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Testy Tuesday – How Many Times Will You Fall for the Same Thing?

Isn't this exciting!

The pre-markets are up 1% after a long weekend.  That hasn't happened since – two weeks ago!  Of course last Tuesday, we were jammed up as well and the Tuesday after Christmas, we were jammed up as well but THIS TIME – we're REALLY feeling it, right?  

The funniest thing is the way they have dozens of idiots saying all sorts of ridiculous things on CNBC and not one of them mentions even the vaguest hint of deja vu in what has been the most consistent pattern of late 2011, early 2012.

On this Dollar chart from Scott Pluschau, you can see the dives that are occasionally taken to goose the markets and we have another one this morning with the Dollar down 1%, making the 1% pop in the futures slightly less impressive when taken in context.  

This time may be different because, according to Friday's Legacy Commitments of Traders Report released by the CTFC, Commercial Traders are now net short on the Dollar to the tune of 59,023 to just 6,061 longs – about a 10:1 ratio that is EXTREME to say the least.  Non-Reportable, Non-Commercial Traders (ie. Speculators), on the other hand, are almost 10:1 the other way with 9,765 long contracts and just 1,390 shorts.  Reportable Non-Commercial Traders (Hedge Funds) fill out the rest of the longs with 52,644 long contracts against just 8,057 shorts.  

To some extent, hedge funds are also speculators and usually you would assume their bets are covered but that's kind of hard to see with a 7:1 long/short ratio.  Keep in mind that Commercial Traders are institutions with business reasons to hedge – they are not going to be flip-flopping their positions so they will NOT be buying Dollars just because they get cheaper.  So, if it all hits the fan and the Funds shift to short – we could get quite a tidal-wave of Dollar selling.

That's an odd sort of positions for the speculating class to be taking (super-long on the Dollar) considering the possibility of a highly dilutive quantitative event (QE3) in the very near future.   This is why we can't be gung-ho bearish – tempting though it may be and this is why every little rumor of Europe being "fixed" sends the Dollar flying down – there are no buyers – only nervous long Dollar holders.  

As you can see from the chart above, it's not unreasonable to look at the Global situation and assume the Dollar can get much stronger as it can still gain 50% and not be back to 2002 highs.  Of course, as we know, the 20% run in the Dollar from early 2000 to 2002 is the reason "partying like it's 1999" has a negative connotation for stock traders and, at 81, a 20% run in the Dollar only gets us back to 97.20 – not "strong" by any measure.  

The commodity pushers want the Dollar as low as possible (so they get more of them) and our stocks are also priced in Dollars so our Corporate Masters also like a weak Dollar as it pumps up their balance sheets and makes them look clever as they make more money for selling the same or even less stuff as our own Federal Reserve take inflation denial to new heights with each glowing report on our economy.  

Yet you fall for it EVERY TIME – it's amazing really.  If investors were rats, they would be shipped back from the behavioral laboratory to the rat farm as  "defective" – unable to learn even the simplest of mazes as they head down the wrong path over and over and over again.  It's not your fault though – this is a pattern that's been going on for over 100 years as America's "dirty little secret" has always been currency debasement as a secret tax on it's working citizens (ie. the bottom 99%):  

At what point on this chart would it have made sense to lend the United States money for 30 years at 3% interest?  THAT's why we had a very bad bond auction last Thursday as Global Lenders have their own problems and, without a strengthening Dollar, they have no reason to risk their relatively sound currencies to fund our continuing deficits.  If not for Europe LOOKING even worse than we do at the moment – the Dollar would be at new all-time lows.  Just take a look at the damage that's been done to the economy in the Great Recession:  

Here we are with many stocks and commodities right back at 2007 levels – as if we haven't skipped a beat.  Does something seem wrong with this picture?  If so, you are what they used to call "rational" but are now called a "nattering nabob of negatavism" – a term first used by Spiro Agnew (written for him by the great William Safire) to dismiss the various crimes and economic catastrophe of the Nixon Administration and recently brought back by Phil Gramm, who's economic strategy for John McCain was to tell the American people to "suck it up" and "stop whining" about the Bush economy.  

It's always good to label your enemies with alliteration – it makes you seem smart and gives them a label that sticks in people's minds and, as we know from the Smashing Pumpkins:  

The world is a vampire, sent to drain
Secret destroyers, hold you up to the flames
And what do I get, for my pain?
Betrayed desires, and a piece of the game

Despite all my rage I am still just a rat in a cage

At PSW, we don't have to run through the maze 5 times before we know what lever to push!  Like last Tuesday and the Tuesday before that and the Tuesday before that, we took the opportunity in early morning Member Chat to short the BS Futures rally and already (8:50), our Egg McMuffins are paid for as we got a nice little sell-off.  We'll be happy to go bullish – truly we will – when there is ACTUAL EVIDENCE that indicates we should.  

So far, we are NOT feeling it this morning with MTB missing by .49 (out of $1.53 expected) and C missing by .10 (out of .48 expected).  CHKP beat by a bit, EDU had a slight miss, AMTD had a slight beat in earnings but missed revenues by a smidge, WFC was in-line, FRC small beat, MMR big beat and FRX had a small beat.  Unfortunately, misses by two big banks trumps so-so results by the rest and should not support $14 on XLF today. 

We have plenty more "real" evidence this week to gather with PNFP tonight, SCHW and GS tomorrow morning, FFIV and KMP Wednesday night, BAC, FCS, PGR and UNH Thursday morning followed by ED, PBCT and SWKS that night and Friday we hear from Poppa GE along with SLB adn STI and THAT will give us a pretty good picture of what really went on in Q4.  

Unfortunately, that means we continue to play it close to the vest, using our cash to poke at a few opportunities and picking up some good deals (like RCL this morning on the dip) but generally for quick trades until we get a clearer picture of where things stand.  

The FT pointed out this weekend that the ongoing Iran crisis is masking internal signs of Brent weakness – something we're also picking up in the above-mentioned Commitment Report.  Backwardation is changing to contango in the oil contracts and that's often the sign of a correction coming (we are long SCO already) and, if Iran doesn't "come through" for the oil bulls and do something very crazy very soon – the serious lack of Global demand for crude combined with the record supplies that are now on-line are capable of leading to a very sharp correction (see "The Oil Hawks are Living in Cloud Cuckoo Land" – also from the FT this weekend).  

Our position on oil has been very clear – over $100 we short it.  At $101, we short it.  At $102 (which we had early this morning), we short it.  At $103.50 – we back up the truck and short it.  Why?  BECAUSE OIL IS NOT WORTH $100 A BARREL.  I'm sorry, it's just not.  Gold is also not worth $1,500 an ounce but that doesn't mean there aren't going to be idiots lining up to buy it.

Thank goodness for those idiots – they pay for all our Egg McMuffins!  


Currency cartoon by Elaine Supkis, Culture of Life News.

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  1. TESLA MOTORS – Confrenence Call
    Starting NOW… an update for why executives depart

  2. Elon: Apologizes for the "way" the news was released, it was actually good news for transition.Peter was chief engineer for body & chasie, he resigned for personal reasons. He asked for Nicks resignation. New hires Jerome & Eric are better at this phase of tesla's development
    Meet or beat delivery date of July 2012 for the Tesla
    Deliver at Least 20,000 cars in 2013
    Margin of at least 25% on each vehicle
    JB Strobble – management of vehicle electronics & power train 
    - on track,  4.4sec 0-60mph & 130mph both met on real world testing for performance line
    - Model X – two platforms for design 
    - beta build completely on track
    - second winter test in minnesota with the beta car
    - areodynamic testing better than expected
    - crash testing, body in white testing, getting ready for homology testing
    Elon: There will be no safer car you can buy
    Timing of Mannufacturing is on time for the production line in Fremont.
    261 people hired for line production
    most of the production equipment has been installed
    Next shipment delivery is Jan 27 for stamping part
    End of February going into a new phase of delivery
    VP Sales Worldwide
    - 6 new stores, 200,999 visitors  to those alone.
    - 1500 new reservations in Q4, up from 1200 in Q3
    - sold out of model s completely in the US
    - after pricing announcement, they had the strongest new reservation week
    Elon: Model S & X on track! Consumer will be blown away with the car when delivered, test drives of Model S coming soon
    Q&A transition

  3. Oil Lines

    R3 – 102.22
    R2 – 101.26
    R1 – 100.75
    PP – 99.79
    S1 – 99.28
    S2 – 98.32
    S3 – 97.81

    Yesterday's high and low – 100.3 / 98.83

    Breakout lines – 102.67 / 94.98

  4. OLED's
    I've read a ton about OLED tech in the past, and this year's CES they finally were the star.  The TV's are brighter and crisper, and much much thinner.  Anyone know of good companies to invest in which will profit from the coming OLED switch?

  5. PP for today:

  6. Q&A
    Paint Shop in full automatic mode, and have used black, silver and white and red many cars now for all coats
    Greatest risk is the crash test not achieving 5 star on all sides (i.e. 4 star on one edge of vehicle)
    Trade Secret and Body and Chasie Patents
    Peter and Nick arrived after the 1st prototype of the Model S, helped make it lighter
    Model X event, lead by Allen Clark, you can ask the team questions
    Elon's favorite CRASH picture of the Tesla Roadster

    - no FIRES, no major injuries for drivers, and with over 2,000 roadsters safe
    - mercedes A class and dailmer Smart car batteries in market >4,000 have also been safe without issues, and passed all safety tests, RAV4 will also be coming
    - in sourcing of high pressure dye casting, going well, 
    Testing of the battery pack, they have 3 levels of containment, build for the liquid cooled component to completely fail and still not have an issue. Good indication of their small cell technology, more complex to handle, but more safe.
    Neither executive has left for a competitor. No significant disagreement between executives. Their role was no longer being appropriate for now, different stage of maturity for the company.
    Model X Event – Evening of Feb 9th, in Los Angles at the Design Studio  unveiling what is kinda an SUV… he's really excited. 1st prototype.  Test rides will be available.

    Tesla CEO confident will deliver 20K Model S next year, with margin over 25%. likely better, he is virtually certain he will.

  7. Baltic Dry Index Slumps To Lowest Since January 2009
    The apparently critical-when-its-going-up-but-ignore-it-when-it-is-falling index of the cost of dry bulk goods transportation has 'crashed' in the last few weeks to its lowest level since January 2009 (back below 1000 according to today's levels). Whether this is seasonal output differences or weather impacts, it seems clear that lower steel output in China and a decline in European imports is having its impact on global trade. The index has fallen for 19 days in a row, down almost 50%, its largest drop since the harrowing period of Q4 2008.

  8. February 14th next earnings report

  9. NFLX – Worth reading the class action complaint filed last Friday: These guys, btw, never lose.

  10. Hum……Airbus warns of plunge in demand. Airbus (EADSY.PK) has forecast that demand for new aircraft could dive by over 50% in 2012 after the company hit a record 1,419 orders last year. A slowdown in A320neo purchases along with the financial pressures of both airlines and suppliers is expected to contribute to the tailoff.

  11. NF**X,
    did you men that NFLX never loses, or that the plaintiffs in such cases never lose?  thanks for sharing the complaint.

  12. I believe he means that the law firm doesn't lose.  They recovered over 7 billion from the eron disaster.

  13. Airbus warning..good thing they are subsidized…what happened to China buying 20 billion planes ;-)

  14. Phil, would it make sense to cash the 9 puts. We are showing a 70% profit with over a month to go. I believe we could get another chance to sell these puts again in the next 4 weeks.

  15. These TNA calls are killing us now!

  16. Good morning for Apple…

  17. Rising support from Friday's low at 1295 ES. If that breaks then the odds for a gap fill are good. 

    If we see a 10.30ish low again today that should be a decent long entry. I don't think the high is in yet. We are in the target zone though. 

  18. Good morning!

    Nice dip in oil to $100, second time was a charm in the Futures!  

    Dollar at 81.39 off the low at 81 when we topped out in the futures – if we pop 81.40, that's going to be bearish and generally, we have been putting our week's high in on Tuesday's first hour of trading so we'll see if they can break the pattern or if we're in for another week of 100% of the gains coming from the Futures.  

    Europe is still very happy with the Dax up 1.3%, CAC up 1% and FTSE up 0.57% but off the highs as well.  Asia was spectacular this morning even though higher China GDP should take all that monetary easing talk off the table that was boosting the markets there last week.  

    Whole Foods making new highs,  YUM making new highs (opposite ends of the food spectrum) AMGN making new highs, GILD new highs…  Financials took a dive but now heading back to $14 – interesting moves.  CVS making new highs – weren't people writing them off a year ago?  

    it's a watch and wait day for the moment, this pop is only 133 points so far and our Jan 3rd pop was 180 so we need 50 more points to be impressed.  Still, we are making progress and not giving up all of the gains during the week so, if we hold our technicals – then we hold our technicals and we have to stop all this silly thinking and just go with the flow.  

    775 on the RUT is a big deal as is, of course, 1,300 on the S&P and we are over that line this morning.  It don't mean a thing unless we can get another 160 points on the NYSE and that's another 2.5% so not likely to happen today.  Meanwhile, if you wish you had more disaster hedges on Friday's open, now is a good time to fix that as we're back up 200 points from there.  

    EDZ has flopped all the way down to $16 and the April $14 puts can be sold for $1.60 and that pays for the $15/22 bull call spread at $1.80 for net .20 on the $7 spread that's $1.29 in the money at the moment.  We used to use CHL as a less bearish offset but they are up much higher now so standard bullish offsets like VLO (June $18 puts can be sold for $1.10) or RCL's dip can be taken advantage of – selling the March $24 puts for $1.05 is a fun way to go.  Remember – it doesn't have to be all or nothing, you can mix the short sales up and spread the risk!  

    In the $25KP, I hate to take another bearish position but the DIA Jan (Friday) $125 puts are .82 – so let's go for 10 of them and see how it goes.  


  19. Finally, some decent premium on FAS…. Let's wait a little more for the dust to settle on this gap opening!

  20. FAS Strangle – Let's leg in this one for a change. I would sell the 82 calls now for about $0.60 and wait to sell the put.

  21. Oil/Phil – not worth $100.. Right. excpet $100 is not worth $100 anymore either.. using "official" rates, the dollar lost 3.75% ifrom 2010 to 2011 (and we can bet that is a lowball amount). So really, oil is not worth $103.75 today. And maybe that is really really "Oil is not worth $106.50" (and climbing)…  and same for gold, not worth $1500 in 2010 should now be $1556*.
    * "officially"

  22. Phil / Roll to new EDZ hedge?
    Last week we put on the 
    Short Feb 17 EDZ puts
    Long Feb 19/24 BCS
    Would you recommend rolling into today's hedge?

  23. FAS Strangle – I am trying to improve the timing of the entry a little bit to see if we can squeeze a little more premium every week given the fact that we have had a low VIX for a while. I am still sticking to allowing for enough protection on either side to be "safer" – for example, the 82 calls give us about 8% protection on the upside which is OK given the shorter week. I'll wait for an entry point on the puts now.

  24. Springheel Jack- the other day on you blog post you mentioned oil short in the 101.50/102 range. Can you update your thinking on that?

  25. Phil, i am with you, we need to hold the line. When this thing pops we are going to party like its 2008! 

  26. StJ / FAS Strangle
    Did you get 0.60 for the 82 call?  It's down to 0.45 already….

  27. pstas – Broken support trendline retest would be at 101.74 today. 

  28. FAS / Burrben – It's a little late for an entry now. It was at $0.72 at 10:15! Might have an entry point for the put soon though….

  29. Jack- do you have  a chart posted on oil?

  30. FAS / StJeanluc
    9.45 – 10 seems to be the money time to put it on.  Hell, if I got in at .72, I'd take it off right now at .34 for a 50% win!

  31. TRGT/Pharm -is the Renaissance program for TC-5214 all the play in TRGT or is there more to them? And how big can this be still after the misses in Nov/Dec? 

  32. FAS Strangle – Not going to br greedy on this one as it worked out much better than I thought! I will buy back the 82 calls for about $0.37 now. That's 38% in about 45 minutes.

  33. Good morning,


    IWM    73.51,  73.92,  74.28,  74.61,  75.12,  75.54,  75.80,  76.02,  76.36,  76.66,  76.82  and  77.06


    Also, I have trend-line resistance now at 77.28 and climbing !!  Support at  76.23 and climbing !!

  34. pstas – I posted this CL chart on Friday morning & the pattern setup is still current:

  35. JRW – three day weekend statistic growing stronger. when will i learn?

  36. FAS / Burrben – I am with you on taking the profits. BTW, the prices that I post are the "mark" price at the time of the post to give an indication of what you can get then as I can't predict what everybody is getting and I want to show an "average" in my spreadsheet. At the time I posted, you should have been able to get in around $0.60 for sure. 

  37. Dollar rejected at 81.50 so far. 

    TLSA/Itrade = Thanks but I still don't see people spending $70K for a sedan just because it's electric but I guess if they keep the run limited they can sell them all. 

    OLED/Burr – There used to be an OLED we invested in but they got bought.  PANL was their top competion but I never thought they were as good.  I'd be careful because, like LED lighting, once they go into production, OLED (the tech) will commoditize very quickly and the marginas will evaporate.  

    Baltic Dry/Kramer – Don't forget there's also the factor of massive excess thanker capacity on-line over the last few years so some mitigation of the apparent drop taking that into account.  

    Airbus/Pharm, Kustomz – They've been taking orders on A380s for 3 years and now they, like BA, are at the start of the 10-year delivery cycle.  It's normal for orders to drop off significantly as most airlines have already ordered what they need through 2020.  

    AA Money/StJ – Yawn.  Yes, I guess we should buy back the puts for .14 and see what happens.  

    FAS Money/StJ – Looks good.  

    IWM Money/StJ – Also fine for now.  "Killing us" is interesting as they can be rolled to 4 Feb $54s ($2.55) if we have to and we could offset that with the sale of 2 $46 puts at $2.85 to collect $500 more for Feb with a $8 spread, which covers about a 5% move up or down on the RUT.  

    $25KP/StJ – What happened to lightening up on MA when they got back to $2?  Did it never trigger?  Watch and wait mode on the rest except the SQQQ calls, let's get 6 more for .25!  


    Oil/Scott – No, I adjust for the Dollar when I say that.  Oil is worth about $87.50 with the Dollar this weak (81).  So, back at 73, we can justify $95 oil and that's around the floor that's set by the Dollar bears, who are buying oil and gold as inflation hedges.  Oil is very attractive to them because Iran gives them the possibility of a bonus kicker, in addition to the straight Dollar hedge.  

    EDZ/Burr – Not really worth the fees to roll it.  If it gets worse, then maybe.  

    Nice oil chart Jack! 

  38. Phil your thoughts please…
    The House Rules Committee will meet Tuesday evening for a meeting
    that will pave the way for a House vote Wednesday to disapprove the
    final installment of last year’s debt hike agreement.
    The vote was triggered by President Obama’s recent letter seeking
    the final $1.2 trillion tranche of the debt ceiling increase that was
    negotiated last August.
    Under the debt hike agreement, now that Obama has formally made
    this request Congress has 15 days — January 27 — to vote on a motion
    to disapprove the debt ceiling increase.

  39. I got out of 5 MA puts at 2.25 on 1/11 in the 25KP based on Phil's original comment to get out of half above 2.

  40. Phil/SPXU – $11.85
    Sell Feb $12p 0.85 and buy the Feb $12c for 0.80 for a net credit of 0.05 with unlimited upside??

  41. AA Money – Buying back the Feb 9 puts for about $0.14.

  42. Phil – that's six Jan SQQQ $17 calls?

  43. MA puts 25KP / Phil – Just the scribe but mampcsA updated me on his position as he did sell 5 of the puts.

    Thanks mampcsA. Please let me know if I missed anything else!

  44. Phil / TLSA — Because it's electric? No. More like it goes 0-60 in 4.4 seconds.

  45. stocks are making that run to 1300-1310 shoritng area i targeted last week…i am going to buy a bunch of SDS at around 17.87..and then into the future..s for now i am hedged but still net long..patience is the key for me today

  46. RRD down -15% today!  What's going on?  Are we still long-term bullish on RRD?  Time to accumulate more?

  47. FAS Strangle – Selling the 70 puts for about $0.58. 

  48. House/Kustomz – That's meaningless, it's an automatic renewal:


    House Democrats on Wednesday afternoon mocked House Republicans for bringing up a resolution disapproving of another $500 billion increase in the debt ceiling, arguing that it is meant only as political theater to assuage GOP voters that Republicans are serious about the deficit.

    We have members on the majority side who have trouble explaining to their primary voters why they had a temporary embrace of reality, said Rep. Barney Frank (D-Mass.), referring to the bipartisan decision to increase the debt ceiling one month ago. So having done what they had to do, they now want to pretend that theyre going to undo it.


    Frank criticized Republicans further by saying that Congress needed to raise the debt ceiling because of the wars and tax cuts that were not paid for.

    We have a majority that has a problem with reality, Frank said. They have a problem with reality in the field of science, they have a problem with reality in the field of the economy. One of the manifestations of that is their objections to raising the debt limit that was in large part necessary because of debt they incurred.

    In one exchange, Rep. Connie Mack (R-Fla.) called on Republicans and Democrats to join him in supporting the resolution. Levin shot back, Working together wont work if you undo the work that we did together.

    Thanks Mampcs – I knew those had to have triggered.  

    SPXU/Canuck – That sounds like fun.  Very aggressive though so watch that 1,300 line.

    SQQQ/$25KP, Jerconn – Yes, 6 more makes 12 at .77 and, of course, we want to get 1/2 out if we get back even to .50 as it would be a nice improvement.  

    TLSA/Rain – Yes but the inconvenience of electric makes it not the car for everyone.  I don't know why they don't make them all hybrids so at least you never get caught with a low battery and no way to charge.  For the sportster, I get it as it's one guy out driving and having fun – car guys will put up with all kinds of crap for a good ride.  But sedan is families and you don't want your family sitting on the side of the road while you hitch down the road to borrow 1,000 watts or whatever it is you need to do when your electric car quits on you halfway to Vermont or stuck in traffic on the LIE…

    My solution for electric cars is standard, swappable battery packs for all US electrics so you can pull up to a gas station and they can open your trunk and pop out a dozen dead cells and put in a dozen charged ones in like 30 seconds and you pay them a couple of bucks and you're on your way.  If all the companies use the same cells, then the R&D to improve those cells would be well worth people's efforts and the standard system would insure batteries are properly tested and properly disposed of when necessary.  In one stroke, you could zoom across country in your electric cars.  

    RRD/Cwan – Who's we?  I don't remember liking them, did I?  

  49. 25KP/StJ – StJ, can you post the link to the spreadsheet, please?

  50. RRD/Phil: It was back in Aug 23, 2011.  Someone asked about RRD, and you said:
    RRD/Jomp – Now that they've sold off so hard I do like them.  They are a huge company and pay a very nice $1.04 dividend so you can buy them at $13.63 and sell the 2013 $12.50 puts and calls for $4.80 for net $8.83/10.67, which makes that $1.04 dividend 11.7%.  Be aware that they were $4.75 in the crash so a small entry with a plan to DD if they go below $7 is the way to go.  For the Income Portfolio – I like buying 1,000 shares and selling 10 puts and calls on an entry we'd be happy to put another net $12K (assuming net 2,000 more at net $6 or less) into if they go that low.

  51. Hey Phil
    What do you make of the S&P rallying to 1300 with the 10 yr. still down at 1.86%

  52. QQQ/25KP – Phil, my sell never executed friday on the QQQ 59 puts  and now ridiculous (annoying!) gap up today. double down? roll out? roll and double?

  53. Interesting chart about sector weighing in the S&P500:

    Definitely tech heavy

  54. Phil,
    I missed the selling of our bearish positions on Fri. I rolled most positions to Feb (and am taking the hit today). So I am bearish based on positions. I did not get the QQQs rolled to Feb and have the Jan 59 Puts as well. I do expect a mild correction – not sure how many more days before that happens. Would you DD/add based on big gap up today in Qs?

  55. Don't forget I'm out of here around 2pm for my BNN at 3:30. 

    Europe finishing Dax 1.6%, CAC 1.2%, FTSE 0.6%. 

    At the open: Dow +0.86% to 12530. S&P +0.93% to 1301. Nasdaq +0.94% to 2394.

    Treasurys: 30-year -0.09%. 10-yr -0.06%. 5-yr -0.02%.

    Commodities: Crude +1.47% to $100.33. Gold +1.61% to $1657.05.

    Currencies: Euro +0.38% vs. dollar. Yen +0.06%. Pound -0.14%.

    10:00 AM On the hour: Dow +1.07%. 10-yr -0.08%. Euro +0.44%vs. dollar. Crude +1.71% to $100.57. Gold +1.74% to $1659.15.

    Market preview: Equities are higher on both sides of the pond despite S&P's ratings cuts on Friday and yesterday, overshadowed by better-than-expected Empire State manufacturingdata and Chinese GDP, Geman sentiment, and successful EU bond auctions. S&P futures +0.7%. Citigroup -2.1% following its earnings miss and Carnival -15% due to its cruise disaster, but Provident+16.2% on acquisition news

    Notable earnings after Tuesday's close: ADTNCREE,FULTLLTC 

    Jan. Empire State Survey: Manufacturing +13.48 vs. +10.5 expected, +9.5 prior. New orders +13.7, +5.1 prior.

    More on the Jan. Empire State Survey: Future general business conditions index +54.9, highest level since Jan. 2011. Employment indexes were positive and point to higher employment levels as well as longer work weeks.

    The San Francisco Fed takes to the Twitterverse to helpspell out its 2012 economic forecast: "We expect GDP growth to moderate in 1H2012; but then recovery should gradually pick up steam." (complete forecast) - OK but isn't that 2013 before we recover?

    The Bank of Canada leaves its benchmark lending rate at 1%. The statement, however, is a dovish one: "The outlook for the global economy has deteriorated and uncertainty has increased … the pace of (Canadian) growth going forward is expected to be more modest." 

    The euro dives from the day's highs as a couple of comments hit the tape. Dutch finmin Jan Kees de Jager says no more aid should go to Greece if its debt is unsustainable, and it's up to the IMF to decide such. Meantime, Swiss economy minister Schneider muses about a eurozone with Germany, the Netherlands, and France.

    Fitch Managing Director Edward Parker expects a Greek default soon, saying the country will likely be unable to make good on a March 20 €14.5 bond payment. As for the PSI deal coming (or not coming) in Athens, it's a default, no matter what policy mandarins call it.

    Formerly bearish on all things financial in Europe, CLSA's Chris Wood eyes rumors the ECB's LTRO on Feb. 29 could hit €1T(LTRO #1 was €489B) and reverses his view. He sees the euro continuing to sink, but EU financials wiping out the shorts in a "violent bear market rally."

    Ben Bernanke and Mervyn King have borne the wrath of many for their easy money policies, but what about the ECB? Viewed as a percentage of GDP (pdf), ECB assets have always been greater than the Fed or BoE, but beginning in 2011, the ratio has exploded higher. That the ECB is some sort of Bundesbank in drag is a myth. (see also

    The reasons for Saudi Arabia's shift of its target price for oilto $100/bbl from $70-$80 mostly boil down to the growing oil export revenue needed by the OPEC states to placate their citizens in the wake of the Arab Spring, FT says. There's concern about overwhelming any global economic recovery, but there’s also the question of Saudi’s ability to impose its will on OPEC, plus the Iranian wild card.

    Economist James Hamilton says an Iranian oil embargo will have "little effect" on either Iran or prices in oil-consuming nations, and will stand as nothing more than a symbolic gesture. He notes the simple impact of the oft-discussed embargo is that the nations participating will buy less oil from Iran, while other countries not participating in the embargo buy more.

    Copper stocks gain on the back of a 2.3% upside move in the metal after China's better-than-anticipated Q4 GDP datayesterday: Freeport McMoRan Copper & Gold (FCX +1.8%), Southern Copper (SCCO +2.1%), Takeko Mines (TGB +3.3%), HudBay Minerals (HBM +5%).

    Of China's Q4 GDP growth, Patrick Chovanec notes 2011 still showed real real estate investment growth of 20%. Were this to level off in 2012, GDP would slow to 6.6% from 9.2% – a hard landing – and this assumes no impact on property-dependent industries like steel and cement, and no impact on the financial system.

    More on China GDP: ANZ Bank's Nicholas Zhu visits a Chinese steel plant and reports back of a near-empty parking lot, work-shifts shortened to 5-day weeks, and just one blast furnace in operation. "Wire rods for use in the construction industry were piled up everywhere: inside a full warehouse at the riverbank, out in the open near wharfs and any empty space next to the factory floor." (see also)


    More from Citigroup (C): Q4 release of loan loss reserves was $1.47B against net income of $1.17B, meaning the company lost $0.05/share without the release. Similar to JPMorgan, the Securities and Banking group saw a sharp decline (53% Y/Y) in revenue. Shares-3.1% premarket.

    "Citi (C -5.9%) investors can be forgiven for seeing theglass as half-empty," writes David Weidner on MarketWatch, with Q4 results "a reality check that showed the bank is still unable to meet even the most restrained Wall Street analysts’ expectations."

    Though times are tough for many LED industry players, the technology's crashing prices are having a disruptive impact on the lighting industry. Siemens (SI) says its Osram lighting unit will slash 850 jobs by 2014, due to the declining sales seen for traditional lighting products on account of the LED market's growth. Fellow lighting giants GE and Philips (PHG) are likely to face similar pressure. (earlier)

    Intel (INTC +0.5%) is downgraded to Neutral by J.P. Morgan's Chris Danely, who calls it “the only semiconductor stock without a major EPS cut." His $2.05 EPS outlook lowballs the Street consensus of $2.39. Gross margin is set to decline this year from 62.5% to 60.6%, he says, due to “higher depreciation and weaker pricing,” and its stock price "usually follows its gross margins." 

    Told you so!  Troubled Sears Holdings (SHLD +11.3%) is shooting higher in early trading, apparently due to speculation that it will be taken private. 

    SA author The Independent Investor brushes off all the talk that shares of Chipotle (CMG +1.1%) are overvalued as the latest momo favorite. The trader claims that if the firm continues to grow at the relatively conservative rate of 20%-25% per year – compared to its rate of 35%-45% for the past five years – the stock actually looks "reasonably valued to modestly cheap."

    Morgan Stanley moves up its rating on Panera Bread (PNRA) to Overweight from Neutral with a $168 price target. The bullish call follows right on the tail of PNRA touching an all-time high in Friday's trading. Shares +1.7% premarket.

    Did somebody say CHINA?!? The Shanghai Daily tips off an ambitious 600M yuan ($95M) plan by Amazon (AMZN +1.9%) to build a distribution center in Nanning to serve its growing presence in China. The firm is believed to be working on introducing a local version of the Kindle Fire tablet to the Chinese masses.

    Research In Motion (RIMM +6.2%) shares spike on heavy volume due to a report detailing Samsung's (SSNLF.PKpossible interest in the company. "One of the biggest assets RIM has is BlackBerry Messenger, and it would be a smart way for Samsung to differentiate itself inside the Android ecosystem," speculates. "Jim [Balsillie] is going hard after Samsung."

  57. Phil/MON – in the 25KP keeps getting nasty. Those short $75 calls are over $6.20.

  58. RRD/Cwan – Oh OK – for $8.83/10.67 I like them well enough.  I thought it was off the recent $15 levels.  As I said at the time, they can go much lower so this is not time to accumulate more if you are in them – not when we're still worried about a large-scale market crash.  

    S&P/Danny – I think this rally is very forced but not much we can do about it but wait for them to either run out of gas of for QE3 to come along and justify the move up.  

    QQQ/Danny – The Jans?  Those are down to .45 and I think, rather than DD, you can spend the .50 better to roll to the Feb $58 puts (now .97) and, if the Qs pop over $59, you can sell the $57 puts (now .70) for no less than .50 and use that money to roll up to the $60 puts (now $1.85) to put you in a $60/58 bear spread.  Hopefully, it doesn't come to that.  

    Sector weighting/StJ – I love those charts.   Notice our economy does better when Energy and Materials are much less important to the index. 

    QQQ/Kallen – See above Jan comment.  

    MON/Nicha – Yes, very nasty, good thing we're not interested in buying them back!

  59. Maybe symptomatics of a slowdown in China – empty parking lot at the steel mill:

    And that chart:

  60. S&P Charts / Phil – Notice also that too heavy a weight by financials could be seen as a sign of trouble!

  61. From the Guardian…looks like these guys can raise money without issue..

    Belgium has cancelled a debt auction scheduled for 30 January – coincidentally the day of the EU summit in Brussels. It has also raised €4.5bn this afternoon with a 10-year bond at a yield of 4.3%, in what appears to be an unscheduled move. So perhaps the 30 January auction was just brought forward.
    Whatever the case, the country has now sold €4.9bn of bonds so far this year, towards its target of raising €26bn in 2012.

  62. Oil going for 101

  63. Dude on CNBC — "Here we are with oil well above 100". Ha!

  64. 25KP/Stj – found what i needed on the portfolio page. :-)

  65. Phil The MON FEB 80 and 77.5 call we hold short they are running against us do not understand your statement
    MON/Nicha – Yes, very nasty, good thing we're not interested in buying them back!

  66. Phil/ Vix
    Selling the Feb 24/30 call spread for$1.20 and buying the April 22 puts for 1.20.

    Your thoughts?


  67. sparetimeturbo – what's your premise for a declining VIX?

  68. Yodi, i believe Nicha is referring to the 4 short Jan 75 MON calls in the 25KP. Not sure which ones you are referring to.

  69. SPX 1302 is the point of interest here:

  70. mampcsA
    MON I am talking about FEB shorts not JAN

  71. Then there is this oddly familiar chart from iloli:


  72. JRW am I wrong to assume your short already?

  73. kustomz / Short

    No, you are correct !! 8-)

  74. Phil, I have sold AGNC 29p @3.00 now is $0.60. Do you think I should let it assigned or take the money and run? thanks

  75. My very good advice about not chasing an up move from October 1st:

    MON/Yodi – It means you only lose money on the short MON calls when you sell them – otherwise it's just the current price.  I don't know why this is so difficult for people.  A couple of years ago, I'm sure your home was "worth" $100,000 less when the market crashed.  Did you lose $100,000 or did you say "I don't care because I'm not selling it now"?  Why do you have a different attitude about stocks that makes you feel you are forced to sell just because some arbitrary, temporary price has moved against you?  I WISH people felt as compelled to take profits as they do to take losses!  

    VIX/Spare – You're going the opposite way from me, I think the VIX can pop back to 25 overnight and into the 30s if we get a good sell-off so not a trade I would touch.  

    SPY/JRW – From the $25KP perspective, that would be great!  

    AGNC/Jophil – I'd buy them back and sell the 2013 $30 puts for $6.50, that's 20% back on the stock without all that messy owning it.  THEN, if you are assigned, you keep the $2.40 and the net $5.90 and you pay $30 and you're in for net $21.70 so, at worse, you bought yourself an extra $4.30 discount from your current $26 net entry, which is another 16%. 

  76. TRGT/scott – it will be a long and winding road.  Not going to invest any more into them for a while. I will continue to monitor their pipeline though, as something good should be in there…..just a matter of what.

  77. Barney //  Funes The Memorius ..Yes like all others in that august chamber conveniently prone to rosemary wood syndrome where any negative adhesions to a congressional record self purged and are re buffed for incoherent dispersion of disdain toward others of the (GOP OR DEM) ASSHAT SOCIETY DC CHAPTER

  78. FWIW Phil is putting alot of GREAT stuff out there right now..don't just listen for the trade recs..

  79. Phil,
    Is the AGNC $30 put play a trade  you would suggest opening now if you like the stcock?

  80. Phil,
    Is the AGNC $30 put play a trade  you would suggest opening now if you like the stock?
    Previous comment had a typo!

  81. AGNC/L4 – I'd start by selling the Jan $25 puts for $2.65 but that's just because I'm a cheapskate and like a lot of cushion on my initial entries.  

    12:52 PM Europe finishes higher for the 2nd straight day as easy money seems – for now – to trump what feels like the old news of lower credit ratings and maybe an imminent Greek default. Stoxx 50 +1.2%, Germany +1.7%, France +1.4%, Italy +0.5%, Spain +1.1%, U.K.+0.7%. The euro +0.5% at $1.2727

    1:00 PM On the hour: Dow +0.86%. 10-yr -0.02%. Euro +0.53% vs. dollar. Crude +1.64% to $100.5. Gold +1.56% to $1656.25.

    The ECRI Weekly Leading Index, unmasked (Bonddad Blog)

    Capital One Financial (COF +0.8%) says credit-card delinquencies dropped in December leading to a decline charge-offs.30-day delinquencies dropped to 3.66% in December from 3.73% the previous month, and edged down to 5.18% from 5.22% internationally.

    "When, oh when, will Europe face the truth?" asks Jeremy Warner in anguish. The EU's "bonheadedness" in misdiagnosing its problems is due to a "refusal to face up to the truth – that monetary union…cannot work under the present framework." Until there's debt collectivization, this crisis is not going to go away.

    While Chinese Q4 GDP looks decent, a peek into the monthly data shows a marked deceleration as 2011 ended, says Wei Yao from SocGen. Investment growth slowed from 25% in October to 18.5% in December. Property investment fell to 12.3% in December from 20.1% in November, with housing starts off almost 25% and inventory up 26%. (see also)

    Skyscrapers ‘linked with impending financial crashes’ (BBC)

    UBS's Jonathan Anderson notes – for the most part - a solid correlation between GDP growth in emerging markets and equity returns. Two outliers on the positive side – The Phillippines (EPHD) and Thailand (THD) – could continue to outperform, while 2 on the downside – Brazil (EWZ) and India (EPI) – both may have their growth slowdowns behind them. 

    The average age of cars and light trucks rises to a record 10.8 years, research firm Polk says. "The increasing age of the vehicle fleet, together with the increasing length of ownership, offers significant business growth opportunity for the automotive aftermarket." 

    Credit Suisse downgrades some homebuilders today on a combination of heady valuations and concern over a potentially choppy, uneven recovery. The firm cuts Beazer (BZH -2%), Meritage (MTH -3%) and The Ryland Group (RYL -3%) all to Underperform (III,III).

    Some Bullish Housing Forecasts for 2012 (Calculated Risk)

    Seven principles for arguing with economists (Noahpinion)

    Gaming stocks, which often swing on news out of China because of the heavy investments U.S. firms have made in Macau casinos, move up after China's GDP continues to show brisk growthand Macau gaming revenue rose 4.7% Q/Q. Wynn Resorts (WYNN+5.2%) also enjoys an upgrade from Susquehanna. LVS +1.4%MGM+1.6%.

    InvestorPlace wraps up its coverage of the tech industry's CES show by calling it a bit "lackluster" compared to previous years' editions. Despite the lack of new product buzz and a no-show by Apple, five companies did manage to make a positive splash that offer up a "tradeable" trend. CES winners: MSFTDELLGLWINTC,SIRI.

    Five Troubling Takeaways From CES (Morning Star)

    Goldman is lifting its PT for American Express (AXP+0.7%) to $58 from $56 ahead of Thursday's Q4 report; the firm expects AmEx to post Q4 EPS of $1.01, above a $0.96 consensus, on the back of 14% Y/Y spending growth. It also thinks indications of continued spending strength among high-income customers could propel shares higher. 

    Citigroup (C -6.25%), under pressure following its earnings miss, is named by Moody's as the U.S. bank with the most exposureto the EU GIIPS with a net amount of $16.3B. Next comes JPM with $15.1B, BofA (BAC) with $13B, MS with $3.1B and GS with $2.5B.

    RIM (RIMM +6.2%) may be climbing on more takeover speculation, but it's not certain Canada would let a foreign company buy the firm, says Bill Mann on MarketWatch, citing BHP's failure to buy Potash as a case in point. The situation "begs for clarity on the part of the Canadian government," Mann asserts.

    Didn't I already say this?  Barclays tells clients to buy shares of Royal Caribbean (RCL -5.3%) on weakness tied to the disaster with rival Carnival's cruise ship. Analyst Felicia Kantor Hendrix points to the sector's strong start to the 2012 wave season, and calls any dip in bookings only "temporary."


    Whole Foods (WFM +3.7%) is outperforming thanks to anupgrade to Buy from Cleveland Research; the firm's checks (like Jefferies' recent checks) indicate a strong holiday season and improving trends. Meanwhile, Matt Andrejczak is singing the praisesof co-CEOs John Mackey and Walter Robb, noting their efforts to make Whole Foods' offerings more price-competitive. 

    Green Mountain Coffee (GMCR +8%) spikes higher following the release of NPD data estimating Keurig brewer salesrose 50% Y/Y in December - well above the 30% growth forecast by SunTrust. Green Mountain, which had 24.6% of its float shorted as of Dec. 30, reports earnings on Feb. 1. (previously

    Rich America, Poor America (Daily Beast)

    Three lunchtime reads:

    1) Is Europe about to unravel?

    2) Three stocks that could start dividends in 2012

    3) Ratings matter for the euro area 

  83. stjean,
    I was looking at the FAS portfolio and there are some shorts which dont look very good (-2 JAN 73 call). At what point do you start taking action on those?

  84. It has been a strong push…

    The chart above shows the cumulative breadth of the S&P 500 over the last year (daily number of advancers minus decliners).  Following the recent rally in equities, cumulative breadth for the S&P 500 is within one more strong day of a new high.  If breadth fails to take out the highs from November, it will mark another lower high, which is considered a negative.

  85. Phil / Income Port
    I think you forgot to tag this post as "Virtual Portfolio Review"

  86. FAS / dmoroz – Still $1 of premium in these calls. And they roll even to the Feb. 80 right now or 2x to the Feb 87. I'll let Phil decide on this one.

  87. FAS Strangle – Buying back the 70 puts for $0.50. That would be a good day… I'll wait to see where we go next!

  88. Tag/Burr – Thanks, hopefully I'll remember later as I've got to run to the city now.  

    Markets weak but not failing yet.  Certainly nothing happened today to make me change my mind from bearish at these levels but, in the $25KP, if we get a nice dip, we should take money and run on the DIA puts.  

    If BNN asks me, I'll likely be picking XRT and SCO as my best shorts.  

    Later all!  

  89. Phil / CHK
    I have the Jan13 $20 puts, only showing a 10% loss right now.  Natgas is falling off a cliff.  What do you think?  Roll, or just close?

  90. Apparently, there are more bad news in stock for banks…

    “If sloppy record keeping and problems with false affidavits is a problem with mortgages, it’s 100 times bigger in credit card accounts,” says Michelle Weinberg of the Legal Assistance Foundation of Metropolitan Chicago.


    JPMorgan Chase & Co. has quietly ceased filing lawsuits to collect consumer debts around the nation, dismissing in-house attorneys and virtually shutting down a collections machine that as recently as nine months ago was racking up hundreds of millions of dollars in monthly judgments.

    These might be unsubstantiated information, but I would tread carefully. I was not long ago seated in a plane next to an attorney who told me he was getting his clients off their credit card debt based on horrible records from the banks.

  91. If there is to be any move from here today, it should show in the next 15 minutes !!

  92. Phil,
    Great point on wishing people were as anxious to take profits as they were to take losses. I need help in taking profits. Mostly in the area of when to take them. I guess I tend to think we have made a good call and want to ride it out – so I keep waiting and miss. Also, I don't always sense when it switches to get out at break even vs selling for a profit. Also, I don't have a system for defining a good price when entering the order ahead of time. I missed your entry on the site for DIAs on Fri. If I had known what to do ahead of time, I could have done it. Many of these trades lately seem to be in the first 30 to 45 minutes of the day – a usually a very hectic time. I clearly need to work on a repeatable method for some of these trades.

  93. Took 1/2 off our $PNRA position we entered on Friday for 2.7% gain. Looking for further breakout above 150.50 for second half.

  94. Almost forgot the cartoon of the day…


  95. Burrben, from Slope


    Natural Gas Firm Support Remains at $0.00


  96. notice everyone is saying things great in china today after one up day and gdp….yet China's ChiNexst plunged again mon… its ONLY down -9.1% ytd after last night's 4% gain.

  97. DIA – Do you think Phil meant SQQQ?

  98. JR,

    How are you positioned?

  99. exec / Position

    I'm still short !!

  100. JRW LMAO!!

    Sideways bot action usually ends with a stick..hoping today is different.

  101. Prepare for a Meeting of "Monetary Cardinals" as Euro End-Game Nears; Sarkozy Falling Apart; "Hope Trade" in Extreme Overvaluation


    Steen Jakobsen, chief economist for Saxo Bank in Denmark, has some very interesting thoughts to share on the sovereign debt crisis in Europe. His six major points are:


    1. More austerity cannot possibly work.
    2. Voters have lost the faith and willingness needed to repair the current EU and Eurozone construct
    3. Credit and debt cycle is busted. Irving Fisher's Debt-Deflation Model is in progress.
    4. The end-game is near for Europe. Prepare for a meeting of the cardinals
    5. Nicolas Sarkozy is falling apart and likely to lose to Marine Le Pen in the first round of French elections
    6. The "Hope Trade" in equities is in Extreme Overvaluation. Be nimble and cash-rich now to be able to take advantage of deep discounts coming up later.

    Faith in Eurozone Dissipating Fast

    More here !!

  102. Phil, would not it be much safer to short UNG rather than oil?

  103. Europe / JRW – I think that point 5 could be argued… I certainly don't see Sarkozy re-elected, but I don't see Marine Le Pen in the second round. I could of course be wrong!

  104. Does anyone know why CCJ is sharply up on big volume today?

  105. How can one explain the move in the markets when we see this…thank you Bernanke?

  106. How big of a dip are we looking for to take the money and run on the DIA puts?

  107. SCO – suprising amount of Feb 37 put activity today..the heviest single strike by 2x.  as if someone is expecting oil to jam upwards..?

  108. SCO – "heaviest" that is..   next month's max pain point perhaps being set now.

  109. alik / CCJ — It was up 5+% yesterday on TSE.

  110. Red engulfing, or yet another Black Bar?

  111. JRW / Chk , NatGas
    So I'd assume your opinion is to get out of the way of the train?

  112. Burrden,

    Not what I trade, but I respect Tim's opinion !!

  113. /DX testing HOD.

  114. All together now, and WHEEEEEEEEEEEE  !!!!!!!!!!!!!!!!!!

  115. closed out the dia puts at 1.15 in the 25kp.

  116. stjeanluc
    congrat on the FAS strangle you did well on the call sorry I missed it as well tomorrow will not be in with it.

  117. Hi, All,
    What are latest XRT and SCO shorts Phil recommended?

  118. The FAS calls looks much better now dmoroz…. As long as you have time and premium, it's worth a chance! Of course, we might reverse tomorrow, but still.

    In the meantime, I kick myself for not selling calls when I covered the puts in the FAS Strangle portfolio. Have to be more mechanical about it!

  119. Phil as well on the FAS Jan 73c play are we still hanging in ?

  120. Phil's Opinion…….DIA – when in doubt, sell 1/2…….by EOD.

  121. in the 25KP, the DIA 125 puts are now up 40%….

  122. FAS / Yodi – These calls now have close to $2 of premium still….

  123. CCJ/alik – not sure why today, but in last couple weeks a growing meme of headlines and articles has been that it's time to get back into the overpunished nuclear space…

  124. JR/Short
    You da man.

  125. JR,

    Bounce or under PP?

  126. stjeanluc
    FAS yes but can go both ways

  127. From Forexlive…Geithner taps govt pension funds to avoid hitting debt ceiling


  128. Taking profit here !!  (IWM 76.15) for 4% !!

  129. JRW / Burrden
    Was that a Freudian slip ???

  130. Oxen Group got clients short on $HBI today at 22.67. Looking for the stock to move to 22 over the next few days. Company seeing shrinking margins and should sell off into earnings next week.

  131. Resistance trend line now at IWM 76.43, fwiw !!

  132. JR,
    Where'd you pull that trendline from?

  133. Burrden / Was that a Freudian slip ???


  134. HI Phil; I Bought EDZ Feb. 18 C at $3.50 and sold Feb. $25 C at $1.40 with sale of PM Mar. $75 P at $1.57. Roll to April?

  135. exec / Trend-line

    On the 1 minute 10:00 and 3:00 today !!

  136. FAS / Yodi – Sure, but still some time to go… In any case, Phil is the driver there!

  137. mrm – what puts do you have on CMG? I am trying do decide on Feb/Mar 310s

  138. If anyone could post Phils interview… TIA!!!

  139. stjeanluc
    Yes I agree but closing my hatches for Friday

  140. Link to JRW strategy discussion
    Lost all my bookmarks.  Anyone have it handy?  

  141. JR/Trend-line

    I see it know.  Do you always filter out the first half hour noise when pulling these lines?

  142. SPX strangles / yodi,
    Just for your info, earlier today, when the market was up, I took the opportunity to buy SPX March 1225/1215 put verticals in anticipation of selling SPX strangles in the next few days.  The put verticals are to protect the short puts.  I am waiting for my application of Portfolio Margin at IB.  Hopefully, they'll approve it tonight.  I can't sell SPX strangles without PM.  Too much margin required in Reg-T.

  143. stjeanluc
    That stock is like a pandora box good for one day trading

  144. JRW Strategy. here.

  145. FAS strangles / StJ:
    Wow!  You were fast!!  In and out in 45 minutes!
    My order to sell 82 calls wasn't filled.  But I sold 68 puts.  (Yeah, 68 because 70 was too high for me.)
    Do you recommend selling some fresh calls now?  Which strike?

  146. One day / Yodi – The truth is that all these 3x ETF are really meant for that – day trading. Maybe swing trading over a couple of days, but not long term trades. Ask JRW!

  147. AAPL Portfolio:   No AAPL trades today.       

  148. FAS / Cwan – I am trying to time these entry/exit better because I feel we leave too much on the table. Phil made that remark a couple of weeks ago that the "dumb" (I mean not timed) entries could be improved. Although these "dumb" entries have done well over the last 9 weeks.

    Too late for me today. Tomorrow is another day!

  149. stjeanluc
    JRW yes but I need to go to the bathroom sometimes!!!

  150. GREAT FUN !!

  151. Phil,
    Are you going to put up a link to your TV appearance?

  152. FAS / Cwan – In addition, I got a signal at 3:20 to sell puts (which I didn't do either – might be too much trading) so I would not sell calls at this moment. 

    On the other hand, I am thinking of starting another more active (and aggressive) portfolio based on mechanical signals. I need to backtest that for a while. But would have been great today!

  153. AVEO – starting a new write up on the company.  Put on your radar FWIW.

  154. stjeanluc – Which signal did you get at 3:20 to sell puts?

  155. Stj:
    What mechanical signals are you using?

  156. Iflan
    Where do you expect AAPL to pin on expiration? 425?

  157. Pharm,
    If you were to enter a position on AVEO, what would you look at doing? Selling the July 12.5P for $1.25? That's about a 14.5% downside protection to today's price.

  158. lagarde signalling a new round of fund raising..that will go over well..

  159. Signal / Diamond and Cwan – An Inverse Fisher Transform of DeMark's REI in particular. Seems to work best with FAS day trading and gave some good signals today – specifically the turns at 12:15, 2:15 and 3:20. But many others as well. I have not tried trading on these yet because it might just be too much trading so I limited today to 2 entries this morning. But we'll see.

  160. JRW great work….IWM 76.36 held! Although they had to push the EUR 4 minutes before the close to get the final push

  161. StJ:
    Inverse Fisher Transform of DeMark's REI.  Wow!  I am impressed, with just the name alone!  Where can we get that?  TOS platform?  Or any web site?

  162. IFT / Cwan – I have it on Amibroker ( which I use for charting. I guess it could be ported to TOS by a brave soul!

  163. Signal / Cwan – And I didn't write the code, there are plenty of indicators on the web for Amibroker. You just need to look. I have hundreds myself, a lot of them redundant. But sometimes, you find a good one!

  164. kustomz / 76.36

    We will see how many BLACK BARS are TOO MANY !!  8-)

  165. 25 KP / mampcsA – Did you sell the DIA 125 puts at any time this afternoon? They were up plenty at some time when I posted.

  166. Spreadsheet is up to date now. Overall, a good day for all the virtual portfolios!

  167. Phil's BNN interview:

  168. dclark……AAPL pin likely 425, or higher.  420 least likely. 


  170. LOL BAC – "One Trade You Can Retire"  Love it!

  171. Retire on one trade ? BAC?
    Was that an outtake from Mad Money?

  172. Phil/    oil's back to 101.  Would you ever hold an oil short thru the close?

  173. Stj, yes i did sell them for 1:15. Look at my comment at 3:12.

  174. Thanks Mam, missed that!

  175. Should you buy Wall Street's top stocks for 2012?
    12:01am ET January 4, 2012 – MarketWatch

  176. Phil/BAC/Motley Fool: 
    I guess that the Motley Fool have been reading PSW – LOL.

  177. Did I miss anything?  

    I didn't get to XRT on the interview.  I decided it was best to just do a bear put spread, the Feb $55/53 spread is $1.10 and pays $2 if XRT fails to go up from here ($52.99 at close).  Seems reasonable that retail sales won't be very strong.  

    CHK/Burr – I'd find something else to trade.  That gas story is getting worse and worse.  I like CHK long-term though so it wouldn't bother me to have them put at net $18 in 2013 and another set at net $14 in 2014 etc but it depends on your time-frame.  One day, for some reason, they'll turn around – maybe hurricanes, maybe an oil spike, maybe just more demand at nat gas replaces coal in electric plants.  Keep in mind Nat gas is an energy source – all the buses and taxis in Vegas have been running on it for years.  Many coal plants can switch between gas and coal and, of course, Germany is decommissioning ALL of their nuclear power plants this decade and LNG means we may put up some sweeping export deal, which would be a clever way for Germany to help us out with our trade deficit while insuring themselves a steady supply.  So, for those LONG-TERM reasons, I like CHK. 

    Credit cards/StJ – Screw that, I'd say it's literally 50/50 at best that if you don't pay your mortgage and challenge their ownership in foreclosure that they can prove it's theirs.  That means everyone should really do it – other than the fact that it's immoral and would affect your credit rating but the banks are just lucky the practice hasn't caught on — yet.  

    Taking profits/Kallen – Just paper trade the $25KP with us.  That's what it's all about – taking money off the table when you make it and rolling when you don't.  I'm not sure what DIA's you missed but we caught a great price on the puts this morning so if you miss one – there's another one the next day.  Once you realize that, you'll be happy to let the ones that don't give you a good price go.  Also, if the first 30 to 45 minutes are "hectic" – then you have too much on your plate and/or you are out of balance.  Only one or two trades in your portfolio should be ones that require daily attention and, even then – what do we do in the $25KP?  Most of the time – nothing!  

    PNRA/Dave – Very good call.  

    UNG/JRW – That's a very unpleasant picture.  

    China/Angel – News was so bad it's good.  Word is they just GOTTA ease policy off those numbers.  

    SQQQ/Morx – No I meant the new DIA's but that doesn't mean you should need me to tell you to take a nice profit if something else does well.  

    Jacobsen/JRW – I am encouraged by the fact that more and more people are coming to realize austerity doesn't work.  That's the key to the Global Recovery – we need a "New Deal".  

    UNG/Alik – Not in the least.  Since October, oil has gone up 20% and UNG has gone down 50%.  If you think it's "safer" to short UNG, that's up to you but I think you're nuts.   8)  

    CCJ/Alik – I think it's this from last week:

    Margin debt/Kustomz – That's a telling graph but I could not copy it.  I did, however, find this not nice one while I was looking:  

    Ah, here it is:

    DIA/$25KP, Jrod – Well, I certainly hope at $1.10 you took your nice .30 gain!  20% on a day trade is huge, that was almost 40%!  

    SCO/Scott – And that someone was right as we're back to $101 and no inventories until Thursday this week.  

    DIA/$25KP, Mampcs – Very nicely done, thanks for letting everyone know – you hit the day's high on the button! 

    SCO/Cwan – At the moment, the Feb $35 puts can be sold for $1.60 and that pays for most of the $34/38 bull call spread at $2 for net .40 on the $4 spread – better than my quote at BNN.  

    FAS/Yodi – You're not going to pay $2.60 for a call that's $1 in the money and expires in 3 days, are you?  

    And what StJ said!  

    EDZ/Dflam – Should have done something with the calls ages ago – 50%.  50%.  50%.  50%.  50% – Once you lose more than 50% on a vertical you are going to be screwed.  At 50%, there are usually adjustments you can make.  Anyway, not big deal as PM is holding up and as long as you REALLY want to own them, then it was a free trade and you shouldn't feel pressure to "make it back,"  Do I like EDZ fresh here?  Sure but be careful not to overcommit on the bullish short put side.  Since you are now long on PM, perhaps it's more appropriate to use and EDZ offset for the next round.  

    FAS/StJ – The whole point is to sell premium.  Shameful if we forget that and start buying it!  

    Thanks Greno!  

    Thanks Jabob.   I never think they're going well when I'm doing them, I hate that rushed TV format.  

    Retire/Pstas – I meant for the year but those people are mainly stock traders, up 50% is a decade for them….

    Oil/2can – I don't mind TRADING futures after hours and I'm perfectly happy with a spread like SCO after the close but nothing that you can't trade that can hurt you on an overnight move – oil is just too crazy.  

    BAC/Okno – Only took them 10 days to catch up. 

    Big Chart certainly LOOKS strong.  Very exciting with the S&P, Nas and RUT all testing their lines now.  

  178. Via Forexlive..

    ME…maybe see oil/copper weaker tonight

    An editorial on the front page of the China Securities Journal says there is no reason to cut interest rates in Q1. The consensus view is that China is unlikely to cut rates at all in 2012.
    The paper says policy will be adjusted via required reserve ratios.

  179. Phil / XRT, SCO
    Are those two trades "25K" worthy, or are they 1 off's you picked for BNN?  I guess I'm asking if you think they are "member" worthy trades.  I like both of them since I don't think oil will go up from here, and I think retail sales aren't going to be great for the xmas season.  If they are certified A1 PSW trades, then I'm going to get out of some of my short put trades that are over 50% winners, and get into these.

    I am now officially moving mid-term bearish. I had a whole bunch of jan2012 puts and spreads that will expire and I'm going to be very careful what I put back. I now short EDC calls as a hedge rather than EDZ puts because of the decay factor. If you are going to carry a permanent hedge, this is the way to do it. Last 12 months, EDC down 12%, EDZ down 60% (they should be mirrors), another case of an inverse pair with substantial decay. I am looking into altering the SPX strangle to a short call and 3x a bear put spread, but I havent worked all the math. We may carry forward for  a while, but we have a hard downturn ahead this year. Is this the Mayan foretelling?

  181. Hey, barfinger,
    If everybody talks about the Mayan thing, it will become a self-fulfilling prophecy!
    Please do share with us your new SPX strangle plays.

  182. cwan? I read before that you were still on RegT margin. It is impossible to play the weeklies properly with that. When you get PM, you could just try what I have done for a few months – strangle SPX for somewhere around $2 premium. If you have to roll, so be it – just set up new positions the same way next month, on top of your roll. If you need to go 2x on the roll, so be it. I am set up so I can afford ultimately a 4x roll, and possibly more (but not 8x). Adjust quantity accordingly.
    (way ahead so far)

  183. besides Rob, who else is in south Florida?

  184. Wow, how about Paula Deen for what, literally, ails us as a nation…this really says it all.

  185. …now perhaps McDonald's should be selling Type 2 diabetes medication…hey, eat what you want, how about a prescription for Nexium and Victoza –  great as a chaser for a Big Mac – super size that will you? 

  186. If somebody wants to show you how to cook a heart attack in a bowl, who says you have to do it? I have prepared some of her stuff with all kinds of replacements because I can't eat it straight. It's still good after it's cleaned up. The TV talks, you dont have to obey.

  187. Iflan
    Perhaps a dumb question, but your answer appreciated none the less. What will you do with the Jan 410/420 spread if you are cprrect and AAPL pins 425? Exit early, or let it go to expiration? I don't think I have ever been in a situation before where both sides of a spread were in the money at expiration. That can either mean I have a knack for picking losers, or that I am very accustomed to rolling and buying more time. :)
    Thank you.

  188. you are bull 410/420? I am bull 415/420, and tomorrow, if it feels right, I close the 415 and save a few pennies and leave the 420 naked. Not saying what "theman" will say, but my 2c….

  189. sorry, i am bull PUT 415/420
    may not be relevant then.

  190. Phil,
    Did get the DIAs from this morning. Sold them at end of day based on your 'if we get a dip' instructions earlier. I am learning. Sometimes market conditions change before you post an entry with directions, sometimes you are ahead of me because I have to do other things. So knowing generally when to sell/buy is my greatest gulf of experience.

  191. Barfinger,

    I live in N. Miami

  192. Anyone got a link to Phil’s interview?

  193. ceegee
    click the link below for inter…

    January 17th, 2012 at 4:34 pm | PermalinkIgnore this user
    Phil's BNN interview:


  194. BNN/Phil – Great interview! And nice one to forward to friends and family to help them understand what this magical mystery blog is that i enjoy.. :-)

  195. Barfinger
    410/420 bcs. Thank you for your input.

  196. Barfinger
    I will be in S Florida next week! :)

  197. Phil… it was trade school not social studies on bnn.  You were great, but the world needs free thinkers on TV.  Maybe your own 30 minute show?

  198. New Post is here.

  199. Good morning!  

    Dollar slammed down to 81.05 to give us Futures highs and this is the kind of move we like as we test the 81 line at 3am for a possible bounce.  Oil is at $101.35, which is not a great line to short but not bad if you are willing to scale in to test $101.50, Nas (/NQ) is just under 2,400 at 2,398 and that is a good line to use for a stop and Dow (/YM) is exactly on 12,450 – a great line to short off.  

  200. Of course we stop out if the Dollar can't hold 81 – regardless of where the indexes are.  

    Euro testing $1.28 so over that line we don't want to be short either.  Pound $1.537 and 76.7 Yen to the Dollar.  Gold $1,658 again after bottoming at $1,645.   Silver $30.20, copper $3.73, nat gas $2.479, gasoline $2.788.

    Hang Seng is up 0.2%, Shanghai down 1.4% and at day's lows, Nikkei up 1% and India flat so we're just all over the place ahead of EU open. 

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    7:45 ICSC Retail Store Sales

    8:30 Producer Price Index

    8:55 Redbook Chain Store Sales

    9:15 Industrial Production

    10:00 NAHB Housing Market Index 

    4:00 PM At the close: Dow +0.45% to 12478. S&P +0.34% to 1293. Nasdaq +0.92% to 2394.
    Treasurys: 30-year +0.08%. 10-yr 0%. 5-yr +0.02%.
    Commodities: Crude +2.08% to $100.94. Gold +1.28% to $1651.65.
    Currencies: Euro +0.54% vs. dollar. Yen +0.05%. Pound -0.06%.

    Market recap: Stocks finished higher but backed off strong early gains after meeting resistance at S&P 1300, as weakness in financials offset better-than-expected global economic news (III) and a successful Spanish debt auction. Banks dropped on Citigroup'sweak quarter, coming on the heels of JPMorgan's report last week. NYSE advancing issues beat decliners seven to six.

    Notable earnings before Wednesday's open: APHASML,BKFASTNTRSPNCSTTUSB

    ASML (ASML): Q4 EPS of €0.69 beats by €0.16. Revenue of €1.21B (-20.4% Y/Y) beats by €0.07B. Intends to increase the dividend by 15% compared with last year. (PR

    Notable earnings after Wednesday's close: EBAYFFIV,FULKMPSLMXLNX

    2:48 AM Asian stocks are mixed after volatile early trading. Japan+1.0% to 8551. Hong Kong +0.2% to 19669. China -1.4% to 2266. India -0.1% to 16458.

    The World Bank sharply cuts its global growth forecast as the eurozone crisis threatens to further slow down emerging economies. The WB now expects global growth of +2.5% this year vs. +3.6% prior estimate, the eurozone at -0.3% vs. +1.8% prior estimate, and the U.S. +2.2% vs. +2.9% prior. Ominously, "even achieving these much weaker outcomes is very uncertain."

    Consumer credit defaults rose to their highest level in nine months, S&P says, in a reversal of a two-year downward trend. First mortgage default rates moved slightly higher to 2.19%; auto loan delinquencies rose 10 bps to 1.27%. Of all lending tracked, only bank card default rates improved, down 31 bps to 4.60% in December.

    The National Retail Federation offers a positive spin on its new survey forecasting retail sales to rise 3.4% in the new year vs. 4.7% growth in 2011: “a vote of confidence in the retail industry and our ability to succeed even in a challenging economy." Among potential dangers cited: rising gas prices, fragile consumer confidence, slow income growth.

    Here's an unusually optimistic housing forecast from Moody's via USA Today: Existing home sales are projected to rise 12% in 2012 after a 2% increase last year, new home sales should jump 74%, and single-family housing starts should rise 37% after falling 9% last year. It's the latest in a series of upbeat outlooks that the housing industry is nearing a bottom.

     "Risk on, risk off" won't do it anymore as the 60-day correlation between the euro and the S&P 500 – hitting an astounding 0.91 in November – has collapsed to 0.58 as stocks move higher while the currency gives up ground. Believing the euro has moved from an asset to "a liability currency," Morgan Stanley sees both the correlation and the euro continuing lower.

    The short-covering rocket fuel that has helped propel the stock market higher may be running out, according to Strategas Research's Chris Verrone. The number of outstanding shorts on the NYSE is at its lowest point in a year, which together with a 14-for-18 run of daily gains on the S&P, could mean “the short covering phase of this rally is likely exhausted.”

    China’s December home prices posted the worst performance of 2011, with only two of the 70 tracked cities posting gains and 52 of the cities posting declines. It was the third month of declines for major cities Shanghai, Beijing, Shenzhen and Guangzhou.

    There's a selective upside to metals as China's growth will continue to drive demand, says Daiwa's Alex Latzer. Look for copper and iron ore to do well, because that's where China is significantly undersupplied. Aluminum and steel however, are likely to lag due to shifts in policy focus. (video)

    More on the Greek deal: Though confident a creditor deal with Greece will get done, Marathon's Bruce Richards expects the country will not make a €14.5B scheduled bond repayment on March 20. The new bonds will pay interest of 4-5% with 20-30 year maturity – the net present value of which amounts to about €0.32 on the euro, Richards says.

    The average age of the 240M cars and light trucks on U.S. highways reaches a record high 10.8 years, the result of slow new vehicle sales since 2008, R.L. Polk reports. But latent demand for new vehicles that's just beginning to translate into stronger sales for the industry should continue for several years.

    Low natural gas prices may be hurting producers, but a range of industries are benefiting, reversing much of the outsourcing meme of 5-8 years ago, writes James Roemer. CF Industries (CF), for one, has seen its natural gas costs decline from $6M to $2M and is planning to spend $1B expanding plants in U.S.

    American Banker reports "JPMorgan (JPM) has quietly ceased filing lawsuits to collect consumer debts around the nation … virtually shutting down a collections machine that … was racking up hundreds of millions of dollars in judgements." The credit card "robosigning" issue is 100X bigger than with mortgages, argues one consumer advocate.


    More on BancorpSouth (BXS): Q4 earnings beat estimates on an improvement in over all credit quality and lower loan loss provisions. Shares are lower in after hours trading however, as the company announces a $100M secondary offering. Shares -2.4% AH.

    Chemical maker Celanese (CEdrops 3.2% AH afterwarning it expects 2011 EPS of $4.45, below a consensus of $4.71. The company blames weak macro conditions, particularly in Europe, for the shortfallHowever, Celanese says it's "experiencing improved order patterns" this quarter, and expects its 2012 EPS to exceed a consensus forecast of $4.70.

    Cree (CREE): FQ2 EPS of $0.25 misses by $0.01. Revenue of $304.1M (+18% Y/Y) misses by $5M. Shares -5.5% AH. (PR)

    Cash America (CSHwarns it expects 2011 EPS of $4.25, below a $4.41 consensus. The shortfall comes in spite of the fact the company is guiding for 25%+ Y/Y Q4 revenue growth, above a consensus of 16.1%. While Cash America says it experienced strong asset balance growth in its pawn shop and loan businesses, rising loan loss provisions and operating costs hurt profitability

    Video game developer Majesco Entertainment (COOLfalls 14.4% AH after reporting FQ4 (ended Oct. 31) revenue of $25.1M (+8% Y/Y) and EPS of -$0.07, missing consensus by $1.9M and $0.11. Majesco is also guiding for FY12 (ends Oct. 2012) of $125M-$140M and EPS of $0.25-$0.35, below a consensus of $141.5M and $0.46. NPD recently reported that U.S. retail video game sales were soft in December

    Fulton Financial (FULT): Q4 EPS of $0.18 misses by $0.02. Revenue of $138.5M (-2% Y/Y) misses by $7M. (PR)

    Linear Technology (LLTC): FQ1 EPS of $0.38 misses by $0.01. Revenue of $294.33M (-23% Y/Y) in-line. Shares +4.9% AH. (PR

    Tessco (TESSFQ3 earnings beat estimates across the board on a surge in retail sales, reporting an EPS of $0.59 compared to $0.38 in the prior year period. Revenue rose by 35% to $226M compared to last year's $148M. Gross profit grew by 17% to $39.5M, and operating margin improved to 3.5% from 2.6%. Shares +2.9%

    That didn't last long:  Samsung denies any interest in purchasing Research in Motion (RIMM). Shares surged 8% today on takeover speculation, and have given back the bulk of that gain AH, now -5.5%

    In spite of weak sales and a massive inventory charge, it appears Research In Motion (RIMM +8%) is still quite committed to the PlayBook. says it's hearing RIM will release a new 7" PlayBook in April, and a 10", 4G-enabled model in December. The site also believes RIM's first BlackBerry 10 phone will arrive in September, and its Mobile Fusion device management software will be released in April. (earlier)

    Cloud wars:  A slew of tech companies (major names include IBM, Cisco, EMC, Red Hat, and SAP) are giving their support to TOSCA, a new standard aimed at allowing enterprises to migrate cloud apps without being locked in to the solutions of a single vendor. As Julie Bort notes, market behemoths (III) Amazon (AMZN) and Microsoft (MSFT) areconspicuously absent from TOSCA's list of supporters, as is Google.

    Though Amazon (AMZN) shares posted a 4% loss in 2011 thanks to profit margin concerns, Marketwatch has named Jeff Bezos its CEO of the year, touting his aggressive investments in the realms of e-commercemobile devices, and cloud services. While many enterprises kept a lid on hiring last year, Bezos was comfortable increasing Amazon's payroll from 31,200 in Q3 2010 to 51,300 in Q3 2011.

    Yahoo (YHOO) announces Jerry Yang's resignation from its board and all other positions with the company, effective immediately. Yang also resigns from the boards of Yahoo Japan and Alibaba. YHOO +4.7% AH. 

    Apple (AAPL +1.1%) perma-bull Gene Munster is loweringhis calendar Q4 Mac shipment forecast by 300K units, to 4.9M, following the release of NPD data indicating U.S. Mac sales rose only 12% Y/Y. However, Munster is also joining a long list of Apple analysts to have raised their Q4 iPhone forecasts, and thinks global Mac shipments rose 18% Y/Y. (Gartner data

    Well, this certainly didn't make me more bullish!  

    Nice drop to $100.78 on oil already!  Dow flopped to 12,419, Nas 2,392 so looking good and the Egg McMuffins are definitely paid for!

  202. 81.25 is a tough spot, now 81.225 and 81.20 is a good stop line now.  Oil $100.73 so 100.75 is a stop, Dow 12,409 is bound to bounce of 12,400 so profits to be taken here with a re-entry on a break-down and Nas 2,389 is ripe for a big fall.

    And wheeeeee – even as I write this, we pass $100.70 to $100.65 as the Dollar pops to 81.33 suddenly.  Europe down half a point and our indexes only flat so looking good for a big move down!  

  203. Jan is not our month: Big pop 
    And i missed to sell the DIA Puts, not of greed, out of negligence.. 

  204. Wow, huge turn around as soon as I went back to bed.  That's interesting…

    I don't see any particularly good news – just the Dollar getting slammed down from 81.40 to 80.85 (now 80.96) but we knew below 81 would be bullish for sure. 

    Looks like total manipulation to me so it probably won't last – as soon as the Dollar is back over 81, I'd short everything.

    Oil (/CL) $101.40 is good right here, Dow (/YM) just over 12,450 shorting target at 12,460, Nas (/NQ) right on the 2,400 line – overall, pretty pathetic to only be back to where we were when we shorted earlier despite the Dollar being much lower.  

  205. 6:00 AM Overseas: Japan +1.0%. Hong Kong +0.3%. China -1.4%. India -0.1%. London -0.0%. Paris +0.4%. Frankfurt +0.5%

    The IMF is reportedly looking to boost its lending resources by $1T in order to have the firepower to cope with any worsening of the EU debt crisis. The organization is pushing China, Brazil, Russia, India, Japan and oil-exporting nations to be the top contributors, although whether they'll heed the call is another matter entirely. - This is what they call a Faustian Bargain – we'll continue to overpay for oil and knick knacks if they lend us some cash.  

    U.K. unemployment +118K in September-November to 2.68M, taking the jobless rate from 8.1% to 8.4%, the highest since January 1996. Benefit claims +1.2K in December to 1.6M, lower than a forecast of +10K, indicating that the labour market deterioration may be easing. (PR) - That's like our Unemployment going up 500K in a month.  

    President Obama may be exhorting U.S. firms to "insource" jobs back home, but the country is rapidly losing high-tech positions to Asia, as Caterpillar, GE and others spend billions on R&D departments in the region. 3M has cited the "moribund interest in science" as one reason.

    Man vs. Machine, a Jobless Recovery 

    The IEA cuts its global oil demand growth forecast to 1.1M barrels per day in 2012, down from a previous estimate of 1.3M bpd. Economic weakness tipped demand into a declining Y/Y trend at the end of 2011, and the lower starting point led to the 2012 revision.- How many ways does it have to be said?

    Greece Short on Time as Debt Talks Stumble (Bloomberg)

    Goldman Sachs (GS), Barclays (BCS), BofA (BAC) and Credit Suisse (CS) are reportedly set to bid in an auction tomorrow for $7B in mortgage bonds held by the NY Fed and formerly owned by AIG. A strong sale could prompt a rally in sub-prime debt prices, as the auction will remove a large amount of supply. (previous)

    Attacks on Social Security, Medicare borrow a strategy from Lenin (LA Times)

    What the Right Gets Right (NYT)

    Google (GOOG), Wikipedia and Reddit are leading a 24-hour protest today against SOPA and other anti-online piracy legislation, although the campaign has failed to gain the participation of some major players. Google has a link about the issue on its homepage, while Wikipedia has shut down English-language services.


    Law-abiding U.S. internet companies would have to monitor everything users link to or upload or face the risk of time-consuming litigation. That’s why AOL, EBay, Facebook, Google, LinkedIn, Mozilla, Twitter, Yahoo and Zynga wrote a letter to Congress saying these bills “pose a serious risk to our industry’s continued track record of innovation and job-creation.” It’s also why 55 of America’s most successful venture capitalists expressed concern that PIPA “would stifle investment in Internet services, throttle innovation, and hurt American competitiveness”. More than 204 entrepreneurs told Congress that PIPA and SOPA would “hurt economic growth and chill innovation”.

    The U.S. government could order the blocking of sites using methods similar to those employed by China. Among other things, search engines could be forced to delete entire websites from their search results. That’s why 41 human rights organizations and 110 prominent law professorshave expressed grave concerns about the bills.


    To make matters worse, SOPA and PIPA won’t even work. The censorship regulations written into these bills won’t shut down pirate sites. These sites will just change their addresses and continue their criminal activities, while law-abiding companies will suffer high penalties for breaches they can’t possibly control.

    There are effective ways to combat foreign “rogue” websites dedicated to copyright infringement and trademark counterfeiting, while preserving the innovation and dynamism that have made the Internet such an important driver of American economic growth and job creation. Congress should consider alternatives like the OPEN Act, which takes targeted and focused steps to cut off the money supply from foreign pirate sites without making US companies censor the Web.

  206. Obama can veto this if it is passed, right?

  207. I missed your early call but I'm catching this one – thanks Phil!

  208. I opened up a technical chat today to IB and asked them how I could create a "SHORT EVERYTHING" button that I could press if the /DX is over 81.  Needless to say I cracked myself up this morning with their responses and questions……

  209. Internet law
    Surely there are already laws regarding piracy. There has been an ongoing saga of a young fellow in England who was making a lot of money off a site with links to illegal movie downloads and is in the process of being extradited to the US to stand trial.

    Congress would be better advised to practice rendition and torture on anyone who disseminates computer viruses, e-mail spam, or links to illegal pharmacies selling narcotics. Personally I would favor using US power to put together hit squads like the one that killed Osama bin Laden to travel the world and deal with the people who write computer viruses. I am sure this would be much more effective than making everyone purchase Norton.
    If a computer virus lands on my computer and demands that I send a VISA payment for a program to lift the virus, why should VISA which is a publicly traded company (V) not be liable to a)  supply me with a new computer, b) identify to law enforcement who is receiving the payments or face confiscation of its assets and closure of its business?
    Anyway, it is a good thing that there is plenty of public debate going on about this issue. Too often in the US at both federal and state level new laws are enacted without being given a good public airing first and the effect of laws is often quite different from the stated purpose. For example this proposed law might have the effect of making it illegal to sell a used compact disc or DVD.