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Toppy Tuesday or Time to Buy the Dip?

Just when I thought I could get bullish, they pull back again!  

While still EXTREMELY skeptical of this rally, I AM trying to get in the spirit.  As I noted yesterday, we have aggressive new levels that we determined in our weekend review of our 5% Rule and still need to see some more progress before we can throw caution to the wind and BUYBUYBUY like it's 1999.  Despite our best efforts, the silly move in the Russell yesterday had me putting up a TZA hedge in our morning Member Chat:  

RUT made a crazy move from 823 to 830 this morning for no good reason.  TZA April $17 puts can be sold for $1 and the the $17/18 bull call spread can be bought for .42 for a net .58 credit for a $16.42 net entry with TZA currently at $17.73 so it's a hedge with a bet against RUT 850 in 30 days.  

At 1:23, I followed up by saying: "Look at the RUT now, stuck at the 1.25% line. Obviously, 840 is the 5% move up from the new 800 base so we take that and expect an 8-point pullback but the indexes have been routinely overshooting by 20% (848) and even 40% (856) before pulling back so now that we're past 840 without a pullback, we'll just have to wait and see but, no matter what, we should expect to see 832 re-tested eventually, which is why I liked the TZA play as they crossed that line this morning."

SPY WEEKLYAs it worked out, that was the dead top of the RUT and we quickly got our break back below 840 and our ride down to 832 at the close.  At 2:50, the Russell Futures failed to get back over 840 and my comment to Members was: "840 on RUT, this is the spot to press those shorts if ever."  As you can see from the above chart – we went very nicely off a cliff right after that.  JRW, our Russell expert had called the bull run and was ahead of me at 2:29, calling "Back to cash!" and my comment, also at 2:50 was:

Cash/JRW – I agree.  As I said last week, better to miss 5% of the next round of foolishness than play this nonsense.  Much fun as it seems to switch off the old brain and buy with the herd, I would hate to miss the opportunity to go short if this all breaks down as that's going to be one hugely profitable trade if it ever happens.  

We're clearly at an inflection point and what we have to be on Alert for is a subtle change of sentiment from the media.  The news is already bad, it's been bad all quarter – but only now are some analysts finally putting the pieces together.  Suddenly S&P's Capital IQ is finding that projections for Q1 earnings are now as low as 0.5% growth, not even 1/4 of expectations by those people we lovingly refer to as "economorons," who are able to miss their estimates by HUNDREDS of percent on a regular basis yet remain employed.  

"Traders are now really fearful that companies are not going to be able to hit their earnings targets next time around," says Todd Schoenberger, managing director at LandColt Trading in Lewes, Del. "That may be the catalyst to really get stocks trending lower, and it could very well stay that way the rest of the year."  S&P is expecting full-year earnings growth of 5 percent that would send the "500" to an aggregate of about $105 per share.

In this upcoming period earnings season officially kicks off April 10 when AA reports.  The best sectors are expected to be Industrials (10% growth) followed by Information Technology (4%) and Consumer Discretionary (3%). The weakest sectors likely will be Materials (down 15.5%), Telecom (-14%) and Utilities (-4%), according to Sam Stovall, S&P's chief equity strategist.  In all, six of the 10 S&P 500 sectors are likely to see earnings declines.   Companies themselves have been preparing investors for a letdown, with the level of negative preannouncements at their highest level since the March 2009 market lows.

I pointed out way back on Feb 29th that a large portion of the S&P's projected 10% jump in 2012 profits were coming from one-time reversals of loan-loss reserves by the Financials.  Their anticipation of a rosy economic outlook allows them to, once again, throw caution to the wind and minimize the cash set aside for a rainy day – declaring the cash they free up as profits.  This has nothing to do with actual economic growth and the fact that the 2008 loan-loss reserves were inadequate to the tune of a $780Bn TARP bailout seems to have been a lesson lost on both the banks and their regulators as we are right back to where we were before the crisis exposed what idiots we were at the time.  

Another one-time benefit that is boosting earnings are the tax-loss write-offs that are still on the books to the tune of almost $1Tn for US corporations.  This allows them to drop much more money to the bottom line, tax-free, than they would under ordinary circumstances.  

X, for example, wrote off $1.7Bn in 2009 and another $464M in 2010 and even another $2M last year so they will have to earn over $2Bn before they have to pay taxes again and that will inflate their apparent net income by 35% – THIS is why you see a pop in S&P "earnings" – it has little to do with an economic "recovery" but that's the story they are selling.

As I'm still trying to get bullish, I won't get into the issues in Europe or China or the wobbly US local economies or the fact that the S&P is downgrading US CDOs in a move that may make current rates unsustainable.  We won't discuss the fact that Hedge Funds dumped 78% of their 2-year TBills in last week or the IATA lowering their Airline profit forecast for 2012 by 14% China's slowdown (good slide show from BHP that sparked the morning sell-off) or the way China's Stock Market has become a complete, unregulated joke.  

No, instead we will accentuate the positive and say that things are still looking good because they are looking good and looking good is all that matters, right Fernando?   Will the market continue to look marvelous or will early Q1 earnings this week bring us back to reality – we are trying our best to keep an open mind… 


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  1. Oil Lines

    R3 – 110.50
    R2 – 109.60
    R1 – 108.83
    PP – 107.93
    S1 – 107.17
    S2 – 106.27
    S3 – 105.51

    Yesterday's high and low – 108.7 / 107.04


  2. And our new level chart:


  3. Phil/Toppy or BTFD

     
    Given the fact that I bought TZA near the absolute bottom yesterday and sold it for 25 cent gain, I'd have to guess that it's going to be a down day without a bounce. 
     
    This is an example of the very very accurate Exec indicator in which I always buy at the correct time and sell way too soon.


  4. Watching CNBC is really not good for my mental health… Again this morning Paul Ryan talking about how lowering taxes will increase growth and actually raise revenues. If my memory serves me well, we have tried that in the past 30 years – twice! It doubled the deficit each time. Only Reagan understood it and actually (gulp!) raised taxes. Lowering taxes doesn't increase revenues (as a percentage of GDP as it's the only fair measurement) – it never did and never will. Even Art Laffer (who is otherwise an idiot) admitted that much. 

    And once he was done with taxes, Ryan then said that they will cut $5 trillion over 10 years. While increasing defense spending by the way. Phil posted a chart yesterday showing that discretionary spending is only about $1.15 trillion of which defense is $653 billions leaving $550 billions for cuts. And since defense goes up, you will need to cut the entire discretionary spending (ex-defense) to achieve the savings – no more FBI for you, no more FDA, FAA, and other agencies. Crime, pollution, unsafe food and medicine – no worries, the private sector will regulate itself!  Planes will crash, but more work for Boeing to replace them. No more State Department – who needs these wuss, nothing that a carrier group can't solve. No more education department – hey, uneducated voters are our best chance for elections!

    It's just surreal….


  5. TIF missed estimates but is up in premarket. Is this going to be earning season with similar effect for all companies reporting lower earnings but announcing better earning expectations.


  6. This is clearly a bot driven market and as an example (and for Jabo's benefit), here is a PCLN chart. Last year the $540 line seemed to be a tough line to crack and I used that as a baseline. I then drew a line 10% above the baseline and used that new 10% line as a baseline and drew another one 10% above that new baseline. And bingo, every time we get to that 10% line and hold there. It does look a bit pre-programmed! 

    Next line is at $718 and they look intent on getting there quickly!


  7. Toppy….I wish it would take it off!


  8. Note to self:  Tax write-offs ran out at year end (2011) — where capital items could be 100% depreciated in that year.   So, watch the capital equipment companies (CAT, DE, etc).


  9. stjean/taxes
     
    Yes, if taxes are lowered, people will earn more and then they will have to pay more taxes so taxes will have to be lowered again so that they can earn more and pay more taxes, and so the revenue goes ever onwards and upwards.

    One of the most economically successful presidents ever was George W. Bush. He implemented the economic stimulus which was so famous that even completely illiterate Mexican women whom I knew were talking about waiting to get their $600 cheque for the stimulo economico as if they were professors of finance. This was so successful in boosting remittances to Mexico via Western Union* that before he left office via the back door of the White House, the stock market was in free fall. Clearly he should have implemented more stimulo economico and started another war, preferably against Israel, to benefit us all.
     
    * In real life no Mexican in their right mind uses Western Union to send money south of the border, because they charge about 10% commission versus other no-name providers available in ethnic stores that charge about 2%.


  10. Good morning,

     

    IWM      81.41,  81.61,  81.94,  82.12,  82.34,  82.67,  82.94,  83.18,  83.33,  83.55,  83.74,  83.96 and 84.26

     

    Also, I have P-bars to 82.82 and 82.34 and trend line support at 82.58


  11. It's another thing Jmm – listening to these guys, I guess war is an excellent economic stimulus! Just surreal…


  12. that was not nice stjean ;-(


  13. Good paper, with lots of eqations….one especially for Jabo.  In essance, the paper uses Kalecki’s profit equation which says among other things that firms’ retained earnings is related to the government deficit!

    FU = If + DEF – SAVh


  14. Just the facts Jabo, just the facts!


  15. There goes OIL!




  16. Good Morning!
     
    Dilbert – Funny how the whistling out their nose comes after talking out their a**……. :-/




  17. Pharmboy – TRGT: Buy, Hold, Sell?


  18. Gimme a W….Gimme a H….Gimme a E….and another E…..whadda's it spell….WHEE..


  19. Paul Ryan…… the GOP Water Boy…. sacrifycing his integrity to be an idiot….. one of several new top guns… LOL


  20. TRGT/DIamond.  I am out.


  21. Some relief on the FAS and SCO front! VXX on the other hand doesn't want to play nice…


  22. AAPL has 2 Pbars down to $570.  Be careful with those spreads….


  23. Phil: broken capitalism
    something that gives me reason to hope is in reading Upton Sinclair "The Moneychangers" (1908) I see that capitalism today looks the same as 100 years ago and yet we have not perished, perhaps there is a Teddy Roosevelt in our future to make sure the system doesn't go completely off the rails.  Also re:AAPL they are building a data center outside of Charlotte that will be the largest end user solar array in the entire country, so that's a good use of some of that cash. my son is a solar technician who will hopefully be working on that project.  GOOG has data center not too far away where they try to keep it green.


  24. Phil – do you expect the drop in oil to continue? Any move on the Apr USO puts?


  25. aapl p-bars to 570!


  26. Just a quick thanks for PSW.  Before joiing PSW I would be worried sick about a day like today. 
    Now I'm just looking for opportunities.  THANKS!


  27. Good morning!  

    Oil down nicely (May contracts) to $106.75 with the April contracts trading at $106.35 on their last day).  Keep in mind that, once they get rid of their April contracts, the pressure will be off and they may be able to move May back up so be careful.  

    All the indexes look weak and the Dollar did press over 80 so that's our bear line to watch.  Euro $1.3185, Pound $1.5845 and 83.68 Yen to the Dollar.  

    RUT futures at next pullback line at 824 (goes by 8s) and that's a 40% retrace so you don't want to lose 820 or things get ugly, that's about 824 on the RUT index.  824 is a good spot to take a bullish poke with tight stops (and then 820 we try again) and the IWM weekly $81s are $2 and that's just .15 of premium so a good way to play if you can't play the futures.  Trades like this are a good way to lock in quick gains on short positions, rather than racing out of them on a bounce.  

    Bernanke speaks later but it's boring – a lecture to students justifying the existence of the Fed.  Hopefully Ron Paul will crash it and sit in the audience and ask awkward questions

    At the open: Dow -0.54% to 13167. S&P -0.55% to 1402. Nasdaq -0.58% to 3060.

    Treasurys: 30-year +0.2%. 10-yr +0.16%. 5-yr +0.07%.

    Commodities: Crude -1.41% to $107.03. Gold -1.12% to $1648.65.

    Currencies: Euro -0.32% vs. dollar. Yen +0.43%. Pound +0.24%.

    Market preview: U.S. stock futures follow the rest of the world lower on concerns about China's growth after BHP issues a warning about iron ore demand from the country, with the S&P benchmark -0.6%. Following earnings, Tiffany's is +4.5% but Adobe is-4.4%Later: Fed's Bernanke, Kocherlakota, Oracle FQ3 

    10:00 AM On the hour: Dow -0.74%. 10-yr +0.16%. Euro -0.09% vs. dollar. Crude -1.64% to $106.78. Gold -0.99% to $1650.85.

    Container shipments into the U.S. rose 4.1% Y/Y in January, reports the Journal of Commerce. It's the 3rd consecutive increase after a late summer/early fall slump.

    Redbook Chain Store Sales: +3.6% Y/Y vs. +3.3% last week. The rise in sales is attributed to warm weather, strength in women's apparel and earlier Easter.

    ICSC Retail Store Sales: +0.9% W/W, vs. +0.7% last week. +3.3% Y/Y, vs. +2.3% last week. Though warm weather gave a boost to weekly sales, the report warns that high gas prices pose a risk to discretionary spending

    People in their 20's are carrying average debt loads of $45K, according to a PNC survey, with education loans topping the list. Servicing much of this debt is about to get harder as the interest charged on government-subsidized Stafford loans is scheduled to jump on July 1 to 6.8% from 3.4%.

    Feb. Housing Starts: -1.1% to 698K vs. 700K expected and 706K (revised) in January. Permits +5.1% to 717K vs. 699K expected and 682K in January.

    The "massive" recovery in single-family housing starts. (earlier

    Housing starts numbers are of a bit more value when broken out between single and multi-family, which Bill McBride helpfully does. The bulk of the barely visible recovery has come from multi-family starts, suggesting still too-high inventory, and affordability/financing issues in the single family area.

    Straw that stirs the drink department: A chart of the growth in Chinese steel production plotted alongside the Australian dollar shows the correlation has gotten especially tight in recent years. Another chart shows the tight correlation between the aussie and the S&P 500. Does this mean Chinese steel production is driving the whole shebang? 

    Chinese vehicle sales are likely to miss their already modest target of 8% growth this year, according to a senior official at the China Association of Automobile Manufacturers who believes even 5% could be difficult to hit because of the "difficult" economic situation.

    The slides from the BHP presentation that's got markets spooked this morning. Slide 7 highlights the company's expectation that Chinese iron ore consumption – after more than quintupling between 2000 and 2012 – is not expected to be much higher in 2020 than it is today.

    Miners are leading declines in Europe following a BHP executive's comments that Chinese demand for iron ore is flattening out. Competitor Rio Tinto (RIO) quickly trotted out one of its execs to say solid growth continues in China, but the damage was done. BHP-2.9%RIO -3.3% premarket. Aussie dollar -1.1%.

    The CFTC creates a specialized enforcement "swaps squad" as it looks to up its scrutiny of the $300T derivatives market. The new team adds to one that focuses on manipulative and disruptive trading practices, including in high-frequency trades. The squads start work as the CFTC finalizes rules for off-exchange derivatives markets.

    Caterpillar (CAT) CEO Douglas Oberhelman predictsanother record year in 2012, with growth to come from new markets such as Eastern Europe, the Middle East, Africa and of course China. "We want to be here (in China) in a bigger way and of course we are investing a lot of time for what would be a 20- or 30-year run," says Oberhelman.

    Frontline (FRO-5.9% premarket after shares aredowngraded to Underperform at Wells Fargo, which believes the "recent short squeeze" – FRO is up 69% in the past 10 trading days, vs. S&P up 5% – has taken valuation "well beyond a sustainable level… particularly given the fact that there has been little-to-no change in FRO’s long-term fundamentals."

    No doubt thanks to the dubious pricing strategies of carriers for 3G/4G tablets, 90% of tablets sold in the U.S. are only used over Wi-Fi networks, notes analyst Chetan Sharma. The failure of 3G/4G tablets to take off hurts both carriers such as VZT, and S, and chipmakers such as QCOM. It's also noted smartphones made up 65% of Q4 phone sales in the U.S., compared with roughly 1/3 of global phone sales.

    More from Sharma's report: In a sign of how the U.S. wireless industry could be nearing a saturation point, it's mentioned the U.S. mobile penetration rate now stands at 110% (thanks to consumers having multiple accounts). Moreover, the industry's totalARPU fell by $0.43 in Q4, as declining voice revenue outweighed rising data revenue. Verizon (VZ) had the most postpaid net adds, while AT&T (T) added the most connected devices (tablets, modem cards, etc.).

    Sterne Agee lifts its price target for Apple (AAPL) shares to $740 from $620, just a hair below the Street high, and says the new iPad launch has been stronger than expected. AAPL 


  28. Damn, Gen Allen shoved to CSPAN 3!?!!?!?! Yes, the stupid republican primary (we know Romney will win) is much more important than the Afghanistan war. Fockers.


  29. TRGT/Pharm – they are down.. but are they out?


  30. Wow, there actually was a trade on AAPL at 570! 


  31. JR

     
    How are you positioned?
     
    Another down leg or do the Bots got it handled?


  32. Who makes money on Wall Street:

    http://www.jamesaltucher.com/2012/03/who-makes-money-on-wall-street/

    People who hold forever. Warren Buffett, Bill Gates, etc. 

    People who hold for one trillionth of a second. i.e. high frequency traders.

    People with inside information: If you know Hilton is about to buy Marriott then you can make an awful lot of money.

    Congressmen. It’s legal for congressmen to trade on inside information. 

     People who take fees. But here’s how it works. You raise $100 million and you make about $2 million straight off the top in fees which you split with your partners and the people who raise you money. Then you split any money that comes in off the profits on the $100 million.  In the long run you lose money for all of your investors but you make a TON of money on fees.


  33. Ron Paul may be a hero to some, but he is the most inarticulate spokesperson for his own advocacy I have ever heard.
    CAnnot stand to listen to him.  His mushmouth meandering all over the place, is fatal to his attempts at anything.
    Too bad the only in in CONgress who will speak out, can't f'in speak!


  34. Flip, could it be because there is no reasoning behind his argument?


  35. Ron Paul is the only nominee who you  know what you're buying when/if you vote for him. He has consistency.


  36. Big Chart/StJ – Very nice but we need to put in 2.5% lines (maybe thinner ones).  Not sure why line is not drawn at 13,150 on Dow, that one is in range, as is 840 on the RUT chart.  

    TZA/Exec – It is very much a take the money and run kind of market.  If we shift to epic fail, there will be plenty of time to play that dip but it will take a few times burning the well-trained dip buyers until they learn their lesson.  Also, volume just 27M at 10:10, not bad but nothing like a panic sale.  

    CNBC/StJ – Idiots on parade.  

    TIF/Spiyer – Revenues were a beat and guidance was raised and, on the whole, they are still (at $73) $10 off last year's high.  I think the whispers were low because Wall Street bonuses were weak this year but their Q ended in Jan and I'm not sure how much of that impacted them this Q so I'll probably like them for a short if they get back over $80 ahead of next Qs earnings.  

    PCLN/StJ – I'd have to call $500 a very significant line and base moves off that so $550, $600, $650.  When in doubt, use those psychological whole numbers anyway.  So $700 is 40% up and that matches the 38.2% Fib level at $691 so that should be a tight zone we expect to hold if they are going to break over $700.   If we do pop 40%, it's 50% that's very tough to break as that's a significant Fib and 5% Rule level where 9 out of 10 times we get a pullback to that 40% line (20% retrace of the 50% run).  

    War/StJ – War is a great stimulus.  Best thing about it is you hire suckers for minimum wage who's main function is to consume good created by the top 1% and charged to the bottom 99% at outrageous mark-ups but the purchases are not approved by the bottom 99% but by your pet politicians who the Defense Contractors put into office.  The overpriced goods are created to be destroyed and disposed of in foreign countries, where they have no environmental concerns or product liability – it's a Capitalists wet dream!  

    FAS Money – At $3.23 and owing $2,000 to our callers, it's time to buy 10 XLF 2014 $15 calls for $2.45 and put a stop on the Jan $13 calls at $4.50, which is .50 more than we would have gotten on the spread.  If XLF keeps going up, we have 10 open long calls to cover a 2x roll and if XLF falls below $15.50, we'll collect our $4.50 and probably add some more long calls (or roll the ones we have lower) but we're very well protected by our short FAS sales as well as the Jan XLF short calls.  

    IWM Money – Looking good

    $5KP – Worth spending $1.10 to roll TLT weekly $111s to April $111s and we'll see if our callers expire worthless and then decide about covering.  

    $25KP:

    • DMND – Fine 
    • XRT – Fine 
    • BBY – Fine 
    • SCO – For .40, we may as well take out the $39 caller.  
    • TZA – Should have gone for DD yesterday.  
    • SQQQ – Fine
    • USO – 1/2 out at $1.69
    • FAS – Oh, the pain! 
    • TLT – Same roll as $5KP (to April $111s for $1.10) 
    • DIA – 1/2 out at .45+
    • VXX – Fine 

  37. Phil/Shorting

     
    Trust me….I've been burned so many times by holding TZA too long that anymore I start getting antsy the instant it executes.  By contrast, TNA always comes back and goes green…..no matter where you buy it.
     
    Never the less…..I'm sticking with JR's method of back to cash by the close.


  38. Lines / Phil – I don't have a 13,150 line for the Dow. Is it a 2.5% line? As for the 840 line, I drew it, but Stockchart put it out of bounds when it reduced the charts to fit. I'll have to play with scaling to make more lines fit.


  39. TLT sinking again


  40. FAS Money Update – Buying 10 XLF Jan 2014 $15 calls (now 2.49). Setting a stop in the Jan 2013 11 Calls at $4.50 (now 5.08).


  41. AMRN….what a joke.  Not allowed, continuance….allowed.  Give me a break.  Someone is going to get their arses handed to them.
     


  42. I'm just a newbie here, barely starting to find my way around.  Joined hoping to find some good trading ideas and info (which I am finding).  Gotta say, though, all the political bashing is off-topic and off-putting.  Is it necessary?


  43. catspring2 – Let me guess….Republican? 
     
    You've joined just in time….. ;)


  44. AAPL $570/Pharm – That was my gap fill target!  

    Solar/Lincoln – That's encouraging.  What's discouraging is that the difference between America in 1908 and today is that most Americans back then read "The Moneychangers" whereas today thinking is generally discouraged.  

    Oil/Yshen – Over the month I do but today, we got our good drop to $106 – that's all we could have expected.  Much easier to play the futures on oil than USO as it's all about taking quick profits.  

    That's great Arivera – glad to hear it!  

    Allen/Jrom – Out of sight is out of mind, unfortunately.  

    Ron Paul/Flips – Also nutty as a fruitcake.  He's exactly the kind of guy that people in power want criticizing them because it makes it seem like they tolerate dissent but he comes across as crazy and makes the opposition look nutty by association.  Also, he's got enough crap in his closet that they can crush him if he ever becomes a serious threat and now they have his son – that's always great leverage.  

    Cash by close/Exec – Very good system. 

    13,150/StJ – Sorry, I'm just senile.  13,260 is the -2.5% line if I did the math right, that's the one I was thinking should be on the chart.  Didn't know Stockcharts drops lines like that, I always just do screen captures when I'm happy with chart, don't use saved charts…

    FAS Money/StJ – Since we're at $5.08 now, let's raise that stop to $4.75.  We can always buy more long calls above $16.   

    Welcome Catspring!  Does politics affect the market?  Then we have to talk about it.  Can people keep their personal opinions out of it – not 500 of them apparently.  We do have a rule not to waste time with partisan BS during trading hours but some people can't seem to help themselves (political Tourettes?) and, if you don't like it, you'll quickly discover who can be ignored, which may include me if you are a Conservative who doesn't like to hear non-approved sound bytes.


  45. catspring2
    It comes and goes. I don't think you should concentrate on that. There is such a wealth of talent here when it comes to trading that it's worth bearing through the occasional political banter.


  46. Buying back Apr12 SGEN $15 Ps for a nickle.  That trade is not essentially free, with the April $20 calls holding and up slightly.  I think they are gonna pop, but I would not add to that position, but rather buy the stock and sell the June $20 straddle.  I am 1/2 covered on my stock with the June $20s.  And do have the $17.5 puts sold.


  47. Catspring 2 – welcome. I am a basic member , so I sit and observe in the "cheap seats". The political bashing will have you ROFL at times.It is like watching "spring training " all year long.   : )    THIS site is RICH in trading ideas.


  48. Anyone catch how many shares were traded at $570 for AAPL?  I noted the Pbars, but not the share number.


  49. TVIX is flat today and has been coming down, last time market was down and TVIX was flat we had a decent rally the next few days.


  50. Pbar AAPL Volume/Pharm
    Roughly 253,000 according to Scottrader.


  51. reports that ipad running 10 degrees hotter…consumer reporters looking into whether it poses injury risk


  52. Pbar AAPL Volume/Pharm
     
    Looked like 2 trades, a few seconds apart.


  53. Thx Laddoo.


  54. newbie…we might have 500 on board but there are only thrity frequent posters…the best of the best..a hot bed of liberality!


  55. Someone made a comment yesterday that VXX was another widow maker. If you look at a chart going back to Jan 2009, you can see that out the 39 or so months, it was good only for selling calls on about 33 of them. The underlying instrument (VIX) with its option structure makes it hard for VXX to go up in up or even flat markets. The problem is that when it moves up, it's generally very violent… So could be a widow maker on the way up as well!


  56. ACAD - I find it very interseting (concerning) that when things are posted on SA (esp. small cap biotechs), they run like crazy.  Check out this article and then look at the charts.  Coincidence?  I am going to post there right after here.  Mercy.


  57. Pbar AAPL Volume/Pharm
    Got more info from ETRADE:
    101.9K at 9.51.
    253.7K at 9:52.
    Can STILL see them on the charts…


  58. TRGT/scott – not interested any more.  We played for a catalyst and it failed. I am moving on.


  59. pharm! tell us what your going to post! :)


  60. They must have hit someone's stops.  That is pretty amazing that they put it in at 570 exactly.  I was looking for a few shares, but that seems like it was a stop.  If it was only a few hundred shares, they I would have ignored it.  I think Phil's target is in play though.


  61. VIX sure is a strange beast – the MAR 25 puts are $9 and the APR 25 puts are only $6, that's 'anti-premium'.  VXX puts don't exhibit this anomaly, clearly that one makes a better hedge.


  62. Pharm / stops – speaking of, they just hit my YMI stop today at 1.75, hopefully I'll get a cheaper re-entry down the road.


  63. Hi Guys Greetings from Frankfurt just arrived


  64. ACI/craigz – might be a nice play for the IRA account.  3.6% yield.  Selling a few puts on them.


  65. Phil/All – thanks, and for the record, neither Republican or Democrat.  Just think there's too much polarization and bashing, generally, which makes me grumpy.  I think the Fed has totally propped up this rally off December, so sure, politics affects us.  Can't get as bullish as you are… :)  so I might be grumpy all year!
    trying to watch / learn your options strategies…  glad to be here.
    Cat2


  66. YMI/mrm – yeah, they are doing large vol push downs then slow ascents up.  These stocks are very closely held, and YMI is no different.  SGEN is a prime example.  ARIA is not far behind.  @ 1.50, I will buy more YMI, as I am about even now from put sales.  I still have the Jul $2.5 Ps @ 1.10, now 80 X 95.


  67. AMRN – $1 off the high.  Suckers.  That's how 'they' are reducing their basis. 


  68. Pharm/ACI – what strike are you looking at? July $10 or $11 or something else?


  69. Hi Pharmboy,
    On SGEN do you think much will happen before April?  I'm thinking we get a market selloff in April and I could sell some puts then.


  70. ARIA / Pharm – Any update on this position? is the commitee going to announce their decision today? So far its down today


  71. VIX / MrM – Good article on the issue with VIX and VXX:

    http://www.smartinvestingdaily.com/articles/smart-investing-042611.html

     

    VIX Options Are NOT Based on the VIX Value

    So after all that, there is yet another layer of confusion. Being that you can't actually buy the VIX itself, traders might buy calls when they think the VIX is going to rise and puts when they feel it might fall… But guess what…

    THE VIX OPTIONS ARE NOT EVEN TIED TO THE "SPOT" VIX PRICE!

    Yes, you are reading that right. The VIX options derive their value from the VIX futures, which may be much higher or lower than where the VIX is actually trading.

     

    You may think the VIX is $15.77 (yellow highlight at the top of the figure), but in actuality the options are priced based on the future value of $19.57 (red highlight at the top of the outlined column). So tomorrow, if the stated value of the VIX goes up to 18, but the future drops to $18.50, you will actually LOSE money!

    I can't tell you how many traders (retail and professionals) have fallen into this trap. In fact, just Friday, a friend of mine bought the June 17 calls and lost money today when the VIX was up almost 8%!

    Just look at how EVERY call option was down (orange highlighted column) today, with the VIX up $1.08 — That would not happen under normal circumstances.

    VXX

     

    I have also found that frustrated investors may choose to invest their dollars in the VXX instead of the VIX, seeking a volatility trade. VXX can be bought and sold like a stock, but it has its share of nuances as well.

    Because the VXX is NOT based on the VIX, but on front-month futures in the VIX, the VIX could be up and the VXX might be down or vice versa (this was happening yesterday); it is all very confusing and sometimes frustrating for many investors.


  72. yodi no speeding!


  73. ACI/nicha – I am watching the intra-day chart, but $12s or 11s July Puts.  Probably 12s.  you could buy the covered stock here, and by the time they hit the 11.74 PP for today, sell the 12 Put.  Nice 2.60 (21% if they hold 12 or you are called away).  IF not, it is 11 lower here.  Not quite or 20% discount, but move out in time, and I am sure that could be ok.  I am in shorter stints now due to the VIX being low.

     

    SGEN/rdn – hard to say.  If they cant get through here, I see them in the 'channel' back to 17.5 or so.

    ARIA/dpast – it is today, so waiting.  mrm's play is still ok.  I think it was the 16/17 bcs April for 18c.  ARIA's compound is best in class, they need a compelling arguement, but looks like things are priced in, as the volatility is so so….


  74. ARIA / Pharm – The trade was BCS Apr 17/18 for 0.18$.  I bought a couple and sold 11$ puts. Even with a positive outcome you dont expect a pop? that would be rather disturbing :-)


  75. oh, the ARIA compelling argument is that they do not 'extend' lives per say, but work on slowing the cancer.  Extending lives is a very long, drawn out trial.  Look at my comments to Ilene's article last night and you will understand why.  The trials, are large (no. of patients), long, and expensive.  When life is short (when cancer is present), it is hard to get life extension built in unless it is dramatic.  That is why going from 4 mo to 6 mo in a small number of patients causes these biotechs to shoot up, but is it worth it?   That is not my call.


  76. ARIA – well, for 7c more then, I can buy the 16/17…..well, again, how much is priced in?  That is always the question.  We have for comparison DNDN, ITMN, and VVUS.  Those pops are not normal….JMHO.


  77. angelcur still waiting to get a car will buy one


  78. Pharm – What do you think of the ARNA 1.5-2.5 April bull call spread for .38?


  79. NOK has been on an upswing lately with publicity given to the fact that their chief elves and gnomes are developing a Windows 8 tablet that may be in stockings next Christmas, or even in time for the school year. Today, a down day for most stocks, it is up a bit, holding on to recent gains. The ex-dividend date for the ANNUAL dividend of about 4% is just after April options expiration, which should hold the stockings up, and there seems to be a lot of support just below $5. I believe that selling the April $5/$2 put spread for 10 cents is likely to return an easy 3.3% in one month without much risk unless Germany attacks Russia and  the Panzer divisions of Angela Merkel roll through Finland on the way to St. Petersburg disrupting reindeer transportation routes across the steppes of northern Europe.
     
    Sorry for any political comments that may have cause offense. Politically I am a pragmatist somewhere between hardliner and moderate. My great-great grandfather, great grandfather, and  grandfather all died young in wars or political conflicts leaving orphaned children, which has probably made me biased in favor on nonlethal methods of conflict resolution.


  80. ARNA….fine by me.  I am not in them (for now).


  81. For the record, I think we are going lower, maybe much lower !!

     

    IWM support;  82.64,  33,  12,  00, and 81.92 for now


  82. VXX,
    As Vince Lombardi would say: "What the hells going on here."


  83. JRW, today in the next few weeks?


  84. STJ…good article I was very frustrated yesterday at the very same differential bet vix and vxx. where I felt I should have been taking profit off the table I was flat and forced to continue my trade even though I was right with the VIX just not the VXX…I'll not be trading this instrument much more.


  85. Damnit, JRW.  I was getting long….


  86. AMZN spread from yesterday…..yeah baby!


  87. CLDX….nice.  


  88. Catspring/Politics

     
    Cat if you lean Republican then you better take a dip in hot oil to thicken skin. 
     
    I'm not certain……but I think Phil might be a staunch Republican…..it's hard to tell…..he really likes to keep his political preferences close to the vest.


  89. Capt. / Lower

    Both !!  The key is (for today) 82.64 and 82.33 holding


  90. AMZN / Pharm – Right on!! Thanks for the heads up yesterday! 


  91. Pharm / Long

    Well, "they" are trying to pull it up !!  The key for you is a break North of IWM 82.96, fwiw


  92. Anybody here a user / client of OptionsExpress ?
     
    I have been having some significant issues w/ Schwab and am probably going to move my accounts.
    Schwab owns Options Express, but I don't know much about them.
    Their portfolio margin would be a big benefit for me as Schwab does not have that, but apart from that, why should I go there vs. Fidelity or Etrade or Tradestation ?
     
    I wold be intereste in any comments regarding trading platform, execution, service, costs, problems, etc.


  93. JR

     
    I tend to agree….IWM is ignoring the DOWs bounce.
     
    Not to mention, we always have the Exec indicator that's almost always right which I pointed out in my 8:38 post. 


  94. Pharm / long - don't worry, I still have lots of EDZ, SQQQ, VIX, and VXX so there's a floor to any dip until I stop incessantly rolling these…


  95. NOK
     
    However, they do announce earnings on April 19th. Since a great deal of the company's future hopes are based on the Windows 8 phones and tablets, expectations aren't very high at this time, so if the stock continues to climb into earnings and ex-div date, that looks like a positive sign for $5 put sales.


  96. I thought they were "topless", JR?  :)   I would rather them sag (the indicies, get ur mind out of the gutter all). 


  97. I am almost out of money mrm for doing that, otherwise I will have to sell my biotechs….


  98. JR

     
    Are you short or waiting for a breakdown.


  99. There goes AMZN…..seems to be a counterweight to the market..


  100. 1/3 out of AMZN spread


  101. exec,

    Buying a break !!


  102. VXX/Stj – thanks – great article, very helpful!


  103. Cap: brokers
    After seeing people have issues with various brokers, and using TOS myself I have to say Fidelity has always been very solid and the execution excellent. PM seems to calculated in a very reasonable way, not sure if that varies between firms or not. fwiw


  104. VXX/Stj - thanks for the link. I've lost money before on VXX and avoid trading it. What are the alpha indices that are mentioned in there?


  105. BDC – were you the gent in the background?  :)   Oh, and that video is not for the weak of heart…literally.


  106. GG   

    I love the Simpsons…


  107. JR

     
    I was curious about how you trade.
     
    On a day like yesterday, were you in and out all day or did you just hold your long and ride the channel up?


  108. The Oxen Group just opened a position in Monsanto (MON) with Apr20 75/72.50 bull put spread at 0.45. We are looking for MON to remain flat to up into earnings in early April and then see it trend higher from there. Position has potential 22% gain!


  109. Hotter/Angel – That can get annoying fast.  Current model cool as cucumber though so not sure what difference 10 degrees will make but I guess 80 vs 70 would be noticeable.  

    VXX/StJ – That's why I only like to play it off lows.  When it does move, it can move very big but I would never play it if I weren't expecting a good pop (33% on VIX back to 20).  

    SA/Pharm – If you manage to land on the front page, where it says "new on neglected stocks" you can have quite a profound effect.  

    VIX/MrM – Keep in mind that VXX is traded across 2 months of the VIX, not just one, so it's going to look smoother.  Each month of VIX cash settles independently so it's a loose relationship month to month.  All that discrepancy says is that no one thinks VIX ($15.32) is coming back to $25 this week but next month, people are fairly certain we'll be over $19, which suits us fine with our bullish VXX bets.  

    Frankfurt/Yodi – Have a great time.  

    Grumpy/Cat – I mainly advocate going with the flow but when you watch water flow uphill for 3 consecutive months – after a while you have to start betting on gravity.  As to party affiliation, I agree with Barry Ritholtz, who says:  "I am not a Democrat, because I have no idea what their economic policies are; And I am not a Republican, because I know precisely what their economic policies are."  My politics come from what I think it good for the country, and if I think one party's policies are disastrous – of course I'm going to say something about it.  Not really different than identifying a company with bad leadership or a bad strategy – if you look down the road and you see an end game you don't like, the time to do something is now – not when it's far too late.  

    NOK/JMM – How can the fact that someone is making a tablet be considered good news.  Look how many companies have said the would have an IPod killer and are now themselves dead, look how many people said they had an IPhone killer – dead too.  So the IPad killer is now where we throw money?  No thanks!  Let someone kill AAPL first and we can make money shorting AAPL and then make money playing that stock to go to $500 but they already have the best and the brightest pulling out all the stops just to match AAPL and no real challengers yet, other than the KIndle, which is given away like razors so AMZN can sell the blades.   NOK does not have that luxury.  

    Option Express/Cap – I left them for TOS and would never go back.  

    Rut 823 – not a good sign, especially with Dollar just 79.80.  


  110. JRW,
    I'm having trouble seeing if the break is to the upside or downside?


  111. Cap
    I have no experience with OE but do with Swab and etrade. I continue to use Swab's Street Smart Edge but do not trade with them. I use SSE to plot lines and some of their studies but it crash every time volume goes up and almost evey day at 3:30 to 3:45 before the close. Etrade pro is many times faster and executions are lightning fast. I used to have problems with them and never won a protest but those problems went away about 18 months ago. It takes a lot of trades and time to get $7.99 per trade, Swab was $7.99 instant.


  112. Has anyone added a feed for this page onto their mobile or computer? I was trying to use the RSS 2.0 link below the main content but somehow the feed reader (Google) is not able to identify it.
    Thanks.


  113. Well, I guess they answered that question with authority.


  114. Pharm / AMZN – You are so welcome!  I followed lflan and others into the AMZN 'short of the year' so my loss is your gain…


  115. Pharm,

     
    Yep………I'm glad I listened to JR.  I was tempted to buy some TZA ahead of the break.


  116. mr stick already?
     
    wtf? can't this mkt ever drop?
     
    let me guess—cmg and pcln will be up for the day again and hit new all-time highs?
     
    Phil--serious q--will these two ever come down? mkt?


  117. LOL mrm.  


  118. Alpha indices / Yshenhar – It looks like pair trade indices. I am not familiar with them:

    http://www.nasdaqtrader.com/micro.aspx?id=alpha


  119. Pharm/AMZN – good call on Amzn yesterday
    Kiva deal announced… 
    http://blogs.marketwatch.com/thetell/2012/03/20/amazon-shares-rise-as-street-likes-kiva-deal/


  120. exec / Yesterday

     

    9:38-9:59 long 2.8%, 10:05-10:12 short 1%, 10:13-21 1/3 long .1%, 10:36-59 long .8%, 11:40-11.52 long .5%, 12.53-2:03-30 long 1.1%, 3.22 2/3 short 1%; 7.2% on the day !!
     
    I misplayed both shorts, but………..

  121. 12:00 PM On the hour: Dow -0.53%. 10-yr +0.13%. Euro -0.14% vs. dollar. Crude -1.92% to $106.47. Gold -0.91% to $1652.05.

    12:44 PM European shares close sharply lower with comments last night from mining giant BHP about flattening Chinese growth apparently being the excuse for a "risk off" session. Stoxx 50 -1.2%, Germany -1.4%, France -1.3%, Italy -1%, Spain -0.2%, U.K. -1.2%, Euro flat at $1.3231.

    1:00 PM On the hour: Dow -0.52%. 10-yr +0.09%. Euro -0.03% vs. dollar. Crude -1.81% to $106.59. Gold -0.77% to $1654.45.

    Moody's Analytics lowers the probability that the U.S. will be in a recession within six months by 4 percentage points to 22%. It's the fifth consecutive month the reading has been trimmed despite rising oil prices. 

    Expect Stocks to Be Higher by Year End (Minyanville)

    A rally built on fairy tales (MSN Money)

    Bartlett: The Origin of Modern Republican Fiscal Policy (Economix)

    The recent rise in interest rates has caught the attention of the Fed, says Ben Bernanke in brief remarks ahead of a lecture on the central bank's history. "It's an interesting period right now. We've seen some improvement, but we've still got a long way to go."

    The Federal Reserve reports 2011 earnings of $77.38B, less than 2010's $81.74B and well below expectations for $90B. The bank blamed a flattening yield curve for the disappointing result. Shares -3.5%. (PR)

    Wells Fargo chief economist John Silvia keeps the faith, saying that despite short-term hiccups the market still stands very positive for long-term investors. He notes that the interplay of the U.S. economy with the global economy usually produces expansion and growth three to five years into a new cycle.

    Are the Rich Driving Americans to Spend Too Much? (WSJ)

    I always love this concept – "The market will go up because it's been going up":  With the S&P 500 up 12% this quarter, many portfolio managers could be looking to jump in to some big names before quarter's end on March 30. The market’s march higher has caught many fund managers flat-footed, and those trailing benchmark returns may feel the need to take action. “Heavy portfolio window dressing for the quarter [is] expected,” BofA's Mary Ann Bartels says.

    "There's a changed psychology among buyers," says Patrick Chovanec, waving off the myth that Beijing can flip a switchand get the country's property market booming again. He's also skeptical a building boom from affordable housing will save the day, saying the money to finance this isn't readily available. 

    The recent ouster of Chongqing Communist Party secretary Bo Xilai signals an upcoming decline in Chinese "state capitalism," proclaims Zhang Xin, CEO of Beijing property developer Soho China (SOHOF.PK). Remarks from premier Wen Jiabao about greater economic opening are also cited as a sign of a policy shift. But Wen has also talked about the need to limit growth. (previously

    Caterpillar (CAT -2.2%) is the Dow's top loser as renewed concerns about China's economic growth sparks a decline in shares of U.S. industrial companies (XLI -1.4%), and as CAT says its sales are rising in each of the world's regions but at a lower rate than in past months. Among other top industrials: JOYG -4.7%CMI -4.1%.

    The financial sector (XLF +0.2%) is the only positive performer in morning trade, coming after Jefferies (JEF +1.6%) reported better-than-expected fixed income and investment banking revenue in its FQ1. Bank of America (BAC +3.2%) led the group after it denied a rumor that it would issue shares in a secondary offering. Also: GS +2.3%MS +2.1%C +1.6%.

    The Home Construction ETF (ITB -2%) is underperforming the Homebuilders ETF (XHB -1.5%) amidst weak housing start data. CNCB's John Melloy notes ITB weighs homebuilders higher while XHB owns a bigger proportion of retailers. XHB +19%ITB +12% Y/Y.

    Dust off the Geiger counters: One of the issues on the table at an upcoming nuclear summit meeting in Seoul is the proliferation of atomic material that has been discarded as trash. It's a topic that could also draw the interest of companies that use scrap metal for manufacturing. In January, Bed Bath & Beyond (BBHY -0.6%) had torecall metal tissue holders from stores after they set off radiation detectors.

    "Short iron ore/long Air Jordans," writes Joe Weisenthal,noting miners and equipment makers are getting hit after the BHP warning on Chinese demand, but companies leveraged to the consumer are cruising. CAT -2.2%DE -1%

  122. Cap

    Thanks Shadow, Phil.
    Shadow, FWIW, I pay 6.99 at Etrade, 6.95 at Schwab.  Maybe you can lower your costs a bit.


  123. Very well said by Barry:  

     

    I had a conversation with a friend recently about Wall Street. We discussed some of the odder aspects of the Street, not so much about investing itself, but about having a career in finance.

    I have a somewhat skewed and skeptical perspective on Wall Street. I started out as a lawyer (I loved law school but hated practicing); got a job as a trader under very random circumstances; eventually moved to research and then onto asset management.

    But I spent a long time learning what this industry was about — reading everything I could get my hands on, critically analyzing what works and what doesn’t. Learning and studying was a crucial aspect of a job in this industry; Long before Malcolm Gladwell wrote about it, I had a colleague who used to say that it took 10 years to become an overnight sensation.

    As a newbie, I critically read everything I could get my hands on. Over that period of study, there were quite a few things I learned about Wall Street that surprised me:

    1) Deep thought: Surprisingly few people rolled up their sleeves and thought deeply about why things in market are the way the are. What causes markets to go up and down? Why do things blow up? Why do most investors under-perform markets? Lots of myths and urban legends, not nearly as much quantitative evidence.

    If you get really deep about it and study the data, there are some rules to learn. To succeed in markets, one needs to become a philosopher-mathematician.

    2) Long-Term Greedy: Too many people went for the easy money, but that was never what motivated me. It was more about intellectual curiosity and honing ones craft, and less about the quick hit. I made less money compared to many of my peers, but I kept more of it and never blew up.

    The phrase “long-term greedy” was coined by former Goldman Sachs director Gus Levy many years ago. You can make (lots of) money over time, but only by serving clients’ interests. Its amazing to me that view is so far out of fashion today.

    3) Hard Work: There is no other field where a person of average skills and intelligence who is willing to put their head down and work hard can makes 100s of thousands or even millions of dollars a year — but only if they are diligent and patient and willing to put in the hours.

    However, most of Wall Street is taught how to sell products to clients; rarely are they instructed what they buy, why they are buying, when to sell (or why). This is the industry’s fatal flaw.

    4) Get Rich Slowly: Few people have the patience to get rich slowly — everyone on Wall Street who ever got into to trouble was impatient, and couldn’t wait the requisite 10-20 years it took to become a millionaire. They ended up in jail or as mortgage brokers. Patience is virtue.

    5) Mentorship:  Finance is filled with amazing, generous, really smart people — who mentor and teach and bring along the next generation. I hope the crisis & collapse and bailouts and mergers didn’t ruin that — My fear is that has gotten a lost over the past decade.

    I have found Wall Street, warts and all, to be a deeply satisfying place to work, filled with intellectual challenges, wonderful people, and deep rewards. Sure, there are frustrations, and there are people who focus on the piles of money to be made, to the detriment of all else.

    If that’s your focus, you will have missed out on some very important life lessons.


  124. chasw / Break

    That push had no strength, we may go a bit higher, but I think we close lower  (unless "they" bring out Mr Stick ) !!
     


  125. Phil / NOK — NOK is big outside the US and in emerging markets.  They once had a religious following like AAPL enjoys today and they still might:
    Windows Phone hits 2.5% marketshare in Europe on Nokia's back

    • The even better news for Nokia is that, in the UK, they have the top Windows Phone device, by a wide margin. According to the report, of all the Windows Phone devices sold, 87% of them were from Nokia’s portfolio. 

    The combination of NOK and MSFT may be a shoe in for many businesses.  Granted that 2.5% is a pittence (up 500% yoy) but but not everyone drinks the AAPL kool aid. In fact, there are some, that believe it or not, avoid AAPL. I'd bet on NOK before I'd bet on RIMM and I believe there is room for all three players (AAPL, MSFT, GOOG — which all provide advantages/disadvantages for a diverse set of customers). I suspect NOK will be at $11 before AAPL is at $1200, although I might be in the minority since I don't wear the AAPL colored glasses.


  126. Ever/Jabob – Perhaps if you stop offering to have sex with them…  ;)  


  127. AMZN – will still be a big short this year IMO.
    But not without periodic squeezes like today.


  128. MRX – selling April $35 puts for 45c.  We have the stock covered with the Jul $35 Calls.


  129. David Ristau/MON Trade, MON reports earning on 4/4, I don't see big move before reports, are you planning to close this trade before 4/4?  TIA
     


  130. Cap / AMZN — What is your premise for shorting AMZN?


  131. phil--thanks i needed that ;-)


  132. NOK/Rain – I like NOK, they massively misplayed their phone strategy when they went for the $49 phone world-wise just when AAPL decided to come out with a $499 phone people liked much better and it takes a long time to recover from that kind of mis-reading of the market.  Having been burned waiting for MOT to come back, NOK just feels like the same old dinosaur story to me although they actually have more sales than AAPL – it's just that they don't make any money on them!  

    TLT coming back to a defendable $110 line.  April $108/110 bull call spread is $1.15 and you can sell the $108 puts for $1.30 for net .15 credit on $2 spread with 900% potential profit in 31 days.  


  133. Alpha funds / StJ – Many thanks for the link. I browsed through the presentation. Its not a bad idea, especially for Apple. By buying the AVSPY (apple vs SPY) you factor out any market risk, so can one can benefit as long as AAPL continues to over-perform the SPY
    I am interested to hear also what the other guys think about these. Cheers


  134. JRW exec
    That last push was on nothing but it was the third try to break out. Baseball rule 3 strikes your out! I expect a close of about the LOD.


  135. Wheeee – oil falling below $106 – $105 in sight! 


  136. Nicha / NOK — Since NOK has been brought up and AAPL never goes away, did you happen to notice what people in India had a preference for?


  137. Priceline.com price target raised to $750 from $700 at Lazard Capital
     
    Lazard Capital continues to view shares of Priceline.com as attractive despite the nearly 50% year-to-date rise. The firm raised its price target for shares to $750 and keeps a Buy rating on the stock


  138. FU OIL!!!! hahahahah Let's shoot for $98!


  139. AMZN squeeze thanks to AAPL Ipad heat issues. yea LOL..

    JRW they need to keep the perception that markets will head higher… maybe we get a clearer direction by 2:30 if its up or down big…after the pump in the oil market.
     


  140. If I read the story about the Kiva acquisition, this could help lower costs at AMZN as they would replace workers by robots. Short of moving the warehouses to a 3rd world country (shipping next day would become expensive), that seems to be the way to go! Robots don't sleep, eat or take coffee breaks. And don't require benefits. But, there is always the chance of:

    http://www.youtube.com/watch?v=EmoiAK60xmk

    I guess we'll take our chances and I want a Number 6!


  141. Alpha indices / Dpas – Some seem to have options but it seems that you add a level of complexity on top of a complex equation when you have to bet on the performance of a stock as compared to another instrument! Maybe it's just me but it looks like the lottery when the keep on adding different games to fill the need of gamblers.


  142. a "modest" 14% pullback on PCLN is …. 100 points


  143. bio--that MF can't even pull back 1%!!
     
    FU PCLN!!!


  144. kustomz / 2;00-2:45

    If they can't break through IWM 83.18 this next attempt, it's a short !! 
     


  145. rainman/India – surprisingly Blackberry is widely used and much more preferred over any smartphone. NOK used to be big but Samsung has been gaining a lot of traction with the galaxy line especially with the recently lauched galaxy note (I don’t understand why ppl want to carry a tablet sized phone). LG had good products too but mostly geared towards the low end. Nokia still has a large presence but I was most surprised by Blackberry. Another thing, everybody pays full price for the phone. For example one of my cousin bought the iPhone 3G for Rs. 45000 (approximately $900) and another cousin bought the blackberry bold for Rs. 20000 ($500). So I guess the huge cost difference is turning ppl off on the iPhone.

    On another note, there were a lot apple stores that were selling iMacs and iPads.


  146. Well, TRGT and AZN  made it official today that their partnered depression drug--TC-5214--proved a complete bust in Phase III. The last two of four late-stage studies failed to meet their primary endpoints, extinguishing any hopes for a comeback after the first two Phase III studies ended in failure. 

    For AstraZeneca the clinical failures mark the disappointing end to yet another drug prospect for a deal to which it once committed up to $1.24 billion dollars. AZ--which has already signaled that it is winding down much of its neuroscience work in another round of layoffs--is left to face a chorus of critics who have castigated the pharma giant for its failure to assemble a promising late-stage pipeline. For Targacept, the failures put the biotech in a defensive crouch as top execs rallied behind a substantial wall of cash as they prepared for an inevitable reckoning.


  147. Well, AAPL is at another ATH.  How much higher will this air balloon go??


  148. Nicha — Well, well. Maybe there is hope for RIMM after all. I wouldn't have guessed blackberry. Thanks!


  149. nicha I love the Galaxy note and got comfortable with its size in a few days. Holding my IPhone actually feels awkward now.

    Roger on 83.18…3 big volume pumps today and not much follow through..que the scary music


  150. Can we ever CRASH at theend of the day!?!!?!? Lets have a -200 pt day just once!!!


  151. here comes cmg and pcln about to be green as usual


  152. The man has spoken for the world: Ben Bernanke Explains Why The World Will Never See Another Gold Standard

    Read more: http://www.businessinsider.com/ben-bernanke-explains-why-well-never-see-another-gold-standard-2012-3#ixzz1pgRGH5BI


  153. Big save in oil at $105.75.  Earthquake in Mexico (you OK Yodi?) maybe they think it will affect oil.

    strong 7.9 earthquake rattles central southern Mexico, including rocking buildings in Mexico City. EWW broker lower after the news, before recovering to stand -0.4%.

    Robots/StJ – At least Cylons create jobs (defending the earth), these Kiva Bots will simply take them away and leave very Terminator-looking automated factory floors.  There's a commercial on TV where they talk about how the assembly-line robots are now smart enough to repair each other – we are one bad line of code away from being eliminated!  

    IWM $81s made .25 – that's about all you can ask for as quick protection.  Then you can use those profits to roll up your short plays and play for the next cross on the RUT (835).  

    RIMM/Rain, Nicha – Yes, still the best solution in countries that don't have wall-to-wall high-speed access, where smart Phones tend to ground to a halt as soon as you move outside the major cities.  

    VIX – By the way, TODAY is expiration day for March VIX contracts.  We'll see what happens tomorrow when we roll to April.  

    2:00 PM On the hour: Dow -0.41%. 10-yr -0.09%. Euro -0.12% vs. dollar. Crude -2.42% to $105.94. Gold -1.2% to $1647.35.

    Despite Bank of America's (BAC +3.2%latest denial of any capital-raising plans, WSJ's David Reilly thinks Brian Moynihan will need to consider taking advantage of BofA's recent share-price strength. "As painful as dilution is, the bank would still be highly geared to a U.S. economic recovery… a stronger balance sheet could actually put more wind under the stock's wings."

    H-P (HPQ -1.3%) will today announce a major restructuringthat will include the merging of its PC and printing divisions and the departure of printing chief V.J. Joshi, sources tell AllThingsD. Both divisions posted weak sales in H-P's FQ1, as each struggles to cope with cannibalization from rival technologies (tablets for the PC division, online photo sharing for the printing division) 

    Chinese solar stocks fly off of the news that the U.S. will slap tariffs on solar panels imported from China at a lower rate than was expected. The tariffs – set at 2.9% to 4.73% – are a reaction to subsidies the U.S. government says China gave to manufacturers. Advancers: STP +7.4%JASO +1.7%TSL +6.2%YGE +12.6%.

     Jefferies warns that the U.S. decision to set a tariff on imported solar panels shouldn't be lighting a fire under solar stocks such as JA Solar (JASO +3.8%), Yingli Green Energy (YGE +13.9%), Trina Solar (TSL +7.9%), and Suntech Power (STP +9.9%). Analysts with the firm note that a more significant ruling on anti-dumping charges is not set to be released until May 17.

    Attn Gold bugs:  UST has $10.9Bn of gold but that's priced at $42.22 an ounce!  Actually we have 258.6M ounces, worth $426Bn – so there's $400Bn of our deficit knocked down whenever they want to re-price.  

    Money is already off the sidelines: 


  154. Bob -

    Plan on closing 50% before earnings.


  155. Bad line of code / Phil – That has probably been true ever since they automated the nuclear launch procedure. Remember Wargames!

    And those Cylons ended up creating more jobs by wiping out 90% of the human population. That would of course solve many problems related to over-population.


  156. FU CMG!!!


  157. EDZ surprisingly still hanging on at $12.50.  After falling hard that level in Feb, it's held up well since with $11.41 the low.  July $11 puts can be sold for $1.35 and that pays for the $10/16 bull call spread at $2 for net .65 on the $6 spread.  Another way to raise cash is what we have been doing, which is selling long CHL puts.  CHL is way up but selling the Jan $42.50 puts for $1.40 is not a bad way to go (currently $52.10) as it's very unlikely that EDZ fails while CHL is weak.  


  158. FU PCLN!!!


  159. The big earning report tonight is Oracle (ORCL). Any ideas Phil?


  160. re-dic-u-lous…..


  161. I think it's great that the whole World has adopted our economic model – we're certainly on the road to utopia now:  

    gdpdebt.png


  162. So, I take it from the chart above on 'money' off the sidelines that from 2010 on, there is little money being put in the market, thus…..there are no sellers…thus…this continues to go higher until that chart changes?


  163. Phil:
    Oh, why look at numbers like that? Your such a pessimist! :)


  164. We now sit on the largest debt bomb ever created..

    http://www.youtube.com/watch?v=8PbZnZy1qr8&feature=related
     


  165. Phil, money is off the sidelines, into Bonds.


  166. Phil Hi thanks for the wishes just a bit cold for me 10degrees C Cancun is 30 so quite a difference but sunny, will be here for 14 days to prepair everything for a three month summer vacation. Buying a car and an RV to travel through Germany and part of northeren Italia. Had already my first test run on the autoban with one of the cars offered to me we will see. Everything is so clean where my friend is living it is unreal to Mexico.


  167. rpme,
    money is off the sidelines into bonds, but how much of the money that is in the market chasing stocks right now is borrowed vs other times in market history. that's what i would like to know


  168. Margin/Sparky – I believe Margin debt has come off the highs recently.


  169. Phil I have been watching the market a bit this afternoon 8.30PM here now and can not make up my mind about AAPL the 600/700 Jan13 bull with the Jan14 put worked out very good but for today the stock went from 595 to 605 so where can one start to jump on the train again?


  170. RSS / Pat_Swap – Try adding /feed/atom next to the url,
    i.e.  http://www.philstockworld.com/2012/03/20/toppy-tuesday-or-time-to-buy-the-dip/feed/atom
    otherwise you can dowload rssowl, a very good program to read feeds and you can program filters that can pop up alerts every time MrMocha wants to go long the market and every time jabo FUs PCLN :-) … priceless moments in PSW


  171. inkarri,
    margin yes, but also borrowed cash.


  172. lflan – was today's action on aapl their version of the pullback? I'm guessing it just goes up from here.


  173. ORCL/StJ – I think we just need to see how the early earnings results play out.  Judging by this pop into the close, people think ORCL will do well and they are still 20% below the highs of last year with expectations of 4% better earnings and a reasonable p/e so, if anything, I'd play them up from here.  You can spread 3 Sept $27 puts at $1.22 ($366) and sell 4 April $30 puts for $1.04 ($416) for net $50 on the spread and, if ORCL stays over $30, you make $50 plus whatever is left on the back end.  If under, you have a rolling problem on a stock that is pretty good to own anyway.  

    Money/Pharm – It shows money came out of the market rapidly during the crash but has since ALL been put back in (or at least been used for other things, like gas).  What it really means is that all these people who tell you there is a lot of money on the sidelines ready to go in the market are full of crap as there isn't that much money out there – not in money markets anyway, which is usually hot money for stocks and other investments.  What does this mean?  Where did the money go if not already in the market?  What happens if these 3 groups get worried and want their $2.5Tn back like they did in 2009?  

    Pessimism/DC – PLEASE find some bullish charts to post.  I keep looking…

    Well that stick rally sucked….

    Debt bomb/Kustomz – Not helping…

    Bonds/Rp – You think so.  I got the impression those aren't popular either.  I think it's in stocks and there's our rally.  The reason MM cash went up in the 90s was that wages were rising, unemployment was down AND businesses were being created – so there was literally more money.  That's not the case this time.  

    Cancun/Yodi – That's right, you're in Germany.  Good timing.  You don't live near Cancun, do you?  

    AAPL/Yodi – I would wait for a pullback.  I know pullback is a dirty word but it will happen one day.  We're so toppy now in the overall market, it just pays to be a little patient – especially on the high-flyers.  


  174. Defying Gravity….I know I have put this up before, but it is still, so so appropriate.


  175. thanks dpastramas! I will try it now.


  176. Phil Yes I do live near Cancun but I am going to tour my old country this year


  177. I agree with jabo about PCLN. Should have known not to go up against Cptn Kirk…


  178. Long Put List Opportunities: 

    • PCLN July $500 puts at $6.10 ($450 puts are $3.70 so $2.40 to roll up $50).  
    • CMG June $300 puts still $1.80 (down .20) 
    • FAS July $60 puts are $1.90 (down .10) 
    • GOOG June $500 puts are $2.35 (down .45)
    • GOOG June $540 puts are $5
    • IWM Aug $65 puts are $1.10 (down .15)
    • IWM Aug $71 puts are $1.95
    • LVS June $50 puts $1.50 (down .35)
    • LVS June $55 puts ate $3

    Others are the same as last time or moving our way.  These are our "fresh horses" – ones that are better deals than when we first looked at them.  

     



  179. JRW I didn't get in… too late in the day to risk it. Looking forward to tomorrows lines, have a great evening folks.


  180. ACI – I decided to do the July 13/12 strangle.  Round 1.  Sold puts are Round 2.


  181. RSSowl / Pat_Swap – use the /feed/atom trick in rssowl and it should definetely work.  Let me know if you need more help 
     
    Also keep in mind that you would need to add every day the link of the latest post.  Unfortunately there is no workaround on this, as phil changes the link every day


  182. thanks dpastramas! Have you tried to add it to any smart phone?


  183. Damn fine song Kust…..


  184. RSS / Pat_swap – My smart phone (Nokia N8) has a built in web feed reader and i use that to read the comments on the road. It is quite decent, i can get to see all graphs and pics. dont think there is an rssowl version for smartphones though.  
    What kind of phone do you have?


  185. Defying gravity/Kustomz – That show, with Idina Menzel and Kristin Chenoworth was fantastic.  Menzel's songs were like going to a great concert and the kids loved it.  

    Kirk/Oakd – That bastard always pulls a victory at the last moment!  

    "We don't really understand why the prices are behaving the way they are," says Saudi oil minister Ali Naimi, vowing to boost the kingdom's oil output 25% if necessary. He dismisses comparisons to the price surge in 2008, saying supply was far firmer then. At the moment, he says, there are no customers asking for additional crude.USO -2.1%.


  186. RSS/dpastramas – HTC – Sensation 4G


  187. Besides Bernie Sanders who is an Independent, can one of our idiot Congress people just say oil is being manipulated by GS and JP Morgan and some hedge funds and we should start regulating the trading of oil so it can screw the American people like Enron did to energy to California.


  188. meant so they can't screw the American people in last sentence


  189. RSS / Pat_swap – Mmmm sorry not a clue for HTC.  You can try googling or maybe some other member can suggest you sthg


  190. Phil/NOK
     
    No I don't think the announcement of the tablet is that big a deal either, though I do think the advent of a good quality Windows tablet will interest a lot of people. One reservation I have is that there are going to be two versions of Windows 8, an Intel version and another version for mobile devices, so you won't necessarily be able to use all your favorite Windows programs (as we used to call them before they became known as apps) on the mobile devices.
    Having been a Windows user since birth and DOS before that (the birth of Windows that is, not my birth), when I eventually got an Apple iPod touch I initially found certain things quite annoying about it, and still do, though it certainly does have its uses like taking a quick photo of an airline or car reservation from the screen of my laptop, or making portable backup copies of my passport and birth certificate, or reading extracts from PSW in the Kindle app on the run. So probably there are a lot of conservative people who would like to try a Windows tablet.
     
    However my earlier point was only that it now seems very unlikely that NOK will go below $5 prior to April expiration just before it goes ex-div, though in a general crash, I suppose it might.


  191. TV/Phil – PD:  How's the Mitsubishi big screen working for you?  About to replace a big Samsung and Mit is only thing to consider other than a projector.


  192. ARIA / Pharm – Thumbs down from the panel :-(
     
    http://www.bloomberg.com/news/2012-03-20/panel-backs-glaxo-s-rare-cancer-therapy-rejects-merck-s-drug.html
     
    Stock down -1% AH.


  193. Ben's presentation to GW University today. Interesting reading
     
    http://www.federalreserve.gov/newsevents/files/bernanke-lecture-one-20120320.pdf


  194. Good Afternoon!    No trades in the AAPL portfolio today.   AAPL's gravity-defying action surprising even me.  We must be due for a pullback.  But I've been thinking that for several weeks now.   And remember when some time back we talked about having some buy orders in place on stocks you like, at prices you like?   So I did not have a buy order in for AAPL at 570 yesterday, but wished I had.  Would it have filled, with the brief foray down?  Don't know.  Also, Pharmboy, good call on AMZN.  Closed my bear put spread on it today.   See you tomorrow.  Be careful!


  195. Phil, I have added the closest 2.5% lines in dashes – above Must Hold green and below red (best we can do with Stockcharts). Let me know if that works for you.


  196. To go back to the Ryan plan AH because it will have an impact on the economy (and a big one as it is spelled out), I find it hard to take a plan seriously that includes the following forecast – and that's from the CBO grading:

    http://cbo.gov/sites/default/files/cbofiles/attachments/03-20-Ryan_Specified_Paths_2.pdf

     

    Revenues—from 15½ percent of GDP in 2011 to 19 percent in both 2030 and 2050;

    Medicare—from 3¼ percent of GDP in 2011 to 4¼ percent in 2030 and 4¾ percent in 2050;

    Medicaid and the Children’s Health Insurance Program (CHIP)—from 2 percent of GDP in 2011 to 1¼ percent in 2030 and 1 percent in 2050; 

    Social Security—from 4¾ percent of GDP in 2011 to 6 percent in both 2030 and 2050; and 

    Other mandatory spending and all discretionary spending—from 12½ percent of GDP in 2011 to 5¾ percent in 2030 and 3¾ percent in 2050.

    First of all, it admits that revenues at 15.5% are too low (we have been saying for a while – how can you compare Obama's deficit with revenues at 15% of GDP with Bush's deficit and revenues at an average over 19% of GDP but I digress) but proposes to make up that 4% by cutting taxes! 

    The Medicare, Medicaid and Social Security numbers seem to basically ignore the fact that we are getting older and that health care costs are growing 2x times faster than GDP (at least).

    And then discretionary spending at less than 4% of GDP in 2050. And that includes defense! As Kevin Drum says in MoJo:

    This is, to put it mildly, nuts. Defense spending alone amounts to 4% of GDP, and it's vanishingly unlikely that this will ever fall much below 2-3% of GDP. This means that all domestic spending will decline from about 8% of GDP to 1-2% of GDP by 2050. That's prisons, border control, education, the FBI, courts, embassies, the IRS, FEMA, housing, student loans, roads, unemployment insurance, etc. etc. It's everything. Whacked by about 80% or so.

    My only guess is that this is only a political document to be displayed for the base as no one could seriously be using this as a baseline to govern. Unless you are ready to cease power to super corporations. Maybe that's the plan, but it should be spelled out then. 


  197. There are stocks performing better than AAPL in the NASDAQ:

    http://www.bespokeinvest.com/thinkbig/2012/3/20/best-and-worst-performing-nasdaq-100-stocks-ytd.html

    Gosh darn it, even NFLX! And PCLN is not far behind… "Beam me up Scotty!"

    SHLD is a complete mystery – the more store they close, the higher they go. Total opposite of retail stocks! But I forget, it's not a retail stock, it's a real estate hedge fund!


  198. Escape velocity on the QQQ:

    And BTW, another good example of the 10% line – these guys use 59 as a baseline from last year, and QQQ seemed to stall a bit around 65 this year which would be the 10% line! 


  199. Article about negative effect  of high temperature on battery life in AAPL products.
    http://market-ticker.org/akcs-www?post=203636


  200. So, ARIA sold it to MRK….nice.  The deal terms were going to pay ARIA a small percentage, and ARIA has a leukemia drug that is lights out.  I know, I know, the mTOR inhibitor IS best in class….but again, it comes down to body bags now.  There is an mTOR inhibitor on the market.  Tomorrow, we will start to sell puts on ARIA to get back in.


  201. How about this strategy Phil – basically a synthetic:

    http://www.investingwithoptions.com/2012/03/20/risk-reversals-offer-alternative-trading-stock/

    I guess the difference with financing a BCS with the short put is that with a synthetic you don't cap your maximum profit.


  202. Phil:
    This is one heck of a comment about demand from someone that derives benefits from high oil prices. Is anyone listening!
    "At the moment, he says, there are no customers asking for additional crude."
    Saudi oil minister Ali Naimi
    (FROM ABOVE)


  203. AAPL minitrade
     
    I used to have a couple of AAPL leaps, but  I found the effect they were having on my overall portfolio volatility was a bit more than I wanted to tolerate because even 2 LEAPS represent $120,000 of a very volatile stock, even when short calls are covering.
     
    However recently have started to dip my toe back in the water with some very small scale trades to dampen down the volatility. For example Thursday last week I sold the 2013 $500/$490 bull put spread for $307 and am already up  $30 or a bit more depending on fill price. This won't buy many Egg McMuffins, but on the other hand it does represent a 10% profit in less than a week, which is good. I may experiment more with this kind of trade, because with  tight stops on the downside contingent on the stock price, it could be a useful play. With the deltas at 0.16 and -0.18 they are probably a bit too far out of the frame to be really useful, but I will probably look at other expirations and prices.


  204. jmm1951  ……    Selling bull put spreads.    A few months ago Phil gave me a verbal thrashing for selling bull put spreads.   And yet, I have made tons of money with this option strategy.  I think the trick is to sell the spreads on stocks that are not likely to drop precipitously…..such as AAPL.    I find that I can routinely make 5 to 10 percent per week selling these types of spreads on AAPL.  There is one in the AAPL portfolio right now.   So I've read what Phil has to say about it, but I don't fully agree with his contention that it's a bad trading technique.   Given the right stock and  the right spread choice, I think you can make a lot of money with these spreads.  


  205.  jmm1951--every trade/strategy has a dark side.  work your plan, know your absolute risk and rolling/repair strategies prior to entering any trade. happy trading



  206. Yodi/Cancun
    Do you actually live there?
    Are you on a resort?
    I have never been there, and was wondering how easy it is to visit…and how safe, given the armed robbery of cruise passengers recently somewhere in Mexico.


  207. Yup Rustle, the party of small government for you… I just don’t know how they reconciliate all these contradicting positions in their minds.


  208. Man were do thet get these moron from


  209. hmmm need to work on that syntax before asking that question


  210. Quote from Forbes article:  "Let there be no doubt that Obama will do everything in his power to bring down oil prices."   Well, it's an election year, that makes sense.  SCO looked good today, and with the Saudis on Obama's side, we may be looking at "Don't fight the Prez" on oil prices.  I'm banking on the symbolism of "under $100", and hence think $98-$95 is the political "must hold" line.  http://www.forbes.com/sites/greatspeculations/2012/03/20/saudi-king-defies-irans-mullahs-to-help-obama/ 


  211. Angel:  Nice!!!!!


  212. first of all who is the worst typist on the site?…second if i thought it wasn't a series of typos i never would have used the word syntax..(is that better?)


  213. Something has been bothering. Me about this rally, and I think I have an idea. I went to St. Louis Fed website and looked up the M2 money supply for the period from 2007 through present. Interestingly, in late 2007/early 2008 the money supply was 7,500 (in Billions of dollars). Curre toy, we are at roughly 9,700. This is an increase of 29.33%

    Here is where it gets interesting vis-a-vis this rally. The top of that rally in DJIA was 14,000 and change, with full employment, bustling economy and nothing but bright shiny days ahead. Had there been 30% more money in the system back then, it would have meant the DJIA was $18,106, assuming a 1×1 correlation which I know not to be completely true, but bear with me.

    Maybe, this rally is more a result of that 30% increase in money supply, and not that we are back close to the top in DJIA. If we took today’s levels, and compared them to the M2 adjusted DJIA level of 2007, we are at 72% of the 2007 high(($18,100 x 72%).

    Given that the US is the prettiest girl at the ugly contest, we could have some room to run. I don’t think we could get back to $18,100 level without more uptick in the economy, but we could break the previous rally’s high, simply because of the extra money in the system. Plus, with capital flight continuing from Europe and now out likely Japan also, this rally could begin to sustain itself.

    So maybe I’m getting a little more bullish at just the wrong time, but since you have been looking or reasons to be more bullish, I thought I might share this premise.


  214. Sorry for so many typos, I hate typing on my iPad. Anyway, FRED website I used was

    http://research.stlouisfed.org/fred2/graph/?id=M2,M2NS,

    Fundamentally, I totally with you, but the market clearly doesnt want to hear it rightt now. And I completely agree with your idea that the asymmetric risk is becoming the downside bet, so have been layering a few on here and there.


  215. Hoss – Interesting premise.  The capital flight out of Europe should pump up the dollar, following your logic, but a higher dollar seems to have a damping effect on market prices on some global purchasing power basis.  I wonder how one would figure that in.


  216. hoss: A 30% liquidity premium means oil should run to $190 a barrelThats gonna be a buzzkill.


  217. Yup…and yup. Gets me thinking out of the box alright.

    Dollar flight should pump the dollar, but what does one do with said dollar? They have to chase yield, and right now equity yields look better than CDs, Treasuries, MBS……we might see a period of the dollar increasing AND the market increasing(or at least flatlining, which would look like consolidation until the next round of cash infusion which would drive the mkt higher), because of the yield chase.

    And yea Kinki, that will be a buzz kill…..until employees start demanding more pay for the same work. Then, fireworks.

    And I am no expert, just attempting to look at this rally in a way that might make more sense.


  218. Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    9:30 Hearing: 'Europe's Sovereign Debt Crisis' (Bernanke & Geithner)

    10:00 Existing Home Sales

    10:30 EIA Petroleum Inventories 

     

     

     

    SPY 5 MINUTE

     

     

    At the close: Dow -0.49% to 13174. S&P -0.29% to 1406. Nasdaq -0.14% to 3074.

    Treasurys: 30-year +0.2%. 10-yr +0.02%. 5-yr -0.03%.

    Commodities: Crude -2.14% to $106.23. Gold -1.11% to $1648.85.

    Currencies: Euro -0.14% vs. dollar. Yen +0.48%. Pound +0.22%.

    Market recap: Stocks skidded to negative territory amid comments that China's demand for iron ore is "flattening out," adding to worries over the country's economic outlook. Treasurys gave up early gains, as 10-year yields hit 2.399%. Oil prices settled below $106 after Saudi Arabia promised to meet any supply shortfalls. NYSE declining issues led advancers more than two to one.

    Ben Bernanke trashes any idea of returning to the gold standard as "not practical for monetary reasons or policy reasons": there's "not enough gold" to sustain today's global economy, changes to the supply cause short-term price instability, the economy was far more volatile under the gold standard… and since the gold standard determines money supply, there's not much use for the Federal Reserve

     

    SPY WEEKLY

    More on Bernanke: Peter Barnes posts what appears to be a copy of Bernanke's Wednesday remarks for the House. In the remarks, Bernanke asserts U.S. banks and money market funds are still vulnerable to Europe's woes, and that the Fed is prepared to offer more assistance to the ECB if needed. He also seeks to assure the Fed's stress tests took a potential European crisis into account.

    Minneapolis Fed President Kocherlakota – responding to questions after a speech - says the Fed should begin withdrawingmonetary stimulus later this year or 2013 if his forecasts regarding growth and inflation are correct, quickly adding, "That doesn't mean I want to raise rates tomorrow." The long bond quickly sheds half a point on his remarks, now yielding 3.46%.

    The Treasury market may be bleeding hard (III), but it will reclaim its lost ground leading into year end, David Rosenberg says, with 10-year yields possibly falling to 1.75% as economic growth relapses: “The Treasury market is visibly oversold here, and growth and inflation perceptions are out of whack with reality." 

    Goldman's Jan Hatzius still thinks the Federal Reserve will initiate another round of quantitative easing this year, but has lowered the odds. The “probability of it has come down from well above 50% in January,” Hatzius says, but “they haven’t said anything about that for quite a while so there's a lot of uncertainty.”

     

    ITB WEEKLY

    Barton Biggs has been bullish for a while, and now he's boosting his bullish bet to 90% net long. “There's an awful lot of money that is out of stocks and in very low- yielding fixed-income instruments," Biggs tells Bloomberg. "I think the odds are that money is going to migrate back." Only the Middle East gives him pause: An Israel-Iran war would be "very, very serious" for the economy and cause a double dip.

    Stocks may look reasonably priced based on a simple P/E, writes James Montier, but this is distorted by profit margins that arethe highest ever. Not only that, but analysts' forecasts are for margins to rise even higher! A believer in mean reversion, Montier expects barely positive returns over the next seven years if profit margins move just partway back to their long-term average.

    Doug Kass now thinks stocks are overvalued, as his fair markets value is 5% below current levels. He's eliminating any possibility of a recession this year but increasing the chance of sub-1% 2012 real GDP and "substantially raising" the likelihood of a muddle-through scenario (i.e., 2012 real GDP growth of 1.5%-2%).

    BAC WEEKLY

    Nowhere is the inflation argument more relevant today than what we're seeing in the relative performance of the stock market versus gold. After several years of going up and down together, they've begun to diverge dramatically. Since February the April gold contract has dropped more than 7%, while the Dow has risen more than 2%. That's a big divergence, and an encouraging signal that fears of a deflationary collapse have finally faded.

    The Chinese government is seeking to make it easier for foreigners to invest in the country's stock market, NYT reports. The move, not publicly announced but disclosed by some private money managers, indicates China seeks to stem a rising flight of capital from the country, a worsening slump in real estate prices, a weak stock market and a trade deficit caused by a steep bill for oil imports.

    BHP forecast flattening in Chinese iron ore demand, not a decline, writes Robb Stewart. Growth is still the forecast and don't expect BHP (or RIO or Fortescue for that matter) to back off plans to spend billions on additional capacity and instead raise payouts to shareholders. 

    EEM WEEKLY

    Coal stocks are weak today, after Sterne Agee says they see a nonexistent market for spot and near-term coal prices as utilities continue to wrestle with unexpected generation declines, and to expect more production cuts for the industry: Patriot Coal (PCX-3.3%), Peabody Energy (BTU -5.4%) and Alpha Natural Resources (ANR -4.4%). 

    Cotton continues near 2-year lows as the U.S. government estimates record crops in key producing countries will expand stockpiles by 32%. "Cotton is a cub right now and can grow into a fully-fledged bear," says a trader. Standing to benefit are clothing retailers such as Gap (GPS) and Abercrombie & Fitch (ANF). Cotton ETF: BAL -49% Y/Y. 



  219. The solar industry's 
    brutal price war may leave well-financed conglomerates such as GE, Samsung (SSNLF.PK), and 3M (MMM) as the dominant players, speculates Bernstein. Technology improvements and increasing scale have only served to  hurt the ability of manufacturers to differentiate themselves, and that opens the door for the conglomerates to dominate if they choose to ramp their investments. (earlier

    RSX WEEKLY

    Sears (SHLDhires real estate specialist David Lukes, former head of real estate company Mall Properties, in an attempt to mine the value of its assets. Sears has struggled with tough competition and weak demand for its merchandise, so the troubled retailer hopes to generate cash by selling off its massive real estate holdings.

    Oracle (ORCL) guides on its FQ3 call (webcast) for FQ4 revenue growth of -2% to +2% and EPS of $0.76-$0.81 (no forex adjustments); the former is below a consensus for 3.4% growth, while the latter is largely above a $0.76 consensus. New software license revenue growth is expected to be -2% to +8% Y/Y. Hardware revenue, which was down sharply in FQ3, is expected to be flat to up $100M-$110M Q/Q. ORCL now +0.1% AH.

    Oracle (ORCL) was once looking for $6B in damages from Google (GOOG) over Android's use of Java. But now it looks like the final settlement figure for the bitter legal dispute between the companies will be well under $100M, given new filings which show Oracle providing a "starting figure" for damages of just $32.3M. The companies are set to go to trial in April.

    FXI WEEKLY

    Google's (GOOGhiring of Digg founder Kevin Rose, who has joined its Android team, is part of a broader effort to give the engineer-dominated company an infusion of design talent, says a former co-worker of Rose's. Last July, former Googler Paul Adams made waves by stating he left the company for Facebook in part because he felt it was difficult for a Google researcher or designer "to have your voice heard at a strategic level." 

    Though it lost a bit of share in 2011 thanks to a weak 1H, Cisco (CSCOstill dominates the enterprise router market, with Infonetics estimating its share to be near 75%. Interestingly, H-P (HPQ), for whom networking is one of very few bright spots, has passed Juniper (JNPR) to become the market's #2 vendor, doubling its share in 2011 thanks to strong exposure to the fast-growing Chinese market. (previously

    Though it opened lower, Amazon (AMZN +3.7%) finished the day with a solid gain, as analysts rushed to praise its acquisition of Kiva (III). Goldman and JPMorgan note the potential of Kiva's technology to put a lid on Amazon's soaring headcount and fulfillment expenses, and UBS, which believes Kiva generated $100M in 2011 revenue, thinks the deal should be accretive going forward.

    Figures from iiMedia Research drive home the challenges facing Apple (AAPL) as it works to increase its Chinese smartphone share. The firm estimates only 6.1% of the 280M phones sold in China in 2011 had an unsubsidized selling price north of $465, and 58.7% of sales involved phones that sold for $155 or less. The iPhone's average unsubsidized price is around $650. (also

    Fahrenreit 116. That's the temperature that was recorded by Consumer Reports when the new iPad was running games. The same testing found that the new iPad cooled down to 113 degrees if the charger was disconnected. (previous)


  220. Screwing Americans/Rustle – We'll see on Thursday if Obama stands up to the oil industry or if they break him (he's giving a speech from Cushing).  Maplight, an independent research group in Berkeley, California, that tracks the influence of money in politics, has conducted an analysis of oil industry contributions to members of Congress supporting the pipeline.

     

    Maplight found only two of the 118 members of the House of Representatives who list oil and gas industry among their top 10 campaign contributors opposed fast-tracking the pipeline. The two hold-outs were Ed Markey, the Massachusetts Democrat who headed the global warming committee that has since been disbanded by the Republican leadership in the house, and Charlie Bass, a New Hampshire Republican.

    Only 10 of the 195 members of the House of Representatives who list the oil and gas industry among their top 20 contributors opposed the bill. In all, the oil and gas industry has given nearly $12m in direct contributions to members of Congress in the last two years, Maplight said.

    Here's a look at some of the oil and gas industry's favourite members of Congress as compiled by Maplight – all members of the $100,000 club, and all supporters of a bill to push Obama to pass the pipeline – along with some of their recent statements on the Keystone tar sands project.

    • From Steven Pearce, the New Mexico Republican, who heads the list, receiving $370,000 in direct contributions from the oil and gas industry in the two years from July 2009-July 2011. "It is time to put the political games aside," the congressman said on his website last month. "We must all work together to ensure the culmination of projects, such as the Keystone pipeline."

    • Mike Pompeo, the Republican who represents the Wichita Kansas hometown of the oil billionaire Koch brothers, comes in number two on the list with $333,156 in industry contributions. Pompeo is also the main recipient of Koch political funds, according to another organisation tracking money and influence, Opensecrets.org.

    • Bill Flores, a former oil company executive and a Republican from central Texas who received $266,184 in industry funds according to Maplight during the debate on the Keystone bill last July, has said: "If we do not tap this valuable resource, the Chinese or other countries will."

    • Dan Boren, an Oklahoma Democrat who received $201,800, said the pipeline would create "tens of thousands of new jobs" – claims that have been debunked by economists.

    And other proponents of the pipeline, from Texan Ted Poe to Louisianan Steve Scalise, have regularly disparaged opponents to the Keystone XL as "radical environmentalists who are against jobs".

     

    Rank of Oil & Gas as a Contributing Interest Group

    Name / Vote on HR 1938 [the act to "direct the president to expedite the consideration and approval of the construction and operation of the Keystone XL oil pipeline, and for other purposes"] / Total contributions from oil lobby (1 July 1, 2009 – 30 June 30, 2011)

    1 – Rep. Steven Pearce [Republican] / AYE / $370,020

    2 – Rep. Mike Pompeo [R] / AYE / $333,156

    3 – Rep. Bill Flores [R] / AYE / $266,184

    4 – Rep. Cory Gardner [R] / AYE / $205,124

    5 – Rep. Dan Boren [D] / AYE / $201,800

    6 – Rep. John Sullivan [R] / AYE / $179,200

    7 – Rep. Jeff Landry [R] / AYE / $176,050

    8 – Rep. Tim Griffin [R] / AYE / $164,709

    9 – Rep. James Lankford [R] / AYE / $156,760

    10 – Rep. Rick Berg [R] / AYE / $151,561

    11 – Rep. Michael Conaway [R] / AYE / $136,850

    12 – Rep. Tim Murphy [R] / AYE / $133,700

    13 – Rep. Dennis Rehberg [R] / AYE / $133,152

    14 – Rep. Steve Scalise [R] / AYE / $125,335

    15 – Rep. Francisco Canseco [R] / AYE / $121,767

    16 – Rep. Pete Olson [R] – AYE – $106,400

    17 – Rep. Tom Cole [R] / AYE / $103,400

    You can't "fix" our system without first destroying it.  This thing is corrupted to the core and the fact that people are not outraged that Congressmen receive entire year's salaries from a single lobbying group to buy their votes shows you have far gone we all are – we're long past the point of caring – it's like living in a Mob neighborhood where no one says anything because it's not going to help and you'll only get yourself in trouble….


  221. Jabob, exec,
    TZA

    Somebody once said "when your position goes against you so bad you feel like you're going to puke, you should probably double your position".

    That's what I just did.

    Doubled my TZA (shares), Limit order at $17.36 (for Wednesday)


  222. NOK/JMM – That's all I was saying, not what I consider a "safe" bet.  

    Mitsubishi/NF – I love my TV!  Now that I've had it a few months, I have gone to BBY to check out the competition and I haven't seen anything I like better.  Ours is the modest 82" model and it's plenty big enough.  The picture is fantastic and it was surprisingly light (80 pounds).  The speakers weren't bad but we turned them off as we have a Bose surround system and we have the Tivo XL on it, which records 2 channels of HDTV at a time while you play another and the picture is great on that.   For sports, I like it way better than LCDs or Plasma as you don't get that jitter when there's fast action.  We bought the stand that came with it at AMZN, that's a perfect fit and perfect height for it to – especially shoved in the corner of the room like ours is.  You do need a big room for it or the TV is stupid big.

    Fed speech/Dpast – I find it funny that slide 21 says "Before the Federal Reserve was fully established, the country was hit by another serious financial panic in 1914" and the slide shows 150 banks closed in 1914 and 500 was the worst prior crisis in 1893.  What it doesn't show is that, from 1986 to 1991, we had 5 consecutive years with 200+ bank closings thanks to the first S&L crisis (over 2,000 in all) and we lost another 700 banks in the last crisis 20 years after that.  It's not better with the Fed, it's WORSE!!!  Not to mention the Fed was established in 1913 and, just 16 years later, we had the worst economic crisis in our history.  They are a useless, pointless, damaging institution…

    This it the most important slide (40) from Bernanke – this is how he thinks!

     

    Monetary Policy in the Great Depression

    • Policy errors included

    – tightening of monetary policy in 1928 and 1929 to stem stock market speculation

    – policy tightening in 1931 to halt a speculative attack on the dollar

    – policy inaction in 1932, despite high unemployment and falling prices

     

    This is not a guy who is ever going to be inclined to take his foot off the gas…

    Big Chart/StJ – Very nice solution, thanks!  Problem with the numbers though.  Dow and S&P are calculated down from 16,000/1,600 so it's in even 800/80s – 15,200, 14,400, 13,600, 12,800 – not recalculated from 13,600/1,360 must hold line.  As we get closer to 5,000 in the Nas, it would be the same thing and we'd begin calculating from the top.  I guess the problem is we have 5% and 10% up categories and it's confusing but not much we can do about that.  So 13,600 is really the -15% line but, as we're setting aggressive goals, it's also the Must Hold.

    Note the Nas stopped at 3,075 (2.5% line) today.  When we have fresh lines, it's nice to see them getting confirmed that way.  Dow also rejected right at 13,200, another 2.5% line while NYSE is holding their 2.5% line at 8,200, RUT we saw getting rejected at 840 (5%) and 1,400 held on S&P (2.5%) which is, on the whole, bullish! 

    Nice Kustomz:

    In short, about $8.5Tn spent to stop a $40Tn market from falling to a realistic price.  Who does this really help?  Certainly not the generations of people who will have to pay it back.  

    Ryan plan/StJ – I don't take it seriously.  The guy is as loony as Santorum.  As to ceding power to Corporations – THEY ARE RUNNING ROMNEY – how much more spelled out do you need things to be?  

    Better than AAPL list is funny.  FOSL was under the radar, I thought that fad died out – how much is Swatch?  AAPL, BRCM, MU and STX were all Buy List picks from last year.  I'm surprised CMG isn't there, not as bad as we think.  NFLX totally ristickulous.  

    Escape/StJ – But isn't that what the chart would have looked like last July?  Oh wait, how's this?

    We fell 10% the next month and were back at 50 by August.  It's kind of funny how they can just run the same exact Bot pattern and everyone falls for it again.  This time is always different to people, no matter how much the same it really is…


  223. AAPL/Msf – I would think this heat thing would be a bigger deal.  My IPad 2 doesn't even get warm in regular use, over 100 degrees would be ridiculous but maybe it's only playing graphic-intensive games so won't matter to most people.  

    Reversal/StJ – Sure, we do those once in a while but it's a very aggressive move, I only like to do it on things I really think are bottomy AND I think will go up more than the short call we would usually sell AND I really like owning the stock at the net price.  Then I like them.  

    Demand/DC – It's true.  The Saudis have been offering more oil for over a year and no takers so far.  That's why they are buying tankers, it's their own sort of gambling as they can dump some oil into floating storage, move it past the Strait and then, if Iran cuts things off, they can come to the rescue with their oil tankers.  Very good PR for the Saudis if it works.  

    AAPL/JMM – That's a nice way to play, wide enough margin of safety that you aren't likely to get burned and a cap on losses if you do.  

    Selling spreads/Iflan – I don't like it on most things but if you can get $3 on a $10 spread that's almost 20% in of the money, that's not too bad.  I'm pretty sure the ones I didn't like were a lot riskier.  The problem is, especially in a volatile market, that these trades may work 9 out of 10 times but, if they only pay 5 or 10%, then all it takes is one loss to wipe out all the gains and, if you have 2 losses close together, you end up in a hole that you won't get out of.  It would be one thing if you could point to a year in which AAPL, for example, didn't have a 20% move in a month but that's not the case.  That means the risk is higher than the reward would indicate.  Nov 8, 2007 – 10% drop, Nov 12th 2008 – 10% drop, Jan 3rd 2008 – 7% drop, Jan 23rd 2008 – 20% drop, Sept 29th 2008 – 20% drop…  It's fine if you know, accept and can afford the risk but what I really object to is the danger of promoting this as a "safe" strategy.  These trades do blow up.  If you make them all the time, if you use stops, if you can afford to roll – then you have a good chance of doing well but I've seen them cause people a lot of pain so I'm not a huge fan in general.  

    Winder/Rustle – Wow, where do they dig these guys up?  

    TVs/Morx – Big Brother phase 1 has commenced!  

    Oil/ZZ – Meanwhile, we're still at $106.72 in the futures (/CL May).  Should be an interesting week for oil. 

    Money Supply/Hoss – Yes but we're not getting that money in other places.  Stock prices SHOULD NOT have anything to do with how much money there is to buy them but, of course, they do as it's an auction and, as we know from Christie's, put a lot of dumb rich people in a room with things to buy and you can sell any sort of crap for double what it's worth.  So, the easy availability of capital to the rich does jack up asset classes and, since houses are out of vogue and TBills and Money Markets have very small returns, that jams a lot of cash into equities.  But, that doesn't mean the Dow should be at 18,000 because they still have to SHOW US THE EARNINGS!  

    If the money supply is in the economy (as opposed to sitting in bank and other Corporate vaults) then that money should drive to the bottom line of companies.  If that's not happening, then the expansion of the money supply is creating an illusion of recovery with no actual recovery and all that does is set us up for another crash.  As I keep saying, until we see wage inflation and a housing recovery – we don't have a stable economic recovery, no matter how much money they pump in at the top.  

    On the other hand, the money is out there and, if it does begin to move, we can get some massive inflation very quickly and that will be good for equities.  

    Asia closing down a bit but not too much damage.  India up half a point.  

    Europe futures up slightly.  

    Dollar 79.59, Euro $1.327, Pound $1.588, 83.58 Yen, oil $106.74, gold $1,653, silver $32.24, copper $3.86, nat gas $2.33 and gasoline $3.36 (not giving up Friday's run so new all-time March highs this week). 

    TZA/Newbie – Just watch that 840 line, you don't want to see the RUT getting back over it. 


  224. Lines / Phil – If I understand you right then the lines for the Dow and S&P need to be calculated as the -5%, -10%, -15%, -20% etc from the 16,000 and 1600 levels. So in reality they are not 5 and 10% of the Must hold lines. To avoid confusion why don’t we call these lines S and R then as in S1 and S2 for the -5 and -10% and R1 and R2 for the 5 and 10% lines.


  225. JR/Yesterday

     
    That's impressive.


  226. Lines/StJ – Less confusing for you maybe but not for me!  There are different S&R lines that will be calculated so I think just as much confusion that way so I'd just as soon leave the chart as is with the levels properly adjusted – you could always put an asterisk on them if it makes you feel better.