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Friday Follies – No Jobs but Hey, Look at Facebook!


That's all we have lately.  Greece's silly $171Bn loan is meant to distract us from Europe's $17Tn debt hole and the US continues to borrow $171Bn PER MONTH to cover it's deficit and we don't even talk about Japan as the debt climbs over 220% of their rapidly declining GDP and who knows what's going on in China but, generally, when you have double-digit declines in home prices on a monthly basis – there's going to be a problem down the road.  

This may be my last bearish post before drinking the technical Kool-Aid this weekend and we've already selected 5 trades for our Members that will make 200-500% if the market keeps moving forward and there are still plenty of stocks we can make a lovely Buy List out of if this rally has legs – especially the way we like to bet, since our hedges allow us to make very nice returns, as long as we simply hold our current levels.   

There's the rub though – are the current levels sustainable?  The nice thing about consolidations like the one we've been having this year is that they firm up a floor and give us a very obvious exit point on the way down so we can move some of that sideline cash into play – as long as we hold 12,500 on the Dow and 1,300 on the S&P and 2,800 on the Nasdaq – pretty simple strategy, right?  

Notice the 2nd row has our major indices priced in Euros and our third priced in Yen.  My main issue has been that we've been much weaker than it seemed as the Dollar's relentless decline masked a downturn in the inflation-adjusted price of our stocks (and the weak Dollar also serves to inflate revenues reported by multinational companies) but, at the moment, we're at our breakout levels by any measure so we may as well go with the flow until we see a proper reversal.  

First we need to get past our NFP report at 8:30 of course.  I'm expecting a miss but will the market even care or will that just mean Uncle Ben has an excuse to pump up the QE according to their new "formula"?  

Keep in mind that what Bernanke said last week regarding the Fed's system for determining policy boils down to – As long as US corporations don't hire American workers, he will continue to give them money at historically low rates.  I don't know about you but if I'm GE and I'm thinking about hiring 10,000 workers but I'm also looking to borrow $100Bn – I think I'd put off the hiring until after I get my loans lined up in the very least.

8:30 Update – Well, I'm wrong (or so it seems from the headline number)243,000 jobs were added, almost double the 125,000 officially expected and unemployment dropped to 8.3%.  Hours worked up is up as well so this is a strong report.  Private-sector employment grew by 257,000, with the largest employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment down slightly for the month.  Manufacturing added 50,000 jobs, mainly in the Durable Goods space – another positive.  Even Construction added 21,000 jobs.  

On top of all this good news, they bumped November up from 100,000 to 157,000.  While it's horrible to think that the figure we have today could swing 57% one way or the other, the trend does look good with the initial adjustment to December going from 200,000 to 203,000.  I guess the Conservatives will have to start calling Obama the Great Job Creator now…  

NOW we get to see how much gas the market has left in its tank as there is no possible excuse not to bust out to new highs on this one.  The big drag I see is that more people working means more demand for Dollars to pay them and less QE per the Fed's formula (especially if prices also kick up) and that is, of course, Dollar bullish which is oil bearish (not that oil should need any help with Shell saying oil may fall to $70) and other commodity bearish and makes for a tough dollar-adjusted gain in our indexes the same way that a week Dollar gave us an artificial boost before.  

So let's keep an eye on that Dollar as it can really hold back the rally and this would also be a great time for the BOJ to run a Yentervention as they've been waiting for a chance to goose the Dollar into clear market strength and we're not likely to get a stronger number than this and we have TBills to sell next week so this should be the spot to run the Yen back to 77 at least.  

As I mentioned, we had our 5 bullish trades in yesterday's post and it looks like we can look at 5 more already.  Our plan was to add one a day, beginning yesterday, to layer up for an extended rally.  Of course we've been doing this every week with FAS, BAC, TNA, etc. as we're never all bear or all bull (70/30 is EXTREME in our balance).  

Since we are going to be popping into the open, let's concentrate on some longer-term trade ideas that will be less affected by the morning move.  Keep in mind, as long as the net of the trade is the same, it doesn't matter what each leg trades for:

  • BA ($75.22) is still very cheap at $75.  If the World economy isn't going to collapse, then BA has over 3,000 planes to deliver against a current capacity of under 500 planes a year so a 6-year backlog and last year they grossed $65Bn with a $3Bn profit delivering older and less profitable planes as just ONE 787 was delivered in 2011.  Although they pay a 2.5% dividend, I think it's unnecessary to own the stock as the 2014 $60/80 bull call spread is just $11 and you can sell the $65 puts for $8, which TOS says has an ordinary net margin of $6.50 so net $3 of cash to make $20 (566%) if BA gains $5 into Jan 2014 is better than holding and covering the stock for the $1.76 dividend.  Don't forget, when you have those calls, you CAN exercise them and become an owner – if they raise dividends, for example (doubtful with their current cash-flow profile as they ramp up).  
  • F ($12.26) is still down in the dumps and their volatility makes them a fun stock to sell calls against.  As I said, the way we hedge, we don't need the markets to go up, they can just stay flat and with F, you can pick up the 2014 $8/12 bull call spread for $2.40 and sell the $10 puts for $1.50 for net .90 on the $4 spread that's 100% in the money to start.  TOS only wants $96.50 per contract of ordinary margin on this trade that makes $310 if F flatlines or better for 2 years.  Meanwhile, SINCE you have a 300% upside, you can buy 10 of the long spreads (net $900 cash, $3,100 potential) and sell 2 March $12 calls for .65 ($130).  If you get away with a $130 sale every couple of months, you have a free trade by the end of the year and you're giving yourself a very nice 15% bi-monthly dividend while you wait for your 300% pay-off!
  • GS ($115.45) may be the devil but don't you think they know how to profit from a market that NEVER goes down?  Let them worry about day-trading while you pick up the 2014 $80/110 bull call spread for $20 and offset that with  the $90 puts at $12.50 for net $7.50 on the $30 spread that's $35.45 in the money to start.  Your worst case is you end up owning GS long-term for net $97.50, which is 15% below the current price.  TOS says net ordinary margin for shorting the $90 puts is just $9 – not bad..

Oops, out of time, I'll have a few more in Member Chat, of course – looks like we'll be closing this week off with a bang!  

Have a great weekend, 

- Phil

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  1. A guy's wife I work with said yesterday he wanted to buy into Facebook's IPO. The same guy's financial planner also convinced them to sell Apple from a few years ago when it was around 90.
    I don't understand the logic behind either of these lines of reasoning.

  2. Phil/Bearish

    I agree that you need to stop the bearish post.  Every morning I'm ready dive in long, then I read your bearish comments, which incidentally I happen to agree with, and I don't plunge in. 
    Hold your nose and jump.  The waters great.

  3. Wow!!! Were the job numbers that good?

  4. I cannot believe i was forced to close out the TLT 118/117 short put spread due to the options exercise. Would have expired worthless today.

  5. Oops, that was the short CALL spread on TLT. .95 down the drain.

  6. These numbers are really unreal… It's going to be tough to argue that the economy is not doing better now! Tough for bears and the GOP I guess.

  7. FAS Strangle – It's going to be a tough morning I guess… Once again, we have been lucky so far and I expected to have a bad week eventually, I just was not expecting it on the upside. Might have to roll these calls really out of danger now because these markets are on a roll now and we've got to stay out of the way! As I said last night, momentum is tough to fight and we are gathering more momentum this morning!

  8. There go all my profits for the last few months.  Between the EDZ, TZA, GLL hedges going bust, the FAS Strangle getting killed, a long term DIA hedge worth 0, a dumb XRT trade,  and a stupid RUT bear call spread very close to blowing up.
    Thank god for LFlan and his AAPL portfolio or my Q1 PnL report would look really awful!

  9. Interesting enough, the dollar didn't tank on these numbers and is actually strengthening decoupling from the markets.

  10. Looks like a sell into the initial excitement day today.

  11. StJeanLuc – FAS
    I'm not convinced it makes sense to roll the call.  It's probably just going to get run over again if the markets keep on pushing higher.  I'd rather try to make the loss back in other ways, like some of the bullish trades from yesterday.  

  12. If I didn't know better – Joe Kernan on CNBS looks and sounds "disappointed" with the good jobs number….

  13. Good Morning!

  14. Bust / Burrben – It's been a tough week to be bearish… I hope that you had the long plays to go along with hedges though!

  15. USD / StJ – Why should the dollar tank because of strong numbers? Shouldnt it strengthen as the "economy" is getting better? Also it could be that as unemployment goes down so does the probability for QE3. Looking forward to your perspective, it would be my lesson of the day :-)

  16. FAS / Burrben – It's really your choice on what you do with the position. There will be corrections in the run-up that will allow us to recapture some of the cash I am sure. But it might get rough for sure… It's a risky setup!

  17. StJean –  Well my bullish trades are all longer term 2013 option plays, but my short term trades were mostly bearish.  So the pain is more accute right now.  

  18. Phil,
    What types of trades will benefit from Yentervention? If dollar goes up… Oil down? Gold down? Other commodities down? Others?

  19. One of our old fav's GNW beat.
    8:32 AM Genworth Financial (GNW) +7.6% premarket after reporting late Thursday Q4 EPS of $0.22, reversing a year-ago loss of $0.33 and beating consensus $0.20. Q4 revenue unchanged at $2.6B, in-line. Losses in U.S. mortgage insurance narrowed to $94M vs. $352M a year earlier; U.S. life insurance posted a $114M profit.

  20. USD / Dpas – Actually my point was that the dollar had been moving in the opposite direction of the market and with this huge move in the S&P futures this morning I was expecting to see the dollar tank and yet it is moving in the same direction. I would agree that the dollar should be strengthening on good news and given the fact that everybody is printing money as fast (or even faster than we are).

  21. 1020/Kernan — I thought the same thing…he looks like his whole day is ruined by the good news. I can't wait for Mittens to spin it down….

  22. Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low
    it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation

  23. FU bearishness!!!
    3x, decay, wrong way…

  24. Any ideas to sell into initial excitement?

  25. Kernen / 1020 and Esco – He was trying to spin this after the numbers, saying that it was still going to be tough race because Obama is still basically a European socialist… If these numbers keep coming back this way, historically speaking – recall Reagan coming out of the recession, it will not be close. It's tough to spin that the economy is doing worse in the face of good numbers. You could argue that they could have been better if another plan had been put in place, but it's a tough argument to win.

  26. Here is the WSJ spin on reduction of labor force
    "The latest drop in the jobless rate, which is obtained from a separate household survey was largely because of genuine job growth rather than a reduction in the labor force, the report showed. The number of unemployed people fell to 12.8 million, a three-year low, and the jobless rate has fallen from 9.1% since August."

  27. Regardless – those of us on the short side are about to take a serious beating

  28. Its going to be the day of the thousand FUs in Phil stock world today.. 

  29. So keeping with the them of 'Distractions', ZH initial analysis concludes that BLS 'determined' that 1.2M people dropped out of the labor force in one month. It is a 30 year low in labor force participation. so that's how we say unemployment of 8.3%. So they just need to drop the participation rate and we 'recover'. Lies, damn lies, and statistics…

  30. Esco/Mittens   You mean my favorite cat detective?  LOL…

  31. Wow – serious surge in the dollar against Euro -
    I don't get DX quotes anymore – anyone have real time

  32. /DX, 79.435

  33. as you all know i ve been short the futures since 1307 but thats one tenth of my portfolio so i ve given back all my futures gains in january my overall portfolio is up..qe3 is clearly being discounted..insane but don't count on the markets to be rationale..price is the final arbiter..i am going to have a mt gay and ginger and an eight ball now

  34. samz 79.435 hitting some resistance from last tuesday levels

  35. 1020 — Good one.  I meant to say "Willard."  FU TLT!

  36. From Forexlive
    ni ecoECB will take the crown for easiest central bank at the end of February
    It now appears clear that the Fed can hold off on QE3 for the very near-term at least. It is also clear that there will be very large demand for euros at the February 29 auction of 3-year loans (LTRO) from the ECB.
    The ECB’s balance sheet is already larger than the Fed’s in USD terms($3.5 trln versus $2.9 trln)  and it will take the crown by a mile if the ECB auctions anywhere near the EUR 1 trln that has been rumored in recent sessions.

  37. stjeanluc/argument   Agreed, but it will be fun (and sad) to watch…. :)

  38. My only good short trade, long uup is heading up?? I'll take it

  39. Great to see both the SNB and BOJ @ work!

  40. Almost forgot the oil lines:

    R3 – 100.33
    R2 – 99.16
    R1 – 97.78
    PP – 96.61
    S1 – 95.23
    S2 – 94.06
    S3 – 92.68

    Yesterday's high and low – 97.99 / 95.44

    Breakout – 102.11 / 88.76

  41. For good measure, some dollar lines:

    R3 – 79.81
    R2 – 79.56
    R1 – 79.35
    PP – 79.10
    S1 – 78.88
    S2 – 78.63
    S3 – 78.42

  42. I presume we are going to need some adjustments in the 25KP.

  43. Goog morning everyone. Market is up what is so negative about this Looking at the FAS strangle we down 1520$ but I am looking at the bright side my Portfolio is up 20K inluding the -1520. So let us sit back and enjoy the ride and wait what the day will bring I think the market might kool off and than we see where we roll to.

  44. "$VIX falls as much as 6.3% to 16.84, lowest intraday level since July 8” .  how can we benefit from that? Buy puts?

  45. Any chance we get a meltdown today?

  46. This may explain why we rally like this. The FED is engaged in liquidity swaps that are possibly a covert bailout of Europe!

  47. exec, did you mean meltup? :-)

  48. I don't think Zero Hedge is reading the numbers correctly - BLS report
    take a look for yourself but it seems like people were added to the labor force bc BLS switched to using 2010 census. 
    If you look at Table C. 500,000 people were added to the labor force -
    The question is how many people were dropped from unemployed to not participating in labor force -
    Can anyone point to this stat bc not in the labor force increased by 1.2 million but you cannot tell if this is from people who became discouraged and are no longer counted as unemployed or if those people were added by changes in the Census 

  49. What is the volume looking like?

  50. Dam having finger troubles this morning cold out side 80F So GOOD MORNING again.
    Buy or sell in the excitement ADM 1/31 bought stk for 28.50 and for good measure sold the Jun 27 p for 1.30 waiting for the up draft to sell the call

  51. A fun friday video for skeptics to watch while enjoying a cool glass of koolaid….

  52. Did the Dow just drop 50 points in a second?

  53. samz3700,
    ZH came to that conclusion with other numbers, not from the BLS report.

  54. Samz – I think he explains it in one of his other articles.  The "Implied Unemployemtn Rate Rises to 11.5%" article.

  55. Volume doesn't look that impressive @ 2.218 million on the dow as of 6:51 pacific time. It appears to be the same gap up during the overnight sessions and essentially "Levititate" throughout the day  in a narrow range into the close IMO.

  56. Yodi –  The FAS Strangle for the Feb 3rd options is down a lot more than $1520.  I'd say more like $6000 or more.

  57. Good morning! 

    The only way I can still be bearish now is if we have a big volume sell-off that indicates this news was "known" and is being used as a final exit by the pumpers.  Other than that, we're having a huge open against a Dollar that popped over 0.5% already and the VIX is down to 16.92!  

    YUM is hitting new highs, M new highs, COH new highs (despite China saying people should buy less) – news doesn't matter, we're into some big momentum now.  

    I STILL don't like the market but, at this point, that just means going for 50/50 rather than 60/40 until we get a little more proof next week.  As I said yesterday, the FAS trades are ideal for covering the bull side and FAS is already up another $4 this morning to $88.  It will probably calm down to about $86 but WOW!  

    I don't advocate chasing Momo stocks – it's the real stocks that have a lot of catching up to do if this nation is rallying.   

    • In addition to the 3 plays above, how about SVU, still at $7.10 and they pay a 5% dividend (.35) so worth owning and you can sell the 2014 $7 puts and calls for (and I'm not kidding) $3.70 to drop the net to $3.40/5.20.  That makes the dividend 10% while you wait to get a double!  
    • HPQ is down but not out at $28.85 and you and it's nice that they pay a 1.7% dividend because that attracts institutionals but no reason to own them when you can go for the 2014 $20/30 bull call spread for $5.60 and sell the $23 puts for $3 for net $2.60 on the $10 spread.  TOS says net $3 in margin to make up to $7 over 2 years – that's reasonable and all we need if for HPQ to go up $1.15 to get paid in full. 
    • NKE had really good numbers so why shouldn't SKX?   This one is more speculative but they're really cheap at $12.78, which is just $640M for the whole company with $2Bn in sales and $150M in profits.  My rule of thumb with shoe companies is would NKE do well buying them and NKE has $21Bn in sales and drops 10% to the bottom line and it's very easy to imagine that NKE can find $50M of cost savings acquiring SKX (marketing, management, distribution, manufacturing…) yet NKE trades at $48Bn (24x earnings) while SKX is priced at 4x so NKE could buy SKX for double ($25, $1.3Bn) and dropping just $150M to the bottom line would add $3.6Bn to their bottom line.  Therefore:  I like the SKX July $11/13 bull call spread for $1.20, selling the $11 puts for .90 for net .30 on the $2 spread that's $1.80 in the money.  

    OK, that plus the above post plus yesterday's 5 plus the other 30 or 40 bullish trade ideas from Jan should be a good start fo our new and improved bullish attitude.  Of course, I'm not even going to look at the news or I might change my mind but, if you have been too bearish – I'd still hold over the weekend but it's also time to get balanced and ready to be bullish next week. 

    Oops, one more.  TLT is at $116.5 and we have to sell notes next week so how about buying 10 next weekly $115 calls for $2 in the $25KP.  

  58. Opps! typo:
    Volume doesn't look that impressive @ 2.218 million on the dow as of 6:51 pacific time. It appears to be the same gap up during the overnight sessions and essentially "Levitate" throughout the day  in a narrow range into the close IMO.

  59. 4real,
    Depends what they do with the dollar.

  60. Burrben
    FAS strangle I look at it this way For the 81c they want 8.20 I hold 2x so I would have to pay 1640 at the moment less my .83 cents I received less the put plays. So I do not know where you get 6K???

  61. exec/ Dollar
    Well, it now looks like the dollar is "decoupling" !
    As we speak, the dollar is up .22 and the dow is up 127 points and change!

  62. Anyone like YHOO?  Buy April $16 @ .94 and Sell Jan 2013 $12.50 @ .91  leaving .03 risk and large margin of safety on the puts.  Works out great if there is another takeover rumor before April expiration.

  63. Service ISM numbers are also good. Piling up on top of good news, are more good news!

  64. PP

  65. Todays #s should help boost $

  66. Facebook/Kwan – I wouldn't get in front of that train, there's a lot riding on creating a new dot com atmosphere and all those underwriters taking very low fees indicates they are swamped with demand.  Keep in mind that, after the IPO, they can go up and up because there won't even be earnings for 3 more months to bring people back to reality.  So, in a bullish market – these guys can pop like crazy until all 800M people who used Facebook have at least one share.  Value doesn't enter into this equation for quite a while. 

    Bearish/Exec – I'm seriously not even looking at the news.  Dow 12,800 is all the news we need.  S&P 1,339, Nas 2,893, NYSE 8,017 and RUT 824 with the Dollar at 79.30 means everything must be just perfect in the World,  

    Oh wait, Jan ISM now 56.8, up from 52.6 and the best since last Feb.  Factory orders up 1.1% also good.  Why is oil just $97.06?  Don't worry, be happy.  Gold $1,741 at least is giving us a small break. 

  67. Good morning,


    IWM    77.96,  78.34,  78.76,  79.10,  79.53,  79.80,  80.46,  80.96,  81.41,  81.92  and  82.44


    If we don't start to fall by 10:30, my plan is likely negated; good hunting !!

  68. Yodi –  The numbers are different since you're not trading 10 contracts.  I'm following StJ's updates, so I consider the "official" numbers to be in his spreadsheets.  The percentage's should be the same though.

  69. [JOBS2]

    Come on Conservatives, chant with me – O-Bam-A, O-Bam-A, O-Bam-A!!!  

  70. FAS / Yodi – Burrben is looking at 10 contracts I am sure… We are down $8K right now probably, giving up a large portion of our profits on this move.

    We'll see where we end up today before rolling as we could see some profit taking. And then decide if we roll or just kill the position and start new again on Monday. Finding a safe spot now means looking far in time if this market keeps on rolling. This is what Burrben suggested this morning and we'll have to give it some thoughts now with the news getting better.

  71. Obama / Phil – Already playing with the numbers to make them look bad… I don't recall all this analysis in the last 10 years. 

  72. Phil,
    in 25kp, would we get out even on GLL if the opportunity presented itself?

  73. Burrben
    I would cut off my fingers trading 10x FAS we are trading 2x

  74. They might be going for 14.75 on XLF.

  75. Well, we are definitely dedfying gravity now! A little good news and we are off to the races!

  76. Correction:
    Well, we are definitely defying gravity now! A little good news and we are off to the races!

  77. JR,

    What is the plan?

  78. It looks like they're going to pull back the dollar like every other day the last two weeks to keep pushing it higher.

  79. Phil
    Did you know that Israel is upset with Iran and are threatening to bomb them…….again? :)

  80. Kallen
    I'd love to get out close to even on that one.

  81. who needs "open" qe3 when the market goes straight up and the economy is improving on its own?
    Phil, being bearish was wrong.
    oh well, you can't be expected to always be right (your market direction accuracy is better than most and was almost perfect until now) … 
    chinese water torture on cmg and edz… 

  82. From the other side of the fence, Dr copper (JJC, FCX) is up only slightly, not keeping pace with the indicies enthusiasm. Definitely not en fuego, as Phil's alter ego would say.

  83. I checked a bear den I know of here in Maine this morning………he's still sleeping.

  84. Pharm,
     I sold my BMY position at $35, and sold 1/2 position Jan 13 27.50 puts, but was also thinking of buying back some shares. I was thinking it might retest $30 this year. What do you think?  Thanks

  85. Ahhh, time to relax, have a glass of wine, sit in your favorite easy chair, and ……From Zero:

    A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that's not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.

    Chart below shows it all – that jump is not a fat finger!

  86. Payroll #'s…….Good enough for government work !!

    I’m just sayin'  8-)

  87. Hi Phil and StJ,
    Only roll I definitely have to do before EOD is the weekly TNA 56 call in the IWM portfolio. What's the correct way to deal with this? When I looked earlier a roll to next week's 57 could be done for about even but a monthly 56 would pay a $1 more. With the uncertainty is it worth the risk to get the dollar and bet it doesn't stay up?
    Or should I be thinking of this in a totally different way?

  88. Why not sell some Jan13 $30 puts…???  better ROI than owing the stock at this point….although, I would wait until after next week.  I am not selling puts on anything right now, but selling calls.

  89. Pain Pain.  Two naked FAS callers March 87 and march 88.   Did we sell the calls thinking we'd buy them back later if we were caught with our pants down,or am I just halucinating these naked FAS callers, and this awful pain.

  90. Profits/Burr – Sounds like you're using the hedges for bets – that's not a good thing.  The idea of these aggressive downside plays is to PROTECT long-term bullish positions, like our Income Portfolio – which is doing fantastic, of course.  If you are losing more money than you're making, then you're over-hedged because the idea is to mitigate 50% of the damages in a 20% drop but, in reality, you're not going to leave all the longs on the table once it's clear we're dropping and, as you pull your longs off the table, THAT is what tips you more bearish until you are 60/40 or 70/30 at the bottom but you can't be 70/30 bearish when we haven't even moved down yet – that's just way out of balance. 

    Speaking of out of balance, very nasty hit to our $25KP, which was very aggressively bearish.  We don't panic out of things on a spike like this but we do need to make realistic assessments.  

    MON short $75 calls are $7.75 in the money but we're so toppy I don't even want to sell puts.  Exit strategy is to sell Apr $80 puts (now $3) and roll calls to April $80s (now $5.50) to pick up around $1 more and raise the strikes way up but that roll will be there next week and, of course, we'd rather not so we just keep an eye on the net and make sure it doesn't get away from us.  If you have margin for it, a great intermediate trick is to roll the 4 short call ($7.80) to 10 short Feb $82.50 puts ($1.50) – it's not an even roll but you're selling $1,500 in premium against what was a $720 loss so far and TOS says the margin on 10 short $82.50s is $16,500 while the margin on 4 short $75s is $6,600 so you use $10K in margin to sell $1,500 in premium which expires in 2 weeks.  If MON goes to $85, you owe the callers back $1,000 more than you collected but you would have lost $1,000 on 4 short $75s anyway so that's the official $25KP play with the other good for the margin – challenged.  

    DMND bullish and up to $38 now. 

    SQQQ fortunately can hardly suck more.  The Feb $17 puts are now $2.85 and our loss is $1,400 so they can be rolled to 10 short March $15 puts at $1.50.  If we keep picking up $2 per month in strike on the rolls, I'll bet we get a winner before we get to zero in July!  

    MA is dead, of course.  

    XRT up to $57 and we're pure short.  The $52 callers ($4.80) have no more premium so we may as well roll them up to the March $56 callers at $1.95.  Notice the theme here – we continue to sell into the excitement.  We take our loss of $1,000 on this position and roll that to short calls that are mostly premium.  

    GLL is at $16 and if stocks are hot and the World is safe, gold should still sell off so let's see what happens on Monday with those.  

    SLM is bullish and up to $16

    SCO looks good at $39.81, oil doing nothing today at $97.11

    FAS a huge burn today.  As I said, I expect them to pull back a bit and next week we'll have to offset and roll.  I know I swore off reading the news but I do recall noting that these ultra-low rates are bad for banks and also there will be a massive $25Bn+ settlement they have to pay out on mortgage fraud and, once it actually hits, analysts should wake up and realize that might impact earnings somewhat (I know – too much thinking – must stop!).  

    TZA is March and, frankly, if the RUT gets to 850, I'm going to like rolling them down as a hedge to our bullish bets (that we will be adding next week) so nothing for now with TZA at $18.54. 

    QQQ died a very quick death – nothing to do there.  

    So this reminds me very much of the terrible start we had on the $10KP two years ago and the good news is we ended up running it to $135,000 but that doesn't make it less frustrating at this stage.  Keep in mind, this is a VERY aggressive, margin-intensive portfolio that is meant to teach rolling and sticking with positions and will continue to be so.  It's meant to be a small, aggressive carve-out of a generally conservative and long-term bullish portfolio, which is why we feel free to lean more bearish and we will continue to do so as the market climbs because, one day (and we don't know when) – that's where the real money will be made – despite technicals to the contrary.  

  91. Pharm/wine    While you're "relaxing" try to catch Charlie the Unicorn from my 9:47 comment. It will go well with your "grape" drink….. :)

  92. Thanks Pharm,
    I wish I had sold fewer calls earlier, or I would be selling them too!

  93. jabo/ bearish
    I think part of the challenge for me is that while i'm still astudent of the markets, I believe and act, at times on what appears to be fundamentals and the corresponding Technicals! 
    I am aware of market manipulation but totally blown away by how much it can manipulated!
    Consequently, as a result, some of my trades that appeared to have a valid premise been blown away as well!

  94. I would like to suggest dropping EDC/EDZ as a hedging device, since the emerging markets are substantially outperforming the S&P500, and if we ever pull back, I would expect emerging markets to pull back less. It is now a bad hedge.

  95. Pharm, I don't always agree with ZH but things do feel a bit Orwellian right now.  The other day on TV the reporter was showing a graph of the stock market against Obama's popularity and how they track together.  Then driving to work today, Bloomberg radio was all saccharin: 'Unemployment down, wow. ISM Manufacturing up, wow. ISM Services up, wow. The ISM numbers, not unemployment, are the biggest determinant of presidential election success.'  So these guys were talking like the bull market is baked in, the number's are great, and so the election's already over.  It feels a bit like all the stops are being pulled out to make sure we 'feel' happy right now regardless of the reality we see on the streets.

  96. mrm – I don't agree with many things on Zero, but the graphs are informative on days like these, as one can make any statistical method fit the data, even if the R-squared is 0.5…..!!!

  97. iflan/bear
    i know he didn't see his shadow yesterday….could be his i-ware…….

  98. VRTX AH pump job is over…down now almost 5%.  I think risk appetite is waning.

  99. EDZ / barfinger – "It is now a bad hedge."  I'd vote for 'terrible' hedge, what a bad choice that was to protect my IRA with.  Over Christmas break I read too many articles about the Chinese real estate situation, but Phil and I need to stop reading and just go with the flow..

  100. Hello, Pharm, what is your opinion of THLD? Is this the right day to exit my position, or you would recommend holding? I read their annual report and liked their ideas/approach, but I am not a specialist.

  101. Phil……….it sounds as if you still do not want to drink the Kool Aide. fwiw i had a down/up/down/up/down January so flat for that month.
    since landing here at PSW in early Dec 2011 the futures/cfd/currency accts are up over 20% and that was after a flat Jan and a very difficult market to trade since the 3rd.
    in my experience the value here is as much about the intangibles which means the opportunity to cross reference. thanks to you and the others who participate.

  102. Phil,
      You once advised me that it was bad strategy to roll winning sold puts up into higher risk, but in the case of sold JAN 2013 ISRG $270 puts (sold for $35, now around $3) it would seem to  make sense to roll up to the $310s you just recommended, or perhaps slightly higher. What say you? 

  103. Does anyone know if it is possible to bring up an index chart in TOS, keeps saying not a valid symbol but of course I can see the quotes (and I do know I cannot trade this) TIA

  104. Volume is still anemic at best.  This from Market Highs and Lows

    And this from Alphahorn – of whom I believe JRW and SHJ follow….

  105. Pharm / alphahorn — got a link for that chart? Thanx.

  106. EDZ – I think it might be too soon to call it a terrible hedge.  Some of us got a little too greedy with EDZ but that is the risk with a 3x leveraged ETF.  I think we all knew that going into the trade.  I think that patience might pay off down the road because at least here in Los Angeles, I honestly don't see anything really getting better.  Maybe others in this city may disagree but CA is a little over a month from being broke again.  JMO

  107. Hmmm, have some red on alt energy.

  108. Volume 40M at 10:30, that's pretty disappointing if you consider jobs an "all-clear" signal.  

    CNBC has now mentioned Iran blocking the Straight of Hormuz 10 times in the past 90 minutes and they still can't get oil over $97.50!  Notice they are now using the tactic of talking about it like it's a fact – hoping to pull as many people as they can into oil over the weekend.  

    Acuteness/Burr – That's a problem if you mix timeframes.  Next time try making the bulk of your hedges the same time-frame as your longs and you won't get "burned" by a short-term move up.  Happy to talk about that important topic on the weekend.  

    Yentervention/Kallen – I'd say gold down is a big one.  Oil is already off a lot so gold should snap hardest.  Other commodities may do OK because we're showing jobs and jobs means demand (even for oil) in everything BUT gold – which is about 30% fear of inflation, euro breakup, dollar collapse, etc.  Strong Dollar is terrible for gold, which is why I liked GLL as I felt there were several ways to win with it (but this isn't the way I expected!).  

    GNW/Burr – Seems like every time I mention something on TV it leads a charmed life.  

    ISRG still flying.  

    Not in labor force/Kramer – Wow, that's wild.  Unfortunately it's also news so I have to ignore it.  8)  

    No one is better than Barry at delving into payroll data:


    Despite the cries of the permabears and Rick Santelli, this was unequivocally a strong NFP report. The headline numbers were 243,000 net jobs, as unemployment dipped to 8.3%. The Labor Pool increased — suggesting that the improvement was not the usual employee retirement and discouraged worked giving up looking for work.

    When we go beneath the headlines, we usually see the data’s warts — not this time. Across the board this was a surprisingly strong report. BLS called described job growth as “widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing.”

    Lets go to the details:

    • Total nonfarm payroll employment rose by 243,000 in January. Private-sector employment grew by 257,000;
    • Unemployment rate declined by 0.2 percentage points in to 8.3%; Its down by 0.8 point since August.
    • The Household survey, used to measure Unemployment rate, added a whopping 491,000 jobs.
    • The number of unemployed persons declined to 12.8 million, from over 16 million at the recession peak.
    • Employment-population ratio rose to 58.5% in January (Seasonally adjusted)
    • The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.8 hours.
    • Average workweek for all employees was unchanged in January, but the manufacturing workweek increased by 0.3 hour to 40.9 hours (likely multi shift auto mfr); Factory overtime increased by 0.1 hour to 3.4 hours.
    • Average hourly earnings for all private employees rose by 4 cents (0.2%) to $23.29. Over the past 12 months, average hourly earnings have increased by 1.9%
    • November NFP was revised from +100,000 to +157,000; December NFP was revised from +200,000 to +203,000.
    • Benchmarks were also revised upwards — as of December 2011, total employment was raised by 266,000 (231,000 NSA)

    The Negatives?

    • Unemployment rates for teenagers 23.2%; for blacks is 13.6%; Hispanics 10.5%
    • Long-term unemployed (jobless for 27 weeks +) was little changed at 5.5 million — thats 42.9%
    • Persons employed part time for economic reasons, at 8.2 million, changed little in January; 2.8 million persons were marginally attached to the labor force, and 1.1 million discouraged workers, essentially unchanged from a year earlier.
    • Employment in information declined by 13,000, including a loss of 8,000 jobs in the motion picture and sound recording industry
    • Employment in construction increased by 21,000 in January, likely a temporary blip caused by unusually warm weather

    All told, its tough not to like this NFP report. Markets surely do, with the Dow up 140.

    More news to avoid:

    10:00 AM On the hour: Dow +1.12%. 10-yr -0.58%. Euro -0.45% vs. dollar. Crude +0.47% to $96.81. Gold -1.21% to $1737.95.

    11:00 AM On the hour: Dow +1.12%. 10-yr -0.54%. Euro -0.19% vs. dollar. Crude +0.67% to $97. Gold -0.76% to $1745.95.

    Jan. Nonfarm Payrolls: +243K vs. consensus of +125K, +203K (revised) in Dec. Unemployment 8.3% vs 8.5% expected. Avg. hourly earnings +0.2%. to $23.29. Workweek unchanged at 34.5.

    Canada January employment adds 2.3K jobs vs. expectations of 24.5K and 17.5K prior. The jobless rate rises to 7.6% from 7.5%. The loonie continues lower vs. the greenback, off 0.2% to $0.9982.

    Jan. ISM Non-Manufacturing Index: 56.8 vs. 53.1 expected and 53 prior (>50 denotes expansion). Prices index rose to 63.5 from 62. Employment rose to 57.4 from 49.8. New orders rose to 59.4 from 54.6.

    Dec. Factory Orders: +1.1% ($466.2B) vs. consensus of +1.5%. Factory orders had increased 2.2% (revised) in November. Ex-transport, +0.6%. Shipments +0.7% vs. +0.2% prior. Inventories +0.1%.

    A U.K. think tank sees the British economy contracting 0.1% for 2012 and returning to slowish growth in 2013. Both the public and private sectors will continue to deleverage this year, while 2011's bright spot – trade – will drop off thanks to a slowdown on the continent. These guys must not have viewed this morning's services PMI - all is well

    U.K. January services PMI climbs to 56.0 from 54.0 previously, easily beating estimates for 53.5. "A slide back into recession is now looking increasingly unlikely," says Markit's Chris Williamson, his eyes looking out the sides and rear of the car.

    Eurozone December retail sales  fell 0.4% in December, missing expectations for a 0.2% increase. Sales were down 1.6% Y/Y against expectations for a decline of 1.3%.

    Eurozone January services PMI rises to 50.4 from 48.8 previously, down a hair from an earlier flash estimate of 50.5. It's the highest read in 5 months.

    With Facebook, GlencoreBlackstone, and Goldman Sachs making news yesterday, the team at The Trader connects the dots and realizes the last 3 firms sold out to the public at significant market tops. Will the Facebook (FB) IPO be a repeat?

    Contrary to speculation, eurozone finmins will not meet on Monday says Eurogroup President Juncker, but could meet later in the week if a Greek restructuring deal is reached.

    Chatter is about that the cliff-dive in the euro following NFP is due to rumors of Greek PM Papademos resigning. His resignation would likely mean there is no deal for a Greek debt restructuring, with maybe a disorderly default coming. For what it's worth, the resignation rumor was out there before 8:30.

    China's January services PMI slides to 52.9 from 56.0 previously, led by the property industry, where activity slipped to 38.1 and new orders to 35.7. Overall, new orders came in at 48.5.

    I mean really, are they freakin' kidding???  Also, keep in mind that's net of companies who report losses – the companies that MAKE money are paying FAR LESS than 12%.  While company profits have rebounded following the recession – when they fell sharply – corporate tax receipts have stayed low. The total paid to the government fell to 12.1% of profits earned from U.S. activities in FY 2011, under half the value paid on average from 1987-2008, and the lowest since at least 1972.

    The Hidden Burden of Ultra-Low Interest Rates (Businessweek)

    Whuck?  QE3 is not off the table even with an expanding employment market, says Bill Gross, heavily long Treasurys after an ill-timed bet against the paper in 2011. For today at least, Treasurys are taking it on the chin, the 10-year yield up 10 bps to 1.92%. TLT -2.1%.

    Job growth at the January pace "would absolutely and unquestionably take QE3 off the table" as well as "seriously question" the Fed's decision to keep rates near zero through late 2014, BTIG's Dan Greenhaus says. One month does not a trend make, "but for now, the risk rally is clearly on and from an economic perspective, it is most certainly warranted."

    Commodity Shipping Costs Slump to Lowest in Quarter Century on Vessel Glut (Bloomberg)

    Anatomy Of A Come Back? Charting Obama’s Approval (TPM)

     Citizens United: Colbert v. the Court (Slate)

    DRAM prices firmed over much of December and January after a massive 2011 crash, and Paulo Santos thinks it wasn't a coincidence that chip stocks in general shot higher last month – DRAM maker Micron (MU) certainly wasn't left out. But the DRAM rally is showing signs of stalling, in tandem with signs of global economic weakness, and he thinks that's a good reason to take profits on chip stocks.

    A new government report shines a bright spotlight on the pricing of high-priced medical devices with cost variance ranging as much as 50% across different hospitals for the purchases of the same products. The GAO report raises "serious concerns" over the prices hospitals and Medicare pay for medical devices, as well as stoking up Congressional backlash on the issue. Companies that could be impacted by pricing reform include MDTBAXCOVSYKTMO,ISRGBDXSTJEWBSXBCRVAR.

    Having only recently reinstated its dividend, Ford (F) couldincrease its payout 


    Having only recently reinstated its dividend, Ford (F) couldincrease its payout to shareholders in the next year or two, CEO Alan Mulally told Seeking Alpha in an interview. "That’s something that we’ll definitely consider based on the economic situation,…but clearly where we are in the growth cycle worldwide will be a primary consideration." Mulally added that buybacks were "always a consideration" also.

    More from Alan Mulally's interview with Seeking Alpha: "The latest data from the dealers says that their franchises now are the most valuable they have ever been," he says. And to make sure Ford's (F +1.5%) cars are "best-in-class," Mulally drives "the competitors’ vehicles every night, as does the entire leadership team…Isn’t that fun?" It sure is. (previous)

    Genworth Financial (GNW+7.6% premarket after reporting late Thursday Q4 EPS of $0.22, reversing a year-ago loss of $0.33 and beating consensus $0.20. Q4 revenue unchanged at $2.6B, in-line. Losses in U.S. mortgage insurance narrowed to $94M vs. $352M a year earlier; U.S. life insurance posted a $114M profit. (PR)

    Corning (GLW +2.4%), which badly needs new growth opportunities for its display glass business, is forming a JV with Samsung (SSNLF.PK) that will produce substrates based on Corning's Lotus Glass for Samsung's OLED mobile displays. The news is a positive for OLED technology and materials supplier Universal Display (PANL +2.8%), which counts Samsung as its largest customer.

    Why I still think MON is too high:  Mosaic (MOS) will cut potash production by 20% over the next 4 months as "cautious dealer sentiment continues to delay purchases and lower near-term demand for potash." The firm, however, continues to expect 2012 will be a record year for potash shipments. Shares -1.4% premarket. (PR

    Toyota (TM) says it expects to sell 9.58M vehicles globally, including those by its subsidiaries – a rise of 21% from last year, which would top its 2007 record of 9.37M. Domestic group sales are projected to rise 30% in 2012 to 2.32M, and overseas sales to jump 18% to 7.26M.

    "We give credit to appropriate parties in appropriate amounts," says Steve Wynn on WYNN's earnings conference call, dismissing concerns a rise in receivables (18% Q/Q) has anything to do with deteriorating customer credit quality. "Credit and marketing are 2 separate subjects … the alternative to that strategy is very disastrous." Shares -4.3%. (earnings)

  110. Neandertals more intelligent than Cro-Magnons?  Phil, you come up with some odd tidbits, that's for sure!  Not true, by the way — leaving aside brain size analysis, that doesn't really tell you much — our brains have actually become 15-20% smaller than early Cro-Magnons — Neandertals adopted Cro-Magnon tools, but apparently couldn't, and didn't invent them by themselves. They never, for example, would have thought up Quantitative Easing — probably the basis of your hypothesis!

  111. For the Bears:

     1) we are about to lose support at IWM 82.66

     2) There is heavy selling into this

     3) And this from TraderGirl:

  112. THLD/alik – their drug is a novel alkylating agent for cancer (think mustard gas).  It is in VERY early stage trials and they popped due to a deal with Merck AG (German company, not MRK).  I would sell 1/2 now and let the rest ride.  If they pull back, you can then decide if they are worth it.  I will put them on my list to follow.  Thx.

  113. IRA Portfolio update.  I wish I could find something to deploy more capital to but eveything looks so expensive to me and there is no volatility to sell.  


  114. EDZ / Many – I had a post about that 2 days ago showing that decay had been rapid over the last 6 months – actually even faster than the infamous TBT. At the same time, a quick and violent correction would also drive it up quickly and EEM is really volatile (up 18% since December). But it's the disadvantage of these 3x ETF, the built in decay makes them bad long term hedges, all of them. For short term moves, you can really make good money. Timing is key there…

  115. Bears are extinct (or close to it JRW), no?  Oh, wait, I am still lurking in the forest, and I can also see the trees!

  116. IMO, EDZ is a bad hedge because it is OUTPERFORMING the market (in reverse). Any 3x you hedge with has done badly in the last six weeks, but I believe this one is the worst possible choice. And I thought I was being clever selling EDC calls instead of EDZ puts as a vehicle, trying to take advantage of decay. Not so much, I guess.

  117. Rainman….

  118. exec / Plan

    That we would NOT close above SPX 1328, and that would be the beginning of the long awaited correction !!

  119. Phil,
    I like the TLT option play, are you basing it on the 30-yr treasury auction next week?  Thats wednesday isn't it?

  120. TLT / Phil – Building on Gingbaum's question, can you also provide the background of the trade? I've never traded TLT (or any bonds). What are we looking with this trade?

  121. Selling/Bob – I like selling those MON calls from the $25KP and FAS calls of course for the reasons I noted.  

    BOJ/Checho – Oh this is nothing.   I think this is just the normal arb calculation of adding 250,000 $40,000 jobs causing a demand for $10Bn payroll Dollars and (assuming labor = 1/3) another $20Bn in Corporate spending.  If you extrapolate it out to 2.5M jobs for the year – then you're looking at a forward demand for $300Bn, which is enough to move the needle a bit on the Dollar by itself.  

    Oil still under $97 – pathetic.  

    Good balance Yodi, congrats!  

    VIX/Dpast – Well it's a good time to buy puts or calls and a lousy time to sell them.  How about CMG?  The 2013 $400/340 bear put spread is $30 so a nice way to get short on CMG and you can sell March $340 puts for $3.70 for a nice 10% dividend while you wait (and you can also sell the $390 calls for another $3.60 if you are brave).  

    Also, VXX decays but not that fast and you can sell the March $24 puts for $2, which is around VIX 15 that you're betting against.  

    • AA Money/StJ – Oh I am so sick of this one!  Nothing to do if we don't get a dip but ride it out.  
    • FAS Money/StJ – D'oh!  
    • IWM Money/StJ – D'oh!  
    • Lots of work to do next week if we don't calm down! 

  122. FAS Strangles / StJ,
    What strike do you think is safe to roll to?  Do you still have your historical data to run statistics?  For example, what are the averages % for 2-month/3-month/etc expiry?
    BTW, I also agree with Burrben, we might get run over again.  So, I am thinking the following:
    - Roll only 1/2.  Buy back the other 1/2
    - Sell puts (in Peter D's words, it's called flipping, ie, flipping the calls you bought back to puts)
    - Take some losses now if necessary and get them back later.
    "We Shall Come Back!"
    What I am really saying is that DD is probably a bad idea, in my experience.  Because if the market runs you over again, you need even more margin to roll.  Calls are actually MORE DANGEROUS than puts, because you roll HIGHER = MORE MARGIN.

  123. Plan / JRW – 1328 by closing bell? That's a very tall order.  Do you think it there is a chance?

  124. So is the only thing left on the table to bring us down Greece? (Assuming that we won't get a catastrophic earnings miss or another nuke meltdown)?

  125. Have a good weekend everyone!  I'm going surfing!
    If the market corrects, and my new FAS 85/90 BCS also goes in the red, I'm giving up!

  126. How can we BTFD when they don't even give us TFD?

  127. cwan120 / FAS Puts  -  I was thinking of the same thing, but Vol is so low right now that you don't get enough juice.  Then you can lose two ways, a whiplash move down, or a vol spike….or both!

  128. AAPL beeline to 460

  129. It seems like with no volume and prices being driven up by overnight futures, 'overbought' is not an appropriate concept here. Perhaps 'overpriced'. Seems like this relates to the Ob Balance Volume topic from last week.

  130. Craigzooka — covered calls — not sure if it's what you like, but you can sell ZNGA Feb 13s for about $2.15 on the stock at $14.20…that about 7.5% if it holds $13 for two weeks…and considering the FB IPO frenzy, it probably will…. and if not, you sell again.

  131. Correction – On Balance Volume

  132. Craig / IRA — what is your criteria for your IRA trades?

  133. GE in a holding pattern the past month…what gives if they are the posterchild of companies…???

  134. FAS / Cwan – I am currently doing an analysis of where this market could take us and what it would mean to FAS. For example, on XLF I see resistance levels at 14.82, 15.88 and 17.21 if we reclaim last year's highs. Not saying that it will happen, just planning for the worse in our case. The levels are 1%, 8% and 17% away. That would mean FAS at around 93, 112 and 136. Planning a roll to 93 is manageable, the other levels would be very challenging in the short term. On the other hand, the good news is that it's the call side and decay works for us… But we have to plan for continued strength. Last summer, selling lasted for 3 months before we reversed.

    Let's see where we are at the end of the day, but I am more inclined to take the losses today and start with a new position on Monday that will be more manageable. We are still positive on the P&L thanks to some good weeks. There will be more ahead. On the other hand, the VIX will make premiums lower and make the position more risky. It looks to me that we will have to be a lot more careful with timing entries and exits.

    So, it was a bad week, but like I said, it was not unanticipated given the underlying instrument. It's just a matter of knowing when to fold and wait for the next hand!

  135. VIX at 16.82. It has stayed in this range for Apr/May 2011 (SPX 10% Up Line and High of last year) and Dec 2010 thru Mid Feb 2011 SPX run from Must Hold line to almost  10% Up line).

  136. Covert/L4 – Not too covert, we knew they were doing it, this is just evidence.  

    Dow volume 51M at 11:23 – still slow.  Will the sideline money ever come in or is this the market from now on?  

    ADM/Yodi – I like them, with CAT where it is, ADM should be much higher.  Unless, of course, CAT is bogus and comes crashing back down.  CAT by itself has added 200 of the Dow's 600 points this year.  

    Unicorns/1020 – I think I need to rewrite the user contracts so I can bill you for links that totally waste my time!  ;)  I had to watch that to see if there was any point whatsoever and now I'm crying over 7 minutes I will never see again.  At least you can be happy that, years from now, on my deathbed – my last thoughts are likely to be how I wish I had that 7 minutes back! Actually, with 24M views taking up 7 minutes, that's 1,346 years worth of 40-hour weeks used up on that stupid video – which all by itself can account for much of this nation's lowered economic output.  I think one of the lawyers here should put together a class-action lawsuit against the person who posted the video and GOOG for enabling it and running it without an appropriate warning….  

    YHOO/Rev – Not for me, those guys mess up every opportunity that comes their way.  They are good for the occasional rumor though.  

    GLL/$25KP, Kallen – Sure, I'd be thrilled to get out even at this point, that's $2,000 better off than we were if it happens.  

    Israel/DC – What?  No way???  That is a stunning turn of events.  I wonder if Charlie the Unicorn knows about this? 

    Wrong/Jabob – It's always going to be wrong eventually.  We play a range until the range breaks and when we get to the top of a range, we are at our most bearish and at the bottom of our range, we are most bullish and that works wonderfully until it doesn't and then, as we are doing in the $25KP, you take your losses and you reset your range and start again.  We had a fantastic run (assuming this is really a breakout and not a brief spike over) and "nailed it" over and over and over again since the summer of 2010, when we broke out of our last range of 9,500 to 11,500.  We reset to 11,000 to 13,000 and now you seem absolutely positive that we're blowing through it and who am I to argue with you after, er, zero days of evidence?

    12,876 was the high of last April.  I suggest to all to go back and read those posts as we were "wrong" then too to stay bearish above 12,749 but I wanted to wait a couple of weeks before redrawing the Big Chart as the Dollar seemed ridiculously low at 73.  As it turned out, we were richly rewarded for our bearishness at the time but this time MIGHT be different because the Dollar is almost 10% higher now and we're still way up so we have to respect this move more so than we did last April but I won't feel good about it until we do hold up despite the Dollar coming back a bit more than 79.25. 

    Oh, how could I forget BTU!  I know we did them a couple of weeks ago but you can sell the 2014 $30 puts for $5.40 and that, by itself is nice with BTU at $38.31 (TOS margin is $3) and you can take a flyer with a 1/2 sale of the 2013 $40/50 bull call spread at $3.20 so committing $3,000 in margin to 10 short puts and $1,600 to 5 long spreads puts net $1,400 in your pocket with a $5,000 upside potential at $50 and worst case is you end up owning 1,000 shares of BTU at net $31.40, which is 18% off the current price.  

  137. Stj, the SQQQ and XRT trades went through in the 25KP at the prices posted by Phil.
    I'm still undecided on which MON play to go with.

  138. Thanks mampcsA… I really need to calculate the total margin used by the portfolio as of now to ease the decision process. For example, the 5 short FAS calls probably use about $10K of PM margin and about $20K of Reg-T margin. The short XRT calls are also adding to the margin.

  139.  Doug Kass was very bullish in the last month and just went flat.  He posted the George Lindsay's "Three Peaks and a Domed House chart and it is eerily accurate so far and it looks like the next move according to the chart is a 70 point sell off on the S&P.

  140. If you want to be short, maybe try these overbought stocks…

  141. Phi/ unicorns and wasted 7 min!
    Hilarious! LOL!

  142. Lflan – is it time to buy puts on AAPL?

  143. It appears from various comments some of us have been hurt on the EDZ and TZA hedges (but of course we were — they were insurance and our longs have gone up!).  What about a different, more true disaster hedging approach:  hedging not the first 20% down from the top, but the next 20% down (i.e., accepting the first 20% down against a long term, dividend paying portfolio, but hedging the next 20% down after that)?  In my case it is the second 20% down that would get me the most concerned about my short put trades.  (No, I have not written puts on anything I would not be happy to buy, but I wouldn't necessarily be thrilled to have everything put to me on the same day if a bomb goes off!)  What would be the cheapest, most efficient way to hedge the gap between down 20% to down 40%?

  144. BSX
    I wrote some extended comments on  that subject at the end of yesterdays thread, if anybody is interested.

  145. Resistance is set up at the 82.93 line, the next line is also about R4 83.49.

  146. @rainman,  My criteria is normally a dividend of at least 2%, decent vol, liquid options, solid fundamentals.  Unfortunately my criteria have had to slide to market conditions.  Now I look for 1.5% dividend.  Unfortunately theres just nothing attractive that I can find.


    @escohen, unfortunately ZNGA doesn't pay a dividend.  Which, in my opinion, means they can make up whatever numbers they want for earnings.

  147. newbie
    Your comment revieled more than stock value. Thanks

  148. Phil
    Very funny the unicorn comment!

  149. lolo….no

  150. Implied/JRW, StJ – Stop showing us news!!!  8-) 

    TNA/Zip – I take it you are short the $56 call, now $6.70.  I'd roll to the next week $61 call at $3.  You don't have to do 2x, if you have a $3 loss and you're rolling your loss than getting even is fine, isn't it?  If that doesn't go well, THEN you might want to go 2x the Febs ($65s are currently $1.60) but, for now, it would only take a tiny pullback to win $3 off the next week calls and if that gets you out with no damage – it's the easiest escape route.  

    Awful pain/2can – The March $87 calls are $8.50 with FAS at $89.68 so $7 of that is premium.  The only way you lose that $7 is if you fold.   You can roll them even up to the April $92s or to 2x the $102s ($4.25) and those can roll to the July $115s ($4.70) and, if you are that gung-ho bullish on FAS, then you may as well sell the July $76 puts for $10, right?  If you have margin and patience, there are 1,000 ways to work yourself out of trouble on short sales but, if you have neither – these are not good trades for you to be making.  

    EDZ/Barf – At $12.50 you DON'T want to buy them?  If Emerging markets go up 20%, you only lose $7.20 so you can use EDZ to hedge FXI ($40.50) Aug $37/42 bull call spread at $2.90, selling Jan $35 puts for $2.65 so the only way that spread costs you money is for FXI to fall more than 10% and that's a 30% pop in EDZ so you could hedge that trade with owning EDZ at $12.40 and selling the July $11 puts and calls for $4.80 for net $7.60/9.80 (down 20% at $9.80) so if you took 10 EDZs, you make $3,200 unless FXI goes up 7% so you can pick up 5 of the spreads for net $175 and those make $2,325 if FXI goes up $1.50 (3.7%) which would drop your effective net cost of EDZ to $7.48 if put to you at $9,800.  Since you win if they flatline or don't move too much either way and you can roll the loser anyway, it's not a bad way to play the emerging markets. 

    Kool-Aid/Roro – I'm not there yet and I won't be a very happy bull for quite a while – really until we establish a much higher high and re-test the low but, as I said above, how about we simply establish a higher high than last April before we slaughter all the remaining bears?  I think, as a rule of thumb, the market keeps going higher until just Matt and I are bearish and then it turns down sharply.  That's happened about 7 times in the past two years but I'm sure this time is different!  

    On the S&P, 1,344 was the top last Feb (early) then 1,249 in March.  1,370 was the top at the end of April, then 1,258 in June and 1,356 was the top in July (always end of month/early month) then 1,100 in Aug.  October (middle) was 1,292 and we fell to 1,158 in Nov – so we narrowed the range there and now, amazingly, it's earnings time again and we're making highs – again – but this time it's different because…………

  151. Phil—no argument. 

  152. Come on Conservatives, chant with me – O-Bam-A, O-Bam-A, O-Bam-A!!! 

    Just got in and catching up- I do think congrats are in order for the Prez. I am thankful he had the wisdom to set aside his ideology long enough to extend the job creator tax cuts. Works every time.

  153. Hedges / Ronresnick – Like Phil said, there seems to be a need for more hedging education. As pointed out by Phil, you need to take into account not only the size of your long portfolio, but also the timeline and the composition of the portfolio. if you have a lot of long dated puts sold, then protection might superfluous as you can just roll the position. It does seem that there is no standard hedge, there could be some general ideas and they need to be tinkered in an individual basis.

  154. 1020/Unicorns – I drank my wine faster watching that video….

  155. I'm doing some profitable day-trading on AMZN.   STO next week 180 calls yesterday, BTC today…..+40%.       Now STO this weeks 185s for .50, stop loss at  .80 (BTC).    More fun right now to trade than AAPL. 

  156. Thinking AMZN pins 185, AAPL 460. 

  157. Iflan   BTC  STC??

  158. BTC….buy to close
    STC …..sell to close
    BTO….buy to open
    STO….sell to open

  159. Iflan/ Sorry STO BTC?

  160. Rosie is reading PSW….cause I said it the other day…or great minds think alike!

    I smell a fish: Well, we sifted through the January employment data with our custom-made fine-tooth comb and could scarcely find a blemish in the report. I can’t sit here and quarrel with the data. It is what it is. But I remain skeptical nonetheless,

  161. I'll bet if you sold AAPL this week's 460 calls for .45 with a stop at .60 that you would bank the money.  ( I haven't done the trade).

  162. StJ,
    Thanks for the analysis.
    Yes!  "We Shall Return!" (General MacArthur)

  163. Phil
    i have a largely bullish portfolio but got wacked today on a FAS bear put spread Feb 1 weekly $90/$86. Would like to roll out and patiently get back to break even or small loss, if possible.  what do you recommend?

  164. StJ,
    Do you have the FAS historical data as a file that you can email me?  I'd like to do some data analysis.
    My email address is cwancalo at gmail dot com.

  165. Phil,

    I thought Matt was also quitting after the comments at the end of yesterday's post.
    so, then rustle123 put this up; Doug Kass was very bullish in the last month and just went flat.  He posted the George Lindsay's "Three Peaks and a Domed House chart and it is eerily accurate so far and it looks like the next move according to the chart is a 70 point sell off on the S&P.
    followed by stjeanluc's OverBought bespoke charts………
    if this is real then OIL has a ways to run………

  166. I just got an email from Motley Fool with the heading:
    Don't Just Do Something! Sit There!
    Hmm. Sounds familiar

  167. ISRG/Kevin – Well really you are just killing the play early (and you should as why wait a year to make 10% more?) and now thinking about another play.  The logic is sound as you already are using the margin so why not put it to better use BUT, don't you think ISRG might get rejected at $400 and, if so, give you a much better price on short puts?  Not the news (oh no, not news!) item above regarding the report which is raising issues of medical device payment reform – now THAT would be a great opportunity to buy ISRG if it spreads and they sell off more than they should.  So, unless you HAVE to be short all the time – maybe this is a good time to take a break.  

    Index chart/Sage – If you can see it somewhere, you should be able to right click on it and send it to one of the charting choices.  Not sure if that's what you meant but all the indexes are listed under indicies under the MarketWatch tab.  

    Neanderthals/ZZ – How about the fact that Neanderthal genes persist in Asians and they clearly kick our ass in academics?  Yes, I have not done extensive studies but I did know they certainly had larger brains and I was under the impression they did have stone tools as well and the main difference was that Neanderthals simply didn't use them to bash skulls so the Cro-Mags made short work of them (kind of the whole Cain and Abel thing).  Now, thousands of years later, we of course have conclusive proof that Homo-Sapiens are unintelligent while no such proof exists for Neanderthals.  

    Expensive/Craig – I agree.  With 99% market correlation into a rally, it's really tough to find good deals so, like Buffett did between 2005 and 2008, we wait (hopefully not that long) for a good opportunity to deploy our cash.  Something always goes on sale around earnings, we just have to figure out what overall market support lines we'll be able to trust but, for now, we'll just have to take our current breakout levels on faith and bet bullish until they break.  

    Almost 1pm and volume just 66M – REALLY?  This is the strangest rally ever.  

    TLT/Ging, Dpast – Yes, we assume the Fed will pump it up for us ahead of their auctions – many of them next week with 10-year Weds and 30-year Thurs.  We'll be happy to make .50 and get out.  

    Greece/Rain – It's the only obvious thing.  We could have bad auctions next week but that's the opposite of what we're betting on.  Yentervention could pop the Dollar 1% and send the markets down 2% but, if we hold that, I'll be more bullish myself.  Iran could finally do something (as opposed to endless yapping) and shoot oil over $110 and that should knock the markets back a bit if it's sudden.  People might start paying attention to all the Bank lawsuits now well under way or Greece may be fixed with terms that wreck an EU bank or another MF Global we don't know about yet.  I keep looking at the earnings report each week and I just wish there were less red – that would make me happy…

  168. Interesting, MON not participating in todays rally.

  169. lflantheman 
     is sto    Statoil ASA        STO:NYSE  ?

  170. TNA/Phil,
    Re: the instructions from noon to roll the weekly TNA 56 call to next week's 61.
    Is this what you're doing with the same 2 Feb1 56 Call (TNA) you've got in IWM Money — or are you waiting it out to the bell?

  171. Iflantheman/AMZN
     What trade would you recommend at this moment?  In other words, please give me a specific trade to make. And what does BTC, STC, BTO, STO stand for? Thanks.

  172. qcmike
    STO=Sell to order

  173. FAS Data / Cwan – Tell me what data you need and I'll send it to you if I have it.

  174. I posted earlier, but BTO is buy to open, BTC is buy to close, STO is sell to open and STC is sell to close. 
    A few minutes ago I was stopped out on the short calls, so I've doubled down on long calls, using Monthly Feb 185s.  Got them for 4.60, now 4.75.   But I'm not going to actually recommend this trade right now.  I may come out of it by EOD (end of day)

  175. JRW
    What are you using for a correction factor?  Not using one at all is off about .2% or more. This is why I like your numbers better, too much goes into them. Thanks!

  176. Phil / GLW – your play was well-timed.  I like the long call/short put plays.  Similar plays on EGLE and SONC are working out well. 

  177. JR,
    How are you positioned?

  178. adding to YMI ….

  179. 2.25 on YMI….hit the button too fast

  180. Well, I've had fun with AMZN today.  I'm out of the 185 at 4.90 and all back to cash as far as AMZN is concerned.  What will next week bring for the markets?  Who knows……..

  181. CERS….buying round 2….3.14

  182. BMY down today.
    Week Chart lately.  Is it time to sell puts?

  183. Phil
    Are you looking to DD on those {Feb. (next week) TLT $115} at some point? Now $168

  184. Have fun Burr. 

    List/StJ – None of those (other than NFLX) stand out to me as obvious shorts.  Maybe I should be more bullish…

    Disaster hedge/Ron – I think BTU is an excellent buy on a sell-off so you can sell 10 of the 2014 $30 puts for $5.30 ($5,300) and TOS tells me that's a net $3K in margin but, of course, you are obligating yourself to buy 1,000 at net $24.70 so, assuming 50% margin on sticks, you want to allocate $12,500 to the purchase.  Then you take your $5,300 and you can buy 5 TNA Jan $70/50 bear put spreads at $11.50 ($5,750) and that's $450 out of pocked and you are $3,500 in the money so up 677% on cash if TNA flatlines or goes lower and, if it goes higher and BTU doesn't independently crash, the insurance costs $450 at most (assuming you don't kill it before being wiped out).  

    If the market is so wiped out that you get executed on BTU, then you have the $9,550 net profit from the spread towards your $30,0000 purchase of BTU and that's $21.45 a share (45% off) and that's the key to these hedges – IF the market horrifically crashes, do you REALLY want to own 1,000 shares of BTU for $21,450 and if the market flies up, do you mind losing $450 on the hedge.  Your sweet spot is anything where BTU doesn't go down $8 (21%) and the TNA doesn't rise $7 (11%) but the beauty of the spread is that you can pull (in a bullish move) the spread with a 50% loss and still make money as long as BTU stays over $30 so it's not just free insurance but profitable insurance even when the market goes against you.  

    FAS/Crussell – As above, you have to match your time-frames.  If you are in a Feb Fas spread, that's a bet, not a hedge against longer positions.   Also, did you say weekly, as in today?  Well, then you are just screwed, aren't you?  I guess you can salvage .45 by killing the $90 puts and let the short puts expire worthless (would suck if they don't) and then it's just better luck next time as it's not a roll when you have no money left.  Note that next week FAS only goes to $93 and this week $90 was the highest strike so don't feel bad – even the market makers never believed it would go this high!  

    Matt/Roro – Oh now, I guess I'm all alone then….

    File:Kool Aid Man.jpeg


    Dollar down to 79.10, oil $97.18, gold $1,741, TLT $116.05, XLF $14.68.  Dow volume at 1:35 is 72M – no one is buying but even less people are selling.  

  185. BMY/exe – I would wait personally.  INFI, though…wow.

  186. That's it CAT… open a factory in Arkansas and then complain you can't find skilled workers?! WTF?

  187. INFI – buy stock, sell April 7.5s for 6.20 or better.

  188. exec / Postion

    I'm in cash; I haven't made a trade all day !!


    BTW, resistance is now IWM 83.01 and support at 82.42 !!

  189. Pharm,
    You mean a net 6.20?

  190. Phil
    Yesterday huge blocks after hours, we gap up, who knew what when? This afternoon the action is reversed from the last few, mostly sellers, more volume early, and indicators are reversed. Are we setting for a close gap down? The market is rigged but which way? This is very different! 

  191. exec – yes.

  192. Gilead Sciences ($GILD) received its first bonus from the monster $10.8 billion deal to acquire Pharmasset ($VRUS) after CSO Norbert Bischofberger told analysts yesterday evening that PSI-7977 combined with ribavirin cured a group of genotype 1 hepatitis C patients after four weeks of therapy. The analysts already knew that the same treatment had performed well for genotypes 2 and 3, and promising data on the more-common genotype 1 pool added some significant luster to one of the most closely watched programs underway in the industry…..

  193. Craig / IRA — What kind of return are you after? BHP March $80 puts can be sold for $2.85 (3.5% or >1/2%/wk) with about 2.5% downside protection. I'd wait for it to get above the 200 DMA though — which it's bumping up against.

  194. JR,

    My either, however, I'm tempted to buy some TZA to hold over the weekend.  I was looking at the charts, and IWM typically closes a gap up within a few days.  This has been such a BS rally that it wouldn't surprise me if it closes by Tuesday.
    In fact, as Phil pointed out earlier, it would be just like them to be selling into this rally, and wouldn't surprise me if they've already directed their pawns to start talking down the market starting at the close.  They might just be herding in the last of the bulls for the slaughter. 
    It's interesting how they dropped the dollar despite the great jobs report.  Wouldn't you expect the dollar to rise on such a report?  Something just isn't adding up.

  195. Pharm,
    Schwab rates them a D.
    Why do you like them?

  196. Motley Fool/Daveo – Good advice

    TNA/Zip – No, in the IWM Money Trade we are patiently waiting.  You asked what you can do with them and I told you but I have no intention of capitulating into the weekend – plenty of time for that next week.  

    GLW/Terra – Yes, fortunate timing helps but, when we don't get that – that's why we scale in. 

    TLT/DC – It would have to be worth it as it's a big ($2K) commitment with a short time-frame so not adding $1,600 more to drop the basis .20 but would add $1,400 or $1,200 on Monday if we got a spike down without something fundamental changing our expectations for TLT.  

    Skilled workers/Rain – Don't you think some highly educated person at CAT should have studied the labor market BEFORE having the company commit millions to a new factory?  That kind of stuff drives me nuts…

    Gaps/Shadow – I have no opinion now, I'm just waiting for the technicals to tell me what to do (kind of like switching to Son of Sam mode).  If we get a big volume sell-off into the close, then my bearish premise is intact but it's not a very good bearish premise if we have low volume moves up and volume sell-offs but the net move each day is a half-point gain.  Then we have to say – who cares how they do it, as long as it works?


  197. exec
    There is something setting up, read my question to Phil at 1:42 and post after hours yesterday for a few hints. Why is JRW not trading? He is the master at missing disasters!

  198. MU CEO dies and the stock is up – there's a kick in the ass!  

  199. TNA/Phil
    Sorry for my confusion. But don't the IWN Money Feb1 56 Call (TNA) expire today?

  200. MU Shares halted…

  201. Phil/BTU,
    Are you selling the BCS here selling the 50s buying the 40's?
    "Oh, how could I forget BTU!  I know we did them a couple of weeks ago but you can sell the 2014 $30 puts for $5.40 and that, by itself is nice with BTU at $38.31 (TOS margin is $3) and you can take a flyer with a 1/2 sale of the 2013 $40/50 bull call spread at $3.20 so committing $3,000 in margin to 10 short puts and $1,600 to 5 long spreads puts net $1,400 in your pocket with a $5,000 upside potential at $50 and worst case is you end up owning 1,000 shares of BTU at net $31.40, which is 18% off the current price.  "

  202. MU — CEO died in plane crash.

  203. StJ,
    FAS data: Do you have daily open/close/high/low?  What do you have?

  204. TNA / Zipla – You are right, these TNA calls do expire today and need to be rolled.

  205. Phil
    You're not alone! I haven't consumed the "Spiked" beverage yet!
    But It does look tempting though! 
    FWIW , this rally reminds me of what a duck flying near a "Blind" experiences before he's shot down!
    The decoy looks like a duck!  Sounds like a duck!  Doesn't really act like a duck! But WTF!
    Lets fly down for some "Duck Chat"
    If the duck paid attention to the paint peeling off the decoys plastic bill and kept flying, he wouldn't be duck soup!
    Just my opinion!

  206. AAPL portfolio/  I've placed a good-till-cancelled order to sell the   10  July 390/415  bull call spreads for 23.75.   This would squeeze 95% of their eventual worth out of them.   Right now they are at about 19.75, so another  $4,000 can be elicited from the trade being closed at 23.75.  There is $19,000 tied up in the trade, so we can make 20% on this in 5 months just by sitting on it (if it takes that long).  After that I'll want the money to put into a more lucrative play, as July is another earnings month.   I just post this for anyone interested in how I think about this stuff.

  207. FAS / Cwan – You tell me, I can get you almost anything going back years on a daily charts and many months on intraday charts! That includes almost any indicators you can think of!

  208. Micron Tech
    I have a contack, If I can think of a reason to call this weekend I will report. Last I heard secrets were thicker than Tulie fog, people die from that. The company has no compasion for anyone, my guess is they are about to move out of Bosie. ID government is in on problems there.

  209. Dropping the dollar.  They're going for maximum pain.

  210. IWM mostly sellers now at trendline resistance. MMs have the gap very close!

  211. Homebuilders…..more for them I guess, since no one can buy one anyway…sheeze….

  212. So…TrimTabs is saying actual job outstanding, not seasonally adjusted, are down 2.9 million over the past two months…must resist the kool-aid… 

  213. Someone is getting out, taking bid  whatever that is, the sheeple have their eyes closed!

  214. mu ceo dead in plane crash

  215. lflantheman / AAPL Bull Call Spreads
    How do you determine the downside risk of this trade?

  216. StJ,
    FAS Data: Either FAS or XLF, daily open/close/high/low, as far back in years as possible, if the file is not too big.
    cwancalo at gmail dot com.
    For now, I just want to do some simple average, std deviation, etc.  I know that you've reported statistics like those.  But it would be nice if I have them on my computer.

  217. Data / Cwan – OK, I'll process a file for you this weekend. Remind me by Sunday if I have forgotten…

  218. Phil, AMZN now $186.26  Sold 2 $150.00 puts yesterday at $14.55 now 11.50 $3.00 net.
    What would you suggest. hold, do a trailing stop, or turn it into something else?

  219. 14real….you have to have a specific bcs to determine the risk of the trade. 

  220. Another flush!
    Fake! Fake! fake! Why was I blocked? Who is spying? Volume in IWN is at the moon, no a moon around saturn!

  221. Shadow,

    They're running up IWM big time chasing out the shorts.

  222. CEO dead in plane crash? Wow that is how it has gone in Idaho for a while now. Nothing to investigate works!

  223. lflantheman
    I'm referring to the "10 July 390/415  bull call spreads for 23.75"   

    I understand the comments on hedges, but I think one needs to step back and look at the role of hedges. I went heavy into financials with Bull Call Spreads, went aggressive on MON Bull Call Spreads and some more modest Bull Call Spreads on the premise that for some reason the market did not want to collapse, even with the problems in Europe. I took the above hedges in EDZ/FAZ/TZA as well as selling puts in FCX. They were all mentioned by Phil.
    When all my Bull Call Spreads started advancing rapidly, I realised I did not need to be married to the hedges. I flipped the hedges from bear to bull by selling the long calls and leaving the sold calls naked. A gutsy move maybe, but that is when the decay of these 3X vehicles works in your favour. Yes, I have risk until April (the expiry date of the naked calls) but I am way in the money from the Bull Call Spreads and can easily finance some long calls if things turn nasty.
    For me the real value of Phil's missives are not so much the picks, but the process of thinking through the trades for oneself. My most unprofitable trades are when I have followed Phil literally – the most profitable when I used his picks for inspiration. 
    ..and the most important lesson I ever learnt – if you don't become an expert in knowing when and knowing how to roll – be careful out there.
    I apologize if this comes across as grandstanding – but if people don't add a large dose of thinking for oneself to Phil's advice I believe it is a very risky route to take. 

  225. exec
    Chasing out shorts! This is looking like the blow out top of tops! Now the action is lots of small trades but the result is the same. Wish I had the knowledge and guts to play this. WHEN IN DOUBT STAY OUT!!!!!!!!

  226. Phil – do you still like long /DX  (as long as it stays about 78.85)going into next week? You said they are selling a bunch of treasuries during which time they usually tank the market? Also potential Yentervention… I know I just asked you this yesterday, but that was pre-jobs, now we're talking post jobs report

  227. lflantheman 
    I'm referring to the "AAPL -10 ea July 390/415  bull call spreads for 23.75"   

  228. Shadowfax/Exec/Shorts
    Short interest in the market was extremely low so you really don't have any shorts to chase out.  That is partly why the volume is so low.  If this were a short squeeze today, the Dow would've been up at least another 100pts. 

  229. The Bloomberg guys were just saying that the average 2012 target on the S&P from analyst was 1350! And we are only 6 points away… 

    So what now, sell in February and go away?

  230. @Winston
    I'm presuming that you mean on a really— from the get go— 'spiky' day, like today? On that basis your strategery makes sense to me.

  231. IWM Money/Zip, StJ – My bad, I keep misreading those.  Thanks for pointing it out.  Yes, we do need to roll the 2 TODAY $56 calls (now $7.60) to 3 next week $62 calls (now $2.90) and hope we don't gap up another $3 on Monday.  

    MU – Ah halted, that explains it.  He was  a hands-on guy, I would think they drop to $7.15 in the very least (out of respect).  

    BTU/Sage – Sorry, going to fast for my own good.  No harm as still $38.14 but I meant doing a 1/2 sale as in that type of play but it would be SELLING 10 of the 2014 $30 puts for $5.40 ($5,400)  and BUYING 5 2013 $40/50 BULL call spreads (you buy the $40s, sell the $50s) for $3.20 ($1,600) for a net $3,800 credit where you make up to $8,800 if BTU makes it to Jan expiration above $50 and you make $3,800 as long as BTU is over $30 and you own 1,000 shares of BTU for net $26.20 (31% off at $26,200) if it's put to you below $30 so I had the right Idea but then I somehow reversed the math.  Now I like this trade even more!

    See why I don't feel hurried to make bullish trades?  You can always find these if you look for them. 

    Duck Soup/L4 – Now that's a good description (and a classic movie

    Unemployment/Ink – I hear those guys are all lazy anyway… 

    AMZN/Rip – Depends if you have something better to do with the margin than make $11.50.  The idea was no way would AMZN go that low so we took advantage of a dip to sell premium.  The return on margin is about 100% at $15 so still 80% or whatever is no reason to kill it unless you have lost faith in AMZN holding $150 for the year or you have a better, safer, faster way to put $15 of buying power to work to make $11.50 in the next 12 months.  That's how you should always be evaluating your positions – are you getting good bang for your buck?

  232. 14real…post  2:52……..the downside risk of the July 390/415 bcs is AAPL falling below 415 by expiration.  Anything below that and the spread starts to lose money.  We paid 10.60 for the spread, so the break even point is $400.60.   Now I don't calculate these numbers in my head (Phil sometimes does).    There are several programs for quick computer calculation of trade risk.  I use to crunch these numbers for me.  So, put into simplespeak, if AAPL stays above 415 between now and July we make money.  We start to lose ground at under 415 and we break even at 400.60.   At 390 we lose all and below that can lose no more.  Chances of all that with AAPL?  I say less than 2% .

  233. rustle123
    I don't think this is a short squeeze and it seem to only be the Russel, but sometimes it is the indicator. Last night someone traded $29 billion in IWM, 2 orders, same second after close!

  234. 29B, that cant be right

  235. Lflan
    Fidelity is showing a net DEBIT of $19 for the July AAPL 390/415 BCS
    How do you 'sell' it for $23?
    Buying the 390's for $78, selling the 415's for $59.
    What's up?

  236. @Shadowfax
    HFT program.  Gotta love 'em

  237. Phil,
    you're not entirely alone, but there is the LTRO 2 coming at the end of Feb and then the FED again in March all of which is probably keepng the sellers wary especially after the run since Jan 3,
    i think i mentioned yesterday that i saw a Harmonic Butterfly pattern that projects the AUD/USD on a trajectory to reach 1.15 with a close today above 1.765., but that 79 number for the Dollar Index looks like a lot of support unless there is a Trillion of Euros coming followed by another Trillion USD from the Easter Bunny
    that may make OIL worth a long look?

  238. IWM Money – Bought back the TNA Feb1 56 calls (7.40) and sold 3 Feb2 62 calls (2.70).

  239. Very nice adjustments Winston, thanks for sharing.  

    Dollar/Jrom – I like long the Dollar over 78.85 but not so much the risk of being long Forex overnight.  UUP should hold $22 and you can simply play the March $21 calls for $1.06, which is just pennies of premium with UUP at $22.03 so that's great leverage with no margin requirement that anyone can use.  

    QQQ $62 puts at .06 with QQQ at $62 are fun for $60 on 10. 

  240. lflantheman 
    That is an excellent analysis using quantifiable data to reach a premise for entering and exiting the spread! 
    Thank you

  241. $29 Billion more volume after close than all day! Today pull up a volume graph check ou 2:10 to 2:40, WTF!

  242. There's no way there will be a QE3 unless Europe gets extremely messy.  I don't think they'll even be able to keep interest rates low till 2014.  If you look at the yields in bonds today, they are anticipating late 2013 for interest rates to rise now.

  243. typo………1.0765 AUD/USD

  244. Maya1…You dont sell it for 23 right now.  I just decided I want 23.75 for the spread and I put in the good till cancelled order for 23.75.  As the spread gets more valuable (as time passes, as AAPL goes up in price, or both) it will eventually become worth 23.75 and the sale will be automatic.  I do that to decide what I want for the spread now, put in the bid, then just forget about it.   That's something I'm trying to teach the younger investors.  You decide what you want  to be paid for your position, or what you want to pay.  Don't let them decide.

  245. Phil/Unicorns   I think I saw a smile….. :)

  246. Maya……Note that we already own this spread in the AAPL portfolio, 10 of them.

  247. Pharm – Wine is a wonderful prelude to body surfing – Today's waves are breaking BIG….. ;)

  248. flipspiceland
    Hi asked you yesterday three times what was your impression about Belize thanks

  249. There are some huge TZA orders going through


  250. flipspiceland/hedges
    Not necessarily. Those BCSs and Hedges were put on six weeks ago. For the first week, the BCSs were losing money and the Hedges were performing as they should. Then the financials took off and kept on going. That's when I sold the Long calls on the hedges. It was a weird feeling. In the past I had always kept Hedges until the bitter end, and somhow felt proud that they lost money, especially when the longs they were protecting were making money. It does not have to be necessarily all or nothing.
    To your specific point, I would not make any change based on a one day 'spike'. But the advantage of these 2X and 3X hedges is the decay. The trick is being flexible enough to go back in when risk exposure dictates, i.e. buy long calls to cover the naked calls if the sector collapses.

  251. Lflan,
    Oh! got it.
    NOW it makes sense. Thanks.
    Sorry, was not quite following the 'portfolio'

  252. Those were the QQQ puts that expire in 45 minutes, of course.  

    Oil/Roro – I can see the upside case but, in the end, the demand isn't there so hard to play it up when the Fundies don't support it.  Better to let others bid it up and then we can enjoy shorting them.  You know me, I'll go long for a quick ride but certainly not as a longer bet.  

    IWM Money – Keep in mind that the goal of this trade is to simply pay off the cost of the long spread ($1,104) and get a free and bullish ride on the RUT to 770 (now well past) so we make a clean $5,400 if the spread expires above $77.  So these sales are just gravy and very well protected as we can't lose on the short calls without the currently $2,800 net spread going deeper and deeper in the money.  

    And what Lflan said re. AAPL…

    Unicorns/1020 – Like the Neanderthals, you're not going to survive if you can't tell a grimace from a smile… ;)

  253. exec…..I've thought that a small amount of TZA held over the weekend might be a good idea.  Perhaps I'm not the only one thinking same.

  254. FAS Strangle – Not much hope for a broken stick today now… I'll close the position and we'll restart fresh Monday. I'll have some notes this weekend on how I might change entries and exits based on this week's action. We obviously can't take another 10% week either way especially since the premium will not reflect that volatility!

  255. And FU CMG!!!

  256. Fas Strangle I am looking of rolling 1x to FEB2 85c and 1x to Feb 85c what can go up by 5$ can go down by 5% cost +- 520.00

  257.  IWM is holding the 200 minute SMA and JRW's resistance. I can't spell manipulation but I can see it.

  258. Fas Strangle still waiting for the market to drop sorry it is 5$ not 5%

  259. StJ,
    Thanks for the data!
    As far as FAS Strangles, I bought back my FAS 84 calls.  But instead of waiting until next week, I sold 1 contract next week 94/84 strangle.  Just ONE contract.

  260. FAS / Yodi – It could, but it could also go up another $5 next week on any news from Europe this weekend. A roll is basically buying back your position and selling another one. Nobody said it had to be done at the same time so I'll wait and see what happens. The market will be open on Monday and I am sure we will be able to sell premium again… But good luck… and have a good weekend!

  261. Fas Strangle  I have the 83's I Think I'll roll to feb 85 for even and see.   This low vix is really hurting our premiums!  

  262. Hunter S.
    So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark—that place where the wave finally broke and rolled back.

    11 year high in the NAZ!! High water mark?

  263. FAS / Cwan – I don't see a 94 strike next week. Do you mean the Feb options? As I said to Yodi, I am taking the weekend off and see what happens next week….

  264. Jabob – I think that was the first "FU CMG" of the day.  Thank you.

  265. AAPL portfolio:  I have sold 5 of the 10 April 425 calls for 40.90.   Note that this is the same as my shorting AAPL, because it leaves 5 of the 450s without long support.   AAPL could not reach 460 today and I don't see it surging upward on Monday.   We will see.  

  266. yodi,
    Be careful!  You don't know how liquid those calls will be in the last few minutes!

  267. FAS Premium / Joemayo – My point exactly on the premium – it doesn't pay us for the risk mostly up but down as well. And if we are going to have a correction next week, we might be able to get better prices on the premium we sell so no need to rush to complete the roll… This week is a setback but they sell premium 5 days a week and I am guessing we'll make more in the weeks to come!

  268. StJ,
    Sorray, it's 93 call next week (not 94).  Just a small position; can't resist.  Will follow you next Monday for more positions.

  269. Oh and FU FAS….

  270. and…FU TNA!

  271. Phil,
    i did mention this before, and although i am pretty fluent with the futures/cfd/currencies i am also very elementary when it comes to the options so here is the question;
    since i was looking for short opportunities back in dec and jan i probably could have hedged against a run up with some simple and maybe inexpensive out of money  call options using applicable EFTS and/or futures contracts?
    i know it is pretty beginner but have to start to get a handle on options trading too. thanks

  272. That's all for me this week… It has been "interesting"!

    Have a good weekend all!

  273. 1:18 PM European shares close the week with gains, getting their big boost at 8:30 ET when the payroll report hit. Stoxx 50 +1.5%, Germany+1.6%, France +1.3%, Italy +1.5%, Spain +1.1%, U.K. +1.8%. Euro flat at $1.3140. Stoxx 50 +3.2% for the week, +9.3% YTD. Stolid Germany is up a cool 14.7% YTD.

    Up 1.4% today and crossing the 2,900 mark, the Nasdaq hits an 11-year high (Bush and Gore were duking the election out in the courts then). The index is 11.3% higher YTD.

     "The Fed might want to think twice about carving (0% rates forever) in stone," writes Caroline Baum. Job gains were broad-based, with nearly 2/3 of 266 surveyed industries adding jobs. "Looming fiscal imbalances will supplant cyclical weakness as the #1 policy concern facing Washington. That's a discomfiting thought."

    The city of Providence faces bankruptcy by June, warns its mayor, facing a $22.5M deficit even after pay and benefit cuts agreed to by unionized employees. He's asking for retirees to accept lower benefits and tax-exempt institutions like Brown University to chip in millions.

    Russia's central bank holds policy steady, its benchmark rate at 6.25%. Even with inflation running at a post-Soviet low of 4.1%, the bank's statement has a hawkish tint. At least some of the recent improvement in inflation numbers is from the delay of utility bill hikes until after the Presidential election. Russian ETF: RSX +19% YTD. The ruble: FXRU +6% YTD. (PR)

    Russia cuts gas supplies to Europe for a 3rd straight day, needing the fuel itself as there is no letup in the particularly harsh winter there. Unlike 2009 – when supplies were cut over pricing disputes – EU states have improved their storage facilities and ability to move gas about. Gazprom (OGZPY.PK+17.8% YTD.

    Hopes a bumper corn crop in Argentina could ease tight global supplies are dashed as rain arrives too late to help the 80% of the crop that is past the pollination stage. The USDA's slashed production estimate of 26M tonnes is looking optimistic, with some forecasters calling for just 17M. Even a crop of 20M would leave world ending stocks frightfully low. CORN -1.6% YTD.

    Today's jobs report was a good one, but a bit of perspectives hows both the devastating number of job losses during the recession as well as the minimal bounce off of the bottom. A disturbing feature of the modern recession is its lack of a "V' move in employment. 

    Refusing to take losses on its holdings of Greek paper, the ECB is considering other ways to assist the debt restructuring. Among them, a plan for the bank to sell its Greek bonds to the EFSF at the price it paid for them. Once the EFSF owns the paper, it could then accept a haircut. The key is to avoid the appearance of central bank independence being compromised … too late for that.

    Portugal has been quietly reaching out to advisers to hear options about restructuring its debt, reports IFR. The government is keeping an eye on Greece with the thought of trying to replicate whatever the final version of its PSI agreement ends up as. "(It) could create a significant precedent," says one sovereign debt adviser.

    Wow, laying it on a little thick now:  These 10 undervalued stocks could rise by as much as 58% this year, J.P. Morgan says: HESERJFCXALLACINOVAAMETFLRWCN

    NY AG Schneiderman slaps a new lawsuit on Bank of America (BAC), JPMorgan (JPM), and Wells Fargo (WFC), charging them with "deceptive and fraudulent" foreclosure proceedings through MERS – the national mortgage electronic registry. "The banks created the MERS system as an end-run around the property recording system," he says. (PR

    Jefferies maintainsa Buy rating on Pfizer (PFE -0.9%) on the potential for a strong H1 in advance of a strong H2 pipeline. Analysts with the firm set a 2012 EPS target ahead of the midpoint of Pfizer's own guidance, $2.27 vs. $2.25.

    Merck (MRK -0.2%) drifts lower on a downgrade to Neutralon valuation at Davenp2ort, saying earnings visibility into 2013 looks relatively flat. 

    US Airways Group (LCC +5.9%) says consolidated January traffic rose 3.7% as capacity increased for a second straight month. Passenger revenue per available seat mile, a key profitability metric, also increased nearly 10%.

    It's been a game-changing day for THQ (THQI) after shedding 23.3% following a weak FQ3 report. Earlier in the day, a Brean Murray analyst said the firm faced a liquidity crisis and would need to tap a credit line or boost sales. That call was answered later in the day with word that THQ signed a strategic agreement with Innovative Leisures to publish titles starting this year.

    STR Holdings (STRI -20.1%) freefalls after preannouncing Q4 revenue of $36.5M (-63% Y/Y) and EPS of -$0.04, far below a consensus of $44M and $0.10. The maker of solar encapsulents says that while there was an uptick in German solar installations in late 2011, the demand was mostly satisfied through existing module inventory. STR had previously warned on its Q2 and Q3 results.

  274. Shares of wind turbine parts maker American Superconductor (AMSC +9.7%) are lifted by peer Zoltek's (ZOLT+38%strong quarter and the Obama administration's fast-track plansfor making areas off the coasts of Maryland and New Jersey available to wind-energy developers by year's end. Also: OPTT +15.8%BWEN+10.5%CPST +2.9%.

    Zoltek (ZOLT +38.6%) shares skyrocket after beating on earnings and revenues in its FQ1 report. The producer of carbon fibers used to produce windmills says the large turbine segment of wind energy will increase at 15%-25% annually for the next decade or more. Forbes' Eric Savitz also suspects shares are getting a boost from short covering.

    Shares of DryShips (DRYS +10.1%) pull a rally out of thin air – surging over the last 30 minutes of trading. Erick McKitterick set offan options volatility warning on the stock earlier in the day noting a 33-to-1 call-to-put ratio.

    Boeing (BA +1.4%finalizes a $1.7B deal to supply C-17 military aircraft for India, extending the life of its Long Beach production site entasked with building the giant cargo planes. (previous)

    Bank of America (BAC +4.1%) more than doubles the maximum consideration payable in its debt tender offer to $3.5B from $1.5B, after saying the offer was oversubscribed.

    Caterpillar (CAT +2.8%) says it will close a locomotive assembly plant in Canada where unionized workers have been locked out since the beginning of the year after they refused to accept pay cuts and other concessions. The Canadian Auto Workers Union says CAT never intended to keep the plant open.

    Private investors stick to a Facebook (FB) valuation of close to $100B, according to new trading data released from Sharespost. Facebook shares traded at $40 a pop – compared to a $34 share price from a previous auction completed on Jan. 24 before the firm filed its S-1 with the SEC.

    The love-fest from Facebook's (FB) IPO extends into its second day, as Zynga (ZNGA +7.5%) shares add to yesterday's 17% jump. But the options market isn’t so sure the rally is sustainable, as ZNGA’s “fear gauge” – a reading of 30-day implied volatility – jumps to a new high of 120%. At the least, traders view the stock as one withlots of volatility in its future

    Jim Rogers says he won't buy Facebook (FB) because it's too expensive. Current valuation on the IPO puts it a over $100B, the largest internet offering ever. “It’s been demonstrated many, many times before that sellers are usually smarter than the buyers, " Rogers says, "they usually know when the best time to sell is, and Facebook is doing it.”

    Google (GOOG +1.9%) files for an experimental license to test a Wi-Fi and Bluetooth-enabled device in four U.S. cities (FCC application) in a move that could tip off that the firm is considering a new hardware device of some kind. The mysterious product under development is still a secret, although GigaOM reasons that it could be a set-top-box style device or a new version of Google TV.

    Even if one counts tablets as PCs, 2011 saw smartphone sales eclipse PC sales for the first time: Canalys estimates global smartphone sales rose 63% to 487.7M, while "PC" sales (63M tablets included) rose 15% to 415M. Android accounted for 49% of those smartphone sales, and the iPhone 19%. Soaring smartphone and tablet usage, partly at the expense of PC usage, has major implications for many Internet companies.

    Sprint (S) attempts to challenge the Kindle Fire by offeringthe ZTE Optik, a 7-inch Android tablet sporting a Qualcomm (QCOM) Snapdragon processor, for $100 with a 2-year contract ($350 without a contract). 3G tablet sales have lately failed to keep pace with the tablet market's overall growth, and that's proving a hindrance for Qualcomm and other wireless chipmakers.

    Android, which has seen its enterprise adoption held back by security concerns, receives a vote of confidence from the U.S. government, which plans to install a secure version of Google's (GOOG) OS on phones used by multiple agencies. The government also has plans to support iOS (AAPL) devices, but says it chose to work with Android first due to its ability to modify the platform to meet its needs. (earlier)

    Your latest Apple (AAPL) patent craziness: Shortly after Motorola Mobility (MMI, soon to be GOOGwon an injunction against Apple blocking the sale of most 3G-capable iPhones and iPads through Apple's German online store, a German court decides tosuspend the injunction. Separately, thanks to a favorable November hearing, Motorola has won an injunction banning iCloud's push e-mail capabilities in Germany. 

    In spite of huge holiday iPhone sales, Android (GOOG) continued increasing its share of U.S. smartphone users; comScore estimates Android's trailing 3-month share rose 40 bps in December, to 47.3%. However, the iPhone (AAPL) did post a larger gain, increasing its share 90 bps to 29.6%. Unsurprisingly, Research In Motion (RIMM) was a loser; its share fell another 60 bps to 16%. (November data)

    Three lunchtime reads:

    1) Ford CEO Alan Mulally's exclusive interview with Seeking Alpha

    2) In rise of gold bugs, history repeats itself

    3) Greece's hazardous road to restructuring

  275. Sold a bunch of TLT 119/120 put spreads for .90 today and picked up a few 122 calls for .05 (All are next week expiry). Will wait to sell the TLT 120 calls for hopefully around .4 next week to complete the whole trade. Essentially, hope to end up with the short 3X short 120/119 put spread for .90 and short 1X the 120/122 call spread for .35.
    I'm still upset about my last TLT play. Had shorted 100 of the 118/117 weekly call spreads for .95 that i had to close out on Wed because the 117 calls got exercised and IB has this stupid rule where the trade has to adjusted to get within margin (although the risk here was limited due to the long 118 calls). Ended up leaving 10K on the table this week. Time to take a cold shower now.

  276. Thanks all and have a nice weekend closed FAS Feb1

  277. STJ  I know  I've narrowed the stangle to collect premium and it's back to bite me this week.   Last Thursday I considered a 10% on either side selling 89 calls but didn't open them.  I certainly didn't think those would be itm today 

  278. Options/Roro – Sure, especially on the Ultras.  I believe, when we began the FAS money trade, that IWM spread (not an ultra) was only on the money, so pretty bullish bet but now it's on track to make $9 out of $2, even without the offsetting short sales.  That's a really simple trade and they are slow to lose money (and slow to make it) but you are clearly either on or off track with no particular pressure to make quick adjustments.

    TLT/Mampcs – But next week is the week we do think they go for the $120s 

    Have a good weekend STJ – and everyone else!  

    Let the fact that the US economy is turning around and the markets are once again pointing towards prosperity be our biggest problem in 2012!  

  279.  Shanghai Copper Inventories are up +471.0% ytd to the highest level since March of last year and approaching their April 2010 record.

  280. TLT/Phil, yes, i'm hoping they are going to be taking it to 120 next week. That's why i sold the 120/119 put spread for .90 today and picked up the 122 calls for .05. I need the short 120 calls to essentially pay for the .10 that i'm liable for on the 120/119 spread. The long 122 calls are just to limit the margin on the short 120 calls.

  281. To clarify on the TLT play, i hope to end up with the following:
    3X TLT Short 120/119 put spread at .90
    1X TLT Short 120/122 call spread at hopefully around .50 to .60.
    Net out of pocket = 0 (after commissions).
    Makes 6K if TLT finishes next week at 120. Makes 4K at 121. And makes 2K above 121.
    Off course, this is contingent on being able to sell the 120 calls next week for around .50.

  282. Oops, that should read 4K if X=20 (i.e .60 of the put spreads and 20 of the call spreads).

  283. Copper/Angel – That's what's keeping me out of FCX.  Last March copper wass $4.50, now under $4 but we fell all the way to $3 last year, which is probably about the right price.  

    TLT/Mampcs – Ah yes, I never do those spreads so I keep thinking of them as bearish.  TLT already made a nice bounce off $116 today.  

    Oh NOW the Nas drops – thanks a lot –  FU TradeBots!  


    Barry's Succinct summation of week’s events:


    1) Jan Payroll gains show big upside surprise of 243k, about 100k more than expected, unemployment rate falls to 8.3%

    2) ISM services index rises to best since Feb ’11

    3) ISM mfr’g up 1 pt but touch less than expected

    4) Jan vehicle sales at 14.1mm is best since clunker month in Aug ’09 and the most since May ’08 before that

    5) US savings rate rises to 4% from 3.5%

    6) Initial Jobless Claims fall 12k

    7) Amount of Germans unemployed fall again, rate at 6.7%

    8) UK mfr’g and services PMI figures both rise

    9) Final euro zone mfr’g and services PMI in line with initial

    10) Portuguese bond yields fall from highs, Italian yields lower too with Spain flat

    11)China mfr’g PMI stays above 50, Taiwan and South Korea rise but remain below 50

    12) India’s mfr’g and services PMI’s both jump


    1) US Jan Consumer Confidence falls almost 4 pts to 61.1, well below expectations of 68 as labor market answers soften and those that plan to buy a home falls to lowest since Aug and those that plan to buy a car down at lowest since Oct ’10

    2) CS home price index falls to lowest since Feb ’03

    3) MBA said refi’s fell 3.6% and purchase apps were down 1.7%

    4) Canada’s Jan jobs report disappoints

    5) China PMI services index falls to 52.9 from 56, the 2nd lowest since Feb ’11

    6) Taiwan’s economy in a recession after Q4 contraction q/o/q

    7) Greek debt discussions for another week are hours away from wrapping up

    8) Amount of LTRO funds from ECB continue to be redeposited with the ECB

    9) Giants/Pats Super Bowl again? How many more tortuous years will I have as a Jets fan?

  284. Lotsa BOT bashing here and rightfully so. Also lotsa techies in PSW world. Potential early endeavor for "Build A Berkshire"….. design and build PSW BOTs. Or, anti-BOTs if you will. 

  285. I was expecting a thousan FUs today, only saw 7.  Probably we are in much better shape than i thought ;-)
    Have a nice weekend everyone

  286. Pharm – when you get back from body surfing, do you follow this company? THER

  287. AAPL portfolio:    So I bought sole the April 425 calls, then had second thoughts about  leaving AAPL short calls uncovered over the weekend, so…………..just before close I converted the April positions to the following:    5  April 425/450 s converted to 5 April 400/450s.      Why would I do that?   Here's the math:  Say AAPL goes to 470 within 10 days, by 2/13… the 425/450 spread makes $900 but the 400/450 would make $1,700….due to differences in delta.    If AAPL were to go to 450 in 10- days the 425/450 loses $1,005, and the  400/450 would lose $1,310.     So the advantage is, a  loss of 10 points is -$305 for the new spread (not much difference),  but a potential gain of +  $800 for the new spread.   So not much downside, but some upside advantage with the new spread.  What I really want AAPL to do is pull back, so I can unload these short calls and wait for the inevitable later upturn.  But , geez, everything seems to be pushing upward.  So, we'll see.   Stj……here are the numbers for AAPL trades today:   STC 5 Aprl 425 calls for 40.90    BTO  5 April 400 calls for  62.65.

  288. typo….above should read ….So I sold the April 425 calls………
    Going skiing for the weekend, then stuporbowl on Sunday.   See you all Monday.  Have a great weekend. 

  289. Inkarri1982/Los Angeles
    Re your post today at 11:02 am
    I live in Venice and all I see are new restaurants opening up all the time on Abbot Kinney — and, to may amazement, they all seem to be doing well. Seems like you're seeing a very different picture in LA. Seems to me that most people are oblivious to it. Must be the climate.

  290. Warning – Reality Alert!  

    Thomson Reuters data pours cold water on the likelihood of a continued climb for stocks from current lofty levels. S&P 500 Q4 earnings growth is running at 8.4%, or 5.3% if Apple’s results are excluded; 43 S&P companies have issued negative EPS pre-announcements for the current quarter vs. 12 positive – the 3.6 negative to positive ratio is the largest showing since 2001. 

    All 3 ruling coalition leaders in Greece oppose new austerity measures being demanded by the country's creditors as a condition of the new €130B bailout. A €14.5B bond comes due on March 20, and German bankers are known for their brinksmanship in debt restructurings. The clock ticks. (see also)

  291. morx – never heard of them.  Makes money, but not much.  I need to look at the market size.  To me, looks like a shot in the dark…..

  292. Please stop poisoning our koolaide Phil….I am drinking heavily this weekend, as I feel …. Barking mad!

  293. Reality Alert, Phil, Aren't we still supposed to be ignoring reality? Suspension of disbelief is what great fiction is all about. Good weekend to all.

  294. Well, even the Thompson article is saying you should ignore the facts… for now.

  295. just a thought that crossed my mind reviewing the DAX……….100 point move up on a 5 minute bar on the NFP.
    the DAX closed at 6,785, but is still below the July 2011 highs 7,500 although the DOW has already made it back to highs seen last summer.
    MASSIVE RESET underway by central planners?……….
    the other odd thing i picked up early this morning watching price action during European hours was how the EZ equity indexes were acting like there was no care in the world in front of the NFP print.
    just an observation…………

  296. I assume on the hopes that either things get better on their own or if they don't that the CBs will step in and do whatever they need to to prop up the economies I imagine.  Moral hazard to the extreme? 

  297. Rather than trying to explain away the fact of a rocketing market, I tried plugging an explanation into the fact of it.  There is a crystal clear intention on the part of the U.S. and European central banks to print money until inflation starts to erode job creation instead of inspire it — a plan that has quite a bit of room to run.  And, In  2011, wasn't $80 billion taken out of stocks and dumped into banks?  Interest rates either are, or are about to be, negative in inflation-adjusted terms going forward; BoA offers a withdraw-anytime CD/savings account rate of 0.003%.  That's 30 basis points per year.   Have I said anything untrue so far?  
    Hence anyone who reads any newspaper understands that — however badly "the economy" may be doing — the risk of having your dollar or Euro bank balances evaporate into nothingness must far outweigh the possibility that the corporations which comprise the S&P are collectively going to do much worse than that.  And since most people don't read the paper — or read it often enough to understand the above-invented "explanation" — there is a potentially fantastic premium for getting in early, however much "uncertainty" may surround the future of Apple, or Google, or Ford, or Boeing, or Exxon, or  Amazon, or — go through the list.
    "Oh, but there could be a big selloff any minute!"   And your point is……?    I'm not even sure that an Israeli missile hitting Tehran would take down this market for long — it would probably constitute a CCJ buying opportunity!  Remember Fukushima?  It created an instant bull market in potassium iodide!
    I'm not cynical. OK, maybe I am.   I just don't see how the risk of owning U.S. large caps at their present  price level — before the bank depositors abandon their CDs — overmatches the risk of accepting under-2% CD rates with the ECB and Fed hovering overhead shoving bales of money out of their helicopters.  I'm not a TA guy — more a T&A guy, perhaps — and I accept that buying now may mean suffering through a bad month or two. I've already suffered one in the other direction, and I'm still standing.  But I don't think Kool-Ade is needed to see that — even if the current market is the product of massive bot-driven manipulation — it is not likely to be for the purpose of dumping shares on the unsuspecting public, since they already have their money stashed in banks.  It is more likely a government-driven plan to pump up equities to create a badly-needed "wealth effect."   As long as the helicopter is hovering over my house, bomb bays agape, I don't see the risk in standing out there with my arms outstretched while my neighbors cower in theirs.  But I'd be happy to be instructed.

  298. 0×0, that's exactly what they are doing:  trying to create a wealth effect.  Ben even admitted to it.  Once. 

  299. Not exactly a ringing endorsement of NFP by Lee Adler as posted by Ilene;

  300. Bruce Krasting calls the score for Sunday; Giants 37, Patriots 35.
    Don't know………I think it depends on Brady. If Brady comes out hot then lookout.
    I did call the Bruins 4- 0 over the Canucks for game 7 last spring, and did also call T Thomas to win the Conn Smythe.
    for Canuck, if you are around; nice to see the Red Wings beat the Canucks the other night too!

  301. Zero,
    Or is it political?
    Is it a coincidence that oil went to $150 a barrel before the previous presidential election? 
    Outside forces have more control over our markets than we like to believe.  One working theory is that foreign countries want to see Obama reelected because they believe his policies will make us more like them, or worse, like they used to be, since they are trying to reform the very policies in which the current administration is taking us.  Additionally, there's the entire "new world order" thing going on which apparently this administration favors.  Do you really believe that everyone wants the USA to be stronger than them?  I'm sure Phil and many of the more liberal members will totally discount this concept, but I believe that it is possible that outsiders can influence our markets and our elections and thus they will not allow this market to fall during this election cycle.
    I'm mad at myself because we were having this very discussion last fall and I didn't listen to myself and go fully long because I just couldn't make myself believe that they could control the markets so effectively.  In hind sight, everything is playing out exactly as you would expect if there was a concerted effort to steer an election.  Obama is already starting to deliver his "see my policies are fixing everything and I just need 4 more years to complete the mission speeches" from the BS news that was released yesterday.  Bloomberg was reporting that one oil expert is expecting 50 to 70 dollar a barrel oil by mid summer. That's a far cry from the $150 a barrel oil that started the last meltdown.  The media in general (with the exception of FOX) remind me of cheerleaders the way they report on Obama.  Where's the daily death counts? Where's the daily Gitmo releases, the daily pain indicator, the homeless interviews, daily reporting on the unemployment crisis, energy crisis, the deficit crisis, there's no steady drumbeat of negative Obama reporting. I just scanned through the news on yesterdays unemployment numbers.  You don't find anywhere the detailed analysis like you do on this site that explains what those numbers really mean.  Instead, they spin everything to be a positive, or less bad, or better than expected.  It's truly a joke.  I can totally relate to Phil when he says he wants to get bullish all the way up to the point when he reads the paper.  There's no logical explanation for why the market is doing what it is doing other than manipulation. This is by design.
    They point is, they will do everything in their power to keep this market propped up until the election.  What will be interesting is to see what will happen after the election.  My guess is regardless of who is elected, they'll have to let the air out of this balloon.  So hold your nose and jump in.  Well be seeing double digit gains on the market which Obama will highlight eloquently in his campaign speeches.
    I know the liberals despise this guy, and I understand he has an agenda, but he's politically astute and sees things the average American does not.

  302. ZXZ- I think your point is fair. Asset valuations are relative. It is a simple mathematical fact that  projected S&P earnings/cash flow represent a better return than Treasuries. The lower the "risk free" rate in a standard NPV calculation raises the current value of future cash flows. I think that is what is fueling the market more than anything else.  I don't buy in to the grand conspiracy theories. The notion of wizards behind the curtain manipulating prices with the intent to unload on the Sheeple is just silly. Also convenient. As long as you have a boogey man to blame, then failure is rationalized.
    Sure, there are HFT programs but these , in my opinion, just exaggerate the moves.
    As long as future earnings look good and interest rates stay low, the S&P wins out. On the other hand, historical S&P valuation indicates caution. I like Doug Shorts analysis.
    So, what to do? To his credit, Phil admitted he was wrong on his market call. Small consolation but he had a lot of company, me included. Perhaps his call is just early? I had a very good December and started going short in January based on Phil's call and the technicals. My gut instinct was the opposite- stay long. I have made adjustments to get more balanced and that has helped. My long term holdings are doing OK so no big deal overall. Right now, I am neutral and waiting for some clarity.

    Seems like a good moment to share some thoughts on the PSW approach and its practical application. I have found the detailed explanations of lflan and StJeanLuc on their respective strategies most informative and educational – even though their different approaches do not fit in with my style. After a couple of years of being a member of this community and being open to absorb the different perspectives from the many different contributors I have distilled all these differing ideas into an approach that, up until now works for me. It may be more useful to those new to the board, but may offer some points of interest for longer term members as well. There is nothing original here, and I make no apologies for that, as the greatest contribution to my approach has come from ideas contributed here at PSW.
    1. Selling premium. This exhortation from Phil, with constant reminders, may risk to diminish its importance. But repetition is the mother of learning. I now set myself a monthly target of premium to sell. This is not optional, it is simply a duty for anyone managing an inventory of options. Whether VIX is high or low, I sell premium to reach my target. It is the bedrock on which other profit enhancing approaches are built. It is interesting to note that over time my monthly target has increased substantially, and I force myself to look constantly for opportunities to sell.
    2. The ledger only recognizes CASH. The P&L fluctuates, hides the complexities of rolling, but nothing adds to the cash flow than cash itself. And it is cash generation that your business of trading options should be focused on. Cash comes from closing winning positions. The one that got away may make for an interesting tale at the bar but it does not pay the rent. I wish I had reminded myself of this during the internet bubble of 1999-2001.
    3. CASH makes many things possible. Phil has mentioned that managing large accounts opens horizons to many approaches not available to the more modest sized account. I can vouch for that. a CASH cushion allows the possibility to make corrective rolls and take offsetting positions that could not be supported by a small account. Another reason why selling premium is so important.
    4. Although selling premium is the bedrock – the adrenaline for a portfolio is provided by directional spreads. I try to place zero cost spreads financed through the sale of Puts. One of the breakthrough discussions on this board was the realisation that there is no need to finance spreads through a sale of a Put on the same underlying. This was a liberating concept. Normally, there is a Put sale to finance most Bull Call spreads that will result in a zero cost basis – which is at a strike price 20% of the current stock price. This fulfills the 20% discount rule which makes sense. It may just be a question of going out far enough in time.
    5. The focus stock. There are clear favorites on this board. But learning everything you can about a particularly company and how it's stock price responds to internal and external circumstances offers a wealth of information. I stick to a core set of stocks which will be familiar to this board (CHK, GS, JPM, MON, SLB, GE, CSCO, INTC, VLO, XOM). I watch their evolution closely over time. I know when they are moving to their upper channel (sell CALLs) and when they descend to touch the lower channel (SELL PUTs). I know when to get aggressive and when to assume a more conservative stance.
    Apologies for going at length, but I thought I would make an effort to give something back. There's more but I will wait for another time.

  304. Winston
    Thanks for the post… excellent analysis for those of us attempting to "learn the system".  Your explanation of "cash" is so importtant…. Go ahead and post the rest of your analysis. We appreciate your input. BTW, do you constantly monitorduring the day or is your trading less intensive… Thanks again 

    AMZN- some negative comments:
    Amazon shareholders have been conditioned to expect slender profit margins in exchange for sales growth, but perhaps they should start holding Amazon to profit expectations as they do other retailers. "The market has always given Jeff Bezos a hall pass on margin erosion," says Larry Haverty, associate portfolio manager of the closed-end Gabelli Multimedia Trust, which owns a small stake in Amazon. "In this case, it seems that anything that Jeff wants to do, he has a license to do. Will investors ever take the hall pass away?"

    The money manager's primary concerns, besides annual margins of 4% (based on 2011 earnings before interest, taxes, depreciation and amortization), are that the company is carrying too much inventory and that vendors are financing its growth. Inventory swelled 56% to $4.99 billion in 2011, outpacing the amount Amazon is owed by customers. Accounts payable, the money Amazon owes its vendors, rose 38.5% to $11.45 billion last year. That $3.09 billion surge in accounts payable was only $810,000 less than the company's total operating cash flow for the year.
    IN ESSENCE, AMAZON IS THROWING OFF "low-quality" cash flow, which makes it difficult to justify the high price of the shares—even after last week's drop, Haverty argues. Amazon is trading at 70 times forward earnings, compared with Apple (AAPL), which is trading at 10 times earnings.

  306. Roro/wings,
    I've been driving north that past few days so I haven't been watching — sounds like a good game to miss!!  Luongo must have been in goal if we got beat that bad.
    In Salem, OR at the moment — took Hwy 395 north out of palm springs and it is a gorgeous drive up to Tahoe and Reno and then wide open driving after that — much nicer than I-5, but very rural and sparsely populated.

  307. EDZ/pain,
    sounds like I'm not the only one feeling it this month on edz —
    in hindsight, I think stealing Mike Tyson's pet tiger would be more fun than owning EDZ —
    However, the month isn't over and we can always roll it down and out…

  308. IWM- another one of those technical (shudder) resistance points:

  309. LLY- 7:19 PM Eli Lilly says it will freeze base pay for most of its employees in 2012, citing financial pressures caused by patent expirations on top drugs. Shares -0.2% AH
    Pharm- more confirmation of your hypothesis. I like it short again now especially below 39.

  310. IRS/WegelinBank
    Zero Hedge has an article written by Bruce Kasting "DOJ' s Latest "Beat Down on Swiss banks".  At the end of the article there is an article written by Konrad Hummler, the president of Wegelin Bank.  WB is (was) the oldest private bank in Switzerland.  In his article (written 3 years ago-prophesy has come true) he discusses the intent and current law(s) of the USA regarding taxation and the eventual backlash to come.  it is a MUST READ, to truly appreciate the "reach of these laws" even for foreigners owning US securities…… enough said…

  311. I would post a link…. but it does not work….

  312. Winston..I enjoyed your post….good insight into the process, particularly the part about adaptation of your trading methodology to your own personality makeup…..very important. Several good points. Thanks

  313. Canuck…………lived in Boston for 10 yrs so had to pick the Bruins. i know it hurts since I have been with the Red Wings in the bad years and playoff failures before that got turned around.
    right about Luongo…………4-3 in a shootout
    had a friend who followed the Red Sox (devoted) with season tickets (for yrs) looking down to 3rd base………..suffered for a long time until the spell was broken.

  314. Canuck………i envy you the drive. haven't done that one but i always loved the West and imagine it must be pretty nice to see and experience.

  315. Winston: Here Here.  I am walking the same path as you friend.  Perhaps the greatest realization I have come to is that for all that I lack in intelligence, investment prowess and experience I make up for by being very patient.  I know KO, MCD, IBM, GE etc…  are great companies.  Warren Buffett, the greatest investor in the world, and Phil, the smartest investor I personally know, have told me as much.  All that I have to do is be extremely patient and levelheaded and I can beat most of these exalted and venerated "geniuses" of Wall St.  This has been the greatest thing I have come to realize, and it was ironically the very first lesson I learned when I clicked on the Man Who Plants Trees video.

  316. New item….last week some members discussed the idea of ( paraphrased ) “Taking $100,000 to $500,000 in a year” Both Phil and I replied that it would involve taking too much risk. Someone else suggested using a smaller amount, say 5k. I’m interested in the concept, using under 25k to start, and I’ll tell you why. First, such a portfolio would force you to plan carefully and do every thing right. You would have to pay careful attention to stock picking, position sizing, entry and exit strategies, and all sorts of other things that are very important to successful investing. You would have to ‘not lose money’! And all this with no margin if you start with less than 25k. This would be a ‘stand alone’ portfolio. Plus, such a portfolio might allow even the smallest investors on our board to participate. We have several portfolios running already, but I think one like this would be extremely educational. I would be happy to oversee such a portfolio, but would want stock picks, entry/exit, etc. to be a group function. Discussion (and of course we need to hear from Phil on this).

  317. Pharm….
    what do you think about CDXC?

  318. lflan,
    How could we not benefit from such a portfolio? The account size and account limitations would be realistic for starting investors and the techniques we would have to reinforce would help drive a discipline into new traders or old traders that want to be more profitable.

  319. As usual, the "Greek talks" are not going well this weekend.  And even if they do, Portugal and Italy wait in the wings.  So despite my "paen to bullishness" last evening, it is only fair to point out that I am still seriously hedged against the Euro falling off a cliff.
     If the air is let out of the Euro balloon gradually, maybe it's no biggie. But if the levee breaks — if, for example, it is perceived that the U.S. will now see an accelerating recovery on the back of improved employment [a debatable proposition, to be be sure]  and it's the right time for European investors to bail out into dollars — then a rocketing dollar will likely take down U.S. equities, despite some hopeful chatter about "decoupling" this week.  

  320. Speaking of balloons and bubbles:
    My college student son filled out a credit application to buy a car last week. He put on the application that he is currently unemployed, as his last job was part time last summer. They offered him $14,000.
    No wonder auto sales have been good. 

  321. politics, love it or hate it……… Romney and Coulter – Together Again
    Quote from the Thursday Sean Hannity interview, "‘You owe me and you better be as right-wing a president as I’m telling everybody you’re going to be,’” Coulter said (to Romney)

  322. Romney/Coulter
    Don't worry… he won't be.   And he won't win… but even if he does I'm with George Soros.
    Billionaire financier George Soros thinks that, if Mitt Romney wins the presidency, there will be "little difference" between him and Barack Obama in the White House.

  323. peedlew……….i think it is all corrupt regardless of party affiliation, but Coulter is a zealot………a white zealot.
    Coulter…….."I'm a Christian first, and a mean-spirited, bigoted conservative second, and don't you ever forget it."

  324. Coulter as Secretary of Labor (Camps) in the Romney Admin……..she did say he owes her. these people are scary.

  325. Phil,
    Charles Biderman is NOT drinking the NFP Kool Aid……….yikes!

  326. Now we have Exec leading us to a knuckle-dragger site.  The comments are amazing and most are from Texas, which is, I guess where many kds live.

  327. Winston, I also appreciated very much your take on the lessons learned from this site.  When you complete your analysis, please post it.

  328. roro,
    Thanks for posting Biderman's reality check on the BLS (or is it just BS) numbers. 

  329. NFLX is attempting to reduce the bandwidth required to stream HD movies by partnering with eyeIO. They claim the new encoding method won't degrade video quality. Less bandwidth should = more $$ in the company's pockets. Maybe hold off on shorting them for the time being?

  330. sparky……….i think Lee Adler also has doubts about NFP, and speculates in his article that the 'real' tale won't be told until feb and march.
    the damage may be done as in the price is right and the market has been propped on possible fumes, but Greece looks slippery into Sunday so Vee shall see as the Germans say.
    maybe this all turns out to be a nice cap and some nice selling can ensue. who knows? this article says a Greek default is all but inevitable for the looming 14.5 billion bond maturity due march 20.
    in the interim there is the LTRO 2 for feb 29 and then the FED again mar 13 so have to think the 'officials' have calculated and are bracing for a shock, if as the article infers that the "sovereign Lehman weekend has finally arrived".
    had to argue the Jan NFP did not buy time, if the numbers do fall apart over the next several prints
    the so-called Greek fix is part revolving tragedy and part revolving incompetence joke as far as i can see not to mention it has literally taken almost forever to come to a decision one way or the other
    time to sell?………something to ponder.

  331. Winston
    Thanks for your valuable comments. I have independently come to practically identical conclusions on every single point. In particular I think it is important to closely follow a small number of favorite companies and to know everything about the behavior of their stocks, especially regarding the high and low channel levels. One of the companies I follow is BP and only a few months ago when the overall market was slumping I said to myself "there is no way the BP stock price is going below the level of the darkest days after the Macondo disaster when the dividend funds had dumped the stock and the oil was still flowing with every attempt to stop it failing and the CEO subject to a 2-minute hate daily on all the TV propaganda stations." On this basis I sold BP $30  and $35 2014 puts, a trade that has already paid off massively. I also agree totally that selling premium is absolutely key to a successful strategy. Sometimes, as over the last week, it is slightly distressing to see stocks on which I have sold calls and puts surging higher and higher without fully participating in the upside, but then again, a 20% annual return should always be acceptable, and it is always nice to know that you can stand a substantial downside before any loss kicks in.

  332. News Alert
    from The Wall Street Journal

    Mitt Romney won the Nevada caucuses on Saturday, capping a pivotal week that saw him regain his front-runner status on the strength of a hard-fought win in Florida.

    The Associated Press called the race for Mr. Romney. Second place remained too close to call, with Newt Gingrich and Ron Paul in contention.


  333. ' the real economy lost 2,689,000 jobs, while net of the adjustment, it actually gained 243,000 jobs: a delta of 2,932,000 jobs based solely on statistical assumptions in an excel spreadsheet . . . the end result is that in January, those "not in the labor force" did in fact rise by 1.2 million (whether compared to December or to 2011 – please, go ahead and check as many times as needed), and the labor force participation rate dropped to a new 30 year low of 63.7%, a number which incidentally only has to drop by 5% more percent for the BLS to report zero, or even a negative, unemployment rate
    What can one say, but:
    Anyhow, please pass the kool aid or the hopium pipe . . . .

  334. What, are you guys reading the news again? Tisk, tisk, you’ll never get bullish that way….

    Great points by Winston, should go in the wiki!

  335. Winston/Jmm: Re: A small, well-known universe of stocks — it makes perfect sense.   I have logged lots of hours wandering around in the woods over the years and come to realize over time that animals, neither predators or prey, do much wandering during most of the year.  They remain within very limited areas that they know intimately — every sound, every copse of trees, able to detect the slightest change in its rhythm. I always assumed animals just hiked around looking for berries or whatever, but, evidently, that is not a sound survival strategy.  Deer, birds, martens, foxes, coyotes,pumas, porcupines and lots of other stuff settle in to a micro-environment — one side of a canyon, for example — and you'll see them there again and again.  
    Predators must perforce range over a wider area, but even they limit themselves to particular territories.  Only in mating season will most animals run the risk of crossing much unfamiliar territory.  I could analogize mating season with runaway bull markets in respect of human investor behavior as a time when punters will load up on risks they normally wouldn't think of taking, but Phil has already made that point any number of times on PSW!!

  336. Zero

    I like that analogy.

    What is your short list of equities that you are most comfortable with?

  337. zeroxzero/mating season
    I think humans are the same. After getting a first class degree from a good university, my nephew had an excellent job in London doing postproduction work in the movie industry as a sound engineer (where he was on first name terms with notables like Beatles producer Sir George Martin) and was engaged to a beautiful fashion designer. When the relationship with the girlfriend went south, he quit his job, packed up a rucksack with a few clothes, a Macbook, and a guitar, and set off to travel the world. He climbed most of the  way up Mount Everest.  In Malaysia he met an oriental girl and fell in love with her. Went back and climbed 3/4 way up Everest again so she could see it too.
    Conventional story! But there is a twist. She is a Canadian woman of Vietnamese refugee descent who was on sabbatical from her job in a high level civil service job in Canada, and to cut a long story short, he is now married and living in Manitoba and working as  a much-in-demand Web site designer.
    I have always thought his story fits very well into your theory of mammalian behavior and roaming when in search of a mate. Of course he would deny all of this, and the fact that he spent over a month in Thailand and 6 weeks in Burma "visiting historic sites and temples" has nothing to do with the romance of the East.

  338. Having a crazy busy weekend – thought I'd be around today but my daughters have other plans.  They both made 1st honors AND Jackie's 10th birthday is tomorrow so who am I to say no?  It's a good thing actually, as I'd otherwise be tempted to read the news and that could lead to thinking and we certainly can't have any of that so GO GIANTS and I'll see you guys later!

  339. lflantheman ,
    I like and support the idea of the less than 25K stand alone portfolio… the can't loose mindset and thought process around this definitely would be educational. People with more $ who like the approach can then trade in multiples. 

  340. Phil, congrats on your daughters accomplishments and bday! Family is to be enjoyed!! 

  341. Lflan/25k
    Thanks for thinking about the concept, however risky it may be…
    the original idea was to invest a small enough amount that if lost would not cause loss of sleep.
    perhaps through knowledge and skill of members here, reduce likelihood of loss, and possibly make some mullah and have fun while doing it

  342. The decline in the BDI has been discussed previously- oversupply of ships – but this article has a chart showing what is coming on line. Seems this indicator will be shot to hell for some time.

    What this table cannot tell you is when or why the ships are coming on line.  In many cases, the new build is not because of higher demand – but higher efficiency (hull and propulsion) to reduce costs.  Unfortunately, most of the less efficient ships are not being scrapped but just sold off.  This just adds more tonnage to an already oversupplied market place.
    So yes, just a small increase in the supply of ships can make a major difference in a very competitive marketplace.  It makes the BDI an inoperative economic indicator, and one less tool which can be used as an economic metric.

  343. Retail in the USA
    I just spent 2 days in the USA on a flying visit. Apart from the inedible food (MCD, DPZ), like many people visiting Florida (FL) from the Caribbean or Central America, I shopped for electronics.
    I wanted a Netbook computer for a gift and I knew they  were in stock in all branches of Walmart for $250, but I wanted to see if I could get a Toshiba (TOSBF), which I had before and liked.
    In Best Buy (BBY) they told me they do not carry Netbooks any more, because tablet computers can do everything that a Netbook can do. "OK, I said, show me a tablet that can run Windows programs." The salesman immediately capitulated, and said they could not, but showed me an Asus tablet that came with a docking station/keyboard that could effectively turn the tablet into a Netbook, but for about double the price of a Netbook.
    He told me that the Apple (AAPL) iPad was pretty good, but when I asked if it had a USB port so I could attach a Magic Jack, a camera, a hard drive, or a mouse, he has to admit that it could not be done. (Actually it may be possible to use USB devices using the extra camera attachment device, but is not guaranteed to work. But I don't think my BBY blueshirt knew this.)
    Again double the price of a Netbook. I then asked for a handheld document scanner. No luck with that either. They did say they could order me the items for later pickup, but I informed them that I was already familiar with the concept of Internet shopping, and that if I wished to order online, I would not go to a store to look for something. [I also noted the Blackberry Pad was "on sale" for $499, though since Radio Shack (RSH) had the same item for $199, I daresay Radio Shack had the edge on that one. In any case my helpful BBY blueshirt dude told me the BB tablet was useless and that I didn't want it.
    I also tried Sears (SHLD). They had two Netbooks on display, but were unable to sell me one. I went to Target (TGT), where they had one Netbook on display, but again this was just to give the impression they had Netbooks and didn't actually mean they sold them. Office Depot (ODP)where I had previously bought my iPod touch also had no Netbooks and doubled down when I asked about iPods. They didn't have them either.
    All in all pretty dispiriting, so I went to Walmart (WMY) and got an Acer (ASIYF) Aspire for $250. It only took 10 minutes for 2 employees to operate a bunch of keys and extract the computer from a metal cage. However, it was worth it, because  the recipient is totally delighted with it. With the addition of an  $8 mouse and a $30 rechargeable speaker, it was now converted into a powerful boom box cum Skype telephone cum photo album cum photo editor cum Internet surfer cum word processor that would fit into a handbag. Although the new owner has never owned a computer before after a couple of hours she was already able to identify some potential improvements to Windows 7 that she would be happy to forward to Microsoft (MSFT)
    I feel like I am the little boy who called out that the emperor had no clothes with regard to Netbook vs Tablet computers. Has no one else noticed that this tablet fever is all about charging consumers more money for less performance and about getting them away from Windows which has thousands, probably millions, of excellent freeware and open source programs available, for example Open Office,or programs that can play music archived in noncompressed FLAC format, or Paint.Net a free program that is a very good competitor to Photoshop. (It should be noticed that there ARE WIndows 7 tablet computers, but Best Buy doesn't want to sell them, and some are not available in the US.)
    Another observation. The Nook Color (BKS)  now selling for the same ($199) price as the Amazon (AMZN) Kindle, which is supposedly a loss leader. (Whomever chose the name Nook  was probably not familiar with vernacular English.)
    Also saw the new Nokia (NOK) phone in Walmart, but it was looking a bit sad, just sitting in a glass case with some other sick puppies, and no special display stand or anything to trumpet the presence of a Windows phone or of something new or different. It looked OK, but they did not have a demo model up and running.

  344. Jmm:  Had more luck with BBY  in NYC a few months back, lots of small PCs [that's what a netbook is, right?].  I picked up a Sony Vaio with a 13" screen.  It's great, I can easily pick it up when open and running with one hand.  I have an iPad, useful for a number of things, mostly because of zero bootup time — like showing a plane reservation to an agent, with codes attached, etc.  But I gave up carrying around an iPad bluetooth keyboard to simulate a netbook — the Sony weighs the same as iPad + keyboard, is integrated, has all kinds of USB and other i/o slots [I connect it to a 48" TV screen to trade, where the lack of resolution is more than compensated by the immense size], is compatible with all my Windows files back to the Stone Age, etc. etc.   Tablets have their place, but it's always horses for courses.
    As for mating peregrination, yes, males of all species have a tendency to wander far afield in search of mates, probably because genetic distance tends to create healthier specimens.  But i a lack of shared cultural premises is can be very challenging to a relationship, even to someone like myself who has spent only of my life in my country of birth.  Throw in a bunch of kids, and you have a situation that would flummox Freud.  

  345. "half" of my life.

  346. Lflan and all, I also love the idea of the 25k portfolio and would assist in any way I can. As a beginner ( but with a decent size portfolio) I would find this a great way to really learn the skills and disciplne that Phil’s wonderful site teaches but on a level that would be more comfortable for a novice. Sounds great.

  347. First impressions of USA 2012
    Flying in to Fort Lauderdale at 5:00 a.m. one cannot help but be overawed by the might of America. Even at that hour from the air one could see thousands of electric lights stretching as far as the eye could see in a superb display of conspicuous consumption of energy. And then the huge airport complex with many gateways, hallways, and signs to tell you what not to do.
    And then you get to immigration. Only two agents to process 150 or more arrivals, many of whom are foreigners. After half an hour the lines had hardly moved and then a supervisor (a woman) showed up and assessed the situation and decreed that one agent was to wave through the arriving US citizens while the other took on the "aliens". In the meantime she would watch, direct traffic, and exort passengers who were traveling on Spirit (discount) Airways on the joys of paying $100 or so for super automated immigration clearance for future travel. Soon the line got moving again, and we were out.
    The whole thing seemed like a parable of USA in 2012. The massive, if crumbling, infrastructure, the understaffed government services, the ingenuity and problem solving spirit of employees at the managerial level, and the dull wittedness of those they supervise. Was this the first time a flight had arrived at 5:00 a.m. and they yet had to figure out how to get so many passengers through immigration with so few officers, or were they dealing with absenteeism in a demoralized work force? And then you exit to the car rental center, a magnificent building like a Greek temple with mirrored marble floors, and where the men's bathroom walls are lined with tasteful lime green tiles, (but you can hardly get enough water to get your hands wet) and there is a car rental agent for each passenger and the cars are cheap and comfortable and equipped with all the latest dashboard gadgets, USB connections, and so on.
    Could we subcontract the stamping of passports out to Avis or Hertz and get some company to figure out a way to collect rainfall from the roof to use for flushing toilets and washing hands?

  348. Phil

    I was wondering if you could explain the bullish trades you outlined above in today’s article. For example when you use this strategy and what you want to happen by buying the very in the money calls. It’s this a strategy that you use when you are moderately bullish and are waiting for the sold call to decay.


  349. Political    /   Exec.  Of course the manipulation is political.  Hard to prove, perhaps, but easy to connect the dots.  However, I don't see any need to bring foreign  money to the market to effect manipulation, although it's certainly possible.  There is enough money flowing from the Fed at 0% interest into the wall street banksters hands to prop up whatever they decide to prop up.  A trillion dollars a year is a lot of power.  Apply a trillion a year to the overnight futures market, and to the large cap leaders of the markets at just the right times during the day.  But we don't need to use only politics as a motiivation.
      I won't repeat what's been discussed at length on this site about the money that the banksters can make by manipulating the market with unlmited free money from the Fed.  So politics, power, and greed.  That's my take on it.

  350. I've no idea when the Age of Aquarius ended, but I think it's fair to say that its over for now.  Lots of blood and hot air emanating from the desert regions these days.  You would have thought that, since the original Jewish Exodus in 1313 BC, these Middle Eastern folk would have reached some sort of entente cordiale over the ensuing 3,000 odd years..

  351. Cool Hand Luke, Zero……….Captain says you have to get your mind right.

  352. Cool Hand Luke was one of my favorite films……….and, that line.

  353. Winston, Nice February 4th, 2012 at 10:10 am post!

  354. freud was flummoxed many times…he was a particular schlamazzle regarding cocaine…and cigars speaking of tubular fixations

  355. Giants 21 – 17……….Go Phil!!

  356. Looks like the Pats receivers forgot the Stickum.

  357. Good morning from SL—--go Giants !!!—was able to watch the super bowl with the American Embassy personnel—worth the trouble

  358. ICE Futures put out a video this weekend with Mark Longo of "The Options Insider" discussing the rise of weekly options – the most important characteristics of short-dated options, situations in which traders use weekly options, and some strategies for using them .,..which are different for stocks vs futures.  quite interesting and helpful. it is here.

  359. Winston – a teriffic write up. thank you!   re the liberating idea of selling puts for other underlying to finance directional spreads, do you try to keep expirations to the same date, or does not matter? I'd be interested to hear your experience/conclusions as to how far out you find your monthly premium sales to be structured.. next month? 3-6 months? more?   Presonally, i'm moving more toward 6 month max sales (unless writing buy writes to build an underlying position) and preferably less, to get that decay up. And even the 3 and 6 month out sales get to be feeing "too long."

  360. Savi – cool that you were able to do that.

  361. it turns ot the BLS has some kind of secret 'magic formula' for computing the numbers of employed that only the BLS knows, and now it is back down to the wire on Greece as Papademous has set 0500 AM EST for parties involved to decide on bailout terms with Merkel and Sarkozy scheduled for a press conference at 0645 AM EST.
    flip a coin?

  362. Greece?  What is this Greece thing?  Never heard of it….  Why is gold $1,717?  Should we be buying the dips?  

    This is a hell of a bad start to my first officially bullish day, isn't it? 

    Dollar 79.62, Euro $1.304, Pound $1.5735, 76.666 Yen to the Dollar and EUR/CHF $1.2062.  

    Oil $96.66 (many signs!), silver $33.36, copper $3.85, Nat Gas $2.457 and gasoline $2.8927.  

    This really sucks because now I have to read the news (of course I read my NYTimes over the weekend but really, that was all) and I know that's going to put me back in a bearish mood.  Maybe we'll get lucky, who knows?  

    So here's my challenge for the day – I will attempt to look on the bright side of the news this morning!  

  363. Monday's economic calendar:

    10:00 Employment Trends Index

    3:12 AM Asian shares mostly rise following the strong U.S. jobs report on Friday and despite the various Greek debt talks continuing to rumble on without producing that all-encompassing deal that will prevent a meltdown. Japan +1.1% to 8929.2. Hong Kong -0.3% to 20685. China flat at 2331. India +0.6% to 17708.

    3:59 AM EU shares are lower in early trading, with worries about the interminable Greek debt talks overshadowing the fading euphoria over U.S. jobs data on Friday. Euro STOXX 50 -0.8%, London -0.3%, Paris -1.1%, Frankfurt -0.4%, Milan -0.5%, Madrid -0.7%

    Notable earnings before Monday's open: HASHCAHUM,LLAZNNNSOHUSYYUDRUSG


    Sun 4:44 AM Eurozone finmins warn that they won't OK a deal to restructure the country's private debt unless it agrees to certain reforms. However, the coalition government members oppose some of the demands, including over wages and spending cuts. "We are on a knife-edge," says finmin Evangelos Venizelos.

    Sun 5:30 AM Chinese Premier Wen Jiabao softens his countrymen up for aid to the eurozone by saying it's in their own interests. Since the EU is China's biggest export market and its largest source of technology, "helping to stabilize European markets…amounts to helping ourselves. We must make all quarters of society understand this." (previous)

    Sun 9:52 AM Greek PM Papademos is ensconced in a meeting with the leaders of the 3 parties of his coalition government to convince them to agree to a package of new austerity measures demanded by the Troika. The two sides (Greece and the Troika) are "quite far apart" over the measures, according to a Greek official. Sunday night looms again.

    Sun 4:46 PM The (anticipated) debt restructuring won't be of much help to Greece, writes Dimitris Kontogiannis, who believes another major restructuring will be necessary down the road. It will however, make the official sector – central banks and the IMF - the largest holders of Greek paper, thus making the cost of an exit from the euro so expensive to the eurozone as to put the idea to rest.

    2:46 AM Greek PM Lucas Papademos will today meet again with the leaders of the three coalition parties after they agreed yesterday on the framework of more austerity measures demanded by the Troika. However, differences remain as to the details. 

    2:58 AM More on Greece: The parties agreed in principle to cut spending in 2012 by 1.5% of GDP, or about €3.3B ($4.3B), to lower auxiliary pensions, to reduce wages and non-wage costs, and to re-capitalize banks without nationalizing them, although key differences remain on the wages and the banks.

    4:44 AM The EU's debt crisis claims another national leader as Romanian PM Emil Boc resigns following weeks of nationwide demonstrations against IMF-imposed austerity cuts and ahead of an election later this year. Just as in Italy and Greece, the next leader is likely to be a technocrat, says political commentator Mircea Marian.

    5:04 AM As if to underline Wen Jiabao's exhortations to his countrymen that China needs to help the EU, the IMF warns its growth could be half of the fund's 8.2% projection for this year should Europe’s debt crisis worsen. "However, a track record of fiscal discipline has given China ample room to respond," the IMF says.

    5:23 AM The EBA intends to challenge the capital restructuring plans that EU banks plan to undertake to meet stringent new requirements, the FT reports. With 30 banks needing to fill a €115B gap, up to half the measures don't appear credible, including the way banks want to recalculate risk and pledges to sell unattractive assets.

    5:35 AM Portugal has been talking to sovereign debt advisers aboutrestructuring its debts, IFR reports. If a Greek debt deal ever gets done, a precedent would be set that Portugal could look to replicate. "It would show that after all debt reduction is possible and not the end of the world," says an adviser.

  364. Chinese New Year sales on the mainland +16% to 470B yuan ($75B), which sounds good, except that this is China and it's the slowest growth since the 2009 financial crisis and 3 percentage points less than last year. The weakening could mean problems for the foreign firms rushing into the country, particularly luxury brands.

    China Cuts Dividend Payouts for State BanksChina's Central Huijin Investment Co, the state parent of the country's "Big Four" state banks, said it would cut the dividend payout ratio for three lenders to help relieve their capital strains.

    China's economy may be headed for a "rough landing," says Singapore PM Lee Hsien Loong. "They've built a lot of infrastructure … a lot of capacity in many industries, autos, some of the electronics industries," he points out, channeling his inner Jim Chanos

    China's Export Pain May Be Mexico's GainBuying stuff from China isn't such a bargain anymore. One consequence of that: Companies that move freight from Mexico are getting busier. China has long been the destination for companies looking to cut costs. A huge population of untapped workers, along with a leadership keen to build out the country's manufacturing infrastructure, made it the world's best place to make things cheaply. But nothing lasts forever. The pool of Chinese workers is getting shallower. China's one-child policy and cultural preference for boys have led to a shrinking population of young people.

    Spain Economy May Shrink 1.5% in 2012, de Guindos Tells El PaisThe Spanish economy may shrink about 1.5 percent this year, prompting the government to agree with the European Union on new targets for the country’s budget deficit reduction, Economy Minister Luis de Guindos told El Pais. Spain’s current 2012 deficit target of 4.4 percent was set based on gross domestic product growth of 2.3 percent and is in agreement with the European Union, de Guindos told El Pais. “The deficit reduction should generate confidence but not a negative impact on the economic evolution,” de Guindos told El Pais. “The circumstances have changed, but we have commitments with our communitarian partners so we can’t unilaterally decide.”

    Greek Politicians Oppose Government Austerity Cuts. Greece's coalition government has opposed proposals that seek to cut state-funded jobs and reduce salaries. Representatives from the Pasok, New Democracy and Laos parties won't support the measures sought by the members of the so-called troika: the European Commission, the European Central Bank and the IMF.

    When Greece Defaults, The Credit Default Swap Dominoes Will Fall.   Here is a brief summary of the situation in Europe:

    6 Hour Greek Meeting Ends With No Agreement, Troika Demands Answer By 11am Tomorrow, EURUSD Drifts Lower.

    Juncker Warns of Greek Default as Europe's Patience With Greece Runs Out.

    How Europe Has Evolved From A Democracy To A Bankocracy And Why Austerity Will Lead To Chaos. (video)

    Iran Softens Line on Cutting Oil to EuropeIran has indicated that its threat to cut oil supplies to European states in order to pre-empt a European Union oil embargo that comes into effect in July may be only a symbolic one.

    Mitt Romney builds momentum in his run for the GOP's presidential nomination with an easy win in Nevada. The economy ranked as the top issue among voters, with Romney attracting nearly two-thirds of the support of those who named it as their biggest worry. Next up are Minnesota, Colorado and Missouri on Tuesday.

    Why the GOP should stop invoking Reaganomics (Washington Post)

    Goodbye and good riddance to organized quackery’s best friend in Congress (Science Blog)

    Right-Wing Media Rely On Discredited Evidence To Dismiss Positive Jobs Report (MediaMatters)

    It's taken a year, but states and five banks are on the cusp of finalizing a $25B deal over problematic foreclosure practices after California returned to negotiations following a four-month absence and New York – another hold-out state – said it could support the deal. State AGs must indicate today whether they will sign on to the deal.

    As part of any settlement to resolve foreclosure abuse, investors in mortgage bonds will be forced to write down up to $40B for distressed homeowners. The Obama administration plans to use the threat of litigation against large institutions to obtain additional aid for struggling borrowers. (see also)

    Before the financial crisis, economic doomsayers like Nouriel Roubini were on the fringe, but with their forecasts being the most accurate, NPR's Adam Davidson worries about their predictions of  more turmoil. With pessimism dominant, though, at least possibly the most fringe forecaster today, Ed Yardeni, is predicting healthy growth

    Arnold Kling rejects the notion that Keynesianism can help create jobs for the long term. "More government spending can at best create some unsustainable jobs in the short run. In the long run, it will only distort and impede the adjustments that are needed to create patterns of sustainable specialization and trade," Kling writes in theWSJ. 

    While "everyone seems to be talking about a crisis in manufacturing," Berkeley's Christina Romer isn't convinced of the economic rationales for using policy to strengthen the sector. E.g., "A key argument for encouraging manufacturing is to create jobs," but "unfortunately, those effects are probably small."

    Alpha Natural Resources (ANRfalls 4.7% AH after announcing it's slashing coal production at some of its Kentucky and West Virginia mines, on account of lower demand. The cutbacks will reduce annual production by roughly 4M tons, and results in the displacement of about 320 employees. Alpha adds rising natural gas production is affecting its coal sales to utilities.

    After rising 15%-plus in little more than a month, short-term gold traders should seriously consider the possibility that the yellow metal is highly vulnerable to a pullback or worse, contrarian Mark Hulbert warns. His sentiment index has surged from 0.3% on Dec. 29 to 51% now – a quick return to the bullish camp by many gold market timers.

    GM (GM) is likely to report that 2011 net income jumped 70% to a record $8B when it releases its results in ten days time, theWSJ reports, with the firm's performance boosted by strength in N. America and China. GM aims to increase its profit margin from 6% to 10% over the next few years and earn an annual profit of over $10B.

    Who’s Buying What in Super Bowl 2012 (Ad Age)

    "Apple's (AAPL) iPhone business alone is larger than all of Microsoft's (MSFT) businesses combined," writes MG Siegler. Yet Mister Softee – with a $250B market cap – is more a favorite of the value crowd than Apple, which has more than double the sales and a valuation of just $430B. (breakdown by business segment) 

    How To Pimp Your LinkedIn Profile (Read Write Web)


    Who’s a Daily Facebook User? Anyone who clicks “Like”


    An Open Letter To Mark Zuckerberg About Why It Doesn’t Matter Where You List Your Stock



  365. There, that wasn't so bad, was it?  I have no idea how to take out the double graphic – I wasn't purposely doubling it for emphasis…

  366. C’mon Phil, I thout you were on top of tthese things.

    Google “ny post rubber room” and catch up on all the currentand past articles about Alan Rosenfeld and other miscreants who are bilking us sucker taxpayers.