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Jobs Loss Tuesday – Will We Survive?

I already sent out an Alert to Members this morning.  

Obviously, with the Steve Jobs situation, everyone is wondering how to play things.  At the time (7:03) I thought the fact that AAPL was only down 3.7%, at $335, seemed fake and ridiculous – but what else is new in this market?  Our position was to short pretty much everything as the Nas futures were all the way back to 2,310, which was not even down half a point from Friday’s close and some simple math tells us that AAPL is over 20% of the Nasdaq so a 5% drop in AAPL will take the Nasdaq down 1% while a 20% drop in AAPL will take the Nasdaq down 4% – right back to the 50 DMA at 2,640 and that seems like a reasonable pullback – especially when you consider that 2% of the current 2,755 was a result of Friday’s ridiculous rally.

Surely at least we would expect the loss of Steve Jobs to AT LEAST put  the Nasdaq back to Friday’s open at 2,730 (2,300 in the futures) but I’ll be very surprised if we don’t at least test that 50 DMA so that will be our watch line for the week.  Oddly enough, we had been discussing Steve Jobs’ health as one of the key unpriced market risks last Thursday, when I said to Members (in response to why I preferred a very defensive AAPL spread to holding the stock):

AAPL/Iflan – As I said to Maya, I like my above AAPL trade better than cash but I do not like AAPL stock better than cash because you can only sell 10% worth of protection and that caps your gains at 10% (and we can do better with cash) and it also doesn’t cover the risk of Steve Jobs catching a cold or just coughing on stage, which could cost you 20% very quickly.

In fact, concerns of AAPL and Jobs’ health were the premise for pressing our QID bets in February (see our $10,000 Virtual Portfolio Review), where I said at the time: "QID/Drum – Well since we were saved from doom on USO I got brave and went for a DD on the QID Feb $10s (now .82) and I think that’s worth the risk into expiration and the following weekend. Same goes for waiting on the puts as $12 isn’t all that far away if AAPL falls."  No, we did not have any insider knowledge of what was going on at AAPL – we simply paid attention and Jobs has been scarce at Apple events and we had earnings and a product announcement coming up and that’s when (January) Apple tanked in 2009 on our last Steve Jobs health scare

At the time, I was pounding the BUY button with AAPL at $78.20 ($85 was our buy point) but that’s because it was DOWN from $192.24 in Q2 of the prior year and we didn’t see any way that earnings were going to fall off that hard.  NOW IS NOT THE SAME, with AAPL UP at $348, UP 75% for the year already on (as I pointed out to Members on Sunday) "just" 46% more earnings per share.  The full text of that comment is appropriate here as it was my general commentary on why I was cautious about both Apple and the Nasdaq into earnings (we were discussing using SQQQ as a way to benefit from a Nasdaq crash and how AAPL’s earnings may play into it):

SQQQ/Trad – It’s not about AAPL missing but about "can they exceed expectations?" They are up 10% more this month on top of a 12.5% run since last Q (from $280) on expectations that they hit $5.38 in EPS for the Quarter, which is up from $3.67 last year (46%) when the stock was at $200. So the stock is already up 74% on a 46% gain in EPS (and they sold off after earnings last Jan), which means they are running a bit ahead of themselves so ANY disappointment is not likely to be taken too well, whether it’s soft IPod sales, lowered guidance due to memory supply constraints or any sort of decrease in margin. I wouldn’t bet on those things happening because AAPL is the greatest company on the planet Earth but – even with all that going for them, at the moment 2011 is projected to hit $20 EPS, up from $15 last year (33%) and 2012 is pegged at $23.15, up a mere 15% – that is slowing growth and, as we often point out re. extrapolating – AAPL is NOT priced for slowing growth and, also as I have pointed out – unless they come out with cars or TVs they can sell to the top 10% over the next 5 years – they soon become a company that will go back to refreshing the same old things, fighting for market share with everyone else.

So the short story is AAPL $350 bothered us for a whole host of reasons, with Steve Jobs’ health being just one of them.  Now that his health is back in play I was amazed to hear a rumor that Jim Cramer sent out an Email to subscribers last night saying AAPL would be a BUYING opportunity this morning.  Talk about herding sheep in for the slaughter!  I don’t subscribe to Cramer so I don’t know if it’s true or not but I certainly hope not as it is simply beyond irresponsible to jump into what is, at the moment, a very minor pullback on an already overpriced stock right before earnings AFTER they just got devastating news about their CEO/President.  I mean – THIS is a buying premise, Jim?  REALLY?

In addition to reviewing our $10,000 to $50,000 Virtual Portfolio over the weekend (just under a virtual net $30,000 with a week to go) our weekend edition of Stock World Weekly took a close look at the situation in Europe as well as the coming storm in the municipal bond market.  It was also noted that the first week of January booked huge outflows from Domestic equity funds with almost net $5Bn running away from the markets in a holiday-shortened week vs. $500M of inflows during Christmas week’s light trading that was considered "rally fuel" as it was the first positive inflow in months.  So if $500M coming in is "rally fuel" – what is $5Bn going back out a week later?  

Also very nicely done by Elliot and the team at SWW was the tracking chart of Goldman’s Alpha 2 TradeBot program we’ve been watching for the month of January.  This is a great visual presentation of last year vs. this year but do keep in mind that we expected the flatline to stretch out to this Friday’s expiration day and THEN we feel it would be a good time for a 5% dip in the Dow:

If you pull those blue lines back a week, you’ll see we’re actually well on track for our 11,850 target (as long as AAPL doesn’t derail us), which we expected to hit this Thursday.  Of course we are now running into the harsh reality of earnings season and I would urge you to review my macro outlook from "Monday Morning Musings" to get right up to speed on the Big Picture as we get ready for China’s Hu Jintao’s visit to America, which hopefully will go better than the last time those crazy kids got together.  

I love that video (original is even better) – It sums up our situation so nicely!  As I pointed out in this morning’s Alert, there are Strange goings on in China as well as the Shanghai opened down almost 2% but closed flat with the huge stick save coming into lunch, beginning at 11am.  The Hang Seng, on the other hand, fell 250 points after lunch and closed flat at the day’s low.  The Nikkei went up 50 points at the open to flat and stayed flat all day while the Bombay bounced off 18,888 – a number that the Chinese consider very lucky (by coincidence, of course). 

Europe is up about 1% across the board despite Spain looking at a possible 7% bond auction on 10-year notes.  Meanwhile, our own 2/20 Year Yield Curve is at a record 3.96% – compared to an average of 2.07% over the past 10 years.  Talk about ignoring an elephant in the room!  Speaking of Hu Jintao (more like an 800-pound gorilla than an elephant), on the way to meet with Obama, he said "the present U.S. dollar-dominated currency system a "product of the past" and highlighted moves to turn the yuan into a global currency."  
 
 
Meanwhile, PBOC’s Zhou, who says China’s excessive money supply is at the root of high inflation and cannot be easily solved?   The central bank has had to print lots of yuan to buy foreign exchange in China to maintain a relatively stable exchange rate between the yuan and the U.S. dollar, which has depressed the value of money held by ordinary people, Zhou said in the latest edition of the China Reform magazine.  
 
China is also making moves to reign in lending at home by 10% AND is looking to hike interest rates - not exactly what would ordinarily be considered "rally fuel."  As I mentioned, we went over this at 7am and already picked short spots in the futures so now there’s not much to do but wait out the open but, at 9am, it does look like there will be an opportunity for us to buy back our short DIA covers that we used to stay short on the Dow over the weekend in our $10,000 Virtual Portfolio (as noted in the review).  

It remains to be seen if the bulls can support the market through expiration day (Friday) or if things do, in fact, begin to fall apart on the 21st, as they did last year.  C, DAL and MMR had misses this morning and the Empire State Manufacturing Survey was in-line at 11.9, up from 10.57 last month so not all bad news this morning.  

My biggest concern of the weekend was Jeff Nielson’s very negative review of the holiday shopping season, in which he points out

The most important number we need to begin this calculation is the real rate of inflation. As regular readers know, there is only one destination for those who want realistic statistical information on the U.S. economy: Shadowstats.com. Visit that site, and John Williams (the respected economist who runs the site) will tell you that as of his most recent reading, U.S. inflation was still running at about an 8.5% annual rate of increase.

Now the raw data from the U.S. retail sector. Comparing December 2010 to December 2009, we see that total retail sales rose 7.9%. Subtracting 8.5% from that number, we see that the sales of goods in the U.S. fell in December 2010 – to below the level of the two worst (previous) shopping seasons on record. If we look at the full-year numbers, the picture is even worse. Total U.S. retail sales in 2010 were up 6.6%, nearly a full 2% lower than the rate of inflation.

How long can we keep going pretending that the headline numbers are real while ignoring the facts that really are not all that deeply buried before the surface?  Will Steve Jobs prove to be the scratch in the surface that exposes the weakness that lies beneath or will it be just another injury we ignore while we continue to party like it’s 1999 – or the summer of 2008.


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  1. Good Morning!


  2. Phil
    I have 2 of jan 320 calls on aapl – would shorting a hundred or two hundred shares premarket make sense (can you short premarket) thanks


  3. What Cramer Said on AAPL
     
    This Tech Holding Is in Good Hands
    This morning, Apple’s (AAPL:Nasdaq) co-founder and current CEO Steve Jobs announced he will take a medical leave of absence to focus on his health. He will remain CEO and continue to be involved in all major strategic decisions at the company.
    Tim Cook, current COO (a position he’s held since 2005), will take over the day-to-day responsibilities at the company. This is a role he is very familiar with as he was the interim CEO during Job’s last medical leave, which took place in January 2009 (and lasted six months).
    Cook is very qualified to lead the company and has a proven track record of doing so. Add to that the deep management team and technology innovators at the company, and Jobs’ current medical leave shouldn’t be a game changer for Apple. Shares fell $22 in overseas trading, and I think it’s a buying opportunity.
    During the last leave of absence the stock actually performed quite well. On the initial day of the announcement, shares fell 5%, but they rallied 60% by the end of Jobs’ leave. And that is because revenue, earnings and the enormous cash generation at the company continued to grow.
    In the first half of 2009 revenues rose 21% and earnings grew 54%. Product launches were also successful, including the refreshed iPhone. The prep work for the iPad continued to press onward, and the device launched in early 2010.
    We own this stock for its product cycle story, and that remains very exciting. I expect on tomorrow’s earnings conference call (earnings will be released after the market close) the company will delve deeper into its product portfolio and new versions/refreshes of its existing lines.
    The consensus is for $24.4 billion in revenues and $5.39 a share in earnings, and like most quarters gross margins will be the key focus. (I think guidance is too low and that management could exceed its 36% forecast by 100-200 basis points given lower component costs and better manufacturing efficiencies in iPhone/iPad.)
    iPhone and iPad sales will be drivers to strong earnings. (The iPhone ramped into 89 countries vs. 64 countries last quarter, and iPad product constraints have eased.) Mac sales will continue to benefit from its refresh and stronger international penetration. Earnings for fiscal 2011 are estimated at $22, which means the stock is trading at a price-to-earnings ratio of 15 — at the low end of its P/E range of 15 to 38. Net cash is $54.92 billion — and growing hand over fist. Naturally I am restricted in the stock (I get asked about it on a daily basis), but I’d be aggressively buying the stock tomorrow on the Jobs news, and should Apple provide its typical conservative guidance, that’s an even better bonus to getting one of the best growth stories at a discount.
    Regards,


  4. Futures overnight:  High = 1293.00, low = 1282.75
    current = 1288.25
     
    NET $ = +.82%,  dx/y = (.53)%
    on the dx/y side, 78.75 and 78.50 are intermediate support on P&F charts


  5. Phil/AAPL,
     
    Good morning.
     
    Last night I was watching fox news of all places and the commentator was talking about Steve Jobs and what a masterful job the company did of releasing the information.  She said "they waited until Friday to release the news so the market had the weekend to absorb it " and "with earning, the stock will most likely recover all of it’s loss before the close"
     
    Christ…..even fox news….and I’m not talking about the Fox Business is on board with the hype.
     
    Unbelievable.


  6. C numbers were bad, only did a quick check

    For the year 2010, Citigroup net income was $10.6 billion

    Loan loss reserves back on on the balance sheet "Citigroup provisions for credit losses and for benefits and claims1 declined $25.7 billion, or 50%, to $26.0 billion"
    So their loan losses were 51.7 B at the end of last year, they moved on to the balance sheet 25.7B, the 25.7 B is greater then their whole years net income of 10.6 B
    just acct games still
    this is with mark to make believe, low cost money from the FED and guaranteed profit on all of the BS treasury auctions.  They should be able to make money and still need acct gimmicks.
    Just my first look, I will keep tearing through numbers, carp just like the JPM numbers


  7. C misses, no mention
    and CNBC is the apple savior for the world
    probably figure the govt will manipulate and protect C, so CNBC has to do damage control on Apple


  8. Thanks for posting Ricky Gervais clip Phil yesterday, poignant & funny.


  9. Net $ = +1.19%,  dx/y = (.60)%
     
    $$$/Yuan had been (.22)% all morning, just went flat


  10. Phil or anybody,
    I have 300 KMP at from long ago at 59. I sold 3 2012 70 calls for 3.45. They are about the same now,.The dividend is about $330 this Jan.
    Do you think I will get called away even though expiration is 2012? I want to keep the stock.  Thanks


  11. looks like the fix is in early today
     
    C = 1291.91, F =1288.75
    10yr = +1.17%,  30yr = +.90%
    VIX +4.53%
    oil(.87), gold +3.10
     
    NET $ = +1.21%,  dx/y = (.57%)


  12. I imagine this woman will need another Iphone…..no wonder AAPL is recovering.


  13. C = 1293.34, F =1290.00
    10yr = +.63%
    VIX +2.91%
     
    NET $ = +1.08%,  dx/y = (.62)%
     
    Euro/$ = +1.30% strongly higher again


  14. Phil, what do you think about T here?


  15.  Phil,
    Considering a buy/write on SVU. Can you suggest the Expiration Duration & Strike Price combos you might like and would you pull the trigger now or wait for a ugly day which may come next week? Any thoughts on whether the dividend is safe given the performance of the stock price?
    Thanks


  16. exec
    great video!  my laugh for the day.


  17.  Can anybody post the link to the RIcky Gervais video? I missed it


  18. Phil, we know that VXX is a sucky ETN, but it seems that there is another ETN that does a slightly better job – VXZ. It invests in medium term instruments and doesn’t seem to be a victim of decay like VXX. Not a perfect match either, but seems better:
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/better-way-to-track-vix.html
    The issue as I see it is that VXX is much more popular and VXZ although optionable doesn’t have a high volume so trading is not efficient. Hope that changes. 


  19.  Good morning!  

    This is interesting – AAPL is heading lower and the Nas is heading higher.  

    You can tell they are going to save the markets when they get Cramer out of bed early and have him do the morning show.  Still, the short Jan $117 puts are down to .29 and we should take that money and run in the 1050P as that’s .65 better than our sell point.  We WON’T roll the calls higher, tempting though that may be as we’d be thrilled just to get our money back at this point.  The QID Feb $10s stopped at .94 and fell back to .82 already.  We’re in at $1.15 and have a month so only if we get the chance to get out even should we take it.  

    Not much else to say other than – WOW! – look at the strength of the bulls!   Volume is surprisingly light with 28M on the Dow in the first 15Mins.  I cannot believe people are buying AAPL at $337 right now as if that’s some kind of great sale opportunity but, as I said earlier – this is a great opportunity to sell with minimal damage. If they have great earnings, you can rebuy it then or, if you are a die-hard AAPL supporter and you think this proves they will never, ever go down than I still like:

    Selling AAPL 2012 $275 puts for $31 and using that money to buy the 2012 $300/360 bull call spread for $31.  Net margin on the put side should be about $30 and the trade is $35 in the money so, as long as you are REALLY willing to buy AAPL for net $275 – it’s a free short at $60 in 12 months.

    I stand by my futures shorts on copper, silver, oil, gold, the Nasdaq and the S&P from this morning’s Alert but they are all chasing now so don’t do that.  The Dow is still playable to the downside and the DIA Jan $119 puts have very little premium at $1.35 and you can play them with a .10 stop and move the stop down to the Dow 11,800 line if it crosses lower or just make that your entry point – kind of like a futures play as the contract is active enough for you to make very quick exits with penny spreads.  

    Speaking of targets, TBT hit $39 again and I have said that’s where we should short them (for the channel back to $37.50) so let’s see how they behave but a short seems ill-advised today as we think the markets may start falling. 

    BIDU Jan $107 puts are $1 and those make a fun play but keep in mind it’s a short week!  



  20. @Phil
    "…Volume is surprisingly light with 28M on the Dow in the first 15Mins…"
    Am I reading the wrong number for C?  It seems that 500,000,000 shares have already changed hands this a.m.?


  21. Phil, AAPL 2012 Jan $275 calls oly show $16.80/17.85 on my TOS? Please check it.


  22. C = 1290.60, F =1287.00
    10yr = +.59%
    VIX + 4.72%
     
    NET $ = +1.26%,  dx/y = (.66)%


  23.  incometrader
    when you plan to open insurance for feb cycle????


  24. flip / vol — dow volume isn’t a sum of its components.


  25. @rainman
    But is that right?  500,000,000 shares have really traded already on C?


  26. Phil your AAPL trade above selling the 2012 275 puts for $31, I see those listed at $17??


  27. flip / C – yes.


  28. AAPL/Jcb – I think you are very lucky to be able to take money and run on those.  

    Cramer/Rwv – Thanks.  Amazing to compare 2011 with 2009 as if it’s the same thing!  I do agree that, long-term, AAPL is still AAPL and I’ll be happy to buy them if they go on a real sale but telling people to buy into uncertainty at $335 is just insane.  

    AAPL/Exec – So in short:  "That was some great manipulation!"  Our society is now so corrupt that we appreciate well-done bad behavior….

    C/Mike – Yeah they should have reversed 80% of their loan losses to show a profit like JPM!  I’m very surprised they are holding up so well, also after a huge run-up anticipating good news that never came.  

    KMP/Jomp – The 2012 $70s are now $3.40 so net $73.40 if the they exercise early and, in any given quarter, the dividend is about $1.10 so if the dividend about to be paid (maybe the 27th) is more than the remaining premium on the call, then the caller might decide to call you away to swipe the dividend.  If you like the stock so much that you think you would buy it back right away, then you can sell 3 of the $67.50 puts for $4 and that’s as much as a whole year’s dividend anyway so that becomes your new buy-in if you are called away and, if not, then you’ll get $4 in dividends plus $4 from the putter plus $3.50 you already collected from the  caller is a nice $11.50 towards your $67.50 purchase price of 300 more shares.  

    Dow 11,850 just around the corner.  If we have a rally today it will really cement the idea that this market cannot go down under any circumstances.  No point in sticking with futures puts if you didn’t stop out already – we got our tiny little dip and its over for now! 


  29. Do you think the small POMO matters today?
    The market is now rallying as usual?


  30. AAPL trade… I think it’s 2013 $275 puts, $30.85/$33.30 in TOS.


  31. bobhu
    AAPL Jan 12 275 shows 16.80 and not 31$ aswell Phil must have an other crystal ball!!!!


  32. bobhu
    sold some AAPL jan 12 295 for 24.30 now 23.52


  33. "The bull" is impressive!


  34. Phil, 
    As you might remember I missed selling the DIA 117 Puts, and instead sold the 117.75 a day later (sold for .80, now .46) you mentioned in your recommendation to wait for them to expire. Since you are selling the 117′s not sure if I should follow suit with these, as I obviously don’t have the .60 cushion you guys managed but half that…
    Thx


  35. MELI – forging ahead….oh, and Good morning!  CELG $57.5 Feb11 Cs are $1.92 for a swing trade.  Earnings are late next week, but I like them for a bounce for the next few days.  Out if they close below $57.


  36. Does anyone know why the RUT is lagging?


  37. Interesting note from Rosie yesterday and something that has been noted on this site since energy was in full swing in 2008:

     

    ADDING UP THE CARNAGE
    This is just the fifth time in modern history that BOTH food and energy prices have risen at a double-digit annual rate for any length of time ? 1979, 1980, 1996, and 2008. In those five time, we experienced two recessions, one year (2008) was a lead up to recession, and 1996 was a year in which the economy generated three million jobs, the unemployment rate was hovering at 5.5%, home prices were rising at a 5% annual rate, and we were in the fourth year of recovery. As if the current landscape resembles that. Note that in those other years of surging food and energy prices, the only place for an equity investor to hide was in the energy sector ? the consumer discretionary group was a consistent underperformer.

    At this rate, the energy bill is going to create a drag U.S. household spending power by $60 billion this year. The surge in grain and meat prices is going to lift the grocery bill by $40 billion. The end to the debt-service relief (relief that was supposed to be nurtured by QE2) is another $100 billion of incremental drainage. So there we have $200 billion of headwinds that is going to offset 70% of the federal fiscal stimulus that was unveiled last month.


  38. Phil I try to understand the BIDU play I guess it is a sell the 107 p for a credit of 1$ It is actually trading for .83 and for 83.00 you pay TOS on PM 1386.00 margin a lot for 83$ is it not?


  39. A big ..!., from GS to the SEC: Goldman to exclude U.S. from Facebook placement


  40.  LOL Exec!

    T/JMM – Well, it’s a stock so I guess it will double.  I like them long-term and they pay a very nice 6% dividend.  They had only a small sell-off since word came out about AAPL and VZ and it’s not like T is LOSING the IPhone – they are just losing their exclusive on it and they wouldn’t  have let it go if they didn’t feel it was cost-effective so I imagine the marginal benefit of paying AAPL a big premium has run its course for them and now they will turn their attention back to what the American Telephone and Telegraph company should work on for the next 150 years.  VIX makes this a dull trade but, at $28.43, you can sell the 2013 $27.50 calls at $2.70 and the $25 calls for $2.70 too and that’s net $23.03/24.02, which is a nice 15% discount to go with the 6% dividend.  

    SVU/CSL – They have a nice 4.7% dividend and you can pump that way up by buying the stock at $7.46 and selling the 2013 $5 calls for $3.50 and that’s net $3.96, which makes the .35 planned dividend almost 10% so you can buy 2x like that and leave it at that as it’s still a nice 25% more if called away at $5.  If you pair that with the sale of the 2013 $5 puts for $1 as well – then you are into a $2.96/3.98 buy/write so the same net if put to you but a better upside so you need to determine which works best for you margin-wise.  

    Gervais/Rav – That was in comments on the Weekend Post.  

    VXZ/StJ – Well, if it’s true you can go long VXZ and short VXX (proportionally) and you should clean up on the differential!

    Volume/Flips – I don’t actually know what it is that Etrade measures on Dow volume exactly but it is consistent year after year and the fact that it’s measured in reasonable Millions instead of Billions makes it much easier to hold the numbers in our head and quickly determine on and off-track performance.  

    AAPL/Bob – I see $60 and if you see something like that you shouldn’t ask, just offer and see if you get it.  Strange things do happen (think flash crash where people bought JNJ for .50).  

    AAPL/Doro – You are right, that was the short 2013 $275 puts for $31, not the 2012s.  


  41. Trading AAPL:    I have closed out all positions.  Fortunately, I had a lot of covers on AAPL calls I held as of open this morning, so losses were minimal.  Anyway, I think it’s best to be out of this stock right now; let the dust settle.  If AAPL has great earnigs ( and they probably will), you may still see a post-earnings selloff anyway, allowing you to get back in later at an even lower price.  The market reacts to uncertaintly by selling, not buying, so look for the stock to drop even further in the short term.   Sit and watch.  Be patient.   That’s my take.


  42. JRW
    How about some lines today lol?
    I’n on TZA, just need some confirmation lol


  43. CNBC is shameless pumping today, worse that I have seen or heard it today (and that is hard to do after the BS the last few years)


  44. Phil, you mentioned patterns in your notes this morning, but looking at the last 12 months, it’s been eerie to see pattern repetitions. Technically speaking, we had one wave starting at the end of Feb. 2010 that repeated itself at the beginning of September but only after testing the lows of earlier in Feb 2010. The move since early December is almost a carbon copy of these 2 waves but the difference is that it build upon the one from September with only a small correction in November. Relentless move up with no respite for over 2 months each time! This is really scary. On a TA basis, there is no sign of weakening at all! The truth of the matter, some stocks are still cheap (look at INTC, CSCO, T, even IBM and others trading between 8 to 12 times earnings), so these might support the next wave. But what is driving the last 6 months – PCLN, NFLX, AMZN, AAPL?


  45. Good Morning Phil. I have synthetic buy/write we discussed way back in August of 2010. CSCO Jan11 20/22.5 bull call at $1.37, with Jan 11 20 putters for $1.30. While the overall position is positive, I am long term bullish on the stock and don’t really want to take a haircut on the long calls. Suggestions on repositioning? Thanks. Oh, and Ricky Gervais was hilarious and had me bursting out with laughter at about midnight.


  46. Phil Holding the C Jan 12 bull call spread 2.5 to 6 and 2.5 to 7.5  I know C is down today 4.5 % but would it not be a good time to roll the short caller 6 sold for .30 now .32 and the 7.5 caller sold for .15 now .13 to  a higher call as I expect C will be possible trading at 9 or 10$ in Jan 12. Just leave the long caller of 2.5 as is. your thoughts please thks


  47. C = 1292.18, F =1288.50
    10yr = +1.80%
    VIX + 3.88%
     
    getting nuts on the currencies
    NET $ = +1.77%,  dx/y = (.83)%
    oil (.03)


  48. THANK YOU FOR PLAYING!  BIG BIG win for us.

    Ariad Pharmaceuticals Inc., a biotechnology company with no approved products, gained the most in 18 months after its experimental cancer therapy slowed tumor growth in an advanced human study.

    Ariad soared $1.40, or 27 percent, to $6.65 at 10:17 a.m. New York time in Nasdaq Stock Market composite trading, after earlier reaching $6.84 for the biggest intraday increase since July 2009. Before today, the shares had more than doubled in the previous 12 months.

    The pill, ridaforolimus, reduced the risk of progression in sarcomas by 28 percent, Cambridge, Massachusetts-based Ariad said today in a statement. Patients also lived about 3 weeks longer without their cancer worsening. If approved, the pill may generate $365 million by 2015 for Ariad and its partner, Merck & Co., said Phil Nadeau, an analyst with Cowen & Co.

    “Metastatic sarcoma is a fatal disease for which there are very few active therapies available today, and thus the unmet medical need is high,” Nadeau said in a report today. “The data are solid, and likely to get ridaforolimus on the market.”

    Merck, of Whitehouse Station, New Jersey, gained rights to develop and sell ridaforolimus for multiple cancer types in May under a restructured partnership with Ariad. The biotech is eligible for milestone and royalty payments under the accord.

    U.S. Clearance

    Merck plans to seek U.S. clearance for the drug this year, Ariad Chief Executive Officer Harvey Berger said today on a conference call with analysts and investors. “Overall we’re certainly enthusiastic about it,” he said.

    Sarcomas are tumors that develop in connective tissues. About 12,000 U.S. patients are diagnosed each year, Nadeau said.

    The most common side-effects with Ariad’s drug were dry mouth sores, fatigue, diarrhea and platelet disorders.


  49. iflan, there is big volume on the AAPL 350 calls that expire in 3 days – is that selling? I just checked the option chains and these can be rolled even all the way to the July 450. And October 500… Would make sense, no? 


  50. Citibank – A billion shares by lunch?


  51. AAPL/stjeanluc….I think that’s probably "dumb money" buying Jan 350s, but I don’t know for sure.   I would just stay out for now. 


  52.  Phil/Ricky Gervais, I found it! But that was from last year’s ceremony.. I thought you posted the one from this past sunday.. it was fun too! 


  53. Iflan, thanks! It’s still look crazy to me that these 350 calls can be rolled up to 500 by October! I mean common, is AAPL going to run up another 40% this year with earning growing at 15%. I know, it’s a casino…


  54. SEC should be watching
    bet the large block trades in C read like a who who of the Free Money Boys, could be the litigation list
     
    But just like TARP, fake acct, easy Fed money and C trading (for the last 2 years) is the give me they want to engineer


  55.  POMO/Jabob – I think as long as the overall schedule is on track then individual days don’t matter much.  Keep in mind it’s not like the Fed is buying equities – they are buying TBills and the IBanks get cash and then they go buy equities and HOPEFULLY, they are not all down to their last dime waiting for the Fed to hand them some money…  Also, note that JPM and now C simply made a bookkeeping entry that suddenly frees up tens of Billions in cash – they didn’t need the Fed for that – just a total lack of regulatory oversight.  

    DIA/Amatta – Oh sure, same goes for you.  It’s a nice little win and we take it.  This is the same with everything – BY DEFAULT, you should feel compelled to take anything off the table that made more than 20% and then pulls back on you.  The more it makes, the more compelled you should feel not to blow it.   

    RUT/Exec – Interesting as the futures failed 800. 

    Rosenberg/Pharm – I can’t read him every day, it’s too depressing!

    BIDU/Yodi – You really, honestly believe I would say I like selling a BIDU put that is $1 out of the money with 4 days to go when I am holding onto shorts on the Nas and the Dow?  No, it was BUYING the puts in anticipation of a sell-off, back to $105, hopefully. 

    Facebook/Rain – That was funny.  And now it will be a foreign company…  I wonder what Goldman’s game was with this as you have to assume they understand the regs so they knew this would not fly in the US so why play that game?  Are they trying to make a large point so they can say "see how the SEC made America miss out on Facebook" in order to get those regulations struck down as well?  It would be a huge new revenue source for them, essentially funneling angel financing to start-ups – I could see it as something GS would want to get into.  

    Good point on AAPL, Iflan.

    TZA/Rwv – I’d go for the 10% rule off $16 on TZA and assume that $14.40 is your baseline and a 20% bounce back off the $1.60 drop is $14.72 to that’s your bullish breakout to the upside while failure at $14.40 is a clear sign the bulls are remaining in control. 

    Wow, Meredith Whitney upgraded JPM 10% over street avg!  

    CNBC/Mike – Maybe they are right.  Maybe we have an invulnerable market that will never go down again.  It seems mindless, doubtful and pretty ridiculous but, since Dec 1st, the S&P is up almost 10% with just 10 down sessions out of over 30 and only one (12/15) was significant.  Before that, we went up all of September and October with another 10% gain and hardly a look back the whole time.  With 12 months to go in 2011 – S&P 1,400 (10%) or even 1,550 doesn’t seem so outrageous, does it?  

    Speaking of which, here comes a special Kudlow segment coming up where he tells us "How much higher stocks can go."  (I’ll be it’s "a lot").  


  56. Phil
    When we get a meaningful pullback how do you feel about GS. if you like them where would you be a buyer?


  57. Here is an even better break down of Internet data


  58. Hello Pharm, what do you think about APRI?


  59. Hi Phil & all,
    I have 3 Jan DXD $24 short puts that needs to move along. I am about $1300. in the hole from DXD hedges for 2010. Much of it from these puts that i held thinking the reverse was coming. When i look for where to roll the bid & ask is miles apart. Do you have a thought on adding a long put or another vertical to make up some of the loss?
    Thanks for your help.


  60. APRI/alik – there are so many San Diego companies I have never heard of….well, NVS licensed the technology in 2005….and here we are in 2011.  Their Phase III data are due out sometime, and I don’t like the chances at this point.  If playing, make it all gambling money.


  61. Phil, I ran a comparison between gold and the dollar because I am sick and tired of hearing these guys on CNBC tie the 2 together.
    http://lemoyne-mappingthemarket.blogspot.com/2011/01/dollar-gold-relationship.html
    Over the last 18 months, the dollar is down about 1%, but gold is up 45%. There should an inverse relationship, but this is pushing it. OK, demand is up, but production last year was up 10% and large organization like FMI have actually been selling gold on the market to raise funds. And if I recall, the Russian have also sold a ton of gold on the market. This is looking more and more like the same speculation run that took oil to $150. And actually, on Barry’s site he had a graphic that I posted yesterday that outline the run that gold and oil had against inflation for the last 40 years. I don’t think it’s sustainable.
    http://www.ritholtz.com/blog/2011/01/not-stocks-for-the-long-run/
    I mean, copper is way cheap… And priced in gold or oil, housing is a real bargain!


  62. Pharm     Whats the next move on FRX after earnings and raised guidance?


  63. ZMH is starting to lift off as well.


  64. C = 1293.80, F =1290.00
    10yr = +1.59%,  30yr = +1.19%
    VIX +3.23%
     
    NET $ = +1.25%,  dx/y = (.47)%
    Europe is closing


  65. Phil, doro165 and me had similar questions(10:13am and 10:02am) about AAPL tarde. Why you told me that I shouldn’t ask that question but admited to Doro that you were wrong?


  66. oil +.14, gold +7.70


  67.  Patterns/StJ – Other than AAPL, you are looking at relatively small cap companies that are driving higher vs much bigger companies that aren’t.  That’s just an efficient allocation of capital.  If you have 1,000 stocks and you have enough money to add 10% to the market ($3Tn) and your goal is to draw in other investors to support it then are you better off spreading the money around and pushing the market up 10% and hoping that pulls money off the side or should you double the price of 10% of the market and just move all those stocks up to the front window, using your MSM mouthpieces to make sure that those 10% are pretty much all anyone talks about?  No one is going to divert their savings into the market because it took a 10% bounce after they lose 40% on 2008 but if they see stocks that are "popular" running up 50%, 100% and 150% – then they start to feel like they are missing the party…

    That was goaaaaaaaaaaaaaaaaaaaaal at 11,850, by the way!  

    CSCO/JBur – What?  If they expire on Friday and CSCO is over $21 (now $21.30) your putter expires worthless and you keep $1+ and that’s up 1,400% from your net .07 entry.  Why would you be concerned about that?  You can call it a roll of you want but the same set-up in 2012 lets you take the $17.50/20 bull call spread at $1.70 and sell the $20 puts for $1.80 so same margin and you pocket the $1.30 or whatever you make on the Jan spread plus the dime on the new spread and you’re in line to collect another $2.50 if CSCO manages to hold $20 for a year.  

    C/Yodi – I don’t know.  I think you should be happy with the massive gains you’ll get if C makes $7.50 so why mess around.  If you are going to add money to the trade, rather than buying back callers that are out of the money, just add more long calls or roll lower.  

    Oil running back to $92.  No point in shorting as they ran the Feb NYMEX contracts all the way down to 88M already.  March is now 374M, April 112M, May 84M and June 108M so all rolled to March now, which is very bloated but way too early to bet against at the moment.  

    ARIA/Pharm – Brilliant call!  


  68. Stock – not sure what you have, but I am in the 30 and 32.5 Jan12 Ps and covered with the 31 Jan11 Ps (full) on the move down next week for income.  So far I am up for the time being on them by selling the front month Ps.  These are a long term hold and may have to get more agressive on the sale of Ps to offset our long Ps.  Just waiting.  They are down from their high today, so I want to see where the channel settles. When doing long dated Cs. and Ps, I ALWAYS use Opts methodology for covering (1/2, 1/3, etc.).  I still think they go down.


  69.  PHARM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
     
     
    ARIA was big. Room to run? I will at least sell half (1!00 shares, hahahaha, I know, big potatoes………..), but just wanted to ask about your exit strategy.


  70. Phil BIDU thanks for the final clear words. Still bet against you that BIDU short put will be a good gamble just does not fit the margins!!!


  71. Pharmboy—this one is right in your wheelhouse!!!!  NNVC--Nano Viricides. Long shot, but if they get FDA approval anywhere along the way for their anti-virals, it could be a home run with the bases loaded!!!
    They have cash enough for 24 more months of research and testing. No debt!!!
    When time permits, I’d love to get your take—Thanks


  72.  Phil
    Do you still like a short play on Oil? I have USO Feb 39 puts – not sure if I should DD here or bail…


  73.  NAK is turning into one of my best performers of all time. Definitely taking half of the table today at some point though. But wow. I mean, WOW.


  74. BDC – yes, room.  I think MRK takes them out. 

     

    NNVC/clarence – we played them last year and I still like them.  We were out at 2.40 (or around there), so yes worth a flier.  I wanted to get back in at $1, but they did not hit my target bottoming out at 1.0X.  I would wait on them to move back to the 1.30 range IMHO.  I still really like NWBO at 68c.  These will take a LONG time to move, but hey, at 68c, they are a better bet than Vegas.


  75. Phil: Of course!  Thanks, thanks for helping me put it in the right context.


  76. Phil,
    Follow on question to your stmt below:
    "Speaking of targets, TBT hit $39 again and I have said that’s where we should short them (for the channel back to $37.50) so let’s see how they behave but a short seems ill-advised today as we think the markets may start falling. "
    If the equity mkts drop wouldn’t one expect a flight to the safety (relative) of bonds (esp gov’t) = TLT up and TBT dn?
    Wouldn’t a TBT short be appropriate?
    Thanks


  77. Phil – more SVU    
    I did a Jan 2012 B/W in Nov when they dropped .
    $11.17 entry Jan 12 C 1.35      P 1.65      8.17/9.09.
    Obviously not a good entry looking back, but I though the dip then was buying opportunity.
    Bought back the C for $1.00 profit so I can resell one for more premium when VIX improves and if they recover some at a lower strike. Am considering either DD trade you suggested earlier today to CSL to lower my cost. Or maybe selling the Jan 2013 7.50 C for 2.20 which would give a loss on the original stock of 11.17 – 1.00 (call profit) – 9.70 = .47 and holding the 10.00 P for B/even if SVU recovers over 8.35 (10.00 strike minus 1.65 premium sold). Thanks for the help.
    This has been a good exercise as I learn much more from my problem trades (which thanks to you are few) than the good ones.


  78. C = 1292.75, F =1289.25
     
    NET $ = +1.59%,  dx/y = (.56)%


  79. 78.50 has held on the dx/y so far, but took out the 78.75
     
    those were two intermediate P&F supports on dx/y, see if the 78.50 the bigger of the two holds or not. 
     
    Lots of crazy moves in the currencies the last week.  Amazing how calm the S&P is, does not seem right.


  80. of course, I think too much, always my weakness, but especially when the Funny Money is flowing it hurts


  81. Hi, Pharmboy, RE GILD
    I have GILD stock.  I’ve been selling puts/calls for a while.  I currently have short 38 Jan calls and short 36 Jan puts.  I am waiting for the 36 puts to expire worthless in another 3 days.  I am debating whether to roll the 38 Jan calls or to let them call away my stock.  What’s your long-term outlook on GILD?
    Thanks!


  82.  Phil,
    MOS: Similar to what you advised a week or so ago, I still have 200 MOS with a Jan $70 Covered Call.  Your thought then was to sell the MOS and buy back the call, then do a 1.5 X’s Jan 2012 $72.50 / Mar $75 Spread with a Jan 2012 $57.50 PUT.  
    Any thoughts on adjusting the spread?
    Thanks


  83. Pharm /  CERS – sell half or hold on?  I got in at 2.70.  Thx. 


  84. It would be tempting to short AAPL above 340 but this market is insane!


  85.  C = 1293.09, F =1289.50
    Mike: 10yr = +1.66%
    Mike: VIX +2.72%
    Mike: NET $ = +1.47%,  dx/y = (.53)%


  86. half out of IMGN (9.69) that I bought back during there crush to 5.50. Still looking for an AMAG recovery ……
     
    half out of NAK at 18.70 (in at 6.74 on Aug 30th), +177% !!
     
    in 1 NFLX Jan 190 put for 2.85. Also, took a sucker bet, AAPL 310/360 Jan straddle for 2.46 or about $500. I know, I know…..


  87. Pharm / ARIA – get out completely or sell half?  is approval likely?  Thx.


  88. HOV CEO on CNBC, never ever trust a CEO that draws hair on his head with a sharpie


  89.  Gervais/Rav – I must have picked up the wrong one on YouTube.  Here’s his opening from Sunday.  

    GS/Z4 – I think JPM is totally superior but I’ve always liked GS below $145.  

    Internet/Mike – Gosh, you would think there must be some way to make money off of all that traffic…

    DXD/Morx – Well $1,300 hopefully was cheap insurance.  You can roll to 2x the July $20 puts at $2 and hope they wipe out but that won’t pay for new protection so you have to think about your goal for the position vs. just taking the $1,300 hit until you have something else worth protecting.  

    Gold/StJ – Sure, it’s totally out of control.  We’re generally back to a bubble like we had in 1980 and for pretty much the same reason – debasement of the currency.  Keep in mind that Nixon took us off the gold standard in 1973 and it took almost the whole decade for inflation to hit a real crisis and peak out (and only then because Volker took drastic action to beat it down – who would have the backbone to do that now?).  So the gold bugs are looking at a 15x run in gold they got then (20x in oil) and that would take us another 200% higher than we are now, to around $3,500 an ounce and that’s what the gold bugs count on.  

    HOWEVER – this fails to account for the percentage of total money in the World and this is where speculators always get things wrong.  Even if you assume gold is not this time competing with many other metals and coal and oil and cotton and corn – the fact is that you need to look at gold in terms of how much money can possibly move into it.  There are 165,000 tons of gold in the world so 5.3Bn ounces at $1,370 an ounce is $7.3Tn.  There’s another 165,000 tons (about) of known reserves in the ground about 2,500 tons coming out of the ground each year.  Reserves, as of last year, were as follows:

    Rumor is that China has bumped up to 1,300 tons and we all heard about India’s buy from the IMF but that was a transfer and created no "demand" for gold.  The real demand change is the speculators, as ETFs now hold close to 1,500 tons of gold, up 100% (600 tons) since 2007 – so almost 10% of the mined output of gold for the past three years has gone into a speculative ETFs – of course that makes a shortage!  

    Even if you want to ascribe the best an most legitimate intentions to gold – how can something like the World’s supply of gold gain $1Tn a year for the past 5 years when only 80M ounces a year are sold?  80M x $1,300 is $104Bn, not $1Tn but – as you can see – there’s my stock and commodity rule of thumb – that it only takes 10% to move the market.  The problem is, as it is with all bubbles – that you have a pipe that is, in "the best of times" able to pump in $100Bn a year yet you have inflated the global value of 165,000 tons of gold by $5Tn.  Only confidence keeps this alive at this point as it would only take a panic that makes just 2% of those people want to sell ($100Bn) and they would exhaust the buyers and prices would begin to fall hard and fast.  That’s why I stay far away from these silly things (see my Roach Motel Theory). 

    I wrote that Roach Motel article about oil in Oct 2006, it was not about shorting oil but about the sector as I pointed out at the time that there was not enough money in the world to take XOM far over $70 a share.  I was, of course, way early with the general call (but oil stocks did fall off a cliff the next week so it was a good call then) but the theory is the same and the situation is similar now – even more so as we have less available cash for all this nonsense now that our homes are no longer ATMs that store $45Tn.  


  90. kustomz – That was cold!


  91. Buy them dips, boys.  I bought AAPL 340 calls at the open and they’re up 136% already!


  92. phil/others, what is the mattress play currently?  thanks.


  93. HK – closing the calls I entered in December at 18 for a small gain, will re-enter next week if I see some strength but it’s been a laggard compared to SD and my other energy names.


  94. mr, AAPL was a DT gift this morning…tonights earnings are going to be fun and I think margins will tell the story going forward. Lots of competition for parts going forward and prices are on the rise..

    Thank you pak, I try..


  95. Phil,
    Apple is getting close to filling the gap off this morning’s open.  What do you think about shorting the QQQQ as it gets closer to $344 looking for a potentially big down move if earnings are not met perfectly??  Also we still have the other overpriced names which we have been expecting to move down.


  96. Lloyd can’t get ALL of the Global Strategist’s to drink the kool-aid
     
    Basing economic growth on loose monetary policy driving up asset prices is simply doomed to failure," he added.


  97. The coming correction may be one of the most profitable short periods in recent history (maybe even trumping October 2008). It’ll be over much faster than the Oct-08 though so vigilance is required. However, there is no need to try and time the top, wait for the trigger and go in with some ordinance immediately after. I definitely think it’ll be post Jan11 options expiration, so I ‘m saving some dry powder. Probably won;t have to wait until March, Feb probably gets it done.


  98. Well folks,
    It pays not to panic. This morning my AAPL was down $67k and now I am back in the green!!!!!!!


  99.  C = 1294.16, F =1290.25
    Mike: 10yr = +1.59%,  30yr = +1.15%
    Mike: VIX +2.20%
    Mike: oil +.16, gold + 7.20
    Mike: NET $ = +1.39%,  dx/y = (.53)%


  100. Highlander,
    This may be the perfect time to sell, who knows?


  101.  Phil, now that ALL levels are above your targets, when do you plan on making the new 5% levels? I think that the LAST thing you are waiting for to give up any slight bearish premise and just forget fundamentals and go long is if we are past Jan’s expiration and the markets don’t fall, am I correct in my assumption? We were waiting and waiting for levels to hit the targets and now I don’t recall another thing we should wait for other than Jan’s expiration (?)


  102. Phil – is there any way to trade the clockwork 10:30am-3pm flatline that the markets have done every single day for the past 3 months?  My logic tells me that since nothing is moving there’s no way to actually make money…despite being able to predict that behavior.


  103. rwvjx5

    IWM 81.69, 80.76, 80.41, 79.94, 79.76

    JRW III (premium)

    Technically, there should be a good move up on Tuesday !!

    Have a good weekend all !!


  104. Guys,
    AAPL is like the little boy who cried wolf. The world is getting used to the very sad truth that Jobs is not imortal but AAPL has a a very good life ahead, the jobs premium is gone out of the price, the price is actually cheap and it has less then 5% market share in most of its areas. It will kill droid, it is doing so in Europe already and only the exclusive deal here with AT&T gave it the droid a  shot at life here.
    Anyone who owns an i-Pad realizes it is truly a revolution. My wife & I use our laptops less and less and instead our little girl’s i-pad who is demanding that we get our own machines and do it quickly!
    If I can not convince you to get on the wagon at least stay out of the front of it. Playing AAPL short in any form is dangerous. Spreads are OK after earnings.
    Phil will tell you the same thing!


  105. Europe finished up 1% for the day – all around the day’s highs. 

    TBT $39.44, holding up and a huge breakout for them but not a word about it that I’m reading or hearing.  TLT back below 91 with a death-crossed 50 dma rapidly catching up to the lower levels (not good).  Dollar 79.27 and CNBC saying Euro is strong but it’s not really at $1.336 but the Pound looks good at $1.596.  Yen is at 82.75, which is too strong against the dollar to make Japanese exporters happy.  TM may have topped out at $86 unless the dollar can come back. 

    AAPL/Bob – You asked me about 2012 calls, not puts.  I didn’t even know your 10:02 question was related to the trade – I thought you saw a strange bid/ask spread and was wondering if it was correct.  

    I find this very interesting.  Niall Ferguson at the Aspen Institute conference was told "Don’t be too dark" prior to making his speech.  Meanwhile, if you watch this video, he failed miserably and came off pretty damned dark!  

    BIDU/Yodi — Be careful! 

    Oil/Yshen – Inventory reports are not until Thursday and it’s the wrong time in the inventory cycle now (early) to short them, even at $92.  The Feb $40 puts have little premium at $1.75 (.50) with a .64 delta so, if you can’t short the futures off the $92 line (with very tight stops) then this is the way to go – consider it the $39 line here.  

    NAK/BDC – Congrats!  Now I have to do the very hard work of identifying another undiscovered mining co.  It was MRB and NAK but MRB got bought and now NAK is on the moon.  HMY is still unloved and we did ABX again on Friday as they bottomed. 

    TBT/8800 – Yes, we would not expect the markets to be rocketing and TBT to be going up at the same time but they are so staying away is more appropriate until we figure out which one is crazy.  

    SVU/TxChili – It’s really just a question of rolling a $4.50 putter and if you roll them out to the 2013 $10 puts and calls at $5.30 you pocket another .80, which is a nice dividend and you still have a 25% upside at $10 (more if you take the .80 off the basis).  Not much else needs to be done there and you can stop out some calls (1/4) at $2.50, $2.75 and $3 if you want to play for more upside but, for now, no need to put cash in.  

    MOS/Mjj – LOL, that was now 10% ago, right?  How crazy!  Well the short put (I hope it was short) looks pretty safe while the long $72.50s are $20 and the short $75s are $12.  They can be rolled to the June $80s for about $1 so just don’t let that roll get away from you but that puts you on a path to roll to a $72.50/90 bull call spread if they keep going up and up but, for now – why not just let the callers protect your nice gains?  

    AAPL/Jabob – Don’t forget earnings tonight.  Total wild-card but I think the Bulls are nuts risking this.  

    AAPL earnings play:  I like buying the March $365 calls at $8.70 and the March $325 puts for $9 and selling the Feb $360 calls for $6.80 and the Feb $330 puts for $7.60 as that’s net $3.30 and any finish between the Feb strikes should be a nice winner (wiping out the Feb puts and calls between $330 and $360) and, if a big move, the losing put or call should be rollable int a vertical that’s bigger than net $3.30.  

    Mattress/Lunar – Same as the 1050, we sold the $117 puts and took them off with a .65 profit so now naked on the June $119 puts (now $5.55), not ready to roll up yet.  


  106. Phil, sorry, my bad about call/put for AAPL.


  107. Kustomz … that sharpie joke was funny !  good one 
     
    Highlander, let me take the opposite side of your argument …. does anyone NEED an I-pad ?
    I would say no.
    Even the self described Geek Apple employee that I enlisted to explain to me who the buyers of I-pad were and shouldn’t I get one, admitted that its a bit of a weird product in that nobody really needs one, and the customers that bought it tended to use it for photos and games mostly.  Didn’t seem to believe in the utility of it for a business person.
     
    I don’t have one.  I could see having one, but every time I really think about it, I say, nah, don’t really need it.   Would be cool to sit on the couch with it instead of a laptop; or take it on the go w/ me; but I just don’t really NEED it.


  108. Inflation expected to be around 4% in Britain next year! They might need to raise rates even though the economy is still fragile and austerity measures are in place. One of the factors is the VAT which was raised from 17.5% to 20%! I guess you reap what you sow! 


  109. Well, that is a near perfect gap fill in AAPL so far.  Let’s see if it can continue the roll over and take the rest of the market with it


  110.  Cap/AAPL, good argument, I think the same about the iPad (I already own an iPod touch).. if anything I wanted it to read books, but I ended up getting a nice Kindle 3G for a much cheaper price with a battery that lasts forever (a big turn off for that purpose in the iPad, or even the Touch :)


  111. Happy Tuesday Phil, et al.
    I have a quick question on strategy related to ARW (Arrow Electronics).  Dark Horse added the stock at $30.55 on 11/4/10 and the stock has charged up to $37.41 today on a BUY recommendation from the "always late to the party" analyst world.  I can’t find an option strategy that makes sense (on my own) and am inclined to "sell on the news".
    Any thoughts on the stock or strategy?
    Thanks as always.


  112. Lord help us (sorry if inappropriaite)
     
    someone has to save us
     
    All of these companies cooking up all types of gimmicks for their balance sheets now.  They all want to get the pensions plans in a way, so they they can bring them on and off the balance sheets as needed.  Sure sounds like the banks and repos
    Just give yourself enough fudge factors and any quarter can be made pretty


  113.  I am sure Wallstreet is right there consulting and teaching them too
     
    Ok going for a walk
    C = 1294.30, F =1290.50
    10yr = +1.35%
    VIX + 2.39%
     
    NET $ = +1.00%,  dx/y = (.39)%


  114. cap :-)
    not needing things but buying things is our motto (US)

    Anyone here watch RT news? They just ran a great story on how the US is helping the criminal element in Afghanistan exploit the stupidity of our countries leaders. They are starving the poor intentionally so they can keep the money donated for schools and food programs while poppy fields flourish so our citizens are guaranteed never ending supplies of Heroin. Way to go US and God damn my conscious!
     


  115. Talk about shiny metal shortage – no, not the yellow one:
    http://ftalphaville.ft.com/blog/2011/01/18/462091/silver-shortage-rumours-abound/ 


  116. So Yodi, are you buying more C calls? I was thinking of scaling in to the $3.50s.


  117.  anyone want to bet $1 AAPL splits tonight? (you gotta give me $5 though, if they do)


  118. The numbers boggle the mind:
    http://www.ritholtz.com/blog/2011/01/by-the-numbers-internet-2010/
    Phil, no need to worry about NFLX clogging our pipes. 107 trillion emails in 2010 should do it! 2 billion video watched on YouTube every day! Unreal…. 


  119. Nice 8.5% move in YRCW today.   Thought I was going to get assigned on my Jan 3.5 Puts, but I’ll be just as happy to keep the premium and sell the Feb 3.5P again.


  120. Phil--in Oct you gave us the following great trade on TM that I put on--do not know how to adjust now or should I just close it
    sold april 70, calls @5.50
    bought jan 13, 55 calls @ 20.10
    sold april 65, puts @ 1.4
    Tx


  121. BDC/AAPL – you are on!


  122. cap ravalos
    Went to the verizon store last week, when I asked about the new G4 data bundels. He grabbed his ipad, then a wireless keyboard and mouse. That just starts the shortcummings like no DVD drive, limited memory, and high cost. A laptop or notebook is protected when closed, all included, and cheaper! Expensive colorfull  e-reader plus apps.


  123. highlander / iP* — I’m not on the apple or android bandwagon but I am an observer (agnostic). I do have to admit that I have an Android device but have no skin in the investment game surrounding these two. It would appear to me that Android is gaining traction on Apple quite quickly though and I believe the last few months have android sales outpacing iphone sales although I don’t have numbers to back any of it up, Even Jobs stated that android outshipped iPhone. Even those numbers might be meaningless if there is no correlation to the bottom line. I don’t think that makes google a long nor do I think it makes apple a short. I only post this because your post sounded like it was doing a bit of cheerleading and perhaps tunnel vision might be setting in… and that, my friend, usually results in poor investment decisions.


  124.  BDC – split … I had that thought also


  125.  OK nicha!
     
    I only have room for one taker.


  126. Phil – Article in Le Monde today talking about the fact that the CAC40 closed over 4000 today for the first time in 9 months. They mention the fact that brokers see it as jumping point to a 15-20% rise in 2011! If you have seen "Inception", now might be time to check if the spinning top is still spinning!
    In French:
    http://www.lemonde.fr/economie/article/2011/01/18/le-cac-40-repasse-au-dessus-des-4-000-points_1467422_3234.html#xtor=RSS-3208 


  127. I’m starting an internet commerce company around a unique concept that has yet to be captured. We would be looking to raise $100k-150k initially. If anyone is interested please email me at biodieselchris at gmail. Rule 501 applies. High risk, change-the-world type idea, good Founder team in place. Biz plan mint date in about 2 weeks.
     
    - BDC


  128. C = 1295.11, F =1291.50
    10yr = +1.23%
    VIX +2.20%
     
    NET $ = +.89%,  dx/y = (.35)%


  129.  Phil,
    I took a small stab at the Apple play you outlined above.  Can you give me a little more detail on how I adjust if Apple has a big move off earnings?  
    This is the first time I have tried a play of this kind.
    Thx.


  130. Pharmboy, nice work on ARIA.  I played it with the May 3/5 call spread so I limited my upside but still did a double and then some so thanks.  This is another example of why Opt keeps saying ‘when you’re playing a direction, never sell full covers’; although the other side of that coin is that full covers helped me limit my losses on the ARNA debacle…


  131. morxlntway
    C  Phil set up a play for me just about a year ago with some 100th of options to make up the loss on the stock when the last bobble broke I am up very well on them but still running very high in margin. So I stay as is. But there is no harm to buy bull call spreads say Jan 3.5 at 1.59 to 6 at .32 still throwing a Jan 12 5 putter in for .71 so the play cost you only about .51 cents


  132. NFLX is just goofy, I’m going to buy some calls to stop it from going up any more.


  133. 2:39 Big Fast Sell Program
    Maybe we have seen the high for the day if IWM stays under JRW’s 80.41 line.


  134. Phil, clubbing on the DJI to get it back in line before close? Volume look light enough.


  135. mrmocha / calls — they watch you too?


  136. Phil I do like the BIDU but not for a PM margin of 1350.00 or so. not so crazy!!
    Your AAPL play cost about 4000.00 in PM margin for 1 contract!!!!
    BIDU/Yodi — Be careful! 


  137. Pharmboy - A few years back you were playing BCRX, it’s going down and down lately, is there a price where you would re-enter or is this stock a no-play?


  138. Rainman - yup, like a hawk!  I can buy a call on DIA or TZA at 1.25, put in a stop at 1.08, watch the chart turn immediately downards, hit my stop and close my position, then immediately turn and run it up, just to infuriate me…


  139. Yodi --
    TOS is showing me about -$5600 PM for 10 contracts on that Apple trade (with a $3.65 net debit).


  140. Phil:
    Does any SQQQ play on AAPL earnings make sense?
    If AAPL is 20% of NAS and SQQQ is -3X NAS doesn’t that make SQQQ -0.6X AAPL?
    I am thinking a long SQQQ Jan27 strangle?
    Let me know what I am missing.
    Thanks


  141. mrmocha / hawk — maybe we should work as a team and play a little pong 8)


  142.  Does anyone know what this scam is all about?


  143. @Biodiesel

    errr….ummm….not to be too cynical but in these clintonesque day, please define: "if AAPL splits tonight". 
    I might be interested in the other side of the bet too if you mean that AAPL will offer a 3 for 1, 1/2 for 1, that type of split.  If a stock dividend, then not.  


  144. Closed my AAPL calls from this morning, used a little of the profits to roll the dice on the 350/360 call spread in case of an earnings pop.  Between AAPL and ARIA, this is one fun day in the markets!  I guess today is "Brought to you by the letter A."  Should we gear up to play BIDU and BA tomorrow?


  145. Phil — Here’s a bargain for you Phil: I Have To Have That


  146. Pharm  – at what point would you buy back OPXA and AEN?  I sold near the top and just watching them pull back for now.  Thx. 


  147. escohen5
    Well I would not play 10 contract but I set it up again and receive the same amount in any of my three accounts
    One contract 4,022.00 margin PM I have various plays in 2 accounts but even in the one where I have no AAPL plays it is the same. Well I would not go in for that. Your price  margin looks good so possible go for it.


  148. Don’t count on a stick save today fast stoch, realitive strength index unusually low, and well below the EMA. Programed buy/sell stopped about 12:30. All on AAPL and IBM?


  149. PHIL:
    Thinking of buying ABX  at $48.09 and selling 2012 $50 C in my IRA account for 17 % return if called. What do you think? Thanks. 


  150.  NFLX – Why am I drawn to the idea of selling Feb $125 Calls?  It is like a song is stuck in my head.  I am hoping by voicing this personal problem y’all will keep me from doing unto myself….


  151.  Gap/Button – I think it’s a fine idea but I’ve gotta tell you I give up trying to guess what this market is going to do.  Although it is exactly in line with my theory that the plan was to hit Dow 11,850 at all costs and that "they" would not care about Jobs and would continue on plan regardless – it’s kind of freaky to see it happen.  Can it really be possible that our markets are so tightly controlled and so dominated by TradeBots that the retail player is a non-factor?  If that’s the case then, then we stay up until next week no matter what and then drop straight off a cliff for a good 5-10% correction.  So I don’t think I’d go with the Jan puts, in any event.  

    Of course it is worth noting that everyone but the Dow is down or flat today.  The Dow is boosted by a 2.5% jump in CAT and a 3% pop in BA that account for almost 40 points of the gains today.   IBM, MCD and IBM are each contributing about 8 points and no one is really hurting them to the downside other than VZ, who are celebrating the IPhone by dropping $1.  

    AAPL/High – You have WAY too much AAPL if that dip hit you for $67K!  

    New levels/Rav – You are right – as part of my healthy capitulation process I must accept the need to make new levels.  I’m really just waiting for expiration day as the week after that is when we collapsed last year but, after that, the sky is the limit if we’re still heading up.  

    Flatline/Chuck – You are right, not much to be done about it but a bullish play every day at 2pm and taking the money the next morning has been annoyingly persistent.  

    IPad/Cap – Yes, but keep in mind they are $499 and the question is "Why would I need/want a laptop?"  Other than the fact that my laptop sits on my desk and runs a monitor as well – there is no reason I couldn’t just plunk my IPad into it’s spot on a charger, use it all day for work, and than take it with me to listen to music or watch TV on the way home and then sit on the couch and answer my mail and read my papers and magazines in the evening.  Unless you type A LOT, there is no point to the keyboard section of a laptop and, also, I haven’t bought a program in a store since I bought my IPad but I do have about 200 aps (90% free) – that’s another game-changer.  

    UK/StJ – That’s what I was saying on the weekend, it’s s tricky balance and the markets are betting our governments are infallible and will get everything just right.  

    ARW/Scott – Well, I’m a big fan of take 20% and run on a stock especially.  On the other hand, the option prices are pretty good and you can protect games by selling the June $35 calls for $4.50. which drops you basis to $26.05 with + $8.55 on a call away vs. taking $6.60 and running now – it’s not bad money ($1.95 in 6 months) for leaving $26.05 on the table.  Of course, if they do pull back and you still think they are a bargain at $33, then the June $32.50 puts should be up to about $3 (now $1.30) and if you sell those, you drop into a buy/write at $23.05/27.77 which makes this not a bad long-term hold if you want something like that in the DHH.  

    Gimmicks/Mike – Cramer says this proves Citi’s greatness!  

    News/Kustomz – Too depressing.  I’m sure you know from my previous writings that the Wizard of Oz was a parable about gold, banks and the Great Depression and the idea that the Witch (Wall Street) used poppies to dull the wits of the population was around even then (the British, of course, did this to drug China in the opium wars).  So why should things change in our dealings with Afghanistan – it’s just an extension of long-standing Westerm policies. 

    Split/BDC – I think AAPL likes the Google-sized stock price.  

    NFLX/StJ – Yeah those web stats are cool.  Shame on GOOG to have 2Bn videos a day and they can’t figure out how to make 0.001 each (still $2M per day or $750M/yr).  

    YRCW/LV – Very interesting as the Transports are down today.  

    TM/Savi – You let the April callers get a bit too far in the money but no big deal as you have $31 2013 $55s against the $15 Apr $70s and the puts are gone so net $13.20 now net $15.50 ish is a good gain.  I would take the long $55s off the table and buy the 2012 $75s for $13 and the $95s for $3.35 and roll the Apr $70 callers ($15.30) to 2x the July $80s ($7.70).  That takes about 1/2 off the table and your callers have $1.36 delta vs $1.06 for you so slightly bearish with 6 month of time on your side and the callers are 1/3 premium, about the same as you.  Very easy to adjust if TM goes higher as you can add 2013 $85s (now $11) and pull the 2012 $95s on a good run.  Anything down or flat would be good for you.  

    Protected/Shadow – Look what Tina got me for Xmas!  

    That was my favorite XMas gift this year (2nd was a stand with a keyboard for the IPad – great for typing on the road).  

    CAC/StJ – Yep, everyone is off to the races.  I’ve had that top for years, it works with a magnet in the base and doesn’t stop spinning until the battery wears out, which is almost never.  I used to use it to freak people out when they came for interviews as its fun to see how distracted they get by the top on my desk that keeps spinning and spinning way too long…  They have a cool levitating version now.  

    Changing the World/BDC – Great!  I wish I wasn’t doing my raise at the same time.  

    AAPL/Palotat – it depends on the move but most likely roll into a vertical on the side AAPL goes past.  

    Dow/Rain – I can’t believe we’re up in the first place! 

    BIDU/Yodi – You do realize that was buying a put.  There is no margin buying a put.   As to the AAPL play, $4K in margin to make $6K upside is not a bad way to go, especially when you are starting out $4K in the money.  

    SQQQ/Reza – It’s fine for a gamble but kind of hard to bet against after today, especially using an ultra.  If AAPL were the only stock moving the Nas then you would be right but other stocks can go in other ways – like they did this morning – to prevent an AAPL sell-off from taking down the Nas.  It’s interesting because they held up the nas with other stocks (AMZN all-time high today) and then that forced the index buyers to buy AAPL, even though it was going down – very clever!  

    Scam/BDC – Well they could be trying to get your personal info (needed to get an account) or they could be looking to use you as a patsy for illegal trades they will run under your name.  Try telling the SEC "Well they gave me free money and told me to trade it and I’d keep 80% of what I made" as an excuse for insider trading activities on your account….  8-)

    Thanks Rain!  


  152. stick me


  153.  NFLX   –  ooppss… I meant $205 Calls…


  154. @Biodiesel
    Not necessarily a scam, there are legitimate Prop Firms out there.  But be careful and only go with established and the best.
    Off the top of my head, the Bright Trading Group focuses on equities and has been around.  (not a recommendation, solicitation or endorsement). 
    Just do some internet searches.  There are many firms out there, but you are right to be careful.


  155. Just saw Phil’s thoughts and notes, trust his instincts


  156. C = 1294.72, F =1291.00


  157. Interesting:

    Citi had $190.4 billion in cash and deposits with banks at the end of 2010. The company also had a net positive position in the Federal Funds market of $57 billion. Money is either borrowed or loaned overnight in this market, so it can be converted into cash very quickly.

    Taken together, this left Citi with $247.6 billion in cash, which equals 12.9% of the bank’s $1.91 trillion in assets, according to Bove.

    “This is possibly an all-time record but I am sure that in the Depression the ratio was higher,” Bove wrote in an email to MarketWatch.

    In contrast, J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 44.95, +0.04, +0.09%)  had about $90 billion of cash and deposits with banks at the end of 2010. The bank also had a negative Federal Funds position of about $65 billion. This is on an asset base of just over $2 trillion.


  158. The IWM 80.41 (now 80.45) line just broke, we are going further !!


  159. Let’s PARTY !!!!!!!!!!!!!!!!!!!!!!!!!!!!


  160. Phil
    The majic ecth has changed since I had one 50 years ago, I personally would break/smash a touch screen, I have enough trouble with a keyboard and those touch pads on laptops are a no no.
    I can detect all kinds of things but what do they mean, I have no idea now a stick? I don’t trust it, I think consumer high tech is a miss this xmas and I see more androids than iphones. Meaning?


  161. Tx Phil



  162.  ABX/Dflam – Yes, I do like it.  LONG-term, ABX is a must have hedge against inflation.

    NFLX/MJJ – I totally agree with that one.  

    11:00 AM On the hour: Dow +0.39%. 10-yr -0.44%. Euro +0.88% vs. dollar. Crude -0.02% to $91.52. Gold +0.58% to $1368.40.

    12:00 PM On the hour: Dow +0.54%. 10-yr -0.35%. Euro +0.90% vs. dollar. Crude flat at $91.55. Gold +0.67% to $1,369.70.

    01:00 PM On the hour: Dow +0.54%. 10-yr -0.35%. Euro +0.53% vs. dollar. Crude -0.04% to $91.50. Gold +0.51% to $1367.50. 

    02:00 PM On the hour: Dow +0.45%. 10-yr -0.27%. Euro +0.6% vs. dollar. Crude -0.04% to $91.50. Gold +0.45% to $1366.60. 

    03:00 PM On the hour: Dow +0.52%. 10-yr -0.18%. Euro +0.76% vs. dollar. Crude -0.21% to $91.35. Gold +0.39% to $1365.80.

    NAHB Housing Market Index: 16 vs. 16 expected, 16 prior. "Housing remains on the sidelines of a weak economic recovery as consumers and builders wait for clear and consistent indications that jobs and economic output are reviving," NAHB Chief Economist David Crowe says.

    With volatility low, the S&P 500 (currently +0.03% to 1,293.65) is headed for a 33rd straight day closing above its 10-day moving average, which is getting up there as far as streaks go. 

    U.S. public pensions face a $2.5T shortfall that will force state and local governments to sell assets and make deep cuts to services, according to Orin Kramer, former chairman of New Jersey’s pension fund. Although Kramer says some local governments would experience “severe strain,” he does not foresee mass defaults.  

    Stop the presses: David Rosenberg is bullish… on muni bonds, "the most compelling opportunity to add income to portfolios since… late 2008." The doom-and-gloom hype is way overblown, he says, and besides, "even if you buy into the default talk, look at the yield protection you get now… Long-term AAA-rated munis are now trading well north of 5%, or 116% vis-a-vis Treasury bonds." 

    "I have been too bullish," SocGen’s Albert Edwards declares, changing his view that America’s demographics would prevent a Japanese-style lost decade. Retiring baby boomers liquidating their assets "exacerbates the secular bear market for property prices… as well as the equity market," and not even QE2 can prevent it until "rock-bottom valuations are reached." 

    Which chart showing who holds U.S. debt worries you more? Is it that China leads foreign investors that hold a combined total of $4.3T in Treasury securities? Or that the U.S. owes so much to its own people (42.2% to American indviduals and institutions, and just 7.5% to China)? 

    The IEA raises its forecast for 2011 global oil demand, pointing to improved global economic growth. The new forecast is for demand growth to expand by 1.4M barrels/day to 89.1M bpd this year. Yesterday, OPEC raised its 2011 demand estimates as well. 

    While both the IEA and OPEC forecast growing demand for crude in 2011, the two remain at loggerheads over whether OPEC’s current output ceilings are appropriate. On Monday, IEA’s executive director warned OPEC "must continue to be alarmed" over rising prices, prompting OPEC’s secretary general to respond: "There is more than enough oil on the market." 

    The reality of rising fuel costs begins to sink in, as airline stocks sink after Delta’s (DAL -3.1%) deep earnings miss. Rising fuel prices could add $1B to costs over last year, the company says, and options for offsetting those costs are few. LCC -3.1%, UAL -2.2%, AMR -1.5%.

    Where’s the global economy’s breaking point? When the energy sector’s size hits 9%, says Merrill Lynch’s Sabine Schels – and it can get there with $120 oil, which could be fueled by emerging-market inflation and the coming summer demand. It’s already looking a lot like 2008, says the IEA’s chief economist.

    Macroman notes that Shanghai has fallen below its 200 day moving average and considers the worrying implications for commodities, whose fortunes have tracked Chinese shares. A divergence in performance, starting in mid-November, has widened significantly. 

    Yet another stock celebrating a move to send jobs overseas:  Evergreen Solar’s (ESLR +2%) closing of a Massachusetts plant shows that green energy will never produce millions of jobs for Americans, NYT‘s Edward Glaeser writes. It’s pointless to try to beat China at cheap manufacturing, he says; the U.S. formula for success is entrepreneurship and education, not large-scale manufacturing… "from ideas, not products." 

    IAMGOLD (IAG +4.4%) says Q4 gold production was up 21% from the third quarter, to more than 310K ounces, and expects to produce 1.1M-1.2M ounces in 2011 at cash costs of $565-595 per ounce. 

    Up 3.3% on this news?  Boeing (BA) pushes back the delivery date for its new 787 Dreamliner until Q3, and says extra time has been built into the new schedule in case anything else goes wrong. It’s the latest of several delays for the new jet; flight testing was halted after an electrical fire on a test plane in November. BA +1% premarket. (PR)

    Shocking: "Three years after bad home loans helped trigger the recession and six weeks after the government cashed in the last of its $45B Citigroup (C) investment, the New York-based bank is still selling mortgages that violate quality standards, according to an internal Freddie Mac review." (Bloomberg) C -4.7% premarket. 

    Goldman Sachs (GS) was clearly caught unawares by the uproar over its private Facebook sale – but why? It’s clear the media hoopla was designed to create hype that securities rules are there to prevent, the Deal Professor says, and while the risk of getting nailed was small, the consequences are anything but.

    Three lunchtime reads:
    1) The role of the dollar: Who cares?
    2) The "new normal" of unemployment
    3) Emerging-market bond warning


  163. Rainman - I guess my magic still works, I got out of my NFLX calls even after stopping NFLX dead in its tracks for an hour.


  164. Bought a few C 5 calls for .02, what the heck, a lot can happen in three days…


  165. Phil,
    That $67k dip was the hit to my long leg not the whole position but a hit of that magnitude can sometimes make you rush to hit the close button when the market is in a panic!!


  166. Good call JRW, made a quick $100 bucks off my TF contract. Gracias Senor!


  167. Sorry, been in meetings….

     

    GILD/cwan – I would roll them up.

    CERS – I am holding, but when in doubt, sell 1/2.

    BCRX/mrm – time to move on I think.


  168. Anyone following my computer development
    Yesterday I replaced the northbridge, heat tubes, and cooler, added a jury rig fan to move air in the cabinet, in the past this would be the CPU bus, controler, and buffer. I turned the memory clock up 66%  to max, no more heat problems, total stability. The next step will take a lot of study but this thing is better than expected and now running very cool.


  169. We ought to be looking to trade CREE during earnings. They have been good for 10% drop the last couple of times. They build up that stock and it manages to not meet expectations every time! 


  170.  Meaning/Shadow – Who knows what this all means now.  I’m just stepping back and figuring NOTHING matters other than hitting the bot goals (Dow 11,850) to draw in the right number of retail players to transfer the bags prior to the fall-off.  It’s all up to AAPL now but does it really matter what they or IBM say?  The Nas made new highs today and the Dow is just off goal and the S&P is just 5 points below 1,300 – so much for the people who "only" predicted 1,350 for 2011, right?  

    $67K/High – Oh, that makes me feel better then!  

    What a crazy day:

    At the close: Dow +0.43% to 11838. S&P +0.14% to 1295. Nasdaq +0.38% to 2766.
    Treasurys: 30-year -0.41%. 10-yr -0.23%. 5-yr -0.06%.
    Commodities: Crude -0.33% to $91.24. Gold -0.1% to $1366.80.
    Currencies: Euro +0.67% vs. dollar. Yen +0.44%. Pound +0.47%.

    Market recap: Investors shrugged off slides in Apple and Citigroup, and stock indexes rose after data confirming manufacturing strength pushed materials stocks higher. Treasury prices fell, pushing 30-year yields toward their highest levels in nine months. Crude futures inched lower, cushioned by a weaker dollar. Decliners narrowly outnumbered advancers on the NYSE.

    Cree (CREE): FQ2 EPS of $0.55 misses by $0.03. Revenue of $257M (+29% Y/Y) misses by $20M. Shares -10.2% AH. (PR

    IBM (IBM): Q4 EPS of $4.18 beats by $0.10. Revenue of $29B (+6.6% Y/Y) beats by $800M. Shares +2.5% AH. (PR 

    All up to AAPL now.


  171.  MOS moving higher on buyout rumors.


  172. Phil – I respectfully disagree….

    Investors shrugged off slides in Apple and Citigroup, and stock indexes rose after data confirming manufacturing strength pushed materials stocks higher.

    Should say

    Investors shrugged off slides in Apple and Citigroup, and stock indexes rose after more free money hit the table.


  173. OPXA & AEN – I would wait on each.  OPXA to $1.50 or so, AEN $1.  Just let the charts do the talking.


  174. 2 1/2% on TNA (sold 1/2 the position too soon at IWM 80.45); tomorrow we are likely to go higher IWM 81.45 or so.


  175. AAPL blew the doors off of even the whisper # of $5.90


  176. AAPL had great i-pod numbers even probably the touch which is a sleeper of a product!!!!!!


  177. AAPL even Cramer was right predicting over $6.00


  178. will see AAPL over $355.00 later. 


  179. the vz sales will skyrocket and the droid will suffer in mkt share in USA! even the Chineese gov’t is buying i-phones for its employees. Can you believe it.


  180.  Free money/Pharm – Definitely a factor but AAPL looks like they earned every dime of their rally.  7.33M IPads sold in first Quarter – no cannibalization of other products.  

    Apple (AAPL):   FQ1 EPS of $6.43 beats by $1.07. Revenue of $26.7Bbeats by $2.3B. iPhones sold: 16.24M. Macs: 4.13M. iPods: 19.45M, iPads: 7.33M. Shares are halted. (PR)

    Apple sold 4.13 million Macs during the quarter, a 23 percent unit increase over the year-ago quarter. The Company sold 16.24 million iPhones in the quarter, representing 86 percent unit growth over the year-ago quarter. Apple sold 19.45 million iPods during the quarter, representing a seven percent unit decline from the year-ago quarter. The company also sold 7.33 million iPads during the quarter.

    “We had a phenomenal holiday quarter with record Mac, iPhone and iPad sales,” CEO Steve Jobs said in a statement. “We are firing on all cylinders and we’ve got some exciting things in the pipeline for this year including iPhone 4 on Verizon which customers can’t wait to get their hands on.”

    Nas futures now up 0.5%.  

     


  181. Ol Steve has got to be proud !!!!


  182.  Wow. the AAPL numbers are incredible. growth is incredible. the percent of business from outside the US is incredible. the EPS this year for AAPL should be incredible. even at $400 AAPL would be ~15 PE after you subtract cash. wow. what a business.


  183. Apple should be in to top 20 soon…
    http://www.ritholtz.com/blog/2011/01/apple-the-sovereign/ 


  184. there she goes!


  185. Phil, 
    Any adjustments to the VIX play? After the lessons you are teaching me not to let things get too out of hand I am trying to be more vigilant. That is the March 16/19 with the VXX 27 puts (for net 1.70)… Now down 1.40…
    Thanks


  186.  IBM earnings  http://www.ibm.com/investor/4q10/press.phtml

    Fourth-Quarter 2010:

    Diluted earnings per share of $4.18, up 16 percent;
    Record revenue of $29.0 billion, up 7 percent as reported and adjusting for currency;
    Record net income of $5.3 billion, up 9 percent;
    Pre-tax income of $7 billion, up 9 percent;
    Gross profit margin of 49 percent, up 0.8 points;


  187.  AAPL – 347 now after hours



  188. ONXX – that is a VERY bullish candle today.  My Ps never filled, but the BCS is up nicely.


  189. Thanks Phil for strategies on ARW.  I had to chuckle late in the day when S&P came out with a downgrade from STRONG BUY to BUY on the same day as the upgrade from Longbow.  Like you, I love the idea of taking 20% profits and will more than likely find another horse to ride while the Analysts jockey over the stock.  In a pull back I can always add it back or re-enter with Buy/Write (my personal favorite).  I will be studying the rankings this week as I need to add 4 long positions to remain properly hedged as option expiration week has afforded many opportunities to be called away this time.


  190.  AAPL not barreling higher. That would be a nice if it did.


  191.  BDC – you owe me a buck!


  192.  Per Lex 1/18/2011:  Standard Chartered is surveying Chinese attitudes through Baidu search trends. They report that the hot issue in China is inflation.  Judging by searches for the term "CPI", "inflation", while the upward curve of CPI search trends tends to match increases in Official CPI, there is now more online interest in inflation than 2008, when inflation hit 8.7%
    Chinese are responding to inflation, according to the search term survey, as follows: "gold, FX, structured products and equities, respectively."


  193.  AAPL has over $65/share in cash and long term investments. Wow. And, it keeps growing every quarter. Big Iphone 4 backlog. Raised next quarters EPS/rev way above street, and they always low-ball…must be going really well so far for them to do that. I’m talking myself into selling some $300 puts, as it seems like a) great entrance, or b) free money.


  194. Phil / short Steel and base metals. Returning to my steel short thesis. There is apparently huge global excess manufacturing capacity in steel. The main uses are autos, construction (buildings and infrastructure) and shipbuilding (don‘t have % breakdown globally). The US, Japan and Europe won’t be using much steel for construction/infrastructure given the huge excess capacity and emphasis on budget austerity. Shipbuilding has huge overcapacity now coming on line (witness Dryships).
    Auto looks like it will muddle through subject to consumer liquidity/jobs etc and growth in the BRICS.
    We’ve read about the massive infrastructure projects built in China during the past 2 years, empty cities, shopping malls etc. If China’s growth slows then this steel sector could return to the 50% capacity utilization of 2008?
    Steel and iron ore still look like a decent short prospects at current prices?
    Similarly read that China has only consumed 65% of the cement they produced / imported during the past 5 years (no way to check).
    Surely the new emphasis on austerity and controlling inflation in the BRICS has to seriously threaten demand for commodities like steel, iron ore, cement, copper etc., especially if China really is a bubble. Are we approaching the time to short these manufacturers globally?


  195. hanna/AAPL – a and b sound good. I will wait till after expiration to see where the markets go.


  196. I am really starting to like the communist regime in this country! Look at the market, up and away! No wonder they keep on re-electing their leaders in China… :-)


  197.  T-Dog, who would you pick on if basic materials demand drops?  Arcelor?  Chilean ETFs? Cemex? BHP Billiton?


  198. Hanna/AAPL
    What expiration puts?


  199. Phil,
    What do you think of CREE
    I think a couple of months ago, you mentioned to a member that you liked the stock at $55.
    Thanks for any strategy you can come up with!


  200. http://www.marketwatch.com/story/four-reasons-buffetts-legacy-will-die-by-2020-2011-01-18?pagenumber=1
    In the latest Foreign Policy Journal, Immanuel Wallerstein, Yale scholar and advocate of “world-systems analysis” warns that “The Global Economy Won’t Recover, Now or Ever.” Never? Berkshire shareholders better listen: “Virtually everyone seems to believe that in the next few years the world will somehow ‘recover’ from these difficulties” since 2008. “But it is wrong,” warns Wallerstein.“All systems have lives. … Our existing system, what I call a capitalist world-economy, has been in existence for some 500 years and has for at least a century encompassed the entire globe. It has functioned remarkably well. But like all systems, it has moved steadily further and further from equilibrium. For a while now, it has moved too far from equilibrium” into a “structural crisis.”“The only sure thing is that the present system cannot continue. The fundamental political struggle is over what kind of system will replace capitalism, not whether it should survive.” Get it? Capitalism is dying, rapidly


  201.  Hanna/Maya, I’ve been thinking the same thing about Apple puts, but I keep stopping myself because we are expecting (hopefully) a 5-10% correction.  If it finally happens, we will get a lot more for them.  


  202. terrapin22
    Thanks for the link, scary stuff that is all too true, I’m saving that one!


  203. Phil
    Do you know someone or can you translate those articals? please continue


  204. Palotay/AAPL
    Since the Steve Jobs news is a done thing and since AAPL reported phenomenal earnings today, their stock not going up 5% would seem to me to be the( 5% correction) you are looking for.
    But you are right…if we get a market correction, today’s earnings will be forgotten and AAPL will take a hit too


  205.  MOS/Aug – That’s a little strange as Cargill (huge private Ag firm) is dumping their 64%, $25Bn stake in MOS, presumably because they think it’s toppy but the spin as Cargill dumps it is that this will make MOS a buyout opportunity.  I wouldn’t bet against them – at current Ag prices, their valuation is reasonable but I’m not too comfortable with them at $85 either.  Still, it only costs $6 in margin to sell 2013 $60 puts for $6.80  and you can buy the $65/80 spread for $8 so net $1.20 (plus $6 margin) to make $13.80 at $80 and the good thing about buyouts (if it ever happens) is that they might either pay off your contracts early or at least squash the premiums so you can cash out early.   Of course, even if you have to wait two years to make $13.80 on $7.20 cash and margin, many people would consider that a decent return and your only risk is owning MOS at net $61.20.  

    VIX/Amatta – Like TBT, the VIX is being artificially depressed.  The question is – how long can they keep it up and the answer seems to be forever at the moment.  The March $27 VXX puts are $1.43 and $3.50 out of the money while the $16/19 VIX bull call spread is $1.75 so net .32 but, of course, you get your $1.75 back (at the moment) and then the play is just about expiring the VXX puts worthless.  It does seem crazy to think that the VIX will stay below 16 but why not?  If we keep going up for another 60 days in a row, then maybe it goes to 12.  The June $17 calls are $6.80 (+2.25) and have a higher delta than you so if the VIX goes down the roll should get cheaper.  If you get worried, you can roll out there for about $2 on the assumption that you can get that back selling the April or May something after the March caller expires worthless.  That’s what you need to keep an eye on if you plan on staying with that side.  If you don’t like that outcome – just cash out now and then you only have to worry about keeping VXX below the money (and right now the June $22 puts are $1.30 so that’s your watch level there but you don’t WANT to roll if you don’t have to as VXX has a nasty decay over time).  

    Piracy/StJ – Give me $12Bn and a license to kill and I’ll have that whole area cleaned up next week!  

    ARW/Scott – Right you are.  Plenty of rising fish in the inflationary sea….

    Inflation/ZZ – I think in the previous Stock World Weekly (9 days ago), there was an article that the number one character used in China was the symbol for inflation.  When inflation hit 8.7% in 2008, Chinese were gaining jobs in record numbers and wages were rising and that was 8.7% off 2007′s 100 to 109.  In 2009 they got another 8% to 118 and last year about 10% to 130 so even if it’s "just" 7% this year – that’s still another 13, which is 44% more price growth than in 2008.  That’s the joke about inflation statistics, they keep measuring them against bigger and bigger bases.  That’s why, once it starts, it quickly gets out of control.

    AAPL/Hanna – Totally great earnings BUT – Who are they hurting?  Certainly the answer can’t be "nobody" as retail sales are generally flat so a $9Bn increase in quarterly revenue had to come from somewhere.  

    Steel/Tusca – Did you know China consumes almost 1/2 of the World’s steel?   Our use and Europe’s use is irrelevant – it’s ALL about China, who are projected (via extrapolation) to go over 700MT this year.  

    China is also significantly ramping up their steel production.  Just between 2008 and 2009 they went from 17.7% of World production to 27.2% (US is about 10%) and their goal is to be self-sufficient in steel production.

    This can lead to a TREMENDOUS over-production of steel if China trips up and we already see they are using that steel to build empty cities and airports where no planes ever land and, of course, rails that already eclipse the total mileage of tracks in the rest of the World combined.  

    Steel Consumption- U.S.-Vs.-China

    So I like the premise of shorting steel but MT, X, etc are nowhere near their old highs – not even half.  That means the danger on this investment is very much to the upside so it depends how sure you are that China will allow their economy to slow down.  Since China has about $3Tn in cash and no debts – I would not make this one of my favorite plays – temping though it may be.  If the steelmakers double back to where they were in ’08 – I would feel very differently and would be happy to make steel a focus short (one we are determined to stick with and DD and roll as needed), as we did in 2008, when we shorted X from $80 to just over $100 before finally having our day.  

    If anything, I’d say BHP is overdone (aside from FCX, of course).  They are dangerous with earnings coming up on 2/16 but I do like the Feb $85 puts at $1.12 as a speculative short.  

    Commies/StJ – Yep, there’s nothing like government intervention to prop up an economy.  It works so well you would think everyone would do it!  What can go wrong? 

    CREE/Maya – I am pretty sure (and I HOPE) that I said that I DO NOT like CREE or any of the LED guys as I think that it’s an industry that will be commoditized and shipped to China in very short order.  Perhaps I said that, IF someone wants to buy CREE, THEN I’d wait for $55 and maybe sell $50 puts but please do not mistake that for me liking CREE!  I just think that’s the level at which enough suckers can be herded back into the stock to give it support.  

    Wallerstein/Terra – I don’t know if you can call Capitalism a structural crisis.  Does he propose a return to hunting and gathering or are we allowed to farm and, if so, how will land rights be determined?  Capitalism isn’t a fad (and I include Socialism under Capitalism as it’s just Capitalism with a conscience) – it’s the most efficient natural organization for societal transactions.  No one forced Capitalism on the World 500 years ago – it developed along with human society over time but even cave-men hoarded trinkets and traded them for a particularly nice bone club or whatever it is cave-men traded for.  

    Translate/Shadow – My Chrome does it automatically.  

    Not much out of AAPL so far – looking flat along with Europe and our futures.

    Speaking of our future – Nice shot of the Treasury with our Master’s flag flying on the mast!