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Fickle Friday’s Jobs Report

Gallup's U.S. Unemployment Rate, 30-Day Averages, January-December 2010 Trend I don't know what the Jobs will be but I'm betting on disappointment

I had said to Members yesterday that I liked the Jan QQQQ $56 puts at .77 and the Weekly (next week, not today) QQQQ $56 puts at .53 as good ways to play a jobs miss.  My comment in Member Chat was that I felt the ADP figures pushed expectations up significantly higher and now we would be much more likely to disappoint with almost any number short of 250,000 jobs added.  

The key is the seasonal adjustments but there was already some very disturbing jobs numbers in the Gallup Poll, which came out last night and showed unemployment RISING from 9.3 to 9.6% in December and, even worse, the number of Underemployed workers shot up from 18.5 to 19%, just 0.5% lower than we were in January of last year.  

Gallups Job Creation index showed no improvement in December but it is holding +10, which is the best net level we've had since October of 2008.  So we have ADP going one way, yesterday's unemployment numbers were flat and Gallup says things are getting worse.  8:30 will be very interesting indeed.  

While we wait for the number, let's take a look at last week's post to see how things are tracking.   Monday morning I mentioned we liked FCX short at $120 (a trade that was reiterated Tuesday morning) as we felt the run in copper was overdone.  It was a rough week but FCX is down at $116 now so we're on track at the moment of course we took a spread in chat, which was the Feb $119/110 bear put spread at $3.60, selling the Jan $120 calls for $3.60.   That spread is now $4.60 and the calls have dropped to $2.30 for a nice net $2.30 gain already.  

I said that $90 was already ridiculous for oil and we shouldn't go any higher.  We picked up the USO Feb $40 puts on Tuesday morning in Member Chat at $2.10 and those are now $3.70 so a nice $1.60 gain there, which is about the same as if we had just shorted the stock as it dropped from $39 that morning to $37.68 now.  That's where puts are very useful, you don't have to commit as much as a short on the stock, you limit your losses and have a much lower margin requirement.  When the VIX is low, we don't mind paying the premiums as much as we usually do.  

Also in Tuesday morning's FREE post (you can get them delivered to (in progress) you at 8:30 am with a Report Subscription) I also mentioned the QQQQ Weekly $53 calls at $1.38 that was our upside hedge – those are now $2.93 but we flipped back negative on the Qs, as I mentioned above).  I mentioned our FAS and DBC inflation hedges as well as SKS at $10.92 in a spread and they are already up to $11.47 despite a generally weak set of reports from Retailers yesterday.  While I liked my top 1% play on SKS, I was dubious on overall retail numbers, saying:  

I still fail to see where the money is coming from. I mentioned to Members yesterday that perhaps the deleveraged consumers are simply re-leveraging for the holidays and we’ll be right back to tightness in January as people are stunned by their MasterCard bills – especially if it’s combined with rising grocery prices and $50 tanks of gas again.

I closed that post calling TBT a buy at $37.50 and they really took off on Wednesday, hitting $39.30 yesterday and settling at $39, which has been the top of our range but, as I said Tuesday, this time we're looking for $40.  Wow, that's a lot of free picks!  Don't get used to it, these are just a "commercials" with "free samples" this week as we're getting ready to do a marketing launch (and raise prices to pay for the marketing launch) on the Newsletters.  Of course we had many, many more trade ideas in Member Chat, these are just the ones that were published for the general public

Wednesday I explained why I don't like GM but we're scared to short it this early in the cycle.   We talked about China, inflation and trickle-down economics and I suggested a complex trade selling AAPL 2013 $175 puts for $8 and buying 2 SPY 2012 $125./135 bull call spreads for $4.80 which was a net cost of $1.60 on the 2 $10 spreads.  AAPL and SPY had a nice couple of days already and the $175 puts dropped to $7 and the 2 SPY $125/135 spreads are now $5.10 each ($10.20), which is a nice net $3.20, up 100% in just 2 days.  See, these are nice trades to help you keep ahead of inflation!  

Yesterday I picked GLW at $18.98 and CSCO at $20.77 as two examples of stocks we do like to buy (as opposed to the junk Cramer tries to push on you) and if you look at the way GLW took off from the open, you'll see why we don't make a lot of public picks.  This is not Mad Money – I don't want people stampeding in and out of stocks when I mention them!  While GLW held their gains, CSCO did not, which is to be expected when you stampede into a widely-held stock and run it up – try not to do that, please.  I reminded readers of the same FAS and DBC plays we discussed Tuesday and what a difference just 2 days makes on those as we're already cashing them out!   Don't worry, as I always say to Members – I'm sure we'll find something to trade next week….

8:30 Update:  OK, that was a great time-killer.  Jobs were, as I expected, disappointing with just 103,000 jobs created in December, 57,000 less than the official estimate and way worse than the jacked-up whisper numbers from the ADP report.  Ironically, now the number is so bad it's "good" as the dollar is pulling back on expectations that this green-lights The Bernank to drop even more money on the IBanks.  20,000 Government jobs were lost on the State and Local level and that's a trend we'll be seeing all year as Municipal budgets get downsized.  

The MSM is spinning off the headline 9.4% unemployment number as millions of workers have been "adjusted" off the workforce.  How much BS is this?  Are you sure you want to know?  Looking at Table B – In Dec 2009, there was a "Civilian noninstitutional population" of 236,924,000.  Of these non-prisoners (and being in our educational system apparently counts the same as being in prison), 153,172,000 were considered the "Civilian Labor Force" while the other 83,752,000 adult citizens apparently just don't want jobs.  Of the people who do want jobs, 15,212,00 were considered to be unemployed and 15.2/153.2 = 9.9% Unemployed last December.  

In December 2010, we added almost 2M new citizens so the "Civilian noninstitutional population" grew to 238,889,000.  AMAZINGLY, ONLY 520,000 of these 2M new "Civilians" apparently wanted to work and the "Civilian Labor Force" only grew to 153,690,000.  That little bit of very fuzzy math allows the government to subtract the 139,206,000 people who have jobs (part-time, minimum wage counts!) and come up with "just" 14,485,000 Unemployed workers.  Isn't math fun???  That brings the total number of Unemployed people down to just 9.4% vs the 11.4% figure we should have had if the Government had actually admitted that the 1,445,000 people they dropped from the statistics existed.    

Are you shocked?  Outraged?  Nah…  As Orwell said in 1984:  

Day by day and almost minute by minute the past was brought up to date. In this way every prediction made by the Party could be shown by documentary evidence to have been correct; nor was any item of news, or any expression of opinion, which conflicted with the needs of the moment, ever allowed to remain on record. All history was a palimpsest, scraped clean and reinscribed exactly as often as was necessary.

We can look forward to even more BS as Bernanke testifies before Congress this morning.  Expect him to say he expects to keep handing out money for most of the coming decade, which XLF should like ($16.40) but we're not the only ones who can read an unemployment report and sift out the BS so expect a sell-off into the close. 

Have a nice weekend proles!  

- Phil


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  1. reza99 / keyboard — Thanks! Left alt-shift is the ticket and I found it in the control panel too!

  2. Futures = 1268.50
    overnight:  high = 1272.75, low = 1264.50
    fell off on the unemployment miss to the low, then gapped back to the 1268.25 and held like a rock (looks like someone holding it)
    10yr = (1.14)%,  30 year flat
    oil +.46, gold
    NET $  = (.53)%,  dx/y = +.23%
    NET had been down at (.99)% and started rising in the last 15 min, has been between (.99)% and (.69)% for most of the night

  3. Phil / SP 1500 – If volume remains low, what’s the probability that GS with the help of the Bernanke and POMO operations can make this forecast come true?  I see the dollar strengthening with the Eurozone troubles so it prob won’t be via dollar devalaution. 
    NEW YORK (MarketWatch) — Analysts at Goldman Sachs on Friday predicted that the Standard & Poor’s 500 stock will hit 1,500 by the end of 2011. Such a move would represent a 21% total return for investors this year, including a 2% dividend yield, said the analysts. The analysts predicted a three-month target of 1,325 and a six-month target of 1,400. They based their predictions on an expected 5% growth of the U.S economy in 2011 and 8% sales growth. They noted that while the economy was 16% larger at the end of 2010 than at the end of 2005, the S&P 500 was just 1% above the level of year-end 2005

  4. Good Morning!

  5. Looks like bad is good as everything starts moving higher on weaker dollar

  6.  ???  9.4%!    Phil, I’m Calling Shenanigans…..again…..

  7. Oh, and a big Middle Finger to those unemployed who are now unaccounted for…..

  8. Rainman,
    Sure; glad it worked.

  9. Phil/Members
    This morning I had something strange happen.  I bought some TNA yesterday 75.08.  This morning when I logged on, my cost basis was displayed at 76.52.  When I called to inquire about this, the rep told me that Schwab has adjusted to reflect the losses that cannot be taken due to the "wash sale rule legislation that has recently taken effect.
    When I asked about the "wash sale rule"  he told me that it is new legislation that has gone into effect that prevents losses from being taken if a security is bought or sold in a shorter than 30 day time frame.
    I can’t believe this is true, but if it is, day traders are totally f’d.
    Does anyone have the skinny on this?

  10. Greetings Phil:
    Do you mean if we were not at inflection points odds could be higher? Care to give a few examples of when odds of successful short term trades improve drastically?? Like if RUT had punched thru 800 w/other indices holding up?
    Thanks much
    "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."

  11. Good Morning,

    I am looking to transfer my account from Schwab to TOS. Anybody know if there’s a better way that doing a complete transfer (7-10 days!) or having to close all positions and re-open in new account (a lot of commission plus selling lower and buying higher, not to mention if market moves against you in the meantime) an account between brokers?

    Thanks for any input.

  12. Wash Sale Rule
    I guess this is the governments way of turning everyone into long term investors.

  13. mike 
    thank you for the $ updates

  14. exec / wash — wash sale rules aren’t new. I try to avoid wash sales but I did have one this year and my broker (Fidelity) adjusted my cost. The "new" part might be the brokerage having to account for it since my accountant use to ask if I had wash sales and he no longer does. Wash sales can be a royal pain in the ass, especially if you are trading the same instrument in multiple accounts so I just try to say "no".

  15. reza / 50/50 — I think you’re reading too much into what Phil said. I’d trust you would have better chances of a successful trade if you knew which way the market was going, right?  Well if you don’t know (inflection point) then the chances are less.

  16.  Looks like spread of Spanish-German 10Y bond is starting to widen again – see the chart and add GDBR10:IND as comparison.

  17. amatta / acct — I find that closing positions and reopening them is best since the accounting is cleaner (my accountant charges me per 1/32" of paper :) . I usually try to setup an electronic transfer link between the accounts and just move cash as posiitons are exited.

  18. U6 at a high of 16 percent.

    See zero hedge

  19. Amatta,
    as I remember from the dim and distant past when I transfered my acc. to TOS you just give instructions to TOS to tranfer the account from your present broker, giving cash all options and stock you wish to transfer you do not have to open and close positions but better phone the acc dept of TOS

  20. NET $ popped positive into the bell
    NET $ = +.27%,  dx/y (.04)%

  21. @Phil
    Perspective, half full, half empty
    CNN, the cable network that has lost all its credibility, confirms it when they had  this to say about the ‘decline’ in unemployment:
    "Spectacular drop in Unemployment"—to 9.4%, Surprising all economists who predicted a decline from 9.8% to 9.7%. If a drop from 9.8  to 9.4 is spectacular, what would they write if unemployment  fell from 9.8 to 8.8%. 
    There must be a media maven that takes the most insignificant fraction of a fraction and hands out only lies to the news readers and the running tape at the bottom of the screen.  
    The question is: Do they have data that  tells them that whatever they say or print will be believed by those who watch this propaganda?
    Would it be advisable to sell the GM shares and keep the short call. Or close the entire trade? I’m up 3.50 on the stock nearly 10% in a couple of weeks.

  22. wash sale rule/rainman, exec.. this is a royal pain, specially for us trading in options (and SPECIALLY when we roll losing positions).. you incur in gains for tax purposes on the moment you roll/close a transaction, but any loss will be carried on until you COMPLETELY close the entire position.. so you might be carrying a loss for a while while taking gains (and paying taxes for it) as you incur them, and you have the risk to not recover your losses so you might take a HUGE loss as soon as you entirely close the position, and then you can only deduct $3,000 of that PER YEAR. Talk about unfairness.. the thing is that brokers are now being obliged/forced to carry these costs for you as opposed to YOU carrying them..

  23. CERS – selling May $2.5P for 40c, buying the stock.  We played them last year….time to get back in….writeup will be out in the newsletter….

  24. EFA flipped to a negative trend indication on the open, fyi
    so here is what happened last few days on the ParSar for what its worth
    Negative trend indications on :  XLB, XLE, SLV and now EFA
    the biggie to me was the flip yesterday on the dollar,  the DX/ gave a trend change yesterday and is showing a positive trend indication
    The S&P would change to a negative trend indication on a break below 1264.93 and the EEM would give a negative trend indication  below 47.22
    again use it for what its worth, just info and part of the puzzle

  25. Good morning Phil,  look like you didn’t sleep too much last night(first post on 3:47am).  I have a VERY bad trade need your help.  I sold PCLN weekly(expire today) $420 call on 1/3 for $3.00, will be over $20.00 today.  Which week/month/price should I roll to? or sell some put to help.  Cap and others help are VERY welcome.  Thanks.

  26. Wash Sale
    Ok….I received a call back from the Schwab rep and here’s how he explained it to me.
    If you purchase a security and have a loss, let’s say $500.  Then buy back the same security before 30 days, the IRS will not let you claim that loss.  So the way the platform will account for this now will be to add that loss to the new purchase.  Example.  You had a $500 loss in TNA and bought it back the same day.  Your cost basis on the new sale would reflect the $500 loss, and the date of the trade would tie back to the previous trade.

  27. flipspiceland, all — speaking of tickers, anyone know how CNBC determines what runs on their ticker? I’ve asked them but never got a response (imagine that!). That’s the only thing I miss about watching the TOS CNBC feed — don’t know which stocks are pulling shenanigans.

  28. C = 1275.64, F =1271.75
    10yr = (.18)%,  30yr = +.90%
    VIX (2.47)%
    oil +.52
    NET $ = +.29%,  dx/y flat

  29. rav / wash — ya know, I wonder if my accountant uses some other form of accounting standard  for options. He seems to just use simplified accounting as if option transactions are unique instruments not tied to the underlying. I’ve seen comments before like yours and recall something in the tax code like "substantially similar" that I thought might come into play with options, but I don’t pay much attention to it. All I want is to not have to keep up with tax law and for him to go to bat for me if need be (i.e. I just want his signature on my return). No problems so far…

  30. Phil,
    I have a RIG, 2012 $45-$60 Bull call spread. The stock is now at $74. Any suggestions would be very helpful.

  31.  rainman, you should be careful with those matters. The IRS expects you (or your accountant) to do due diligence when it comes to capital gains.. so selling options should be also handled with the "wash sale rule" into account. Since we roll a lot, we definitely incur in this rule many many times, and unless you’re considered a "trader" (which most of us don’t if we hold primary jobs) you need to keep a sheet on those transactions.

  32.  Good morning!  

    Unemployment numbers are nonsense, just math games and I hope other people say so over the weekend.  

    We intended to hold our QQQQ puts over the weekend so it’s gut check time but I have faith in all downside plays looking at the raw data on Unemployment (and don’t forget last night’s look at Gallup and the shockingly poor Retail statistics – I highly recommend looking at last nights late commentary, I wrote about 4 ages, maybe more this morning!).

    Another thing to look at on a lazy, crazy Friday when we are going to ignore the BS up move is Ilene’s contest to win Vitaliy’s new book.  All you have to do is tell us where the Dow will close in 2/28!   

    It is still all about Russell 8-0-0 and we’re still waiting on the balcony with our hearts all aflutter but the bastard isn’t showing!  The other levels don’t seem very threatened and it will be shocking if they are: Dow 11,600, S&P 1,260,Nasdaq 2,675, NYSE 7,935 and Russell 800. 

    JPM picked WYNN, LVS and MGM to goose that sector and KBH beat estimates, giving builders a boost.  Goldman upgraded DO to conviction buy from sell, boosting that sector.  

    LIZ, on the other hand, is a catastrophe and down 15% this morning.  

    We have Leading Economic Indicators at 10:30, so watch that and Fed Governor Duke speaks at 11 and at 12:15 there’s a conference with Fed boyz Evans, Rosengren and Kocherlakota so a veritable quote-fest in store for us today.  At 3pm we get Consumer Credit numbers so this is not a good day to go to the bathroom!  

    Other quick news:

    Excessive bullish sentiment shows that the market has discounted the positives but not the negatives, Randall Forsyth writes. Indeed, Boehner cries, birds drop, and many other signs portend a crisis-filled year – yet stocks may keep rising as long as they’re the only game in town.

    U.S. health spending rose to $2.49T in 2009, a record 17.6% of GDP, partially due to the shrinking of the overall economy. Federal spending on Medicaid jumped nearly 22%; states reduced their Medicaid spending by 10%, thanks to added federal stimulus support. The health law is expected to add 16M people to the program starting in 2014.

    The SEC is investigating whether California violated securities laws and failed to provide adequate disclosure about its giant public pension fund, NYT reports. It is unclear whether the SEC is focusing on the failure to disclose risks and the amount of money needed to cover any shortfall or on possible conflicts of interest in steering investments to related parties.

    Investors skeptical about Illinois’ ability to climb out of its $13B deficit hole get a ray of hope, as the governor and Democratic leaders reach an agreement that would raise the state’s income tax rate. Bond buyers say the state has increasingly relied on debt to pay bills, rather than making deep spending cuts or raising income taxes to increase revenue.

    Best Buy (BBY): December revenue -1.6% to $8.4B. Sees FY’11 EPS of $3.20-3.40 vs. consensus of $3.31. Shares +0.7% premarket. (PR

    Japan’s TV makers brace for the end of a subsidy that may cause sales to drop from 24M in 2010 to 13M this year. Sony (SNE -0.58%), with only 10% of its TV sales in Japan, seems best positioned, while Sharp (SHCAY.PK +0.56%) is most dependent on the domestic market.

    Las Vegas home prices won’t return to their pre-recession peak until after 2032, and other depressed markets will take 20-30 years to recover even in terms of nominal prices, Moody’s Celia Chen says. "These economies were very closely tied to residential construction. Now, housing is over-supplied and that part of the economy will not come back for a long time." 

    Chinese regulators grant approval for JPMorgan’s (JPM) JV with Shenzhen-based brokerage First Capital Securities, and to Morgan Stanley’s (MS) tie-up with China Fortune Securities, allowing the two U.S. firms to underwrite stocks and bonds in one of the fastest growing securities markets in the world. 

  33. ARRY – I have been watching the volume in them and there are some things taking place inside Pharma that makes me think these guys are in play for purchase (write up here).  Their pipeline is long and not too shabby, and their ability to find targets is impressive.  We have been in and out of the stock many times (mrm may still have them).  I am going to pick up a 1/4 entry…..options are not too good.


    CERS is here.

  34. C = 1272.75, F =1269.75
    10yr = (.10)%
    VIX (1.49)
    The Bernack

  35. NET $ flat, dx/y = +.06%

  36. @Phil
    Not sure how you feel or think about being congratulated once again, but the SAM straight out Jan 90 puts you recommended last month, when I asked how high it could go on such thin trading, just came into port.
    That takes care of 75% of my renewal.
    Thx once again.

  37.  Pharmboy/CERS –  I see the put price is drying up this morning, down to about .25.  I’m leaving a GTC order at .40.  Make sense to you?

  38. i see Cramer gave BAC a .50 boost after talking it up last night

  39. Phil / HMY – I’m looking to double down here.  already in May 2011 13/15 bull call spread and sold Jan ’12 $10 puts.   i’m down about 12%.  looking for a new play or should I just reload on this one?  Thx. 

  40. OK, this is getting annoying….CERS and ARRY were goosed right after my post…does Cramer have an account Phil?

  41. rev – absolutely leave at 40c. 

  42. Bernanke, that looks better

  43. rav / wash — are you saying that options are subtantially similar to the underlying? if not, then a roll can’t cause a wash sale.

  44. OK, I am going to start putting prices in NOT to pay over XX to protect us from ourselves…..

  45.  rainman, an option is exactly the underlying..

  46.  rainman, an option is nothing else than a derivative of the underlying, reflecting its value change based on SOLELY the performance of the underlying..

  47. Phil, 
    WYNN, I am getting smoked. I rolled 4 calls from the 102 to the 107 two days ago (sold for 3.50 originally). I still have one 102 that didn’t get filled. What do you recommend now? Looks like I have to go out pretty far… perhaps selling some puts also? Or wait for a pullback? I mean, what is so good (even if they report a 60% increase in revenues in Macau (which were based off of a ridiculously low base as it was when the crises was in full bloom (and LVS was at $3!)  that they can go up 18% in a week?  

  48. pharmboy – don’t want to burst you bubble but that didn’t happen with CLDX. :)

  49. LOL morx….yeah, I know.  They are issuing more shares (5 M)…and it was not the stock ()!

  50. ARNA continues its slow recovery after the FDA debacle; it plans to re-submit for approval of Lorcaserin before end of year.
    Stock currently 2.20
    1/2012  $1/$5  bull call spread currently   $.90; currently $1.20 ITM     looks like a good speculation to me

  51. rav  — I’m no accountant, but I think you’re discounting the time component of an option that the underlying does not have. The value change is therefore not SOLELY based on the performance of the underlying. The underlying does not have theta. But as I said, I’m no accountant and this is exactly why I hire one.

  52. Phil—thinking of doing a stock replacement on BEC— would appreciate any suggestions?

  53. Phil/AMZN
    I did not understand your trade three days ago when AMZN was at 185.40 approximate
    You recommended selling the 185 weekly calls for $2.30 (now $3.04)
    and buying the Jan monthly 190 calls for $1.90 (now $3.40)
    Stock now at $188.10
    How does this trade work?
    Can I still make it work?
    I feel I am not quite getting the simple principle behind the trade and if you can explain in a single sentence …. Would be grateful!

  54. Was sale

    IRS has not defined substantially similar

    Accountants have different opinions.

    Those playing it conservative count all options tied to an underlying as substantially similar and thus subject to wash sale.

    Others argue that different contracts with different strikes and dates are not similar.

    You also have to watch out for the “straddle rule” don’t confuse it with an options straddle – it’s about offsetting positions.

    I now just use trade log and give the wash sale record it generates to my accountant – all 169 pages of it which must be technically filed with your return.

    A lot of people seem to just file gain loss reports – this is technically incorrect as every wash sale must be accounted for even if the gain loss reporting has the same end result.

    I don’t know what happens in an audit I am not an accountant but I would guess that if you generate the wash sale report and that it looks official and the IRS is not going to want to go through all of it to try and find an error. The average IRS agent probably does not know the wash sale for options that well because there are no clear guidelines. It’s hard to find an accountant that is knows it well and frankly the cost of having your accountant do the form is not worth it – much easier to have trade log spit the damn thing out.

  55. Pharm – while i have your ear, a friend of mine works for Inspire Pharms and is contemplating a job change after recent problems with a new product. Do you have any insights into this companies situation?

  56. Interesting Observation
    On assignment of stock TOS charges a flat fee of 15$ I expected to pay only depending what you pay for bying or selling 100 shares say 1.00/ 100 shares. So if you have only 3 putters to be assigned better buy the 3 putters @ 3.00 and if you still want the stock buy 300 shares for 3.00 total 6.00 against your fee of 15.00

  57.  rainman, let’s take TNA as an example. If you sold short calls in Nov 2010 with Dec 2010 expiration, and come December you have a paper loss, at the time you roll to Jan 2011, you are inherently closing a position (realizing the loss) but simultaneously opening a new one on the same underlying security, hence your gain/loss is still based on the performance of the underlying and you will be able to recognize the loss (or gain) until you entirely close any option related to the Russell index.. the time factor is not considered for capital gain purposes in the IRS.. you’re still closing a position and simultaneously opening a new one on the same underlying class, hence your cost basis of the new option must take into account any previous loss. If you do this often, do u know if your accountant carries these things on?

  58. Oh no, Bernanke sounds like he’s about to cry!  

    1,500/Terra – The way Bernanke is talking, I’d say they’re going to pull out all the stops.  What they can’t control though is Europe and if Europe goes down, they will have to let the dollar rise and the markets fall otherwise they’ll use up all their firepower (and there are limits) just trying to keep us level.  That’s a misleading point GS makes about the economy because so much more of that economy is concentrated in a few sectors that are doing well (like GS) whole manufacturing, retail, etc are sucking wind.  The earnings of the top 1%, be it corporations or individuals, are like a cancerous tumor that grow and grow and eventually starve the rest of the body (the bottom 99%) to death.  Until the body actually dies, taking the tumor with it, the tumor’s growth is, internally, considered a great success…

    Wash sale/Exec – Maybe that basis is how Schwab is interpreting their new reporting requirements.  Actually, it’s not detrimental to you as it didn’t cost you more cash, just raised your basis so when you go to sell, you will book less of a profit.  I wonder if other brokers are tracking it like that?  

    Odds/Reza – I don’t have a slide rule for that.  The odds of breaking below resistance when all 5 are over is always slim short-term (as we can see with the struggle for RUT to make 800).  When you are on the line, you could go either way, when all break over, you are probably heading up (the assumption is the last one to break through was holding the others back) when you get to the next resistance, it’s more likely you fail as you have 5 of 5 below and until you have 3 of 5 above, that’s how you play it.  Not too complicated… 

    Wow, Conrad actually talking about cutting Defense.  Good luck with that!  

    Transfer/Amatta – It’s not an all or nothing game.  You can just shut down positions you are done with or unsatisfied with and transfer the cash and just keep doing that over time.  Actually it gives you a better negotiating position because, in a month or two, you can tell TOS you’ll drop more cash in if they lower the rate more.  

    And what Rainman said! 

    GM/Flips – I have zero faith in that stock.  I would also be terrified to hold them into earnings.  If you think I’m nuts, you can grab the 2012 $40/50 bull call spread at $3.20 so you put .30 profit in your pocket and stop out if they drop to $2.20 so you keep $2.50 no matter what (unless they totally collapse) and raise your possible upside to $10 without having to worry about your original $35.  CNN and the MSM are just a total joke.  Thank goodness for the Daily Show or I would have broken a lot of TVs by now as I throw stuff at the screen…

    PCLN/Bob – You say you sold on 1/3, I assume that means you have 2/3 more stock that is naked?  Assuming that’s the case, why not be happy to take some off the table at $423?  I’d sell it all.   Earnings are coming and a miss can easily cost you 10% but the roll is easy if you want to fully cover with, say Feb $440s, which are $27.  You can ditch the stock and sell the 2012 $350s for $35 and buy the Apr $450s for $33 and cover with 2/3 those Feb $440s and then you’ll get a good portion of the upside without too much skin in the game as your worst case is you get assigned back at $350ish.  

    Tickers/Rain – In theory it’s whatever’s registering strong volume moves.  

    Wash – All of you guys need to looking into electing trader status – talk to your accountants.  

    RIG/Datuu – You have $12 of $15 possible so you need to decide if it’s worth tying up $12 to make $3, which does look pretty safe and is a 25% ROI so, unless you think you can do better than 25% in 12 months – not much to do. If you are so positive that there is no way on earth RIG goes back to $60 – you can sell the $60 puts for $4.70 and buy the $75/90 BCS for $5.70 so another $1 and you don’t miss anything if they head higher.  

  59. Income Plays/Phil – You put out the idea a few days back of selling weekly calls covered by monthlies which is very cool. So I ran this on AIG (lower margin plus decent premiums appealling for me) selling the Jan1 62.50, buying the Jan 65 then closed out the short yesterday for a nice gain (in at .55 out at .19). Looking ahead I’m comfortable holding the long call over the weekend but not sure about reloading the short before Monday. Would the strategy normally be to let the weekend pass before reloading or is it situational so you might just roll the position to the next week if you’re confident and want to collect a little more theta? To me the risk of all that could blow up over a weekend doesn’t seem worth that for a short on a weekly. Also, given the volatility (the kind that goes up as well as down, not the VIX kind) I’m considering rolling my long up a strike or two while the stock is up today so my next postion might be short Jan2 65 long Jan 67.5 or even 70. 

  60.  samsz, I keep a log of my trades manually using spreadsheets.. I don’t have to tell you it’s a ROYAL pain in the ass.. how’s Trade Log for this? What’s the cost? Is it user friendly?

  61.  Wow!  How’s this for news they are not telling you:  


    NEW YORK, Jan 7 (Reuters) - A measure of future U.S.
    economic growth fell to a 2-week low in the latest week, while
    the annualized growth rate rose to a 32-week high, a research
    group said on Friday.
     The Economic Cycle Research Institute, a New York-based
    independent forecasting group, said its Weekly Leading Index fell to 128.9 in the week ended Dec. 31 from 129.0 the previous week.
     That was the lowest since Dec. 17, when it was 128.0.
     The index's annualized growth rate rose to 3.3 percent from 2.3 percent a week earlier. That was the highest since May 21,
    when it stood at 4.9 percent.
     "Occasionally the WLI level and growth rate can move in
    different directions, because the latter is derived from a
    four-week moving average," ECRI said in a statement.
     (Reporting by Edith Honan; Editing by Chizu Nomiyama)


  62. Thanks Phil--that’s very helpful on RIG--one thing I don’t understand (never had a bull-call spread before with the underlying doing so well) is when would you ever consider buying back the short call and selling a higher call or is that just stupid?

  63. C = 1273.59, F = 1268.00
    10yr = (1.14)%
    VIX getting whacked (3.85)%, is a Friday though
    NET $  = flat, dx/y (.03)%

  64. Sorry Phil, I wasn’t clear for PCLN trade.  I sold naked weekly(expire today) PCLN $420.00 Calls for $3.00 on 1/3/2011.  I am thinking to roll to Feb. $450.00 call(about even).  Thanks again.

  65.  Amatta/TOS --
    I agree with Phil on that.  There is no way we option traders can be in limbo for a couple of weeks on positions, and I would never be able to sit still during that time.  Better to just withdraw cash and move it over, even in several installments.  This is the way I did it when I moved to TOS in September.  As you close them out in the old account, new ones get opened in the new account.  Doesn’t have to happen all at once.

  66. rav / wash — I think he just carries an aggregate of short and long term losses forward.

  67. C = 1269.51, F =1266.50
    10yr = (2.05)%
    VIX (1.78)%
    NET $ = +.03%,  dx/y = (.01)%

  68. Short term DF trade: DF @ 9.19, Feb calls and puts for $1.30. If called 14% in 6wks (121% annual), or an entry of $8.45 (8% discount).

  69. Here’s my slide rule :)

  70. Oops, adding the image didn’t work.

  71. this Bernanke questioning is incredible
    all these senators want to know i show to get access to more money fro the states, acne the FED help bail
    (not sure why I am surprised)

  72. INSP/morx – wouldn’t touch ‘em with a 10′ pole.  CF is VERY hard to treat…..

  73. sorry for all of the typos
    this Bernanke questioning is incredible
    all these senators want to know is how to get access to more money for the states, asking can  the FED help bail
    (not sure why I am surprised)

  74.  Hi Phil
    Can we get a safe play on SVU? Recent mangmt change causing hicup this am
    thinking buying stk @ 8.7
    selling Apl 8 p @.7
    pays 4.1% div and hit 3yr low of $8.2 in Dec

  75. C = 1269.98, F = 1265.00
    10yr = (2.16)%,  30yr = (.55)%
    VIX (1.38)%
    oil +.57,  Gold +4.50
    NET $ +.36%,  dx/y = (.06)
    Europe is closing

  76.  Shoot … its the wild west out there ….
    AIG – ridiculous pump and dump in process.
    OPEN — same thing  (sold $80 calls for $2; may get to close them today for about $1).
    WYNN, LVS, MGM — flying …. sold a couple of WYNN 122′s for 1.67
    FCX — all over the map w/ big price upgrade .. down, up, down
    PCX — all over the map; been shorting it in the 22.90 range.  short, cover, short cover, what fun.
    COF…. big selloff all of a sudden   (I messed that one up; covered my short from a couple of days ago at a small loss; would have a nice gain if I just left it alone).
    House of Reps is voting to repeal ObamaCare.  Will pass w/ a big margin including at least 20 Dems voting for repeal.
    Too bad the Senate will probably block a similar effort.

  77.  Phil,  
    Wash sale/Exec – Maybe that basis is how Schwab is interpreting their new reporting requirements.  Actually, it’s not detrimental to you as it didn’t cost you more cash, just raised your basis so when you go to sell, you will book less of a profit.  I wonder if other brokers are tracking it like that?  
    I am seeing the same thing, on the WYNN position mentioned above with the roll, they added the loss from the previous sale to the current sale, inflating my (current) loss, so I don’t understand what good does it do for IRS purposes? I am showing MORE losses not less! … Also how does Schwab arbitrarily change the cost basis? Where is the other side of the transaction, it has to be cash no?

  78. rainman/Equity Market Neutral.  Thanks.

  79. Weeeeeeeee!  Done go the banks pulling the rest with them!!

  80. Seems like a good spot to drop a "Just buy the F’ing dips you F’ing idiot" – especially on the invincible again PCLN!

  81. The EEM has broken its ParSar indication at 47.22, so is now giving a negative trend indication, along with the EFA flipping negative this morning
    The S&P cash number is 1264.93, so watching that too

  82. Phil:
    The one hedge I have is TZA. In the ongoing adjustment process I am still holding April $17 puts (in at $2.95/now at $3.85) with the following spread: long July $15 calls (in at $3.9/now at $3.6) and short April $21 calls (in at $2.33/now at $1.21)
    Still have premium in both the sold puts and calls, but a little worried about the $17 puts. Should I move to 2012 yet or just wait it out a little longer? If i look at July I would have to sell more puts than I want to make sense. 500 shares (if put to me) is plenty for this hedge. Thank you. And thank you for the QQQQ trade yesterday-looks like it’s going to work out just fine!


  84. Phil / Employment and QE   All this monthly hope for job creation is frustrating.  As we’ve discussed, the ponzi financed job creation of the past decade was all in unaffordable RE overcapacity and public sector, disguising the ongoing export of jobs to China under the con of ‘free trade’.  No political action has yet been initiated to reverse the manufacturing decline via mercantalism (in fact it’s amazingly still not a political issue – the GOP loves free trade even more than the Dems, so bring on Korea etc.).  So, we need to stop obsessing over this monthly bs fraudulent Gov stats.    Lots of smart bankers understand that the media and political bullishness is all bs and that the Fed is pushing on a string, so it’s not as if this unfolding disaster is a secret. Yet, astonishingly, there is no political pressure for fiscal structural initiatives and mercantalism.
    My investment question remains can QE and pomo as far as the eye can see prop up the markets while the real economy is in continuing decline, net of transfer payments, due to the structural uncompetitiveness we’ve created via ‘globalization’?
    It strikes me that pretty soon there’s going to be an awful dip in mainstream discretionary consumer spending as food and energy inflation, housing equity declines, public sector layoffs etc bite, so shorts in RE and consumer discretionary (ex high end) could be good bets now?  The growth forecasters at the rich investment houses in NY have no feel for the growing despair at street level.  Fewer people are buying their ‘upbeat story’ on tv, they just got their new health insurance bill and they can’t afford it.  How about a short play on health insurance cos which are going to lose millions of members (but not the already sick members)?

  85.  So are we still looking to hold QQQQ through the weekend?

  86.  SAM/Flips – Oh no, don’t congratulate me, I hate that!  LOL, I appreciate feedback, it’s good to know what’s working as I can’t keep tabs on everything.  Congrats on that one!  

    HMY/Terra – Gold finally bouncing off $1,350 on bad jobs numbers (oh, sorry, great jobs numbers) so HMY oversold.  Why not spend .85 to roll to the Aug $10s ($2.30) rather than DD at $1.45?  That gives you +$1 of intrinsic and raises your upside delta and buys you time and puts you lower to the caller who you can take out of .20 and then wait for a bounce to re-sell for .50.  

    CERS/Pharm – Yes, he does, or someone who works for him does.  Way too many coincidences over the years with him including him quoting me from chat on his show (no credit of course). 

    Amazing how little CNBC covers the Bernank!  

    Prices/Pharm – Just make refs in chat while working on the post.  I get the same thing, once I put it on the post it heats up.  Welcome to the world of moving and shaking!   Remember:  With great power comes great responsibility.  

    WYNN/Amatta – I recommend not doing anything on a day JPM upgrades them and sends them up $6.  The time to put on the brakes by selling a put was when they crossed $110, not $120.  With a low VIX, the rolls suck so just be patient and see what happens Monday.  

    ARNA/Humvee – Good idea!  

    BEC/Savi – You mean you have the stock and want to swap out to a hedge?  They are pretty dull but you can pick up $3 for the Aug $67.50 puts and that pays for the $75/85 bull call spread ($4.30) so you leave $1.30 on the table and promise to get back in for net $68.80 in order to not regret missing a possible $10 move up.  

    AMZN/Maya – Wrong week, this week’s $185 calls are .75.  Either way though, how does it work?  You are getting a net .40 credit for the spread and the weekly call premium deteriorates way faster than the monthly so your net is now $1.55 for a very nice win already.  Even with the other weekly (a mistake to give more time as it ruins the whole point) it’s net .36, which is still a profit!  Of course all the figures may have changed since you wrote that so maybe that’s the thing but I guess here you can see the benefit – the trade goes totally against you and you don’t lose, it goes your way and you do great.  DO NOT just apply this to anything – I go to great pains to select combos this is likely to work with as I have to find weekly calls I consider overpriced.  Your job is to remind me to look on Wednesdays.  

    TOS/Yodi – Good point.  

    Wheee!  Down we go.  I love it when a plan comes together!  

    Euro fell back to $1.29 and dollar popped back to 81.35 so that’s the shock we just got.  TBT dropped $1 very fast.  

    Maybe Obama can save us by crowing about the BS jobs report.  

  87. anyone,
    Can you please explain to me the selling of a weekly call and buying the higher monthly?
    That is of course a bearish premise, but how does it work?
    And if the stock goes up ? How do you fix the trade?

  88. Does anyone know why HDB is getting hammered?? Looks like it is getting to be a buy.

  89. BANKS LOSING CASE/Terrapin22 – Thanks; informative article.

  90. Should TSRX get through here, $5, here we come!

  91. Anybody – can you please help me understand how Phil calculates the net of $63 frm below.

    “LMT – 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.”

  92.  The Bernank is live on   …. since CNBC is too busy showing you gold commercials.

  93. 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."


  94. matt
    Was wondering when you would join the fun, The banks tried to support the bernank and now Obama but the BOTS have adifferent agenda. The BOTS will win!

  95. Phil / Banks  I should have added, the structural inability to create jobs will cause RE crash again this year which will be a disaster for the banks.  But, if the Fed buys all their mortgages and loans maybe they’ll still survive?  To short or not to short, that is the question?

  96. Nicha – your net outlay is $3 from the spread, and if the stock is put to you at $60, add the $3 in for net $63.

  97. Inflation / the Bernanke – did you guys see this quote? "The facts are that inflation is 1% including food and fuel.". I think he must be getting away with not having his nose grow several feet longer by omitting the time component. The 1% must be something like per day. Either that, or I’m taking him wildly out of context and totally misunderstanding Dr. Bernanke. :p

  98.  Weekly option time decay trades  - These look really interesting.  I had read some of Jeff Augen’s book on trading options at expiration, which was more about monthlies.  Do weekly options pin to a strike price in the same manner?  Again Phil, what an amazing value that you are going to post these trades on a regular basis.  I saw an email of a guy selling a training course on weekly time-decay trading for about $750.  I checked it out on a trial basis and it was simplistic and nothing as good as Augen’s book which cost about $20.  

  99. Next IWM support 78.15 then 77.57. Phil is right again!

  100. Phil, 
    On the ARNA play suggested by humvee would selling the 2.5 puts for a net credit on the spread of .20 be a good idea or is the stock too risky?

  101. C = 1268.10, F =1265.00
    10yr = (2.16)%
    VIX +.06%

  102.  Nicha, 
    You are paying out of pocket $3 and if put to you you will need to pay $60 so that is your $63…

  103. Thank you, Pharm. One more please. How is the break even calculated?

    “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″

  104. revtodd
    Augen’s books are excellent.

  105. The Bernank just said the fed’s purchase program is buying real assets, not deficit spending, it is profitable "because our cost of funding is so low" and so the fed has remitted $125 billion back to the treasury through 2009-2010.

  106. Phil—took profits on your ANW spread--Tx
    You still like the stock to get back in

  107. Good morning,


    IWM  79.96, 79.33, 79.08, 78.78, 78.52, 78.29, 78.06, 77.38 and  $7 Bil of POMO !!


    I will not be available or trading today; have a great weekend and good hunting !!

  108. From D. Short: The unemployment peak for the current cycle was 10.2% in October 2009. The chart here shows the pattern of unemployment, recessions and both the nominal and real (inflation-adjusted) price of the S&P Composite since 1948.

    Unemployment is usually a lagging indicator that moves inversely with equity prices (top chart). Note the increasing peaks in unemployment in 1971, 1975 and 1982. The inverse pattern becomes clearer when viewed against real (inflation-adjusted) S&P Composite, with its successively lower bear market bottoms. The mirror relationship seems to be repeating itself with the current and previous bear markets.

    The third chart is one of my favorites from CalculatedRisk. It shows the job losses from the start of the employment recession, in percentage terms compared to all recessions since 1948. Note the addition of the dotted-line alternative for the current cycle, which shows unemployment excluding the temporary census hiring.

  109. Wash Rule/Ravalos,
    Well on the rolls I don’t see we are affected, it has to do only with the exact option (ie, same strike and expiration) that it seems is when they apply the rule. 

  110. Nicha, 
    Breakeven, is the difference between the money you spent on the spread ($2.30) and the money you take in (1.45) which you need to make back (.85). So if the stock ends up at $14.85 you collect .85 from the long call and bingo, you are even.

  111. Phil:
    How should this Dec9/2010 trade (below) change now for a fresh entry?
    Perhaps Feb19/23 BCS for $1.6 and sell Feb 20Ps at $1.45?? for a $0.15 entry?
    PS: Any idea why the theo. valu of these options are so diff. than their
    market prices? e.g. Feb19 21C: Market: (1.80-1.90), theo val:0.77 it’s more than double!
    "EDZ Jan $20 puts can be sold for $1 and that pays for the $21/24 bull call spread at $1.10 so .10 on the $3 spread is
     very good protection against emerging markets falling down and that can make a nice commodity hedge as well as those
     guys tend to depend on those exports.  "
    Thanks Much

  112.  LMT / nicha – I’ll guess that Phil meant to type "net $73" since the shares were trading around $73 earlier in the day and the $70 strike + $9 call – $6 short put = $73

  113. Phil / HMY -  how do you get to the .85?  I see the August ’11 $10 call costs me 1.70 when i enter rolling order into TOS.  Thx.
    HMY/Terra – Gold finally bouncing off $1,350 on bad jobs numbers (oh, sorry, great jobs numbers) so HMY oversold.  Why not spend .85 to roll to the Aug $10s ($2.30) rather than DD at $1.45?  That gives you +$1 of intrinsic and raises your upside delta and buys you time and puts you lower to the caller who you can take out of .20 and then wait for a bounce to re-sell for .50

  114.  Income plays/Pak – As I said just above, there’s a lot that goes into the selection of those and AIG is way to wild to be considered.  It has to be a stock that I trust the channel in, it has to be a stock where a silly premium is being paid for the front-week vs getting a reasonable deal on the longer position.  It has to have a reasonable exit strategy and it has to have the potential to roll out into a longer spread should it go badly against us.  I may look at option combos on 100 stocks to find one I like but AIG is definitely not one of them!   Generally, I like to do the trade on Wednesdays and they are 48-hour plays.  

    RIG/Datuu – You do it if it makes sense.  As I said, you do nothing and make 25% so how greedy are you to want to risk money rather than take the 25%?  Also, RIG may fall back if oil collapses or they get named in a BP lawsuit so it’s not one I’d be rushing to press the risk on.  I originally liked it because it was low enough that RIG getting back to normal (around $70) gave us a 20% downside cushion to ride out.  Right now you are benefiting from the low VIX and big run with a good value early on but that may not hold up if they fall back to $65 and they were at $69 two days ago so I’d be a little less anxious to turn a great gain into new risk on a stock that’s already popped over 25% for you.  

    PCLN/Bob – Oh that makes perfect sense then.  See how nice those are – you sell the $420s, they don’t work out and you move to $450.  Do that 10 times and you’re at $700.  8)

    DF/Rain – Flying today!  

    LOL – That was so confusing.   I heard like two intelligent interviews in a row and I was surprised so I looked up to see who was talking and it was Bloomberg TV.  I had accidentally hit the back button on the remote.  Much better now with the idiot drivel of CNBC in the background, not distracting me with intelligent commentary…

    States/Mike – Fed has no way to help them.  Totally outside their charter.  Senators should know that (I am surprised when Congressmen know anything but I still hold Senators to higher standards than Reps). 

    Safe play on SVU/Ban – Yes, go with DF.  Supermarkets looking a little risky.  I would just begin with the put sale and wait to see how it goes.  It’s a great ROI as a naked put sale.  

    Wild West/Cap – It sure is.  Did you see Americans spent $2.4Tn on health care.  By all means let’s let that continue to chew up 20% of the economy (at least you can say we are the World leaders in spending by miles!).  

    Wash/Amatta – How is booking less of a profit detrimental?  We pay tax on profits, you  know…  Anyway, they are only doing what your accountant is supposed to do anyway.  I’m sure if you were to book a profit and re-enter, they would show a lower basis on the new trade and then you’ll see where the IRS gets paid.  

    TZA/DC – April is a long way away, ask me when we’re over 800 for two days in a row but I just put up a brand new TZA play this morning at the end of yesterday’s chat (and the market was kind enough to give us great entries).  

    Banks/Terra – That will be interesting.  

    Health/Tusca – That’s a sector I have stayed away from.  Even now they are voting to repeal the legislation.  Who knows what will happen with all that?  I’ll stick to easier plays like the fact that people can’t afford $8 burritos for lunch when they are $2 at Taco Bell.  

    Qs/MJJ – Not if we get a good price today.  

  115. Phil:
    Thanks for responding to my late yesterday’s questions early today. I just realized that!

  116.  Ravlos / TradeLog -
    I really like it – you import data directly from most brokers – you should check if they have yours before you buy.
    Once you have it set up – its really easy to use. It generates gain loss reports and wash sale reports – giving you everything you need for filing taxes. 
    The first time you set it up is not bad – you just have to make sure that you have the cost basis for any positions carried over from the previous year and also wash sale information from that year – since I was unsure about the wash sale from the previous year – it was easier to import the entire previous year – have it generate the wash sale report for that year – and then create the file for the current year or 2010 – it will take the prior years wash sale info and make sure you realize losses that you are entitled to in the current year – sorry if it sounds confusing – my inability to explain much – process is not bad - 
    Once you have it set up – you are good going forward and its just a matter of importing trades. I think you can run some other reports with it but I have not played around.

  117. that forclosure case, may just be another stalling tactic, not sure
    it will definitely slows things down
    it may end up just making the final problem bigger, the assets are still bad, and they are still marked-to-make believe
    sadly they sill keep dumping the stuff to Fannie and Freddie, us the taxpayers

  118.  Wash sale -
    Just to be clear only applies to losses – when you realize a gain – you pay taxes on it.

  119. Thanks Phil--i am not trying to be greedy, just want to understand the thought process--of when to do what and how to determine that--
    thanks again for the advice and the all of the caution the past few weeks (months?)--i know its not easy or as fun for you to have to be the adult and keep putting the brakes on all the time--but i really appreciate it--

  120. I also would appreciate any info sees on IL and their budget, the deadline was supposed to be yesterday or today
    it has gotten very quiet in the press on it around here lately (maybe I am missing), just curious what they will invent

  121. FAS down 5%.

  122. I just LOVE living in Illinois! Nowhere else can you see straight up the greed and corruption in government, from an entrenched Democratic majority that has bought the voting class several times over. 75% income tax hike to cover our bloated spending habits, and guess what, they are taking the extra the taxes should raise AND SPENDING MORE!!!!

    I don’t mind raising taxes for a good reason, but spending MUST be cut also…..GOD that crap makes my blood boil.

  123. C = 1264.70, F =1261.50
    10yr = (3.43)%
    VIX +1.67%

  124. Phil / DF flying — yeah,  it looks like some excitement (high volume) about closing the gap, figured it was a good time to hop on.
    Too funny. Your comments about bloomberg. I’ll often watch two streams, bloomberg and cnbc, which one gets the volume depends on what the market is doing and how I’m feeling but I definitely lose track of what is being said on CNBC when it has the audio. The difference in the anchors and content is amazing.

  125. Hey Phil,
    if we get 20% today on the weekly Q’s for next week (got them at .55) should we close or still go over the weekend?
    BTW: great call on them.

  126. 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 a lit match and survive but you’re still an idiot."

  127. Well there it are the two biggies on the Par Sar, dollar bullish, S&P bearish
    the Dollar gave a positive trend indication yesterday
    The S&P cash just took out the 1264.93, so it has moved from a positive trend, to a negative trend indication  The trailing ParSar indication for the S&P is now 1278.17, below there it is still in a negative trend.
    I will look for bounces to add a S&P put
    this is on top of the EEM and EFA both moving to negative trends earlier today, and the XLB, SLV, XLE two days ago

  128.  Amatta/wash sale, this according to TradeLog:

    What this means for the stock and options trader is that if you take a loss on a stock or an option, and then buy back that same stock, or an option on that same stock, whether the option is the same month and strike price or not, you have a wash sale.  The same holds true if you close an option position for a loss and then buy the same underlying stock within the 30 day window.
    There is no clarification in the tax law as to how far "in or out of the money" the option is, or what month and year the option expires.  So TradeLog™ simply applies this rule as follows: If the underlying stock is the same, then the option is "substantially" the same.

  129. Here’s the deal, raise income taxes 75% for four years to 5.25%. Then reduce(wink, wink) it back to 3.75%. Corporate taxes going up similarly, and cigarette taxes going up $1.00 per pack. Then, they are going to create an “education lockbox” into which any surplus tax revenues, estimated to be 700M, will be kept to improve schools(we’re one of the worst in the country in education).

    Soothe budget goes from $12b in the hole to nearly $13 billion. The additional tax revenue generated will go to pay the $8b in unpaid state bills and $4B in unpaid pension benefits.

    No cuts in services or reductions in spending as of yet. They just think raising taxes will mKe everything all better and we can continue spending like it’s 1999.

    So look for some short term improvements in our credit rating, then they’ll figure out how to borrow onto of the $13B and we’ll be rig back here in about two years. But they don’t care, the additional spending will allow them to gain reelection because if you don’t vote Democrat, they’ll take all your benefits away. And here, we have such a large nanny population, that wins elections.

    Game over till 2014ish….

  130. UPDATE on Q’s: closed at .75. This is my 1st weekly trade so I want to start with a profitable one. Thanks for a 30% play Phil

  131. Phil/Wash,
    You’re right.  There rolling up the losses from trades less than 30 days which brings your basis up and lowers your profits.  So from the tax point of view I don’t think it makes much difference.  Unless of course that tack on another 30 days every time you re-buy……in which case….if you are a day trader like JR who constantly buys and sells the same security, you will never get credit for the losses.   I don’t think that’s what they do because my broker said the date of the trade rolls back to the previous trade.  I does seem confusing to track. 
    The other thing that sucks is that if you are day or swing trading and have a loser.  It was nice to dump it and forget about it.  Now….you will be reminded of that loss every time you re-buy.

  132. Phil, 
    Could you explain this disparity:
    I see FEB PCLN 450 Calls (3% out of the money) as compared to WYNN Feb 120 C’s (less than 3% out of the money). WYNN is sporting a 2.54 Beta versus PCLN’s (1.05… can this be right? its what Google states). Yet the premium sold on PCLN is 4.7% of the underlying’s current price but WYNN’s having a higher Beta and being closer to the money is only 3.6%…. I know the Black Scholes formula is the way to price them, but lacking that is there this blatant mispricing?

  133. PCLN,
    burn baby burn..

  134. the S&P MA’s  (SMA and exponential, respectively)
    21day = 1254.32 – 1252.97
    50day = 1224.24 – 1225.98
    200day = 1148.85 – 1157.11

  135. Just in case we fall below JRW’s 77.38 and I expect it, the next support levels are IWM 76.80 then 76.50 give or take .10.

  136. NET $ got hammered lower here
    NET $ (.65)%,  dx/y = +.25%
    NET was positive as the market fell, then flipped negative right at the 12:40 time frame and the futures bottomed around 1257.75

  137. Pharm, thanks for the ARRY update, I’ve been watching it wondering when you would re-enter.  I stopped out of our last play at 3.30 with a tidy gain and currently hold none.

  138. Phil,
    When/where do you identify your 48 hour income play with weekly/monthly call/put  credit spreads?

  139. UAW all ready at it again

  140. ban2 — re: SVU — earnings are due on Tuesday, which may help explain today’s volatility, as well as the chunky put premium. The supermarket sector has been full of surprises lately (a comp disappointed recently — don’t remember who it was but it wasn’t pretty) and presumably fears are that SVU won’t do any better. So seller beware in this case.
    Also,  Zeroxzero/lflantheman/ephmen85/Phil/and others offline – thanks very much for your thoughts re: asset management (I’ll get back to offline people very shortly) – much appreciated.

  141. Phil
    How low can oil go, what is the range now?

  142. Damn need to learn how to buy the F*ng dips! What a sham of a market, down from peak to bottom 150Pts…

  143. Phil, 
    What is your feeling on the financials, seems like an opportity was given here to do a short term play on this ruling…?

  144. Mike,
    Funny you should post that UAW link.  I just received an email that read:
    Wave of the future Ford Plant.  This is fascinating.  This is a short video of a new Ford plant in Brazil.  One look ant this and you will be able to understand why there will probably never be another assembly plant built in the USA.  It also demonstrates why more plants are going offshore.  If you listen to the last few sentences you will hear why.

  145.  HDB/Reza – India in big inflation trouble.  

    LMT/Nicha – You are selling puts for $6 and buying calls for $9 so the net cost is $3.  If the stock is put to you and you pay $60 to buy it, your cost is that $60 plus the net $3 you lose on the calls.  

    And what Amatta said! 

    Banks/Tusca – POMO goes right to the banks.  They are the worst sector to bet against.  If the economy goes lower, the banks will be given more money unless politicians wise up and realize they are not using it to help the American people but only to enrich themselves with even more undeserved bonuses.  Yeah, that will happen…

    Wow, look at TZA go.  You forget it can do that but that’s why I love them!  

    Bernanke/Snow – It’s horrifying, they are like pathological liars.  

    Weeklies/Rev – You can’t count on a pin.  I hate to say it but this is mainly based on my ability to pick a value combo and predict a stocks motion over a 48-hour period – there’s no "system" to it.  I just need you guys to remind me to look on Wednesdays.  The concept itself can come from a book but to maximize returns you have to really think them out – kind of like our earnings backspreads.  

    IWM/Shadow – 8-)  Nice end for the week.  

    ARNA/Amatta – Well you are adding the downside risk to save the cash.  That’s up to Pharm, I’m not sure what the odds are that they wipe out.  

    Good article JCaesar but I don’t know about starting a currency war with China.  Never pick fights you can’t win and we’d be coming out with $15Tn in deficits tied behind our backs.  

    Remittance/JVest – What crap!   They buy toxic assets, sell some and remit that.  Out of $2.5Tn they remit $125Bn and he wants a parade?  

    ANW/Savi – Nice.   No, I would not go into anything touching commodities right now. 

    Oh JRW – you missed the fun!   Maybe time to catch the upside bounce off 77.38.

    Unemployment/Pharm – Well picture that chart if you count the real unemployment – much scarier.   

    EDZ/Reza – I did those this morning at the end of yesterday’s post.  

    HMY/Terra – I think I thought you had May $11s.  From the May $13s just spend $1.10 to go to the Aug $11s with the same logic.   Next time don’t let them go that long.   

    No problem Reza – You caught me on a productive day.  

    Thanks Datuu – Now you can come over and explain that to my kids.  8)

    ILLINOIS_jumpIllinois/Mike – WSJ Article

    Spending/Hoss – If only the Republicans were in charge you’d have a surplus budget and pay no taxes and poop lollipops!  Dream on dude…

    QQQQ 20%/Obur – Of course you do.  They hit .85, which is up 55% and are now .70, which is half the profits gone but still up 27%.  What if next week it goes the other way and you take a loss – how dumb would that be?  NEVER turn a victory into a loss and you will improve your average considerably.   

    LOL Pak – That’s a very good one!  

    QQQQ/Obur – Ah good job!  See, you didn’t need me to tell you that…  

  146. David Tepper just filed a 13G for DF. Hoo Ha!

  147. Barney on the tube

  148. pakdog – thanks.

  149. C = 1267.03, F =1262.25
    10yr = (2.78)%,  30yr = (.90)%
    VIX +1.44%
    oil (.56),   gold (3.80)
    NET $ = (.91)%,  dx/y = +.38%
    NET has continued to fall since the 12:40 mark which happened to be the low of the market

  150. Any ARNA play is WAY to risky to me.  I would wait to see what happens with OREX.

  151. exec
    thanks that video is great

    wish I could find a way to have that broadcast so everyone could hear the ending in the US

  152. IWM hit JRW’s77.38 line and reversed nicely is it time for them to start thestick?

  153. Another down day on decent volume, notice the bounce here is on very low volume

  154. Tradelog definitely the way to go on wash sales accounting.  You can avoid wash sales by switching instruments within the 30 days — sell BTU, buy Arch Coal, whatever, if you’re not too picky.  The proliferation of ETFs makes it easier — many of them have similar holdings but are viewed as different instruments.

  155.  WYNN/Amatta – I don’t know what you mean.  You can’t compare two totally different stocks and expect them to match up perfectly.  Keep in mind that every strike, especially on MoMo stocks, is priced on sentiment – based on supply and demand of that strike.   The internal VIX for PCLN and WYNN could be miles different and you’re comparing a $3 out of the money $120 call to a $12 out of the money $450 call – how do you think they are supposed to line up?  If you assume that $12 is roughly proportional to $3 then we could expect the $20.50 PCLN $450 put to = a $5 WYNN $120 put and the WYNN put is $4.50 which is close enough to me not to waste time staring at it.   I think it’s good to know the Greeks but once you understand what they are and how they affect option pricing, they are a total waste of time. 

    When/Kallen – Wednesdays.  We like to sell the weeklies on Wednesday as they only have 48 hours of premium left.  

    Oil/Shadow – $87.50 was goal but they have made zero progress getting rid of barrels at the NYMEX which means we should be seeing $85 next week which means we can stay bearish.  

  156. phil/$125B tip from fed to treasury – The senators are clearly outgunned when discussing finance w/ The Bernank. They are being super polite to him, basically asking him what kind of legislation to write, and then he smiles and says, "it’s a complicated problem" and rambles about how the treasury is getting money too. They seem unable to grasp that the they’re getting screwed on a mark-to-market basis.

  157. Phil / HMY – Thx for your help on the roll.  I had the May 11s.  bought the Aug 10s for $2.30 and bought back the may $15 caller for 20 cents.  will look to resell it later. 

  158. Is TOS also marking the postions according to the Wash Rule?

  159. QQQQ vs. IWM    I have ongoing calendar spreads on both contracts in a small account and I’m thinking of closing one out.   My IWM position has grown bigger due to adjustments and I think that it’s probably better for me to manage since I’m not following the positions that closely.  Am I correct in thinking that QQQQ is a more manipulated index since it has a smaller number of underlying stocks?  Any reason to use it instead of IWM?

  160. What I’ve learned about the weekly options over the last three months:
    1.  They are very volatile and the movements in margin requirements can be surprising.  I’ve been selling strangles on the higher premium (ie. higher volatility) tickers like aapl, amzn, pcln and nflx, and even if the stock expires at the midpoint of the strangle (say nflx at 175 having sold 160P and 190C) I’ve had margin issues due to high volatility in the day or two prior to expiration.
    2.  To me, the risk of entering weeklies anytime prior to Thursday before expiration is just not worth it.  All the riak is at the front end of these contracts, whereas you can intuitively establish a risk-return in a 48-hour period that is more conservative.   Exception would be like pcln this week jumping 20 points in a day – good time to sell options (which I did with a 430P/450C,  collecting 2.20 premium on Wednesday).  
    3.  These trades can go against you significantly within the week and still turn out to be very profitable.  If you are prone to obsessively watching the tick chart on these trades, you will be stressed out, not happy and not feeling confident of your analysis and gain even if these work out for you in the end.   Putting an absolute stop in with the trade, and waiting until Friday to roll forward is a better way to have a life and not get torn apart by the intra-trade volatility.
    4… Better to set a wide bracket and collect less premium with more contracts, leaving room in your margin to scale in or out to manage the trade.   While the premium looks juicy in the nearby strikes, it only takes one jump or drop in these hot momo’s to ruin your day, week and maybe even your account!  Why do all the work to win 9 of 10 times only to give it back and more on the one that got away?
    I’ve done quite well with the weeklies and continue to focus my energy on these simply because I cannot make sense of the larger market logic (or lack thereof) and don’t want to ‘invest’ since I don’t have an investment thesis. I don’t trust the market being propped up by the small number of banks firehosing the Feds’ liquidity into the market.   At least on a swing trade level I feel more comfortable, especially in a 48 hour window, as Phil had mentioned previously.

  161. USO/Oil   Phil, there’s one question about your take on the oil markets that I’ve never quite gotten….why is rolling futures for barrels of oil that I never intend to buy into the future any more manipulative than doing the same thing in the equity options market?  I’m often short puts on stock that I don’t really want and roll at expiration…if the difference the number of options contracts vs. the underlying stock, or the fact that oil is a physical commodity that must be stored.  While I agree that the commodity markets have been overly-financialized in recent years, I don’t see the futures rolling as necessarily corrupt.  
    To me the problem is the way USO spells out their rolls so that they can get front-run/gamed by the traders…if USO changed their structure to give their own traders some flexibility it would be a better vehicle.  If USO can’t do that do to securities law, then it’s a bad vehicle for retail investors…but that’s a whole different issue I think.

  162. CNBC    3D TV
    The issue with video trickery is that for us to survive we needed depth perception. Children especially are learning to use their eyes together and it does make a big difference in achievement. Find a seemingly smart kid that hates reading and you have found lazy eye, crossed eyes, or imbalance of some kind between eyes. They will do better if blind in one eye. This is the same type of effect that low resolution didgital sound has to audio directionality. Where is the danger coming from. Both these issues cause fatigue, headackes, even nausia. This is to me about the same as promoting smoking for relaxation, forget the cancer afterward!

  163. Nice chip shot to pay for dinner:   Sold 50 AIG weekly 62.5C an hour ago for .15,   Risking .15 that the stock won’t move up 1.5 (2.4%) in three hours.   If I’m wrong, just roll, but these kinds of trades seem low risk to me.  Of course, putting another zero behind the trade would sure be nice (one day)!

  164. Phil,
    This is from Schwab, and will apply to equities this year (2011) and apply to Mutual Funds, EFT’s and DRIP’s in 2012 and to Fixed Income and options in 2013.
    The account default is the cost basis method on file for an account. The cost basis method is used to calculate the gain or loss for a transaction, and for any applicable reporting to the IRS. You will also have the option to choose an alternate cost basis method at the time of order entry for that order only. You may also change the cost basis method after the order is placed, and before settlement date.

    Any changes to your account default will not apply until the following day, and any open orders that execute today will use the cost basis method on file before you made the change.

    If you have chosen Average Cost as your account default for all securities, you will not be able to change it online. IRS regulations require you to submit a request in writing for all changes to the Average Cost method. Go to, (publication 538) for more information.

    Different methods may yield different adjusted cost basis profits, meaning that you may want to consider which method best suits your personal tax situation, or contact a tax advisor.

    What Cost Basis Methods are available?

    FIFO (First In First Out)
    Shares you acquired first are sold first. This is Schwab’s default for all securities except mutual funds.

    LIFO (Last In First Out)
    Shares you acquired last are sold first.

    High Cost
    Shares with the highest cost are sold first.

    Low Cost
    Shares with the lowest cost are sold first.

    Specified Lot
    Allows you to assign specific lots to be sold, rather than select a cost basis method.

    Tax Lot Optimizer™
    Lots are selected and sold with the objective of taking losses first (short-term then long-term) and gains last (long-term then short-term).

    Average Cost (mutual funds only)
    Computed by dividing the total dollar amount invested in a fund position by the number of shares held. Shares are sold in FIFO order.

    What is the order of sales for the Tax Lot Optimizer™ method?

    Short-term Losses
    Lots reflecting short-term losses are sold first, from greatest short-term loss to least short-term loss.

    Long-term Losses
    Lots reflecting long-term losses are sold, from greatest long-term loss to least long-term loss.

    Short-term, no gains nor losses
    Short-term lots that reflect no gain nor loss

    Long-term, no gains nor losses
    Long-term lots that reflect no gain nor loss

    Long-term Gains
    Lots reflecting long-term gains from least long-term gain to greatest long-term gain.

    Short-term Gains
    Lots reflecting short-terms gains from least short-term gain to greatest short-term gain.

    Cost Basis For Mutual Funds

    The cost basis method is also used to determine the cost of mutual funds at time of sale.

    Average Cost Basis is the IRS-approved method. Average Cost Basis is the total dollar amount invested in a fund divided by the number of shares held prior to the trade date. Reinvested dividends are actual fund purchases and are included in your cost basis. Based on this cost, you can determine whether a sell represents a gain or loss for tax purposes.

    Unless you submit a request in writing, the IRS does not allow you change from Average Cost once it has been established. To request a change, go to, (publication 538) for more information.

    If you have chosen not to use Average Cost for the mutual funds in an account, any changes you make to the account default will also change the cost basis method for mutual fund positions.

    Fixed Income Amortization/Accretion

    Schwab defaults to the “On” setting for amortizing and accreting the cost basis on your fixed income positions.

    Amortization applies to bonds bought at a premium (above par).The value of the bond is gradually adjusted downwards to 100 over the remaining life of the security until it reaches par on maturity date.

    Accretion applies to bonds bought at a discount (below par). The value of the bond is gradually adjusted upwards to 100 over the remaining life of the security until it reaches par on maturity date.

    To change the setting to “Off”, please contact a Schwab representative.

  165.  Dips/Amatta – Maybe it’s just me but I like to pick A direction and stick with it.  I get dizzy going short and long intraday so I prefer to wait for something to test a top (if I’m bearish) and play it down and then get out and wait.  Not try to jump right back on something going the other way.  Try to get one thing a day right instead of going for 3 out of 5 all the time.  

    Financials/Amatta – Short-term, I think they go down (I think I said that in the post) but long-term, they are my play of the year.  I could care less about the ruling.  As agent Kay once said:  "There’s always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they DO NOT KNOW ABOUT IT!"

    Switching/ZZ – Good advice!  

    Senators/Jvest – That is one thing that really scares me.  It is very clear our leaders don’t understand what they are dealing with, that’s why Paulson was able to twist their arms and pretty much why we’re in this mess in the first place. The way they teach math and business in school these days – I don’t see it getting better either.  

    TOS/Amatta – I don’t think so.  

    QQQQ/Eph – Generally I’d say it’s more manipulated but the way the RUT has run, who can tell?  I like the Qs short now BECAUSE they’ve been manipulated and you have these ridiculously inflated balls in the air like PCLN, NFLX, AMZN, OPEN… and earnings are coming up so it won’t take much to spook them.  

    Good thoughts on weeklies LV.  

    Difference/Eph – Absolutely it’s the numbers.  Also, you aren’t writing phantom contracts on stocks that can’t possibly be delivered – that would be a crime.  It is physically impossible to import 300Mb in a month to Cushing, which handlers 45M max, so 90% of all contracts are total BS.   That would be like you taking options on 10Bn shares of AAPL, even though you know there are only 1Bn shares in existence.  But it’s worse than that as they trade those 300Mb back and forth every day, creating 6Bn barrels worth of transactions on 30M barrels that actually get delivered.  USO has net assets of $1.8Bn so they control, at most 20M barrels and they DON’T move them around from day to day.  It is a bad vehicle because their transparency is used against them which is why I often short it and rarely pick it long but don’t use USO to justify the shell game that goes on at the NYMEX. 

    Risk/LV – er, not to punch a hole in your party but your risk selling calls is a lot more than .15 if they pop.  But, I think it’s a good bet that they don’t.  

    Schwab/High – I imagine they are all going to do it.  Nice business for accountants, who will have to help us decide what’s best.  

  166. lvmoda/weekly…  Great points.  Thanks.

  167. Phil, great call on SLW.  Since it’s down so much, time to pick them up?  Thanks.

  168. C = 1267.46, F =1263.50
    10yr = (2.66)%
    VIX +,63%
    NET $ = (.70)%,  dx/y = +.28%

  169.  SLW/Bob – NO COMMODITIES!  Euro still below $1.30, Dollar 81.30 – not a good combo for metal heads.  

  170. Phil, do you think they stick it today?
    What is your thoughts for Monday?

  171.  Phil, 
    With Gold down almost $100, does ABX still meet your criteria for a B/W for 2012 or 2013

  172. Phi,
    When was there a weekly income play announced on Wednesday?

  173.  Stick/Jabob – Volume is low enough (132M on the Dow) but it’s going to be up to Consumer Credit in 5 mins.  Monday is iffy,. that’s why I said take money and run on Q puts – not worth the risk but we are still aggressively short in $1050P (and running out of time).  

    ABX/Jasu – I’d like to see them test $46 and hold it.  Not too far.  Next weekend I will like them one way or another, $45 is always our buy point. 

  174.  What a joke… the vix is even for the day with the plunge we had from the top…

  175. I bought 2 FEB 1270 S&P puts average price 28.80 (I usually stay away from Fridays late afternoon, but I like the setup)
    I will look to flip one off at 33 area if I see it today,
    I am going to give the other one over the weekend, would take it off today if I saw 37 +
    I am also looking at XLE and XLB puts, but have done nothing there yet

  176.  Weeklies / lvmoda – Thanks…

  177. the 50% retrace of the S&P cash range in the 1269 area, so that was my trigger after having the ParSars flip
    on the dollar got positive trend yesterday and the S&P show a negative trend this morning, so I am looking for short trades

  178. Hi Phil : What do you do when you sell a covered call and  the stock moves up rapidly. Roll to next month or sit tight and be happy with your gain. 
    for example, on 12/21 , in my IRA account, I bought TEVA at $51.29 and sold Feb. $52.50 C for $1.29 ( net $50.00) expecting a return of 5%, anualized of 31 % if stock over $52.50. Stock now at $54.22 and C at $2.94 (net 51.28 =2.56 % or 50% of expected return).Thank you.

  179. Phil / Euro   Your call that the PIIGS pressures would likely make the Euro the first of the dominoes to fall seems to be unfolding and more articles are surfacing on how Japan is reaching crisis point.  Would you play this further with more UUP and possibly short some Euro ETF indexes and maybe Japan (which would be a disaster with any int rate inceases)?

  180. C = 1269.28, F =1266.75
    10yr = (2.73)%
    VIX (.11)%
    NET $ (.47)%,  dx/y = +.27%

  181.  Phil / AAPL – Thanks for the adjustment advice yesterday.

  182. Here we go

  183. I would add 1 more FEB 1270 put, if I could get 26 and under and the S&P was pushing 1275 close to the bell

  184.  Income/Kallen – Wednesday, someone asked me if there was something good and I suggested AMZN.  

    Nov. Consumer Credit: +$1.35B (+0.7% annual) to $2.4T, vs. consensus -$2.5B. Prior revised to +7B from +3.4B. It’s the first two-month gain in consumer credit since June-July 2008. Non-revolving credit +$5.56B (+4.2%), revolving credit -$4.21B (-6.3%). 

    Too funny!  For some reason, the CEO of Fortress Paper (FTPLF.PK +9.6%) – the company that literally prints the euro, and is sole printer of the Swiss franc note – is bullish on QE: "very, very busy these days." He says they’re trying to add thousands of workers, and passing through rising costs of key components like cotton. (video, 4:40)

    Bernanke sounds a bit more optimistic about the economic outlook during congressional testimony, but offers no hint that he will back off the Fed’s $600B bond-buying program. “We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold," he tells the Senate Budget Committee

    A drop in the unemployment rate may not be as good as it seems, Felix Salmon says, joining a school that notes that long-term unemployed are still increasing in number, and discouraged worker numbers are rising pretty quickly.

    11:13 AM The Fed’s POMO garners it $7.2B in short-term Treasurys, of $24.168B offered by dealers. Treasurys added to gains so far today, with the 10-year yield dropping another couple of basis points: -0.04 to 3.35%. 

    11:42 AM In the Q&A follow-up to his testimony, Ben Bernanke says don’t worry too much about muni bonds: "We’re not seeing extraordinary stress." The Fed’s got "no expectation or intention to get involved in state and local finance" despite some authority to do so. And don’t panic on inflation: "The facts are that inflation is 1% including food and fuel." LIES!!!  

    Investors ignore today’s historically low dividend yields at their peril, an ominous signal for anyone investing for the long term, Brett Arends writes. "Dividends matter. They may be the one aspect of your return that you can rely on. And right now they are very thin on the ground." 

    As the VIX (VXX -1.0%) falls through multi-year lows, bond market volatility plumbs new highs. Trading in Europe’s most liquid bond market, German bunds, was halted for a few minutes after today’s NFP report triggered a "volatility interrupt." Currencies see plenty of action as well. 

    What is it about Canadian leaders that try to take away the punchbowl while American officials spike it (I, II)? Echoing comments from the PM, the Finance Minister, and the BoC, Canada’s Bankruptcy chief warns of those with too much debt facing the “harsh realities of insolvency.” 

    Whatever happened to the “Texas miracle,” where the "modern conservative theory about budgeting" – never raise taxes, and budgets can always be balanced by cutting waste – supposedly worked, Paul Krugman asks. Texas may now have a $25B hole to fill, so "if the theory can’t make in Texas," he says, "it can’t make it anywhere." 

    Fed Governor Elizabeth Duke: Believes evidence is backing up her expectations of recovery momentum. Expects strengthening consumer spending and business investment in equipment and software, and subdued inflation because of resource slack. More cautious on housing. QE2 "not a panacea," but worth it.

    As the fight heats up over extending the debt ceiling, 60% of private businesses and their lenders don’t want to see an increase out of fear it will hurt the economy, according to a new poll. Small businessmen may feel that the reality of limited borrowing "has eluded the federal government and it is time to start owning up.” 

    The 10 companies expected to be the most profitable in 2011, as calculated by 24/7 Wall Street: XOM, MSFT, CVX, JPM. PFE, AAPL, BAC, IBM, WFC, WMT

    Dean Foods (DF +7.3%) shares skyrocket after news that David Tepper’s Appaloosa Management disclosed a 7.35% stake in the food and beverage company with the SEC. Tepper is known for making a fortune scooping up financial stocks on the cheap. DF was the worst performing stock in the S&P 500 in 2010, dropping 51%

    Three lunchtime reads:
    1) The Japan myth
    2) Market history and the debt ceiling
    3) Three stocks that are cheaper than they look

  185. HGSI – Sumpin’ is up.  Big jump mid-morning.  Feb $25s for 1.42.

  186. Japan Myth / Phil – Yes! Thank you for that link, Phil – as an epidemiologist/biostatistician, I love seeing people understand denominators.

  187.  Phil, 
    I closed half my 118 DIA puts on the 1050 yesterday anticipating a better report. Would you reload instead on the QQQQ’s (from today) which I bought and sold at .78 and 1.02… Now .70? 

  188. thanks for the Euro printing article

  189. Phil / Foreclosure cases in Mass.     Maybe a good thing for the banks?  May keep several million homes off the mkt, slowing the price decline, while banks extend and pretend on these mortgages, not reporting big hits to EPS?  Unclear how the accounting works for the banks?

  190.  Calls/DFlam – As with everything, it depends.  With the stock up $2 it’s not really a big deal with 2 months to go.  They are up $2 in 2 days – it’s way too early to react and, keep in mind, the worst-case upside is you are called away with your profit so there’s no pressure on you.  

    This is a pretty intense video on Fox, especially part 2 on MON and NWS.   Here’s a good general overview of how the news works.  How did this happen?   Here’s the history of recent media.    

    UUP/Tusca – If there’s more evidence of things cracking, right now I am very cautious – look at the Nas – fully rescued already.   How can you bet against this kind of control?  

    QQQQs/Amatta – Yes, I like the Jan $56 puts again, now .73.

    Accounting/Tusca – What accounting?  Whatever they want to say seems to be fine. 

  191. Spreads – Phil, as ever, thanks for the comments and insight regarding spreads. Simpler is always better. KGC can wait for now.

  192. How about that BS of the German bond halt, thanks for the link
    amazing, is the whole game bought and paid for?

  193. YEAH! 

  194. AAPL moving up on very low volume, maybe we will get a retrench next week

  195. Pharm — Showing off your take on the day?

  196. Have to run, take care all

  197. So, Pharmboy, are you still feeling positive on CLDX? I guess i need to get in deeper or get out.

  198. yeah, $4 is all..CLDX, still feel good about them, just have to wait for the offer price.  The Ps are ITM by a few cents…I believe it was a credit spread….

  199.  There’s an image I didn’t need Pharm!  

    Well I guess I was right about waiting for something to happen this week – on the whole, we’re righ back where we started except note the RUT fell from leader to laggard:

  200.  Ah well, it was a good week on the whole.  Have a nice weekend everybody!

  201.  AAPL went out with a new high!   

  202. Nice weekend all.

  203.  Buy the banks on the foreclosure ruling dip, Jim Cramer exhorts, doubting that the ruling from one of the more liberal courts in the U.S. would be repeated elsewhere. He reiterates his call on Bank of America (BAC -1%) as one of the best ways to play an economic rebound. JPMorgan Chase (JPM -1.7%) is the Dow’s laggard even after CLSA’s Mike Mayo raises 2011 and 2012 estimates on the bank.

  204.  Barry’s summary for the week:  


    1) Unemployment rate falls to 9.4% (CAVEAT, helped by 260k drop in labor force)
    2) ISM services best since May ’06
    3) ISM mfr’g best since May ’10
    4) Euro Zone PMI highest since Apr
    5) Euro Zone Economic Confidence highest since Oct ’07
    6) 16 yr high UK PMI


    1) Dec payrolls below expectations but upward revisions helped to offset (ADP an anomaly)
    2) Dec Retail comps below expectations
    3) New high Portugal yields, 10 yr high in Spanish yields, Italy and Belgium under pressure too all ahead of supply next week
    4) CRB food subindex and Journal of Commerce industrial commodity index both at record highs
    5) Inflation expectations in 10 yr TIPS touch 1 year high
    6) Euro Zone CPI up 2.2%, most since Nov ’08
    7) Brazil CPI hits 25 month high
    8) Chinese mfr’g PMI #’s at 3 mo lows (but soft landing?)
    9) UK services index lowest since Apr ’09

  205. And on this note- y’all have a terrific weekend!


  206.  The legal question we asked yesterday “Can Banks Foreclose on Mortgages They Do Not Own?” has now been answered.

    No, they cannot — at least not in Massachusetts:

    “U.S. Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real-estate law. The ruling drove down bank stocks.

    The state Supreme Judicial Court today upheld a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages, which he said were transferred into two mortgage-backed trusts without the recipients’ being named.

    Joshua Rosner, an analyst at the New York-based research firm Graham Fisher & Co., called the decision “a landmark ruling” showing that at least in Massachusetts a mortgage “must name the assignee to be valid.”

    “We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph D. Gants wrote for a unanimous court.”

  207. Barry’s take on NFP:

    By now, you saw the headline data: Unemployment fell 0.4% to 9.4%; NFP increased by 103,000 in December.

    Let’s take a closer look at what the data suggests:

    • Unemployed persons decreased by 556,000 to 14.5 million in December
    • Long-term unemployed (jobless for 27+ weeks) was unchanged at 6.4 million (44.3% of Unemployed)
    • Average workweek was unchanged at 34.3 hours
    • Temporary help trended up in December (+16,000); Note this sector is +495,000 since September 2009.
    • Average hourly earnings increased 3 cents (0.1%) to $22.78.
    • These 3 aspects of NFP — hours worked, temp help and wages — are the leading indicators with in NFP, which overall tends to be a lagging indicator. They were at best modestly positive.
    • Revisions continue to be positive: October revised from +172,000 to +210,000, November revised from +39,000 to +71,000.
    • Labor force participation rate slid to 64.3, accounting for some of the U3 rate change to 9.4%; U6 fell 0.3% to 16.7%
    • Biggest sector gainers were leisure and hospitality (+47,000), health care (+36,000) and professional services (+16,000)
    • Labor force participation rate slid to 64.3, accounting for some of the U3 rate change to 9.4%

    The Labor market still faces several major headwinds:

    1. Post credit-crisis recoveries tend to be weak ion terms of both GDP and job creation. This recovery is no different;

    2. States and municipalities face growing budget gaps; they are freezing hiring and cutting headcount.

    3. The Residential Housing market remains somewhat over-priced, with bloated inventory and a disinterested pool of buyers.

    4. Consumers continue to deleverage and add to savings. The Paradox of Thrift has put a cap on the slowly improving retail environment

    All told, this was a mixed employment report, but within normal parameters for this recovery.

    The silver lining is the Fed has no cause to take their foot of the QE accelerator . . .

  208. Phil – Don’t you think that ADP blip is due to the seasonal hiring by retail?  I think Feb/Mar is going to be where the poop hits the fan.

  209.  Thanks for the news & great calls Phil. Have a good wknd.

  210. Football predictions
    New Orleans 27 Seattle 10
    Baltimore 20 KC 17
    Indy 23 NYJ 16
    Green Bay 31 Phily 14

  211.  Phil, Belated thanks for the review of the currencies. I’ve been too busy this week to add to the discussion, hopefully things will slow down and I’ll have a little more time to play

  212.  Phil – thanks for keeping it real here and entertaining. One reason I tune in everyday is for hard core stuff like what you put up on the media and nuggets like this one here:
    As agent Kay once said:  "There’s always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they DO NOT KNOW ABOUT IT!"
    I’m learning a lot about trading, too, selling premium, cutting losses, not being greedy, trailing stops once you’re up 20%, going in hedged, etc, etc.  (cleaned house and made over 15% this week, which for me is a freakin vapor trail). How cool is that?

  213. Let the speculation commence: Verizon’s just sent out invites for a mysterious press event on Tuesday, hosted by Verizon Wireless President Lowell McAdam at New York’s Lincoln Center. That’s right — a huge event in New York after CES. Obviously the natural speculation is that this will be where the long-rumored CDMA iPhone makes its appearance, and it definitely feels that way — but we suppose it could also be any number of other things, and it’s definitely odd that Verizon’s in charge and not Apple. 

  214. Wow.  Cramer really trying to lead his sheep to slaughter with BAC.  He should be ashamed of himself with all that they are facing.  They are definately NOT a given to go up.  Tells me we have a top for the moment.  I would be suprised if we go down all the way till oe but I do think between now and then we will visit a period below here.  Good weekend to all!

  215. IWM 78.51, Hmmmmmmmmmm……………..missed it by .01 !!

  216.  10 reasons to own BAC according to Cramer. More importantly read the comments below by the readers. I am surprised CNBC has not pulled the comments out of there.

  217.  lvmoda — great trade on  AIG !   kudo’s to you.   Wish I saw your post at the time.

  218.  Cap
    According to Cramer the opportunity in the market today is "just as good as it was 22 month ago"

  219. Phil / Options study – may be of interest to you and others.  In Barrons.
    The study found anyone who bought a put option on the Nasdaq-100 Trust ( PowerShares QQQ ETF, ticker: QQQQ) that was 2% out of the money and expired in six months, and each month sold a call option that was 2% out of the money, realized returns of 185% over 11.5 years, compared with a 3% loss for the un-hedged QQQQ.
    Investors who modified the collar’s put and call strikes in reaction to market conditions dramatically increased investment returns. The active collar portfolio gained almost 290% during the same period. The full study, sponsored by the Options Industry Council, is available at

  220. Ivmoda—tried your AIG play—great one Tx

  221. Morning Phil, hope you are enjoying Saturday morning with  family. I have a question when you get a moment. I had the T buy/write that we discussed on member chat 5/20 or 5/21 of last year. Bought T $24.66 and sold 2012 25 straddle for $7.67. The other day the calls were assigned and I am now left with the T Jan12 naked puts on  which I’ve made approximately 72%.  So, I wanted your opinion:   rebuy the stock at current $28.85 and sell Jan 13 30 calls for $5.40, and keep the Jan 12 25 putters?  Thanks for the guidance.

  222.  nicha – I don’t see any comments on Cramer/CNBC’s 10 reasons to own BAC article. Maybe they already pulled them?

  223. FCX  (Freeport-McMoran Copper and Gold)……….Hello everyone.   I’m interested in the opinion of any members, and of course Phil, on FCX.  I hold it as a short, as does Opt and others.  Cramer’s pushing it as a long, and it got an upgrade last week.  They report earnings Jan 17th and have a 2:1 split slated for Feb. 2nd.    Is this stock a good short?   It was the only holding in my PF  that lost money for me last week.    Anyone’s opinion.   Tx. 

  224.  jvest – I still see the comments.

  225. Phil – As always I love the way you write and your responses to questions put to you. Your way of explaining the facts has opened my mind to think differently!  
     The following questions are in response to the answer you gave ‘exec’ on Thursday the 30th: 
    1) How much is competing related to education?
    2) Do you think it is better to send kids to private schools vs. public schools?
    3) What happens to people who have no skill set or are unwilling to develop them?
    "..It’s not so easy for everyone to adapt to compete in this globally cut-throat environment but we all have to think long and hard about our skill sets, our position in life and our goals and make sure we are ready to compete in the 21st Century or, like Exec’s sister-in-law, we will find our businesses chewed away piece by piece as our work goes to the low bidder overseas."

  226.  Gee, I had no idea that porn and real estate were positively correlated!

  227.  Iflan,   as you probably know FCX is driven mostly by metals futures as a group, which has swooned in the new year.  From what I’m reading and researching, many are expecting this decline to be one of the last entries before a blow-off top in metals later this year.  
    It’s such a tough call in the short term however, since there are so many countervailing forces at play.   The Eurobond auctions from Italy, Spain and Belguim are expected to show badly next week amidst rising CDS rates, further deteriorating confidence in the Euro.  But, do investors move to the dollar or the fiat haven of metals?  
    Remember, most banks are limited to currency trading so I expect the movement to strengthen the dollar and weaken metals, especially with rising interest rates in China reducing their industrial demand growth.  FCX issue specifics I’m not up on, however you might consider the short-term macro environment and how much FCX is tied to those influences.  FWIW.

  228.  Just got The Atlantic Monthly in the mail and the feature cover story is The Rise of the New Ruling Class:How the Global Elite is Leaving You Behind.  (Link added)  From the opening of the article:
    "What is more relevant to our times, though, is that the rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves."

  229. HRB/Phil: Looking at jumping into HRB.  Like it as both a fundamental and technical play since it looks like it hit all time lows and will break-out of an inverse H&S at 13.00.
    Was thinking selling Jan 2012 Puts and calls at 2.25 and 2.45 for a net $8.08 entry on the stock and collecting a 4.7% dividend yield, further dropping the net by .60 a share.  Any thoughts would be appreciated.  Thank you!

  230. One of the innovations at the Las Vegas CES show. Just thought it was interesting.

  231. Good morning!  

    J-E-T-S, Jets, Jets, Jets!  OK, I got that our of my system.  Now it’s on to New England where we got our butts kicked 45-3 last time we played the Pats so let’s just say expectations are subdued at the moment (especially the way Sanchez was choking last night).  

    Currencies/Dmci – Yeah, I’m looking pretty clever just 10 days later, aren’t I?  I certainly didn’t expect the AUD to fold that quickly but you can see why I eliminated CHF right away.   Europe is still downright scary….

    Hard core/Pak – You have no idea what a relief it is to find an outlet for the way my brain works!  I always felt trapped as a consultant because nobody wants you to be funny when writing up a competitive analysis, efficiency review or even (for some reason) a PPM.  Nice job on the week – that is way cool!  

    VZ/StJ – It would be interesting for VZ to be the ones to announce a change in AAPL’s products although maybe they don’t consider CDMA a product change.  Here’s a video of the rumored stainless steel IPhone that is supposed to come out on 2/3.  

    BAC/Matt – I think they could be a winner as they are clearly getting a pass on all their sins and much loving from the Fed but why bet on them directly when you can make nice money playing XLF without having all eggs in one basket?  BAC is 15% of XLF, that’s plenty of exposure to me.  They also have JPM (9%), WFC (9%), BRK.B (8%), C (6.5%), GS (5%), USB (5%) and AXP (3%) so not likely to go voom but a group that you don’t mind adding to if they collapse because one of the components take them down.  This has always been my logic with BAC, plus the fact that I think C is a better gamble anyway.  

    Cramer/Nicha – I think Cramer has some real problems in his trust account as he’s pushing those hard.  Also, if the banks recover, then he doesn’t look like such a tool for steering people into them in 2008 so I’m sure he wants that to happen really badly.  

    Cramer/Yshen – Well if the market opportunity is just as good as 22 months ago, we can all retire betting on NFLX $8,000!  

    QQQQ/Terra – Well, that is very cool but it’s running through the 2000 crash so anyone playing the short side would have cleaned up.  If you look at the chart on pg 33, you’ll see all the money was made pretty much by 2004 and followed by 6 years of drift.  As with any strategy – it works until it doesn’t and had someone sold into the excitement in 2004, they could have done miles better switching to almost anything else.  That’s why we switch strategies depending on market conditions – it’s nice to find plays you are comfortable with and like executing but don’t bring a knife to a gun fight – that sort of thing…

    Speaking of volatile markets, this is a very useful chart from Bespoke:  

  232. Ugh Phil, REALLY?? Jets!!?! Ryan is a good coach but I cant stand him and look forward to Brady kicking your butts :) Besides, let’s talk about my SEAHAWKS!!! Did you SEE that Lynch run!!?? I was over watching the game with a bunch of Saints fans….. I had a good time :)
    YODI – Sorry, couldn’t help posting this link since it was on the front page of Yahoo news. That would be in the SAFE city of Acapulco.

  233.  Jets = toast
    The only question will be burned or just browned?
    Besides, it’s a Bear year (as he crosses his fingers and lifts his hands in prayer) :)

  234. Jets – Maybe next year….sorry……;)

  235. What Mr. Schieffer left out of his written text but stated on his show, was how the talk show types "fan the flames for huge profits".  I think that needs to be a big part of the discussion when discussing "new technologies"…….

  236. Phil/Sanchez, He made the play at the end though that gave the win.
    Looks like Jets are the contrarian play +9 @ NE

  237. Oil up 1.70? Not sure what that is about…. Phil, they havent rolled many barrells have they? Seems like it should collapse sometime in the next week or so.

  238.  OK, now where was I?  (busy weekend!)

    T/Jbur – So you are now short T at $25 with the cash in pocket from the caller?  You already have a commitment to rebuy at $25 and you can get paid $2.60 (almost 10%) more to roll that obligation to rebuy at $27.50 in 2013.  That leaves you short on T at the moment and no reason to buy or cover unless they pop over perhaps a $1 trailing stop as that would cost you .45 as the the 2012 $27.50 calls would gain .55 before you sell them and maybe more if you buy and the momentum continues up.  As long as you stay short, you outgain your putter on the way down and maybe you buy lower and sell $25s or maybe you buy higher and sell the $27.50s but either way you have another $3+ coming (another 10%) so you can afford to be patient.

    FCX/Iflan – I’m for taking the money and running ahead of split and earnings.  How can earnings not be good with copper and gold so high?  After that, they’ll make a good short again.  Our short entry was $119 and $120  and a quick ride to $115.50 has now popped back to $117.50 so over that is a problem anyway.  If you are inclined to ride it out – dollar over 81.50 (which we should have tomorrow as EU news still sucks) is a good watch point. 

    Questions/Nicha – Education is very important.  I’m sure you’ve heard the Chinese are graduating more people with masters in engineering in the next 4 years than we have engineers total in the US.  Unfortunately, the Neanderthals took over government many years ago and decided that funding research, science and education wasn’t the government’s job and now we have a generational problem that will be very expensive to fix, assuming people with the will to fix it are ever considered "electable" again.  On question 2, I think public school is better for developing good social skills but, due to our crap education system – you do have to be realistic and either move to where there’s a good school or opt for private school if you children aren’t being challenged appropriately.  My kids are 8 & 10 and both in advanced learning programs, which are good through grade 8 but I’m worried about the regional High School here and have to make a decision next year most likely.  I love my home and I love my neighborhood but that isn’t going to help my daughters compete for a job when they are 40 in 2040 – it sucks having to make decisions now that will affect my children for the rest of their lives but it’s the responsibility we take on as parents…  Question 3 is a problem because we don’t clearly lay out to children what happens to them when they don’t step up and learn.  My kids are well aware of why school is important – it’s not an option not to study hard and do well but so many kids (and their parents) seem to think "things will work out" regardless of the choices they make and that’s the fault of education and the media that keeps up the illusion that America is number 1 no matter what and everything has a happy ending, etc.  No one in government is willing to tell people the truth or ask for sacrifices so we just keep on heading for that iceberg because no one wants to rock the boat.  So the outlook for people with no usable skills – pretty bleak as the World is filled with those kinds of people who can pretty much low-bid their services.  

    Porn/LV – It’s just discretionary spending.  Anything that requires discretionary income from the masses is in trouble.  

    Elite/Rev – Finally getting a little traction on this issue.  Brewing class warfare?  

    Deflation/Pstas – Right now the consumers need it or things are going to get ugly. 

    HRB/Kinki – I’ve liked them since the big drop in October as I thought it was an overreaction.   In fact, they were one of our dividend plays back on 10/23 (see there for why I like them).  Our net was $5.98/$6.74 on the $7.50 spread so easy to love at that net, yours would be $8.08/10.29 so quite a bit riskier.  Perhaps consider that buying the stock for $12.78 and selling the 2013 $10 puts and calls for $6.20 is net $6.58/8.29 so you can buy 50% more and collect 50% more dividend than the 2012 spread with a 20% lower net and still a nice 50% profit if called away at $10, which I like enough to highlight.  

    Telso/DClark – Many years ago, when blue-tooth first came out, I was working with a Korean electronics firm on a design (my concept, not consulting) for a wireless home entertainment system.  Interestingly the fly in the ointment was the wireless delivery of electricity, not to the main system, as we accepted the need for a plug there, but for the speakers which needed wattage to function.   I was researching Nikola Tesla, who seems to have developed some wireless form of delivering electricity 100 years ago and had demonstrated the technology and gotten investors and was building a tower on Long Island but Edison, JP Morgan and others drove him out of business, bankrupted his company and destroyed all evidence of the system because, if you can deliver electricity without wires – how do you charge people for it?  

    Anyway, I was unable to dig up any serious way to solve the back-end speaker problem and the financial guys were all of nothing Japanese so the project was shelved despite what I thought was a good idea to develop a pad that would be able to universally charge small devices – which is where our research led us as a feasible stage one project we were pretty sure we could bring to market.  Now I see those things all over the place and people are always sending me Emails saying "Isn’t that yours?"  Unfortunately, it’s not but I think now the wireless home theater is very doable as this induction system is good enough to use for wall plates near the speakers so if anyone wants to have fun in this area – let me know!  

    Jets/Jrom – I’m not such a fan that I am going to get all delusional about next week.  Sanchez still chokes under pressure and the rest of the team is capable if he gets it together and if he can relax, they can put up some numbers, even against the Pats but that’s a lot of ifs and it won’t stop the Pats from scoring but the Jets only chance is winning a shoot-out.  

    Poor Acapulco!  

    Giffords/1020 – Tragic.  The guy shot 19 people?  Odd as he didn’t seem like the profile of a guy who should be owning guns to me.  You are right, when the media makes the hatred of any class of citizens, even bureaucrats, seem acceptable, they blur the line and there’s always one or two marginal people who can be "stimulated" into action, which is convenient since the people who push the button get to deny any knowledge that there was a weapon.  

    Sanchez/Jomp – He still threw that last ball high!  

  239. Oil/Jrom – Must be up on some news but probably a good futures short off the $90 line with very tight stops.   Dollar at 81.43 so that’s not why oil’s up and they have 2 weeks to dump 250Mb on the Feb contracts with March already fat at 237Mb and Apri at 101Mb and May at 80Mb so 400Mb in the next front 3 months already means net 88Mb REALLY need to be dumped completely (as opposed to rolled) and really 50Mb more to ease the pressure.  They went from 301Mb to 288Mb on Friday so that’s 13Mb/day which is exactly what they need for the next 10 days but then MLK is a holiday so a bit more pressure on 9 days.  We need to keep track.  

  240. HRB/Phil: Ahh.. yes, your play, as always, is much safer.  I will go with the lower strikes.  Thanks so much for the advice!

  241. Phil – I’m just waiting for one or two of these "marginal people" to take out Paulson, Blankfein, or some other dirtballs from GS or JPM….REALLY surprised it hasn’t happened yet. Guess I can still hope…lol

  242.  FCX –  I just came across this about commodity index funds:
    "Another problem weighing on commodities is the pending rebalance of commodity index funds. The DJ-UBS Commodity Index and the S&P GSCI Index, with about $200 billion in commodity funds tracking those indexes will be rebalanced between Jan-7th and 13th. Basically the indexes try to maintain a specific ratio of commodities in the index. In a year where a commodity like copper has rallied +50% the indexes have to rebalance to bring copper representation back down to the correct ratio. This means the funds with $200 billion tied to these indexes will have to sell copper, oil, silver, etc in order to match the rebalanced index structure."
    A good shorting opportunity for copper and other commodities this week or is it large enough to have an effect?  

  243.  Jets win; they need to thank Cromartie for that kick return; b/c Sanchez passing is pretty sucky.
    More important, PACKERS Win !   On to Atlanta.
    AZ Congresswoman shooting; judge, others killed.   pretty sad series of events in Tuscon.  The kid that did it seems like a real dirtbag loser who went postal.
    Monday should be interesting:
    on the one hand, its mutual fund/merger monday, VZ/Aapl
    on the other hand, we have this shooting, Europe financial woes; oil pipeline shutdown, australian mine flooding and who knows what else.
    And earnings season starts with AA mon nite.

  244.  Oil – It’s a leak inside a pumping station.  Shouldn’t last long but they will make as big a deal of it as possible.  Significant shutdown of 650,000 barrels a day.  

    Marginals/Jrom – Yeah, I had forgotten that Giffords was one of Palin’s "targeted" Dems to take out from that poster that caused all the controversy last March.  It’s nice to know that NOW, after refusing to do so for almost a year, they at least finally took down the map with crosshairs aimed at Giffords and 20 other Democrats.  

    Commodities/Rev – Those rebalancing plays always sound dangerously attractive but usually don’t work.  I think they are arbed out well in advance.  It does seem significant and it may be worth just taking a shot with a put but I wouldn’t go too crazy.

    Right Cap, week is off to a crazy start already! 

    Dollar down to 81.30, oil down to $89.40 anyway, Euro $1.292, Pound stronger at $1.555, copper $4.30, gold $1,373, silver $29.  

  245. an annual convention to talk about the US economic decline. Sounds like a fun way to spend a weekend.

  246. Cap/Packer Backer?  You mean…. We have something in common?!  ;)

  247. Packers/Cap/1020 – Could it be? Are you my long lost brothers?

  248. Yeah Packers got a good shot this year, I think ATL is overrated. Plus, if my Seahawks can beat da Bears again, ya’ll might as well book your tickets to the SB…

  249. Oil may be up due to the Alaska pipeline being shutdown over the weekend secondary to a spill.

  250.  Could be guys, could be …
    1020, shocking isn’t it ?  This can’t be the 1st time you’ve hear about my cheesehead loyalties here … pay attention man !
    jromeha:  Pack is very solid; so is Atlanta.  I would not say they are overrated, they are very good.  The 2 teams are kind of similar.
    Packers lost by 3 to them in Atlanta in a good game, where Pack seemed to dominate, but could not stop Atlanta when it counted; lost on a FG as time expired.  
    I would think that the winner of GB / ATL has best odds of going to Super Bowl.  Bears we will beat.  Seahawks, that would be something.

  251. Phil,
      I’m interested in how and when you think we can short CMG, NFLX, PCLN, AMZN for a quick buck. The call have a lot of premium. Looking at the market pattern in your post a couple of days ago, I think maybe after options expirations.