very fun for a time.  But looking back, I would never advise someone to do it….way too much risk, too few ways to succeed.

  201.  Not good for Spain:  


    The cost of insuring Spanish government debt climbed above 3% this month for the first time. Credit default swaps referencing 5-year Spanish government bonds traded at 340 basis points Wednesday, according to CMA data, meaning it costs $340,000 annually to protect $10 million of Spanish debt against default.

    Will it rain on Spain’s banks?
    That spread has tripled over the past two years, as governments have started taking on the risks that were initially shouldered by overstretched banks.
    The flight from Irish banks has been most pronounced among foreigners, who presumably are less attached to their bailed-out bankers and can easily find other banks that, at least for the moment, appear less apt to go out of business.
    Some 20 billion euros ($27 billion) of overseas deposits fled the country in November alone, according to the Central Bank of Ireland. The level of foreign deposits has plunged 28% in the past year and is down 42% from its bubbly peak.
    But don’t blame just the foreigners. Domestic deposits tumbled by 6.3 billion euros in November, in their steepest decline since August 2009.
    All told, the Irish banking system’s deposit base has contracted by 15% over the past year — which isn’tmaking it any easier for taxpayers to keep the deeply troubled banking sector afloat.
    Meanwhile, the aid the Irish banks took from the eurosystem more than doubled over the past year, to 97 billion euros from 45 billion in November 2009.
    The flight of deposits from troubled Irish banks is an unhappy irony because Ireland was lauded in some quarters in 2008 when it became the first state to guarantee bank deposits. That decision led to a short-lived surge of funds into the Irish banks — not that the money stuck around for long. Since the late 2008 peak, more than 100 billion euros of overseas deposits have left the Irish banking system.
    When you consider that similar trends could easily play out in the other euro countries, you have the recipe for a hangover-inducing New Year that is likely, in the view of Minerd, to see the euro plunge anew against the dollar. He expects the euro to test its decadelong low against the dollar of 85 cents before all is said and done, compared with a recent $1.33.
    "As sovereign credit downgrades continue to flow in and deposits in Europe’s weakened banking system flow out, a broader crisis in Europe appears to be imminent in 2011," says Minerd.


  202. Chinese font/rainman – On windows XP/Vista, I think, the Alt-left Shift (re)sets the fonts on a per app. basis. You can verify this by going through control panel->Regions and Langs ->> Keyboards.
    This may be diff. on your PC.
    Good luck

  203. LVmoda – what restaurant/lounge do you own in Vegas ? I have some friends out there, Ill tell them to check it out.

  204.  Phil, any plays / thoughts on EDZ ?

  205. jomama/kinkistyel/small business,
    Couldn’t agree with you guys more,I closed my business few years ago.  The income was going down, with all the troubles(got complain to label dept. by one 48 year old lady faked her miscarraged because we let her go, I wrote a letter  to label Dept. and never hear it since, got robbed and a gun to me and my wife’s head. Tied up with ropes and tapes for few hours, all the safty issues by local gov., not mention rent and all expense).  Just couldn’t take it anymore.

  206. Note to the top 1%:
    Together, Slim, Gates, Buffett, and Ambani control more wealth than the world’s poorest 57 countries. The danger is that while we have a global economy that knows how to concentrate money and power in an ever smaller set of hands, we have no robust mechanism to alert us to the injustice, dangers, and instability that come along with this package. Someday, to our peril, the poor will find their own way to remind us. 

  207.  Holy cow!  If you want a doom and gloom scenario, check this guy out at MarketWatch with "America’s 10 Worst Years Start Now."

    “The U.S. economy appears to be coming apart at the seams,” Columbia Professor Robert Lieberman warned back then in the Foreign Affairs Journal. “Unemployment remains at nearly 10%, the highest level in almost 30 years. A long trend of “ballooning incomes at the very top and stagnant incomes in the middle and at the bottom. The share of total income going to the top 1% has increased from roughly 8% in the 1960s to more than 20% today. … a level of economic inequality not seen in the United States since the eve of the Great Depression.”

  208. Oh no not again……Cramer. . .Buy Buy Buy

  209.  Monex (CNBC gold advertisers) – Not to obsess but I did just switch back to the ad version of CNBC and the Monex ads every 5 minutes just force me to dig a little (why would anyone selling you gold legitimately push it this hard?) – very easy to dig up dirt on "the most trusted gold dealer in the World for the past 40 years":

    After a reasonable investigation of Monex and relying on sources for which I have a reasonable belief to be accurate therefore because of the extremely large number of Monex complaints with the Better Business Bureau and because of the negative Monex reviews I have refrained from doing any business with them. Therefore, I cannot give an opinion based on my personal experience of dealing with the Monex Deposit Company.

    Nevertheless, for these reasons my Monex review has led me to the conclusion that they are most likely rotten apples in the gold bullion dealer world and I would not recommend sending any money to Monex. It does not appear likely that there is a Monex scam or Monex fraud being perpetuated but where there is smoke there is often fire so I would be extremely careful. Before dealing with any bullion dealers I recommend reading my best practices on how to buy gold, silver and platinum.

    Monex gets an F rating from the Better Business Bureau

    Monex Deposit Company has been scamming customers out of 10s and even 100s of thousands of dollars for decades now. Following is a brief history of government and regulatory actions taken against this fraudulent multi-billion dollar criminal enterprise founded by Louis Carabini.

    There are tons of complaints, this one is just funny.  

    When you consider how many people are mad at them during a multi-year gold rally – it’s VERY concerning!  

    Speaking of concerning:  Cramer saying BAC is your best bet now.  

    Later all!  

  210. lvmoda: Thanks for the sage advice.  I eventually came to the same realization after trying to open up shop in the toughest market in the U.S.   I am just glad I didn’t end up sinking all my capital into a losing value proposition.   I also started out my career in Finance and I.T., but being a chef is the only job I’ve had that was a labor of love — one where I don’t mind putting in long hours and hard work.    So I’ll probably pursue that career after I return to Japan where rent is 1/10th that of NYC and the laws regarding food business is 1/100th as strict.    For now,  I’ll let the CAKE satisfy customers for me.

  211. Kink, Jomama    On the other hand, I know the guy who started this business and is doing well.  He used investor money so he didn’t use all of his own savings.

  212.  jomama  - Indian and greasy go together although its a shame that many tasty Indian dishes can be made without grease. My understanding of malls (food court) is that the malls take a share of your profits in addition to rent.
    My wife keeps talking about opening a vegetarian Indian restaurant here in Upstate NY. I keep reminding her about all the troubles of running a business in NY.

  213.  I suspect that some portion of wealth fleeing Euros is taking refuge in oil equities rather than alternative currencies. Oil is holding up nicely against coal and various other commodities, despite widespread reports about putative coal shortages.  Long Petrobras + PBR  A.  

  214.  Welcome zeroxzero! Nice writing on the hemisphere.

  215. Hey Phil and co,
    I want to add some semi-conductor into my IRA account and I set my eyes on MU:
    1. Buy MU at 8.58
    2. Sell Jan 2012 calls and put at $7.5 for $3.25 for a net entry of $5.33/$6.41
    Is this a good bet or should I look at other players in the industry? The reason I chose them is because this is 1st year they posted a profit since 2006 and they produce flash memory for AAPL products.

  216. nicha – i love southindian food which is mostly vegetarian and not greasy!
    obur – i was looking at micron until i overheard cramer talking about it while i was listening to sirius radio on the drive home.  they have taken a beating on dram but hopefully they are evolving.  I totally missed the boat on sandisk – rode it down and missed the ride up.

  217.  jomama – mmmm, awesome. Love it too. Being an Indian, I eat south Indian once a week. The rest of the time it is norht Indian.

  218. oberlacu
    This is just one opinion but electronics has had a good run. I doubt that in todays world gagets are going to be on fire soon. Governments are also broke not to mention that CNBC spent the day promoting high tech at the CES show. Be very select and trust CISCO only because they said things are not looking all that bright and their price is down. Good luck.

  219. Phil, what do you think about our old friend LMT?  bad news (defense cuts) are out and seemed to be priced in?  Not that far from their low of 67 – 68 and supported by a nice dividend.  I know we are overbought but they are near lows based on possible deep cuts?

  220. nicha, yes i am indian as well – my wife is from laos so we love ethnic food!

  221. jomama – where in india?

  222.  stjeanluc wrote:
    "Someday, to our peril, the poor will find their own way to remind us."
    When I have time, I want to write an article about this.  This has been my toughest year of the seven years I have run a homeless shelter.  I have banned more people than ever before and we call the police more often.  Last week a guy was writing threats to our staff on his Facebook page and a few weeks ago I was told to F myself three times in one week.  (By the third time I said to the guy, "You want to explain how that’s going to work?  Is that a compliment on my size or what are you really trying to say here?"  Don’t think he expected that from the rev. but I digress).  I’ve been working more closely with Parole officers and we all agree that our clients are getting more cranky, disrespectful and taking bigger risks.  It is different that two years ago.  People just have less to lose.  Prospects are dim for jobs so people are more desperate, more likely to turn to addictions and to be violent.  I realize this is all anecdotal evidence, but as I look around the world and see Prince Charles attacked by angry English college students, more police officers shot in Chicago than ever before, food riots in Algeria, Greek anarchists blowing up bonds, etc. I think we are seeing the storm clouds gathering.  
    I’m not one to dwell on doom and gloom, and we are still seeing people turn things around, get jobs and move on.  Our placement rate into permanent housing was the same in 2010 as previous years, but we had to work harder to make it happen.  We have had to change are approach to help people move forward when it is very difficult to be hopeful.  Most people try a few resumes and give up.  The ones that make it send hundreds and never give up.  One guy landed a job by offering to detail a car for free at a auto dealer.  They liked the guy and he got a job.  Most people won’t keep pushing.  They give up and start the rounds of soup kitchens and the shelter.  
    My wife just read me a quote from Confucious "Better to light a candle than rant against the darkness."  How did she know I was getting glum while typing?

  223. Mr. Phil.  What do you think of ocz.   It’s hardware / solid state drive play.  I think solid state drive are hot item given thier speed and size.  But I can’t get into this play with options as there are none.  And that 17 million insiders sale to some outsider at 3.75 makes feel dumb for trying to get in ~1.25  higher … probably not well dicussed here, but thought I’d try …

  224.  Cramer – I thought AA was his best bet !  that was 2 days ago.    Now its BAC ?  ROFL.
    The guy is a laugh riot – I don’t even watch him.

  225. Spreads – Phil, been working on some ‘creative’ spreads inspired by your buy/write strategy and various bull call spread plus put plays you have shown.  Here is one using KGC (but any stock might do if you don’t like gold miner prospects). the curve is quite interesting to me and plays on a fairly broad range:
    using equal number of contracts for each….
    Sell KGC Aug 2011 $17 call @ 2.42
    Sell KGC Aug 2011 $17 put @ 1.92
    Buy KGC Aug 2011 $15 call @ 3.65
    Sell KGC Aug 2011 $25 call @  .44
    This places $113 per set of contracts in my pocket (though TOS Analizer Risk Profile shows -8.78 as current price value) to wait for a maximum $313 gain (3795%) in August, with low breakeven at 15.43 and high BE at $28.12.  Does this pass the smell test or am i exposing myself to something dangerous? Does this consume too much option buying power for the risk (i have no idea how to really evaluate this)?   Thanks-

  226. KGC spread example – plugging it into TOS on demand with late day jan 4 numbers, it uses about $370 option buying power per set of contacts i.e. working with 10 of each used $3710 or so of OPB.

  227.  maya1……Your 1:34 post was interesting.  And no, you haven’t missed anything.  It’s easy to get on T.V. or a board and push this or that stock.  You see it from Cramer, and you see it here.  It’s ubiquitous.  But what you don’t see is the personal portfolio of the pusher.  And that, my friend, is the rub.   Unless you see the speaker’s personal results, then the words are just words.  It’s the old adage……put your money where your mouth is.  If you think stocks ABC and XYZ are so great then show me proof that you now own them.  Not gonna happen.   Guys like Cramer are movie stars, actors.  They get paid for talking, not for investing.   Only he knows whether he is a successful investor, and he won’t show us …..ever.    

  228. Phil and all, watched CNBC ASIA video, one guy was talking about "equity market neutral system" and said it’s low risk with good return, it was working very well on 2010 and should work on 2011 too.  Anyone know what was "equity market neutral system" about?  Thanks.

  229. Cramer -  isn’t he something though? he may be insane, or even psychotic, and is almost without doubt OCD (he really should have his med levels checked). But he’s no dummy, i’ll give him that. I reserve that term for his followers.
    p.s. i’m still chuckling re Phil’s comment that of course he has some winners as he "picks" 200 stocks per week!

  230. Nicha, i was actually born in good old lexington, ky where the men are men and the sheep are scared. my parents immigrated from india in the late 60′s. my dad is from rampur in the himalayas and my mom is from saharanpur, the armpit of utter pradesh. and you?

  231.  Good morning!  

    Euro still weak just before the market opens but no major news.  Dollar at 81.3 and commodities still weak despite all these exciting jobs.  Lots of EU debt sales next week – like the US, this is not going to stop all year as these guys need to sell, sell, sell about $100Bn a month and EU sovereign bonds are selling for more than emerging markets at the moment and it’s cheaper to insure Romanian or Ukrainian debt than Irish debt at the moment.  If you had said 3 years ago what it would take for that to happen – the answer would have been a total collapse of the EU…

    CAKE/Kinki – Margins too low for NYC.  I guess they could just charge more but a lot of chains don’t like doing that so they just stay away.  Also, would be an embarrassment if their cheesecakes didn’t sell well in NYC, which is a possibility as Brooklyn Diner, for one thing, makes a better one as do most delis.   Good point on investing in restaurants – at least you can pull your money out if the business turns down when you do it in stocks and the chance of making a profit in a year with a regular restaurant is pretty much zero and the chance of making money the next year is not much higher.  That being said, my neighbor was the head chef at the Napa Grill in Paramus (upscale) and corporate replaced him with a cheaper guy rather than raise his salary as he hit his time served.   He’s a great guy and dying to open a restaurant in North Jersey and what he does out of his home kitchen can’t be beat.  If you are interested, I can hook you up.  I’m about to pitch him on running my new iced tea company but it’s not what he really wants and I’d be happier if he was doing what he loves – especially as he lives 2 houses down from me!

    MSFT/Cwan – XBox selling well with new system and MSFT showing lots of cool stuff at CES and Ballmer projecting Billions in new sales as he’s desperate to keep his job because only Gates is keeping him there at this point.  Ballmer is a sales guy, you can’t trust anything he says but, then again, MSFT does have a lot of smart people and they have finally gotten on track lately, mostly as Steve’s power has diminished and division heads have had more freedom to "do whatever it takes" to build some new product lines.  On the other hand, here’s a great article that sums up the offerings as "too little, too late."   

    Poor Hungary just took over the EU – weren’t they the ones that started WWI?  Same economic conditions too….

    GLW 2013 $12.50/15 bull call spread at $1.75, selling the $15 puts for $1.55 for net .20 cash on the $2.50 spread with $2.30 of upside if GLW doesn’t fall more than 23% and a break-even at about $13.85, 29% below the current price. Worst case is you own them for net $15.20 and ordinary margin on the trade should be about $3 and virtually no margin in a PM account. 

    Value/Stock – Thanks for noticing!  Thanks to you guys for making us a success, we have no shortage of people who want to come on board and we’re planning on having a dozen writers over time.  The big project now is Stock World Weekly, which will be shortly switching to paid mode with professional marketing (ie. pushy!) and everything.   Good job on CNBC – infomercial is a good way to describe them.  I think I mentioned in one of my posts last week it was time to short sugar…

    Cake/Jo – My favorite weekend lunch.  As you say, kids are perfectly happy to go there as it’s at the mall.  I’ve finally got them to choose good food over "fun" food, which is good for me but they are going to make their boyfriends miserable as dinner at Chilli’s just won’t do it for my girls…  I have a family restaurant idea – 60s style restaurant with good "home cooking" food – kind of like the one in Pulp Fiction, with the seats a mock-up of classic car seats and each booth has a video overhead like a drive-in with a touch-screen to pick classic movies, cartoons, etc..   I think it can be tooled around in various configurations to work in malls, airports, etc.  You set a minimum charge of $20 pp and a maximum time of 2 hours and you have 2 "Dinner & a Movie" seatings and then the after-hours drinking crowd and at lunch you let people watch CNBC, sports or news channels…  

    You’re welcome Hoss!  

    Excel/Rain – You must learn the language of our new masters!  

    NFP/Reza – You’ve got it.  Expectations higher than likely number is the simple way to say it.

    Speaking of jobs (or lack thereof), Gallup came out last night and they are showing a RISE in unemployment from 9.3 to 9.6% in December.  Underemployment is a catastrophic 19%.   Gallup’s Job Creation Index shows monthly average hiring and firing conditions essentially unchanged over the past three months.  Gallup is not seasonally adjusted, these are the raw numbers but up is up and their sample size is 18,000 – not a small poll.  

    Gallup's U.S. Unemployment Rate, 30-Day Averages, January-December 2010 Trend

    Percentage of Americans Working Part Time and Wanting Full-Time Work, 30-Day Averages, January-December 2010 Trend


    U.S. Underemployment, 30-Day Averages, Trend, January-December 2010

  232. Confirmation/Reza – Well we had our 11,500 levels and now 11,700 levels and that means we can begin buying with a reasonable degree of confidence that 11,000 will give us solid support and we know 10,200 is solid support and, as long as we have confidence that a 20% drop is likely to be our max, we can begin committing more cash to buy/writes with 20% margins for error (see GLW above) and also, from this height – we can run a "5 plays that make 500% if the Market Falls" series so we can be covered with confidence.  

    Look at poor TZA at $15.  This is what we love, when our protection plays get so crazy low that we can use them to cover with something like selling July $11 puts for $1.25 and buying the July $15/21 bull call spread for $1.40 for net .15 on the $6 spread with infinity upside (too early for math) and maybe $2.50 in net margin so $5K in ordinary margin plus $300 cash buys you $12,000 of upside protection – that’s the kind of protection we like to have!   Just make sure you have upside plays that counteract the possibility of getting assigned 2,000 TZAs at $11 ($22K) but the RUT would have to rise 11% to cost you $2,000 (TZA $10) and $12,000 protects $100,000 worth of buy/writes from a 12% loss and if the native protection is 20% then you are risking $2K to get 32% of downside protection on $100K and your upside if the RUT is flat or higher is at least $20K, which is about the most you can possibly lose on the short side if the RUT were to double.  Anything in between a 32% drop and a 100% gain on the RUT should be a nice winner for you.  That’s hedging!  

    Pivot points/Reza – Call it what you want, it’s the top of the channel we’ve been tracking since last November and I’m not seeing enough fundamentals for us to hold it – even with my upward adjustments for inflation, QE2 and tax cuts.  

    Podcast/Jordan – Thanks but if it’s not linkable I can’t use it.  I don’t want to mess around with distribution issues.  

    Lounge/Lv – Have you tried getting hotter strippers?   8-)

    EDZ/Ekor – Also nicely beaten down.  I like selling the Apri $17 puts for $1.65 and buying 2x the 20/24 bull call spread for $1 which puts you in 2x the $4 spread at .18 each.

    Business/Bob – Sounds like you were lucky just to get out alive!  That’s why I love the markets – let other people have the hassles!  I don’t run anything anymore, just help get things started and wish them luck.  Just finishing lining up financing for real estate data biz.  It’s nice and neat with all professional customers.   As soon as we get the first round of investors lined up we just have to finish some programming and buy some data and we’re off – that’s the kind of business I like these days! 

    Top 1%/StJ – It’s funny as this is no different from any other time really.  It used to be the mightiest warrior would kill the competition, take all their stuff and live a life of luxury, sleeping with one eye open until someone put a knife in their back – usually their own children.  Then they came up with the idea of promising their children all their stuff, which helped them live longer and they got the peasants to accept this with the whole "anointed by God" thing which, amazingly, they actually believed it.  Usually the peasants put up with their "less loved by God" lot in life until the food runs out and then they chop the heads off the top 1%, toss a bunch of money around to make everyone happy and then the "revolutionaries" become the new top 1% and the cycle begins again.  

    This whole "repeal the death tax" thing along with the BS that Slim, Gates, Buffett or Ambani can possibly be worth 150,000 times more than the average person who works for them is the current American version of the Divine Right of Kings, including the concept that the "Kings" are not subject to the same laws as the people.   Think about it, in the old days, the Kings funded the Church to teach the masses that it was sacrilege to oppose them – effectively the Church was an arm of the Government, full of bureaucrats who required payments and endless, repetitious and seemingly pointless actions by the people if they ever wanted to see "the Big Guy".  That’s been replaced by our modern kings controlling the media, where they preach the status quo, tell you how taxing the rich will undermine your way of life and let you know that all you need is a dollar and a dream and you will go to heaven but, of course, there are about 100 cop and law shows that illustrate what will happen to you if you do bad things.

  233.  1/100th as strict/Kinki – Really?  Now that’s all I’ll be thinking about next time I’m eating in Japan!  

    Veggie/Nicha – There’s a vegetarian restaurant in Montclair, by my house called Veggie Heaven and they are very busy all the time.  I think they are also in Teaneck, just over the Washington Bridge – you should check them out   I don’t know where you are but one appeal here is they are also Kosher (not hard if you are vegetarian anyway) and that attracts the religious Jewish and Muslim crowd that have pretty limited choices for going out.  Ironically, they all eat at the same restaurants!  

    MU/Obur – It’s a good entry.  The only problem with playing AAPL suppliers is AAPL puts a lot of price pressure on their suppliers and, if you can’t meat low pricing, they drop you like a rock so I don’t consider it a big plus to go with those guys if AAPL is going to be a big part of their business.  That’s why I like GLW, they make glass that everybody wants and needs so if AAPL doesn’t buy it, they will sell it to all the other tablet makers.   I like WFR best in the semi space $11.35 and you can sell 2012 $10 puts and calls for $4 and that’s $7.35/8.68 with about the same upside as MU although you can buy 50% more MU for the same money…  

    Indian Food/Nicha – I like Mint in NYC.  If you want "authentic" I think Angon is really good.  Tabla was nice but they closed – too big and too expensive for these frugal times, I think.  I wish someone would reopen the old Nirvana, that was my favorite by far -sitting on pillows in beautifully decorated rooms – great date restaurant…  

    LMT/Jo – I think the military will get cut eventually.  There simply is nowhere else to go in the budget to make real progress.  LMT is nicely beaten down but make sure they break that 200 dma at $74 because they death crossed back in July and are a long way from "safe" looking.  You can sell 2013 $60s for $6 and that pays for most of the $70 calls at $9 so net $63 is your entry with unlimited upside – at least you get $10 off and, if they have a nice $10 run, you can maybe sell the $90s for $5 and then you are in a very nice spread.

    Gloom/Rev – As I mentioned on the weekend, it was rough getting food out to people over the holidays.  Lots of demand on the system and the snow did not help.  People don’t realize how many restaurants have been closing, which sucks for the Food Bank as we have to line up a new donor or we run short of quotas.  It seems to me a lot of restaurants and other small businesses are staying open just to pay off their lease – we do need a real turnaround soon because any downturn can push a lot of people over the edge and, as you note, society is not quite as strongly supported as most people think.  

    OCZ/That – I don’t generally think about $100M companies that make no money at all.  I don’t follow them, I don’t know anything about them and they can’t be hedged so not the kind of thing I would touch, even if you know a guy who knows a guy who knows something…  Seems to me they are one of 1,000 companies who say they have the best parts for the new tablet craze.  Have you checked out how all the laptop component makers have done in the past 5 years, about the time they became ubiquitous?  There might be a nice wave for this new round of suppliers on tablet-mania but I wouldn’t trust it to last long-term as it is, after all, a commodity business.  

    Metrics/Cap – Thanks, I think these charts say it all:   



  234. Shadow/Resolution:
    I know what screen resolution is, I was refering to this comment that you made:

    January 6th, 2011 at 3:26 pm |
    Resistance at  IWM 78.8 is failing and with1929X180 HD resolution it shows continued programed selling.
    The way you worded this, I thought you were refering to some kind of ratio that indicated selling program.  In my trading window I have a ratio window that is always flashing different ratio’s.  I never understood it and  thought maybe that was what you were referring to.

  235. nicha
    January 6th, 2011 at 1:29 pm | Permalink  
    exec – I have a bcs calculator that needs to be inspected . Can I email it to you? Thanks.
    What do you need it inspected for?

  236. Phil, I didn/t see your answer to my question til now as bedtime in Asia. Ment to say .93 on the short puts. Don’t know where 5.55 came from?
    I have a BCS April 10 bought at 3.48, now 1.44. Sold April 13 at 1.55, now .97. Also sold April 11 puts for 5.10, now 5.55. Any adjustments you recommend? Thanks

     QID/Jomp – Well the sale was net $1.90 so if you take the $1.44 off the table, you basically just have to worry about the $11 puts expiring worthless and they can be rolled but you are saying $5.55 for the QID Apr $11 puts?   I see .90 so let me know what’s up with that before we go any further. 

  237. Gene Sperling, my guess is that it cannot be good.  He helped repeal part of GlassStegall which helped set this whole mess up in 1999
    Friends with Rubin and Summers
    "During Bill Clinton‘s first term as President, from 1993-1996, Sperling served as deputy director of the National Economic Council while the Council was directed by Robert Rubin, who was promoted to Treasury Secretary. Sperling became National Economic Adviser to Clinton and director of the National Economic Council from 1996 to 2000.
    As director of the NEC. Sperling was a principal negotiator with then-Treasury Secretary Lawrence Summers of the Financial Modernization Act of 1999, also known as the Gramm-Leach-Bliley Act. Gramm-Leach-Bliley repealed large portions of the depression-era Glass-Stegall Act allowing banks, securities firms and insurance companies to merge.[2]President Barack Obama believes that the repeal of Glass-Steagall helped cause the 2007 subprime mortgage financial crisis."

  238.  @jromeha – My place in Vegas is called Cafe Moda and its a popular place for locals, especially filipino, which is our basic focus although we’re probably now 50/50 asian and american.   Well, Phil regarding hotter strippers… would not believe (I still don’t) what I’ve seen on our dance floor!   For some reason, many of the professional dancers in town are asian and they come here to hang out after their shift.    Sadly, the economy has affected them also and not so many as before.   Paradoxically, even though I advise no one to open a restaurant, I’m exploring franchising our concept since it is unique and profitable…and now proven.   We’re at the bottom or nearly so, and starting a business at the bottom is the best time.

  239.  KGC/Scott – Well, you do have unlimited risk with limited gain, those plays are great until the one time they don’t work and you find out what unlimited really means (usually a buyout).  

    Once you get burned on one, you become far less likely to do them again.  I don’t understand all the drama to make $300 when you can simply buy the Aug $14/18 bull call spread for $2.30 and sell the $16 puts for $1.45 and your upside is $3.10 at $18 or higher and your break-even is $14.95 with a rollable loss on the put side that’s $1 lower than the one on your spread.  

    I know there are a lot of option sites that love to play these range games but just find good stocks that are undervalued and give yourself a solid hedge and commit to positions and you’ll do better with less headaches.  UP is GOOD – end of story, you have a minimum you can watch and less positions to juggle.  Of course, that’s using August.  If you can wait a little longer, you can go for the 2012 $10/15 at $3.80 and pay for that with the $17.50 puts at $2.90 and the break-even on that is $14.40 with $4.10 upside.  

    Equity Market Neutral/Bob – That’s just quant fund gibberish for setting up a portfolio that is not affected by the stock market.  They used to call it buying bonds but nobody’s going to pay you a 2% fee and 20% of the profits to tell you to buy bonds so they jazz it up and give it a cool name and run a portfolio that is full of stocks and very active but doesn’t do anything.  They arb the spreads (like HFT) and you make your pennies on the market fluctuations.  These are NOT good places to put your money in an inflationary environment.  

    Cramer/Scott – Being a celebrity is a drug for some people, once they get it they will do anything to keep it.  That’s what I see in Cramer – nothing matters to him but being "on".  

    Kentucky/Jo – Don’t forget my precious – Wild Turkey! 

    QID/Jomp – Good.  That’s what I said then, if you take the $1.44 off the table, you are in the puts for .57 and if they expire worthless (and they can roll to July $10 puts if you have to) then that’s all you are out on the trade.  Hopefully, you made some money on the upside and that’s cheap insurance.  If you have upside plays and it’s still a hedge, then I’d spend $1 to roll to the July $9s and wait for the Apr $13s to expire (now .47, not .97) and then you can get your dollar back on another roll and maybe roll back and down again.  That’s the idea with a hedge – cheap insurance but INSURANCE that does cost money when your longs are doing well.  

    Starting at the bottom/LV – I agree.  I have had no desire to start anything for the last couple of years but I do feel now is a good time and I have a couple of new projects in the works.  For one thing, it’s a great time to hire and also a good time to find private investors as there are so few good places to put capital to work.  

  240.  AIG/Phil -10-4 … As a wise man once said about high risk trades that work out, "You could also run through a dynamite factory with lit match and survive but you’re still an idiot."

  241.  Meant for Friday…doh