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Tempting Tuesday – Dow 13,000 or Bust!

I want to be bullish

Really I do.  Being bullish is much more fun than being bearish.  According to Bloomerg:  In the midst of the Great Depression, people who bet on stock-market declines were considered unpleasant, unwanted, un-American, un-something. Yet as a New York Times writer noted in February 1932, "The bearish speculator is not often reviled in healthy markets; it is when prices are declining that opprobrium is heaped upon him."  

That's not what's happening now.  It has become so out of vogue to be bearish now that many fund managers I talk to are insulted that I should question their bullish positions.  Being bullish has become the new religion whose Gods are Ben Bernanke, China, the BOJ and the ECB – beings of supreme power who can move the markets with a word and will never, ever let them go down again – all you have to do is BELIEVE! 

There are still some heretics out there as put contracts against Europe are at their highest level since the July/August collapse.   The iShares MSCI EAFE Index Fund (EFA) is matching its highest levels in the last six months, but a huge put spread dominated its option activity Friday.  Options to protect against a 10% drop in the EFA cost 71% more than contracts betting on a 10% gain, according to data compiled by Bloomberg. Put volume jumped to a record on Feb. 24. The ETF has gained 16% since global equities bottomed last year on Oct. 4th.   

The May $52/43 bear put spread is the hot trade on EFA (over 100,000 contracts at net $1.14) at the moment although EFA hasn't been at $43 since April 2009.  It's an $11M bet that Europe is going down but maybe it's just a hedge on $100M worth of bullish positions – it's hard to tell with these things…  

There's still plenty of bad news out there, most notably today that the S&P finally realized Greece has defaulted on it's debt by forcing bondholders to accept 53% less than they were owed (I know – SHOCKING!).  What's actually shocking is the reaction this caused by the ECB, who have now "temporarily," but immediately "suspended the eligibility of marketable debt instruments issued or fully guaranteed by the Hellenic Republic for use as collateral in Eurosystem monetary policy operations." 

So now they WON'T be taking Greek debt as collateral – at least until March, when new agreements may be in place (if all goes well).  Meanwhile, the International Swaps and Derivatives Association’s determinations committee was asked to determine whether the Greek default constitutes an event that will trigger Credit Default Swaps, meant to insure bondholders against default.  Hundreds of Billions of Dollars depend on this decision and there will be many winners and losers no matter which way it goes.  

Banks, hedge funds and other money managers had bought and sold credit swaps on a net $3.2 billion of Greek obligations as of Feb. 17, according to the Depository Trust & Clearing Corp., which runs a central repository for the market. Credit swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt.

Back in the US, $1,120,000,000 of Consumer Debt is delinquent (over 2x Greece's total debt) and $824Bn is considered "seriously delinquent" according to a report from the NY Fed.  The "improvement" in delinquent debt noted in the report is entirely the result of a $146Bn drop in mortgage debt, much of which was defaulted on so – yay! – I guess.  Of course, 2.2% of the outstanding $11.5Tn ($253Bn) "transitioned" into delinquency in Q4 so it's on step forward and two steps back for the consumers in the US economy.  

Pragmatic Capitalism had this great composite chart of our housing "recovery" that really puts it in perspective and illustrates a couple of issues the Fed report brings to light like:

  • Roughly 289,000 individuals had a foreclosure notation added to their credit report in Q4, a 9.5% increase from the third quarter.
  • In 2011, mortgage originations totaled $1.55 trillion, the lowest level of originations since 2000

The good news is that Auto loan originations were $289Bn, back to 2007 levels.  While a pessimist would conclude that people are simply moving out of homes and moving into cars, an optimist would say – "Hey look – Dow 13,000!"  This morning we will alternate shots of Tequila and hitting ourselves in the head with a brick until we are able to adjust our attitude to appropriately focus on the those positives and eliminate those negatives.  

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  1. Oil Lines

    R3 – 111.40
    R2 – 110.41
    R1 – 109.24
    PP – 108.25
    S1 – 107.08
    S2 – 106.10
    S3 – 104.92

    Yesterday high and low – 109.43 / 107.27

  2. From Barry's site – top 5 signs that you have matured as a trader:


    1) Are Self Reliant: When you stop asking other people: “What do you think of the market?” While I respect the opinions of my colleagues, I DO NOT rely on them. I prefer to do my own homework, research and analysis. I LET THE MARKET tell me if I’m right or wrong.

    The ultimate goal for traders is to make confident decisions on your own and trade with complete independence. You should not have to rely on the opinions of others because you should have conviction in your OWN ideas.

    2) Stop Celebrating Winners: When you stop feeling the need to pound your chest every time you make 30 cents on a stock. (It is the flip side  of not getting depressed over every loss). Recognize what you did correctly and move on to the next trade.

    The great Pittsburgh Steelers coach Chuck Noll used to say, after you score a touchdown there’s no need to start dancing. Simply hand the ball to the referee, head back to the bench and “Act like you’ve been there before!”

    Same thing goes for the stock market. Don’t act like you’ve never had success trading before.

    3) Let the Trades Come to You:  When you stop feeling the need to trade every day and you get over the “fear of missing out.” This is the downfall of most traders.

    It took me a while to shift my focus from worrying about “missing out” to playing great defense. Once I did this, I noticed an increase in my confidence level as a trader. Keep in mind, there will ALWAYS be opportunities and it’s okay if you miss a few.

    4) Feel No Need to Brag: Those traders who compulsively tell everyone about every winner are over compensating for their insecurities. It is a sign of lack of confidence. When you make a good trade or a good call on the market, and you don’t feel the need to remind everyone — its because that is what is supposed to happen.

    The key is to be consistent and to separate your ego from your trading. If you are doing a good job, people will notice.

    5) Loss Management: When you learn to cut losses without hesitation. No one likes to lose, but cutting losses is part of the game. I have studied the best traders throughout history and they all have the same number one rule: CUT YOUR LOSSES! Learn to accept when you are wrong and move on!

  3. So much for being bullish – Durable good down 4%!  ROFL!!!

  4. Historically speaking, we might keep going up…


    With the strong rally in equities that closed out 2011 and rang in 2012, the S&P 500 is currently up more than 15% over the last three months.  Going all the way back to the late 1920s, the current period marks the 36th time that the S&P 500 has gained more than 15% in a three month period after not having done so for at least six months.  The table below highlights each of these periods.  We also show the index's performance in the three months following the first day of each period where the S&P 500 reached the 15%+ rally threshold.

    As shown in the table, following most of these periods the S&P 500 continued to see gains going forward.  Of the 35 prior periods shown, the S&P 500 has been positive over the next three months 27 times (77%) for an overall average gain of 3.21%.  This is considerably better than the overall average for all three month periods of 1.76% (positive returns 62% of the time).

  5. I can even imagine your evil laugh right now :-) Damn this market is going to turn us all schizophrenics

  6. Don't Pass Bet  -  Being a Bear in this market is like betting Don't Pass/ Don't Come with full odds at the casino.  On a "cold" table, everyone hates you and thinks you are giving bad juju.  Then I just quietly walk away with my $$.   Almost like selling premium….

  7. "Auto loan originations were $289Bn, back to 2007 levels.  While a pessimist would conclude that people are simply moving out of homes and moving into cars, an optimist would say – "Hey look – Dow 13,000!"  
    "A taste for the superfluous holds sway over a people who are still unacqainted with and do not possess the necessary". (Attr: unkown)

  8. PP

  9. Futures have given back the overnight gains but only back to where we were yesterday afternoon. This market will not die!

  10. Looks like the market is still willing to eliminate those negatives:

    Jan. Durable Goods: -4% vs. -0.7% expected, +3.2% (revised) prior. Ex-transport -3.2% vs. +2.1% prior.

    December S&P Case-Shiller Home Price Index: -0.5% M/M vs. -0.35 expected, -1.3% prior. -4.0% Y/Y vs. -3.65% expected, -3.7% prior

    More on Case-Shiller: All three indices – the national, the 20-city composite, the 10-city composite – close 2011 at their lowest reads ever. Only one town in the 20-city index clocked a gain in 2011: Detroit, +0.5%. "Up until today's report, we had believed the crisis lows for the composites were behind us," says S&P's David Blitzer.

    Housing recovery? Atlanta, Cleveland, Detroit, and Las Vegas all have average home prices that still sit below their 2000 levels, according to the WSJ's Nick Timiraos.

    The Chinese use of copper in financing schemes takes another turn as some banks begin suspending loans against the metal after finding companies using the same collateral to apply for loans from more than one lender. While putting a number on it is impossible, the practice is almost certainly a source of false demand for the metal.

    ICSC Retail Store Sales: -1% W/W, vs. +3% last week.+2.7% Y/Y, vs. +3.2% last week. The warm weather, which is given credit usually to drive people into stores and push sales, is being used 'yet again' as a factor, along with high gas prices for soft sales.

    Germany's Federal Constitutional Court rules a 9-member panel set up by parliament to grease eurozone rescue fund decisions is unconstitutional and needs to be enlarged. The court says members of the lower house – the Bundestag – need a greater say in the operations of the EFSF.

    The EC pledges to do what it can, but warns it will not bend fiscal rules for Spain, which failed to meet its budget deficit target in 2011 (and 2012 isn't looking so hot either). New regulations passed late last year pledges automatic sanctions for states not hitting deficit reduction targets. This time they really mean it?

    Shanghai boosts the city's minimum wage 13% to ¥1,450, or $230/month, following Beijing and Shenzhen which hiked earlier this year. "China has passed the demographic turning point, with little excess labor left," says an economist expecting more wage increases to cope with a chronically tight labor market 

    Morgan Stanley (MS) will have to post another $6.52B in collateral to counterparties and clearinghouses if Moody's follows through on a warning it may cut the bank's long-term debt rating by up to three notches. (10-K filing

  11. Phil— any rec on what to do with the PCLN 605 calls ;-(
    FU PCLN!!!!!

  12. PCLN / Phil,
    Thoughts on the Jan 14 $350 Puts we are short, and the Apr $650-$600 Put vertical we are long on? Should we close out the short puts for a profit and wait for the long vertical put to come our way?

  13. Good morning,


    IWM     81.06,  81.41,  81.69,  82.00,  82.41,  82.83,  83.11,  83.38  and  83.72


    And an 80% chance of a Red day (20% chance of a Green day)

    From King Cobra

  14. Good Morning !    AAPL traders……..we could get a pullback in the market today, and AAPL could move with the market, so I'll be keeping my covers on the long calls.  stjeanluc…..I like your post above.  What I've noticed over the years is that successful traders do not take the market personally.  It is like they are working with mathematical problems and solutions, with no emotion attached to their trades whatsoever.   Very hard to learn or to teach this.   But if you can work on totally detaching yourself emotionally from your trading, then you will make progress.   I'll be on and off the board today, and not likely to be daytrading AAPL or anything else.  Have a good day!

  15. Well I got those negatives out of my system so let's see what happens next.  

    Craps/Burr – I hate that guy!  

    Superfluous/Flips – "In the sky, there is no distinction of east and west; people create distinctions out of their own minds and then believe them to be true." – Buddha

    PCLN/Jabob – I like selling the weekly $625s for $12.50 and putting a stop on the $605s at $32.50 as the loss was $10 (at $30) so we shift the loss to mostly premium.  I think we'll get a nice pullback.  I also like selling the March $620s for $20 if you want to be more aggressive.  

    PCLN/Sank – No change on that spread.  We didn't think they'd drop to $350 and they are not and we didn't think they'd make $650 and they are not. 

  16. thx phil

  17. Its criminal, ECB lends gazillions to banks @ very low rates, they then lend Sov. money and the Sov. force the citizens to pay it back @ much higher rates while slashing entitlements.. JM once said "your all a bunch of fooking slaves"!

  18. Is PCLN in the XRT index…. Up again today!

  19. XRT – chart looks like CMG and PCLN and AAPL…..

  20. Pharm, VVUS playing this on a pullback? What level would spark your interest?

  21. Phil/HPQ,
    I know if you have over 50% profit on a trade with months to go you usually cash it in (depending of course). On my HPQ BCS Jan 13 25/30, the short calls are +59%. Would you roll these down? Thanks

  22. Phil – I'm gonna need to borrow that brick if our morning dip is only going to last two 3 min bars.

  23. The pair trade of the last 5 years – long gold / short Greece!

  24. AAPL port:  I removed the 35 covers from the port.   BTC for 13.30

  25. There might be some hope for Jabo as PCLN usually fades the opening gap…

    Using our Interactive Earnings Database (available to all Bespoke Premium Plus subscribers), we found all occurrences where shares of PCLN gapped higher by more than 5% in reaction to earnings.  The table below is adapted from the database.  As shown, there have been 21 prior occurrences since 2004 where shares of PCLN gapped up by more than 5% in reaction to earnings.  Of those 21 prior occurrences, shares of PCLN have averaged an additional gain of 2.75% from the open to close with positive returns more than 75% of the time. 

  26. @JRW III
    Does red mean up or down day, does green mean down or up day?
    You just never know in a financial, cultural, political, legal, moral world built on a tissue of lies, obfuscation, fraud, deceit, 1000x derivativesa and has crashed thru the looking glass.

  27. YPF – taking a little dip today, good for selling March $30 Puts for over $1

  28. they are discussing gas prices on Talk of the Nation in case you want to call in, Phil.

  29. I'll take that 20% JRW!  At the moment, I'd have to think twice about betting against a 1% chance of being green. 

    FAS Money – Let's keep in mind that our primary goal is to make $2,000 on the Jan spread – everything else is just gravy and we're halfway to goal on our primary objective.  The original point of the short put and call sales was to pay off the $2,030 investment in the Jan $11/15 spread.  As we're up about $4,700 outside the spread, we essentially have a free $4,000 spread AND an additional $2,700 back in our pockets.  The sensible thing to do here is take the money and run on the front months and just leave the spread but that's boring so we keep playing but please – keep in mind that this is a Mission Accomplished trade and what we SHOULD be doing, cashing all but the long spread (which we leave unless we lose faith) and putting our energy into building a new spread that can pay us $4,000 on nothing.  In fact, I bet we could set one up with the XLF Jan $19/15 bear put spread, now $2.90 and start whittling that one down to a $0 basis and then we have 2 $4,000 spreads, one of which will absolutely pay off and, at $15, both of which would.  That would be the clever way to play but, for now, we'll try not to make things more complicated than they need to be.  

    IWM Money – Same thing except here we were very bullish (at the time), looking for a $9 move in IWM for a huge $5,400 payoff on our $1,104 bull call spread.  We've got more than half our potential profit in the spread and actually we have not done so great with our short puts on this one as it's harder to call the RUT than the XLF – which is why, last year, we ONLY played FAS – it's the best one by a mile.  Anyway, we love a good challenge and I'm pretty confident with this range on TNA and IWM is at $82 so looking good for getting our whole $5,400 there.  

    $5KP – Is TSL making a comeback?  Cool!  I guess we shouldn't be surprised.  After all, it is a stock and stocks go up, right?  TLT is in the bag but I'll pay $50 not to have to wait two more weeks so let's try to cash that spread at .95.  DMND is also a stock so no reason to worry about them and I'll look for a new trade during the day. 

    $25KP – Arrgh!  This one is frustrating:

    • DMND – Fine
    • XRT – See Dave's comments (except he's going with the flow):
    • GLL – I do not accept $1,800 gold. 
    • SCO – Nor do I accept $105 oil.
    • FAS – Most of the loss is premium but if XLF goes over $15, it will be time to capitulate there. 
    • TZA – Losing faith on those.  
    • SQQQ – One day…
    • USO – The day after that.  
    • FAS – Hey, those are bullish!  Looks like we can kill the $70/75 bull call spread for $4.75 so let's ask $4.85 and see if it fills early.  No reason to buy the short puts back for $275 we're going to collect in two weeks (unless you are short on margin) and the $85/89 bull call spread only reads $3 out of $4 and helps protect those short calls above so we're not changing those.  
    • GMCR is at $66.66 so we'll consider that a sign to wait for their apocalypse. 
    • DIA was playing for a rejection of 13,000 – today's the day we'll see if it was a waste.  

  30. bot rally being killed off by dollar now?

  31. stjean-- I will be dancing if PCLN closes below +5% for the day
    hard to see that happening this time  ;-(

  32. CSTR making new highs.  UA too!  

    Feb. Richmond Fed Mfg. Survey: +8, to 20 (above 0 = growth). Shipments +8 to 25, new orders +7 to 21, jobs +9 to 13.

    WOW!  Feb. Consumer Confidence: 70.8 vs. 64.0 expected, 61.5 in December (revised). Expectations 88.0 vs. 76.7 (revised). Present situation 45.0 vs. 38.4 (revised). "Consumers are considerably less pessimistic about current business and labor market conditions than they were in January," Conference Board's Lynn Franco says. 

    Although January's durable goods data was "pretty ugly," says MarketBeat, Miller Tabak's Peter Boockvar reckons the fall could be "a hangover from the Dec. 31st expiration of the 100% depreciation expense tax benefit." If so, "cap spending wasn't as strong as it seemed in late 2011 and likely not as weak as it seems in Jan. 2012."

    Redbook Chain Store Sales: +3.4% Y/Y vs. +2.9% last week. 'The weather again'. Unlike ICSC, Redbook attributes strength in sales to warm weather. Who is right?

    See Telller's article on misdirection in magic tricks:  Bravo to the ECB for drawing a line on what collateral it won'taccept (defaulted bonds), but don't think central bank funding of Greek paper is finished. National central banks – through the ELA program -are allowed to accept collateral the ECB won't, meaning Greek banks (and French too) can continue to fund their defaulted sovereign holdings.

  33. Anyone thinking about buying this dip? In 15mins europe will close. 

  34. Keep the faith Jabo and FU PCLN! (can't hurt)

  35. Uh-oh, they are panicking into the Dollar.  Someone must have said something.  Euro fell like a rock from $1.346 to 1.3395 so far.  

    HPQ/Jomp – Rather than spend $1.55 to buy back the $30 caller, I'd rather spend $1.90 to roll down to the $22s as you're buying $3 of intrinsic value for $1.90 so that's a good deal and THEN, if they go down further, you can pick up $2 by rolling the $30 caller to the $25s (now $2.10) and then spend about $2.50 to roll to the 2014 $20s.  So, your backup plan spends about $2.50 to roll you from the Jan $25/30 bull call spread to the 2014 $20/2013 $25 calendar spread.  If you like that "worst-case" end result, then spending $1.90 to roll down in step one is a no-brainer, right?  

    Brick/Rdn – Mine's a bit bloody already, thinking of switching to a baseball bat at this point (easier to wash off). 

    5-year/StJ – Malinvestment on a Global scale.  

    AAPL $530! 

    Gas prices/Morx – No thanks, I'm trying to get bullish so I have to pretend high gas prices are a sign of how healthy the economy is!  


  36. Malinvestment / Phil – You would also have done well being long treasuries / short banks…. Would that be better?

  37. Begin countdown, all indicators are green, its 10:30. Time for liftoff!

  38. and as usual…
     FU CMG!!!!

  39. I have placed a TRIGGER to sell to open 35  April 550 calls at market if AAPL drops below 530.

  40. Lflan, why not use a trailing stop?

  41. Dollar back to 78.50 after brief EU panic.  

    RUT flirting with 830 is a key breakout and Nas creeping up to 3,000 – that's about 60% of where we were in 2000!

    Beware the curse of the Time Cover story!  Is This Stock Market Rally for Real? (Time)

    Ireland will hold a referendum on the new EU treaty, says PM Kenny, as reported by Dow Jones.  The euro – perhaps displeased with an exercise in democracy – takes a bit of a nosedive, now flat at $1.3399. When these sorts of things are allowed a popular vote in the EU, they have a habit of failing.

    World Bank warns: China is a ticking time bomb (Market Watch)

    Shares of YRC Worldwide (YRCW -12%) are getting hammered today after Q4 EPS losses came in much wider than expected, as expenses continue to outpace revenue growth at the struggling company. The trucker, saddled with debt, has been fending off a bankruptcy protection filing since late 2009.

    Although it's not an ETF fund an investor can buy quite yet, a mock "fat guy" fund of companies selling beer, pizza, burritos, and chicken wings is racking up an impressive 6-month return. Holdings:DPZ +38.4%, CMG +30.2%, BWLD +45.8%, FMX +14.2%

    Domino's Pizza (DPZ +9.1%) zooms higher after the company knocks out a Q4 earnings beat and increases its outlook for global retail sales to a range of 5%-8% – from its previous guidance of 4%-7%. Shares hit an all-time high of $37.70 in early trading.

    Priceline (PCLN +7.7%) is the S&P's top percentage gainer, as its strong Q4 report pushes shares to all-time highs. Adjusted EPS of $5.37 on revenue of $990.8M whipped analyst consensus $5.06 and $969.3M. Total bookings rose 51.8% Y/Y, reaching $4.96B, solid results in the face of challenging macro conditions in Europe. GoldmanCiti and Jefferies all raise price targets.

  42. Phil--why is the mkt so strong again today? Have you caved on your bearish fears? Everything is rallying?

  43. maybe we are starting a new trend daily highs in by 10:30am…then again maybe market highs every session every hour is still in place

  44. maybe the market is so strong because is strong.  the market rises till it wants and falls til it wants and the news just doesn't matter. Gann, the great us trader,wans't interested in the news to pick the right stocks but he studied cicles.
    anyhow, since Gann is dead a i know no Gann that is alive, i try to follow the main trend without asking questions.i do it 1% of the time since i'm a bad trader sigh

    Sheer Mirror Image Insanity: S&P Hits New Multi Year Highs As 10 Year Bond Slides Below 1.90%
    There no longer are any words left to explain what is going on in this centrally planned market (technically "enantiomeric" may be a word, but nobody would get it). It is sheer and utter bipolar insanity, when the S&P can hit multi-year highs even as the 10 year drops below 1.90%, something which in the pre-New Normal would be completely impossible.

  46. Pharm - INFI making quite a comback (I only own a little, can't remember if you seeded it).

  47. Greetings,
    New member here…missed the calendar usually included at the end of the Stockworld Weekly this week…has it been moved elsewhere on the site?

  48. SODA - i'm buying calls. 53% shares short.  There's gotta be a major squeeze coming. 

  49. New game today, very few odd ticks, but who buys 750,000 shares at ask, and why?

  50. Markets awfully calm watching the dollar get beaten down….

  51. FU EDZ!!!

  52. Irrational  exuberance is a wonderful thing. IRA funding season is in full swing and  the income tax refunds are coming in, so naturally everyone wants to ride the bull.

    WHAN that Aprille with his shoures soote 

    The droghte  of Marche hath perced to the roote,

    And bathed every veyne in swich  licour,

    Of which vertu engendred is the flour…








    ..Than longen folk to shake off Grecian bondes,

    And enter stockes of companyes blue-chypped , 8

  53. mrm – yes, we bought on that dive.  They should move up to $8 or so.  Not sure after that.

  54. AAPL:    Keep your trigger for sale of the 550 covers about 1.50 behind the stock price.  (Equals trailing stop doro)

  55. Domino's Pizza (DPZ) / 3 year chart — Didn't know $5 pizzas could be so profitable!

  56. Rain/ I think Jabob didn't think $10 burritos would sell like there's no tomorrow but here we are.  Crazy world. 

  57. Behind the pay wall but:


    An unidentified market participant has asked a committee of the International Swaps and Derivatives Association to rule on whether the passage of legislation approving collective-action clauses for Greek debt should trigger payouts on credit-default swaps tied to Greek sovereign bonds.

    At stake are payouts from sellers of a net $3.2 billion of CDS on Greece currently outstanding, and the stigma associated with lending credence to an instrument policy makers have long reviled.

  58. iflantheman could you explain better the trade you have done  with AAPL? what kind of order have you use and why ? tanks

  59. Correction Rainman – mediocre $5 pizza could be so profitable!

  60. Dick Bove says leaks indicate agreement with Attorney General to be announced next week to be hugely positive for US banks (RanSquawk)

  61. rainman/ Dominos, Now you just wonder what they put in those $5 pizzas…. and still make money…

  62. News on Ireland?

  63. Anybody playing FSLR into earnings tonight?

  64. JR No they just spoiled good beer on Merkel

  65. stjean/pizza
    Mediocre? Is that the new dreadful?

  66. Trying to be nice Jmm! I have not had one in 25 years!

  67. FSLR / Lolobear – The options seem to indicate a 10% move on earnings while historically the stock moves about 8% so it's not a compelling candidate for a strangle. 

    However, if you are not too greedy, you could sell a 32/42 weekly strangle (12% on each side) for about $0.70 against $3.7 of margin. Being weeklies, the volatility crush will be violent like CRM last week. But that should be a "gamble" position as FSLR can move fast.

  68. With Consumer Confidence this bright, we should be at SPX 950 !!


  69. I wonder if we could open an exchange to trade these as well:


    Continental Airlines, which merged with United Airlines last year, is also taking business ideas from the world of finance. A year ago, it began selling options on ticket prices. The program, FareLock, lets would-be travelers freeze a ticket price for as many as seven days by paying a small fee which the airline keeps regardless of whether the customer ultimately makes the purchase. United will adopt the program next month, when its reservations system is merged with Continental’s.

    “It’s a value to people like a stock option is a value,” said Jeff Smisek, the president and chief executive of United Continental Holdings. It lets you buy stock at a fixed price. Well, this is an option on a seat.”

  70. stj – i'm thinking of buying straight up puts.  just a little $3k dabble for fun.  See where it takes me.  Options buying seems to indicate a move down. 

  71. lflan
    @10:32a you said " I have placed a TRIGGER to sell to open 35  April 550 calls at market if AAPL drops below 530."
    @11:31 then " Keep your trigger for sale of the 550 covers about 1.50 behind the stock price.
    So if AAPl falls below 530 you sell the 550's C for cover but if AAPl moves up to 538 and starts to roll over you open the 550 covers @536.50?
    When would just sell your 35 open 500C's


  72. Morning Phil;
    I am looking at TZA and i can not understand something.
    the premiums seems very fat why wouldn't i just take advantage of then:
    1. buy TZA bull call spread JUL $15-$20 for $1.70 and sell the JULY $16 put for $2.15, net .45 for a $5 spread ? am i crazy ?

    2. just sell 2014 $17.5 put for 8$ or $9 ? are these proices for real ? how could you possibly loose ?
    i must be missing something please help

  73. The best tech company in the world, bar none…

    Technology's holy grail is the development of a "perfect" Quantum Computer. Traditional computers recognize information as bits: binary information representing "On" or "Off" states. A quantum computer uses qubits: operating in superposition, a qubit exists in all states simultaneously — not just "On" or "Off," but every possible state in-between. It would theoretically be able to instantly access every piece of information at the same time, meaning that a 250 qubit computer would contain more data than there are particles in the universe. IBM thinks it's closer than ever to realizing this dream and if you want to know more, we have the full details after the break.

    The system has serious ramifications in the fields of science, technology, medicine and security — the latter because it can try every conceivable password to access a system within a second.

    No knock on Apple, they make some nice consumer gadgets, but IBM is trying to save the world!

  74. hmmm.  Don't think the board is working.
    test test

  75. FSLR / Lolobear – And if you are wrong, all is lost as the options will lose value very quickly. If you are bearish, then why not sell calls. If you are wrong, you roll to next week, next month or wherever. Just a thought….

  76. ban2 and smala:   What I have is 500 calls, April.   As long as I believe the stock is going to keep going up, then I let them go as stand-alone calls.   But if the stock price turns and heads downward, or if I think it might,  then I want to cover the calls by selling calls further out.  This allows me some downdraft protection, as I can buy back the covers for a profit.  On the other hand, if AAPL continues to go up, then even with covers we are making money.   So I prefer this to just selling my long calls, because once they are sold …..well….they are sold.   But, having said that, if I see AAPL take a huge runup, say 10 or more points in a day, then I probably would just sell some of the calls.   The way this stock is moving upward is extraordinary.  Where most people make a mistake when this occurs is they get out too soon.  They take profits too early.  This comes under "Cut your losers quickly, but let your winners run."    The technique I'm using of covering and uncovering is just a method I like for profiting in both directions as this stock moves up.

  77. SINA up 12%
    From David's All About Trends watch list.

  78. More fundamentals supporting the rally:


    ( Durable goods up to 2009 levels )


  79. What's moving NFLX back up?  Anyone know?

  80. RE:Durable Goods
    Vessel moves in and out down about 8% (West Coast) YOY..compared to last Feb.  Jan was worse than that.  So Feb improved over Jan but will that trend continue in March?  That's what we're all waiting to see.  What the import export tonnage totals are at the end of March.  So far nothing changed…not as bad as 2008 and not as good as 2011.  Maybe that's reason enough to party like its 1999.  It's the hangover I'm worried about. 

  81. lflan
    got it

  82. Durable Goods – The 100% depreciation bonus on capital investments was in 2011.  It is only 50% in 2012.  Doesn't the DG number reflect demand being pulled forward which can only mean that durable goods orders won't be as good moving forward?   

  83. Also, I believe companies are hoping that the 100% bonus dep. will be brought up again and thus holding off on cap investments?  Just my thoughts.

  84. Strong because it's strong/TraderM – That about sums it up, I think.  On the whole, maybe we shouldn't expect anything more rational in our market than we got from the Hang Seng 4 years ago.  After their crash in 2004 (to 11,200), they flew relentlessley higher for 3 years to 22,500 (100%) had one big correction to under 20K (20% pullback) and then jumped to 30K in less than 3 months (up 50%) before collapsing all the way back to 11,000 over the course of the next year.  We now fiddle with our economy as much or more than China so why shouldn't we be able to push our own bubble past the point of reason before it explodes as well?  The Dow bottomed out at 6,600 so we aren't even at 100% yet until we hit 13,200 and then 20% back would be about 12,000 and then we're ready for 18,000 before going back to 6,000 –  what a cool ride this is going to be!  

    Insanity/Kramer – Yep, we have rates as if stocks are toxic and stocks as if bonds are toxic and we're supposed to assume that it's because new money is pouring in to stocks and bonds but – what money?  Where is this money?  A lot of the bonds are being bought by the CBs but, as I mentioned the other day – it's NOT coming into stocks as we're up Trillions on just Billions of inflow.  1,000:1 is not a good ratio for determining value but maybe I'm just mired in conventional thinking and need to embrace the new paradigm….

    Calendar/Laddoo – That''s because Elliott (editor) quit so we're in the process of finding a replacement.  Will take a while to get things back to normal.   Econoday's Calendar is good for that stuff.  

    SODA/Lolo – That's a pretty crazy move at 10 – did they discover oil?  

    LOL JMM!  

    DPZ/Rain – Very profitable when you sell a few Billion of them.   Not sure if I'd call those things Pizza, though.  I have a theory that towns with a Dominos are not good places to live (unless they are college towns) as it indicates the people in the town have no idea what good food tastes like.  

    Banks/Kramer – Time for more FAS maybe?  

    FSLR/Lolo – No way, too crazy.  Solar companies hurting but JASO just raised guidance.  FSLR could go 10% either way or, of course, nowhere at all.  

    Meanwhile, Transports still trending down.  

    Consumer confidence/JRW – More and more I begin to think the fact that they can't reach people who no longer have homes or phones tends to skew the results.  

    Rural Americans in 37 states are experiencing unprecedented problems making and receiving telephone calls on their landline phones.  The problem has grown so much, the Federal Communications Commission has announced it will investigate the 2,000 percent increase in complaints from customers who are fed up with bad phone service.

    Fare lock/StJ – Good idea by the airlines, if it's $5, I'd pay it to hold a fare while I shopped around.  

    TZA/Mirco – Not crazy to me, I love those kind of plays.  As long as you don't mind being long TZA for net $15.55, what's the problem?  Selling the longer put ends up with the decay issue looming larger.  Over time Ultras trend towards zero and then they get reverse split and you end up with nothing so better for shorter-term plays.  

    Save the World/StJ – Er, I think that's what Cyberdyne Systems said too…

  85. I had shorted NFLX.  The trade is profitable and I have closed it, as the stock is moving up.  

  86. Phil – What does your comment mean about SODA?  Sorry for being slow. 

  87. MRX – nice.

  88. SLV has officially gone nuts – rolled up my callers to ATM earlier this AM – they are now 25% ITM! QE4ever!

  89. I feel like my quotron is broken, the market hasn't moved in 2 hours.

  90. the euro LOVES the debasing of the euro..haha!

  91. VRTX – buying stock, selling the April $40C and $35Ps for $3.20.

  92. JPMorgan Chase & Co. (JPM) said interest- rate swaps and credit are among the biggest sources of revenue in its trading businesses, as it broke with most U.S. rivals by releasing a breakdown typically kept secret.

    JPMorgan generates $375 million from credit trading in a “typical quarter” and $350 million each from interest-rate swaps and foreign-exchange spot and futures trading, the New York-based bank said today in a presentation to investors. Cash equities produces about $325 million, while the bank gets $300 million a quarter from asset-backed securities.

  93. Skynet / Phil – If they ever complete that research on quantum computing, the Skynet stuff is going to look like so 20th century! Looks like quantum computing in the wrong ends could be quite dangerous though… might have to send someone back in time to bump Watson before he starts IBM!

  94. Phil,
    any thoughts on buying a Mar 72.5/74 bear put spd at .80?
    …I am so reluctant to jump into anything bearish since this royal ass kicking I have received…I will say from history though just as I am about or shortly after I switch horses on a market (up or down) I am seemingly the last (bear/bull) as this kind of rout really messes with my head.

  95. Deano — huge silver rally…feels like last year!  Are you in AGQ, as well?

  96. Test/Peedle – I'm getting slowness when I reload – anyone else.  I also got a note from Comcast saying they expected problems while they do some sort of upgrade.  

    Don't forget, if this site goes down – we go to Seeking Alpha and comment under my last published article (if you follow me, you see most recent posts in top right of my author screen).  

    Durables/JRW – I think even if we take into account that the drop was from ending stimulus, we have to note that the positives were from the stimulus itself and that's lame.  

    NFLX/Lflan – It's a stock, stocks go up.  Only news I saw was their Starz deal is ending but somehow I guess that's a good thing as the spin is they are more of a TV server now and don't need movies to do well.   

    Durables/Ink – That about sums it up.

    SODA/Lol – At 10am the stock jumped about 3% in less than an hour.  I thought you must have seen it if you're watching them.  

    12:00 PM On the hour: Dow +0.22%. 10-yr +0.12%. Euro +0.4% vs. dollar. Crude -0.51% to $108. Gold +0.88% to $1790.55. 

    12:02 PM European shares close mostly higher, bouncing after going negative amidst some weak economic prints from the States. Stoxx 50 +0.3%, Germany +0.6%, France +0.4%, Italy +0.2%, Spain -0.2%, U.K. +0.2%. The euro recovers from a steep fall in the wake of the Irish referendum news, +0.4% at $1.3451.

    Silver continues its big 2012 run, +4% today and more than 30% YTD to $36.94/oz., a 5-month high. Along with a lot of other markets, silver is thus far repeating the action of early 2011 when a winter/spring run took the metal to $50/oz., before crashing. SLV +5%.

    "We expect gasoline prices in California to exceed the June 2008 peak … within weeks," even if crude eases a bit, says Richard Hastings. Up 14% in 4 weeks to $4.34/gallon, prices in CA are just 6.4% below summer 2008. "This event has many of the features of a major price event."

    Borrowers with defaulted mortgages of at least $1M are able to stay in their homes longer than those with smaller loans, as banks tended to keep large mortgages on their books, a WSJanalysis says. The wealthy also have more legal options: “It’s cheaper to pay a monthly retainer to a lawyer than a $20,000 mortgage payment on an underwater loan."

    GE, Boeing (BA), 3M (MMM) and many other companies with large pension liabilities are in a bind: The Fed is keeping interest rates at historically low levels, but new regulations say companies need to quickly find funding for their pension liabilities. For the companies, that’s money that won’t go back to shareholders through dividends or buybacks, or toward expansion.

     "We have something you really have to see. And touch." So goes the invite from Apple (AAPL) for a March 7 event in San Francisco where it looks like the iPad 3 will be unveiled. 

    The iPad 3 (AAPL) will be unveiled in New York next week, CNBC reports. In-line with prior rumors, it's claimed the device will feature a quad-core processor, and that certain models will have 4G LTE connectivity.

    The gorilla now in retail stores, Apple (AAPL) is racking up$5,647 in sales/sq. ft., according to Asymco's Horace Dediu. Next in line is Tiffany at $3,085, then Coach at $1,824.

    Three lunchtime reads:

    1) Focusing on dividends alone remains a big mistake

    2) Reich: Housing is the rotting core of the U.S. recovery

    3) Protect your investments from oil shocks

  97. Speaking of Transports trending down…OK…last sailor news for the day….
    Maresk Lines, the largest shipping conglomerate in the world, reported a $611 million loss in 2011.  Down from a $2.5 billion profit in 2010. 
    Strait of Hormuz: Pirates try to attack a containership transiting the Northern Gulf of Oman…the entrance to the Straits of Hormuz.  First time pirates have been seen that close to the Straits.  Hmmmm…..

  98. sorry that was the mar agq bear put spd

  99. IBM bouncing off support here, if we are to break away from DOW 13k this stock has to perform

  100. Wow, can't believe I missed the latest AAPL trade due to: Internet problems, missing visa renewals on my passport, and our dog getting a scorpian bite.  Really?!??!?
    So much for not getting emotional!

  101. what happened to oil?

  102. please no mr stick today!!!

  103. Nice little dip in oil.   We'll see if that takes down XOM and the Dow. 

    Silver very nice at $37.  AGQ was the short of the year last year when silver topped out (not yet).  

    Quantum computing/StJ – It theoretically means all password protection and encryption is obsolete.  And now you are back to the plot of Terminator, except you want to send someone back in time to stop the machines being built.  Oh wait, that was the plot of Terminator 2!  

    Mystery spread/Sage – Hmm, MON?  BA?  I wouldn't want to short BA…  

    Pirates/Living – Whatever it takes to boost oil.  Rent-A-Rebel has boats, will travel.  

    Oh silver!  Actually I answered that above, I think it's a little soon to short AGQ as they hit $191 last year but nothing wrong with taking stabs at spreads, getting out when down 1/2 and then doing a 2x play where you might lose 1x and then a 4x play where you might lose 2x and it would be very surprising if they run more than 3 months without the pullback you're looking for so a fun way to play if you keep your allocations reasonable. 

    IBM/Kustomz – $200 is a tough nut to crack.  

    You can tell Merkel's a party girl – doesn't even phase her to have a couple of beers spilled on her – as long as her glass is OK, she's happy!  

    $107.22 – that $108.50 line was a good one!  

    Poor Dow lost 13,000 but S&P still 10 points over goal.  

    Dow volume just 60M at 1:45 – ridiculous.

    Iran will take payment from trading partners in gold instead of dollars, according to a report by the state news agency. Sanctions have forced the country's banks into alternative ways of settling trades, even barter. "We would accept gold … without any reservation," says central bank governor Mahmoud Bahmani.

    It appears the banking industry may have landed itself a very positive mortgage settlement, says Rochdale's Dick Bove, having negotiated some "huge benefits" with the Attorney General over its mortgage servicing issues: Bank of America (BAC +0.8%), Wells Fargo (WFC +1.2%), JP Morgan (JPM +0.6%) and Citigroup (C+1.6%)

    Though gas prices are shooting higher, U.S. demand for hybrid cars is declining, as consumer opt for traditional cars that can promise similar gas mileage at a lower price. Hybrids accounted for just 2.2% of U.S. auto sales last year, down from 2.8% in 2009. Meanwhile, demand for fuel-efficient traditional cars such as the Chevy Cruze (GM) and Ford's (F) Fiesta and Focus is surging. (yesterday)

    Google's Eric Schmidt is chock full of interesting anecdotesin his speech at a trade show in Barcelona. For openers, he says the firm considered launching an alternative currency before realizing it would be illegal. Later, he predicted that $70 smartphones will hit the market in 2013. And finally in the totally random category, he says people should consider moving to Kansas City to take advantage of the ultra-fast fiber network that Google is constructing there.

  104. Wheeee!

  105. Golly Batman, indexes moving down while dollar holds steady.  What will happen if the $ starts to rise?

  106. Anyone else having chart problems? I've got some sort of red stuff at the right side of my charts that I haven't seen before.

  107. What happened to oil? Donald trump said OPEC is laughing at US. That must be why it is going down. Nothing else seemed to effect it before!

  108. Phil – I have 1,800 shares of MOO at $49.65.  Would you recommend selling some 2013 or 2014 calls on that position?  TIA

  109. Well, there's your dip for the week, BUYBUYBUY!

  110. Phil – thanks for the /YM play off of 13000.

  111. rain thats just bears blood

    What we need is some volatility ahead of LTRO with some $ strength.

  112. Phil, any plays to take advantage of the inevitable bounce?
    Annoying that EDZ isn't participating in this dip.  Are we in the wrong hedge?

  113.  iran says iaea may be readmitted into iran…SELL stocks OIL IS FALLING!

  114. Phil,
    I am just wondering how we plan on rolling the XRT March 55 and 56 calls in the 25k portfolio. It looks like in order to roll even and raise our strike price we would have to roll to either June 56 and 57 Calls, or maybe even the Jan 2013 61 and 62 calls.  We you planning on adding back a third leg so we aren't only short?

  115. Trump/Celeste – Hey if he can bring down the price of oil, I'll say: "Trump for Prez!"

  116. Phil, yu say:"maybe we shouldn't expect anything more rational in our market ". my biggest mistakes were the ones expecting something before it actually happened. my best trades, like silver at the start of the year, were the ones when i followed a signal from the market to go mistakes (shorting) happened cause i expected (i hoped) the market would drop.better to wait for a break of the trend and then enter. what do yu think?
    "When we do not expect anything we can be ourselves. That is our way, to live fully in each moment of time."(shunryu suzuki)

  117. Now we're getting somewhere on those XOM March $85 puts – .66!   It's 50% now but could do better so maybe 1/2 out at .60 and stop the rest back at .45 (.20 trail).  

    Oil hit $106.50 and below that we should see $105 and $103.50 but I don't see a reson and the NYMEX closes in 30 mins so I imagine it will be saved but inventories tomorrow will be very interesting.  

    RUT gave up 10 very fast, now we see if they can hold 820 there.

    Don't blame the Dollar – way down at 78.35.  

    GMCR $65.60!

    Even CMG is down .02…

    PCLN still $632. 

    Nat gas slammed back to $2.52 from $2.74 yesterday.  That's an insane move for gas.  Gasoline also dove from $3.327 to $3.227 .

    What if Dollar rises/Tryo – Very good question.  The weak Dollar has been the only thing holding this top this week.  

    Laughter is the best medicine Celeste.  

    MOO/Ink – I think they had a good run and I think you underestimate how fast they can drop in a sell-off so be careful.  They pay a crap dividend so not really worth holding and you can flip it into an inflation hedge by just selling the 2014 $42 puts for $4.50 and then you make another 10% (ish) if they just hold $42 and your worst case is you're back in the stock at net $37.50.  TOS says it ties up just $4.50 in net margin so you free up about $40K of margin for other things and, if you want to be more aggressive – since you are buying back in at 33% off the current price, you can go with 25 short puts for $11,250 in pocket now and worst case is you have 2,500 shares for the same price as you currently have 1,800 and, otherwise, free $11,250!  

    YM/Tyro – Congrats!  That's why it's so great to play lines like that in the Futures, since they are hard to break, you tend not to get badly burned on a move against you and, once in a while, you catch a really nice move down.  

    Bounce/Palotay – Sure, we discussed using IWM last week, that's still the best play.  Off the 820 line ($82 on IWM) you can play the weekly $80 calls at $2.22 with about .15 premium and a tight stop below $82 (maybe $2.10) and use it to catch a quick .25 or .50 on a move up – nothing to sneeze at as a momentum trade.  

    XRT/Ging – If it doesn't work this month we'll roll 'em to the next one.  See chart above – it's ridiculous that XRT is 40% ahead of the S&P.  If they break $60, we can add a defensive put but, otherwise, it's just another over-inflated ETF that's likely to crash hard – one day. 

    Expectations/TraderM – "Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat." – Sun Tzu 


    "To see victory only when it is within the ken of the common herd is not the acme of excellence."

    "Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win."

  118. Pharmboy/VVUS
    you stated that you would wait until April to short them I was wondering why wait, is this due to folow on upgrades and such as a results of the approval?

  119. CMG green now, bots just had a quick nap, back to work!

  120. phil-- i am starting to wonder if it is even possible for CMG or PCLN to be down for the day …
    every day they get pumped up?
    how long could this go on for before the buyers disappear?

  121. why does there never seem to be any profit taking?
    Are the "owners" just unwilling to sell until they are up 100%?

  122.  Bank lending in Brazil contracted in January for the first time in almost three years while more consumers and companies fell behind on their loan installments, in another sign of the abrupt slowdown afflicting Latin America's largest economy.

    Outstanding loans in Brazil's banking system fell 0.2 percent in January from December, the first month-on-month drop since the 0.02 percent decline recorded in February 2009, the central bank said on Tuesday.

  123. Hi Phil PCLN weekly short 630 was it to close EOD today and not hold over night just in case we have a pop up follow through.  this market should be tire by now should it not????

  124. Yesterday Cobra showed a recent pattern of three up days, then one down.  Based on that, today was supposed to be down.  Looks like this market just wants to break all patterns and predictions…

  125. At this rate EDZ is going to split soon and make a complete mess of all my options…

  126. Phil, how are the SQQQ and SDX hedges looking now?  I didn't put them on end of last week, but starting to feel the need to do so now…

  127. If I did not know any better I wouyld say this market seems heavy, but I do know that the bots will be here shortly to book a .38% gain on the day:)

  128. Here sticky sticky…..

  129. Phil/IBM:  What do u think of buy Jan.IBM $185/$200 BCS paired with $175 P for net $.05 credit on $15 spread? Low risk w/nice return,but with this market being so over  bought,I'm concerned that I should wait for a pull back. Thanks

  130. VVUS/sage – I don't want to be whipsawed.  PLX play for their May PDUFA is may 5/7.5 BCS, selling the April $5 P for 35c credit on the 2.50 spread.  More aggressively, sell the 7.5 P in April for .40 credit on a 5:2 ratio BCS:P.  I think they run up into the PDUFA, so one could buy back the puts in April if they go our way.  Since I have so much stock, I will play this one on a small, limited basis FWIW.

  131. MrMocha/Cobra – What do you think of Cobra's service?  Is it worth signing up?

  132. every day another all-time high… WTF??
    FU CMG!!!

  133. AAPL portfolio:    I have sold ALL 35 April 500 options for 44.35.   We are in CASH in this account.  Why to cash?   This account has gone from 50k less than 3 months ago to now over 200k.   Let's say I just feel the need to rest the damned thing for a few hours.  I certainly have no objection to you staying in for a longer ride.  I will reassess everything overnight and will probably re-enter tomorrow with different options.

  134. and FU Mr Stick!!!

  135. swoon and stop on a  magical sloppy buyer dime

  136. palotay / Cobra – I joined just a few weeks ago, based on JRW and Pharmboy referencing him from time to time.  So far he's been a bit off, like everyone else, saying the market is toppy and due for correction, so he's simply fed my propensity to buy more hedges and then get squashed like a bug 8) .  I do learn from his chart comments, so that's modestly useful, although you can learn as much from Fry and Kimble for free.  He has a chat room that seems to have some smart people in it but I don't have time to follow.  So I guess I don't have a very strong opinion either way just yet, ask me again in two months…

  137. palotay – RE: Cobra … YES!

  138. I dub this market RESTICKULOUS!

  139. Appl / Iflan – thanks for the heads up. Tomorrow is supposed to be one hell of a day (LTRO, ISDA, Ben).  Wise to be in cash.

  140. Phil, do you have a bottom for the dollar?

  141. lflan
    By the time I read your post this morning that you had bought back the Apr $550 covers, the stock had already run up quite a lot. Consequently, I decided to leave the covers in place which is the situation at this moment.  In my place, would you still go entirely to cash or would you leave the Apr 500-550 spreads intact?
    Which trading platform do you use that allows you to execute a stored trade when an event (like a specific price) occurs?
    Appreciate your efforts

  142. i'd like to take this opportunity as sure to be one of many to call it the top ;-)

  143. Anyone get out of TLT ?

  144. Thanks MrMocha/Diamond.  I might try it out for a month.

  145. cslanson (and anyone else following any time-sensitive portfolios) – try using something like RSSowl to read the comments. I have it set up to check every 30 seconds, and I also have several alerts, including one that plays a foghorn whenever lflan posts a comment with AAPL in it. It sure beats refreshing the page all the time and checking for new comments. Now I just have to start actually following the trades! :-(

  146. ARIA/mrm – those 1/2 covers should have done quite well, no?

  147. Dollar smacked down to 78.23 by whoever is desperate to print 13,000 on the Dow.  Not helping oil bug gold back up.

    MoMos/Jabob – People were paying 1,000x earnings back in 2000 so there's really no such thing as a limit for popular stocks in a bull market in the short run but, in the long run – were past the limits already.   The question is, can you stay solvent long enough for the market to become rational?  

    PCLN/Gucci – Depends on what you are trying to accomplish.  If you are comfortable rolling them out until they expire, you can stick with them but if your goal was to make a quick win – you got it so get out and we'll find something to play tomorrow. 

    CMG putting up new highs as we speak.  $391.28.  

    EDZ/MrM – I doubt they'd split above $5.  

    SQQQ/Jerconn – I'm bullish above S&P 1,360 (in theory).  Plenty of time to buy more shorts if we fail it but, if you have no hedges, then those are good ones.  

    IBM/Dflam – I like it but, as you note, I'd like it a lot more AFTER a correction.  

    Restickulous/MrM – That's a keeper!  

    Dollar/Rpme – 78.50 (around) has been very strong since December, I don't think we fail 78.20 and I still expect a 10% run at some point – but I also expect the market to pull back and that's not happening yet…

    Ireland's EU fiscal ballot is ready: 

  148. ARIA, buy stock, sell the $14 call and $15 P (April) for $2.95.  Not a bad return.  I am trying the modified strangle first, and then will buy the stock.

  149. Well, the joke continues to be on us…or not, depending upon which view one takes…have a nice day….I am going to drink, workout, and then drink some more!

  150. cslanson  ….   I would just leave the spreads alone.

  151. CMG – Proof that no humans own it.  Look at the 5 day 3 minute chart.  Assuming someone wanted to be long CMG (no one here), what rational person would buy at the end of the day when clearly you can buy it cheaper first thing in the morning? I can see a ramp on expiration fridays to screw all the short call holders, but who else?

  152. From Seeking Alpha:
    The results of the ECB's LTRO are scheduled to be released about 5:15 AM ET tomorrow, with estimates seeing the take-up at €500B. "Consensus is that an LTRO that is higher, equal to, or lower than consensus … will all be positive for the euro," writes ZH of the currency which has defied mostly bearish forecasts thus far in 2012. :-)

  153. IWM $80s up $1 already – see how easy it is to be bullish!  Now excuse me while I wipe the blood off this bat I've been bashing my skull with…

    CMG/RDN – That is the fakest-looking chart I have ever seen.  

    Oh man, some seller is giving huge grief to whoever is trying for 13,000 – right on the line all buys are met with sells.  

  154. Pharm skip the workout all together and stick with the latter and former of the 3 to do list you got there.

    Your not alone Pharm…our day will come!! I refuse to take the blue pill.. I dont care where the markets go…its not natural!

  155. man over 15 million shares traded after the bell that is over 13% of the days entire volume in the dow!!

  156. 13,000/Phil - "right on the line all buys are met with sells" can you take a minute or two and explain this and why it is huge grief to the buyer? thx…

  157. actually that is over 24 miilion shares or 21% of the days volume

  158. Blue Pill/Kustomz – clearly it is the market that took the blue pill!

  159. Boy Phil:
    Keep saying it and maybe it will finally come true! Very frustrating watching this day after day. But as Iflan wrote earlier:
    "What I've noticed over the years is that successful traders do not take the market personally.  It is like they are working with mathematical problems and solutions, with no emotion attached to their trades whatsoever.   Very hard to learn or to teach this.   But if you can work on totally detaching yourself emotionally from your trading, then you will make progress."
    Great advice if you can actually do it!  "I want to turn it off and do what Iflan did."… "I want to turn it off and do what Iflan. did"…….."I want to …….
    Mr. Mostly in cash and watching on the sidelines.
    Iflan: Very impressive performance! You earned a day off! :)

  160. Phil
    That should have been written: Boy, Phil. You are all man! :)

  161. Oh sorry, that was 13,000 on the Futures, I see the index officially held 13,000 on 114M volume.  The Futures are at 12,988 now.  

    All in all, it was a bullish day and we'll just have to see what happens next but as long as we add one of our bullish plays each day – we'll be fine and won't miss much.  

    Grief/Scott – Because someone is running a BuyBot looking to close the Dow over 13,000 and someone else is dumping all their shares on a robot that just mindlessly keeps buying and the longer it keeps up, the more expensive it becomes for the buyer – who likely doesn't really want to hold the shares but just wanted to paint a picture to spur demand for his own shares to unload.  

    Now we'll see what happens in Europe tomorrow. 

    At the close: Dow +0.2% to 13008. S&P +0.36% to 1373. Nasdaq +0.67% to 2986.
    Treasurys: 30-year -0.11%. 10-yr +0.07%. 5-yr +0.06%.
    Commodities: Crude -1.75% to $106.66. Gold +0.66% to $1786.65.
    Currencies: Euro +0.49% vs. dollar. Yen -0.14%. Pound -0.46%.

    Market recap: Well, what better place can you put your money right now? With that prevailing sentiment, stocks continued to ease higher despite declines in durable goods orders and home prices. The Dow finished above 13K, and the S&P closed at its best level in nearly four years. Oil prices fell sharply for a second day; gold and silver rallied to multi-month highs. NYSE losers slightly led winners. 

    "Be warned," tweets Josh Brown, "We're getting to that stage of the rally where my civilian non-finance friends are calling me to talk about their winners."

    Central banks continue to inflate the debt bubble and "defer the pain," writes Thomas Feeney. The problem is that the world's central banks face a debt crisis so severe that they continually ward off the "corrective forces" of recession by issuing more and more debt. According to Feeney, the bubble will will eventually pop for a future generation with government defaults.

    St. Louis Fed economist Daniel Thornton maybe makes a bad career move, breaking from Fed leadership dogma that the liquidity pumped into the economy poses little inflation risk. He says the recent acceleration in the money supply is of concern, especially with inflation already above the FOMC's (implicit) 2% target. (full paper)

    The ISDA says it has accepted a request to consider whether the events surrounding Greece's debt (i.e., subjecting private holders to a 53% haircut) is a credit event. The Determinations Committee will meet early Thursday morning to decide. (PR

    Nymex crude slips 1.6% to $106.77/barrel, giving up morning gains in the past hour or so. Futures may be responding to weak U.S. economic data showing home prices continue to lag and declining durable goods orders. But some analysts say the last two trading days "have all been about profit taking by the hedge funds and banks" after oil prices topped $109 last week. 

    IBM has laid off over 1,000 North American workers this week, says an advocacy group for Big Blue employees. It was recently reported that IBM, which has over 426K employees worldwide, might cut 8,000 jobs in its German division.

  162. scottmi..LMAO, The markets had a pump installed no pill needed.


  163. kurtww  / RSSOwl comments?
    How do you subscribe to the comments on the site using RSS Owl?  It will load about 4 RSS feeds each day, but I can't get the comments to work.

  164. Oh Phil, should've just let me buy those puts on FSLR… Complete miss and lower guidance.  Ugly across all levels.  Trading to resume at 4.45.

  165. Burr – I just copy the URL for the daily post and add /feed/atom to the end, so for today it would be:
    In RSSowl I have a folder for PSW, and in there I right-click, add new feed, it automatically puts in the clipboard, and I just add the feed/atom at the end. Any saved filters and alerts just keep working with the new feeds. It would be nice to have the new feeds added automatically, but it only takes a few seconds this way. 
    I just keep the old feeds around, you can mark certain posts (comments) as sticky to find later, and of course you can search the lot. I also have a separate folder for Optrader's thread, and a couple other places I follow (Kimble for one). They all appear in one app, so I'm not constantly switching and refreshing pages. It's SOO much easier.  

  166. stjean – whatever Phil's paying you, it's not enough!

  167. Thanks Kurt… I'll ask for a raise!

  168. BTW, I had never plotted all these lines in my charts, but look at the NASDAQ chart going back 1 year. These lines seem to work very well. That is until this month….

  169. kurtww: thanks for the instruction on RSSowl. I havent found how to get a foghorn alert (or any alerts for that matter). It looks like a robust program :)

  170. Kurt – what is the URL to download RSSowl?  I did a google search and it didn't come up…

  171. barf – It's under News->Filters, create a new one, put in the criteria you want. Author contains "lflantheman" and Entire News contains "AAPL". Then add an action, Play a Sound, and choose a .wav file on your computer. I downloaded a selection off some random website so I have some that are very distinctive, and I hear them even if I'm in the other room. The one weird thing I've noticed is that after a while the sounds stop working. Quitting and restarting the program solves it. This has happened a couple times, maybe it's my machine. 

  172. jmm1951 – I'm scanning through today's posts and find you quoting Chaucer! wow.

  173. pakdog/Chaucer
    More like misquoting, I think.

  174. The Next 8 Most Nerve-Racking Dates In Europe:
    Wednesday, February 29
    Thursday and Friday, March 1-2
    Thursday, March 8
    Monday, March 12
    Tuesday, March 20
    Tuesday, March 27
    Friday, March 30

  175. At the bottom of this link there is some info on AAPL options 

  176. Phil and stjeanluc, I didn't follow the XLF/FAS and IWM/TNA/TZA trades beacuse I can't watch PSW all day.  Do you think the guys like me(look PSW few times a day) can follow those trades?  TIA.

  177. StJean  did you sign up for Elliot's job as well!

  178. jmm – a little poetic license is allowed here I think

  179. Restickulous™ – reposting with the appropriate mark 8)

  180. In Michigan, according the exit polls currently posted by CBS News, Romney runs strongest with Republicans who report incomes of $200,000 or more per year, running 26 percentage points ahead of Rick Santorum (55 percent to 29 percent). He runs ahead but by a much smaller, seven-point margin among those earning $100,000 to $200,000 per year (44 percent to 37 percent) and trails Santorum by four (35 percent to 39 percent) among those earning $100,000 or less.
    that is the kiss of death for the gop..romney is just dreadful..does anyone else think he loooks like christoper lee (count dukoo..and of course Dracula)

  181. The SPX has been up eleven of the last sixteen sessions while the Russell 2000 has been down twelve of the last sixteen.

  182. so you think this is rigged?

  183. angel
    he looks like the male/ political version of a stepford wife

  184. sparkle that is perfect!

  185. Good morning!

    Not much action in the Futures so far.  There was a little dip around 10 but then we recovered back. 

    Asia pretty flat, France and Germany up 0.5%, UK flat.  Euro $1.345, Pound $1.5925, 80.57 Yen to the Dollar and EUR/CHF 1.205.  Oil $107.09, gold $1,788, silver $37.20, copper $3.95, nat gas $2.52, gasoline $3.25.

    Greece’s Parliament ratifies a €3.2B package of spending cuts in a 202-80 vote, bringing the country one step closer to securing its rescue funds. Another vote follows today legislating permanent changes to pension funds and healthcare spending.

    Irish Open New Front in European Debt Crisis as Treaty Vote Plays on EuroIreland will hold a referendum on ratifying the European fiscal compact after government ministers sought to frame the campaign as a vote on the nation’s determination to keep the euro

    Ireland Is Getting A Choice – Which Is More Than Other Eurozone StatesDemocracy continues to interfere with the European Union's best laid plans.

    The results of the ECB's LTRO are scheduled to be released about 5:15 AM ET, with estimates seeing the take-up at €500B. "Consensus is that an LTRO that is higher, equal to, or lower than consensus … will all be positive for the euro," writes ZH of the currency which has defied mostly bearish forecasts thus far in 2012.

    Europe Delays Debt Talks After Signs of Uncertain SupportDomestic politics in euro zone countries emerged again on Tuesday as a serious obstacle to resolving the European debt crisis, contributing to a decision by officials to postpone a crucial meeting they had planned for Friday. The setbacks illustrated again how hard it has been to reconcile impatient financial markets with democratic processes.

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:30 GDP Q4

    9:45 Chicago PMI

    10:30 EIA Petroleum Inventories

    2:00 PM Fed's Beige Book

    3:00 PM USDA Ag. Prices 

    ATA's For-Hire Truck Tonnage Index fell 4% in January after surging 6.4% in December. Noting December’s increase was the largest M/M gain since early 2005, ATA's Bob Costello says January's drop shouldn't be a surprise, and he's optimistic about coming months: "While many fleets said January was normal, they are also saying that February has been pretty good so far."

    Average February Gas Price At All Time High; Follows Record January Gasoline Costs. (graph)

    Another Unintended Consequence: $80 Billion 'Gas Price' Tax on ConsumptionReal-time income tax withholdings suggest real wage and salary growth was barely positive in January and February. If fuel prices hold steady or rise further, we expect real wage and salary growth to turn negative.

    Small Firms Prep For Rise In Gas Prices. Businesses that rely on fuel to get their products directly to customers are bracing for a sharp rise in gas prices. "We're terrified," Fain-Rossen said. "We don't want to let anyone go, but we have a family to support. We're actually wondering if we should raise prices now in anticipation of prices going up so that we don't get hit later unexpectedly."

    India's GDP rose 6.1% in Q4, the slowest pace in more than two years as domestic demand weakened and the global recovery faltered. India has raised rates to the highest level since 2008 to fight inflation, but may need to lower rates now to spur growth.

    Germany's unemployment rate is unchanged in February at a seasonally adjusted 6.8%, vs. expectations for a modest decline to 6.7%.

    Japanese industrial production rose a seasonally adjusted 2.0% during January, beating expectations for a 1.5% gain, but was still a slower improvement than December's 3.8% M/M advance. Shipments dipped 0.7%, while inventories rose 3.1%

    BOJ's Shirakawa says the central bank will pursue strong monetary easing. (via BOJ's Shirakawa says the bank's recently introduced price goal of a 1% rise in CPI is "a policy with an active stance," and is likely to boost the public's inflation expectations

    Pump Job:  China's residential housing market is beginning to improve, especially in major cities, according to Citigroup. Pent-up demand and softer mortgage terms are driving the improvement, and while home prices should remain soft this year, Citi forecasts "a correction rather than a collapse."

    Reality: China's Stocks Snap Eight-Day Gain on Housing Policy Reversal; Vanke Falls. China’s stocks fell, dragging the benchmark index lower for the first time in nine days, on concern the government will retain measures to curb gains in housing prices this year. China Vanke Co. (000002) led a gauge of developers down the most in four weeks after the China Securities Journal said Shanghai scrapped a plan allowing some non-local residents to buy second homesThe property policy reversal has damped investors’ expectations that an easing of policies would put the economy back on track,” said Dai Ming, a fund manager at Shanghai Kingsun Investment Management & Consulting Co. “That will weigh on sentiment given we’ve had a good rally this year.”

    China's highway construction debt-asset ratio is more than 70%, higher than high speed rail construction's ratio of 58%, citing a report by Beijing Jiaotong University. The National Development and Reform Commission requested the report from the university. Funds for public road construction takes up a "relatively large" proportion of financing from local government financing vehicles and poses a "relatively large" risk to banks, the report cites Guo Wenlong, a NDRC researcher as saying. Fees from highways in China's central, western regions aren't enough to cover interest payments on loans used to fund the projects, the report cites Guo as saying.

    Bank lending in Brazil fell 0.2% last month, the first contraction in almost three years, while loan defaults rose for the first time in two months. Both underscore the abrupt slowdown in Latin America's largest economy, though seasonal factors also contributed to the weakness. 

    It could take as long as 5 years to bring unemployment down to 6%, cautions Cleveland Fed President Sandra Pianalto. The economic recovery has been "frustratingly slow," but monetary policy is now appropriately positioned to eventually achieve this "maximum employment" level.

    Treasury Yield Descending Since January Seen Signaling Slowing U.S. Growth. The $10 trillion market for U.S. Treasuries is signaling that the economic recovery may be poised to weaken even as consumer confidence rises toward pre-recession levels. Yields (USGG10YR) on 10-year Treasury notes, the benchmark for everything from mortgage rates to corporate bonds, fell as low as 1.89 percent yesterday, down from this year’s high of 2.09 percent on Jan. 23, according to data compiled by Bloomberg. Bond investors are focused on Europe’s sovereign-debt crisis, oil prices that exceed $100 a barrel again and home prices that have dropped to the lowest level since 2003. “You have an economy that’s not yet firing on all cylinders, Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York, one of primary dealers that are required to bid at Treasury auctions, said yesterday in a telephone interview.

    Stockton, California approved a plan late yesterday to skip some bond payments in an effort to avoid becoming the largest U.S. city to file for bankruptcy. Along with defaulting on ~$2M of debt payments, Stockton will seek to enter mediation with its major bondholders as it struggles to tackle a budget gap projected at $20M-38M.

    U.S. banks increased lending by $130B in Q4, the largest quarterly pickup in four years, according to the FDIC's latest industry report card. The lending pickup is a bright spot after a mostly depressing 2011 that was the industry's most profitable year since 2006 but also just the second annual revenue decline in 74 years.

    The DOJ is conducting a criminal investigation into whether the world's largest banks manipulated the Libor inter-bank lending rate, a source tells Reuters. Though it was well-known that investigation was ongoing, it wasn't previously known to have a criminal aspect to it. 

    Can Facebook (FB) solve California's budget woes? Not completely, but FB's upcoming IPO will help; according to the state's Legislative Analyst’s Office, it could lead to as much as $2.5B in additional revenue for California over the next five years, thanks to capital gains taxes on stock options, including $1.5B in 2012-2013.

    Another day of Apple (AAPL) love (IIIIII) pushed shares to another all-time high and propelled its market cap within a hair of $500B - rarefied air indeed. Only five companies have ever had $500B market caps in absolute value terms, and three of those pooped out during the tech boom in 2000. Josh Brown's latest "thing Apple is worth more than": the U.S. interstate highway system. 

    U.S. carriers are making it easy for Apple (AAPL) and Amazon (AMZN) to dominate the tablet market. Verizon VZVOD) and AT&T's (T) latest 4G tablets, Samsung's Galaxy Tab 7.7 and Sony's Tablet P, respectively cost $500 and $400 with 2-year contracts attached. Between the high cost of these tablets, theconsumer preference for Wi-Fi-only models, and the ability to buy 3G (and soon 4G) iPads without a contract, carriers shouldn't act surprised when their sponsored hardware fails to sell.

  186. FSLR/LOL – I said it could go 10% either way and it did.

    Thanks for the chart StJ!   We are getting close to having to move the lines.  One week over 1,360 or 2 over the 15% line should do it.  

    Nerve-wracking dates/Diamond – Reminds me of Mark Twain's comment on the market: "OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The other are July, January, September, April, November, May, March, June, December, August, and February."

    AAPL/Joe – Ah but in May 2009 AAPL was at $120 and more than doubled into the next year and has now doubled again so I wouldn't consider this a negative as much as a certainty on the part of investors that there's still huge upside potential:

    Guys like you/Bob – I think you can apply the same concept to monthly trades, you just won't get such exciting results (but, then again, you won't get such exciting results if the trade moves against you either – last year, FAS Money started off with big losses before the Financials started behaving themselves).  You could play the weeklies with stops when you're away as you are better off stopping out and dealing with it later than coming home to a huge mess and, if you're checking in a few times a day anyway – that should be plenty but the key is to get into your own rhythm of trading – not just relying on our calls.  It's arbitrary anyway as I generally just respond to the posting of the chart in the morning – I'm not sitting there starting at FAS all day but, if there is a major move, then I might call for a rare adjustment in the afternoon.  

    Speaking of major moves – it should be LTRO time….

  187. Dollar right on my 78.20 line so LTRO has to be a bust according to my Dollar value theory.  Of course, LTRO becomes a factor that affects my valuation of the Dollar but, for now, and based on the bulk of factors affecting the Dollar – it would be simpler if LTRO disappointed and the Euro falls and the Dollar spikes up and the markets crash.  We'll see soon…

    Romney/Angel – He's a winner today.  The GOP just can't get rid of that guy.  

    Good observation Peedle, RUT has been a very good leading indicator so far. 

    Colbert/Pak – I love that show!  

    $529Bn – Very Goldilocks, just a touch over the $500Bn expected but not so much it causes a panic.   Now we see if it's the sell on the news we expect because – SO WHAT?

  188. Wow, Futures are loving it!  Dollar 78.18 but S&P 1,377, Dow 13,035, RUT back at 630 (where it's been a great short), oil $107.40, gold $1,792.  

  189. Oh good, it was just a headfake.  RUT failed fast, now a chase at 828.50 but Dow still over 13,000 and makes a nice short (/YM) if it crosses the line and S&P (/ES) is playable below 1,375 (there now).  

  190. Refresh rate still very slow. Is this a specific problem with Comcast or across the board?

  191. fundamentals or not you have been consistently wrong by betting against your "rigged market" premise which has been also backstopped by blatant central bank printing since mid december Phil, but maybe this time you get it right?
    then again, you also have B Bernanke up at 10 this morning so good luck with that.

  192. MY first post . I am in the deep end of the pool. Spent a month as a VOYEUR Member and moved up last night. I have learned more in 28 days from PHIL Iflantheman, Pharmboy and others than in 23 years as an investor. Truly amazing. I have a long way to go, including rearranging a portfolio that TWO PROF MONEY MANAGERS were nice enough to LOSE several hundreds of thousands of DOLLARS over the years. Phil I like the way you think, and love the stories you tell. Thank you!

  193. Well, here's one way to help clean up your balance sheet…..

    Problem solved  :)

  194. Phil

    When you have time, what do you think about CEL?  Thinking of staying away at least until after next earnings but then maybe selling puts.  Early march is next report date.

    1. Is. gov. breaking up telecom conglomerates, increasing competition
    2. high payout ratio/large debt load


    1. large dividend
    2. looks really cheap