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No Sale Thursday – Will the Dollar Save Retail or Doom Us All?

It is down but not yet out.  

The once mighty US dollar flops around in the mid-70s like a fish out of water, gasping for it’s last breath.  Like the Emilio, the goldfish (see link), it would be very easy for the powers that be to stomp the life out of it in its weakened condition but, if someone would be so kind as to pick it up and put it back into a bowl of water (or Global Liquidity, as the case may be), it might fully recover as soon as it catches its breath.  

As noted by Gold and Oil Guy, Chris Vermeulen – "Most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally."

Chris also has some lovely charts indicating that the Gold sector may be presaging a rapid decline in the price of gold and another that points out that the Russell and the Transports are clearly rolling over – something that was discussed in last night’s Phistockworld Wrap-Up Show:  

Indeed Bill Gross’s comments are well worth a read and let’s not forget Mr. Ron Paul, who we discussed yesterday morning, who added yesterday: "It is important to understand the Fed’s role in creating today’s unemployment crisis, while also highlighting that high unemployment and low economic growth can persist even in the face of tremendous monetary inflation."  Wow, that was the topic of Monday’s special post – how timely we are getting!   Robert Reich added to our conversation last night, saying

Corporate earnings remain strong (better-than-expected reports from UPS and Pfizer fueled Tuesday’s rally). The Fed’s continuing slush pump of money into the financial system is also lifting the animal spirits of Wall Street. Traders like nothing more than speculating with almost-free money. And tumult in the Middle East is pushing more foreign money into the relatively safe and reliable American equities market.

It’s simply wonderful, especially if you’re among the richest 1 percent of Americans who own more than half of all the shares of stock traded on Wall Street. Hey, you might feel chipper even if you’re among the next richest 9 percent, who own 40 percent.

But most Americans own a tiny sliver of the stock market, even including stocks in their 401(k) plans.

What do most Americans own? To the extent they have any significant assets at all, it’s their homes.

It’s year 4 of our housing downturn and home prices are still dropping.  This is not at all surprising to those of us who are not in denial because we realize that homes are expensive, generally costing much more money than the average person can find under the sofa cushions.  That means they have to save up if they want to buy one – even if you can demonstrate that it would save them money in the long-run (see "Interest Scams and How to Avoid Them – Mortgage Madness" for a reality check on that).

This is the part the top 1%, even the top 10% don’t get and why they think that housing will recover if the Fed just keeps giving money to banks.  That is total crap!  People (the ones who buy the homes) need to save up (back to Tuesday’s post now) two years of the average American’s income just to put a 20% deposit down on a new home.  

That’s without moving and furniture and painting and all those other little expenses that those of us who can afford them consider annoying, whereas, for the bottom 90% – they are insurmountable obstacles.  The bottom 90% used to borrow deposit money from parents and other family members – now those people have no spare money either.  

If anything, the banks have tightened their lending requirements and the MSM has blamed the victims of the sub-prime scam for not being smarter than Mortgage Professionals and Bankers and seeing through the contracts they were advised to accept (by people they paid professional fees to).  That has taken the option of giving the working poor the ability to purchases housing with little or no deposits off the table – EVEN if the mortgage and taxes are cheaper than their current rents.  

Why?  Why would we do such a thing?  Because the Banksters are not done stealing the homes yet.  There’s a reason that cash is required at foreclosure auctions and that there is no way a poor person could get a bank to give them a blank check to go house shopping with:  The game is designed to block them out.  Only rich people with money can buy cheap houses, silly.  What do you think this is, Russia?  China?  We’re Capitalists here – and that means NO POOR PEOPLE ALLOWED, right?  

The Colbert Report Mon – Thurs 11:30pm / 10:30c
The Word – Swift Payment
Colbert Report Full Episodes Political Humor & Satire Blog</a> Video Archive

Unfortunately, we need those poor people to BUYBUYBUY the crap we sell them.  Again, the problem the investing class has understanding this is that we are too far removed from the poor.  And by poor, I don’t mean your maid or the guy who rakes your leaves, I mean the 50% of the working people in this country who earn less than the median $26,500 a year.  Jim Cramer says they will be buying houses, Jim Cramer says they will be subscribing to NetFlix and shopping on with their high-speed web browsers, perhaps on their new 3-D TVs…  They will eat out at Chipolte and, of course, they will BUYBUYBUY food and gasoline no matter how expensive it gets.  

Does that make sense to you or, is it just remotely possible, that 50% of the people in the United States of America can’t possibly afford to live in Bullish Projection America and that the growth that is priced into the markets is, perhaps, overly optimistic?  Our friend, Whitney Tilson, has finally capitulated and once again we’re feeling very lonely on the bear side of this market.  I have long said I will feel comfortable being bullish long-term once we get past April without a collapse as, by then, inflation will have taken hold and we can be as aggressive as we like with little fear of a pullback.  

Perhaps that will make us slow to join the party but I’d rather be late than wrong because late means we can catch up, while wrong means we’re down considerably and writing books with sad little titles like "Getting Back to Even."  I don’t mean to pick on Cramer but it’s amazing how many people I meet begin their questions with "Cramer says.." so he sort of embodies the mentality that led us to disaster in the last cycle and, as indicated in this chart from last year – here we are again, right at the top or the overheating commodity cycle that is driving inflation rapidly higher.  

I guess we can ignore it.  

But not today.  


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  1.  Phil: All    Urgent need to 
    I need to know if anyone else can relate to this scenario watch/11027260/

  2. I am really going to start believing these Fibonacci retracement – classic example, the dollar. The latest daily chart shows the greenback bouncing off from one line to the other! Uncanny: 

  3.  And the latest installment in the fundamentals screening. This time – accruals and insider buying. Accruals actually turned out to be counterintuitive, but some good research backs up the argument.
    More on that subject in coming days. I will also start setting up the screens and publishing results.

  4. Colbert (along with Lewis Black) are two of the funniest men on TV…


    Rav – my premise on the TLT/TBT going forward is here….

  5. Good Morning.
    Here is my Robot theme song …

  6. Hey guys! 
    Phil, that round up bit is just too funny- 
    I’m not a Bible thumper but I do go about every other Sunday.  Nonetheless, Bill Gross had me searching for Mammon last night on Google.  I just couldn’t agree more with his comments.  Of course, his credaiility is completely in question being that he himself is a money changer.. and he stands to lose the most in an inflationary environment… but the comments are still dead on.  Thank God someone of his stature is still capable of speaking the truth.

  7. Good Morning!
    Pharm – Two of my favorites  :)
    What ever happened to Dennis Miller anyway?………oh yeah…..

  8. Good Morning Phil, 
    LOL The evening wrap up is fantastic! good job.  PCLN short a bullish play though?… any airline shorts for today?

  9. Anyone know anything about APKT ?
    … that sucker has been flying; looking for an exhaustion level to trade

  10. Phil,
    In current environment, your  thoughts on long U$ and short gold:
    (1)  USD spreads (Mar vs Jan12,  22/25 selling 21 puts) ?
    (2) Gold using GLL calls or  GLD/GDX puts, given low vix

  11. Morning Phil and All
    Looks like EDZ in the 25kp is coming down should i still try to buy the Bull call spread Yesterday you mentioned 12 contracts for those who are not getting the right margin on the short March puts?

  12. For tech. analysts, KWK is greaking higher from a long flag pattern.

  13.  I guess that would have been pre-market !  (apkt)

  14.  MCP … 60 strike calls should be a good sale
    Hard to short the stupid stock.

  15.  CMG reports next week.
    Pumping ahead of report.
    235 I think is a good place to look for a short, I just have options right now.

  16.  short a little CMG at 235.50

  17. What is everyone thinking on the DIA puts in the $25KP? 

  18. DIA puts are fine for now JM.

  19. Seems the Ags are forming a cup-with-handle formation.  Might be indicative of another move up in the sector.  MOO, MON, AGU, CF, etc.

  20.  Pharm – you mentioned ABT over the weekend.  It got close to your $45 target and seem to be turning around.  Do you see an entry yet?
    Do you follow IBD and the O’Neal school of entry points?  I agree on the ag sector.  By his rules, AGU is a breakout buy at $95.90.  (.10 above the last high.)

  21. Good morning!  

    Dollar ramped up to 77.8 (up 0.6) as Egypt gets worse.   

    Overall retail numbers were strong, especially after the weather discount, up 4.2% (but over a very bad 2010).  Again, great reasons for the markets to drive higher so let’s see if they do.

    TradeBot likes the IWM Weekly $78 calls at $1.60 as long as IWM is holding 79.43, which was our critical watch line from yesterday.  

    Let’s be careful and watch the Dollar too (now 77.8) BECAUSE The S&P JUST said that they have no plans to downgrade US Credit Rating and that is a Dollar booster, which can be a rally killer – we’ll have to see.  

    Standard & Poor’s says it has no plans to downgrade the U.S. credit rating, but it believes credit risk may increase in the long term. "It looks like there will be a slow but continual build of credit risk from what we view as excellent credit risk… but in our view it is not a fast moving issue." Moody’s warned last week of a potential U.S. downgrade.

    We’ll see if our levels hold:  Dow 12,020, S&P 1,300, Nas 2,750, NYSE 8,200 and Russell 777 (800 is where we give up and drink the cool aid).  

    Chart watchers note a growing divergence between transportation stocks and the broader stock market. The headline rally in the Dow Industrials (or S&P 500) is not confirmed by similar gains in the Dow Transports (DJT) or iShares Transportation ETF (IYT).

    We had good jobs and productivity numbers, which is very good for the top 10%.  Unfortunately, for the bottom 90%, Unit labor costs fell 0.6% for the Quarter as people continue to get paid less for doing more.  

    Initial Jobless Claims: -42K to 415K vs. 423K consensus. Continuing claims -84K to 3,925,000. 

    Q4 Productivity and Costs: +2.6% vs. +2.1% expected and +2.4% prior. Unit labor costs -0.6% vs. +0.1% expected and -0.1% prior. 

    Thursday’s economic calendar:
    Chain Store Sales
    8:30 Initial Jobless Claims
    8:30 Productivity and Costs
    10:00 ISM Non-Manufacturing Index
    10:00 Factory Orders
    10:30 EIA Natural Gas Inventory
    12:30 PM Bernanke: Economic Outlook
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

    At the open: Dow -0.13% to 12027. S&P -0.13% to 1302. Nasdaq -0.09% to 2747.
    Treasurys: 30-year -0.21%. 10-yr -0.34%. 5-yr -0.23%.
    Commodities: Crude +0.34% to $91.17. Gold +0.17% to $1334.40.
    Currencies: Euro -1.03% vs. dollar. Yen -0.23%. Pound -0.02%.

    Notable earnings after Thursday’s close: CBG, CFN, CPX, CSTR, JDSU, LIFE, LVS, NCR, NGD, PWER, SIMG, SUN, VRTX

    Jan. same-store sales (actual vs. estimate), update #1:
    BJ +2.7% vs. +2.2%.
    BONT +0.3% vs. -1%.
    BKE +6.3% vs. +6.1%.
    CATO -4% vs. +1.5%.
    COST +9% vs. +6%.
    FRED +2.1% vs. +3.3%. 

    Jan. same-store sales (actual vs. estimate), update #2:
    ANF -4% vs. -1.9%.
    ARO +1% vs. -3.2%.
    DDS +6% vs. +1.3%.
    HOTT -3.3% vs. -1.8%.
    LTD +24% vs. +6.9%.
    SSI +5.1% vs. +2.3%. 

    Jan. same-store sales (actual vs. estimate), update #3:
    JCP -1.2% vs. +1.9%.
    JWN +4.8% vs. +2.6%.
    SKS +4.4% vs. +5.4%.
    SMRT -1.2% vs. -2.2%.
    TGT +1.7% vs. +2%.
    WTSLA +6.2% vs. -2.1%.

    Jan. same-store sales (actual vs. estimate), update #4:
    AEO -6% vs. -7.6%.
    GPS +1% vs. -3%.
    KSS +1.4% vs. +2.4%.
    M +2.6% vs. +2.1%.
    ROST +3% vs. +0.3%.
    TJX +2% vs. +0.2%.
    ZUMZ +15.3% vs. +8.1%.

  22. What is up with CMG?? WYNN getting an upgrade and hitting 121… Damn

  23. Good one redlog!
    Phil, Ms Moneypenny is much better than the Tradebot 3000.

  24. Phil – productivity came from all the capital equipment bought in Q3……put into use in Q4. 

  25. CMG … they are sucking in all the momo breakout chasers

  26. DEPO continues its ascent….

  27. Zeroxzero – You suggested a pair trade yesterday (Long/short – EWG/EWQ). I ran a quick analysis to find a correlation between the 2 and it is indeed quite strong. However, the model suggests that EWQ is now undervalued as compared to its predicted value. 
    I am not a political analyst, but I would be careful going in the next 12 months in France and Germany. Both Sarkozy and Merkel face tough elections. I don’t know as much about Germany, but in France Sarko is losing badly in all the polls against pretty much anyone in the Socialist party. Heck, I should run and ask Phil to run and finance my campaign (would be a nice social experiment). In any case, desperation in politics usually brings desperate moves! Who knows what impact it could have. Also, all the budget predictions in France are based on some very rosy growth predictions. There could be some bad surprises. In essence, who knows! But, be careful out there!

  28. Pharm / cup — I’ve been seeing cup with handle patterns in many charts for weeks. It’s not only ags. It’s one of the few things that keeps me from getting net short (mostly cash though).

  29. Pharm
    Did you expect this run-up in DEPO this soon? Is It a quick up and out at certain price point? I like to follow a lot of your moves and this is one that I am in. Thank you.
    Still have DNDN leaps (right now naked) and trying to find an opportunity to sell March calls (round 2) against my 2012 35′s. I figure it’s the only way I am going to make money on the most frustrating stock I have held.
    Thanks again for sharing your thoughts.

  30. Pharm/ARRY – in at $3.23. Now $2.84. Should I bail or DD? Thank you.

  31. Funny Red but it’s kind of what people don’t get about learning how to trade.  It’s like trying to be a trial lawyer without learning courtroom procedures – you can have the best arguments in the World but you’ll get your ass handed to you once you are in a real court.  Making money is easy, learning how to keep it is hard but, if you prefer to run before you can walk – go ahead and buy.  It’s not like we don’t have 20 or 30 upside ideas a week but if you want someone to tell you to buy every day no matter what and hold like an idiot – wrong place…

    XLE finally turning down.  Not going to get our roll in the $25KP and the March $70 puts are $1.02 now ($1.10 entry).  We should be able to pick up $1.35 on a good dip so let’s target that for now.  Oil $90.75 despite the violence in Egypt so this is a Dollar thing.  

    UUP flying like a rocket.  Good timing on that Hoss!  

    Fibonacci/StJ – Oh I think those work great.   

    Nice article on fundies again, thanks!  

    Robot theme/Cap – Come on, it’s got to be Gigantor or "More Human Than Human." 

    Oh dear – down we go!  

    Thanks Matt.

    Dennis Miller/1020 – He turned into a major Conservative tool – so, of course, no longer funny…  I never understand how that happens to liberal pot-smokers – I wish someone would do a study. 

    Thanks Amatta.  I don’t know what you mean about PCLN being bullish.  Please address all wrap-up show questions to the team when they are on the air.   I believe they have a hotline.  8-)

    Environment/8800 – Gold is too strange to make it a pair.  I think we go down to $1,200 but the same panic that puts people into the Dollar can put them in gold too.  I just like the long dollar play, like yesterday’s UUP idea.  

    EDZ/Willie – If you can get the price we were looking for then I still like the trade.  If you can get it cheaper.  I like it more.  It will take you a while to get used to the idea of fundamental trading.  I don’t care what the price of something is at any given moment – it does not affect my day to day decision (other than level-oriented plays). 

    KWK/Jomp – Interesting and more so if they hold up against Dollar at 80.  

    Don’t get too excited.  TradeBot said he would be buying tis dip and volume is low so far (33M on Dow at 10:20) so not an impressive sell-off yet.  Another 100 points on the Dow to a gap fill and that’s where I’d like to poke at a few buys but this may be it right here so be careful.  


  32.  Sorry, should have mentioned I feel that way because the Dollar is at 78 so a natural point to get knocked back. 

  33. rain – thanks.  I started looking through charts as well and came to the same conclusion.

    DEPO/dc – not this soon, but when you have a $3B drug on hand, then I guess traders are expecting a buyout of the company by ABT.  I think they will FWIW.  As for DNDN, I think they are still overvalued….but what do I know?  Someone thinks they are worth $4B with no earnings and no show for even production – I am wary of investing in them.

    ABT – If you don’t mind owning at $45, then selling the Jan12s Ps for $3.5 is the way to start.

  34. IYT-DIA / Phil – While it is true that transportation (by way of IYT) is showing divergence, we need to take into account the fact that since their lows of March 2009, DIA is up 84% (I know crazy) while IYT is up 136% (crazier still). In essence, IYT is most certainly overvalued and might be reverting to it’s more normal correlation. In an historical model that I ran, IYT should be closer to 80 than 90 so might be room to go on the down side. FWIW!

  35.  ok; skinned a couple of points out of CMG; will re-load on it if they try to jam it higher

  36. Pharm
    DNDN- obviously you know more than me! 8)

  37. PHil, what are we supposed to be doing with the SPWRA puts in the 25K portfolio? They’re way past 20%…
    Also, I missed the selling the 2013 $17.50 INTC puts for $2 a week or so ago…now they’re way down to $1.67…what do you think of selling the $20.00 puts, now around 2.70?

  38. IWM 76.87 77.10 78.52 78.83 79.26 79.60 80.05 80.21

  39.  Phil, at what point would you consider a double down on the nflx 200 puts at 3.5?

  40. SPWRA / jerconn – yeah, I second that – although I think the idea was to wait till expiration & make our $190

  41. Phil/Miller    He’s always been a tool…..

  42. INTC, Interesting. Stk. is down but my short puts are up and my short calls are down?

  43. MCP/Cap – That China story is just too easy to manipulate.  Any time they pull it out they give MCP a boost.  CMG, on the other hand has got be getting hit by input costs.  Tomatoes are insane, they use those, right?  

    DIA/$25KP, Jmiles – It’s got two weeks left and we plan on holding naked over weekend unless we get our $1.75 early.  (Am I somehow not clear enough about these things in the Portflio notes or does nobody actually read them before asking?) 

    WYNN/Amatta – More great numbers from Macau.  Don’t forget Chinese workers are getting raises so every month there are another few million people who can afford to gamble.  

    MoneyPenny/Doro – Yes, I love that accent.  

    Productivity/Pharm – Ah, good point!  Certainly wasn’t a natural looking gain. 

    Campaign/StJ – Don’t you guys just storm the Bastille when you want change?    Good point on IYT!  

    SPWRA/$25KP, Jerconn – Those aren’t 20% plays.  We’re willing to own SPWRA so we don’t really have any negative to the downside.  Either we get the stock we want at a price we’re happy to pay or they pay us the full 100% not to own them.  INTC is great and it’s the same logic – as long as you REALLY want to own them for net $17.30 – what’s the downside?  

    NFLX/Mampcs – What puts are those?  The Feb $200 puts?  I wouldn’t double down until I was done flagellating myself for not taking $4+ off the table yesterday.  With 2 weeks to go, NFLX is not close enough to $200 to make a DD attractive, you are better off rolling and it costs $1.50 to roll up from the $190 puts so that’s how much I’d want to spend to roll up to the $210 puts, which would put you in them for net $5 (they are now $5.90) and THEN maybe I would DD.  Meanwhile, you can sell the WEEKLY $210 puts now for $1.25 and execute that roll up if they blow $210 and then you’ll look to roll to the 2/11 $200 putters, now $1.25.

    Miller/1020 – He was always an obnoxious jerk but at least he had a twinkle of humor in his eyes.  Now his eyes are dead and humorless – like a shark and there’s no heart behind what he says anymore. 

  44. Thanks, Phil, clear answer…

  45. Phil/Miller  His radio show is bad as well…..What can you say?   He has become a walking contradiction…..

  46. Mistake/forgot 79.42 or as Phil says 79.43

  47.  IWM rejected back at 79.43. Dollar hanging out at 77.91 – talk about an inverse pair trade!   

    Oil testing $90 again, fun if it breaks but yesterday they popped back to $92 although things at the NYMEX are getting worse as they closed out the day with almost $3 of contango (up from $2 yesterday) into April and 381M March barrels to roll.  Here’s what the NYMEX strip looks like:  

    Notice only 115K contracts (1,000 barrels per contract) traded in March yesterday.  About 1/2 of normal.  The traders are eating that money rather than pay $3 to roll as they usually would.  1/3 of those contacts belong to USO and they have to roll regardless but the rest are all speculators (only about 30M barrels actually get delivered after 6Bn are traded in a month) so there’s about 240Mb worth of oil that needs to get rolled or dumped in the next 10 trading sessions.  

    We’ve seen them move 25Mbd on average around on the NYMEX BUT, that was last month when contango (the roll cost) was $1, not $3.  Even GS doesn’t like to lose $3 on 200M barrels of oil rolls.  That’s forcing prices down as traders attempt to, ROFL, find actual buyers for their barrels.  Either that or they cash out with a loss (you need to find a supplier who has barrels that he is willing to cancel delivery on for $90 or whatever the current front-month price is).   The reason a speculator might be driven to cancel rather than roll (as it’s the same loss) is that they may feel they’ll only get trapped in another $3 loss next month.  This is how oil starts falling off a cliff and it is only the riots in Egypt that is supporting the prices we have now.  

    So, if $90 breaks – I still like using that line for futures shorts and I wish I would have been quicker out of the gate with more USO puts this morning.  I won’t forget next time and this is the background reasoning for why I like shorting oil despite the Egypt mess.  

  48.  Phil, instead of futures, what uso puts would you buy if oil crosses 90? 

  49. Notice that 12,020 1,300 and 79.26 line up in time, a very important level for all.

  50. phil – mrk? sell some jan 30 puts?

  51. short some CMG again at 237

  52. Ol’ friend ARIA holding the $6 area nicely.  I think as a LT play, the Jan12 $5/7.5 BCS is a good one at 1.15, alll ITM, and selling the $5 Ps for 70c makes the play 45c for a 2.50 spread.  Their mTOR worked, and it will continue to work…and MRK loves them….Hell, MRK NEEDS them.

  53. phil any new tbt spreads – sorry if i missed it – working too much on a projec.

  54. 10:00 AM On the hour: Dow -0.22%. 10-yr -0.46%. Euro -1.29% vs. dollar. Crude -0.21% to $90.67. Gold -0.23% to $1329.00. 

    11:00 AM On the hour: Dow -0.12%. 10-yr -0.25%. Euro -1.26% vs. dollar. Crude -0.57% to $90.34. Gold +0.06% to $1332.90. 

    11:08 AM A big POMO from the Fed gets the central bank $8.87B in Treasurys maturing 2016-2018, of $23.519B offered by dealers – including a surprising $5.2B for a single two-week-old seven-year note.

    EIA Natural Gas Inventory: -189 bcf in-line with consensus. Futures trim gains +0.2% to $4.43.

    Jan. ISM Non-Manufacturing Index: 59.4 vs. 57 expected and 57.1 prior (>50 denotes expansion). Prices index rose to 72.1 from 69.5. Employment rose to 54.5 from 52.6. New orders rose to 64.9 from 61.4.  

    Dec. Factory Orders: +0.2% ($0.7B) vs. consensus of -0.5%. Factory orders had increased 1.3% (revised from 0.7%) in Nov. Ex-transport, 1.7%. Shipments +2% vs. +1.6% prior. Inventories +1.1%.

    Interesting thought from Mr. Black Swan:  Countries that have ongoing political crisis – think Lebanon or Italy – are safe, it’s the stable nations that are most risky, says Nassim Taleb. “A perfectly fragile country is a country, say like Egypt (and Saudi Arabia) … there is no variation and then — puff — you got a crisis and it’s mayhem." 

    "I’m in favor of everything that gives credibility to the European project," says Portuguese PM Socrates, supporting a German plan for coordinated economic reforms across the EU. Leaders meet in Brussels tomorrow for another summit to discuss a resolution to the debt issue. – The other Socrates said: "True wisdom comes to each of us when we realize how little we understand about life, ourselves, and the world around us."

    Slightly lower following weaker than expected eurozone retail sales, the euro will look to Jean-Claude Trichet’s 8:30 ET press conference following the ECB meeting. Trichet’s hawkish comments in January set off a multi-week move higher for the currency. Euro buys $1.377.  ECB President Trichet’s press conference begins and the euro sinks to new lows for the day as his early comments focus on weak growth rather than inflation concerns. Euro -0.7% at $1.3715. Stoxx 50 -0.9%. Question and answer session to start soon.

    The bailout may not be restoring much confidence as another €40B in deposits flees the Irish banking system in December, bringing the total for the year to €110B. "Would I want to leave money in an institution where I don’t know who is making the rules?" says a bank analyst.

    "A significant intensification of unrest … and the increasingly negative consequences for the economy, public and external finances of the continuing disruption," leads Fitch to cut Egypt’s rating to BB and place the country on negative watch. Premarket: EGPT -2.6%.   "The most important player is the army," says a Middle East analyst on Egypt, "things have really taken a turn for the worse." Clashes between protesters and pro-Mubarak forces continue in Cairo’s Tahir Sqaure, where opposition groups call for Mubarak to step down immediately.

    Unimpressed with President Saleh’s announcement that he will step down in 2013, protesters in Yemen hold their own "Day of Rage." Saleh has been battling al-Qaeda’s presence in his country, making a power vacuum in Yemen a different matter than in Egypt.

    The UN’s Food and Agriculture Organization Food Price Index rose for the seventh straight month, +3.4% from December, and reached its highest level since records began in 1990. Sugar prices +5.4% M/M, cereals +3%, oils/fats +5.6%, dairy +6.2%

    It’s another record high for the FAO’s food price index which pops 3.4% from December, now well above the levels that set off rioting in June 2008. "The new figures clearly show that the upward pressure on world food prices is not abating," says an FAO economist. 

    After climbing 30% in 2010, copper continues its ascent, reaching a record $10,000 per metric ton as investors bet the global recovery will lead to increased demand for industrial metals. Copper supplies this year could fall short of demand by 822K tons, more than double last year’s deficit. 

    Homebuilders have outperformed the market in recent months, but Goldman Sachs says stocks are getting ahead of the recovery. Housing data has been lackluster this winter, and indicators such as mortgage applications point to a continued slump. BofA/Merrill Lynch downgrades Pulte (PHM -3.3%) and MDC (MDC -4%). Also: DHI -3.7%, LEN -1.5%, TOL -1.7%, KBH -1.1%, RYL -3.1%

  55.  Phil, wow you couldn’t have been more prescient on this move! 

  56. Good morning friends from Chicago,
    Phil, any earnings trade suggestions?  Backspread on CMG?

  57. If anyone knows a good investigative reporter…..tell them to look into Marion Co., FL.  Bank closures in Ocala, some of the largest decrease in housing prices in the country over the past 4 yrs or so, and NOT one forclosure……think the county is in bed with the bankers and developers?  Send it on …. there is more.

  58.  Debt/Flips – How old is that?  US under $9Tn?  Creditor is the other guys who owe money.  We all print money and use it to fund the other guy’s debts.  It’s fun!  

    USO/Mampcs – I’m waiting for oil to do another run-up first, then I’ll see what looks good but proably, around $91.50 (up $1) I’ll be liking the March $39 puts, now $2.05, probably $1.60.  DUG is a fun plays too, they were $37.50 in Jan, now $31.43 and you can buy the March $30 calls for $2.50 so I like them and you can offset by selling Feb $32 calls for .75 but I’d wait for at least $1.25 to cover.  

    MRK/Samz – Yes, good idea but July $32 puts can be sold for $1.70 and they, of course are rollable down to 2012 $30 puts (now $2.10) so I’d rather take a chance on making the quicker money first.  

    IWM $78s up to $1.72, watch 12,020 on the Dow very closely as well as 79.50 on IWM but it’s looking good.  Thanks TradeBot!  

    TBT/Samz – $77.50 was our buy point.  We need to wait and see if they can break and hold $40.  Big reject this morning so we’lll see.  

    Prescience/Amatta – I just listen to the TradeBot.  8-)

    CMG/Dano – How about buying 2 Sept $260 calls for $20.50 ($4,100) and selling 3 March $240 calls for $14.30 ($4,290)?  If CMG goes down, you are golden.  If CMG goes up, you drink the Kool-aid and buy two more calls and roll the callers up for a few months.  

    Investigative Reporter/Pharm – You should have Ilene hook you up with Sam Antar.  He’s a pisser and knows lots of reporters and government guys who check things out and he’s a hound-dog himself digging up dirt.  If you are ever in NY, we can all go to dinner.  He’s out in LA a lot too, they fly him around to lecture on fraud…

  59.  IWM $78s at $1.89!  When does it become greed?  Well we’re getting very close to 800 so if we don’t pop it, you know you’d better get out.  Oops, $1.92 – now the stop is $1.85, right, lock in a little somethin’ somethin’ for our troubles…  We can always reload if it goes back up from there.   

  60.  My Jan 2013 FXE $100s just popped 11+% in the last few minutes.  I thought I was hallucinating.  ????

  61. Thx Phil (Sam).

  62. Merck investors got another reminder today of just how painful a Phase III setback can be for the company’s financial prospects. The pharma giant was forced to write off $1.7 billion for the fourth quarter after investigators halted a trial of its blood clot drug vorapaxar.

    Vorapaxar was considered the jewel in Schering-Plough’s R&D crown when Merck agreed to pay $49.6 billion for the company. Billed as a potential megablockbuster capable of earning $3 billion to $5 billion a year, investigators slammed the brakes on one of two Phase III studies of the drug after noting that stroke patients were apparently exposed to an increased risk of bleeding after taking the drug.

    Stroke, the graveyard for drugs……oh, so is psoriasis, RA, Alzheimer’s…..

  63. The French newspaper Le Figaro has weighed in with its own insider account of the Sanofi-Genzyme merger talks, speculating that the deal could get wrapped up early next week--provided, of course, both sides continue to narrow the gap that exists between what Sanofi is willing to pay in cash and what it promises in milestones.

    While various news outlets have reported a conflicting set of price points, Le Figaro‘s sources are telling the newspaper that Sanofi is offering $72 or $73 a share in cash plus a contingent value right milestone package worth $2 to $5 a share. Genzyme has been widely reported as pressing for more cash and a smaller CVR, while Sanofi’s interests are best served by reversing that formula. No two news reports on these negotiations actually match, but all of them put a final price of cash-plus-CVR in the upper-$70s, significantly more than the $69 lowball bid that Sanofi used to get the conversation started.

    In fact, one of Le Figaro‘s sources says that the final number could be in the "very high $70s." But it’s impossible to gauge exactly how the discussions are panning out right now. While insiders have been leaking like sieves, both companies have been officially tight lipped. And while each side likes to give the financial press a peak at some of their cards, no one is tipping their entire hand.

  64.  Thanks, St.JL – No options available EWG/EWQ on this side of the pond, no shares shortable. I’ll find another way to express my Euro grievances.

  65. Hello Phil hope your doing good.
    what do you think about selling some May or JUL CSCO $23 puts ?

  66. Permabears’ growling, grudging bullishness – now you know it is time to capitulate….

  67. pharmboy – would you be a buyer or put writer on merck down here? thanks

  68. Also selling puts for HRB ?

  69. Warning shot from Verizon on the eve of the iPhone start:
    "Verizon Wireless strives to provide customers the best experience when using our network, a shared resource among tens of millions of customers. To help achieve this, if you use an extraordinary amount of data and fall within the top 5 percent of Verizon Wireless data users we may reduce your data throughput speeds periodically for the remainder of your then current and immediately following billing cycle to ensure high quality network performance for other users at locations and times of peak demand. Our proactive management of the Verizon Wireless network is designed to ensure that the remaining 95 percent of data customers aren’t negatively affected by the inordinate data consumption of just a few users." 

  70.  added shorts to CMG at 238 and 239

  71. samz – I swallow hard when buying any stock right now (I am starting to move to GG again, though)..  I would sell puts to establish a position.  Like ABT, the down grades and other will swarm, so do so with a small position that can be rolled or added to ad lib.  From the Newsletter, MRK is down, from my pick last week, MRK is on track.  Start with Phil’s recommendation, but small. 

  72. Cap – Opt is taking the opposite stance as you FWIW…..

  73. Ask yourself – could the Media and the Government possibly be working harder to convince you to buy stocks?  

    Fed Chairman Ben Bernanke: There are grounds for optimism in an economy that’s still gradually recovering and seeing "broad-based" consumer spending. The central bank’s asset purchases have provided a boost. Despite increases in "highly visible" prices like gasoline, overall inflation is more like 1.2% and wage growth has slowed. - See, slowing wage growth is a "good" thing to the Bernank!  

    Then ask yourself – why?  

    12:00 PM On the hour: Dow +0.01%. 10-yr -0.33%. Euro -1.1% vs. dollar. Crude -0.23% to $90.65. Gold +0.83% to $1343.10. 

    In just a few minutes, a gold spike of $20 (now +1.4% to $1,350). And the dollar (mixed overall) is rallying against the euro today (+1.2%). 

    Richard Russell pokes his head out of the buy-gold cave: "I believe the Dow (but not all stocks) is being seen as a hedge against the dollar and as a safe haven for those who perceive that the dollar is steadily losing purchasing power," he says in recommending buying DIA. A similar thaw from Dennis Slothower shows a couple of permabears grudgingly getting more bullish

    Amidst near panic buying, the ICE is considering the rare step of requiring buyers of cotton to prove it "economically appropriate" should they wish to purchase more than 300 contracts. March cotton futures turn south after earlier touching a new record high of $1.812/lb. BAL -2.2%

    The only kind of high prices most find acceptable are for stocks and real estate. Jim Rogers makes the case that high commodity prices are absolutely necessary to ensure continued supplies. "Are the politicians going to work 12 hour days in the field for nothing?" 

    Could the Chinese real estate bubble be a myth? A key metric, the ratio of property prices to income, has been in decline since 2007 and stands well below levels in the U.S. and Europe. Cities like Beijing, Shanghai, and Shenzhen are clearly perky, but make up less than 5% of countrywide sales.   This summary spin (Seeking Alpha’s) is VERY strange because the actual video link in the Financial Times has Jim Chanos teling you how short he is on China and what a huge bubble they are in.  I’m telling you – it is so dangerous to take headlines at face value!  MUST WATCH VIDEO.    

    As U.S. citizens rush to exit, intrepid Russians, not willing to give up a few days of sun on the Red Sea, are camping out in airports to catch a flight to Egypt. "Everyone is leaving, but our tourists (can’t wait) to fly there, even though the looters have already taken over the hotels," chuckles Vladimir Putin. 

    Didn’t this used to be FaceBook?  Just in case there was any doubt about its desire to unload Myspace, News Corp. (NWS +4%) chief operating officer Chase Carey says: “With a new structure in place, now is the right time to consider strategic options for this business… the plan to allow Myspace to reach its full potential may be best achieved under a new owner.”

    Isn’t NFLX the new Blockbuster?   Warning to Netflix (NFLX): In Time Warner’s (TWX) Q4 earnings call, CEO Jeff Bewkes hints at the need to extract more money from the streaming-media distributor for its movies: "We just think that value that … our film companies should get for that period of exhibition is considerably higher than what is there now." 

    Three lunchtime reads:
    1) Rethinking stocks for the long haul
    2) ETFs and taxes: Not all products created equal
    3) China: Who’s afraid of the big bad dragon?

  74. Pharm/GG – what are you lookng at for a trade? Thanks.

  75.  Devon [DVN] just leapt to the top of the call options charts [WSJ]

  76. Margin requirement calculations for regular, 2x leveraged and 3x leveraged short naked options
    From TOS margin folks
    The displayed margin in paper trading is WRONG and may be wrong in a regular margin account also – GREAT -  it is a display problem they are trying to fix.
    But the good news is that the system will reject your trade if you don’t have enough margin in your account because the trading system uses the correct calculation.
    The requirement calculations for regular naked options
    Calls: The greater of
    20% of the underlier minus the out of the money + premium x quantity x 100
    10% of the underlier + premium x quantity x 100
    $50 + premium per contract
    Puts: The greater of
    20% of the underlier minus the out of the money + premium x quantity x 100
    10% of the strike + premium x quantity x 100
    $50 + premium per contract
    The naked requirements for 2x ETF’s
    Calls: The greater of:
    40% of the underlier minus the out of the money + premium x quantity x 100
    20% of the underlier + premium x quantity x 100
    $50 + premium per contract
    Puts: The greater of
    40% of the underlier minus the out of the money + premium x quantity x 100
    20% of the strike + premium x quantity x 100
    $50 + premium per contract
    The naked requirements for 3x ETF’s
    Calls: The greater of
    60% of the underlier minus the out of the money + premium x quantity x 100
    30% of the underlier + premium x quantity x 100
    $50 + premium per contract
    Puts: The greater of
    60% of the underlier minus the out of the money + premium x quantity x 100
    30% of the strike + premium x quantity x 100
    $50 + premium per contract

  77. Anyone   
    Do you guys know why "ALY" at $7.70 has such a rich premium on the March  7.50 Put  (bid $2.50). The chart doesnt look that volatile.

  78. Question…if EMs that are pegged are being inflated by our deflation, as if the US were a big balloon shooting hot air into those economies. Were they to depeg, and supposedly stop the pressure, akin to closing the valve in the balloon, wouldn’t the balloon then begin inflating itself? Ie the exported inflation, having nowhere to go, would blow back into our economy?

    If true, then BOOM?

  79. GG/nich – July 40s covered 1/2 by Feb 41s. 

  80. IWM WKLY 78s / Phil – Late to the game; is good time to enter @1.62?

  81.  Bananas now USD 22 cents apiece locally, an all-time record.  Food price demonstrations beginning [Caribbean].

  82. Phil/ Cotton/ BAL,
    I have been following the Cotton futures and BAL and think that a correction or weakness may be in order. Any ideas for a trade in stock or options as I cannot play with futures.

  83. Benny Bern needs a deEsser.

  84. Shorting GDX with a stop @ $57.  Looking for a big move down!

  85. Anyone know what is up with SVU?

  86.  Also good in FT Video:

    • Honesty about inflation (after Chanos):  A debt mountain is weighing on the global economy, and allowing more inflation might be an easy, if controversial, tool for dealing with it. Lex’s John Authers and Edward Hadas discuss whether this is a wise option and for whom.  (3m 33sec)
    • The Wrong Kind of Inflation:  There’s inflation and there’s inflation. The right kind, driven by economic growth, should allow corporate profits to keep up with prices. But it turns out that there’s a magic number for equities: whenever inflation goes through 4 per cent, it has been bad news for shareholders, says James Mackintosh, investment editor.  (4m 24sec)

    CSCO/Micro – That’s one I would give a week to see if we crash first.  The VIX is just a bit low to make selling puts a lot of fun on a stock that hasn’t dipped.  

    In a rare move (just the second time, counting February 2009), Bernanke is taking questions from the media after a speech in which he largely sounded the same notes and defended the Fed’s actions. Stocks are mostly flat though Treasurys are off: 10-year yield +0.03 to 3.51%; 5-year +0.05 to 2.14%. Dollar +1.2% against euro, +0.5% against Swiss franc. – I’m telling you they are getting less bang for their buck out of POMO (5 months to go) and they are already desperate to goose the markets any way they can.  When was the last time Ben did this?   The last time we were collapsing and he wanted to put spin on the money he was dumping into the markets.  

    Dominoes are falling Pharm.  

    HRB/Micro – Yes on that one as they are not too high and April is when they often get a boost (5% dividend is nice too).  How about the stock for $12.90, selling the Jan $12.50 puts and calls for $4.35 for a net $8.55/10.53 entry.  You can also, if you want, buy 2x and sell (full cover) the 2013 $10 put and calls for $6.20 and that is net $6.70/8.35 and that makes the .60 dividend almost 10%.  So, if you were going to buy $8,550 worth in the 2012 spread and collect $600 in dividends, I’m saying that you could spend $13,400 and collect $2,400 (over 2 years) instead for net $11,000 vs net $7,950 so a pretty good use of the extra $3,050. 

    VZ/StJ – That’s BRILLIANT!  Chasing the high-bandwidth users to AT&T to drag down their network unless they pass a similar policy and piss off their existing clients – BRILLIANT!   

    Margin/Edro – Thanks, that’s very helpful.

    ALY/Cnarb – Reflects the great uncertainty of earnings coming up.  They are like a biotech at this point.  

    Boom/Hoss – Very much so.  China is sucking up our inflation by pegging the Yuan/Renminbi to the Dollar.  If the dollar is weak, they MUST buy dollars and sell Yuan cheaply to weaken their own currency.  That artificially keeps the dollar strong.  Obviously, inflation/money printing is what weakens our dollar so we are just ramming dollars down the throats of China and oil exporters and pretty much everyone who sells to us (which is pretty much everyone). Also, commodities are generally traded in dollars so, even as our currency is deflating, other countries, even starving African nations, are forced to use their more responsible currencies to buy more and more dollars to pay for food.  We are screwing the World over long and hard!  

    IWM/Reza – It’s all about that 79.43 line – see how nicely it held on the last spike down.  You can go back in and just don’t be greedy.  

  87.  you have to watch CMG right now.
    the trading is entirely fake … no buying, no selling, just sitting there.
    check out CCME

  88. zero/bananas – not good news for me. We consume 5 of those a day plus I am a huge buyer of fruits. You’ll soon see me in the papers…rioting :)

  89.  Pharm; OPT is a great trader and a friend.  It may fit his rules; but the long trade was 20 points ago, not now.
    It could go higher, if you want to be where it ends up today, I say likely lower than here, but neither he nor I know.

  90.  We have to get Ron Paul in this chat room.  I bet he’s blowing a gasket listening to Bens BS!  

    Bananas/ZZ – That’s nasty, they need those bananas.  

    Cotton/Rehat – I don’t follow it.  Maybe there’s an ETF or something but I don’t know it.  

    GDX/Button – I like it!  

    SVU/RJ – Woohoo!  About time they woke up.  Probably a buy/out rumor as they are way too cheap and that would freak out the very large short % as a lot of people think they will go BK, like GAP.  

    CMG trading entirely fake/Cap – And this is different from the rest the trading how?

    Rioting/Nicha – Yeah, let’s go over to Whole Foods and raise some Hell!

  91. Phil / NFLX – I am short NFLX Feb 200 puts ($9.50, now $14.20) and am carefully monitoring my next adjustment. These were in good shape before NFLX earnings, but not now. With 15 days still left, nothing to worry about too much, I don’t think. I’ve been monitoring a 2x roll up to a higher Feb strike. Unlike a 1x roll, where you don’t want the roll to get away from you, with a 2x roll, it seems that the roll is better made after the stock rises a bit (say to $220). Is that correct? I’m unsure what to do in this weird $205-$215 range right now. Thanks.

  92. Cotton/Rehat – I don’t follow it.  Maybe there’s an ETF or something but I don’t know it


  93.  Phil / good point !  LOL.    This just highlights it.

  94. CELG getting taken out to the wood shack and clobbered.

  95.  ajaytoo … short the 200 puts on NFLX.   Or short the calls ?   Those are what I see at 14.40

  96. LULU selling off, that’s novel.  

    TradeBot seems to be capitulating for the day.  


    I’m liking GLL $31 calls for .50, they were $1 this morning.  Just a risky trade into tomorrow.  

  97. Cotton / Rehat – That BAL ETF has options, but you can drive a truck between the bid and ask! I would not play that… 

  98. Here we go again Dollar pushing 78… but market still holding??? if the dollar gets rejected are we heading to the moon?

  99. Why aren’t we heading down?? Dollar up 1%…

  100. Wow, Bernanke is working on redefining audit in preparation for the meeting next week.  

    NFLX/Ajay –  I assume you mean calls?  I would not do anything right now, they shouldn’t be at $210 or $205 or $200 and you have two weeks to prove it.  Your straight roll is up to the March $210s, now $13 and your callers have $2.50 in premium so look for an even roll there as ideal – IF you HAVE to.  

    Dollar/Amatta – The stick does rest on the dollar but copper has gone nowhere and oil has gone nowhere so I think the dollar was forced down and is more likely to pop over on continuing Egypt uncertainty.  I’m pretty sure if Asia wasn’t mostly closed the dollar would be way higher but we won’t know until next week.  

  101.  Phil: Satire
    Guess I should have used the satire font this morning re: my xtra normal video.  It was meant to show what it’s like describing what I am learning to do to others.  I’m a convert to trading the way you view it.  I’ve been slowly building my long term trades and learning how to make the shorter term trades as well.  I view what I’m learning as the foundation for what will be my business for the next 30 years and have not put making money ahead of learning to trade properly with patience and discipline. So I know I’m in the right place. :)

  102. woohoo one of my comments made it into a main trade :) thats a first :)

  103. Covered call specialists – i own WFR at $13.50. I have been selling calls regularly. the last was for the Feb 12s at .25. Obviously not good after earnings were positive. A roll to July 14s for 1.10 would mean i lose about .05. but gain .50 on the stock if it closes above 14.
    Is this the best plan? Thanks

  104. 1:00 PM On the hour: Dow -0.04%. 10-yr -0.22%. Euro -1.14% vs. dollar. Crude -0.23% to $90.65. Gold +1.7% to $1354.70.

    2:00 PM On the hour: Dow -0.08%. 10-yr -0.3%. Euro -1.39% vs. dollar. Crude -0.33% to $90.56. Gold +1.48% to $1351.80.

    Tune in to Bernanke live at the National Press Club. He’s calling for action on the deficit; is the Fed back to fear-mongering?

    Bernanke taking questions on food prices. "We have a two-speed recovery" where industrial countries grow slowly and emerging markets are taking off. But the Fed’s there for U.S. stability, and nobody can argue the U.S. is overheated. Some emerging markets are growing faster than their capacity, but it’s mostly in their hands and "entirely unfair" to attribute commodity spikes to American monetary policy.

    Dollar boosterDallas Fed President Richard Fisher says he won’t support further QE after the Fed completes its June purchase of $600B in Treasurys. “You can never say never, but I cannot imagine a convincing argument for further quantitative easing after this round, given what is developing now in the economy," he tells Bloomberg radio.

    Very made that US oil is not over $100:  WTI crude isn’t a decent benchmark for prices in the U.S., let alone the world, says Jeff Rubin, who argues that more oil soon to flow from Alberta’s tar sands is going to push the spread to Brent even wider. Bottom line: We’re already back to triple digit oil prices. Brent ETF: BNO. WTI ETF: OIL

    The iPath sugar ETN (SGG) hits record volume of 600K shares and plummets 9% in the wake of Cyclone Yasi in Australia. It had gained 18% over the past year.

    This is cool, from Barry:  

  105. Phil,
    I think Pharm is right on getting into CELG. This looks like a capitulation sell off today. This company has great management and has been very good to stockholders over the years.  I had a large position last year but pulled out when I went to cash in October.  It is tough to buy anything in this market but don’t you think the downside on CELG is limited at this point?

  106. Turns out that spending over 25% of your income on food and gas isn’t just a problem for pathetic foreign workers

  107. CELG/Button – let’s wait until the stick breaks from the beating they are taking.  WSJ sent out an article about them buying someone and then redacted it (see TOS news).  Unreal.  I think they test 48….

  108.  TBT crossed the $40 line barrier.. let’s see where it ends!
    CMG, I’m a bit nervous with the earnings next week.. almost EVERY GOOD BUSINESS with just a small beat JUMPS about 10-20%.. Chipotle IS a good business, and despite its ridiculous valuation, it could still RISE to the SKY just to conform to how and why Timothy Witney’s capitulated…
    "Where have had much less success, however, especially in recent months, is shorting good businesses that are growing rapidly, even when their valuations appear extreme. Such open-ended situations, regardless of valuation, are very dangerous, so going forward we will avoid them entirely unless we have a high degree of conviction about a specific, near-term catalyst."

  109. NFP / Phil – Any interesting trades ahead of the NFP announcement tomorrow based on your expectation?

  110.  Why not down/Amatta – Consensus remains that 78 won’t break so people think they are buying the dip.  The top of your range is the bottom of someone else’s – always remember that!  

    Satire/Red – Ah, I get that and I’m glad you do too.  Unfortunately, my "Get Rich Slowly" strategy is a very hard sell….

    LOL Micro!  Congrats I guess.  I don’t really pay attention to whose suggestion it is.  Just while I am looking up a trade for someone, if it looks like something that is a generally good idea for all, I turn it into a trade.  I hope no one ever feels like I ignore them.  Frankly, it never ocurred to me…

    WFR/Morx – Why not just go out to Apr $13s at $1.02?  That costs you .40 and buys you $1 of upside while keeping nice protection.  If you spend .50 per quarter to roll the callers up to a still-conservative position – then what is the outcome?  You spend $2 to make $2 every year?  WFR is a crazy stock, up and down all the time, you would only be selling $1.10 of premium for July (5 months) vs selling .60 of premium for 2 months.  

    Faced with the choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy on the proof. ~ John Kenneth Galbraith

  111. Food and gas / Phil – And the same people who spend between 20 and 40% on food and gas are also supposed to save for college, retirement and pay for their healthcare so that we can afford another tax cut! Churns my stomach! 

  112. CELG / Pharm, – Well $48 will be the lowest level since July 09.  I saw the article and redaction.  There was also some talk about secondary cancers when on Revlimid but the company is saying that this is the result of the much longer lifespan patients have while on the drug.  Revlimid has been a miracle drug for patients with multiple myeloma and  similar blood cancers that up until a few years ago were untreatable.

  113. Simple moving averages crossed at 11:55 DOW 12,026 and 13:30 IWM 79.52
    IWM 79.60 showing strong resistance, tradeabot capitulating almost 2:30 change time.

  114. Me love CELG long time! @48 will sell some long term puts and buy some in IRA account. This sell off is the gift i have been waiting for

  115. Go SKX go!  loving those April 17.5 puts we sold back in December, Phil. 

  116. Jomama/ CELG GIFT – I AGREE!!

  117. Phil,  Dollar 
    Yes I understand but why in the morning the move to 78 DID bring the indexes down .5 to .75% and when the dollar retreated the markets accordingly recouperated. Now the move goes back to the 78 line and the indexes stay at 0%?? I don’t see as you say any other factors (OIL or Copper) that would be indicating something different…

  118. Pharm - you still like IRWD and NUVA?  do you have any price targets in mind?  I am nibbling on both.  stock only for now.  IRWD has been building a very nice base.  Thx.

  119. AIG s / Phil – I am in AIG ($40.62) WKLY (Feb04) 41s ($0.7 avg.); I am not sure whether to roll to WKLY (Feb04) 40s or
     to Feb11 40s instead? I appreciate your input.

  120. Phil, 
    I have 24 May HMY 13/15 with 1/2 the 2012 10 puts sold (Net .76). Also have the ABX 2013 spread with the 2012 puts-which is even, so not too worried there. With your feeling that Gold heads down would you just sell the 13 calls for .20 now and possibly sell more puts if and when gold comes down? That is of course if you believe gold will come back in the medium term (6-12 months) as inflation rears its head??

  121. There’s wild action in the cotton pits as well, with prices reversing an early limit up move to close nearly limit down, the March contract settling at $1.724. The cotton ETF (BAL -3.0%) only manages double its normal volume (through 2 PM).

    NFP/Reza – Well, last week we had 457,000 unemployed, up about 60,000 from expectations and this week it was 410,000 on 425,000 expected so it dos not seem likely that we will make that NFP number, which is January anyway so this week doesn’t matter of 148,000 expected.  Take into account also that there are a lot of layoffs post-holiday and that the Government wasn’t hiring and I don’t see where they get that number from. 

    Now, let’s get to the real question.   If we miss by 50,000 – is that good or bad?   Well the Bernank just told us that he will keep giving away free money as long as people aren’t working.  I’m sure GE ran right into a conference to figure out how to drive another 200,000 people onto the unemployment line this quarter.  So I think anything from 80-140,000 will be bullish enough to at least end the week at the highs.   Too much over, and the Fed may go off the table so a rally then a pullback.   Too much under and people will realize just how bad things are so down and down.  

    It think we come in at about 100K and the market will dip and recover even though the reality is we need to gain 150,000 jobs a month just to keep up with population growth so anything less than that is still job losses.  

    Churning/StJ – You realize that HOUSEHOLDS under $30,000 is 28% of the total according to that chart?  We don’t need to travel to third World countries, we have them right here!  

    SKX/Terra – Yeah, they are donating money to charity and buying SuperBowl ads – things can’t be that bad, right?  

    Dollar/Amatta – Well, as I noted above, look at the media blitz starring Bernanke that was aimed to boost us up today.  Also, as I said, "THEY" expected the dollar to be rejected at 78 again and, so far, it is.  

    AIG/Reze – You are long AIG and you want advice?  Get out!!!  In the words of The Boss:  

    It’s a death trap, it’s a suicide rap
    We gotta get out while we’re young
    ‘Cause tramps like us, baby we were born to run

    HMY/Amatta – I’d offer .50 to roll to the Aug $12 calls and leave the rest.  I think gold goes down and recovers, just needs time.   HMY crazy cheap at this price but could hit $10 on more gold pullback.

    Double dip on IWM working out, $78s back to $1.75.  10% is great on a double dip so don’t let is slip away!  

    CVX all-time highs!  I’m really flashing back to 2007-8 now…

  122. No i am just glad it was a good trade to use for all. HRB has been your pick a few times through history so i keep an eye on it is all.

  123. IWM $1.85 again!  Pretty amazing! 

    DECK testing $80 and would be a good short if they were not part of the stock market.  

    CMG back to the $240 line.  NFLX $212, PCLN $438…  CAT $99.

    Oh look – Steve Leasman already saying "Even if the jobs numbers are weak, it doesn’t mean the economy is weak…"  Yeah, tell that to the people who aren’t working!

  124. Phil / Ben   So he (again) looked into the camera and said free money as far as the eye can see (since there’s no job creation), commodity inflation is foreigners’ fault and the rising stock mkt is imperitive for the good of the nation.  I keep asking how can we possibly invest inversely to Ben’s jihad.  Conclusion, while most stocks are overvalued, they are about to become even more overvalued as QE3,4,5 is ahead.  With this creep running the country (into the ground), I’m feeling increasingly uncomfortable with my cash.  Hyperinflation is the only plan.

  125. Phil / Leasman — He meant to say "it doesn’t mean the stock market won’t ignore it and continue up"!.

  126. Phil:
    Re NFP – Thanks for explaining your reasoning clearly.
    Re AIG – I hear ya! Remnants of weeklies past, trying to get out w/a small profit or at least BE  :P

  127. DECK – LOL Phil! I was thinkin’ the same thing.  Notice how all the "parabolic" stocks are up big for no reason?  Cramer just actually said that he loves "Stocks that go up on nothing."  Meanwhile, back at the ranch, tomorrow’s a big day in Egypt…

  128. Jo/Button – CELG, agreed, but my $48 is still on track….

    NUVA & IRWD – yes, they are fine.  NUVA target is 35.  IRWD is takeout candidate from FRX.  My WAG on that is $20, post approval.


    DCTH – talk about a company to love…and love and love.  Back to 10.40…..That is one to sell calls against.

  129. Hello, Phil. I was looking for stocks with low P/E (trailing and expected) and low PEG that did well on recent earnings announcements. In particular, I found ARW, ENTG, LZ and NSIT. Do you have any opinion about any of them?
    On the other hand, do you think that ANF will make a good shorting candidate?
    Finally, do you think that buying both February put and call is a good idea to play today PWER earnings (AH)? (Last time it first moved wildly up and then swung down – a natural behaviour for a stock with a very high short interest).

  130. phil tbt breaking out

  131. Patience, patience, patience……..right Phil? On the other hand, do you just see any way that this Bernank Plan works? I am not happy waiting for our own country to fall! Egypt looks ghastly!

  132. On EGLE FWIW -  some of the option flow is hedging of short stock sales.


    CCME – hello, and good by China Medical…..oh, and I see Cap already noted it.

  133. A photo from Eqypt showing Christians banding around Muslims to protect them during their prayers.

  134. Pharm
    On DCTH I have the 2012 5/15 BCS. This is the second time I have watched this stock climb to these levels. Would you try to play this more by selling either side of the spread when its appropriate? Is there any reason you can see for the rise in DCTH?
    If you get 48 on CELG what would be your plan? Thanks

  135.  I should just drink the cool-aid instead of continuing to miss the party!  I even missed those IWM’s as the first time they zoomed back from the dead through 1.60 and I didn’t want to chase…

  136. IMGN holding the 200d MA.  They are also consolidating in the Nov/Dec area. 

  137. All right – I just had two honors students walk in the door with their report cards!   Gosh I’m a proud parent…  

    Ben/Tusca – I don’t think it makes sense to bet against it.  As long as people believe it, he will pump up this bubble until, like last time, it bursts and wipes out half the World’s wealth.  Then we will bail out all the IBanks (ie. commodity speculators), who remain unregulated and too big to fail since we learned nothing last time and the US will go another $5Tn in debt out of "necessity" and another $5Tn will be borrowed by the bottom 90% to finance a 100% stock market run for the top 10% and they will do that over and over again until the poor people in this country will read about African War Lords and say "Wow, I wish we lived in a land of opportunity like that, where anyone with a gun can carve out a little territory for himself…" 

    Egypt/RDN – Why tomorrow?  

    ANF/Alik – I don’t think they are shortable.  Sales were down 4% from last Jan, twice as bad as expected and up they go.  They already took a big hit from $58.50 when the market was 5% lower so they have a lot of catching up to do in this hyper market.  As to the other stuff, just remind me to look after the bell when I have time.  PWER seems solid unless they screw up but an earnings play into a Friday has not been a good payer unless you play for a flatline, which you would be doing the opposite of.  

    TBT/Samz – Just poking up although looking serious about $40 this time.  Which is funny because everything Ben said will completely collapse if our rates rise just 1%. 

    Patience/DC – If inflation picks up, it will be obvious and very long-term and we can leverage 100% gains regularly.  If we begin to fall, it will be sharp and jagged so that’s what we play for until up becomes more obvious.   Look how long and hard we work at getting over 12,000 and 1,300 – it will be the same at 13,500 and 1,400 and 15,000 and 1,500 so plenty of chances to go long once they prove 12,000 and 1,300 is a floor and not a ceiling.  

    Nice pic Pack.  

    IWM/Amatta – Don’t worry, just like 1999 or 2007 – we get them almost every day.  It’s just a buy the F’ing dips mentality. 

  138. dc – DCTH BCS is amazing isn’t it.  The calls are UP, the sold calls are even, so net up big.  They are so volatile that I would buy some stock and sell the $10 Mar Cs.  If you are called, you make ~ 5% in the month.  If not, do it again.  Also sell the $10 Feb Ps if you are willing to take the stock. It is a game I have been playing with them and has worked very well. 

  139. Phil see you talking about DECK  a while back they were loosing badly holding still out of a previous play 100 stk at 79.48 just not to loose on the stock being well below 75 I deceided to sell the Mar 75 call for 4.31 to come out even Now that sucker is up to 79.70 again selling puts I don’t know I feel they are a looser. Buy ITM say 80 put six month out? what do you think? thks

  140. I would be on hold with any TBT play for now. Tomorrow’s report could change the trend! 

  141. Pharm,
    HUGE volume on CELG in last 20 minutes.  I don’t think your going to see $48

  142. Phil
    Congrats to your kids for great report cards! I was blessed with three girls that never disappoint when that time of the year rolls by. How they got so smart I have no idea! :) Enjoy your time with them. It goes so fast. One gone (at Cornell) and another graduates this year. Soon I will just have to take care of myself! Scary thought!

  143.  Only the Dow is at a new high at 12,075.  S&P was 1,309 (+1), Nas 2,765 (+9), NYSE 8,300 (+7) and RUT 802 (+4) along with SOX 456 (+2) and Transports 5,150 (+91) so all very reachable goals but it’s really all about the RUT.  Why can’t the Russell get 800 back? 

    Guy on CNBC telling people you have to chase.  WOW!  

    DECK/Yodi – I did not like betting against them last time so I’d say no.  They were very strong and no point in trying to pick a top if we break higher from here.  That goes for all the MoMo’s if things head up now.  

    DIA $25KP – Now I want to DD with 4 more at .92 for 8 at an average of $1.21.

  144. HSP is right back into consolidation range.  I want to see them hold this area, but the Mar $50s are looking good for a swing trade.

  145. Egypt – My understanding is that tomorrow is the day that the protestors set for Mubarek to step down.  If he doesn’t, a bet on which no one would take the opposite side, the protestors have to either do something to prove a point, or basically start resigning themselves to their fate and going home.  Could go either way.

  146. Pharm
    Thank you. Good advice.

  147.  DIA/$25KP – That was the DIA $119.75 puts of course! 

  148. VIX… can’t believe if this is not volatility what is (Down 60 and up 35 in a few hours) yet the VIX is down almost 4% today! 

  149. alik  – ARW I like fundamentally and just took a short term position yesterday (@39.91, short march p/c @ 40 for 8% in 6 wks). LZ is another I’ve been playing, picking it up aroudn @103 and selling 2 month p/c for returns of around 6-7% or so. Don’t know the others.

  150. As far as I can tell, this is where we stand with the $25K portfolio if you were able to enter at the "right" price:
    INTC – $190
    NFLX – $400
    VIX (as of today) – ($67 )
    EDX (as of today) – $462
    SPWRA (as of today) – $150
    That would be a good week to get started!

  151.  TEVA- Pharm- any thoughts on this one? 

  152.  Scary/DC – I don’t know what I would do without them.  I guess I’ll get a dog or, better yet – Sharks with friggin’ laser beams attached to their heads!  

    Thanks RDN, makes sense but with no clear leader, going home seems most likely.  

    Volatility/Amatta – The VIX doesn’t really measure volatility so much as bearish expectations.  

    EDZ/StJ – Is it really up that much already?   Maybe we should have cashed that one!  Missed the DIA puts we just did the DD on and XLE not going so good yet.  

    Well, that was very interesting.   Very last minute heavy selling there but we caught that top in the nose with the DIA double down – will be fantastic if we fall way back tomorrow.  

  153.  Sorry
    XLE (as of today) – ($120)
    Can’t figure out the DIA P right now with the DD.

  154. I would wait a bit longer on Teva…..they cannot get over the 56 area and it looks like a triple top.  If they can move to the 52, then might be worth going long again. 

  155.  CMG – 239.22, a bit higher than earlier.  holding short
    CCME – wowee
    LVS small eps beat; sales miss

  156. stj – here….

  157.  Pharm; sold the $45 puts for 26 cents.

  158. Phil
    Very funny! I, instead, got a wife to annoy!

  159. EDZ/Phil – I am using Pharm’s entry point as everybody got different ones!  EDZ is actually up $387. Trying to keep up with the different dates and strikes. But a big winner indeed!

  160. Pharm, thanks I had the link already and using it to stay on top of the running P&L. 

  161. Cap – if you have the margin, they should be great….unfortunately, I have a very small account….I tried for fun to get a few ofthe Jan12 $45 Cs for 8.90.  Right when my order went in, they moved it 10c.  Nice……(CELG)

  162. For some off topic humor Glenn Beck threatens a rabbit with a chainsaw! I only wish I was making this up.

  163. CSTR down 10% AH on earnings miss.
    LVS down 5.5%

  164. Phil
    Not only will it be fantastic it might save my butt. Last week I started small trades again. I was up $700 Friday, up for this week, this morning account looks right. About noon they changed everything sells were changed to buys, I now have 100 contracts IWM 78 puts and down $3,000. I have been on the phone forever and all I got was, "You can take a loss, we will look into it, would some free trades help denigh we show only buys. I keep saying the account was different at 10:30AM. What the heck do I do now? Do you known anything that might help other than magic crash tomorrow?

  165. Reza
    Can you repost? No link . Thanks.

  166.  Pharm – small account ?  I have you pegged as a hitter !
    You can do put spreads and reduce the margin (and the margin was not too bad).
    As you can probably tell, I have a lot of margin intensive positions.

  167. Well LVS dissapointed on revenues, see if that starts poping WYNN a little…

  168. Phil, it seems that the RUT has trouble going over 800 but I don’t think we should obsess over that. I know it’s a big psychological number but I ran a historical model and as it stands now, the RUT is overvalued compared to the Dow. It had a bigger run out of the March 2009 lows like IWT.
    Historically speaking (going back to 2001), the RUT should be closer to 700… Of course, in this market, who knows! But maybe it needed to take a breather and let the Dow go to 13,000….

  169. Re sharks w/lasers – If sharks don’t work out there’s always that wacky deep sea fish!

  170. Here’s the Options article.
    Thanks Dclark41 for noticing that.

  171. Phil / Ben    Wow, you sounded pretty resigned in that reply.  I’m just thinking fundamentals are irrelevant during this final run of the ponzi.  Ben and Lloyd are just standing ready to club anyone who dares to short this market, whatever it costs.  He repeated again today that the full might of the US taxpayer will be deployed to boost asset markets and I don’t give a sh.t about starving or rioting peasants in places like Egypt (or America for that matter). 
    Just thinking this bast..d has removed the risk from going long.  Even if (as I supsect) the payroll #’s are awful tomorrow it won’t matter for 5 minutes, as that will lead to certainty of QE9.  And, this printing / liquidity can still spike p/e multiples even if earnings stay relatively flat?

  172. Phil    
    I missed  the last DD on DIA puts at. 0.92. So I put an order for tomorrow  for 6 more puts at 1.02  instead of the 4 at 0.92 that you suggested. That gives the same average of $1.21. Is this acceptable?

  173. Phil – Thumbs up for the girls AND Tina!  Thank goodness for 46 chromosomes, huh Phil?   :)

  174. Button/Pharm – bought some celg in retirement account before close – gonna sell sone 2013 puts tomorrow

  175.  Excel and live quotes
    Anyone have a favorite way to import live stock quotes into excel spreadsheet?  since MSN money add-in is no longer available.  TIA

  176. FWIW, a software vendor who makes custom indicators for a one of the analysis software that I use claims that 2 of his indicators are projecting a major change of trend in the making. I don’t have the indicators myself (thinking about getting them) but it predicted the last big change of trend in April 2009. It’s a bit complicated but it’s based on Shannon Entropy which is a bit voodooish for my math level! 

  177.  LVS/Cap – We should have thought of selling WYNN $120 calls ahead of LVS earnings.  

    Wife/DC – Oh, I’ve got one of those!  

    Glenn Beck/Packdog – Holy Cow!  What a loon! 

    CSTR – Good time to look to get back in.  

    Butt/Shadow – You have 100 IWM contracts?  That is a very large amount and very dangerous.  If the trade was wrong, call your broker, ask for his manager and the one above him until you get the right response.   If you logged a complaint at 10:30, I would think in the least they should roll you back to that point.  

    RUT/StJ – Yes, we should obsess over a major index failing to take out a level it’s already been over, especially when it’s a broad one like the Russell.  Small businesses are in that 25% of the companies that are not beating earnings and raising guidance.  Aside from middle-class Americans plunging into poverty, now all those small businesses that are the life-blood of this country are gasping for breath as well.  

    Pinning/Reza – More so now with the weekly options.  

    DIA/Cnarb – Good adjustment but I don’t think I’d offer $1.02 without having a look at the open first. 

    Chromosomes/1020 – I’m a little more of a nurture guy actually..

    Resigned/Tusca – Well if it walks like a duck and sounds like a duck then it’s a duck..   

    And that makes a perfect lead in to the PSW Wrap-Up show:  

  178. LOL Phil…

  179. Good call on the WK IWM78s; I agree.

  180. Phil – Le vostre ragazze sono fortunati   :)    Guess who’s attending italian classes with his daughter?…. :)

  181. CEPH - The biopharmaceutical company popped up on our scanners at the start of the session after one options player initiated a sizeable bullish stance on the stock in the March contract. Shares in Frazer, PA-based Cephalon are currently down 0.40% to stand at $59.66 as of 11:30am. The drug maker will reveal earnings for the fourth quarter after the market closes for the day on February 10, 2011. One optimistic trader scooped up some 3,000 calls at the March $65 strike for a premium of $0.65 per contract. The investor stands prepared to profit should shares in the name rally 10.0% to exceed the effective breakeven price of $65.65 in the time remaining to March expiration. Cephalon’s shares were trading above $65.65 as recently as December 20, 2010. The majority of options activity on the stock today is centered in calls, with investors exchanging more than 6.4 of the contracts on the pharmaceutical firm for each single put option that has traded thus far in the session. Already up 35c…..

  182. Phil
    I have asked for the highest level, they have returned 3 calls and we dug files off my computer, Now they don’t know how to open them. I explained I built this computer myself, I have auto delete, everything blocked but their tech dept. doesn’t know how nor I which I also warned it can only be brought up on my computer sending it to them was delivered empty 5 times. They just don’t understand NO I CAN"T SEND IT just like my charts and I will not compromise my system. I think to some degree JRW has the same security issue but he paid someone smarter than me to do it, I am still learning.

  183. Phil
    Didn’t know what happened till 2:30. Was hoping for a sell off and couldn’t bear the loss while on the phone.

  184. nurture is probably more common among those who are especially endowed. I am certainly not an expert, but i spend a lot of time helping teenagers with various life issues. Nurturing is a huge part of it but being an honor student also takes an ability to listen and learn and retain.
    In no way would i want to insinuate anything or detract from your daughters accomplishments. Knowing you i am sure they are very talented and bright, but it is also sad how our education system is honoring kids just because they have to honor someone. One of the young ladies from SE Asia who is in one of our clubs was inducted into the National Honor Soc in her school where only 50% graduate. Then she went on to the the local community college and had to be placed in special classes to help her catch up so she could stay in school. One young man from Ethiopia did not graduate but is now in the special classes at the CC and i kid you knot, his reading is on a 2nd grade level! Anyway, i am going off. Sorry, it just makes me sad and the special program is probably going to get axed with budget cuts.

  185. Phil
    It’s ok to forget now and then just not on their birthdays or your anniversary! 8)
    It’s good to be back. I love your site and miss it when I get pulled back to the real business that I own. Great members, great host!

  186. Pakdog: Regarding the photo. Thank goodness, I thought the guy could have been a covert operative for Goldman Sachs.  ;)

  187. Pharm,
    $25KP – I believe we should have 8 Dia Puts instead of 10

  188.  Phil: How the big boyz do it?
    In reading some of Andrew W’s summary of big option trades I have a question on the following from his post,
    "The investor responsible for the transaction purchased 46,500 calls at the April $18 strike for a premium of $0.50 each, and sold the same number of calls at the higher April $20 strike at a premium of $0.20 a-pop. Net premium paid to initiate the spread amounts to $0.30 per contract. Thus, the investor responsible for the spread is poised to profit should shares in Yahoo! rally 8.5% over today’s high of $16.87 to surpass the effective breakeven price of $18.30 ahead of April expiration. Maximum potential profits of $1.70 per contract are available to the investor if shares in YHOO jump 18.6% to trade above $20.00 before the options expire in April.  
    I know the simple view is the breakeven and max profit but would this trader be more likely to follow your approach and be looking to take a nice profit quickly taking advantage of the difference in delta, not really intending to hold to anywhere near expiration if not necessary?  looks like today alone could have made .04 x 100x 46,500= $186,000/$1,395,000 =13%  Am I looking at this right?  TIA

  189. Phil,

    WYNN, yea you should have joined me shorting them. Been fighting them for a month now. We’ll see. If they drop to 115 I can cut to 50% losses…

  190. Hey Phil,
    Just thought I’d share some observations regarding getting started. I thought the place to start would be to define the purpose of what we’re trying to accomplish, then maybe move on to the scope of the project and some tools for aiding in composition to assist you. The purpose, for me, could be summed up as follows:

    To identify the root problems and propose solutions to catalyze a national discussion with the intended result of substantive reforms to the structure of American government and society, resulting in a return to prosperity and the principles upon which the Founding Fathers conceived the Republic

    In terms of scope, I would see the book as a big picture vehicle, as the purpose indicated, and encompassing not only the sort of analysis of what ails America, which many have done or can do, but defining solutions backed up by supporting facts and calculations of the type that you are so facile at presenting in easily understandable and digestible form by people from all walks of life.
    How do you like FIXING AMERICA for a title, maybe with a sub title The Ultimate Fixer Upper, for starters? 
    I started playing with an idea of classifying your articles into various categories both on an overall content basis, as well as on a paragraph by paragraph basis, so that when you wanted to review your published thoughts on a subject like, for instance, The Banksters,  you could get easy reference to specific passages to facilitate building book chapters. In fact, one to the early tasks that occurred to me, once the purpose is squared away, was to define the chapters. Do you thing there would be any profit in such a contrivance? 

  191. 25K Portfolio:  Based on this:
    XLE finally turning down.  Not going to get our roll in the $25KP and the March $70 puts are $1.02 now ($1.10 entry).  We should be able to pick up $1.35 on a good dip so let’s target that for now.  Oil $90.75 despite the violence in Egypt so this is a Dollar thing. 
    I placed a limit sell order at $1.35 which filled.  I am not following why the portfolio doesn’t reflect that sale, either I misunderstood the above recommendation or ?    Can someone explain ? 
    thanks in advance

  192. Interesting tidbits?
    Acc. to SA:
    IWM,  had almost $2 billion of redemptions in January.
    GLD, SSgA’s gold etf, had redemptions of $2.3 billion in January.
    QQQQ, the PowerShares Nasdaq 100 ETF, was the single most popular etf in January, raking in $2.57 billion.
    Market timing is alive and well.

  193. RUT /Phil – Actually my point as it was for IYT was that the RUT is up 132% since the lows of March 2009 while SPY is up "only" 94%. It is actually quite concerning to me that we are up 132% on such a broad index with the current economic conditions. My main point was that 800 was the wrong target to begin with (we should not be that high) and that the RUT probably overshot (probably an euphemism here) with the rest of the indices (even more so). In that regard, it might be a precursor sign of things to come and being the index that is up the most, it will correct more and faster!

  194. XLE / Humvee – If got a fill for Mar72Ps (roll target) @$1.35; that’s great.

  195. Beck / Phil – Not only is Glenn Beck a loon, he is quite dangerous. The stuff that he is presenting as history is such at best fantasy, at worst conspiracy theory that ignorant people just gobble up as gospels!
    "I believe that I can make a case in the end that there are three powers that you will see really emerge. One, a Muslim caliphate that controls the Mideast and parts of Europe. Two, China, that will control Asia, the southern half of Africa, part of the Middle East, Australia, maybe New Zealand, and God only knows what else. And Russia, which will control all of the old former Soviet Union bloc, plus maybe the Netherlands. I’m not really sure. But their strong arm is coming. That leaves us and South America. What happens to us?"
    A Muslim caliphate, Russia controlling the Netherlands – I mean, common… You have to be worried about the future (not looking pretty now), but spreading fear is not the way to resolve problems. Go back to 1936 and see where that lead us!

  196. Book / kevinb63v – I must admit, I thought Phil was talking an investment advice book, and maybe that’s still in the works – so, two books? Because your idea is really appealing, Especially the ideas Phil has for rebuilding infrastructure – with what was done in the 40s, 50s, and 60s and how that’s been neglected since – and with the other ideas like the solar power, WiFi for all – include the supporting data and the history and there’s a book! Enough noise, it gets to be required reading by policy makers, and revolution! Notice I didn’t use caps, so quiet revolution, but nevertheless. Again, I’m so in on this.

  197. A little levity for the trouble in the Middle East….

  198.  Phil / LVS / Wynn – well, I am in the WYNN 125 calls (short of course)

  199.  Phil / Closing video …. Hilarious


    We are busy doing some preliminary ISM work. Looking at the historical record, the index may still be five months from a peak. But interestingly, GDP growth slows thereafter, inflation rises, bond yields edge up and stock market gains subside in the aftermath of the highs. This could require some quasi “stagflationary” strategies such as basic materials, precious metals, energy, TIPS, and credit. Here’s what we found when we dug back through the data to the 1950s.


    1. To put the 60.8 January reading into historical perspective, this level is relatively high and we found that on an upswing, we only see readings close to this level around 2% of the time. Moreover, the percent of the time this level represented a high was 20%. On average, the index peaked five months later and five points higher — so we could see the ISM go higher over the next few months.
    2. Economic growth tends to slow after a post-60 reading. Real GDP averaged 6% four-quarters before the peak and about 3.5% after. Industrial production averaged 10% before and about 5% a year after.
    3. 3. What about equities post-ISM peaks? We found that the S&P 500 rallied 15% in the year leading up to the peak, and 4% one year after.
    4. One standout detail in the January report was the ISM prices paid component, which rose to 81.5. We could still go higher from here though, as the current level represents a peak 25% of the time.
    5. We found that around prices paid peaks, total inflation averaged 3.4% a year before, 4% at the peak and 6% after. Core inflation (excluding food and energy) averaged 3% before, 2% at the peak and 3% after (so no real effect on core inflation). The 10-year note yield tended to average about 50bps higher post peak than pre-peak.
    6. Profits tend to slow around both ISM peaks and prices paid peaks. Using economy-wide profits from the National Accounts, profit growth ran at 15% pre-ISM prices paid peak versus 5% after.
    7. Margins are set to compress and compress sharply and likely weigh against consensus views of +15% earnings growth this year. See Steel-Price Rises Pressure Supply Chain on page B1 of the WS. Unit labour costs are falling, albeit at a far slower rate than a year ago (-0.2% YoY versus -3.5% this time last year). And look for non-unit labour costs, like higher inventory financing expenses, to bite into profit margins as well — see Fearing Inflation, Firms Stocking Up on page C1 of the WSJ.

  201. DCTH ramping up on manufacturing…..OH MY, gonna have to go in a bit more on these guys.

  202. humvee4me/25KP,
    I also placed the same order(limit sell order for $1.35 on my XLE March $70 put today) but didn’t get filled.  I checked that option on TD Ameritrade and it says today’s high was 1.14.  I didn’t know why your order got filled.  I think nobody else got that order filled(let me know if I were wrong).  I think that is the reason the portfolio didn’t reflect your order.

  203. Phil   Each video getting better than the previous.
    PS  Can you get me Moneypenny’s phone number.  The more I know about her the hotter she gets. Sexy and intelligent, what an awesome combo.

  204. TBT might finally be breaking out. The 6-month and 2-year charts are beautiful. All we need is a catalyst like the FED maybe even suggesting, ever so slightly, they won’t be extending POMO until 3499 (yes, the year 3499) and bonds will tank 10% in 5 days. There’s no need to rush. You can’t put $600B back in the bottle.
    Like Pandora’s Box. When it’s out, it’s out.

  205. $25PK/Pharmboy – thanks for the spreadsheet you are keeping. very nice!  I know what BCS is (and thank you also for including the definition) but… what is STO after the VIX and EDZ puts?  I am presuming is "Sell To Open?"

  206. Good morning!

    Italian/1020 – A very nice language!  

    IWM/Shadow – Well, let’s just hope for a nice sell-off then.

    Nurture/Morx – I didn’t know size had anything to do with it!  8-)

    Food stamps/Praiz – Yes, it’s crazy and also amazing how it’s just another thing that’s being ignored in America:

    On the other, I don’t know about "running to the Dollar," so far, just a 1% bounce at resistance is what we expect on the 5% rule.  

    Thanks DC!  

    YHOO/Red – Sure, people doing big spreads like that are very happy to take small profits and run.  As you note, $186,000 in a day is a lot of money, even to a GS trader!  Of course, the assumption made by people like Option Monster is that people who trade like that must have inside information and that we should follow them but that’s stale thinking from the old days when mainly professionals traded options and positions were less liquid.  Now they trade like penny stocks, which isn’t necessarily a good thing but that does mean they are liquid enough that plenty of retail day trades (people like us!) use them for quick ins and outs and there are, of course, thousands of fund managers and pro traders who have learned to do the same.  

    WYNN/Amatta – That’s the nice thing about fundamental shorts – you just need a good break on news once in a while.  

    Book/Kevin – I like the idea of a project collecting all my rantings and ravings like that but we also need to collect the trade education stuff.   Maybe two different tracks.  I was under the impression the Wiki would make that easier.  Please remind me on Saturday, as I do want to talk about it with you.  Thanks. 

    $1.35/Humvee – That position should be closed if it filled and that was our plan and we got the dip we wanted in the morning but I did not get the impression that we hit $1.35.   Both Pharm and I need to be reminded when fills take place so we can keep the updates in line.  I’ll have one out in the morning but I think we’ll have to leave that open as I doubt many people could have filled at that price.  Are you sure you didn’t have the March 31 puts?

    Timing/Reza – Rotation from RUT to Nas?  

    800/StJ – I’ll have to look it over but I think we had very solid reasons to expect Russell 800.  On Beck, I give up.  It’s just sad that he gets a bully pulpit.

    Great snow, that’s 2!  

    ISM/Pharm – Very nice, that should be a post! 

    Videos/Stock – Thanks but a little creepy drooling over Moneypenny as it’s me, you know?    That’s the problem with avatars – you never know who is on the other end.  South Park did a great episode on Warcraft like that.

    Pandora/BDC – Exactly. 

    And, speaking of videos – here’s the one for the morning post finally rendered:

  207. Phil/Italian – I said:  "Your girl’s are lucky" – to have parents like you.  :)