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Wednesday Wheeeee – We Love it When a Plan Comes Together!

Once again, we're done with our day before you get up.  

In my 5am note to Members, I said: "I see nothing in the news to justify this pre-market "recovery" and I hate to sound like a broken record but I like shorting oil (/CL) if we get below that $102 line with tight stops and the Dow (/YM) is right at 12,400, which is a great spot to short. RUT (/TF) is at 762 and below 760 (same as yesterday) will confirm a downturn but 12,400 is a great line so why wait?"  By 6:26, I was able to follow it up with:

And wheeeeeeeeeeeeeeeeeeeeeeeee!  There go the Futures!

It's 7:07 and we're still going down, with oil at $101.24 (up $760 per contract) and the Dow at 12,340 (up $300 per contract) and, as Dennis said: "Good enough for steak and eggs for me!"  Roro got up late but still caught the Dow at 6:16 and that was right on the nose for the oil drop as well as we hit it right on the nose this morning and now we're done and waiting for the next good set-up.  

Of course we scale in and scale out of positions as there's no need to get greedy in the Futures, where a single remaining contract catching a $1 move down in oil (now $101.25 again) pays $1,000.  This week, we have even stationed our own Craigzooka in New Zealand, where it's tomorrow – which makes it much easier to bet on today's action as he can tell us what happened already!  Not that today was all that hard to predict, right?  My comment to Members LAST Wednesday was:

It’s been a pretty reliable bet that they tank the markets into the longer-term note auctions because it scares people into T-Bills and keeps the rates low.  From this line-up, it seems to me they intend to jack us up on Friday and then zap us on Tuesday as Esther George releases something hawkish ahead of the 3-year and it’s no coincidence that Plosser, by far the biggest Hawk, is given the floor at 12:30 on Wednesday – just 30 minutes before the critical 10-year auction.  Coincidence?  Surely you cannot be that naive!

So that's how we've been playing the past 7 days and it culminated in pressing our bets into yesterdays expected morning pump, leaving our $25,000 portfolio so bearish that I had to warn Members that it would be ugly if our premise was wrong.  We had to swim against the TA tide to hold onto our positions but, once again, Fundamentals triumph in the end.  Tomorrow is the 30-year auction but "only" $13Bn and at least that one pays a semi-realistic 3% (for the optimists, that is) so we're not going to chance that and we'll be taking that bearish money and running into today's sell-off (mostly and see this morning's pre-market chat for more news that's keeping us bearish).  

We weren't all bearish of course and, in fact, why don't we take the opportunity this morning to review the year's trade ideas as I won't want to do this again by next week but this should be interesting while we wait for the open.  It's a good chance to see what's working and what's not in a very choppy market:

Tuesday (in order of posting):

Shorting Dow Futures (/YM) at 12,350 – now 12,350 (I'm ignoring the fact that we caught 12,250 in between)

Shorting Russell Futures (/TF) at 750 – now 760 (same for all of these, just reporting current price as we're in and out of these constantly)

  • Selling FCX 2013 $35 puts for $5.85, now $4.70 – up 20%
  • Buying FCX Feb $40 calls for $1.42, now $2.25 – up 58%
  • Shorting Oil Futures (/CL) at $102.50, now $101.50 
  • Shorting S&P Futures (/ES) at 1,275, now 1,281
  • Shorting Dow Futures at 12,385, now 12,357
  • IMAX 2013 $17/15 buy/write at net $10.50/12.75, now $20.25 – too complicated to explain here but $6.50 upside potential (62%) very much on track – here's my comment to Members at the time (11:05 am):

As a new play, I like IMAX at $18 selling the 2013 $17 calls for $5 and the $15 puts for $2.50 for net $10.50/12.75, which is a LOVELY 29% discount if put to you and a ripping 62% profit if called away $1 LOWER than it is now.  

  • SCO Jan $35/38 bull call spread at $1.35, now $1 – down 25% (yes, we do have losing trades!) 
  • SCO Jan $34 puts sold for $1.10, now $.55 – up 50% (oops, I take it back, not yet!)  
  • DIA Jan $121 puts at $1.05 ($25KP play), now .40 – down 62% (there it is)
  • GLL Jan $18 puts at $1.10 ($25KP play), now .50 – down 55%
  • SONC June $7.50 puts sold for $1.15, now $1.24 – down 8%
  • SONC June $7.50 calls at .55, now .45 – down 18%
  • 3 MON April $70 calls at $5.80 ($25KP), now $11 – up 89%
  • 1 MON Jan $70 call sold for $3.05 ($25KP), now $9.30 – down 204% 
  • 1 MON Jan $72.50 call sold for $1.68 ($25KP), now $6.80 – down 304%

Those downs sound bad but, if you kept that trade as is (we didn't), then the net $1,267 entry is now net $1,690 so up 33% in a week on an earnings ratio backspread and a very nice $577 profit in our virtual $25,000 Portfolio but we're working it to hopefully do a bit better than that.

  • DMND June $37/45 bull call spread at $2.10, now $2.20 – up 5%
  • DMND June $20 puts sold for $1.85, now $1.80 – up 3%
  • Shorting Oil Futures (/CL) at $103, now $101.50
  • AONE 2013 $2.50 puts sold for $1.20, now $1.10 – up 9%
  • AONE 2013 $2.50/5 bull call spread at .25, now .40 – up 60%

Wow, what a busy day!  Of course, we were coming off a very cashy close to 2011 so we were just looking for things to trade.  At the end of Tuesday's Member Chat, early Wednesday morning, we had a nice discussion about Futures trading techniques (always fun in a choppy market) and I had occasion to share my favorite market quote: 

"The man who begins to speculate in stocks with the intention to make a fortune, usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes get rich." – Charles Dow

Wednesday (we did not like the Fed minutes and I posited my theory for the next week, as above):

  • DIA March $122 puts at $4.10, now $3.30 – down 18%
  • GLL Jan $18 calls at .80, now .50 – down 37%
  • FAS 1/6 $65 pus sold for .78 ($25KP), expired worthless – up 100%
  • TNA Jan $43 puts sold for $2, now .45 – up 77%
  • TNA Feb $43/49 bull call spread at $3, now $3.30 – up 10%
  • QQQ Jan $58 puts at $1.10 ($25KP), now .62 – down 43% (had a stop at .95) 
  • NAK Aug $6 buy/write at $3.80/4.90, now $6.31 – on track for 58% gain
  • Dow (/YM) Futures short at 12,350 – still there.  
  • Oil (/CL) Futures short at $103.75 – now $101.70

Those last two Futures shorts were from the end of Wednesday's chat/Thursday morning and I did a nice play-by-play call of the trades between 2:59 am and 3:52, where we caught the Dow down to 12,300 and oil down to 102.85 – enough to pay for the old Egg McMuffins.  

Thursday:  In the main post, I called BAC my "One Trade" for 2012 – saying if you want to be bullish, you can just buy my BAC spread and walk away.  This was a rare case of initiating a trade in the main post and not in Member Chat but we don't mind giving out samples once in a while…

  • BAC 2013 $5 buy/write (see post for all details) at $3.20/4.10, now $6.58 – on track for 56% gain
  • FAZ 2013 $40/60 bull call spread (small hedge to BAC) at $3.10, now $2.45 – down 20%
  • FAZ 2013 $20 puts sold for $3, now $3.20 – down 7%
  • BKS Feb $10 puts sold for $1.20 ($25KP), now .60 – up 50%
  • BKS at $10.50, now $11.70 – up 11%
  • BKS 2013 $10 puts sold for $3, now $2.50 – up 17%
  • VLO June $18 puts sold for $1.75, now $1.40 – up 20%
  • BBY 2014 $18/27 bull call spread at $4, now $4.60 – up 15%
  • BBY 2014 $18 puts sold for $3.10, now $2.65 – up 14%
  • Shorting Oil Futures at $102.40, now $101.50
  • Shorting Oil Futures again at $103, now $101.50
  • QQQ 1/13 $58 puts at $1.05 ($25KP), now .62 – down 41% 

Notice that, in our $25KP, we are taking a beating (so far) compared to our more balanced general picks.  That's because it's a short-term, VERY AGGRESSIVE virtual portfolio where we're aiming to hit $100,000 by the year's end (otherwise we underperform last year by a mile) and you don't make 300% a year by sitting on the fence!  So, as I mentioned above, we went short to the point of getting nervous yesterday morning – hopefully our theory will be right and we'll be off to a good start for the year.  

Friday - I strongly reiterate my CASH call for the majority of our Portfolios, markets too dangerous to call:  

  • Shorting Dow (/YM) Futures at 12,350, still 12,350
  • QQQ 1/13 $58 puts at $1, now .60 – down 40%
  • CASH!!!!
  • DIA 3/31 $120 puts at $3.35, still $3.35 – even
  • 2 SQQQ Jan $19 puts at $1.45 ($25KP), now $1.70 – down 18%
  • 6 SQQQ Jan $17/18 bull call spreads at .55 ($25KP), now .50 – down 9%
  • CASSSSSSSSSSSH!!!!!! (from the Morning Alert to Members)
  • HOV at $1.65, now $2.05 – up 24%
  • HOV 2014 $1 puts sold for .50, now .45 – up 10%
  • HOV 2013 $1/2 bull call spread at .35, now .45 – up 29%
  • GLL Jan $18 calls at .65 ($25KP), now .50 – down 23%
  • VXX 1/13 $32/33 bull call spread at .30, now .13 – down 56%
  • VXX 1/13 $30 put sold for .35, now .39 – down 11%
  • 5 NFLX Jan $90 calls sold for $3.50 ($1.750), now $8.20 – down 134%
  • 3 NFLX March $100 calls at $6.60 ($1,980), now $11.20 – up 70% 
  • GLW at $13.50, now $14 – up 4%
  • GLW 2014 $12 puts sold for $2.35, now 2.10 – up 11%
  • GLW 2013 $10/15 bull call spread at $2.85, now $3.50 – up 23%

Here's a good lesson about options.  We had 3 ways to play GLW and you could just buy the stock to be bullish and made 4% or you could commit far less that $13.50 to short the $12 puts for a net $9.65 entry, worst case and you make 11% or you can hedge your bet and commit just $2.85 and you not only make 23% in less than a week but you make .65, which is more than you would have made committing 5x more to owning the stock.  Silly, silly stock traders – when will you learn?  

  • 5 AAPL March $425/450 bull call spreads at $10 ($5,000), now $10.10 – up 1%
  • 1 AAPL July $350 put sold for $12.50 ($1,250), now $11.25 – up 10%
  • 2 AAPL Feb $450 calls sold for $6.25 ($1,350), now $6.10 – up 2%

That last one is another bit of options fun as we're taking advantage of high earnings premiums to commit very little cash ($2,400) towards a potential cash out at $12,500 if all goes well (AAPL under $450 in Feb but over in March) with lots of ways to win in between.  That one is still close enough to play from scratch.  

Well, that was last week but now I'm out of time, maybe I'll do this week over the weekend as it's a nice review for newer Members to go over what is working and what is not as we head into full-blown earnings season next week.  Overall, in our first week of 2012, we had 35 winning trade ideas and 19 that we haven't turned around yet (and I'm only kind of joking as turning around those losing trades is how we make our money in the $25KP).  

We'll see how things go into the 10-year auction.  If it goes well, they can afford to use the Beige Book (2pm) to flip the markets back up as the 30-year note auction of $13Bn tomorrow is a rounding error to the Fed!  

And wheeeeeeeeeee!

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  1. From global news:
    There has been a refitting of the S&P GSC index (Goldman Sachs Commodity Index).
    This is what has made the WTI market so treacherous of late. In the rebalancing,
    WTI will fall to 30.25% of weight from 32.59%. Brent on the other hand shall rise t
    o 17.35% from 15.9%. We are talking billions of dollar in position changes without m
    uch concern for who is in the way.

  2. CMG- Phil, you outlined a trade earlier this morning for Yodi- sell Jan 345 calls and buy Mar put spread 320/300.
    You indicated net .10 on the total spread but also indicated "no margin". Not disagreeing on the trade but my screen does not indicate that. What am I missing?

  3. Good point Judy, thanks!  

    Margin/Pstas – I think I said with JUST the bear spread but maybe I was only thinking it…

  4. phil, just how large of a move down are you expecting in the dow or russel ? thx.

  5. Proof that— if there is a god— she is cruel, capricious, and a wretch:

  6. Phil, didn't we get out of the 3 MON April $70 calls last week? Thanks

  7. PP for today:

  8. MasterCard downgraded to Neutral from Buy at Goldman

    Goldman downgraded MasterCard citing valuation, relative exposure to Europe, and headline litigation risk. Price target lowered to $380 from $400. 

  9. PSA: The $10 per month deal for Cobra's daily report at ?
    will be expire on Sunday Jan 15th.

  10. MA/ Good for our MA puts in the 25KP. MA already down 9 this morning.

  11. Phil and members/   Phil, I said I'd get back with you on your comment yesterday which, paraphrased, was that "they may try to take AAPL down pre-earnings--be careful"     You may be right, so what I'm going to do comes under the heading of "When in doubt, sell half"    I'm going to reduce our short term AAPL 50k exposure  AND establish more downside protection by way of QQQ puts.     So, for the portfolio:    Close out the 10 Jan  315/325   bull call spreads  AND  buy 10 more Jan monthly QQQ 60 puts.  Do this at open. 

  12. Iflan – I suspect you mean to close out the ten 415/425 BCS's, no?

  13. Yes, jerconn, I'm closing the ten  Jan 415/425   bull call spreads.

  14. We may get a better re-entry on those in any case…I think the target by earnings remains the same…

  15. The  QQQ  Jan 60 puts gotten (10 )  for 2.10        The Jan  415/425   bcs  (10)  sold for  9.35/4.25  or 5.10, so a small profit on the trade.  Now we'll see how the day goes.  

  16. Big Move up on WFR to start the morning!

  17. From the last post Tuesday AM – worth repeating as people laughed at me when I talked about making outsized returns using modest risk:
    It is amazing how much confidence you engender, Phil………..I knew the 1% a day trades and repeated often were possible as I had done in stretches, and I knew kill zone trades were also possible and 5% to 10% returns per month were very possible with practice, experience and smart risk management all without having to take a lot of risk, but I guess I was talking to the disbelievers and since I have dropped them into my 'why bother to try to explain it' file and come over to the dark side at PSW I feel soooo much more content not only with the returns, but with the company, the dialogue and the comments and the obvious opportunity to learn and learn and learn some more.
    It all helps the mental and emotional discipline of the trading too. So thanks again.

  18. JR,

    You short yet?

  19. Last chance for WHEEE is a France downgrade? Lets see…

  20. dp France denied the rumor S&P warned them of a coming DG…

  21. Good Morning—was late to the party but caught a short /tf move enough for a coffee

  22. The RUT acting  stubborn.

  23. Good morning!  

    Everything is proceeding as I have foreseen but keep in mind that's what the Emperor said before a bunch of teenagers blew up his Death Star…  You never know where the flaw in your master plan is until it's tested so we'll keep on our toes today and be ready to go with the flow.  

    Dollar 81.62 and markets not down much considering that's more than a half-point gain.  Usually, it's a 2:1 move so either the Dollar goes back under 81.50 (not likely ahead of the auction as it's hard to sell notes priced in declining Dollars) or we have a bit further to drop.  

    I did a big news review early this morning (yesterday's chat) and boy does it suck.  On the other hand, that's all baked in and the Dollar is up and if we don't sell off, then the market is just bullish and won't be listening to facts again until it's too late, most likely.  

    The Euro is back below $1.27 but Germany is getting paid to take people's money as they will be happy just to get paid back.  I suppose it doesn't occur to them the Germany will be paying them back in Euros, not in Marks and it really makes no sense to pay Germany to hold your money when Italy will pay you 7% and – really – if Italy goes, what are those German Euros going to be worth?  

    That's why Hedge Funds are flying into EU debt (didn't work for Corzine but it doesn't stop others) as the logic is they are getting paid good interest on March debt and Italy or Spain's debt is as good as Germany's in that short run.  This then is the main reason that other countries are "improving" in their note sales but I would be very careful about drawing long-term conclusions from the action.  

    Nasdaq has been flying up as I write this (and shortable at 2,700, 2,370 futures (/NQ)), complete reversal and now flat for the morning.  RUT right on that 760 line in Futures (763.50 on index) and we have Dow 12,429, Nas 2,701, S&P 1,289, NYSE 7,639 along with it.  TLT at $119.15 and, of course, they want it higher.  Oil $101.48, gold $1,640, silver $29.80, copper $3.506, nat gas $2.82 (Danger Will Robinson, Danger, Danger!) and gasoline $2.77.  We do have oil inventories at 10:30 and if they are another build, that could start the big market slide into 1pm. 

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:40 Fed's Evans: Economic Outlook

    9:00 Fed's Lockhart: Economic Outlook

    9:30 CFTC Meeting: Swap Rules

    10:30 EIA Petroleum Inventories

    12:30 PM Fed's Plosser: Economic Outlook

    1:00 PM Results of $21B, 10-Year Note Auction

    2:00 PM Fed's Beige Book 

    At the open: Dow -0.44% to 12408. S&P -0.4% to 1287. Nasdaq -0.2% to 2363.
    Treasurys: 30-year +0.35%. 10-yr +0.21%. 5-yr +0.07%.
    Commodities: Crude -0.95% to $101.27. Gold +0.31% to $1636.55.
    Currencies: Euro -0.72% vs. dollar. Yen +0.21%. Pound +0.65%.

    Pre Market Cheerleader - 9:07 AM Chicago Fed President Charles Evans repeats his call for "substantial" monetary ease, and says the Fed should signal rates will not rise until unemployment drops below 7% or inflation rises above 3%. Evans dissented from the last 2 Fed decisions on the grounds policy wasn't easy enough. He sits out from voting on the FOMC this year.  - Well, that's the last of the Super Doves making his swan song…

    Speaking on CNBC the Richmond Fed's Jeffrey Lacker – maybe the only remaining hawkish voter on the FOMC – says the economic headwinds are more persistent than he thought last year. Seeing 2012 GDP growth of 2-2.5%, he says to take his predictions with a "grain of salt." Don't worry, we do.

    More from Lacker: He says he's not comfortable with some of the proposals in last week's then little-noticed, but now controversialwhite paper on housing in which Chairman Bernanke appears to be attempting to create fiscal policy in the midst of election season.

    Market preview: Green premarket yesterday, U.S. futures and EU stocks are red this morning following Fitch's warning of cataclysm for the euro, although falling German GDP can't be helping either. S&P futures -0.25%. SuperValu is terrible value, diving 10%following its earnings miss. Textron +4.7% after it says its conducting a strategic reviewLater: Fed's Beige Book, Fed's Plosser.

    Fitch's David Riley calls on the ECB to redouble its efforts at buying troubled EU sovereign debt or else risk a "cataclysmic" collapse of the euro. He also would have the EFSF turned into a bank so it could borrow from the central bank window, rather than going to the market (which is mostly sitting on its wallet).

    The euro dives below $1.27 and European shares are down alongside with some crediting Fitch's comments with spooking the markets. The Stoxx 50 gives up gains of about 0.5%, now -1.1%. The euro is back within a handful of pips of a 16-month low, -0.7% at $1.2688. 

    Germany sells €3.15B of five-year notes carrying a yield of 0.9%. Bid-to-cover ratio of 2.8.

    The EU fiscal treaty, a major element of which is balanced budgets, could reportedly allow eurozone countries to incur deficitsduring severe recessions or other exceptional events. With the eurozone slumping, countries could use the escape clause before the treaty even comes into force, which is slated for the start of 2013.

    Merkel/Monti press conference:  Angela Merkel and Mario Monti head for the cameras after wrapping a meeting in Berlin (following Monday's Paris meeting that included Sarkozy). Monti: German discipline is best recipe to overcome crisis. Merkel: She expects a final version of the new EU fiscal compact by Jan. 30. Next meeting: Jan. 20 in Rome.  To send a signal to the markets, Merkel says Germany would be willing to pay more capital into the permanent EU rescue fund (ESM). Message received. European stocks trace out a "V," the Stoxx 50 now off just 0.3%. - Not good enough. 

    News EU banks have sold €14.9B of unsecured debt in the first 10 days of January – more than the entirety of H2 2011 – may be less than meets the eye. First, banks have to roll €800B in 2012 so the sales hardly make a dent. Second, it appears the issuance has been mostly limited to Scandinavian, Dutch, and U.K. banks.

    Irish finmin Noonan claims the country is fully funded through the end of 2013, calling speculation about a 2nd bailout "ludicrous." The chatter started when Citigroup chief economist Willem Buiter said Ireland should start filling out an application for another rescue, rather than waiting for the last minute.

    Last night's modest fall in Shanghai (-0.4%) broke a 3-day rally that saw the index gain 6.4% – the largest such move since 2010. Credit Suisse was out with a contrarian note arguing the PBOC may continue to hike interest rates this year as inflation remains high. December price data is due out tonight. 

    Their balance sheets stuffed with bad real estate and unwilling to take the necessary markdowns, Spanish banks have instead become builders as they try to extract value from the assets. Given Spain's massive overhang of vacant property and a 22% unemployment rate, it's a dubious strategy, but the banks insist they are building only in strategically attractive spots. Remarkable stuff.

    It's the kind of headline a prognosticator will often come to regret he ever wrote, but Robert Sinn proclaims $70 oil is a "thing of the past." He points to a Der Spiegel graph showing the breakeven prices for several of the OPEC states. They're a lot higher than one might think. For Saudi Arabia, it's $80.

    Chinese gold imports from Hong Kong rose to a record102.8K kilograms in November, stoked by the upcoming Lunar New Year holiday and, of course, the generally growing wealth of the country. For the 1st 11 months of 2011, imports tripled 2010's pace.

    More chatter from the Detroit auto show: Execs with GM and Ford (F) both say anecdotally that sales are brisk in January through the first 10 days of the year. Though it's unclear if it's the mild winter weather or improved consumer sentiment pushing buyers to showrooms so far this year, another overlooked factor to watch in 2012 is that the average age of cars in the U.S. is close to 11 years.

    Citing valuation, Goldman Sachs downgrades MasterCard(MA) to Neutral from Buy, lowering its price target to $380 from $400. "We see a near-term risk from the tepid European backdrop, currency exposure, and an increasingly competitive U.S. debit landscape."

    SuperValu (SVU): FQ3 EPS of $0.24 misses by $0.01. Revenue of $8.3B (-4.3% Y/Y) misses by $120M. Shares -4.6%  More on SuperValu (SVU) earnings: FY'12 EPS guidance excluding impairment charges of $1.20-1.30 vs. consensus of $1.10-1.30; Revenue guidance of $36.1B vs. consensus of $36.1-37.1B. Same-store sales growth seen at -2.5-3%. Shares, now 

  24. More on SuperValu's FQ3 report: Attributes fall off in revenue to market exits and negative same-store sales growth. Sees 2012 sales of $36.1B on a decline in same-store sales of between 2.5% and 3%. Shares -4.7% premarket. (PR

    China had a whopping 505M Internet users as of the end of November, claims a government agency. However, this still only represents a penetration rate of 37.7%. The number of users on microblogging platforms such as SINA's Weibo) is said to have passed 300M. In October, Barclays noted Chinese Internet users spend far more of their leisure time browsing the web than they do watching TV. (also

    PayPal recorded nearly $4B in mobile payments last year – up from $750M in 2010, and well above the $1.5B it expected to bring in – says a company exec. In addition to introducing popular iOS and Android apps, and supporting various third-party apps, PayPal is experimenting with NFC technology and and offline payment solutions. Parent eBay (EBAY) acquired mobile payments startup Zong in July. (previously)

    Symantec (SYMC) is the target of a lawsuit alleging it uses scare tactics to get trial users of its PC security and maintenance software (who often get the software pre-installed) into upgrading to paid versions. Symantec's security software business has been struggling with slow industry growth, and rising competition from free solutions such as Microsoft's (MSFTSecurity Essentials. (previously)

    Hostess Brands files for a Chapter 11 bankruptcy in Texas, revealing in a filing that it owes creditors more than $1B. The maker of Twinkies, Ho Hos, and Ding Dongs failed to find a buyer from a list of companies that included Kraft and Campbell Soup, according to reports. - How bad does the market have to be that Hostess can't find a buyer?  

  25. svu getting smacked down

  26. Phil
    Any USO/SCO trades? ….or wait for report?

  27. Phil – I have 20 JAN 122 puts avg .93…. They are now around .61, do I hold, DD or close the position at this point?

  28. What's going on with solar today? I don't see any news but many are up big 5-10%.

  29. Move down/Lunar – I certainly think 12,200 will hold and I think 12,300 should do it for the Dow (enough to panic people into paper if they time it right) maybe 1,266 on the S&P and 750 on the RUT.  

    Europe is down half a point and resting for the moment but mainly because we had such a big jump, I think it confused them.  As we turn down, they will probably sell off more and that may put downspin on us as well.  Hey, let's cut this short and point out the Euro is trading at $1.268 – do we really have to make a case for cash against that one very basic fact?  

    No need to make more Twinkies, Flips – the ones they have now have a 100-year shelf-life.  

    MON/JRod – Yes, and we rolled the short calls.  That was not a portfolio review, just a look at what positions we took.  Here's the current $25KP Positions per last night's prices:  

    Not much to do until we see the afternoon action so a good day for an early lunch as it will be crazy later.  

    MA/Mampcs – Not much of a target drop but maybe enough to make people wonder why they have $350 tied up in that thing.  

    AAPL/lflan – Good idea.  

    Mafia/Pharm – And that is worse than GS in what way?  

    WFR/Button – Poor little guys, I forgot all about them!  

    Thanks Roro!  

    Thanks Savi, hope you were quick to get out.  

    Oil (/CL) $101.25 now, should run back to $102 into inventories (10:30) if you want to be brave but I'm more of a one-way better and would rather play them short once we get the BS pop we usually get right after inventories (no matter what they are).  

  30. Phil / Hostess – What has the world come to?  No more market for Twinkies?  I thought we were all turning diabetic.  That company should have it made in the shade.

  31. Phil / Hostess

    I propose that we take the collective profits from the 3-6am futures trading into our Berkshire pool, purchase hostess, and switch from egg mcmuffins, to eating twinkies in the morning. Therefore we can “pay” for our breakfast by owning the food!

  32. Savi/SVU — I still like the buy/write, selling Jan 13 put and calls at 5, so it's 4.23/5.86, but the dividend makes it a 27% return if it holds 5 at expiration….

  33. WFR – could it be Romney is thought to be more solar friendly?
    Phil – is this a good time to sell covered calls on WFR?

  34. Look at WFR fly.

  35. Nonstop Flights Stop for Fuel

    Dozens of Continental Airlines trans-Atlantic flights have been forced to make unexpected stops in Canada and elsewhere to take on fuel after running into unusually strong headwinds.

    Really?  How much abuse are we meant to take?  And they get to blame the weather even though it's only because they are flying the planes with tanks half empty (to save weight/money).  If a plane crashes due to lack of fuel when they purposely didn't fill it – you can scratch one airline from the list on that lawsuit.  

    SVU/Savi – Very disappointing but that's the reality of the bottom 90% consumers.  We're in a recession only no one can explain it to the top 10%.  

    SCO/DC – I still like the Jan spread above but you can sell the Feb $34 puts for $1.60 and buy the $35/40 bull call spread for $2.10 for net .50 on the $5 spread – I like that one with SCO at $36.93 currently.  

    Oops, here's inventory.  UP 5MB – ROFL!!!  1MB expected.  Gasoline up 3.6Mb, Distillates up 4MB – this is a catastrophe.  No one is buying oil or food – they have totally broken the consumers!  

  36. Morx,

    It's the political campaign season……you can expect Romney to become more or at least to pretend to be more friendly with everyone and every thing for the next 11 months.

  37. Phil WFR if you had them in you portfolio you would see the loss every day!
    MA showing fruits already!
    MON just for the play who is interested I rolled the Jan 72.5c  to 77.5 Feb 1x and sold 1x Feb 80c now 2.67 and for good measure sold 2x Apr 65p for 1.29 all transaction done on 1/9/12

  38. esc--hi, how was your trip to the Far East—yes, I have to scale into SVU --thanks for the bw info

  39. inventories up, dxy up, tlt up…
    market recovering?

  40. Wow that report sucks!
    10:31 AM EIA Petroleum Inventories: Crude +5M vs. consensus of +1.1M. Gasoline +36.M vs. consensus of +2.1M. Distillates +4M vs. consensus of +1.9M. Futures -1.51% to $100.69. [Breaking News, Energy] Comment!

  41. good point exec. and if he brings in the rest of the crew it wont matter what he thinks.

  42. Burrben / Hostess — Your premise was blown as soon as you referred to Twinkies as "food".  :)

  43. Phil/transatlantic flight – I am scheduled to take one to India at the end of the month. Hope I make it!

  44. Obama expected to request 1.2T increase in debt ceiling in the next few days – can't wait for that drama to unfold

  45. Nicha, if you're flying transatl west to east, the winds are in your favor and you'll coast in ahead of schedule.

  46. What time is the auction?

  47. How is oil maintaining even 100 on that report??  This crazy logical market of ours.
    Well, oil has now been around 100 since mid November, if it keeps here for another month and a half, the market will fall hard again.  Never has been a time it hasn't including last year.

  48. Phil / NG — Getting close to your shutdown target of $2.50. Who wins? Buy the commodity?

  49. Plosser surprises with an unexpected twist lays the golden egg today and the markets rocket!!!………what are the odds?

  50. Hi, Savi!  The trip was great, thanks.

  51. FAS strangle play 76/69 looking for 1.05

  52. DIA/CC – I'd hang on through the afternoon.  What you can do, if we don't go down is sell the current $122 puts (now .65) and roll to the Feb $120 puts (now $1.70) so you spend net .50 to buy a month and, if the Dow drops on you, you have a reasonable vertical after you roll the short puts (the Feb $114 puts are currently .65).  Feel free to re-ask if the situation comes up.  

    That goes for everyone – the Wednesday before expirations (today) is the day you do not want to be the sucker holding front- month premium unless you have a specific move you expect short-term.  If you don't like a position you own (not a short put or call you sold) well enough to pay to roll it to next month – then get out! 

    Solar/Rain – I don't see it but I'll put money on CHINESE STIMULUS!  

    Hostess/Burr – I think America may be a little too health conscious these days for those guys.  Even my kids won't eat that crap.  I think the brand has value but I can understand how it can be passed up in a BK sale, people will buy assets after they are bust, no need to pay up to rescue them.  

    WFR/Morx – Oh me love them long-time.  $4.36 not too beaucoup and you can sell the 2013 $2.25 for a net $2.11/3.56 entry.  Also, low-level commitment on 2014 $3/5 bull call spread is .45 so you can invest $4,500 with a stop at $2,500 and risk $2,000 with a $15,500 upside potential and you can offset that with the sale of 20 of the $3 puts for .80 ($1,600) so you risk losing $400 in cash with a $17,100 upside potential and the worst case is you have 2,000 shares assigned to you at net $3.02, which is 30% below the current price.  That rests on the assumption that you can trigger the stop but, outside of a sudden Bankruptcy, it seems very likely.  

  53. gmarts- thanks. So I am good to go but may not come back, huh :)

  54. Phil
    I have the Feb 12 GLL $17 calls. What are your thoughts about selling the Feb GLL $19 Calls at $.50 to convert it to a BCS. GLL currently at $17.80

  55. Also, don't Twinkies last forever?  How can they go bankrupt?!?  ;-)

  56. Nicha—have a great trip—thinking of taking a trip to Kuala Lumpur--my favorite city in that vicinity

  57. Phil / DIA Puts?

    So yesterday we DD’s on the DIA Jan12 123 Puts

    “$25KP – I forgot about the new DIA $123 puts, now .70 – of course we want 5 more of those for 10 at net .89. ”

    But today I see you mentioned the

    “DIA Jan $121 puts at $1.05 ($25KP play), now .40 – down 62% (there it is)”

    I’m confused…

  58. Burrbe, the 121 puts that Phil is referring to are from 1/3 that were closed out even on 1/5. He was recapping all the 25KP trades. We still have 10 of the DIA 123 puts at average of .89

  59. Phil, whats the plan to do with the GLL puts?

  60. HOV the latest race horse

  61. Yeah, nicha, you're cool. On the other hand, we're due to fly transpac nonstop from LA to Bangkok later this month. It's the ONLY nonstop LAX/BKK offered by anyone (Thai Air), and that is one LONG M*F**ing flight. Hopefully the winds over the Pacific will cooperate, as the fact that is nonstop is the only reason we pay the extra fare to be on it.

  62. not sure what I'm watching, MSFT warns, drops a little bounce right back up, /cl not so good drops a little right back up this just doesn't feel right  I hope we are not going to repeat last years crazy BTFD scenario

  63. Phil,
    In your note to everyone about Wed before expiration… Do you mean Wed before weekly expiration (2+ days before expiration)? Or 2 Wed before monthly expiration next Fri (9+ days before expiration)?

  64. NatGas – Phil with natgas tanking SWN and UPL being taken to the woodshed today.  Do you like them for buy/writes at this level.  Can natgas really go much lower?

  65. mampcsa / dia

    Thanks. Sorry to be a pain, but does anyone have the link to StJ’s portfolios? Xmarks decided to somehow loose all my bookmarks.

    I looked through the virtual port reviews, but the link isn’t there.

  66. WFR/Yodi – Or, if you were scaling into them, you would see your basis get lower and lower every year.  

    $100.87 on oil.  Dollar 81.62, gold $1,644.

    India/Nicha – Aren't you stopping anyway?  Worst flight I ever took was an Air India flight in college.  Was way cheaper but I sat in the back of the plane and EVERYONE smoked, I think even the children were smoking.  The food was fantastic but I must have inhaled a few packs on that flight and my clothes smelled like cigarettes for days.  Also – HOT!  It must have been 80 degrees back there.  That may have been the last time I ever sat in the back of a plane – a very good motivator for me NOT to have to choose cash over comfort.  

    $1.2Tn/Kramer – Hey, it's less than 10% this time.  Not bad for 6 months.  ;)  

    Auction/Exec – The auction is about 12:30 and lasts 10-20 mins, the results are at 1.  

    Oil/Rustle – Patience grasshopper.  

    Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment.” – Buddha

    Nat gas/Rain – No, there's simply way too much of it.  We are indeed the Saudi Arabia of natural gas and you can buy oil there for $20 a barrel.  A lot of gas production got built on speculation that LNG would ship around the World but that still isn't happening so all that gas comes out of the ground (you have to cap it to make it stop and then maintain the caps) and goes into storage much faster than we can consume it and this Globally Warmed Winter is just putting nails in the coffin for the suppliers (also total lack of Hurricanes last year).  

    Plosser/Roro – Not likely as this is his last speech that matters (no longer voting) and, of course, he wasn't given the anchor position ahead of the auction for nothing. 

    GLL/Crussell – Makes sense. Maybe sell the $18s and roll down to give yourself more leeway.  

    DIA/Burr – Again, it was not a $25KP update, it was a review of trades.  At some point we adjusted and NOW we have the $123 puts, which is good as they are back to .80.  

    And what Mampcs said!  

    GLL/One – Ask me if gold is still over $1,620 at 2pm.

    Non-stop/Gmarts – Ouch, that's a long flight.  I try to stop in Hawaii for a couple of days when I go that way to break it up.  Even a night in Honolulu is a fun break.  

    Expirations/Kallen – No the Wednesday before the expiration week of the current month.  Ie., when you have 7 trading days left the time decay is viciously against you and it's ridiculous to be in positions where you have outstanding premium as you lose about 15% a day moving forward.  

    Nat gas/Stu – It's in free-fall, I'd wait for a floor before going in and I only like CHK anyway – getting attractive at $22 but would be much more so at $18.  

  67. Also, if you do have spreads with current price that isclose to strikes, in the last week, these spreads can 'grow teeth'. It's probably wise to get out or roll to next month before this week is over. Unless (like Phil said) you are expecting a clear directional move 

  68. Look at the home builders go.  Why?  Shadow inventory sits at all time highs. 

  69. Site inacessible / All,
    Was it just me or did others find they couldn't access the site for a few minutes?

  70. RRC really selling off. Might be a candidate for a buy/write in weeks ahead? Where is the bottom?

  71. Well if they're going to bump the dollar to enhance the auction then this is where they should do it.

  72. Pharm:  Isn't this Bloomberg headline enough explanation?  Bloomberg Jan. 11 2012 12AM: "Ben S. Bernanke is signaling his willingness to double down on a three-year bet that’s failed to revive housing, showing the extent of the Federal Reserve chairman’s effort to wrest a recovery from the deepest recession."
    What does that mean, exactly?  Beats me.

  73. India/Phil, gmarts – Continental from Newark to Mumbai (14.5 hours). I would never fly Air India. Food may be good but the service sucks. It’s like travelling in a local bus in India with ppl pushing you around. Although, a good experience for first timers to really know how it will be once they get there.

  74. yodi or anyone playing both SPX and FAS strangles,
    Do you play Peter D's SPX strangles also?
    I just did a comparison of margin requirements in a TOS PM account.  FAS is now about $74-ish, and SPX is $1287-ish.  So, SPX = 17 x FAS.  But TOS tells me that one FAS strangle requires about $3,000.  And one SPX strangle requires about $12,000.  The difference in margin requirements is only 4x.  So, it seems that FAS strangles are "more expensive" margin-wise.  Is that because FAS is a 3x ETF?  Do FAS strangles give me more premiums?

  75. Server went down briefly or something all should make sure they follow me on Seeking Alpha, which is our back-up if we're down for more than a few minutes.  Chat would switch to the bottom of the last article I wrote there, which shows up in the top right of my author page.  

    Europe drifted into the close, down about half a point and we're down about 0.25% with the VIX up 2.5% on that tiny move (good for VXX). 

    Doesn't matter until later but we had a disastrous oil report and oil is holding $101, even with Dollar 81.70 – doesn't seem natural to me at all.   XOM is down 1%, more sensible reaction and OIH is off 1.6% – also making sense so just oil off in La La Land.  

  76. Plosser was kind of tongue in cheek humor but we already know humor is not my forte………nonetheless, I keep a healthy skepticism when it comes to central bankers.
    I find the price action odd too. The Dow just seems to want to hold that 12,400 (futures 12,350) line and it makes me wonder why especially given the reasons you have pointed to be looking to the sell side.
    JRW pointed out in yesterday's comments that the market may be in distribution, but whether it is that or a tip off of an announcement re stimulus from the FED or ECB  or a coordinated effort I do not know, but I still think price action is very strange. If a drop comes I bet it will come very quickly and as you have pointed out this rally has been on anemic volume so far. On the other hand if the market is 'bullish thinking' regardless of fundamentals then the resistance levels for the European indexes are definitely being tested and a break hiher implies 6400 for the DAX and back to 6000 for ther FTSE.

  77. Honolulu Phil…. Yeah that works, but by the time you de-board, mess with the bags, check into your hotel, and get to the beach, and then do the whole thing again in reverse order, You could be chillin' on your own beach with nothing else left to do until you feel like it.
    We like to just take the hit, do the travel time, and Then do as we please for as long as we like. Yeah, sometimes travelling just sucks, but when you can be anywhere on Earth in about 24hrs, it can sure be worth the hassle.  Luxuries our parents (or at least mine) didn't have.

  78. Yes, Dr. B buying MBSs in the future, still does nothing for the inventory that sits in the wings.  Did QE1 or QE2 work?  I would say no…except for those at the top.

  79. /CL up to 101.80?

  80. Remarkable "LALA" -move by crude in the face of that sh*&%y report. This Iran story keeps delivering for the NYMEX boys.
    Phil: I bailed on the Jan SCO spread on the drop before report for a small profit. I will just sit this out until the IRAN thing dies.

  81. Phil
    Where on your Seeking Alpha page do we follow you when this site dies?

  82. I just sold the FTSE at 5675………
    I was in this morning for a quick ride down so it puts my cost at 5685 and 5700 on the nose was the high so far……..

  83. Nicha, 14.5 hrs isn't as bad as I thought. not as bad as 18H to BKK. The only problem I have is flying transoceanic on a US based carrier. The cabin crews usually suck. They seem to get the most senior (read crotchety) cabin attendants, who seem to have the LEAST interest in your comfort and experience. Give me a nice Asian carrier with cute little stewardesses with big smiles and a culture of friendliness.

  84. cwan120
    The FAS strangle is a day play as you should be out in the evening yes the Margin is about 2,500 PM
    the SPX I only play Iron condors and looking at my FEB condor it is only 350$ per contract

  85. Pharm:  And you would be…on the bottom?  I don't see your point.  Clearing bank MBS positions will be done with rather explicit encouragement to get their mortgage lending moving again.  Printing money to evaporate the real, as opposed to nominal, value of mortgages, also works , given time.  And time will pass, as it tends to.  Granted, the pump will work better for some real estate than others — think Palm Beach rather than Las Vegas condos — but I've already seen a flurry of wild-eyed buyers over the last month or two looking to dump their Euros [and rubles] here in the Carib.  
    Here's a quote from an Alphaville article: "The industrial economics of extreme wealth is an interesting subject. It’s often been observed that a lot of the spending of the rich goes into positional goods. A positional good is, in a sense, in fixed supply, or rather, position itself is in fixed supply. If more of a positional good is produced, its positional value decreases. More spending on them can only inflate their prices.
    The quintessential positional good is land. A lot of land is useful in itself, but it is true everywhere that owning x amount of land gives you more positional utility than an equivalent position in cash or securities, and the most sought-after land by area isn’t farmland or building plots near a container terminal or an oil well, it’s billionaires’ row, whose value is entirely positional.

  86. Builders/Pharm – Same as the Banks, rumors running rampant of massive bailout in housing.  Too funny really as Obama won't be able to get debt ceiling extended without a fight but they bulls expect Trillions will rain down on the housing market. 

    Too true about prepping for the experience Nicha!  

    FAS/Cwan – Yes, they upped the margin requirements on ultras considerably.  

    11:00 AM On the hour: Dow -0.31%. 10-yr +0.19%. Euro -0.7% vs. dollar. Crude -1.15% to $101.06. Gold +0.79% to $1644.45.

    EIA Petroleum Inventories: Crude +5M vs. consensus of +1.1M. Gasoline +3.6M vs. consensus of +2.1M. Distillates +4M vs. consensus of +1.9M. Futures -1.51% to $100.69.

    Wells Fargo issues a tepid forecast for global economic growth, saying that its forecast for a 3% rise in world GDP in 2012 will mark the slowest year since 2009. Highlights (or lowlights): U.S. +2.1%, Eurozone -0.1%, U.K +0.9%, Japan +1%, China +8%, India +7%. 

    Oh a timely save!!  Nigeria's largest oil union says it's telling oil platforms to be on "red alert" to shut down output as part of a nationwide protest against the cutting of gasoline subsidies. Nigeria exports over 2M bpd, mostly to the U.S. and Europe. Crude -0.9% to $101.28.

    Goldman Sachs suggests the proposed EU oil embargo of Iran will amount to just a giant swap with China, with Europe getting more oil from Saudi Arabia and China increasing its buys from Iran. China will emerge the winner as it can demand a discounted price from Iran, allowing it to top off its strategic reserve on the cheap.

    At nearly €30T, EU government pension obligations dwarfofficial debt figures by about 5X, according to a study ordered by the ECB. Stable or falling birthrates combined with longer life expectancies are exacerbating the issue on a daily basis. Higher retirement ages and reduced benefits seem a certainty at some point.

    The biggest sovereign CDS bets are in the EU, with France top of the list with $21.8B in net notional CDS outstanding. Next come Italy and Germany, and then Brazil despite its surplus and large forex reserves. "Is the CDS market seeing something the rest of us aren’t, or is it time to take the other side of this bet?" asks Mark Gongloff.

    As expected, China publicly rebuffs requests from Timothy Geithner, who's visiting the country, that it cut down on its oil from Iran. Not that there's any straw clutching going on, but the Obama administration apparently tends to discount Beijing’s public statements and instead watches what the government does.

    Maybe attempting to reverse a troubling slowing in the issuance of yuan-denominated offshore paper, China's NDRC gives permission for 10 banks to issue nearly $4B of debt in Hong Kong. China's own banking issues combined with ideas the yuan is no longer a one-way bet, slashed activity in "dim sum" bonds late in 2011.

    President Obama launches an initiative to encourage companies to "insource" jobs back into the U.S., including eliminating certain tax breaks that the White House says gives advantages to firms that move jobs overseas. Obama is due to discuss the issue with business leaders today, including execs from Ford and DuPont

    The CFTC expands protection on funds used as collateral by customers in swap trades, approving tighter measures by a 4-1 vote with CFTC Republican Jill Sommers dissenting. The new rules allow brokers to pool customer collateral funds, but prevents them from comingling the funds with their own capital. 

    Solar stocks are rallying (KWT +9.3%) on hopes that module prices, which were in a freefall for nearly all of 2011, are finally stablizing. However, Solarbuzz reports module prices remain under pressure in both the U.S. and Europe. The cash burn caused by weak demand and pricing have led many to speculate weaker names will bedriven out of of the market in 2012.

    The Nevada Gaming Board reports (.pdf) a 7.1% spike in gambling revenue in the state for November, with an even higher rate of 9% clocked on the Las Vegas Strip. Gaming companies with Vegas operations are posting steady gains on the day: LVS +1.4%,MGM +1.7%WYNN +1.4%BYD +1.7%

    More from Nomura's Sherlund: A talk with Microsoft (MSFT) execs finds them reiterating their remarks about Q4 PC sales being weaker than expected. In addition, while the execs claim to be optimistic about ultrabook sales, Sherlund thinks they're worried customers will delay PC purchases until later in the year, when Windows 8 ultrabooks featuring touchscreens arrive. - Or MSFT is clueless and they will never buy laptops again when pads are better and cheaper for most functions.  

    InvestorPlace keeps Alcoa (AA -0.3%slated in as one of the "top 10 stocks to buy and hold for all of 2012" despite shares already running up a 10% YTD gain. The take on AA: "A slower global economy has hurt aluminum demand in industries ranging from construction to durable goods to automobiles, but AA is streamlined and prepared to profit in this environment."

    Alcoa's (AAshuttering of capacity followed by Norsk Hydro (NHYDY.PK) and surely to be followed by others are to be applauded, writes Andy Home, but they may not have much impact thanks to China, where production swings more in a single month than all of the announced cuts combined.

    Join Amazon Prime (and we all eventually will), writes Jason Calacanis, and you will understand what those in "the cult" know: Having already upended retail, Amazon (AMZN) will be adisruptive force for another generation, with a chance at erasing a staggering list of brands. 

    In-line with earlier reports, a Japanese blog asserts the iPad 3 (AAPL) will launch in early March. It's also said the device will be slightly thicker than the iPad 2, likely to accommodate theadditional LEDs needed for its high-res display. Meanwhile, iLounge claims it recently saw an iPad 3 prototype, and found the hardware to look very similar to an iPad 2, save for a larger rear camera. 

    Android tablet makers aren't ceding the low-end market to the Kindle Fire (AMZN) and Nook Tablet (BKS) without a fight. Asus is rolling out a $250 7-inch model featuring an Nvidia (NVDATegra 3CPU, and ViewSonic says it will sell a 7-inch tablet with a less powerful chip for $170. Whether such products will be enough to counter Amazon's brand power, sales reach, and content/services bundling remains to be seen. (also)

  87. Savi

    If you go to KL, make sure to hit up the Perhentian islands. I spent a month at AluAlu divers. Really fun, and the garlic crusted fish for $3 was unbeatable. They actually had good internet, and I started building my “income port” from there.

  88. I hate the bots

    Pharm those who bought wont sell, sit and collect rent…then you have talk of deep pockets buying up chunks of inventory…anything from here on out is bullish for the housing market not so much those delinquent..time to pay rent again…

  89. Iran/DC – Seems to me they are pulling out all the stops to keep oil from failing and that, to me, is a good time to short.  We'll see if they make $102 (/CL) but, if not, I'd short below $101.75 with tight stops.  

    Seeking Alpha/DC – There's a link in the comment I made about it, under my picture it says Follow in a box.  

    Cabin Crews/Gmarts – Try Singapore Air – fabulous service all the time.  Virgin very good too but not many flights.  

    OK, one hour to auction – let's see what happens.  

  90. Latest tweet from GSElevator 
    #1: My GF asked me if backwardation is a sexual thing. 

    #2: There's a keeper.

  91. Phil, LOVE Singapore Air, unfortunately their BKK routes add 4 hrs to the trip. We've become huge fans of Thai Airways, and find there service and food to be truly excellent.

  92. Burrben—never been to Perhentian—will definitely check it out—love all the food in Malaysia

  93. This feels like a game of chicken

  94. Pharm, I don't really understand your downbeat assessment of ARIA yesterday.  When I looked at the put volume for the day I didn't see much going on, the open interest on < $10 puts that you mentioned seemed like older lots.  And today they are bullish engulfing.  Still think it's swinging down?

  95. speaking of airlines—never fly Air India —-Singapore is the best but Etihad is great also

  96. Zero – my point exactly and it was mentioned here by Phil (recently) and myself (many months ago).  It's a land grab and redistribution, pure and simple.  Things are moving in my area of So. Cal. even if it is a short sale or foreclosure.  But in the Midwest, not so much.  Then again, who cares about the Midwest (where there is land), when so much is on the coasts, no?

  97. ARIA/mrm – not downbeat at all, just pointing it out as info to digest. 

  98. Savi – Get a real cheap flight on AirAsia, the bus of the skies… But DO NOT spend any nights in Kota Bahru. It’s 99% strict muslim, and if you aren’t fully covered, it’s a uncomfortable experience to say the least. Fly in and get a taxi right to the docks to catch a boat.

  99. 1 hr to auction – auction is already done.  Just a matter release of info and the bid to cover.  Auctions are done many days in advance.

  100. That OIL move back up off the big inventory numbers is weird too.

  101. Pharm, still lovin' MITI?  I have some DITM calls that will expire this month and planning to let them exercise into stock, but wanted your thoughts…

  102. Burrben—thanks for all the info—-have flown AA to Bali and Saba very much like SW—

  103. CES has been almost entirely underwhelming this year. The products announced generally seem like more of the same (due to less money being spent on R & D??)
    The one exception is this virtual browser Aurasma (for iOS or android) that's effectively augmented reality on speed, which I could see advertisers and product developers picking up on as it allows you to see how to do things like connect the cables your new wireless access point (or TV or what have you) by watching a live video on your screen of the object you're actually looking at in the real world.

  104. we could use a little CNBC the world is falling

  105. HOV just blew through it's 200 day. Hoping for some support here so we can run to 3.50.

  106. Oxen Group took clients long off the 102 line for crude with long position in SCO. We are looking for quick 1-2% scalp daytrade. Those inventories were very strong. Looking for move down and dollar strength.

  107. Burrben, Air Asia seems to be the Southwest Airlines of SEA…just dandy for short hops and always great prices. Don't know if I'd wanna go long haul with them though.

  108. The BOTs on IWM are relentless.

  109. OOps, Savi beat me to it.

  110. OXEN/OIL – Inventories were very strong????   That a typo?

  111. TLT creeping up on 120

  112. I’m not sure that Oxen read’s Phil’s comments….

  113. Pharm/auction timing
    if that is the case why would it matter what Plosser or anyone else said prior to the auction…if it was days ago, just a question that is unclear to me based on your statement.

  114. Inventories were strong. They built a lot. I guess my thoughts are strong inventories show a big build. Weakening inventories would be a draw.


    I meant strong as in building.

  115. Burrben—thought the same but Oxen went short oil via long sco

  116. Phil
    nice call. rolled down the Feb GLL $17 to $16 call for $.80 and sold the Feb GLL $18 for $.80 to pay for it creating a BCS and gained $.25 in the process.  

  117. Not looking like we'll get our big sell-off but at least oil gave us a new entry at $102.

    Days/Pharm – Where is that from?  I'm pretty sure it's the same hour.  Maybe they take bids early but that would be crazy if some people know days in advance on such market-moving data. 

    CES/Kwan – We used to go every year but haven't been for last 3, really a general waste of time if you're not there to stock a store.  I like going to Vegas and mostly the show was an excuse to go but it's better to just browse off the Web after or during the show as you get all the info you need and you don't have to walk across an aircraft hanger to compare two items.  Wired had a pop-up store in NYC over the holidays and that was a good idea for showing new stuff but the reality was there wasn't that much that was interesting.

    Oil/David – 1-2%?  Wimp!  You can sell a next week SCO $36 put for $1.20 and that's 3.2% right there with a lower entry but if you want real bang for the buck, 2% of $36 is .70 and you can make $1.10 with 2 of the Jan $35/36 bull call spreads at .45 so 122% upside in 9 days if SCO simply stays over $36.    



    Fed's Plosser: Economy May Drive Fed To Hike Before Mid-2013

    --Plosser: Economy may drive Fed to hike before mid-2013

    --Plosser: Sees growth at 'moderate pace', GDP at 3% in 2012, 2013

    --Plosser: Fed must proceed with caution given its stimulus moves

  119. Nope…..Stock BOTs have a coordinated effort with the dollar BOTs to keep that sell off from occurring.
    They must need more suckers to jump in before they pull the plug.

  120. Plosser was upbeat about the economy while talking rates up, an interesting combo that seems to be working as TLT heads back to 120 and the markets go up as well.  He too sees "moderate" inflation.  

    Nice Crussell!   Now if only gold cooperates.  

    81.61, $101.90, $1,644.  

  121. German paper reporting US may contribute to IMF to help save Europe.

  122. Phil,
    In your view is the Euro bottoming out currently and based on this premise stocks are holding up and will take off once the Euro reverses?

  123. Oil keeps bouncing off that 102, but not breaking below 101.75. Come on oil!

  124. U don't thing the Primary dealers for US Treasuries know exactly what is going on prior to bidding the auction?  Damn right they do, otherwise they would not be primary dealers.  The Treasury tells them exactly what is going on…..thus the auction is over b'f it began.  The primary dealers can then turn around and sell those back to the fed (middle man), hold if they think the prices are going up, or sell to someone else who wants to hold the paper.

  125. Kwan / CES — See anything interesting with Gorilla Glass 2?

  126. ROFL – Oil very easy to scalp nickels but that's all they are giving up so far.

    Euro/Checho – We have 3 months of potential shocks ahead best case so not in the clear by any stretch.  If the Euro isn't bottoming here, at $1.27, then we're looking at $1.21 or $1.19 and that's just a step on the way to $1.05 and total disaster over there.  So, as I said regarding an FXE trade yesterday, they'd better be going up or there's no point being bullish on the market at all.  

    Oil/Burr – If you can make .05 to .10 10 times while you wait, what's the difference?  

    Fixed auction/Pharm – Oh that's different.  I mean they don't hold the actual auction. 

    Wheee – $102 again and a nice .15 dip this time.  Like taking candy from a baby except we're taking money from sleazebags.  

  127. Phil
    I have a VXX Jan $32/35 BCS. Would you wait a few days or roll down to Feb now? Thanks 

  128. yodi,
    I was late reading the comments, and just saw your FAS strangle earlier.  You are going for 76/69??  FAS is about 74.5-ish, only 1.5 from 76.  Isn't that too close to the fire???

  129. AMRN…..well ain't that nice!

  130. Oil/Phil – Still learning, so I like to look for a few bigger moves. I was also following your advice to short off 101.75, which is actually looking like some support…

    Putting in a few of those 10K hours…

  131. Phil do you reccomend bailing on some of these ST bearish positions, small but still money, or would you wait for a late afternoon anti stick?

  132. CME hitting year-lows.  

    NFLX down nicely today.  

    CROX taking off today.  I can't believe I used to have to debate the merits of buying them for under $2.  

    VXX/Crussell – That's a perfect example of where you take you .97 call and roll that to the Feb $32s for +$1.60 and cover with the $35s at $1.70 to pay for the roll and commissions and then let the caller's .40 die over the next few days.  If you put a stop at .60, worst case is that's the net cost of you buying another month.  VIX rarely makes a 10% move in a day ($3 on VXX) so not too dangerous.  

    Bigger moves/Burr – You don't really get them that often.  The real goal is taking pokes at oil until you find a line, like $101.75 or $102, that holds and then you play it until it doesn't.  Playing the .25 lines is always more risky and $1 lines are generally safest, in that – even if they break – you tend to get a lot of pullback tests to give you a chance to get out even.   Right now we have an excellent range between $101.95 and $101.85 that's been working for a half hour and already making its 3rd round-trip. 

    Bailing/Sage – Yep, we're going to have to of we don't get a proper sell-off but the oil inventory report gives me hope.

    Auction went off well so now we have no reason to go down but low volume suggests it could still happen.  Just watching and waiting for now.  

    The Treasury sells $21B in reopened 10-year notes at 1.9% (.pdf). Bid-to-cover ratio of 3.29, vs. a recent average of 3.15; indirect bidders take 38.3%, vs. a recent 46.9%. Direct bidders take 17.4%, vs. a recent 10%.

    $101.75 – good one this time!  80.60, $1,641.  

  133. Sold my Jan VXX play. What a ride that was. VXX at 50 way overpriced before even considering all of it's horrendously odorous decay — almost free money!
    Next up TLT puts, but this is a much tougher bear to wrestle because people think with Europe such a mess that US gov't bonds are so much better(?). Stupid rich people and all of their success. I'd literally rather buy manure, at least it has real value!

  134. Phil
    Are we going to roll any of the Jan. options in the 25 KP or are we waiting until the end of the day. Thanks

  135. MITI/mrm – I still have the original play and most likely you will be the one that gets the stock.  I am going to wait and sell some puts on them to get back in.  I have so many biotech plays right now, my head is spinning.

  136. GTHP with a nice pull back.  Right at the buying support from a few weeks ago.

  137. SGEN rockin'.

  138. Phl
    Do you like nly here?

  139. Phil,
    I have a VXX trade on you suggested on Jan 6 as follows:
    Bought 32 Jan1 3weekly Call for 0.89
    Sold 33 Jan 13 weekly Call for 0.55
    Sold 30 Jan 13 weekly Put of 0.37

    Would you suggest rolling those today or holding out for the end of the week expiration and then rolling?
    Appreciate your thoughts.

  140. looks like today was the wrong day to short CMG ;-(\
    FU CMG!!!

  141. cwan120
    FAS strangle Never praise the day before the evening ! We as well hold still a FAS JAN 73c which looks more critical, but all rollable.

  142. Short Puts/Phil – With Jan expiration coming up fast, are there any short put positions you are liking?

  143. Whuck? Now that was unexpected.

  144. Yodi / FAS Strangle – Today would have been a better day to sell it. The strangle is 1.10 now, and when we got in it was around 0.70. What happened to all that good decay :)

  145. Market – i'm up 4% already today, hedges flat, oil short flat, stocks more or less flat. what the hell is going on? must be too many long and short options.. lots of little adding ups.. 2012 resolution (probably same as 2011s) HOLD FEWER POSITIONS!

  146. Burrben
    FAS strangle I entered finally at 1.00 but we will see

  147. Scott, that happens all the time when the VIX goes up. Can change in a jiffy if the VIX drops.

  148. scottmi/fewer positions – that was my resolution too but I have failed already.

  149. McClellan Oscillatior for NYSE and Nasdaq crossed the overbought lines by close of yesterday, if we finish up, we will be near the upper part of the last year.

  150. Primary dealer holdings of government securities, including bills, coupon securities and inflation-indexed debt, increased to the most since November 2010. The 21 primary dealers held $74.7 billion of the securities as of Dec. 28. The firms held $61.6 billion of Treasury securities due in more than one year as of Dec. 28, a record amount.

  151. CL broke down below 101.75. Next line 101.50?

  152. Oh, man, what do we do with the GLL $18 Jan calls?

  153. Phil, I know you to be a great fan of Microsoft and it's superb management, so you'll be happy to see they are setting a shining example in the area of labor relations as well!
    "Beijing (CNN) -- Microsoft is investigating a report that workers at a Chinese plant that makes its Xbox game systems threatened mass suicide in a pay dispute, according to a statement issued Wednesday by the company's Hong Kong office."

  154. @Gingbaum
    Phill will answer you,
    however, from my experience, for future -  if you have faith in the trade -  you should roll on yesterday drop.
    That's what I did – rolled $32 to $30 for .59c and this way closed today with 18% profit.

  155. Pharm, thoughts on CRIS?
    and I'm sure we'd both like to see PLX continue to run…. :)

  156. My new year's resolution was to stay the hell away from CMG and I already blew that one…

  157. Phil,
    Your note from 11:16 about the GLL 18c in the 25KP.
    GLL/One – Ask me if gold is still over $1,620 at 2pm.
    Just got back from my meeting and thought to look at gold.  Its around 2pm now and gold is 1640.  It has been falling a little since the auction but the b/a is .35/.4.  What do you think we should do now?

  158. $25KP/Danny – I'm still considering.  I know it's very frustrating trading on fundamentals but tough – go back over the last few portfolio and see how it went.  Sometimes I can be stubborn waiting for my move.  

    NLY/DC – I like them but no way to protect the trade as the calls are so slim so I'd just sell 2013 $17.50 puts for $3.30 as an entry at net $14.20 and be done with it.  

    VXX/Ging – Well the short puts seem safe and that pays for the trade so, if you want to stick with the trade, you can just pull the $32s (.92) and either spend $1.50 to roll to the Feb $32s or just let the $33s stand naked and, if they expire worthless, then .92 is your profit and that's just off your max potential anyway. 

    CMG/Jabob – As long as they stay under $350. 

    Short puts/JMM – To do that I'd have to be bullish and not thinking you can get massively burned over the weekend.  Not there yet.  

    $101.50 and $101.40 – Congrats to the faithful once again!  

    GLL/Cwan – We eat them most likely. 

    MSFT/ZZ – Yeah I caught that one.  It's Foxconn again.  Interesting negotiating tactic – I wonder what would happen if workers here tried it?  

    BBook seems pretty upbeat on quick read.  Real estate still a disaster and, of course, what inflation?  

    That's it, now our premise of market sell-of is blown so, unless oil suddenly looks like it's going to tank us – we will have to capitulate on short side but it's to cash for me – not flipping bullish without more earnings proof.  


  159. Speaking of land grabs, makes me remember a very good song from JCM…..

  160. biodieselchris
    CMG well you can not beat the tacos sellers. Phil A while back set up a play with this stock which I followed and extended on as of today I had great wins and now still waiting for a 255p short to expire .07 at present. But I will try to sail more easy waters!

  161. Phil,
    I have weekly options not monthly. Does that change your suggestion?

  162. Phil,
    I agree I am strill trying to master on when to roll and where to roll to. I think your point on rolling the wed. before exp. is a good lesson learned.

  163. Phil—played /CL  up and down was not sure this was a good idea--out with a profit but is this fundamentally good idea if you see a range?

  164. rustle123: SCO
    What are you doing/thinking re SCO?

  165. Oh smack. CL down to 101.10. Phil is your read still down, or a bounce?

  166. Phil,
    Capitulating on short side…
    Sell DIA 123 Puts
    Sell GLL 18 Calls
    Sell MA 290 Puts
    Exit SQQQ positions
    Exit VXX positions
    Is that correct?

  167. Beige Book:

    Prepared at the Federal Reserve Bank of San Francisco and based on information collected on or before December 30, 2011. This document summarizes comments received from business and other contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

    Contact reports from the twelve Federal Reserve Districts suggest that national economic activity expanded at a modest to moderate pace during the reporting period of late November through the end of December. Seven Districts characterized growth as modest; of the remaining five, New York and Chicago noted a pickup in the pace of growth, Dallas and San Francisco reported moderate growth, and Richmond indicated that activity flattened or improved slightlyCompared with prior summaries, the reports on balance suggest ongoing improvement in economic conditions in recent months, with most Districts highlighting more favorable conditions than identified in reports from the late spring through early fall.

    That's VERY bullish compared to any report we've seen last year.  

    Consumer spending picked up in most Districts, reflecting significant gains in holiday retail sales compared with last year's season, and activity in the travel and tourism sector expanded in most areas. Demand strengthened further for nonfinancial services, including professional and transportation services. Manufacturing activity generally continued to expand, although the pace of growth has slowed for selected subsectors such as technology productsAgricultural producers and extractors of natural resources reported generally robust conditionsActivity stayed sluggish in residential real estate markets, and conditions in commercial real estate markets remained somewhat soft overall but showed signs of ongoing improvement in several Districts. Reports from financial institutions generally indicated a slight uptick in loan demand by businesses, along with improvements in overall credit quality.

    Upward price pressures and price increases remained quite limited for most categories of final goods and services, as the effects of prior increases in the costs of selected inputs have eased. Upward wage pressures were modest overall, although a few Districts noted substantial compensation increases for workers with specialized skills in selected sectors and regions.

    That's a lot of green.  Keep in mind this is an anecdotal report and was taken over the holidays when everyone was bullish about holiday sales and outlook.  I am not trying to be a perma-bear but, from the earnings reports we're seeing and the short-term retail sales numbers – I don't know if all these good feeling panned out in the end.  

    Consumer Spending and Tourism
    Reports on consumer spending were favorable in generalMost Districts reported that holiday retail sales were up noticeably over last year's season, with New York and Dallas describing sales as "brisk" and "robust," respectively. Consumer spending and confidence generally werecharacterized as firmer than in recent reporting periods, although Kansas City reported that spending softened. Items identified as the strongest holiday sellers by various Districts included consumer electronics and jewelry, and Chicago noted that luxury items in general sold well during the holiday season. By contrast, many Districts reported weak sales and excess inventories of warm clothing, due to unusually mild weather. Retail inventories more broadly were reported to be at or near desired levels, consistent with retailers' sales expectations. Boston, New York, and Minneapolis noted exceptional growth in Internet sales for selected items. Sales of new automobiles continued to pick up in most Districts. Among the more favorable reports, Atlanta noted that the pace of auto sales in November and December was "the strongest in over two years," and strong demand and sales were reported as well by New York, Philadelphia, Cleveland, and Minneapolis.

    No district should be weakening in a real recovery, especially the mid-west.  Also, Consumer Electronics and Jewelry are top 10% categories.  Show me strong tire sales or strong clothing sales or strong restaurant sales and I'll be more impressed.  Fed Governors are top 10%'ers themselves or even top 1% as most of them make $250,000+ so their "contacts" are also rich business owners who are connected enough to have a line to their local Fed  - all part of the game.  

    They are spinning this a bit heavily so I'm not liking it so far.  What kind of BS is saying "the best in 2 years" – OUR ECONOMY JUST COLLAPSED – it BETTER be the best in 2 years – better than 2009 and 2010 – forgive me if I don't go dancing based on that news just yet…

    More to come but still bearish at the moment.  

  168. Back at the command center in good ol' US of A. What did I miss?

  169. Drug companies with bonds / Pharmboy – Don't pity them, the profits all pharma companies have reaped over the last 20 years in Greece are I N S A N E.  I'm Greek, i know first hand…

  170. Nice SCO pop, coining money, already took off half with .63 gain.  Another good call from the big P.

  171. FAS Strangle – Not bad. It's looking like I will close the 69 puts with a nice profit and keep the 76 calls overnight. And then tighten the strangle a bit tomorrow and Friday. 

    The 76 calls roll even right now to next week 80 (January options) so no panic….

  172. stjeanluc
    Well we did not have a man at the helm.
    I entered this morning a 69/76 strangle which is still hanging in. I find if it goes to the end of the week the spreads are more difficult to pick.

  173. Pity them?  I don't b'c I work for them.  Just have to think about it as a bottom line.  How much is it worth to them (Greek market), and how much does that factor into the mainstream of who has been paid with bonds (other industries) that are now not doing so hot….just thoughts to ponder…

  174. BDC / CMG - Chris, hang in there.  I have been short CMG for half a year and it's driving me nuts, but I learned two things from my big pile of NFLX puts (which I kept rolling for a year and then gave up, one month before it crashed):

    1. Stick it out unless your premise has changed (for me, the premise is that a 54 PE is too high)…
    2. When the market is rising, sell cover puts in the morning and close then at MOC (in case the big drop comes overnight), this gets you some 'rolling money'. 

  175. stj—welcome back—had closed the 69s earlier

  176. FAS / Yodi – I had kept mine open from yesterday so it was an advantage.

    As a rule, you want to look for something tighter as you get toward the end of the week for new plays because of the premium erosion. But at 10:00 your premise good. You are showing a nice profit on the 69 puts but he calls are getting hammered. No worries though as a) they roll nicely to next weekl and b) we might pull back. It's almost tempting to close the 69 puts as they show over 60% profits, but I'll let them ride until the end of the day. 

  177. Stj / FAS

    Right now, just short the 76′s, which are at 1.10. If I had leather b*lls, I’d DD since two days left and it’s all time prem.

  178. Phil is there any good plays on CME

  179. Thanks Savi… I guessed I am back to civilization – drove by a Super Wal-Mart!

  180. FAS / Burrben – I decided not to DD on this portfolio because it's margin intensive. But these roll nicely to next week as I mentioned to Yodi and as you say, they are still all premium!

  181. stjeanluc
    You did not have to fly to the US to go to Walmart here in Cancun we find besides them Costco and Sams aswell much better prices !!

  182. Sorry Yodi, I was just trying to be sarcastic… I forgot you were in Cancun as I was there last April for a week. Oh well, next time we'll get together.

  183. yodi – How much are heads on stakes? ;-)

  184. stjeanluc
    sounds good

  185. diamond,
    They are cheap as long it is not yours!!

  186. Diamond, looking to decorate your front yard?  Tired of telling those kids to "Get off my lawn" ?

  187. Beige Book - continued:


    Reports from most Districts pointed to solid gains or high levels of travel and tourist activity, with pickups evident in both the business and leisure segments. Tourism activity was reported to be above the levels from twelve months earlier by Boston, New York, Richmond, and Atlanta, and Boston contacts expect double-digit growth in hotel revenues in 2012. By contrast, Minneapolis reported that tourist activity was down because limited snowfall has stymied outdoor activities such as skiing and snowmobiling, while Kansas City reported a decline because winter storms hampered some tourist activity. Business travel activity also has expanded of late and is above levels from twelve months earlier, according to Atlanta and San Francisco.

    Not bad but don't forget how strong the Yen and Yuan were so US was cheap for Asian travelers and again, above 2010 is now our benchmark for success?  Wasn't the economy so bad in 2010 that the Fed had to pump $2Tn into it?    

    Nonfinancial Services
    Demand generally strengthened further for nonfinancial services. Providers of professional and business services such as consulting, advertising, engineering, and legal services expanded their activities according to Boston, Richmond, St. Louis, and Minneapolis. Sales of technology services to businesses and consumers grew further, according to Minneapolis, Kansas City, and San Francisco, although the pace of growth slowed from earlier in 2011. Providers of temporary staffing services saw strong and rising demand in the Philadelphia, Cleveland, and Richmond Districts but below-average seasonal hiring in the Chicago and Dallas Districts. Reports from the health-care sector generally pointed to growth as well, with Cleveland, Atlanta, Chicago, and St. Louis highlighting construction activity and bank lending aimed at health-care providers. The exception to growing demand for health-care services was San Francisco, which reported an ongoing decline in hospital admissions. Demand for shipping and transportation services generally expanded. New York and Atlanta reported a significant increase in shipping tonnage by truck, and Dallas noted a broad-based increase in shipments by rail. Atlanta reported that port activity was up over twelve months earlier due to "notable strength in exports," while Richmond reported a decline in port activity that was largely attributed to reduced imports. Air travel was above year-ago levels in the Atlanta District but unchanged over the past six weeks in the Dallas District.

    We're clearing a very low bar but I have to get a little more bullish here.  

    Manufacturing activity expanded in most Districts, generally continuing its steady overall expansion or, in the case of Atlanta, reversing a slowdown in prior periods. For the sector as a whole, further growth or improved conditions were reported by almost all Districts, except for Cleveland, Richmond, and Dallas, which reported that activity was largely stable or mixed, and Kansas City, which noted a slight decline. The strongest reports came from subsectors such as heavy equipment manufacturing and steel, for which demand has been boosted by robust growth in the energy, agricultural, and auto manufacturing sectors. Reports from Cleveland, Richmond, Atlanta, Chicago, and St. Louis confirmed vibrant activity for auto manufacturers, primarily for domestic makes. By contrast, demand remained somewhat weak for firms in housing-related subsectors, such as a door manufacturer in the Richmond District, furniture manufacturers there and in the St. Louis and San Francisco Districts, and makers of lumber and wood products in the San Francisco District. Demand for computers and related electronic components rose further, according to Kansas City, Dallas, and San Francisco. However, the pace of growth has slowed significantly from earlier in 2011, and Boston noted declining sales of semiconductors, mainly due to weaker demand from Asia. According to Dallas and San Francisco, aircraft makers saw further demand increases. Those Districts also noted weak domestic demand for refined petroleum products that was largely or completely offset by robust foreign demand. Demand grew smartly for food producers in the Philadelphia and Dallas Districts, but in the Kansas City District food processing was one of the weakest performers within the manufacturing sector. Export sales of assorted manufactured products generally performed well according to Atlanta and Chicago, although slower economic growth in China and Europe held back sales for some manufacturers.

    Cleveland reported that capacity utilization remained below normal in most subsectors, with the notable exception of steel producers, who were operating at or near normal levels. Similarly, Chicago noted that some auto suppliers appear to be approaching capacity constraints, which may limit further production increases in the near term. Atlanta reported that recent flooding in Thailand was likely to exert modest restraint on auto production. Ongoing capital investments and increases in capacity were reported for various manufacturing concerns in the St. Louis and Minneapolis Districts and for an auto producer in the Richmond District.

    First of all, what the hell is wrong with Kansas City?  Second, we CAN have a nice recovery for a year or so driven by resurging auto sales as Americans have put off buying A LOT of cars and cars create A LOT of jobs.  Nothing like housing, of course, but second most important sector so we CAN construct a bullish premise off this data.   Aircraft also nice and BA is just getting into it's production cycle where it should be throwing out 400-500 planes a year for oh, about 20 years now.   Notice I like capacity constraints in auto as I don't think the turn-around is short-term so that will lead to – yes – BUILDING THINGS!  

    Real Estate and Construction
    Activity in residential real estate markets largely held steady at very low levels, with the exception of further increases in the construction of multifamily residences. The pace of single-family home sales remained quite sluggish throughout the country, although the Dallas District reported a modest increase over the prior reporting period. Some Districts, such as Boston and Atlanta, noted that home sales exceeded levels from twelve months earlier, but mainly because the earlier levels reflected a substantial drop following the expiration of the homebuyers' tax credit in mid-2010. Prices were largely stable on a short-term basis in most areas but in many instances were below their levels from twelve months earlier. Extensive inventories of distressed properties were reported to be a source of price restraint in the Boston, Richmond, Chicago, and San Francisco Districts. Construction of single-family homes remained at depressed levels in most areas and fell further in some, such as the Philadelphia, St. Louis, Minneapolis, and Kansas City Districts. However, Cleveland reported that activity improved during the past couple of months. In contrast to the soft market for single-family residences, the market for rental units tightened in some areas such as the New York and Richmond Districts, and construction of multifamily residences rose in the Boston, Philadelphia, Chicago, Kansas City, and Dallas Districts.

    Demand for nonresidential real estate remained somewhat soft overall but improved in a number of Districts. Vacancy rates and other indicators in markets for office space were largely unchanged in the major metropolitan markets in the Boston, Philadelphia, Cleveland, Richmond, and St. Louis Districts. By contrast, New York reported that demand for office space "picked up in late 2011," causing vacancy rates to edge down and asking rents to rise. Minneapolis, Kansas City, Dallas, San Francisco, Atlanta, and Chicago all reported stronger demand for commercial real estate compared with earlier in 2011, and the latter two Districts also noted a pickup in nonresidential construction activity. Cleveland and Chicago reported that the strongest demand and most extensive construction activity has been for industrial and health-care facilities, while Minneapolis highlighted growing demand for industrial space and San Francisco stressed growing demand emanating from the information technology sector.

    THIS IS THE BEST REPORT ON COMMERCIAL REAL ESTATE SINCE 2006!  I'm not kidding, our last 20 of these has been a sea of red.  It is very possible we are finally seeing a bottom.  So it does make sense that the Fed and Administration are now looking to concentrate their firepower now on kick-starting residential real estate – it really is the last major drag on the economy.   

    Banking and Finance
    Lending activity edged up overall, primarily due to increased loan demand by businesses. Most Districts that commented on lending activity indicated little or no change in overall loan demand, but the remaining Districts identified increases rather than decreases. New York reported a pronounced increase in demand for commercial mortgages, and Cleveland also noted increased demand in this category. Both Dallas and San Francisco noted a slight uptick in commercial and industrial lending. Consumer lending was largely flat compared with the prior reporting period, although auto loans rose in Cleveland. New York, Philadelphia, and Cleveland reported demand growth or continued strength for refinancing of residential mortgages.

    Lending standards were largely unchanged across all lending categories. However, New York reported slight tightening for commercial and industrial loans. Moreover, a few reports highlighted that small businesses continued to struggle with credit access through banks. In the Atlanta District, some small businesses have turned to nonbank institutions for financing, and in the Chicago District some manufacturers have been financing loans to their suppliers from retained earnings. Credit quality improved in many Districts: New York reported a decline in delinquency rates for all loan categories, while Philadelphia, Richmond, Kansas City, Dallas, and San Francisco all reported general improvement in loan quality.

    I don't know how to put it but do you notice in the first paragraph that the news is so surprisingly good that they forget to spin it?  "..but the remaining Districts identified increases rather than decreases.."  That's not the normal BBook BS!  That's a guy writing who's surprised at the turn.  Score two reasons to be more bullish (but I'm not there yet).  

    Agriculture and Natural Resources
    Demand for agricultural products was strong during the reporting period, but growing conditions and input prices were mixed. Farm income and profits were reported to be at very high levels by Chicago and Kansas City, enabling many farmers to repay loans and expand their operations, and San Francisco reported further sales growth for a variety of agricultural products. Rising foreign demand was noted as a source of strength for livestock sales in the Atlanta and Dallas Districts and for dairy and meat products in the Chicago District. Growing conditions were somewhat mixed across areas. Farmers and livestock producers in the Atlanta and Dallas Districts have been struggling with ongoing droughts, which have required costly responses such as supplemental feeding of livestock. While timely rains eased drought conditions somewhat in the Dallas and Kansas City Districts, wheat farmers in the latter are hoping for more protective snow cover for the winter crop's dormancy period. In addition, high or rising prices for some inputs were noted by Chicago and Kansas City, tempering farmers' profit expectations for the coming year.

    Demand and extraction activity rose further for producers of natural resource products. Energy extraction has been on the upswing. Atlanta reported that companies have been expanding their workforces and increasing their production capacity and exploration plans in the Gulf of Mexico. Minneapolis and Kansas City reported that oil and gas exploration and extraction activity were well above their levels from twelve months earlier, and Dallas noted that a high level of activity is expected to resume in early 2012 following a year-end seasonal lull. Minneapolis and San Francisco reported expansion of mining capacity and activity for a range of industrial and precious metals.

    Gosh, I'm starting to feel like Abby Joseph Cohen with all this green!  

    Prices and Wages
    Upward price pressures and price increases were very limited during the reporting period. Reports from various Districts, including Boston, Atlanta, and Chicago, indicated that upward price pressures from rising commodity and input prices have eased substantially, with Boston noting that "even food prices have ceased rising." Atlanta reported that firms have limited pricing power in general, and San Francisco pointed to intense supplier competition as a factor holding down prices. Similarly, Kansas City reported a recent uptick in input prices but noted that few manufacturers passed these increases on to the prices of their finished goods.

    Wage pressures remained modest overall. The combination of limited permanent hiring in most sectors and numerous active job seekers has continued to keep a lid on general wage increases. However, reports from a few Districts highlighted significant supply constraints and in some cases large compensation increases for workers with specialized skills in selected sectors, including the energy sector in the Dallas District and the technology sector in the San Francisco District. On a related note, Minneapolis reported that employers have increased relocation pay for employees willing to settle in parts of that District where worker availability is limited. Increases in the costs of employee health benefits continued to put significant upward pressure on overall compensation costs, although some employers in the Philadelphia District reported significant rollbacks from past increases.  

    Ah, so here's the rub – does this good news translate into PROFITS?  Activity is picking up but all that firing means unproductive training has to take place and now price competition for skilled workers as we've stagnated and eroded our existing workforce.  Costs are up and they are difficult to pass through so we may have a difficult growth phase – made even more so by the feeling that it may be temporary so confidence will be key and again, we need stimulus to make this all happen.

    Overall, I can't help but be more bullish on reading this report but now we have to consider – how much of this improvement is already reflected in the 15% run-up we've had since Q3?  Is this news 15% better than last year?  It doesn't have to be as we drifted around 1,200 on the S&P last year so let's say we are at least 10% better off.  That's 1,320 then and that means we could go higher and, if we see some of these statements reflected in earnings, we may be able to raise the bar of the Must Hold line to 1,292 on the S&P (the current +10% line).

    So we'll get more earnings next week and Italy and Spain have note sales tomorrow and then our 30-year but simply not enough reason to stay bearish now – very sad as I would have liked a good dip…

  188. This is somewhat worrisome for the US, but highlights my premise that IBM is the best tech company out there:

    Patents Granted

    By the way, no Google or Apple in the top 10 and yet these guys are in the biggest patent war! I guess mostly from patent they buy from other people.

  189. As to $25KP positions – Tomorrow, if Italy and Spain don't kill us and oil doesn't collapse after the 10:30 Nat gas report also shows a massive build (were you heating your home last week?) – THEN we will be taking our lumps and dealing with our losses.  

  190. There's consumer spending and then there's consumer spending.
    From the looks of Discover, Visa and Mastercharge record breaking profits, no one spent any of their cash but intead borrowed the money that they INTEND to pay back at Shylockian interest rates, if they don't simply roll over their credit card charges with even dicier loans when the bills come due.

  191. USO – the jan $38 puts are really walking a support line on the intraday charts (10 day, 10 minute). bot action?

  192. StJ,
    FAS strangles are, indeed, margin intensive, as I pointed out in an earlier comment above.  I am thinking going back to SPX strangles after I am done with this round of my FAS strangle experiment.  You can strangle SPX weeklies just as well.  And you pay less commissions, because you can play fewer contracts.

  193. Gotcha Diamond…. Yeah we don't live too far from Juarez, used to go down a lot, just walk across the bridge from EP. We don't do that anymore. We don't have any problems getting on a plane to Cozumel, or the Costa Maya though.
    We know several people who are trying to sell their second homes in San Miguel, not so easy now, as things have gotten rougher even there.

  194. Phil
    So if you are "being forced to feel good about things" why should we not think the GLL won't work in the long run? If equities are the place to be won't that push people away from gold? In addition, is there any reason to think that another round of QE is possible in the near term (3 months). Don't we just need some more time for the GLL trade to work out?

  195. Pharmboy – As far as i know they are the only ones so far that have been "offered" to get paid by bonds.  Healthcare is second biggest cost center to the GR government after Military, and you can bet all your GR bonds that Military supplier are getting paid in cash, especially the german and french…

  196. FAS / cwan – That is one of the drawbacks of the FAS strangle and I have pointed that out from day one. At the same time, the premiums are just incredible. I am not sure you can get that with SPX. But it's probably also less stressful. 

  197. Singapore Airlines, Number 1—-of the top 10— for beautiful airline flight attendants:

    Why Emirate isn't tied for first is a mystery.

  198. Phil, re the SONC play you re-capped above, are you also long on it on short term (< 1 month) time horizon given the possibility of a pullback (but given near-2009 lows, how much more can it slide?)? Thanks. 

  199. Hey Phil,
    I want to trade 25kP on a big account(playing with 25k of it). Should I just start with new positions and ignore the old ones? Or if I enter new positions I need to get some kind of hedging?

  200. Oh my… and to think I was starting to believe the stick was amongst the unemployed now.

  201. Another reason to stay with the GLL trade?
    That doesn’t mean prices are poised for an immediate downturn. The market’s gains are on the cusp of drawing in another set of momentum buyers, he argues.
    “But any real big rallies are likely to be sold at this point,” he says. “I think the dollar is going to stay strong, and that’s going to be a fly in the ointment for gold going forward.”

  202. Gasoline supplies climbed 3.61 million barrels to 223.8 million in the week ended Jan. 6, the highest level since March, the report showed. Analysts projected a 2.25 million-barrel increase in stockpiles. Demand (DOEDMGAS) for the fuel tumbled 4.4 percent to 8.18 million barrels a day, the lowest level since February 2003…what a farce

  203. Phil-- has your opinion changed on EDZ now?
    no hope that the market takes a breather???

  204. Phil / I rolled up to DIA Jan 123 puts (from the 121s) which expire in 9 days.  leaving tmrow for long wkend.  does another roll make sense?  hold over wkend?  thx.      

  205. Singapore/flips – and good food, fine drinks (free in coach! singapore slings!), comfortable chairs, and the best prices from San Fran to Seoul.

  206. Jabo / EDZ – not sure what your goals are but I have been using EDZ to protect my IRA the last two years and it works well, but to avoid the high premiums I simply buy the stock whenever it's below 18 and sooner or later it pays off nicely.  Of course this requires cash, but you could use DITM calls as well…

  207. angelcur
    It really doesn't make any sense when you compare it to the rosy picture from the Beige book. And Pharm's comment from yesterday.

  208. Phil Any plays on KO

  209. VXX/Ging  - Same thing but you only pull .36 on the longs for your profit.  At least it's less likely your puts fail or the caller goes in the money by Friday.  

    Up and down/Savi – I don't mind it when markets are rangy but, as we noted several times this week, oil falls a lot faster than it climbs and our overall stance was bearish so why risk getting caught on the wrong side of a sudden big drop when we are able to play with conviction to the downside and go "wheeeeeee" when it happens?  Of course, that's MY trading style and it certainly doesn't mean it has to be yours.  JRW plays both ways all the time and I am happy to play both ways when oil is in the middle of a range but I think the range is $102.50 to $92.50 at the moment so, over $97.50 I have no desire to play it long – which is NOT to say that it doesn't establish dozens of mini ranges along the way that you can play very effectively – just be careful.  

    $101.10 – You have to expect bounces around $1 levels no matter what.  Right now we seem to have weak consolidation ahead of the next leg down though.  

    Capitulation/Kallen – Now weighing in how much worse it can get vs. maybe 25% chance we luck out and get a big sell-off tomorrow and it's 50/50 but, since capitulating now costs us money and gives us unfavorable exits – much more fun to take the chance of losing another 25% on a move higher when we're only going to roll anyway.  

    Welcome back StJ!  I imagine you must be sleepy.  

    SCO/ZZ – Good job working it!  

    Wow, big stick in progress.  95M on the Dwo at 3:30 is just above closed.  

    Oil bear on CNBC – that's a rarity.  

    Rolling money/Mr M – That is very much the key to success.  Once you are wrong, just be happy to get yourself to a better position.  The big mistake people make is they don't want to cover because it limits the big win they thought they would get when they were totally wrong.  

    CME/Bbates – They are too complicated with too many cross-currents to play so I generally stay away unless they are very low, in which case I like them but they aren't there yet, maybe if they test $200 and hold it well.  

    Heads at mall/Diamond – Why is it they never show the pictures of the bodies?  Actually we make fun of Mexico because they kill people with style but 47,000 drug murders in 5 years would get the Miami police chief a promotion for keeping a lid on crime!  

    IBM/StJ – By far the best.  

  210. Yes Flip, I'd say the article pretty much agrees with the board sentiments expressed so far. Everybody loves Singapore but I would have placed Thai higher than sixth.  The American carriers have deteriorated into a bad example of what happens when union seniority is the deciding factor in job placement. It always sucks coming home and having to board a domestic Delta redeye.

  211. Phil: taking losses
    I have got to improve pulling the plug on long calls and puts that are losers with 10 days to go, for some reason is hard to do, guess hope is eternal.  But I just have to wait for the open tomorrow after Spain and Italy bond sales.  oops see you suggest as much above.  Just feels like floating along waiting for some catalyst to sell off.

  212. Phil – Thats it! I am taking one for the team.  I will go long on DJI. With my luck it will reverse and drop immediately. Enjoy the way down

  213. Thanks Phil--smaller ranges are hard to play—thank goodness got out with a decent gain—will do the one way wheeeeee thing from now on

  214. Dpastramas:  thanks, you're the best.    

  215. Will Stick with the FAS play overnight 69/76

  216. Gold/dclark – why would gold stay strong, even if dollar stays up?  why is dollar going up? to some degree because people are fleeing the euro. but those euro-dumpers aren't necessarily interested in dollars, so some transfer to precious metals, too. the dollar is scary, even if it is the 'strongest' fiat currency around.     i'm not a 'gold-backed dollar' guy, but there is still only tiny diversification into precious metals.   apparently, orers for us silver eagles in Jan 2012 is breaking records. That isn't going to jewelry, or industry, or SLV. Coins by the ounce are going to private hands.  How come? 

  217. Phil,
    After the beige book report, I can't see why they would do any kind of QE3 in the next couple months at least.  I would think that would have to be a bit of a drag on the market going forward, no?

  218. FAS Strangle – Closed the 69 puts for a 58% profit. The 76 calls are getting killed now, but still all premium and tomorrow is another day…

  219. FAS / Yodi – Not a bad call either. These 69 puts are safe for now I think, but I want to try a little more premium tomorrow by tightening the strangle.

  220. EDZ / MrM:
    That sounds like a good strategy.  I guess you don't sell calls to cover the stock?  I did that once (selling covered calls).  The next day, EDZ flies up, and my shares got called away at a low strike.  Do you sell covered calls at all?

  221. Gold/DC – I agree, that may still be playable for exactly that reason, lack of fear premium leaves little reason for gold to go up and strong economy may take the Fed off the table and then why is gold high (other than EU and China investors still running to it). That's why I'd rather take a day to think about the positions now, not going to just knee-jerk kill them all but will have to kill some.  

    Paid with bonds/Dpast – That's because the marginal cost of drugs is very small vs cost to produce so Pharma can accept discount risk on paper in order to keep pushing pills.  

    SONC/Tarpoon – I have no idea which way earnings will go.  Like any long-term play, it's an initial entry that we'd press if they have bad earnings (unless something critical was wrong) or just enjoy the move up if they pop.  Short-term is too much of a gamble even though SONC does look very appealing this low in the range.  

    $25KP/Obur – Yes, anything we're sticking with as of tomorrow can be treated as a new position.  Don't try to 100% match, the idea is to get in and out of trades with quick profits so if you miss some, it shouldn't matter as you can miss a loss as easily as a win.  

    March/Angel – Unfortunately, oil was at $105 in March.  That too was a farce but didn't stop it from going to $115 in April.  

    EDZ/Jabob – Well they have their own problems but we are CHINA to the emerging markets and if they think we are recovering, they should perk up.  Just because the BBook has a good outlook doesn't mean everything is actually fixed but it does lay the foundation for the possibility and that's something we haven't really had for the past 3 years.  

    DIA/Terra – I'd sell the $122s for .48 and roll back to the Feb $122s at $2.13 for net .57 rather than lose .07 a day in time decay while you're gone.  As I said to someone above, if the Dow drops, you have a vertical that's in the money after you roll the short puts but, when you are behind, you play to get even, not to win.  

    KO/BBates – Testing the 50 dma at $67.50 but I'm hoping for $65 or less for a comfortable entry.  

    Floating/Lincoln – Very hard to let go of positions you believe in but, as I said, if you don't believe in them enough to put more money in today and roll them longer – then why would you be holding onto them.  

    Thanks DPast – it is much appreciated.  

  222. Well, here we are (IWM 76.66); I guess it's up or down from here !!


    Tomorrow, I expect a gap open, which I will likely bet against !!

  223. Sleepy / Phil – A little bit. I had to leave my parent's house at 2:00 AM this morning (France time so 8:00 PM last night here in the US) and drive to Paris. I was trying to squeeze another evening with the folks. 

    Got into the plane in Paris, reclined my seat after take off and was surprised to see the attendants serve lunch so soon until I realized that we were already south of Ireland… First time I slept in a plane as far as I can remember.

  224. QE3/Rustle – It's the Real Estate sector.  Now they can point to one thing and, if they fix that – they may actually accomplish something.  Don't you think Ben wants to have a legacy of steering us out of a crisis?  He won't get that if his contribution this year is to take no action.  I'd say it's less likely they do it at this meeting but just as likely in March unless we massively improve.  

    Up or down/JRW – Have to agree with you there but I'm playing for a gap down or our $25KP will be a $23KP!  

  225. underlying bullish bid keeping the SP from slide… "feels" as though awaiting  a catalyst to push the SP  to 1305ish target….lets get on vit it already!
    i am sitting and watching

  226. scottmi
    My premise was based on Phil's assessment of the Beige Book. It could be construed as a green light back to equities and away from safe havens such as gold. If all is fixed, what's there to worry about and why do I need to continue to collect shiny metals?

  227. Lines for tomorrow:


    IWM    73.51,  73.92,  74.28,  74.61,  75.12,  75.54,  75.80,  76.39,  76.66  and  76.98

    Good hunting !!

  228. cwan120
    Like to see one of your SPX strangles thanks

  229. JRW
    you bet gap down tomorrow ??

  230. pointed out (to me) non-conformations of index gains today…
    Bonds Up, Euro Down, Crude Oil Down, VIX Up, APPL/MSFT (recent leadrers) Down

  231. The natural gas slide…

    And here is a scary ratio…

    And to think that France just allowed the national gas utility to raise the price of natural gas by over 4%. I kid you not! Of course France's gas comes from reliable suppliers such as Russia and Algeria!

  232. If you got balls of steels, try one of these for strangle candidates:

    Premiums are pretty good I am sure!

  233. And it does look like we need a correction:

    Some sectors like financials are stretched… More at the link!

  234. Note VIX is up for the day at 21.06. 

    Sleep/StJ – I usually try to be exhausted by the time I get on a plane out of Europe so I can sleep (usually afternoon flight) and then force myself to stay up until 8 or 9 the next day and have one long sleep at home and then back to normal (ish).  I used to go to London for 3-day weekends on a regular basis when my Grandparents were alive so I got good at it.  

    Oddly enough, the Dow closed red yet we're feeling like the bears got romped today!  

    At the close: Dow -0.13% to 12446. S&P +0.04% to 1293. Nasdaq +0.14% to 2371.
    Treasurys: 30-year +0.74%. 10-yr +0.36%. 5-yr +0.13%.
    Commodities: Crude -1.09% to $101.13. Gold +0.65% to $1642.15.
    Currencies: Euro -0.58% vs. dollar. Yen +0.07%. Pound +1.05%.

    12:35 PM Europe closes down a bit after a choppy session and ahead of an ECB policy meeting tomorrow. Stoxx 50 -0.3%, Germany-0.2%, France flat, Italy +0.1%, Spain -0.6%, U.K. -0.6%. The euro-0.7% at $1.2688.

    1:06 PM The Treasury sells $21B in reopened 10-year notes at 1.9%(.pdf). Bid-to-cover ratio of 3.29, vs. a recent average of 3.15; indirect bidders take 38.3%, vs. a recent 46.9%. Direct bidders take 17.4%, vs. a recent 10%

    1:15 PM Treasurys are holding gains after the government sells 10-year notes under 2% for the first time and demand continues to be solid. The 30-year yield -0.05 to 2.965%; 10-year -0.06 to 1.91%; five-year -0.03 to 0.82%; two-year -0.01 to 0.23%. 

    The Fed's Beige Book is a little more upbeat than before, with "ongoing improvement" in conditions reported from most districts. Holiday retail sales were up noticeably for most, lending edged up, manufacturing continues a steady expansion, and wage and inflation pressures were very limited. Real estate activity, however, remained steady at low levels.

    The EU is set to recommend sanctions against Hungary for not doing enough to bring its deficit below 3% of GDP. This sets in motion the next stage of the Excessive Debt Procedure at which the country could be shut out of the EU cohesion fund. For the record: 23 of 27 EU states are running deficits above 3%. 

    Even though short-term dollar interest rates are lower than the euro's, the euro-dollar basis swap being negative makes funding carry trades with the EU's common currency cheaper than doing so with greenbacks. This could explain the euro's slide despite the strong bid in risk markets over the past month. 

    Relentlessly mild winter weather in the Northeast and the shale production boom combine to send natural gas tumbling 7.8%today to $2.77, its lowest price in a decade. Natural gas producers:RRC -6.3%CHK -3.1%EQT -5%.

    Energy companies are putting in place new methods to reduce the cost and increase production from fracking, which hasn't advanced beyond "brute force and ignorance," says former Schlumberger (SLB) CEO Andrew Gould. Halliburton (HAL) is offering a "frack of the future," and Baker Hughes (BHI) has developed disintegrating frack balls.

    As the U.S. faces a glut of gas from shale, ExxonMobil's (XOM -0.7%) Golden Pass LNG terminal, built along the U.S. Gulf coast in a partnership with Qatar Petroleum to import Qatari LNG, is going largely unused. Qatar’s oil minister says it’s time to consider revamping the terminal so it can begin exporting U.S. LNG to the rest of the world. 

    Pengrowth Energy (PGH -4%) takes a hit after Barclays cuts the stock to Underweight on valuation, citing its heavy LNG weighting.

    Southwestern Energy (SWN -7.8%) trades lower after Baird cuts the shares to Outperfrom on valuation, citing its exposure to volatile natural gas prices. The call may be just a bit late, considering the stock has already lopped off over 32% of its value since late October.

    Iran accuses the U.S. and Israel of plotting to disrupt its nuclear program after a scientist working at the Natanz uranium enrichment facility is killed in a Tehran car-bombing. Hilary Clinton has denied any U.S. involvement while a spokesman for Benjamin Netanyahu refuses to comment on such "speculation."

    What can possibly go wrong here?:  A bit of vendor financing in the form of an $8B-$10B fund set up by Beijing is helping keep the Greek shipping industry afloat after European lenders back away from the business. The ships are being built in China of course, which, as of Sept. 2011, held 44% of worldwide shipbuilding orders. 

    Or here?  Barclays updates its skyscraper index, noting more than half of the 124 giants to be completed in the next 6 years are in China. Not just in the major cities, Barclays notes the "frenzied activity" is spreading to smaller towns. "The writing, so to speak, would seem to be already on the glass curtain walling."

    A big jump in new orders booked by Lennar (LEN +7.1%) lifts up shares of the company – as well as helping ring in bold double-digit gains for peers. Ticonderoga Securities analyst Stephen Eastexplains all the fuss: "Orders are the crown jewel in this release, up 20% to 3,027, ahead of any Street estimate we are aware of." Homebuilder advancers: KBH +14.1%MHO +12.1%HOV +15.8%,BZH +6%.

    After a "tiny" dividend cut (the 2nd in a row) and a small drop in price, the bears are again locked and loaded against mREIT leader Annaly (NLY). Take advantage and buy, writes Regarded Solutions. The dividend remains at 14.2%, the shares trade below book value, and the biggest threat – higher short rates – is off the table through 2013.

    RBS will unveil tomorrow its restructuring plan as it looks to turn itself back into a retail banking operation. Thousands of job cuts are expected to be part of the agenda. The bank was bailed out during the financial crisis and is 83% owned by U.K. taxpayers. (previous)

    After reeling for so long from a seemingly relentless public relations nightmare, Bank of America (BAC +3.8%) has placed its entire advertising account on review in an attempt to revamp its public image.

    The exodus continues on Wall Street where 2 of the 4 co-heads of Goldman Sachs' (GS) global securities division announce their retirement. Goldman has laid off more than 1K employees and seen a handful of its 450 partners leave in recent months.


    Deutsche Bank takes a negative view on SuperValu (SVU-12.1%) after digesting the firm's FQ3 report - downgrading shares to Hold from Buy with a clipped price target of $7.50. Analysts with the firm cite slowing growth, pricing pressure, and tough upcoming comparables in justifying their stance. - $7.50?  That's our target!!!

    Chipotle Mexican Grill (CMG +1.7%) is having another good day after providing upbeat comments at an investor conference (slides/webcast). Separately, Yum Brands' (YUM) Taco Bell unit, which has been losing share to Chipotle's costlier, higher-quality offerings, says it's looking to overhaul its menu to better compete with Chipotle. (previously)

    An Infonetics survey turns up growing carrier interest in deploying cutting-edge 40G and (especially) 100G optical transport equipment; respondents cited lower bandwidth costs and superior signal performance as reasons for shifting away from older 10G equipment. Ciena (CIENstands to benefit from growing 40G/100G adoption, and so might recent Marvell (MRVL) acquisition Xelerated.

    Sterne Agee's Shaw Wu, who downgraded Research In Motion (RIMM) in November, is cautiously optimistic about the prospects for its PlayBook tablet, thanks to a pending software updatethat will (finally) deliver BlackBerry Messenger and Android app support. Between the success of the iPad and the Kindle Fire, and the existence of many would-be rivals, the PlayBook may have lost its window of opportunity.

    As Twitter and others cry foul over the integration of Google+ content into Google's (GOOG) search results, many expect the move to draw regulatory heat. But in Eric Eldon's view, closer government scrutiny of the social networking space is bound to hurt Facebook more than Google. Facebook, which recently settled an FTC dispute, has long been accused of playing favorites among developers and other partners.

    Google (GOOG) continues to dominate search with a 65.9% share in December (vs. 66.6% a year earlier), but Microsoft's (MSFT) Bing (15.1% vs. 12% in 2010) overtakes Yahoo (14.5% vs. 16% in 2010) for the 1st time. "Scott Thompson (YHOO) has his work cut out for him," writes Citi's Mark Mahaney. 

    Microsoft (MSFT) may no longer be a growth story, but its products are too deeply embedded into the IT universe for the company to trade at such a low valuation, claims Stephen Simpson. Simpson's discounted cash flow model for the company, which uses a 10% discount rate and assumes just 2% annual free cash flow growth, still turns up a valuation in the high $30s. (earlier

    Boooooooooo!  According to a BI source, Microsoft (MSFT) investors hopingfor Steve Ballmer to quickly leave are out of luck. The source claims Ballmer hasn't changed his mind about remaining CEO until the 2017-2018 timeframe, as outlined in a speech 3 years ago, and continues to have the full support of chairman Bill Gates. 

    Three lunchtime reads:

    1) Why the Fed needs to talk more about housing

    2) Pricing risk assets: a 'walls of worry' update

    3) The ‘first five days of January’ indicator

  236. Shiny metal/dclark – because, despite the beige book (and it's qualifications) all governments are still printing like crazy and especially the US. Them trillions upon trillions are why…  But hey, that's just a macro view. Tomorrow may win you some of them trillions with GLL.. who knows? ;-)

  237. Here is my updated DJI Chart:

  238. Phil the May 67.5/62.5 Bull Put Spread can be sold for $142.  In an IRA account that is a 28.4% return on the $500 per spread on the 100% Margin. The worst case scenario you will be put KO at $66.08 with a max loss at $3.58 or 5.4%.  I believe that is a pretty good return for 4mo with little risk.
    KO held the 200ma today…with the 50ma at $67.70  There is still plenty of time to adjust this position need be.

  239. CWan / EDZ – Covers are really useful (see my thread with Phil above about CMG) in most cases, however with EDZ it never seems to get much below 18 so just buying there and holding has been a great pattern; in a disaster, without covers the thing will just soar.  However, most of Phil's strategies are buy-write or option pairs so covers certainly have their place.  If you have margin, my other favorite cover is VIX below 20.  Buy DITM calls (min. premium) and sell some puts to partially fund it; then also sell half covers when the market is flat (but 5-10 strikes up so you don't squash your gains); this one comes in nicely in a panic but you need stops on your covers.

  240. Thanks, MrM!  Great advice.

  241. Hi, yodi,
    Regarding SPX strangles, please wait until next week.  For personal reasons, I am shifting my cash to a new PM account.  I'll start trading SPX strangles next week.

  242. Beige Book:  I see that when the facts change, we change our minds on PSW.  How refreshing.  I look forward to being long now, as cheerfully as I've been making money on the short side with oil, the Euro [out entirely today] Netflix and Mastercard, while piling up cheap bank positions. My second year on the site is proving to be much more entertaining than the first year. Also refreshing.  Thanks, guys.

  243. Hello Phil – Do you have any recs on a strategy for SVU?  Thank you!

  244. we are nearing upside target from much lower levels was 1300-1310..i would think we would correct to the 1265 area maybe lower then we will see..i like the way finding a bull is alot like demosthenes problem..this could be a big up year..but alot of stuff hanging fire still

  245. zeroxzero,
    any thoughts on currencies you like to trade or may think you may like to trade post the Beige Book and possible outlook shift?
    one i like to watch is the AUD/CAD. it is at a significant high again today at 1.0500 with a top of 1.0655 from october 30/2011.
    the high today of 1.0500 also represents the top of a very significant range from back to june 6, 2011 and this is the 6th time including the 1.0655 it has hist 1.05 and hen sold off (yet to seel lower on this run other than shallow pullbacks over the past week which i have taken advantage of).
    that AUD/CAD has lower lows as it pushes to the range high resistance………also the same for the DAX and the FTSE
    i like the DAX and FTSE as both of thoses indexes are also pushing a range top and a break higher means targets up to last summer's highs, but the European fix is not really fixed is it?
    EUR/JPY……….historic low………..i may look to buy it with a stop at 97.00…… risk 75 pips.

  246. rainman – sorry for the late reply, busy afternoon. Likely to be more of the same but nothing that's obviously a game changer to me. Better bottom line for GLW, certainly as it's costing them less to manufacturer it and/or more people will want it. I read something like 40% of GLW's revenue comes from gorilla glass.
    Use your imagination though – according to pubmed and this article on this site, a really big dog could bite a sheet of the stuff and it wouldn't be able to chomp through it. That's kind of neat.

  247. Microsoft builds TV subscription service, cancels release due to high licensing costs.
    If MSFT can't do it because their pockets aren't deep enough, who can (short of Apple)?

  248. Phil / Oil

    Any thoughts about the 3am or early morning oil trading tonight? I’d like to set a alarm if you’re thinking there will be a tradeable setup.

    Thanks for the Twinkie money off that 102 line. I let 1 contract run with a .15 trailing stop for a while, so I can pay for food and air conditioning tonight!

  249. zeroxzero………i did mean to write AUD/CAD having higher lows.(vs lower lows)……….spelling needs work.
    the other thing that stands out is the narrowing price range day over day as the equity indexes creep higher……….

  250. Hi Phil,
    Appreciate your comment on VOD Jul 25/20 credit spread (0.75, risking $4.25). Thanks for making "risk" factor obvious and highlighting the "rushed" nature of this purchase..

  251. roro:  I have traded the Euro/Dollar over the last year in an aggressive manner solely because its movements were tightly coupled with equity markets.  This year — what there's been of it — has shown a tendency for that relationship to decouple.  I take that to mean "risk on" for U.S. equities.  The only way to eke out a decent gain on a U.S. stock over the last six months has been to hedge it against the dollar/Euro.  This was weird, but once you had the rhythm of it and knew what to watch, it was workable, and I made good money doing it.
    But trading currencies straight-up — unless there's a particular policy initiative to be played, as when GBP withdrew from thet ERM in 1992, the famous "Soros broke the Bank of England trade", which I somehow guessed correctly, to excellent effect — is a crap shoot, as Phil points out.  I don't remember why he thinks so, but probably because his method is based on calculating the value vs. price of a given company, and valuing a currency doesn't easily accommodate itself to a "value" approach.
    I think that, going forward, it's going to be a hell of a lot easier to bet on the universe of beaten-down U.S. companies which have potentially huge upside if the U.S. economy were to really recover.  I'm not one to time this, but it's clear that the U.S. took their hit on real estate valuation and unemployment [i.e., they fired people in droves] while Europe, taken as a whole, either didn't or couldn't.  The Euro is a one-size-fits-all straitjacket that expects Greece and Portugal to compete internationally on the same economic terms as the Germany industrial giant, and "slipping the surly bonds of [Europe]," double entendre intended, has created a very complicated and slow-to-adjust situation.
    The U.S. is not in great shape either, but our traditional American business practice of throwing half of our employees in the street with six months of unemployment payments and downsizing overnight in response to a downturn, is quick, brutal and effective. Unfortunately, the social policies that emerged in Europe from the ashes of WWII would not permit such a thing.
     This fact, coupled with the aforementioned currency straitjacket, has severely limited the Eurozone's range of effective responses to just one: hoping Germany bails out the Peripherals with all those nice tariff-free export earnings they sucked out of them in prior years.   "Austerity" is not an effective response; it is the inverse of an effective response, done in supplication to German sensibilities.  I find it all very sad and counterproductive. 
    That's a long way of saying that currency bets often turn out to be 50/50 propositions — even the Euro at it's present level, since it might fall apart entirely, or Germany could step up tomorrow and send the Euro to 1.40.  On the other hand, Corning will keep selling Gorilla Glass, Amazon will continue to stomp all over traditional retail, Halliburton will help all the majors frack their brains out, and the Too Big to Fail Four will continue to suckle contentedly from the teat of the Fed. Those are the kind of odds I much prefer.

  252. Now you know the rest of the story behind Gorilla Glass:
    Insights on the writing of Steve Jobs – Fortune Tech
    Excerpt (from article):  Steve Jobs when he does the iPhone decides he doesn't want plastic, he wants really tough glass on it, and they don't make a glass that can be tough like they want. And finally somebody says to him, because they were making all of the glass in China for the fronts of the stores, says, "You ought to check with the people at Corning. They're kind of smart there." So, he flies to Corning, New York, sits there in front of the CEO, Wendell Weeks, and says, "This is what I want, a glass that can do this." So, Wendell Weeks says, "We once created a type of process that created something called Gorilla Glass." And Steve said, "No, no, no. Here's how you make really strong glass." And Wendell says, "Wait a minute, I know how to make glass. Shut up and listen to me." And Steve, to his credit, shuts up and listens, and Wendell Weeks describes a process that makes Gorilla Glass. And Steve then says, "Fine. In six months I want enough of it to make--whatever it is--a million iPhones." And Wendell says, "I'm sorry, we've actually never made it. We don't have a factory to make it. This was a process we developed, but we never had a manufacturing plant to do it." And Steve looks at him and says what he said to Woz, 20, 30 years earlier: "Don't be afraid, you can do it." Wendell Weeks tells me… Because I flew to Corning, because I just wanted to hear this story. Wendell Weeks tells me, "I just sat there and looked at the guy. He kept saying, 'Don't be afraid. You can do this.'"
    Wendell Weeks said he called his plant in Kentucky that was making glass for LCD screens, and said, "Start the process now, and make Gorilla Glass." That's why every iPhone in your pocket and iPad has Gorilla Glass made by Corning.

  253. (Because of Steve Jobs …)
    From Corning PR release:
    "As one of the company’s fastest growing businesses, Corning Gorilla Glass is expected to reach more than $700 million in 2011 sales, nearly triple 2010 results."

  254. ZZ,
    Quick, brutal, and effective, but this time thwarted by not being quick, brutal and effective at dislodging and dismantling the "investment banks" because we have a the helm of our central bank a probably basically good guy who thought he knew how to- as Greenspan put it "thwart an economic nuclear winter."  Greenspan at one point wished that he would have the chance to. There is a point however where might does not make right. Just because you can, doesn't meant you should.

  255. Uh, should we be buying Honda? It produced the natgas Civic GX in Greensburg, Indiana. And are any of the gasoline retail majors ahead in natgas fill-ups?  Or more to the point, which car manufacturer is best positions to take advantage of the advanced age of U.S. automobiles with a natgas option.  Any ideas?
    "The natural gas-powered Honda Civic won this year’s Green Car of the Year award from Green Car Journal, leading the way for natural gas-powered vehicles to enter the American market. According to the Journal, the car has the cleanest-burning engine ever certified by the U.S. Environmental Protection Agency. The Civic Natural Gas is currently the only production car of its kind in the United States. Honda has sold more than 2,000 units this year, double previous annual sales numbers. The car costs $5,500 more than a conventional Civic, gets 38 mpg and goes 240 miles per tank. But the higher price is easily offset over time through lower fuel costs; the nationwide average gasoline price was $3.46 per gallon in October, compared to $2.09 for the natural gas equivalent, according to the U.S. Department of Energy. Moreover, in terms of energy equivalence, with natural gas it’s like paying $10 for the same amount of energy that is in a $90 barrel of oil.\

  256. ZZ,
    Natural gas is a cleaner burning fuel than "clean coal" whatever that is. (You can see the effects of sulpher dioxide everwhere in the Smoky Mtns.) The problem is that so far the fracking technology is looking pretty sketchy as far as the environmental effects are concerned. I'm not buying anything at the moment.

  257. Sparky: I'm not sure where you are laying the blame.  If the cuts in U.S. interest rates and Bernanke monetary policies caused the U.S. to recover on the back of a cheap dollar, new domestic energy prospects, and a greatly downsized and restructured industry — showing the capacity to restructure it's industry more rapidly than European countries, and begin the process of economic recovery months or years before they do — then this has surely a good thing for the country.
    But if your referring to the monstrous unfairness of our citizenry suffering the damage that these unregulated players caused to the country by consciously creating a giant bubble of mis-priced mortgage assets,  while almost entirely escaping responsibility, liability and prison terms, I couldn't agree more heartily.  And it's even worse than that: the banking monopoly not only profited hugely, but have on top of that actually concentrated their oligopoly further within an even tighter, more powerful group.  It is a national scandal.
    The resultant Great Recession has, and will, entail much suffering on the part of many, if not most, Americans.  The U.S. has lost much international competitiveness over the last 40 years, so it is also inevitable.  The U.S. is second only to Canada in energy use among large countries, and has for some decades enjoyed a public and private debt-fueled standard of living — credit cards, mortgages, and government spending which included gigantic and utterly wasteful military adventures — that was unsustainable.
     It was not brought about by ill-fortune; the U.S. has enviable resources per capita compared to most countries.  It was brought about by poor leadership and inadequate regulation of the private sector, however that might have occurred. No American can entirely escape the blame for our plight, however.  Nearly everyone enjoyed an outsized standard of living relative to their actual global productivity for the last few decades, surfing on the strength of a dollar which had become an international medium of exchange.
     Seigneurage — the privilege of paying for foreign goods in paper of your own printing — is a powerful drug, and Americans slowly but surely developed an addiction to what it could buy. This will amplify the inequality between Americans who have capital and those whom can offer only labor in exchange for income, unless the U.S. tax structure is modified. 

  258. Sparky:  Nat. gas is poses major greenhouse gas problems as well.  And fracking is undoubtedly primitive and hazardous to our health in its present form.  But with oil over $100 — no, it's not going to go back to $50 and stay there, ever — and nat. gas apparently 1/9th the price per automotive mile, I think it's fair to say that you can buy Greenland real estate and start developing beachfront with no fear of buyers being frightened off by polar bears.  Unless you think the U.S. has improved its ability to regulate rogue industries, a proposition for which there is little evidence, as you point out in respect of investment banks.  

  259. ZZ
    Burning natural gas is cleaner than coal or oil, but I'm not convinced that the environmental effects of fracking on our water resources are less noxious than drilling for oil. And yes, what I'm saying is that I think in the long term, having bailed out our bankers on the backs of working people of all classes will turn out to have been a mistake.

  260. One more nail in the coffin for sears . . .
    Sears Supplier Loans Are Said to Be Halted by CIT Starting Today
    Sears Holdings Corp. (SHLD)’s suppliers will no longer be able to get loans from CIT (CIT) Group Inc. for their shipments to the retailer, according to two people familiar with the situation.
    CIT, the largest U.S. company that provides what’s known as factoring, told clients it would no longer approve credit for orders starting today, according to the people, who declined to be identified because the information isn’t public.
    factoring is essentially selling AR, so maybe CIT is also worried about the sears consumer too . . . .

  261. zeroxzero
    January 11th, 2012 at 10:45 pm
    Well said.  One of the reasons I don't hang out here so much anymore is because I got tired of saying these things. It became too frustrating for me and unhealthy.  But I'm glad to see someone else doing it.

  262. A clockwork pop on equities across the board as the time turns 04:40………
    So far, 40 points on the Dow,  25 on the FTSE and 50 points on the DAX

  263. Spanish auction went better than expected, IT yields are dropping
    Spain Sells Total EUR10B Government Bonds; Had planned EUR4-5 billion, but stressed it was flexible

  264. zeroxzero……..thanks for your very insightful response. i knew i was knocking on the right door.

  265. So its only up to the earnings to take us down..

  266. Phil………I guess the Spanish bond auction went off nicely so given the context from yesterday and run up in equities early this morning are you thinking this is maybe a short USDX opportunity?
    Oil is back to $102.00 already.

  267. Good morning!

    I've actually been up since 1 as I woke up and decided to update the Income Portfolio while I waited for the 3am trade but, at right about 3am, Microsoft decided I had critical updates and restarted my computer (and I have 3 screens on this one but I swear there was no notice) – causing me to lose everything (my bad for not saving in progress). So, after futilely looking for some kind of backup somewhere – I gave up and did it from scratch.  Unfortunately, I missed the cool move up on the "good" bond auctions, which was kind of obvious.  

    Anyway, I had planned to go back to bed so napping now so as not to be useless later.

    On the whole, we're not up very much off the news but we have to respect the technicals if S&P cracks 1,297, which I THINK is 1,293 in the Futures, which is right where it is now.  RUT futures are 770, nas 2,378 and Dow 12,429 so there's benchmarks there. 

    Asia was down across the board but less than 1% and Europe is happy but not ecstatic and up about 1%. 

    Dollar 81.32, Euro $1.276, Pound $1.534 and 76.88 Yen (rejected at 77).  Oil $102.09 (will want to short on nat gas report at 10:30), gold $1,653 makes no sense, silver starting to follow at $30.43, copper now happy(ish) at $3.5975 so watch the $3.60 line.  Nat gas getting WORSE at $2.708 and gasoline at $2.787 and my thought for the morning is that when gasoline futures were $1.10, the price at the pump was $1.40.   Now gasoline futures are $2.79 and the price at the pump is $3.50 – the mark-up has increased 467%!  

    Oh yeah, everyone in Europe has QE Fever now as well as China and the US – setting up for big disappointment if it fails to materialize.  

    Thursday's economic calendar:

    7:00 BOE Rate Decision

    7:45 ECB Rate Decision

    8:30 Retail Sales

    8:30 Initial Jobless Claims

    10:00 Business Inventories

    10:30 EIA Natural Gas Inventory

    1:00 PM Results of $13B, 30-Year Note Auction

    2:00 PM Treasury Budget

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    1:07 AM Asian shares are mostly lower ahead of central bank meetings and bond auctions in Europe. Japan -0.7% to 8389. Hong Kong flat at 19149. China -0.5% to 2275. India -0.3% to 16124.

    Saying the world's central bankers are "printing money like gangbusters," Bill Gross is nevertheless increasing his exposure to long-term Treasurys, whose value would be at great risk if all that money stokes inflation. Likely behind the buys is his belief the Fed will keep microscopic short rates for several more years, making even 2% 10-year paper enticing. 

    German CPI rises 0.7% M/M in December, and +2.1% Y/Y. Both those figures are in-line with expectations. German final 2011 CPI is +2.3%. (statement)

    Eurozone nations may have to pay a larger share of Greece's bailout, as senior bankers say talks with private creditors to take "voluntary" haircuts are going badly and the participation rate is below 75%.

    Japan's current-account surplus shrank for the ninth straight month in November, falling 85.5% as exports dropped amid slowing global demand. Analysts' had forecast a drop of 74%. 

    China's December inflation rises 4.1% Y/Y vs. 4.0% expected, 4.2% in November. For all of 2011, inflation came in at 5.4%. Though the December print is a bit worse than expectations, the inflation rate has fallen to a 15-month low, keeping analysts hopeful for additional monetary ease from Beijing.

    India's industrial production rose 5.9% in November Y/Y, racing ahead of estimates for a 2.1% gain. The data gives the Reserve Bank of India some breathing room to keep borrowing costs unchanged later this month to help fight inflation. 

    RBS (RBS) says it plans to cut 3,500 jobs as part of a shake-up of its investment bank. RBS also plans to exit its cash equities, corporate broking, equity capital markets, and M&A businesses, either through sale or closure, and is in talks with potential buyers. (RBS statement

    December saw 205,024 foreclosure filings, a 9% decline M/M, a 20% decline Y/Y, and a 49-month low. Filings were down 34% Y/Y in 2011. But despite the seemingly positive slowdown, RealtyTrac says foreclosures were in "full delay mode" in 2011 and will rise once again in 2012 as lenders take action. 

    Working hard to bring you $200 oil!  An aide to North Dakota's John Hoeven tells Reuters Senate Republicans are drafting a bill to circumvent the President's authority and approve TransCanada's (TRP) Keystone XL pipeline under Congress' authority to regulate commerce with foreign nations. - Keep in mind this pipline is designed to DEPLETE the inventory at Cushing, which would skyrocket the price of WTIC and let them control inventory levels by throwing a switch

    Ahead of what could be an oil embargo, European refiners have begun stopping spot purchases from Iran as bankers step back from financing such deals. Long-term agreements for crude (which account for about 2/3 of supply) remain in force. With nowhere for some of its oil to go, Iran has begun stockpiling crude in "floating storage."

    Exactly what we expected from BBook reading:  Chevron (CVXdrops 1.6% AH after warning it expects its Q4 earnings to be "significantly below" Q3 levels, thanks to itsdownstream business operating near breakeven. The oil giant blames the downstream weakness on lower margins and refinery input volumes, along with the absence of an asset sale. Chevron will post its Q4 report on Jan. 27. XOM -1%.

    Backing up Microsoft's (MSFTwarning, Gartner estimates PC shipments fell 1.4% Y/Y in Q4, compared with a 3.2% increase in Q3. However, unlike Microsoft, Gartner doesn't claim Thailand had much of an effect on Q4 sales (though it sees a larger 1H12 impact). Instead, it blames soft Western European and North American consumer demand, the result of macro issues of and tablet cannibalization. (IDC data)

    More from Gartner: Though still the world's top PC vendor, H-P's (HPQ) share is believed to have fallen 280 bps Y/Y, to 16%, partly due to the drama surrounding its PC business. Lenovo's share rose by 270 bps, to 14%, while Dell's (DELL) rose by 100 bps, to 12.6%. H-P's U.S. market shared tumbled by 630 bps, to 23.1%, while Apple's (AAPL) grew by 260 bps, to 11.7%, allowing it to become the market's #3 vendor.

    Whether you like it or not, stocks do behave in predictable patterns at times, say J.C. Parets, and far to frequently to just be a coincidence. Seasonality is actually rooted in causation, Parets notes, and despite its voodoo technical characteristics, if you're going to ignore it, your doing so at your own peril. 

  268. one thing i don't get is how the FED went from dim FOMC minutes 10 days ago to an upbeat Beige Book in so short a time span.
    i also get the feeling a lot of the pr is massaged so what is real and not real is difficult to discern, but perception looks like it is everything.

  269. Phil / The Morning
    1) Same thing just happened to my Windows 7 PC.  Rebooted without warning, configured updates, and restarted.  At least it opened my browser windows.  I'm turning off Windows auto-updates.
    2) WordPress has a AutoSave enabled by default for all posts that saves every 60 seconds.  If you log into the PSW blog,, go to Edit Post, under ScreenOptions in the upper right hand corner make sure the Revisions box is checked.  Then it will show you all the Revisions, and a single AutoSave that is updated every 60 seconds.  I'll bet your post is there unless the admin disabled auto-save.
    3)  What do you think of the 102 line on oil right now?

  270. Sparky/hydraulic fracturing
    I can't say I know a lot about the subject, but my brother in law is a consulting engineer who has spent the last 30 years going all over the world, drilling core samples, analyzing geological formations, and advising clients on the location and design of landfills for garbage disposal, so he knows something about rocks and avoiding contamination of drinking water.
    He says that fracking fluid is almost entirely  water and that the chances of it contaminating the general water supply in rock formations that are not local to the drilling is zero. There have been some suspicions of some escaping methane leaking upwards into aquiferous strata in fracking areas, but in general the hydrocarbon bearing rocks are much deeper than the stata that have water, so the likelihood of contamination is slight. Leakage is more likely to occur from poorly maintained surface ponds where excess or used fracking fluid is collected and stored in mining areas, but this is more an operational problem than anything to do with the inherent nature of fracking fluid. This fluid may have absorbed or dissolved other hydrocarbon minerals from underground as it is often slightly acidic.

    Anyway, not much chance of the Great Lakes becoming undrinkable.

  271. So the recycle of the LTRO funds are evidenced by the bond auctions, indicating that ECB will monetize the euro debt problem via backdoor QE.   And a turning point has been reached, but why am I so hesitant to accept it?   Seems like the market is feeling the same – one would expect an explosive move if the market believed the risk in the euro banking system has been addressed.  No doubt that ECB is accepting junk sovereign collateral to recapitalize the banks and in return the banks are bidding on the debt rollover auctions at lower rates, the first actions which finally seem to be coordinated.  How long will it last?

  272. roro/news massage
    Almost all news is massaged in some way, unfortunately. This becomes rather apparent when you watch the TV news here in the Dominican republic and see unvarnished  reports of murders where bloody corpses are shown lying on the floor with closeups of their machete wounds, or automobile accidents where there are pools of blood in the road. In one that I saw a man was being arrested for the murder of his neighbor while protesting his innocence, and the cameraman shouted at him "so why do you have blood on your clothing?" How come these things are never seen on US TV?

  273. Fracking Movie
    Anyone see this yet?  It was really interesting for a Sunday night…
    "The largest domestic natural gas drilling boom in history has swept across the United States. The Halliburton-developed drilling technology of "fracking" or hydraulic fracturing has unlocked a "Saudia Arabia of natural gas" just beneath us. But is fracking safe? When filmmaker Josh Fox is asked to lease his land for drilling, he embarks on a cross-country odyssey uncovering a trail of secrets, lies and contamination. A recently drilled nearby Pennsylvania town reports that residents are able to light their drinking water on fire. "

  274. it is looking like a dump the dollar.

  275. Good morning AAPL lovers!    AAPL up $2.50 in premarket trading and I'm sensing a possible  play today on the weeklies.   I'll get back with you on that if and when I see it.  And those 20 QQQ Jan monthly $60 puts in the AAPL portfolio………I'll likely place a stop-loss on them this morning at about 1.80.   Note that  I manage downside protection a bit differently than most.  I don't simply buy it and hold.  I just don't like to lose money.  So if I see DSP moving in the wrong direction, I don't hesitate to  unload it like I would any other holding.   Later.

  276. Good morning again!

    Thanks Burr, all good except that check box is not there – i'll have to ask Matt what's up but will be nice for next time.  

  277. Fracking/NG
    "The environmental impacts of shale development
    are challenging but manageable. Research and
    regulation, both state and Federal, are needed to
    minimize the environmental consequences"
    MIT study. Reportedly funded by it's proponents; Useful, nonetheless.

  278. Phil / Post
    You have to actually Click the post, which puts it in Edit mode.  THEN click Screen Options in the upper right corner.  You will find Revisions button there.
    The actual Revisions are generally at the bottom then of the post.

  279. Fracking – Challenging, I'm sure. Manageable? Please…..

  280. Largest shareholder suing Wynn.   Smells like a corruption probe to come…Wynn gives $125mm to University of Macau, such an american patriot.   Ever hear Steve rail on Obama?   He's not doing much to support Las Vegas, UNLV or displaced Las Vegas workers!

  281. Wynn down 7.5% pre-market.

  282. FAS is strangling us Stranglers today.  Up +2 premarket to 78.

  283. Wynn has gone from hero to a bitter old goat…. Elaine kept his oars in the water….