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Fall-Back Thursday – Time To Get Real?

Do you REALLY think this will go on forever?

On the right is the AAPL quarterly chart but it could also be the quarterly chart of SHLD, NFLX, FOSL, STX or PCLN (Bespoke Chart), all of whom are up more than AAPL (which is up 50%) in 2012.  We've discussed PCLN as one of my favorite shorts and we had a good discussion in Member chat last night comparing PCLN to EXPE, who drop the same amount of cash to the bottom line (before buybacks and dividends) but have just 1/8th of the market cap of PCLN.   

Sure you can say that PCLN is twice as good as EXPE (it isn't, but you can say it) but can you say it's 4 times as good?  How about 8 times?  EXPE nets $500M a year – 8 times that is $4Bn – more money than the entire travel sector makes!  How, exactly, will PCLN grow into that valuation?  Eliminate all competition and then grow the sector by 50%?  Well, that's pretty much what AAPL did but how many AAPLs can you have in one market?  

THAT is the problem my friends.  Aside from the macro concerns we discussed in yesterday's post, we have a sort of value mania that is driven by the very real success of one company, much the way we had a dot com boom in the late 90s driven by the very real success of just a few companies.  Back then, everyone was the next QCOM, YHOO, MSFT, CSCO – whichever category you were supposed to be the best.  Qualcomm, in fact, was the best performing tech stock of 1999, gaining 2,619% that year and finishing right about $100.  By the end of July, 2002, they were trading at $10 but hey, what a ride!  

In fact, here's the CNet story from Dec 29th, 1999 titled "Qualcomm Jumps on $1,000 Price Target" and coming on the heels of "Qualcomm to offer Net2Phone services in Eudora" it's no wonder people were super-excited!  AMZN was "only" up 25% that year to $100 but Jeff Bezos was Time's Man of the Year and yes, their business has been growing at an amazing rate for the past 12 years and they have crushed their competition and dominated the sector – and gained less than 6% a year for their troubles.  

Who else was up huge in 1999?  Well I can't even use their symbols because some don't even exist anymore (yet all were over $1Bn, not small caps) but they were BroadVision (1,494%), Metricom (1,416%), Ortel (1,271%), VeriSign (1,192%), ARM Holdings (1,171%), BEA Systems (1,042%), DoubleClick (1,037%), Emulex (1,025%) and InfoSpace (1,023%).  So maybe AAPL up just 50% is a chance to get in early!   

The two worst performers of 1999 were IM, who dropped 63% to $10 but are up 80% since then and XRX, who fell 62% to $20 and never did recover.  Long-Term, the market doesn't know a thing!  In the short-run, we can play PCLN, FOSL, NFLX or the CMG but don't delude yourself that these are long-term investments – that's how fortunes get lost…

Meanwhile, the real question is – are we in late 1999 and about to get a major shock of cold water thrown in our faces or are we in late 1998 and taking a pause that refreshes before the real fireworks begin?  

The bull case is all about recovery, which we're just not seeing on a Global basis (and even the US is debatable) and INFLATION.  Inflation I consider a good reason to bet AAPL can go to $1,000 – because $1,000 is how much a new IPhone will cost once inflation takes hold and it's very likely it will take hold as the supply of money, World-wide, is through the roof – up over 100% since 2007.  The problem is that money is not moving (no velocity) so the economy is not growing.  Until we see the money move through the broad economy (wage increases, interest rates rising), we're not going to have inflation that sticks because the consumer is out of money.  

How will PCLN (now $704) take over the entire travel sector AND increase sector revenues and profits by 50% if the consumer is out of money?  That's why PCLN strikes me as particularly vulnerable – aside from getting too big for their britches, they also depend on the bottom 90% traveling and the company has been benefiting from a recovery in top 10% travel and higher airfares but, like gas prices – we are hitting a wall at how much money the average consumer can afford to pay.  We're already seeing drastic cutbacks in fuel consumption (see yesterday's post) and David Rosenberg postulates that the only thing that saved the economy in January and February this year was a mild winter – now that we hit driving season, where is $80 per tank going to come from?  

In my Morning Alert to Members yesterday, I put up an aggressive DDM ($69.66) spread for playing the Dow if it ever gets back over 13,200, playing it to hold that line through May for 500-1,000% gains.  Nearer the close, we were discussing what to do if inflation does kick in and I laid out another way we can play the Dow over 13,200, looking for another 50% move in the Dow over the next two years:  

When wage inflation does kick off an inflationary cycle, you won't have missed much as we're talking Dow 20,000+ so, if you are dying to buy, the DIA 2014 $160 calls are $1.80 and you can offset 100 of those ($18,000) with the sale of 30 $80 puts at $2.90 ($8,700) for net $9,300 and a $25K margin commitment.  That way, if the Dow pops up to 20,000 as suddenly as you fear, you'll collect $400,000 for your troubles.  Worst case is the Dow crashes and you are long 3,000 DIA at net $89.30 and if you aren't willing to be long at Dow 8,930 (32% down from here) – you'd better re-check that bullish premise.

This is a point I keep trying to make to Members – if we are, in fact, heading into a 1998-1999 style rally, we're not going to miss very much by failing to participate in the initial break-out.  If you missed the first doubling of BRCM in 1999, it was OK, as it doubled 5 more times by the end of the year.  YHOO went up 4x in 6 months AFTER it doubled at the beginning of the year (now 1/10th of where it was).  IF the rally is real, IF the Global recovery is real – then we will see broad, deep participation and will have many, many opportunities to get more bullish.  But, if it's all an illusion and about to blow up in our faces, then Cash will be King – and that is how I prefer to play it at the moment.  

We had our usual fun shorting oil yesterday (and this morning) as we got not one but two spikes to $107.50 that we caught for nice short moves in Member Chat and now (9:15), we're getting a very nice move down to our $105 target so congrats to all the players and a big thank you to all the evil bastards who tried to manipulate the NYMEX yesterday and gave us a perfect entry at the top!  My commentary to Members is noted on the chart to the left.  

We're also getting a nice winner off my Russell call this morning as that index is already down to 816 in the Futures but nowhere near as exciting as oil ($10 per penny per contract!), which is down to $104.79 – even as I am writing this and just ahead of the bell.  

Will this be the beginning of the big sell-off I predicted on March 5th?  After being wrong for two weeks – it's way too early to declare victory based on a one-day pullback and I am still trying to get into that bullish mindframe and will be more so if our technicals hold up on this pullback but, meanwhile, I still see many, many reasons to stay cashy and cautious at the moment.  


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  1. PP for the day:


  2. What is your view on entering appl now?


  3. From C-Net review of iPod from 2001
     
    Stephen Baker, an analyst at NPD Intelect, said that the iPod will likely stand out for its large storage capacity but predicted that the device may have trouble digging out a niche in the market.
     
    From George Gershwin
     
    They all laughed at Rockefeller center
    Now they’re fighting to get in
    They all laughed at Whitney and his cotton gin
    They all laughed at Fulton and his steamboat
    Hershey and his chocolate bar


  4. Here is another sign that everything is NOT  fixed:          Sturm Ruger Faces Runaway Firearm Demand

    Sturm Ruger has happy problems. The firearms maker announced it has temporarily stopped accepting new orders because it can't keep up with demand. Customers have ordered more than 1 million units so far this year, outstripping the company's production capacity. RGR shoots higher by 11 percent on the news.



  5. A big wheeeeee on oil right now….

    Oil lines

    R3 – 109.04
    R2 – 108.34
    R1 – 107.46
    PP – 106.76
    S1 – 105.88
    S2 – 105.81
    S3 – 104.30

    Yesterday's high and low – 107.64 / 106.06


  6. Phil--I am short PCLN Jan 800s…Is that insane? My FU tantrums are because they have gone from under 10 to 46 in less than 2 months (ouch). Remember, we thought PCLN was overvalued in the 400s. Now they are at 700+??? MoMo madness?
    CMG too. I am short the Jan 490s and 500s…
    I blame this on your gooble gobble one of us video ;-)


  7. Gordon Ramsay or Phil Davis?
     
    I am a pretty good cook, not professional,but I can make breads, apple pies, cheesecakes all from  scratch without using recipes.  When I used to use recipes the results were not usually good as invariably there  was some  ingredient  not available or not available in  good quality.  Years ago  I read a book about the chemistry of food and cooking and I realized that once you understood the underlying chemical process produce by application of heat in various manners to various different substances, plus some understanding of  flavours and textures, you did not need recipes. Scrambled  eggs, quiches, custards, and cheesecakes are just points on a continuum.
     
    I don't usually make pasta, but last week I was asked to make a spaghetti bolognese, which I had never done before,  and even though I was missing a couple of  ingredients I wanted, it passed  the taste test which was confirmed when I received third party repeat orders only a day later.
     
    PSW is the chemistry book of options trading. Most books and Web sites just offer trading recipes, but PSW teaches you to compose your own recipes. Phil is the Gordon Ramsay of options, offering a valuable dialectic on trading processes through corruscating critiques of trading ideas and unwillingness to tolerate second best. Thanks, Phil.


  8. What's more insane Jabo is to see the PCLN Jan 2014 1000 calls at $40.00….  Unreal! Is PCLN working on a cure for cancer?


  9. For a little humor on a Thursday morning

    THE GYNECOLOGIST WHO BECAME A MECHANIC….
     
    A gynecologist had become fed up with malpractice insurance and HMO paperwork, and was burned out. Hoping to try another career where skillful hands would be beneficial, he decided to become a mechanic.
     
    He went to the local technical college, signed up for evening classes, attended diligently, and learned all he could. When the time of the practical exam approached, the gynecologist prepared carefully for weeks, and completed the exam with tremendous skill. When the results came back, he was surprised to find that he had obtained a score of 150%.
    Fearing an error, he called the Instructor, saying, "I don't want to appear ungrateful for such an outstanding result, but I wonder if there is an error in the grade?" "The instructor said, "During the exam, you took the engine apart perfectly, which was worth 50% of the total mark. You put the engine back together again perfectly, which is also worth 50% of the mark."

    After a pause, the instructor added, "I gave you an extra 50% because you did it all through the muffler, which I've never seen done in my entire career".


  10. Jabo – I wonder if you could use an Etch A Sketch now and give you PCLN position a shake!


  11. Good Morning
    Pharm/STJ—-  :-)


  12. We have come a long way…

    http://www.bespokeinvest.com/thinkbig/2012/3/22/jobless-claims-fall-to-lowest-level-since-march-2008.html

    Interesting that these numbers are now lower than most weeks in 3 years of the first Bush terms!


  13. Housing shmouzing….Student Debt Exceeds $1T.


  14. GM to you as well Savi!  Wonderful day here in paradise (as my neighbor 1020 would say)!


  15. stjean—that isn't what I am shaking!!


  16. A bigger wheeee on oil…. Can we get to $104?


  17. Good morning,

     

    IWM     79.10,  79.29,  79.56,  79.82,  80.17,  80.46,  81.04,  81.41,  81.65,  81.94,  82.12,  82.34,  82.67,  82.94,  83.18,  83.33,  83.55  and  83.74

    And where we are now:


  18. 1/2 out of DIA puts.  I am in at a bit lower basis, but take it when it gets to 48/9c in the 25Kp.


  19. Jabo – I would say that PCLN looks to open lower, but that has not been a great indication all week! And for whatever reason CMG looks to open higher. What do they put in their burritos… I have never eaten there and my kid told me that I have not missed anything!


  20. 25 KP – Indeed 1/2 out of the DIA puts now at $1.35!


  21. PCLN flying as usual
     
    FU ME!!!


  22. 25KP – Let's keep an eye on the USO puts (now 1.79) as we want to get 1/2 out at $1.99. And the TZA calls (now 2.02) where want 1/2 out at $2.15.



  23. The weekly TNA calls are showing good profits. Maybe set a stop on these?


  24. Good Morning!
     
     
    Pharm/Paradise   I pinch myself every day….. :)


  25. Sell 1/2 the DIA puts at 50% profits or at least set a stop…. That's why we DD!


  26. 25KP – 1/2 the USO puts can be sold as we DD with a net of $1.67…. They are now at $1.79!


  27. FU CMG!!!


  28. Phew… a $17K swing in one day! Looks like we use the Etch A Sketch on this portfolio and gave it a good shake!

    Phil, I took out 1/2 the DIA puts at $1.35 and 1/2 the USO puts at $1.79 based on our DD.


  29. AAPL portfolio:     The weekly 560/535  bull put spread closed for  .09/.04   or 5 cents.   I'm closing these because I want to use the margin for a similar play for next weeklies, which I will make either today or tomorrow,.


  30. Good morning and wheeeeeeeeeeeeee!  

    Don't get too excited, the Dip buyers are well trained and we are miles away from a serious breakdown.

    We got $1.80 on those USO April $41 puts, which is over our $1.69 target so you are BANNED from playing the $25KP if you don't set a stop at $1.70 on 1/2 as we cross each .25 on oil (now $104.65) by more than .10 we set a stop at the .25 line above us so, at the moment, $104.75 is our stop on 1/2 the USO puts.  

    We have nat gas inventories at 10:30 and that can give us a pump back up and, if anything, I like oil LONG (/CL) if they get over the $105 line with super-tight stops to protect our remaining USO puts ($3,000 worth) but hopefully this is a major fail that takes them to $102.50.   

    Dollar up to 80.17 and over 80, as we said yesterday, is bearish.  Oil just under $105 at the moment, gold $1,630, silver $31.39, copper $3.75 (under $3.80 is bearish), nat gas $2.32 and gasoline all the way back to $3.30.  

    Our European cousins are not looking so good, down about 1.5% so we're actually holding up well by comparison and the Euro is at $1.315 so it has another 1% to fall and the Pound is back at $1.578 so we'll watch those lines to see which way they take us into the close.  The Yen fell (rose against the Dollar) to 83 and that sent the Nikkei back to 9,980 in the Futures (/NKD) so watch that 10,000 line as another recovery indicator.  

    As a bullish play, the Dow (/YM) over the 13,000 line is a good bet along with oil over $105 (/CL) – if either of them recover.  On the bear side, if you don't have any hedges – shame on you!  

    Unfortunately, it's kind of a watch and wait thing, at least until the EU close.   Plenty more data to come:  

    Thursday's economic calendar:

    8:30 Jobless Claims

    10:00 FHFA House Price Index

    10:00 Leading Indicators

    10:00 Hearing: International Harmonization of Wall Street Reform (Tarullo)

    10:30 EIA Natural Gas Inventory

    12:45 PM Bernanke: 'The Federal Reserve and the Financial Crisis'

    1:00 PM Results of $13B, 10-year TIPS auction

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply

    7:30 PM Fed's Dudley: 'Building the Financial System' 

    At the open: Dow -0.55% to 13052. S&P -0.69% to 1393. Nasdaq -0.64% to 3056.

    Treasurys: 30-year +0.34%. 10-yr +0.23%. 5-yr +0.14%.

    Commodities: Crude -2.31% to $104.8. Gold -1.29% to $1628.95.

    Currencies: Euro -0.54% vs. dollar. Yen -0.54%. Pound +0.53%.

    Market preview: More strong weekly jobless data makes little impression on EU shares, U.S. futures and oil, which are all down following PMI data that further confirms that things 'aint looking good inChina or the eurozone. S&P Benchmark -0.5%. Randgold -11.5%after a coup in Mali, while McDonald's (-0.6%) is little moved by theretirement of its CEO. Later: FHFA House Price Index, Fed's Bernanke, Dudley 

    Treasurys get a small lift as risk moves to "off" this morning, but yields remain near multi-month highs. The long bond -2 bps to 3.36%, and the 10-year note -3 bps to 2.27%. TLT +0.4%.

    St. Louis Fed President Bullard takes note of the inflation risks posed by QE having spread to all of the major central banks, and says the Fed needs to be on pause. Bullard is not a voter on the FOMC.

    A drop in the ratio between copper and crude oil prices from a high on Feb. 6 suggests this year's rally in stocks will fade, Wells Fargo's Gina Martin Adams says. “When copper is accelerating faster than oil prices, stocks tend to do particularly well. Much the opposite has been the case recently."

    Prudential's John Praveen leans bearish with his call that the stock market rally faces too many headwinds to last. He sees more of the same drama continuing in 2012 – with Greece, European sovereign debt downgrades, and high oil prices dominating the headlines.

    Initial Jobless Claims: -5K to 348K vs. +2K consensus. Continuing claims -9K to 3.35M.

    Markit Flash Germany PMI for March: manufacturing 48.1 (50.2 in February), 4-month low; services activity 51.8 (52.8), 4-month low; composite output index 51.4 (53.2), 3-month low. "A slight stumble for Germany’s private sector in March, meaning the survey is tracking a modest GDP rise of around 0.2%" over Q1," Markit says- And this is the BEST economy in the EU!

    Markit flash eurozone PMI comes in at 48.7 vs. 49.2 expected and 49.3 prior, suggesting the eurozone has slipped back into a technical recession. Following the weak numbers, EU's Barroso says the sovereign-debt crisis is far from over. Euro -0.45% to $1.315.

    U.K. February retail sales volumes -0.8% vs. -0.4% expected. Volumes up 1% Y/Y vs. 2.6% expected. In addition to that weakness, January's gain is revised down to 0.3% (0.9% original) and 1.4% Y/Y (2% original)

    Canada's January retail sales grow 0.5%, far less than 1.7% expected. Excluding autos, sales declined 0.5%. Additionally, December sales are revised to -0.2% from flat previously. The loonie slides a bit further, -0.6% and buying $1.0014.

    Student debt may have passed $1T late last year, preliminary data from the Consumer Financial Protection Bureau shows, pushed up by a surge in college attendance, increases in tuition fees, and borrowers falling behind on payments. The debt burden has led to fears about the effect on the housing market.

    Austerity poster-boy Ireland slipped back into recession at 2011's end, as sliding exports had GDP shrinking 0.2% in Q4 following Q3's 1.1% decline. For all 2011, GDP increased 0.7%, ending 3 consecutive years of contraction.

    Spain's borrowing costs continue to rise, the 10-year note +9 bps to 5.49%. The rate stood at just 4.83% at the start of March. Italy's yields are marginally higher, but remain near multi-month lows as Spain is the troubled peripheral country du jour. 

    Portugal's core government deficit almost triples to €799M in the year's first two months from a year earlier. Higher tax rates were offset by a sharp contraction in the economy, leading to a 4.3% fall in government revenues. At the same time, government spending (in the midst of an austerity program) was actually higher than a year ago.

    More on the weak China HSBC PMI: HSBC economist Hongbin Qu – who typically tries to spin a positive message from these reports – sounds gloomy. "Worryingly, employment recorded a new low from March 2009 … external demand … decline(d) at a slower pace, implying no improvements in the (domestic) demand outlook." (full report)

    More air carriers will go bust this year as fuel costs and sluggish economies undermine profitability, Emirates president Tim Clark tells Bloomberg. “We can reel off a whole load of airlines that are teetering on the brink or are really gone. Roll this forward to Christmas, another eight or nine months, and we’re going to see this industry in serious trouble." 

    One of the Dow’s key pillars is showing weakness: Shares of Caterpillar (CAT) are riding a four-day losing streak, tumbling 4%.Earlier this week, CAT disclosed dealer sales slowed in the last three months, raising concerns about growth prospects. CAT is a major contributor to the price-weighted DJIA; it accounted for 34% of the Dow’s 415-point advance in January. CAT -1.6% premarket. 


  31. 1/2 out at $1.80 on USO April $41 puts as we crossed back over $104.75.  



  32. did they just sayon cnbc  PCLN will hit 1000?


  33. Could someone point me to the SQQQ hedge that Phil posted this or last week. I couldn't find it.


  34. Which stock will hit $1000 first? AAPL or PCLN?


  35. MSF65 – "SQQQ June $10 puts can be sold for .60 and the June $10/14 bull cal spread is $1.05 for net .55 on the $4 spread.  "


  36. Bobhu – The market makers are thinking PCLN – look at options in the future. No options at $1000 for AAPL anywhere (they top at $910 in Jan 2014)  but as I pointed out earlier the Jan 2014 PCLN 1000 are over $40.00. Insane!


  37. Marketwatch has the Dow down over 100 points and Ameritrade is only down half that, and this has been true for a few minutes now. Anyone else see that?


  38. Priceline.com [PCLN 709.59 5.94 (+0.84%) ] – A Piper Jaffray report says the travel company’s shares could hit $1,000 in two years, because of the rapid shift in travel bookings from offline to online.


  39. AAPL/RMS – If you like AAPL enough to commit to buying owning them at $400, I love selling the 2014 $400 puts for $32.  Net margin on the trade is $40 so you set aside $40 to make $32 (80%) if AAPL simply stays over $400 through Jan 2014.  Of course, if AAPL does drop, the margin requirement will rise, which is why we NEVER, EVER sell puts against a stock that we don't really, Really, REALLY want to own at the net strike.    That being said, with $32 in your pocket and a love for AAPL, you can also spend another $20 out of pocket to buy the 2014 $500/600 bull call spread for $52 and now, for $20 in cash plus the margin, you collect $100 (500%) if AAPL holds $600 through 2014.  As long as you pull the plug on the bull call spread before it falls below $25, you still have net $5 and make that much if AAPL holds $400.  That's how I like to play AAPL at $600.  At $500 I will have much more aggressive trade ideas but you have to be patient.  Meanwhile, I know 500% returns on cash are "boring" compared to the usual hot-dogging, but I'm just not that confident in the broad market. 

    AAPL/JMM – I love those blasts from the past. 

    Guns/Stock – well, you know my favorite cartoon:  

    Housing/Diamond – This one says it all:  

    New Home Sales

    This is the problem with monthly statistics after a crash.  10% gains sound really great unless you put them in perspective.  

    PCLN/Jabob – Nothing wrong with shorting the $800s UNLESS you will be forced out of them on a move up, then it's very dangerous as PCLN can easily go to $800, or $900 or $1,000 in the same way a $7 stock you short can blip up to $10 on a good run.  It doesn't matter if you can ultimately roll and DD and go for longer strikes (your caller is $44 and the 2014 $1,050 calls are $32 so a 1.3x roll and you're up another 25% in strike) and then sell puts if you have to and, eventually, you have a good chance of winning but the market CAN remain irrational longer than you can remain solvent so the key to these kinds of plays is to never risk more than 10% of your portfolio and to start with a 2% position so you can DD at least twice in case you're wrong before you HAVE to give up and take the 10% loss.  It's the same problem with selling short strangles – it USUALLY works but, when it doesn't – OUCH!  Look what happened in 98/99 – there's no rational to that – many wise people shorted YHOO at $100, $200, $300 and $400 and any one of them who hung on for 2 years did very well but, for the guys at $100 and $200 – those were two very crappy years to ride out!  

    Thanks JMM – I like that description (I also cook and love Ramsey).  Maybe we should pitch a "Hell's Options" show where we start with 20 traders and, over the course of a trading season, we eliminate one each day until we have this year's Master Trader.  I could run around looking at people screens and screaming at them and we can make prospective traders do all sorts of dump tasks in reward challenges…  

    Market bounce not looking so good so far but Dollar is drifting down (80.05) and below 80 will fix everything for the bulls.  So far, it's a very weak buy of the dips and volume on Dow is 28M coming into 10:30 so not much conviction.  

    Nat gas was an increase of 11Bcf – nothing that will support oil at $105. 

    10:00 AM On the hour: Dow -0.44%. 10-yr +0.19%. Euro -0.5% vs. dollar. Crude -2.44% to $104.66. Gold -1.24% to $1629.85.

    Feb. Leading Indicators: Leading Index +0.7% vs. +0.6% expected, +0.2% (revised) prior. Coincident Index +0.2% vs. +0.2% prior. Lagging Index +0.2% vs. +0.5% (revised) prior. - Same weather effect, I think.

    Jan. FHFA Housing Price Index: Unchanged month-on-month, vs. +0.1% (revised) in December. Prices are -0.8% Y/Y.

    Precious metals continue a decline which began around the start of March, touching their lowest levels since January. Gold-1.3% to $1,631/oz., silver -2.5% to $31.41. Of continuing concern is higher import duties for gold in India where jewelers are expected to reopen today after a week-long strike.


  40. PCLN — Rapid shift to online? Really? I'm not even sure I'd know how to book a flight offline anymore. What percentage of bookings come from offline?


  41. AUD/USD with a bounce off support not pulling the markets with it. Hoping for the worst..

     Im a gearhead Pharm, enjoyed the funnies this morning..

     


  42. PCLN — Dude on CNBC answered my question. Offline bookings: 40% US, 60% euro, 85% asia


  43. Phil/5K
    any action on the TLT 112C? I know they should have bought back at 0.30 yesterday. They are now at 0.60.
    thanks


  44. Hell's Options
     
    Yes,  sounds like a great idea,but it  might be a hard pitch to  sell advertising.


  45. Phil – Your new homes sales chart reminds me that I started my contracting business, working with KBH PHM TOL in Vegas, the spring of 1996 and retired from contracting mid 2006.
     
    If only my trades went that well….. :)


  46. PCAR – down on the news? PACCAR gets order for 1,000 Kenworth Trucks


  47. PCLN $1,000/StJ – Wow, it almost seems irrational NOT to sell those calls.  

    Long way/StJ – You are like an abused wife who thinks her husband must love her because he hasn't beaten her in a week!  Even if we get back to "normal" job losses, it's meaningless if we don't gain jobs.  We're down about 20M jobs and it will take 4 years of 500,000 net hires just to put the current unemployed/underemployed back to work but then we need another 5M jobs for the normal population growth so now it's 4.5 years IF we more than double the current rate of net hiring.  Until that happens, we have a large segment of the population who are long-term unemployed and struggling and placing a burden on what little social safety net we have left (not to mention contributing less tax revenues).   

    That's another big negative of unemployment as workers give about 45% of what they make back to various levels of government while Corporations who fire those workers and keep that money as record profits pay an average of 12% – this is why top-down stimulus is a complete waste of money.  

    DIA/$25KP, StJ – Good call, thanks!  Right on all those adjustments.  

    FAS Money – A little improvement but we'll need actual bad banking news to get back under $15 on XLF.  

    IWM Money – Right on track.  

    $5KP – Amazingly, we now have to worry about rolling our caller!   We hit our 1/2 out spot of .40 on the $128 puts so I hope that was executed and we'll see how today goes re. possibly giving up and being happy to be out near even.  

    $25KP – Well, up $18,000 in a day is not bad (I knew the down $32K was silly yesterday).  That's one of the hardest things about managing a short-selling portfolio, you have to ride out some very painful balances at times and that's why it should always only be a SMALL portion of a larger, more conservatively-based portfolio – if you don't have the margin to play with, you get forced to buy high and sell low!  So all good at the moment but that can change, of course so we'll just have to watch and wait.  


  48. Hell's Optioins – great idea as long as lflantheman is not  one of the competitors.


  49. Easy money on the weeklies:   AAPL 630 calls sold yesterday for .78, bought back today for .13    (not an AAPL portfolio trade).  Remember,  I think AAPL will stagnate here for awhile.  Good time for call selling both ways on the weeklies, but be careful……


  50. Phil – if unemployment stays like this, then how do u suppose housing recovers?


  51. wow, I haven't booked an 'offline' ticket since maybe 2000.


  52. Beaten wife / Phil – Ouch….


  53. IWM Money / Phil – The weekly TNA 61 calls are now $0.48 up 82%. I would suggest we set a stop (maybe $0.60 – up 75%) on that sucker to lock some of the profits in case we get a stick.


  54. Phil
    what is the best way that you know of to properly value DOTM options for purchase or sale, i.e. PCLN? TIA


  55. $25KP Moves:  

    DMND – Roll June  $25s ($1.80) down to June $22.50s ($2.90) for $1.10.  Intent to add 6 more at $2.50 if they keep going down.

    TLT – Need to stop out the $111 calls (now $2.55) at $2.25 or below $112 on TLT (now $112.33).  If we do fall below $112, then we need to sell 10 additional $111 calls for $2.25 or better to leave us with a net .25 $110/111 spread.  If all goes well, the market keeps falling and we'll have this conversation at $113, $114 and $115 without stopping any out.  

    VXX – DD on April $19 calls at $1.46

    President speaking on oil soon – be careful on oil trading! 


  56. 12898 in /YM should be support..if we blow through then it may get ugly


  57. Love that Goldman comes out to say we're at a generational low today.  I believe that alone is causing the sell off since know one buys the crap they're trying to sell anymore.


  58. JR

     
    Are you eyeballing any specific area for a healthy bounce?


  59. Goldman / Rustle – They must has a ton of long positions to unload on their "clients".


  60. Goldman – I meant to say "counterparties" not "clients". I sometimes get confused….


  61. Goldman/Stjeanluc
     
    You mean Muppets


  62. Barry summarizes why going back a gold standard would make no sense:

    http://www.ritholtz.com/blog/2012/03/bernanke-vs-the-gold-statndard/

     

    • The gold standard requires digging up gold in South Africa and storing it in a basement in New York. (Nonsensical)

    • Everyone’s currencies become linked. This causes policy in one country to effect another country (see how U.S. policy is transmitted to China, because of the Yuan/Dollar fix).

    • William Jennings Bryan observed that the gold standard causes deflation. His “cross of gold” speech: Because farmers had debts fixed in gold, loss of pricing power in commodities were very damaging.

    • Gold standard cause interest rates to rise during downturns and rates to fall during good times — the opposite of what monetary policy should be doing.

    • The economy was far more volatile under the gold standard (all the depressions and recessions back in the pre-Fed days).

    • The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.

    • The only way the gold standard works is if people are convinced that the central bank ONLY cares about maintaining the gold standard. The moment there’s a hint of another priority (like inflation or unemployment) it falls apart.

    • Gold standards leave central banks open to speculative runs, since they don’t hold all the gold.


  63. One thing constant in this market…THe juggernaut that is ARNA!!!! lol. Sorry, cant help myself. I have a small account but tons of ARNA so I am loving this! . Ill just make sure to sell 1/2 before the recommendation is announced this time!


  64. For any TVIX traders – So It seems that today TVIX is not an inverse VXX ETF?  Incredible.


  65. A flat world indeed:

    http://www.thereformedbroker.com/2012/03/22/fidelity-on-us-blue-chips-and-the-impact-of-global-trade/

    Look at GE – now more than 50% of revenues come from outside the US as opposed to 15% 20 years ago. Caterpillar and Wal-Mart also on a big upswing!


  66. Offline travel/Rain – Other countries still have lots of travel agents, I think that's what they mean.  

    And what you said!  

    TLT/$5KP, Pat – Yes, we were supposed to buy back the $112 calls for .30, wasn't reflexted in StJ's sheet for some reason.  If you still have them, not much to do but wait and see where they have to be rolled.  

    Contracting/1020 – That's why I can't get behind the inflation play yet.  How are we going to put all those people back to work?  Where will those jobs even come from?  It will take a couple of years just to fill the inventory we already have without massive Government stimulus that will never happen as long as the Reps have even a filibuster to block with.  

     PCAR/Scott – Maybe they were expecting more?

    Housing/Nicha – I don't (see above).  That's one of the reasons I can't get bullish.  I don't see how you get there from here yet.

    TNA/IWM Money, StJ – I think if you are going to set a stop that tight (and it's a good idea) we may as well just kill it and take the money.  If we regret the sale, we can always sell a next week $60 for $2 so it's not a bad trade-off and .12 can be triggered on a wiggle and 80% is a good gain and we ALWAYS sell (or buy back) into the initial excitement.  

    DOTM/Sage – I just look at them as if I'm owing the stock, as that's the only reason to own deep options anyway (as a leveraged proxy).  Once you knock out most of the premium, you're effectively just owning or shorting the position as it is. 

    Goldman/Rustle – I think every day for the last week they have come out with another pronouncement aimed at herding the sheeple into the market.  It is getting tired.   Even CNBC is playing clips of muppets on a regular basis.  

    Funny/CNBC finally joins Obama in progress.  He is expected to capitulate on Keystone.  


  67. exec / Bounce

    80.54, 81.24 or 81.61


  68. Ink, TVIX welcome to the twilight zone!.. should be over 15 at least.


  69. By the way, for those of you who haven't seen it – here's how you benefit from the Affordable Health Care Act (Obamacare).  I'd like to see this link on every web site in America and put an end to the BS attacks on this critical step (and first of many we need) to get health care in America under control.  


  70. Let's have one big wheeeeeeeeeeee for getting back a little on all the heretofore doomed short plays!!!!!!!


  71. Kustomz – Exactly.  I meant to say that today TVIX ia an inverse VXX ETF.  I would imagine it would be closer to $16 today. 


  72. Phil: 1999?
    IMHO, a difference today is that unlike 1999 when the real momo stocks were venturing into what was undeniably new territories, vis a vis the internet, with all the new products (software/hardware) and services (search/shopping), todays momo's are not on the cusp of any new "paradigms", (another throwback to 1999).  For example in '99 it was possible to extrapolate big numbers because no one could say with certainty what the limits would be.  PCLN, CMG and LULU may have profitable businesses but the risks and opportunities can be better understood and hopefully that will keep the prices more rational.


  73. While you east coasters work on your suntans, I woke up to snow today for the third time in a week (just outside of Seattle).  Plus five feet of new powder in one week at Stevens Pass Ski area -- springtime is heaven when you can play soccer on Saturday and ski on Sunday!


  74. the FU portfolio is holding…
     
    AAPL PCLN CMG MA
     
    die….


  75. IWM Money – The TNA weekly 61 calls are now $0.60 so we are out! Next week's 60 Calls are 2.12 now so we'll roll these.



  76. Why is the FU portfolio holding???
     
    Can't these MoFo stocks ever go down?
     
    Does the market need to drop 1k before they drop 1%?


  77. jromeha – this one's for you


  78. Lincoln- well said- the only difference, and I am in no way justifying the valuations of today's MOMO's as they are not justifiable- at least the ones today have revenues and earnings of some sort- in 2000- many of the companies not only had no earnings- they had no revenues


  79. My bad on the $5KP – I covered the 112 calls in the $25KP but forgot to make the change in the $5KP! The spreadsheet is now up to date.


  80. kustomz  / twilight zone – well said, the TVIX / VXX relationship today is inexplicable, how can VIX and VXX be up big and TVIX crash?  Would love to hear how Velocity explains that but don't have time to call them..


  81. Lflan,
    where do you think AAPL is more likely to pin tomorrow $600 or $605?


  82. Dollar failed 80 and oil over $105 to $105.20 so good for the Bulls but not looking strong at all.  Dow not over 13,000 yet (/YM Futures) and RUT just sad at 813 (/TF) so nothing impressive so far. 

    More rational/Lincoln – I would argue that the prices for many of these companies is already irrational.  Sadly, we won't know for sure for another few years but I don't see the Global GDP pond being big enough to accommodate so many big fish – it's as simple as that.  

    Skiing/Mr. M – I had just one weekend all season – very pissed.  

    Holding/Jabob – Buying the F'ing dips, especially on those stocks, has been the percentage play since October – you can't expect people to all change their minds overnight.  They need to get burned a few times before they get the message.  

    Thanks StJ! 


  83. From Doug Kass

    Goldman to Investors: I Want To Pump You Up!

    Mar 22, 2012 | 9:00 AM EDT

    • Let's take apart the Goldman long-equities call.

    It's time to play the music,
    It's time to light the lights,
    It's time to meet the muppets on the Muppet Show tonight!
    It's time put on makeup,
    It's time to dress up right,
    It's time to raise the curtain on the Muppet Show tonight!
    Why do we always come here?
    I guess we'll never know;
    It's like a kind of torture
    To have to watch the show!
    -- Theme from The Muppet Show
    As I mentioned yesterday morning, Goldman Sachs wants to pump you up on stocks.
    This week Goldman "discovered" that risk premiums are high in an upbeat "Birth of Equities" research piece ("The Long Good Buy; The Case for Equities") that implores investors to move aggressively into equities after the most munificent and coordinated global easing in history that fueled the S&P 500 to advance by 27% since early October and by 110% since the Generational Bottom (from 666 to over 1400).
    After having moved into a net short position in my hedge fund and after just having reduced my market exposure in The Kass Model Portfolio, I am clearly in disagreement with Goldman's view. I see profit margins topping out, inflation and interest rates rising, a potentially disappointing upcoming EPS season, and, as I mentioned this morning, a slowdown in global growth.
    I can't help but think that Goldman Sachs might have rung the bell that the market has topped in the near term!
    Also apparently in disagreement is Goldman's head domestic strategist Dave Kostin who recently in a Bloomberg video (http://search1.bloomberg.com/search/?content_type=all&page=1&q=kostin) confirmed his view that the S&P 500 will close 2012 at about 1250. And Jan Hatzius, Goldman's chief U.S. economist, two weeks ago reduced the firm's 1Q2012 real GDP forecast to an industry-low +1.7%.
    Goldman Sachs' lengthy and well-documented report made the following conclusions — my replies follow.
    My majors criticism with the report is that the conditions mentioned in the body of the report have been in place for some time — many of which (e.g., the high risk premium) I have used to support the notion that if certain conditions improve (technical, political, geopolitical), the S&P had the potential of approaching its 2007 high in this year's second half.

    • "After more than a decade of derating, equities are implying unrealistically large declines in growth and returns in the future." I continue to see relatively weak worldwide economic growth and profit uncertainty, as I suggested in yesterday's opening missive, "What Goes Up Must Go Down."
    • "While future growth may be lower than experienced over the past decade in many parts of the world, we believe this is more than reflected in current valuations." Mr. Market already trades at 14x, not far from the historic averages of 15x over the past five decades … but, its different this time, as we face numerous secular headwinds.
    • "Future returns in equities are heavily influenced by valuation. The prospects for moderating risk premium raise the probability that equities will embark on a steady upward trajectory over the next few years." But what happens if the interest rate rise exceeds the consensus and a spike ensues? Won't bonds once again provide refuge in a risk-averse world with a consumer pressed to make ends meet and disinterested in buying stocks after two market disasters since 2000? Remember, the retail investor, in 2007, was not a muppet — he sold at the top! The individual investor might have learned a lesson over the past decade.
    • "The ex-post equity premium has been strikingly poor in recent years." Agree, but so what — is "cheap," given other cyclical and secular concerns, enough of a reason to buy stocks?
    • "The prospects for future returns in equities relative to bonds are as good as they have been in a generation." While stocks might be "the best house in a bad neighborhood" and will be more attractive than bonds, any real estate agent would tell you, "Never buy the best house in a bad neighborhood!"

    Position: Short GS


  84. With TVIX down so much and again being pretty accurate as leading indicator think we might get a stick today or rally tomorrow.  Took some short profits earlier.


  85. I'm no gold bug… But didn't we have to save nearly all the big banks?  Kinda makes this one silly:
     
    • The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.
    really should be:
     
    • Under a Gold standard, massive transfers of wealth to bankers would be much harder.


  86. Nas has a long way to fall to catch up, Dow right with FTSE with France (FCHI) the big drag at the moment.  


  87. You gotta love the Bots…..they are good at tempering a major sell off.


  88. Phil
     
    any thoughts on PCX; getting killed from China data; Perhaps a May 5/8 BCS selling 6 puts for net debit  1.01?


  89. Pharmboy - how about that ARIA chart?  Nine straight days of green candles.  None of our whimpy Momo stocks can make that claim.  GO BIO!


  90. Phil/ stj
    On the IWM money, we are rolling to the TNA next week 60 calls x 2? 


  91. JR

     
    How are you positioned?


  92. IRA Portfolio update.  

    I wanted to give everyone an update on how our IRA Portfolio is doing.  Since the end of January we have turned $100,000 into about $101,300.  I realize that return seems quite small.  However, we were hoping to scale into some decent sized positions when the market dropped but the damn thing refuses to go down.  As a result we have never had more than $15,000 of our $100,000 deployed.  This has given us a return on capital of just under  10% in two months.  Here is the current status of the portfolio


  93. What's up with this?  Is there going to be a new Muppet Show?  My kids love those old DVDs (and so do I). 

    PCX/Sage – Why  buy PCX when you can buy BTU cheap?  PCX is a fund toy, BTU is by far the best of the best long-term and you can sell 2014 $25 puts for $4.60 for a net $20.40 entry and $20 is about where they bottomed out when we thought the world was ending.  I wouldn't mind pairing that with the 2014 $50 calls at $1.70 because BTU was $75 last spring and $85 before the crash if you get lucky and catch an upswing – could be a 10-bagger and, even if not, you still have the short puts at net $2.90.  

    TNA/L4 – No, see above, just one for now.  

      


  94. TVIX is quite the horror show today – VIX up 5% and TVIX down 13%. So much for being only 2x inverse!

    All these VIX instruments are very unpredictable. Good for short term trades, but too many factors to play them in the long term! 


  95. They managed to retrace the sharp sell off in the EUR from last night 1.3996, thats our  boys doing the squeezing.

    TVIX they blew through a chit load of stops. Last year they did the same thing before the massive spike up and the S&P dropped nearly 100 points.


  96. TVIX/StJeanLuc
     
    TVIX is calculated differently, it's based on the S&P furtures short term index.  That's why it's been good for predicting how we will do for the next couple days.  It's indicating rally from this in short term.  I've only been using it recently but it has been accurate.  Last week it was edging up while the market was positive indicating mild sell off this week and before that it headed down hard while the market was going down during that 200 pt sell off and it was on target with the rally we had.


  97. I already have some BTU but down a bit perhaps a DD on BTU a better choice than PCX?


  98. msf……AAPL pin.  Hard to tell.  I would like to see a bit of a pullback here in the next 24 hours, perhaps with the market.  I'm interested in selling some weekly puts before EOD tomorrow.  A pullback would give us a good entry on that play.  If no pullback I'll likely sell some anyway, but will make less on the play. 


    • UK FTSE -0.9%
    • DAX -1.3%
    • CAC -1.5%
    • Spain IBEX -1.6%
    • Italy MIB  -1.7%
    • Portugal PSI -1.0%

      European close thanks to Forexlive


  99. exec / Position

    All over today, cash now; up 1% but I don't do well in a drifting market !!


  100. TVIX / Rustle – Thanks for the information. I'll have a look at it in this regard!


  101. Yawn, good morning!  It's all very interesting — PSW even beats my excellent coffee for morning stimulation — but the two salient questions I have are:   Phil / Inflation:  How should we monitor the monetary velocity issue?  I've long been aware of it, but confused as to what the earliest or leading indicator would be.
     
    Jmm:  If you can improve on spaghetti Bolognese — not much room to maneuver there, so impressive — where can I place an order and have a motoconch pick some up? I'm willing to pay, and to divulge, in return, how many seconds I microwave an egg.


  102. WTF is CMG at an all-time high???


  103. Wow, you listen to CNBC and you have to look twice at the actual indexes because, the way they talk, we're rallying today!  Always makes me extra nervous when there's such blatant spin going on.  

    11:00 AM On the hour: Dow -0.68%. 10-yr +0.27%. Euro -0.38% vs. dollar. Crude -2.28% to $104.83. Gold -0.85% to $1636.25.

    12:00 PM On the hour: Dow -0.49%. 10-yr +0.17%. Euro -0.17% vs. dollar. Crude -2.1% to $105.02. Gold -0.65% to $1639.55.

    The average rate on the 30-year fixed mortgage rose above 4% for the first time in more than three months, according to Freddie Mac, suggesting the window to buy or refinance a home at historically low rates is closing. The 4.08% rate was a sharp jump from last week's 3.92%; the 15-year fixed moved to 3.3% from 3.16%.

    "I have never been more in the dark," writes Caroline Baum of the Fed's new transparency. Fed funds futures are pricing in hikes in 2013 even as the Bank of Bernanke pledges to sit on rates through late 2014. Inflation isn't paying attention to the Fed either, remaining above 2% even as the bank's models predict otherwise. 

    The Bloomberg Comfort Index moved a bit lower over the week, falling to -34.9 from last week's four-year high of -33.7. A gauge of household sentiment on the direction of the economy recorded the most positive reading since Jan. 2004 – helping the monthly expectations index hit a one-year high of 1.

    Bullish sentiment rises to the highest level in 4 years according to the Charles Schwab Active Trader Survey, with 51% of frequent traders in the bull camp vs. just 25% last October. Most bullish sectors: Tech and energy. Least: Financials, healthcare, minerals, consumer discretionary. 

    It's no surprise flows into short leveraged ETFs can be contrary indicators, but TrimTabs attempts to put numbers behind the idea. The worst returns for the stock market tend to come after 7 weeks of money flowing out of the bearish ETFs. The opposite thought – money flowing into bearish ETFs being a signal for a bull move – shows no such correlation.

    While China's weak PMI number may be the spark that started today's sell off, shares in Shanghai and Hong Kong, ended last night flat to positive. Both markets have already suffered declines of about 5% in the last month on top of more significant drops in 2011. Perhaps the washout in shares has already occurred, says Doug Kass. 

    Hello, McFly in the ointment!!!  Despite its bottom-line beat, FedEx (FDX -4%) shares are buckling under the weight of disappointing manufacturing data out of China and the shipper's light guidance. Q4 is still expected strong but "we just don’t have as strong an economy as we hoped it would be a year ago,” CFO Alan Graf says, adding that high fuel prices are taking a toll. But many analysts remain optimistic about long-term prospects.

    Here's the beginning of Financial negatives:  Agricultural Bank of China unexpectedly reports a 14% decline in earnings in Q4 thanks to higher-than-anticipated provisions for bad loans. "(This) raises the red flag of potential asset-quality deterioration," says Masterlink's Rainy Yuan. China Financial ETF:CHIX -1.8%. (earlier on Agbank

    As expected, Pres. Obama says he'll speed up approval of the southern section of TransCanada's (TRP) Keystone pipeline, connecting Cushing in Oklahoma to refineries in the Gulf of Mexico. However, despite Obama saying the U.S. doesn't have enough pipeline capacity, there's not going to be any fast-tracking of the northern part.

    Crude oil sinks under the weight of slowing economies (III) around the world, hitting its lowest level (outside of the dive on the SPR release rumor) in nearly a month. WTI crude -2.2% to $104.94.USO -1.7%.

    Coal stocks keep up their hypersensitivity to data on the direction of China's economy, falling hard on today's weak PMI number. It's not without some merit though, given that China consumes a whopping 1.3B short tons a year of coal – 24% more than the U.S. manages to burn. Decliners: PCX -4.9%CNX -3.9%ANR -3.9%,BTU -3.2%.

    Auditors say that India might have been ripped off by as much as $210B when the government sold state-owned coalfields without a competitive bidding process. The magnitude of the scandal is such that PM Manmhan Singh is under fire in parliament. EPI -3.4%.

    The natural-gas boom and the warm U.S. winter could cause storage facilities to fill up by the end of October. While bad news for producers, who would probably have to lower prices further and maybe even halt output, homeowners would benefit. Storage facilities are now at 58% capacity, the highest they've ever been for this time of year.

    Following the coup in Mali, Citi analyst Jon Bergtheil tells clients that the country has been fairly stable and so could return to "business normality" in a few months. While Mali is one of Africa's most important gold producers, the turmoil is doing nothing to support prices today – futures are -0.8% - despite wreaking havoc with Randgold (GOLD -8.6%). 

    Precious metals continue a decline which began around the start of March, touching their lowest levels since January. Gold-1.3% to $1,631/oz., silver -2.5% to $31.41. Of continuing concern is higher import duties for gold in India where jewelers are expected to reopen today after a week-long strike.

    Stifel Nicolaus analyst Michael Widner strikes a cautions tone on homebuilder USG (USG -2.6%), as he projects growth in housing starts of 15%-20%, well-below the rosy forecasts of many industry watchers. He also notes that a warm winter might have boosted housing market stats unnaturally high and tells investors not to become too enamored with major USG-stakeholder Warren Buffett's jawboning on the sector.

    Domino's Pizza (DPZ -2.6%) falls again, hitting new lows since announcing its special $3 dividend. While some major websites and stock screeners and are showing a 10% beatdown for DPZ on the day, the actual loss is more modest with the stock trading ex-dividend today. - That's because, once you pay the dividend, you are the same dopey company – only with less cash!  

    Headcase Etch A Sketch Hard Case for iPad 2 (RSI-162-2)

    Mitt Romney wasn't helped by an adviser's ill-advised comparison of the presidential candidate's views to an Etch a Sketch, but shares of Ohio Art (OART +141.2%), maker of the drawing toy, areskyrocketing. The pink-sheet company began selling the toy in 1960, and it was its best-selling product until last year.  – By the way, I love my Etch A Sketch IPad cover - it's heavy but very cool.  

    Luxury electric auto maker Tesla Motors (TSLA -1.7%) is reportedly using customer down payments to finance its operations and stay in business. If revenue from down payments decreases, the company would become more dependent on the federal government, whose assistance to clean energy companies is coming under increasing scrutiny.


  104. Someone please tell me when the low of the day was….oh, wait, same as yesterday….and the day b'f that…again….and again…and again.  Such a bot market.

     

    Look at INFI go.  THAT is how to trade biotechs…well, at least good ones.  Wait for the fall, then come in for the trade.



  105. Piper Jaffray boosts its price target on Priceline (
    PCLN+0.7%) to $763 and says the stock could soar to $1,000 by mid-2014, suggesting another 42% upside from current levels. Non-GAAP EPS of $50 for 2015 is "realistic," the firm says. 

    Benchmark's James Dobson follows his upgrade of OpenTable (OPEN +2.3%) with comments on a SF Chronicle articletouting rival Urbanspoon (IACI) as seating 1M diners per month using its automated reservation system. OPEN isn't seriously threatened, Dobson says: Urbanspoon has just 11% of OPEN’s volume, and has ~1,200 restaurants signed up vs. OPEN’s 17,150.

    How has Lululemon (LULU) turned yoga gear into a mini empire that's worth $10.62B and that has a PE ratio of 65? It's not with focus groups, big discounts or data tracking. Instead, CEO Christine Day spends hours on the shop floors, watching and listening, and changing things when necessary. Keeping products scarce is also a big tactic. (see earnings)

    Volatile, richly-valued Lululemon (LULU -0.8%) is holding up fairly well after providing slightly soft EPS guidance to go with itsFQ4 beat. Auriga (Buy) notes management is typically conservative with EPS guidance, and considers future upside likely. Jefferies(Hold) feels likewise, but is a little worried about the company's high inventories. 

    Annaly Capital (NLY -1%) slips on a Sterne Ageedowngrade to Underperform. The firm cites refinancing risk in its large RMBS portfolio.

    Morgan Stanley's Adam Holt expects Microsoft (MSFT) to continue its strong 2012 performance, raising his PT to $37 on bullishness regarding the next version of Office, codenamed Office 15. Heavily influenced by Windows 8's "Metro" tablet UI, Holt calls Office 15 a "revolutionary product" that should bolster Microsoft's tablet position, and allow its cash-cow Business Division to grow at a 10%-20% clip in 2013, up from just 3% in FQ2

    As iTV speculation continues to swirl, Apple (AAPL) has filed a patent for a universal remote app that would take a picture of a user's current TV remote, send it to iCloud for analysis, and subsequently receive a "virtual copy" of the remote. Apple has also filed to patent advanced haptic feedback technology that would allow users to "feel elements on the screen,"

    Three lunchtime reads:
    1) Tax changes loom; it may be time to harvest gains
    2) How the German economy became a model
    3) Marks: Deja vu all over again


  106. Hi ho mrm….look at ARIA go!


  107. TASR having a nice day (my Stock of the Decade).  

    Here comes Dow 13,000 but oil failed $105 with the Dollar at 79.90 so hard to get excited about it.  Dow volume 53M and they can't keep it up – not a good sign! 

    TLT blew $112, no problem getting $2.25-$2.35 on the short $111s. 

    BTU/Sage – Sure, it's like saying you have MCD and they dropped 20% so should you buy more of them or load up on SONC?  I like SONC (also back on sale), but they are no MCD!  

    Velocity/ZZ – M&A activity on the top, retail spending (not credit) and, most importantly, wages.  If wages don't go up, everything else is temporary.  Henry Ford figured that out over 100 years ago but we've gone backwards since then.  As to spaghetti sauce, that's one of my specialties – all about the experimentation, I hardly ever make it the same way twice.  I've been working my kids up to spicier and spicier levels over time – now they are pros and we can have all sorts of fun varieties.  

    CMG/Jabob – There is no logic.  Once stocks break up like this, they can just keep going until they finally implode under their own weight but it's like when you are shooting water at a carnival balloon and you can't believe it doesn't pop – it just doesn't….

    Lows/Pharm – Same bots, different day…

    Speaking of lows – oil back to $104.70, taking another run at $104.50 and below that is $102.50!  


  108. GS on LTRO effect on Euro: Note on U.S. T-Bonds [forgive the length, formatting impossible, feel free to delete it, PSW]
    Anticipated Impact of ECB’s Balance Sheet Expansion on the EUR
     

    The increase in liquidity, and crucially the reduction in tail risks that it implies, encourages the final recipients of the fresh cash to deploy part of it into new financial assets. Whether they buy foreign or local assets makes all the difference in terms of the EUR/$ impact of the LTRO.
    "First Evidence; No Conclusive Evidence of Large-Scale Liquidity-Driven EUR Outflows
     Relative Interest Rate Differentials Are Still The Key EUR/$ Driver
    In the absence of evidence (so far) of strong and persistent outflows driven by the ECB’s liquidity injection, we pay closer attention to shifts in asset prices (absolute or relative).
    A simple benchmarking of levels in Italian yields vs the EUR shows that the EUR has not fully reflected the large compression in risk premia, which drove Italian yields to late June 2011 levels. Should the EUR to return to June 2011 levels, it would hover at 1.45. The shift in peripheral bond yields may have not been fully reflected on the EUR because a large part of it may be due to the policy intervention by the ECB rather than to a genuine and proportional decline in Euro-area risk premia; the still prevalent extreme steepness in peripheral curves is conducive to such a hypothesis.
    However, the relative increase in US yields vs EU yields has worked against the EUR/$. Finally, it is important to point out that there is a level of endogeneity in both factors. Weak Euro-area growth expectations could be a reason why both Euro-area rates have underperformed US rates and risk premia have not fully normalized (at least in terms of curve shapes), thus keeping the EUR anchored at levels close to 1.32.
    From a tactical perspective, we think US yields can increase further from quite suppressed levels before they reach levels neutral to our forecasts. We continue to recommend clients to short 10y US treasury bonds via futures. Based on the discussion above, for the EUR to outperform in such an environment, we would need to see upside surprises in Euro-area growth data."
     


  109. Ben just said that part of the reason for the housing bubble was because people thought prices would keep going up and up.  What he failed to mentione was WHO was saying that.  I believe he also saod that evidence has shown the Fed was not responsible for the housing bubble.  At no point in time have I heard him remotely hint that maybe the Fed's policies had anything to do with anything negative.  Not unexpected but still frustrating.


  110. lflan – are you selling weekly calls today at all?  If apple ends a little lower in the opening, don't the premiums vanish overnight?


  111. Phil
    No rush but when you have a minute what do you think about these two long term plays DCM and TEO?  Seem like both very good long term values to me.  Also surprised DMND is getting so badly hammered.  Expect it to drop a little but not 7%.  Should we DD on DMND?


  112. AAPL/iflan and Phil – iflan, thx for ur note yest re "conservative" bull put spreads.  Re my related post, I'm out of all positions in "this" port for the week.  Made my 1.5% (absolute return on port value) – and am just stuck with some way OTM puts that formed the cheap underpinning of the written puts.  This as a small part of my trades.  My main trade(s) – and hence my question – were DITM bull call spreads.  I'm looking to same for next week and curious why or why not you or others wouldn't open less risky BCS positions – than even fairly low risk bull put spreads.
    For ex, if I can get into the next week AAPL 575/580 bull call spread for even the non-bargain price of, say, $4.20 – why wouldn't I do that in volume?  70-80 cents seems like small change – but it's a 15-%-20% return on trade risk – and I open enough to make my 1.5%-2% for the week on total port value – or do it combo with another (i like DITM bull call spreads on very recent and justified gainers too – KORS has been paying well)
    Other than being overconfident that AAPL won't see 580 next week – versus the more lucrative but "riskier" (and more margin intensive) bull put spreads, what am I missing here?  (I do like the straight decay of the sold puts – esp over the weekend, but still, the call spread seems cleaner.)
    Thanks in advance PD, iflan or all.


  113. Phil and sage – in the coal space good idea to consider also CLD, they are third biggest US coal company, a spin off from RIO, and a buyout candidate.  


  114. NF**X,
     
    I thought a bull call spread and bull put spread have similar risk reward profiles, so don't understand why you prefer the DITM Bull call spread to the OTM bull put spread.  Right now it  TOS quotes next weeks 575/580 bull call spread as a debit of $4.20 with max gain of 0.80 cents while the 580/575 bull put spread shows a credit of 0.80 cents and margin of  $4.20.  Aren't they equivalent?  Also, with a bull call spread, one has to pay commissions to enter and exit, whereas a bull put spread, one pays commissions to enter but if it remains OTM, can let it expire worthless and save on the second set of commissions.
     
    thanks,


  115. TASR – yeah, PD, I'm in there with ya.  But whats ur take on SWHC?  With Walther in their arsenal (pun – lol) and the massive growth in the concealed weapons market, they seem super cheap and solid.  However, I know nothing about them at the time of this post on the investment side – but have you seen the marketing these days for small guns – esp to women?  They even come in colors, man.  Yow.


  116. Hard to believe that we have going sideways for over 10 years now…

    http://www.bespokeinvest.com/thinkbig/2012/3/22/sp-500-and-nasdaq-composite-long-term-price-charts.html

    And I don't see how we break the highs soon! Will the last 5 years repeat themselves?


  117. what's up with Bidu?  Getting tempted to short that one


  118. zerox/bolognese improvements
     
    It can vary from good to incredibly lousy depending on whether you use fresh tomatoes,  canned tomatoes, tomato paste, tomato sauce from a jar, and how you balance the amounts of salt, pepper, orgegano, garlic, etc., though it is not very complex, I admit. Like Phil I never make anything exactly the same,because it depends what ingredients are lying around or needing to be used up. I like to mix a bit of Parmesan cheese into the sauce, though.


  119. Congress can't insider trade anymore!!!
    sell PCLN and CMG!!!
     
    FU congress!!!


  120. Hey STJ Bernanke just showed the S&P chart you've just highlighted…he cant believe it either!


  121. Chart / Kustomz – If we can extrapolate (it's scientific, trust me) then it would make sense to buy SPX puts at around 800 in 2014 as we will be back there again!


  122. DCM/Russell – Japan's a really tough market.  Keep in mind, this is where they are WITH massive stimulus.  I just don't see growth and I'm sure they had a big infrastructure bill after the quake so I'd certainly wait until their next full-year earnings report to see how they were affected in the very least.  

    DMND/$25KP – Yes, our goal was to buy 6 more June $22.50s for $2.50 and they just hit $2.55 so close enough (it's not an exact science). 

    On TEO, I don't know WHAT is going on in Argentina but they already have a 50% market share so, again, where's the growth going to come from?  At least TEO has a good region and a very nice dividend (12%) so, if you can buy them for $18.97 and sell the Oct $17.50 calls for $2, that's a reasonable .50 premium, which is almost the .55 quarterly dividend so no harm if called away and you can also sell the $17.50 puts for $1.50 and that puts you in for net $15.47/16.49, which is a nice way to establish a position there.  

    AAPL/NF – There's a reason they are at $4.20, there's a 20% chance (roughly) that AAPL fails $575.  I don't know why traders like to believe they are smarter than the odds – you may as well go to the track and make the same assumption.  The only advantage you have in trades like this is your ability to take a less than full loss but, if you're not the kind of person that knows when to do that, then the odds are against you because one miss wipes out 5 wins so your real bet is that you can play AAPL not to fall 4% in a week 6 consecutive times before you lose once and then you will make .60 (+$4.80, -$4.20).  If at any time you have bad luck before your 6 consecutive wins – you are then in a hole and will need 10 or 15 or 20 consecutive wins before you get out.  I know – maybe you can double down, right?  Then if you lose that, you'll need 20 or 30 or 40 consecutive wins to get out of the double hole….  That's what I don't like about those trades – it's Russian Roulette – eventually, you'll blow your brains out.  


  123. AAPL/      No trades today.  If I do a weekly option play it will be tomorrow, and on the next weeklies.  And why not a  next weekly BCS 575/580?   Because AAPL might pull back to 575 by next week.  Not likely, but possible.  I'd rather sell some puts or do a bull put spread below the 570 number.  I don't think they will pull back below 570.  We'll see what tomorrow brings.  If AAPL stays around 600 tomorrow I'll feel safer doing a weekly play.  And , if it pulls back some then we can find a better play, at a lower put strike.   I'm gone for the day .  Good luck!


  124. P-Bars to IWM 83.02, fwiw !!


  125. "Conservative" AAPL Spreads – or even next week 660/640 bear call spread.  Tho I think it's highly unlikely AAPL goes 640 next week, I don't much like being in front of the train.  100 of those, for example, pays well in both ROR terms and even better on ROP terms.  Just learnin' and thinkin' – thanks for indulging me.  Back to my basic cave.


  126. Big Screen/PD - Oh – and PD – I'm all in on the 82 Mitsubishi – it'll be in our mini-media room (seats 6-10) and, frankly, with surround sound, even being just 5-7 feet from such a big DLP screen looks fantastic.  Nice small replication of imeersive theater experience.   Can't sit that close with a projector.


  127. Greeno- nice. lol.


  128. CLD/Jerconn – Until nat gas comes back, coal isn't going to be a very exciting play….

    Whatever's around/JMM – That's the secret!  

    S&P puts/StJ – You can short Berkshire if that happens as Buffett sold about $5Bn in short 900 puts!  

    Media Room/NF – Sounds nice.  Gotta get the seats with the cup-holders!  

    79.98 on the Dollar – not a good close if it breaks up.  


  129. JRW – that this the PP median for the day, and I don't see them in TOS.


  130. Really tired of hearing CNBC talk about that Piper MF and his $1000 PCLN target in 2 years!
     
    FU CNBC!!!


  131. /ES did not hold 1393, but SPX is holding 1390/1.  Gonna be close.


  132. Phil/LULU
    Novice question, but should be informative for all newbies. On tuesday, I bought several Apr80 calls at the low of the day LULU 72.05 @ 1.14. (option traded at highs of 1.61 on Monday and 1.90 ??? on Friday) Yesterday, the stock traded 73.32-74.57 and the options were trading at or below my cost.  Today, LULU reported a beat on earnings and the stock "whip sawed" to a low of 70.95 and began to soar upward for a high today, so far at 75.92…………… the option however, has been lucky to trade not much beyond my cost basis of 1.14 when I purchased it 2 days ago when the stock was at 72.05….. Is this dramatic change due to March expiration… why such a big adjustment ????  Thank's…    


  133. acobra – VIX has increased a bit, and I am sure the volatility of the April Option was high(er), and thus they have luckily held.  I would get out now while you can, b'c if volatility soars, and the stock goes down, those will lose fast.  The stock is going to need to rocket up for those to be a winner.  JMHO.


  134. WEll, I see they are a winner….so take them off and be happy for 30%.


  135. AAPL weekly DITM Bull Call Spread(s) – Gotcha.  So the danger is exacerbated by the lack of any time to roll or fix such a short term spread?   Still learning.  On a longer timeframe BCS, then, ATM-ish or ITM-ish, the "uncertainty" in looking further out is offset some by much greater flexibility?  I've had my 12 weeks of lucky runs I guess – not just AAPL – on these things.  Maybe I've exceeded my limit on same and basic asks here.  Thanks.  


  136. Pharm,
    Thank you for the PLX March $5 put suggestion. They expired worthless for a nice profit. Do you have an opinion about another round of PLX puts?


  137. Pharmboy 
     
    What do you think the chances of Watson buying Actavis?  Any trades?
    Is Watson poised to grab Actavis?
    http://www.fiercepharma.com/story/watson-poised-grab-actavis/2012-03-22
     


  138. Oil (/CL) spiking into 2:35 NYMEX close ($105.40) – yesterday it was $107.50 at the same time and then they ran into a spot of bad luck but now we head into the weekend so no sure things but not a bad short at $105.50 if the line holds.  

    LULU/Acobra – The option was pricing in the possibility that LULU would jump 10% on earnings.  Now earnings have passed and the possibility is no longer there.  That's why my play on them yesterday was to exploit what we call the "volatility crush" after earnings by selling the $75 calls for $3.30, which opened this morning at .55, against the Sept $72.50/82.50 bull call spread at $4.40 which is, of course, still around the same at $4.70.   I know you may have heard this before but we like to SELL premium to suckers who think they can beat the market.  That LULU bet was net $1.10 and jumped to $4.15 in a day (up 270%).  Even now, with LULU back at $76.18 (up $2 from yesterday) and the April calls back at $3.60, the spread is still $1.10 and there are 5 months left to roll the short calls for a nice profit.  Isn't that more relaxing than buying premium all the time and needing big moves to get a win?  

    Luck/NF – It's been a one-way market so, if you've been playing it long, then was easy to get consecutive wins.  Just be aware that any stock can lose any time and don't over-commit and don't sell positions you won't be happy to own.  As you know, if I want to play AAPL bullish long-term, then I just sell the 2014 $450 puts for $48.  It's a net $402 entry, which I'm happy with and, in theory, any month that AAPL doesn't make 1/24th progress towards $402 (down $200), I'll be ahead.  So the bet is more or less 24 bets that AAPL doesn't fall $8 in a month and any month they are flat or go up from $600, I should make 1/24th ($2) on the short put, which is 3x .80 anyway.  So it's just making your bet one time at $402, rather than trying to make 80 cents 60 times.  It saves me a ton of fees not to mention a lot of hassle.   See the logic?  


  139. WPI are great, and I advocated for them at $30.  I think they are getting big for their britches, as TEVA has a lower P/E (for now due to Copaxone).   I would wait for WPI to fall back.  As for TEVA, call buying in here is a good deal, as they are bouncing off the 200d MA.   Selling May 40 Ps is also good for a few.

     

    PLX – well the trade was the Aprils a while ago, so the BCS May $5/7.5 is the way to play now.  I have stock, and am trying to buy back my Apr puts, as well as I have the BCS noted above.


  140. Total collapse in TVIX. One of the craziest moves I've ever witnessed.


  141. When you chart the TVIX and VXX for three months, they track nicely then completely divorce today.  Other than the fact that I bought some earlier this week in my IRA for short-term protection, is there any rational explanation?


  142. TEVA calendar would be ok as well for a low risk option (against the grain of selling premium though).  April/May $45 calls.  The 42.5/45 April BCS is good to go as well.  so many choices.


  143. Actually selling the May puts with the calendar is a 13c credit. 


  144. MRM – I have been following TVIX since its inception and have never seen this.  This is just insane to me.   


  145. Pharm,
    What about the Aug $5 puts on PLX for $.85?


  146. mrm reverse split maybe..I dont see any news.


  147. FDA is May, and I don't want to go out that far until we get past the FDA.  I would rather do the BCS.  I love the company, technology, etc, but things are just too unpredictable right now with those jokesters.  Otherwise, sell the May 7.5 Ps, and if they rise into the event, buy them back.


  148. Are you long JRW?


  149. TVIX/Kustomz – That's why I don't play those crazy things.  VXX bad enough.   You and Mr. M may be the only humans actually playing it.  Oh wait – there's a note that they stopped creating new units – maybe the ETF is blowing up!  I'd love to know the story because NOW they look kind of interesting but maybe they are liquidating and there's no point.  

    TEVA/Pharm – I like them long-term.  


  150. Phil, what is the explanation for the VIX up 8% while the TVIX is down 25%?
    Thanks in advance!


  151. BHI being beat, drawn and quartered.


  152. Thank you for pointing out the Nasdaq on that chart Phil.  I bought the QQQ $68 puts at .75 and .65 and now getting out at $1.20.  Thanks to you I've learned how to make those momentum trades on my own and I really appreciate it.  


  153. TVIX - just for fun I bought 1000 shares at 10.50 thinking they might find and fix the computer bug before the close.  Won't hold overnight though, stop at 10.35.  Call me crazy but in this market it could be 14 again by EOD!


  154. Luck – I got ya, PD.  Thanks for working with me.  The thing I've tried to do, tho, is not just play long.   Some bear call spreads too (this week, eg, had NFLX capped at $125 – cashed out today.)  I do see the logic.  I just have a hard time – with AAPL or anything really – being long-term bullish.  Or long-term one-direction.  As you've put it, trying to be right once versus 60 times is surely more attractive.  So perhaps these spreads aren't the best way to grow this port 1%-2% each week, but I am very much attracted to the idea of having to be right over only 3-5 days versus a year or more.   Even if I have to do it a lot – with the caveat that some weeks I simply don't have to trade at all. 


  155. Im not in TVIX but I do watch it. Im having a hard enough time adjusting my exposure in TZA.
    Stopped creating new units explains it
    http://seekingalpha.com/article/428511-tvix-an-emerging-arbitrage-opportunity
     


  156. Here's more info on TVIX and why it moves the way it does:
     

    http://seekingalpha.com/article/428511-tvix-an-emerging-arbitrage-opportunity


  157. TVIX - stopped out, bet it opens at 14 tomorrow 8)


  158. 12:56 PM European shares close sharply lower – their 3rd straight decline – gapping down on the open on poor Chinese data, and falling further on the eurozone's own weak PMI. Stoxx 50 -1.4%, Germany-1.3%, France -1.6%, Italy -1.7%, Spain -1.5%, U.K. -0.9%. Euro-0.2% to $1.3188. 

    1:00 PM On the hour: Dow -0.44%. 10-yr +0.17%. Euro -0.2% vs. dollar. Crude -2.21% to $104.89. Gold -0.69% to $1638.85.

    1:13 PM The Treasury sells $13B in reopened 10-year TIPS at -0.089% vs. +0.887 at last May's auction. Bid-to-cover ratio was 2.82 vs. 2.66 last time; indirect bidders take 40.4% vs. 40.7%. Direct bidders take 21.1% vs. 3.1%, with primary dealers making up the rest.

    2:00 PM On the hour: Dow -0.54%. 10-yr +0.13%. Euro -0.26% vs. dollar. Crude -2.05% to $105.08. Gold -0.51% to $1641.85.

    3:00 PM On the hour: Dow -0.67%. 10-yr +0.13%. Euro -0.21% vs. dollar. Crude -1.68% to $105.47. Gold -0.48% to $1642.35.

    Income inequality, which undermines social mobility and therefore harms national growth, has three major causes, write Roger Altman in the FT. These are the rise of IT, "a shortage of workers with the skills to adapt to this change," and "weak rates of secondary school and university completion." Altman's solutions: raise education levels and taxes. 

    Hennion & Walsh's Kevin Mahn highlights the common complaint that core inflation readings such as CPI and PPI understate the prices that really hit consumers – food and energy – as a reason toload up on some inflation hedges. Despite the moderate inflation readings and a slowdown in China's economy, worldwide demographic trends point to more price pressure on select commodities in the agriculture and energy sector. 

    Treasury prices add to gains following the TIPS auction at which 10-year inflation-protected paper was sold for a negative yield for only the 2nd time. The 10-year note (very much not inflation-protected) is off 3.4 bps to 2.26%. The long bond -2.8 bps to 3.36%.

    While municipal bonds might look cheaper than they did two weeks ago, they’re still too rich, MMD says in advising new money to stay on the sidelines until relative value becomes more compelling and the recent swoon in Treasurys abates. The muni bond ETF (MUB) has pulled back more than 5% over the past month. (also

    The percentage of bulls dropped 3.2 points to 42.4% in theAAII Investor Sentiment Survey for the week ended March 21. Most of those leaving the bullish camp turned neutral as the bear group rose just 0.6 points to 27.8%.

    The Fed's actions were not responsible for the housing bubble, says Ben Bernanke in lecture #2 on the history of the Fed that is instead turning into a defense of a generation of easy money policies. Today's talk also includes a pat on the back for Greenspan for achieving economic stability. "Depends on what the meaning of 'stability' is," snipes Caroline Baum. 

    Samllcap investors should beware the just-passed JOBS Act, whose new rules on crowdfunding may make ripoffs easier. The legislation would let firms generating less than $1B in revenue raise more money from multiple investors without SEC registration, exempt accountants from attesting to internal controls of the firm it audits, or disclosing conflicts of interest with brokers who provide research.

    While the IPO market and the VCs are playing a game that might "make a small number of people extremely rich" and create a "very small number of hugely successful" companies, writes Felix Salmon, it's not a game that's good for the founders and "for healthy, long-lived companies," and it's not "good for the economy as a whole."

    Italy and Spain are "too big to be saved," says a senior German finance official, making the argument that tossing around big numbers regarding the EU firewall is "just a show." Germany is resisting worldwide pressure to boost the size of the permanent rescue fund, not wanting to be on the hook for more, and saying it reduces incentives for governments to cut their debt.

    Have gun stocks, will travel? The runup in weapon makers Sturm Ruger (RGR +13.1%) and Smith & Wesson (SWHC +12.8%) could just be getting started as the industry sees an ongoing boom in demand. In January, background checks for gun permits rose 17.3% Y/Y – marking the 20th consecutive month of increases. Recent Supreme Court decisions and the reappearance of guns in Wal-Mart have helped stoked sales numbers over the last year. RGR +43.1% YTD, SWHC +77.5%.

    China Unicom (CHU -2.6%) heads lower after reporting a 2011 profit that missed expectations, as 3G and broadband subscriber growth fails to offset declining 2G subs and growing handset subsidy costs. Unicom, which plans to spend CNY100B ($15.9B) in 2012 capex, now also to contend with a loss of Chinese iPhone exclusivity, as rival China Telecom (CHAbegins selling the 4S. (earlier)

    This is why BIDU was up:  Bemoaning average download speeds that are well below the global average, the Chinese government is calling for a new national broadband strategy. A major broadband push by the government would have an impact on top ISPs CHA and CHU, whose broadband investment levels have been criticized, and perhaps alsomerging online video sites YOKU and TUDO.

    Canadian National Railway (CNI +0.1%plans to buy 161 new locomotives to handle the increase in rail traffic that it expects to see. The latest data from the AAR shows that combined North American railroad volume in 2012 is down 0.4% Y/Y, while traffic and container volume is up 4.3%.

    Chipotle (CMG +0.4%) ekes out a small gain in a weak market on positive comments out of Bernstein this morning. Bernstein says the company is posting solid revenue growth, and can drive comps without a material marketing spend through menu news and its loyalty program. The firm reiterates its Outperform rating and raises its price target to $475 from $450. 

    Las Vegas Sands (LVS +1.4%) moves up after receiving approval from Singapore regulators for the first set of licenses to tow junket operators. JP Morgan views this an unexpected positive for the casino operator, and says it will continue to drive upside within the VIP gaming segment.



  159. The Street has decided it's not happy with Diamond Foods' (
    DMND -7.1%) dividend-suspending, interest rate-hiking forebearance agreement after all. Though the agreement results in a relatively modest increase to Diamond's interest expenses, the fact the company needed to restructure so quickly is likely heightening fears about its liquidity situation, and perhaps also its negotiating power with P-E investors.

    Sonic (SONC -5.3%) slips as its FQ2 revenue disappoints. Earnings fell 61% on weak Y/Y comps, as the operator of quick- service drive-in restaurants posted a one-time debt-related gain in the year ago period.

    Rovio's Angry Birds Space has surged to the top of the App Store's bestseller list in the U.S. and 27 other countries, just hours after being released. Rovio, which has managed to create a global consumer brand out of its wildly popular egg-retrieval games, has partnered with Wal-MartNASA, and others to promote Angry Birds Space's launch. It's the first of 5 franchise games due this year.

    Where's our AAPL news?  Used to be every time we'd have AAPL stories at the bottom of news.  Now they have gone and that's not good for AAPL bulls if people have lost interest!  


  160. kustomz, TVIX - interesting article, thanks, except that it called me an 'uninformed speculator'!


  161. http://blogs.marketwatch.com/thetell/2012/03/22/the-coming-hunger-games-short-squeeze/
    Interesting article concerning this weekend's blockbuster, "The Hunger Games."  This is going to be big with a teen audience.  I'm staying long IMAX, considering RGC, in part because of a 6% dividend.  Anyone no much about them?


  162. Pharm/
    Thanks…. Will do… this is the first time I've seen such a dramatic "down draft"….. A trader bought 12,000 contracts on on Monday at 1.61 ….. wonder how that's going…………….. LOL  


  163. Capt. / Long

    No, I just got out of my short from 3:00; drifting market !!


  164. TVIX/IZega – I think the persistently low VIX may have broken the ETF.  Something bad happened, that's for sure.  

    You're welcome Dennis – congrats!  

    AAPL/NF – And, of course, avoid earnings weeks or announcement weeks like the plague!  

    TVIX/MrM – Another reason why I don't play anything that doesn't have options.  If a stock or ETF has options, it generally indicates it trades withe enough volume to be relatively stable over time and, of course, that there are people willing to take both sides of the bet.  Anything that trades without options that's not new should at least be suspect.  

    RGC/Rev – I don't follow them but they seem a bit pricey for a theater chain.   It's not like they made the movie.  IMAX, on the other hand, I love long-term but they are not cheap anymore.  

    Yawner into the close so far.  Dow volume 75M at 3:35, Dollar 79.95, oil $105.49, gold $1,642.  VIX $16 though, that's fun!  


  165. acobra65/12,000 contracts at $1.61, I don't think we need to worry about "the trader", he/she probably trade with other people's money.
     


  166. $5KP – 5 DMND May $24 calls at $1.35.  


  167. Senator Dick Durbin (D) Illinois is this weeks congressional idiot.  He is looking for attention so he now wants a hearing to examine bounties in the NFL.
     
    The NFL showed they're more than capable of taking care of any problems, you'd think he'd have more important things to do like taking a payoff from an oil company.


  168. Next week is the end of the quarter.  Buy the dip now and get ready for a week of paint the tape?  Then get out before April Fools Day?


  169. Phil/ SONC
    BCS JUN 5/7.5 and sell Put 5 for 1.70 (2.6-.5-.5) on a 2.5 spread in the money?
    Or wait a bit longer for the downgrade police…?


  170. FU PCLN and CMG!!!


  171. Is TVIX out of parity where it pays to short it then?  Can it go to zero?  Or does it have to come back up?


  172. Markets and AUD/USD tracking closely..1.0381 may be tough resistance..just broke it (that was fast work) and Asia loves AUD so we may get a pop tomara.


  173. DCM/Russell:  Whats killing DCM is what will kill any wireless telecom:  Lack of iPhones and iPads.    There competitors Softbank and KDDI have the AAPL products and that is causing DCM to go out of favor.
     
    But it IS the largest wireless company in Japan with 60 million subscribers with a decent balance sheet, good dividend yield, and stable cash flows.  Over 60% is owned by the parent company NTT, and a large share of NTT is owned by the Japanese Ministry of Finance.  So consider it partly "state-owned".    I believe its a good value here, and if the management would come to their senses and sign a deal with AAPL, there is your catalyst for price appreciation. 
     
    Phil gave me a buy write play of selling the Oct 2012 15 put/calls for $2.70 which puts you in the stock net 14.25 which was around the 2009 bottom.    Not as good as the awesome MTU and TM plays Phil threw up a few months ago, but a nice conservative 15% profit in 6 months plus a 4.2% divvy.


  174. Phar/LULU
    Just sold them for 1.61 for 41%…. thanks for the tip…… I do believe the stock will go to 80 but for now I won't be a pig… Just wish I would have taken another position early this morning near .13 (the low) ….. Shoulda… woulda…. coulda…. LOL


  175. VXX down 5% in 30 minutes?!?!


  176. rustle123/NFL  
     
    I agree, our law makers should be working on more important matters, though the thought of bringing criminal charges to those who paid and got paid to f*ck up other players, despite NFL penalties, is the right thing to do…..


  177. SONC/ my mistake PUT strike 7.5 not 5…


  178. For those of you who think Occupy Wall Street was a passing fad – here's photos from today's march.  

    Not to be outdone, Portugal on strike.  

    And, very timely if the above depresses you – A Primer for those Considering Expatriation.  

    The TVIX DEBACLE by ZHedge!  

    Goldman getting very desperate – now they are trying to get people to dump the Dollar to goose the market.  I have a feeling they are going to have a crap quarter if we don't close near the highs.  

    Click to enlarge:

    HFT Has Disconnected Commodities From Fundamentals

    Got Global Warming?  From from March 9 to March 19, more than 4,000 heat records were set in the U.S


  179. Now I know how Mr. Mocha feels… my VXX calls plummetting for no known reason in the last hour… sheesh, I sure can pick em.


  180. Phil, when you say
    "there's a 20% chance (roughly) that AAPL fails $575." 
    How do you know/calculate that?


  181. NFL/1020
     
    This was overblown, hearing from veterans this is an old practice and there were no illegal hits used.  No one was going to get fined 20,000 for a $500 reward.  And Roger Gidell sent a pretty clear message, though I think he was more pissed that Greg Williams lied to him when asked directly.


  182. TVIX – Marketwatch quoted Jon Najarian saying that a big hedge fund decided to liquidate today.


  183. There is something broken with all these VIX instruments – look at TVIX (thanks for the article Rustle) and VXX today. I am adding these to the list of daytrading only stocks with TBT and the other 3x ETF. These VIX instruments are completely unpredictable and seem counter-intuitive to me. Got to find a better way to hedge!


  184. And besides I believe there are now some 30 or more ETF or ETN trading around VIX futures. It's becoming a crowded trade and we know what happens to lemmings at the end!


  185. Buy the Dip/Rev – Cash for me.  I think all you'll be buying in this market is what GS is dumping.  

    Now PEET is making new highs and KKD says they are getting into the coffee business.  And why not, it seems to instantly give you 30+ p/e ratios as if the World just discovered coffee (or maybe they just discovered that they can go out and pay $3 a cup instead of paying .30 at home).  

    SONC/Lionel – I'd wait to see if they hold the 50 dma at $7.50 as the 200 dma is at $8 so they're not going to take off on you, most likely and maybe they get cheaper on downgrades or a bad overall market.  

    TVIX/Rustle – I don't know but I wouldn't touch 'em.  

    VXX/Weasle – It's a joke.  As long as you realize that and don't take it seriously, it won't bother you.  

    20%/Msf – Because you're being paid .80 to $4.20, which is about 20%.  That's all options are, they are odds bets on an event taking place at a certain time, in this case you are betting $4.20 that AAPL is at least .80 higher than $75 next Friday.  If you are right, you can make up to .80 (19%) and, if you are wrong, you can lose up to $4.20 so it's a 1:5.25 bet indicating there's a 1/5.25 chance that you can lose but, of course, like any good bet, the odds are usually stacked against you so it's more likely 1/5 – if you are lucky!  

    Just like a horse race or a football spread, there are many intelligent people (and many dummies) some with inside information and some with statistical models and some with "systems" that are betting on both sides and generally the bets will settle down somewhere around the true odds.  No one is paying you 1:5.25 for a 1:10 possibility of failure – just as you, hopefully, don't risk $4.20 to make .80 on a coin flip.  

    EDZ close to breaking up at $13.16 tomorrow – that will make things interesting!  EEM already failed their 50 dma so very likely EDZ pops theirs.  


  186. STJ If you find a hedge that acutally works, please let us know. Other than that I plan to limit my hedge purchases to the local plant nursery.


  187. rustle123 – Not sure about what "veterans" say, but I would guess Darryl Stingley would have felt different….
     
    Where do you draw the line?


  188. yeah…very weird VXX action.  Did anyone notice it on actual premium on contracts?  Or was this some VXX specific thing?



  189. NFL/1020
     
    It's a thin line there because at one point, they are doing what they are supposed to do anyway.  Hit a guy legally as hard as they can.  The real incentive is having a good hit of yours on ESPN highlights.  So I don't know if a bounty really gave that much incentive anyway.  If they were using illegal tactics and trying to cut someone's knees because of the bounty that's different.  BTW, most of the real illegal hits happen in a pile.  Guys are having fingers broken, ankles twisted, balls squeezed and it used to be much worse back in the day.
     
    Osi Umenyiora lives around the corner from me and I see him on occasion, I'll have to ask him what he thinks.
     


  190. Hedge / Sparky – Got to trim my hedges as well…

    Green-fingered Gavin Hogg who has turned the hedge outside his kitchen window into a herd of elephants. The unique topiary hedge has become a tourist attraction outside his country mansion near Brecon, South Wales.


  191. SONC/
    Thanks Phil for your input.


  192. St J   With my timing, it's a good thing that I didn't go in for the "elephant sized" hedge!


  193. Just in case you need some help trimming your hedges to a smaller size Sparky….


  194. Putting the CAT out
     
    Looks like we might see  some more downwards movement for CAT. I bought the 2013 $80 puts the other day for $3.43 and the  last sale on them was $3.90, so a quick 15% already, and more than likely more to come. If there is any thing I have learned in the Hell's Kitchen of Options it is that:
     
    1. Volatility is all that counts.  Sell premium high,  buy back low is the name of the game.
     
    2. Patience is definitely a  virtue and you can't lose much money sitting on a pile of cash.
     
    3. No one ever went broke underestimating the stupidity of the market.


  195. StJ/ Great picture


  196. Global Warming vs. "global warming"
    I'm sure I'll regret bringing this up… but here goes.
    There clearly is climate change on our planet… always has been and always will be.  The question is; how much does human-kind impact the change and what can we do about it?
     I'm all for lots of research into the subject… but the Al Gore posse clearly has manipulated the science to suit a political and financial goal.  We know this for certain with the leaked emails.  The "nothing to see here" crowd on the other side is just as bad… But only one side is trying to use this issue to construct a whole new global tax collection mechanism…. Payable to bankers.  I for one call bullsh!t.
    The real problem is that they have refocused peoples attention away from very real problems with pollution… But who wants to stop a few of their friends from polluting when you can convince self-loathing humans that every time they exhale they are destroying the planet… I'm sick to death of the endless blame transfer away from big polluting, manipulating cheating corporations and on to the backs of average folks exhaling and driving to work.
    When do we point the finger at the people who ACTUALLY threaten life and liberty?


  197. Phil – I am looking at opening a new position on TNA by selling May calls. My premise is that the risk is greater to the downside (but I could be wrong), therefore, what strike would you suggest right now? Thanks!


  198. DB/ Zerohedge article on Deutsche Bank move to avoid Dodd-Frank Act new capital requirements
    http://www.zerohedge.com/news/deutsche-outmaneuvers-dodd-how-germanys-biggest-bank-took-fed-ride
    It looks like DB USA, and other undercapitalized foreign banks subsidiaries will have to dump assets.
    That could be the trigger for a long overdue market correction.


  199. JMM I agree on CAT options.
    I followed Phil's puts list from last week, picking 5 I liked buying on Monday. CAT was one. Buying the May $95s for 1.05. Sold today for 2.15. I would have to forfeit my PSW membership if I had not cashed 100% in 4 days. The other 4 are net neutral, but I have months to go on those.
     
    Thanks very much Phil. 


  200. TVIX/Phil Now one is supposed to use UVXY instead of TVIX.


  201. Phil and stjeanluc/VXX, TVIX's move was very scary.  Should I take my VXX trade(Apr. $19/23 BCS, sold Apr. 21 Put – currently down about 4K) off the table?  TIA.


  202. peedlew99/environment
     

    There is always a human tendency to exaggerate. If you look at the cities of the industrial revolution in the nineteenth century with black buildings, open sewers, perpetual fog, canals and rivers choked with refuse and industrial effluent, rampant TB, cholera, etc. and look at those cities today with the buildings all cleaned up, flush toilets, parks and flowers, and mostly healthy people, then you can hardly deny that environmentalism has done a lot to make the world a better place. On the other hand there is limited proof that global warming is caused by humans. My thinking is that generally it does no harm to err on the side of safety, but the US does tend to have a tendency to go overboard. In the hotel swimming pool I was in today there is a list of rules including "Do not drink the water".


  203. Mike Luckovich: Etch A Sketch :-)


  204. Diamond – Thats funny….but not as funny as the current state of the republican party…. :)


  205. Don't drink pool water?  That's like warning that coffee is hot!
    Pollution is better now than the 19th century… but there are plenty of compelling environmental issues well worth our attention.  But global warming… we don't even know if we have the power to reverse it!  regardless of the cause.
     
    But people live in fear of the weather while at the same time eating genetically altered food and gallons of high fructose corn syrup.


  206. NYSE/Phil – so how does the NYSE record an up day when EVERY sector is down?


  207. Phil
    Good afternoon
    About 9 mons ago, you espoused the benefits of participating in AAPL BCS’s rather thn owning the stock, because of lower up front cost, but also because AAPL did not pay you to own the stock-- ie no dividend!
    Well, now with the 1.8% dividend announced and if they carry through with it, do you have better reason to own the stock vs calls?
    For example, hypothetically, if one owned 10,000 shares of AAPL, it would equate to $106,000 per year in income.
    For a family of one or two, that’s enough to live on if the family has no mortgage, $400 car payments per month, $35 electricity costs for an electric car and a not too extravagant lifestyle….they could still save $30,000, after paying the tax on dividend income.
    Compared to the higher dividend payers like AT&T etc, one gets to take part in the growth of the undelying too!
    Your thoughts?


  208. rustle123/NFL
     
    As with hockey, I enjoy a teeth jarring hit and I do not have a problem with a player receiving some $$$ after a great hit/play.
     
    It is the premeditated hit that includes a cash incentive and the intent to harm another player that gets me…..
     
    http://en.wikipedia.org/wiki/Violence_in_ice_hockey
     
     
     
     
     
    If


  209. St J,
    Thanks for the offer. That contraption could completely eliminate my hedges!


  210. Ed Stein


  211. Maya/AAPL dividend,
    Regarding your hypothetical scenario above, if I could afford to buy 10,000 shares of AAPL, I would not be on this forum anymore – you would find me on a Caribbean island or hiking the Sierras, LOL!
    Just kidding, of course, wouldn’t want to miss the political rants!


  212. Week Ending 17March2012: Rail Is Continuing to Send Cautionary Economic Signals
    Eleven of the 20 carload commodity groups posted increases compared with the same week in 2011, with petroleum products, up 32 percent; motor vehicles and equipment, up 15.5 percent, and stone, clay and glass products, up 11.3 percent. The groups showing a significant decrease in weekly traffic included farm products excluding grain, down 21.9 percent, and coal, down 14.7 percent. 
    For now, cumulative tonnage is negative y/o/ytd. Coal shipment declines still a major factor but now some farm commodities and intermodal trailers exibiting weakness.
    The caution lights are flashing.
    http://econintersect.com/b2evolution/blog1.php/2012/03/22/week-ending-10march2012-rail-is-continuing-to-send-cautionary-economic-signals


  213. Phil – Looking for thoughts/feedback on RadioShack.  RSH closed near the 52wk low at 6.46.  Might be hard to get, but selling Jan 14 $7 puts and calls can raise $4 for net entry of $2.46/4.73.   Dividend is .50/year. 
    This is for a long-term income/IRA portfolio. 
    Thanks.


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    Global warming:
    Peedlew,  I sort of agree with your point. The leftist wing nut extremists have shot their wad and may have irreparable credibility problems. While there is ample evidence of rising temps and there is credible evidence leading to man's activities as a culprit there is serious, substantial and legitimate scientific disagreement on the magnitude of effects, if any especially as it relates to the so-called feedback multipliers.
    Of course, the alarmists on all sides have an agenda particularly the zealots.
    Far better, as you suggest,  to focus attention on mitigating pollution. Much progress has been made but it will be an ongoing effort to balance human economic activity and environmental impact.
    On the other hand, knee jerk accusations aimed at "corporate polluters" is disingenuous. To paraphrase, Pogo- "they is us".  The reality is we all love pollution – at least enough to allow continued romps in our Land Rovers and Beemers and Lears and Citations along with sufficient fossil fuel burning to heat/cool our  multi-thousands sq. ft. domiciles and power our boats and jet skis and make snow for the slopes.
    Show me the evidence of intentional air and water quality law breaking and I will be the first to tie the noose. Otherwise, spare the moralizing. It's all about balance.


  215. pstas,
    my intention wasn't to moralize… sorry if it sounded so.  I suppose blanket statements about evil corporate scumbags sounds a tad reactionary.  For the record, I admire many many corps… I even sometimes try to invest in companies I feel "do the right thing"…
     
    but I don't think "they is us".  Those with rovers and particularly lears and citations are a very very small part of america.  Yes, I have a big house and a nice car, but I could never make my money off the back of slave labor, or putting people to work in toxic situations… There is a segment of the elite, not just in america, but the world, that are far too willing to sell out people and the environment.  The examples are too numerous to list… but it is rarely small business people guilty of these things.  It is always a company with deep ties in the government that can have rules bent and broken in their favor.
     
    I grew up in Napa on a small winery.  We had several outdoor tanks, mostly used at harvest to hold the crushed grapes before they were pressed.  One day the EPA dropped in and ruled that we had to catch and treat the rain water that dripped off these tanks.  There was NOTHING on the outside of these tanks that needed to be treated.  Dust?  Doesn't matter.  It cost thousands and thousands to make the required changes.
     
    Cut to: GE makes a nuclear power plant that is so poorly designed it puts millions of people at risk because they store fuel rods on the roof.  Last year one actually blows up.  Does the EPA shut down these plants in the USA?  No.  They simply raise the level of environmental radiation that they decree is "safe".
     
    Big business has so corrupted government that it's now hard to find the good guys… but I think by and large, individuals mean well and MANY actually live well….


  216. Which came first? The chicken or the egg?
    Did business corrupt government or did government corrupt business?


  217. peedle,
    thank you for that example. smaller businesses are eviscerated by government regulation, while large corporations with their tenticles around both parties in this country get away with what they have bought and paid for. pstas, both government and corporations are corrupt and they walked down that path holding hands. 


  218. Hey!…  Where have I heard this before???
     
    http://www.youtube.com/watch?v=LbnzhTmiyec&feature=player_embedded#!
     
     
    :)


  219. Peedle:  "Pollution is better now than in the 19th century."  Which means what?  That 19th centurions polluted more per capita?  Maybe, although they were mostly burning wood, some luckier ones coal, with nary an internal combustion engine in sight.  But there were less than 2 Billion of them — the world population didn't reach 2 Billion until around 1925.  Now it's around 7 billion, headed for [up to] 10.5 Billion by 2050.


  220. Not that I disagree in the slightest with your "corporate polluters" argument.  The faceless, professionally-managed, corporate citizens [according to Citizens United v. Federal Election Commission, No. 08-205] has set us on the road to political and economic ruin.   Sure, corporations will pollute at" all times right up to the maximum permitted by their lawyer's interpretation of current laws and the profitability of doing so — and bribe politicians to make sure current laws say what they need them to say in respect of their particular industry.
     
     But anyone on PSW has heard my running battle with Phil over his notion that a bad "1%" or "0.1%" is ruining the country versus my very sincere belief that it is our multinational, tax-evading, politician-bribing, election-determining "corporate citizens" that have made a mockery of the U.S. democratic system.  
     
    "The ruling, Citizens United v. Federal Election Commission, No. 08-205, overruled two precedents:Austin v. Michigan Chamber of Commerce, a 1990 decision that upheld restrictions on corporate spending to support or oppose political candidates, and McConnell v. Federal Election Commission, a 2003 decision that upheld the part of the Bipartisan Campaign Reform Act of 2002 that restricted campaign spending by corporations and unions." 
     http://www.nytimes.com/2010/01/22/us/politics/22scotus.html?pagewanted=all


  221. Why Apple Will Hit $1,650 by the End of 2015 – Whoa!  Honey, we're selling the house, I'm going to buy a giant pile of the 800/900 leap spreads for $18 each, and early retirement is a done deal.  Any other takers?


  222. TVIX – Reading more about it today, these ultras do provide some interesting / scary scenarios in both decay and premium vacillation.  While on the surface they seem like good leveraged protection for IRAs where you can't or don't trade options, caveat emptor for sure.


  223. No MrM, but do let us know once the house sale closes and you're firmly into those Leaps; I made some pocket change the last time you top-ticked Aapl!


  224. Gold -James Turk gives a good rebuttal to Bernank's comments. And learn a few things too.


  225. Good morning! 

    Asia selling off again (Go EDZ!), down about a point.  Good summary

     

    Asian stock markets were mostly lower Friday with resource and exporter stocks underperforming across the region amid fresh concerns about the global growth outlook, while the Tokyo market struggled due to the yen's recent strength.

    The regional mood was dimmed by losses on Wall Street and European stock markets Thursday, after poor Chinese manufacturing data were followed by disappointing euro-zone manufacturing activity. 

     

    "A lot of the rally in equities this year has been premised on global growth surprises, which have started rolling over, so people are taking profits," said IG Markets institutional dealer Chris Weston in Sydney.

    Janu Chan, economist at St.George, said in a note that despite further positive jobs data from the U.S. Thursday, "the correction in share markets suggests that the recent optimism (about global growth prospects) might have been overdone." 

    It's always funny to see the mainstream analysts finally catch up to us…

    Dollar still over 80 but no damage to our indexes yet.  Oil flat at $105.50, which is to be expected into the weekend, gold $1,644, silver $31.495, copper $3.788, nat gas $2.279 ($2.25 was bouncy) and gasoline $3.33 again.  

    Nikkei sitting right on that 10,000 line (/NKD failed) with 82.87 Yen to the Dollar and if they are going to be upset about being under 83, this is going to be difficult.  Euro was just rejected at $1.32 off a fake pre-EU rally and the Pound failed a run to $1.5825 and is not testing the $1.58 line.  A double failure there will give Europe a bad open and it's not like they had a good day yesterday in the first place.  


  226. RUT (/TF) failing 820 again, we had a run down to 812 yesterday.  Dow (/YM) 13,000 is our other good short line. 

    Wow, does this sound desperate or what?  

    Jim Rogers says the hit that stocks took today over concerns of an economic slowdown in China is actually a good thing. “I’m delighted to see it,” Rogers says. “They need to do that. It’ll be good for China, it’ll be good for the world, and it will present opportunities for all of us. I hope that the Chinese market collapses so I can buy Chinese shares.”


  227. At the close: Dow -0.53% to 13055. S&P -0.67% to 1393. Nasdaq -0.38% to 3064.

    Treasurys: 30-year +0.18%. 10-yr +0.1%. 5-yr +0.09%.

    Commodities: Crude -1.73% to $105.42. Gold -0.49% to $1642.25.

    Currencies: Euro -0.21% vs. dollar. Yen -1.04%. Pound +0.36%.

    Among the day's biggest decliners amid signs of slowing growth in China and Europe are commodity producers. "What you had was continued speculation on the depths of the Chinese slowdown and the uncertainty surrounding the Chinese data," one strategist says. “Both those factors immediately hit materials." X -5.9%NUE-1.4%AKS -2.2%FCX -3.7%AA -2.6%.

    Market recap: Stocks fell broadly as economic concerns over China and Europe overshadowed a better-than-expected jobless claims report. Sectors most exposed to global growth, such as energyand materials, led losers. FedEx's dim outlook added to negative sentiment. Energy commodities and precious metals fell across the board. NYSE decliners topped advancers two to one.

    In light of stocks' three-day slide, did Goldman's call yesterday of a once-in-a-generation opportunity for investors to rotate out of bonds and into stocks turn out to be a contrarian indicator? Doug Kass, for one, thinks Goldman got it wrong, and "might have rung the bell that the market has topped in the near term."

    Today’s WTF headline: Jim Cramer: Economy Set for a Long-Term Bull Run  (CNBC)

    How Wall Street exploits individual investors (CBS News

    The rich versus the seething masses (Reuters)

    Loopholes for Sale: Campaign Contributions by Corporate Tax Dodgers (Citizens for Tax Justice)

    From a JPMorgan trade desk on today's action: "Despite a sea of red, trends on the desk weren't very busy and investors seem more apathetic and bored than outright negative … Shorts were more active (and comfortable) … there was an uptick in downside hedging activity." (via)

    David Gille attempts to explain the collapse in the 2X VIX ETN (TVIX -27.6%) even as the VIX ETF (VXX +2.7%) surges. Unlike ETFs, an ETN in certain instances can have little correlation to the index it is tracking, so selling/buying can drive it far from underlying value. The TVIX premium to NAV got far too high, and now is correcting.

    More on the collapse in TVIX : "The long term expected value of your ETN is zero. If you hold your ETNs as a long term investment, it is likely that you will lose all or a substantial proportion of your investment." That line from the Credit Suisse prospectus is bolded and underlined. Don't say you weren't warned. (h/t Kid Dynamite)

    The Chicago Fed's Charles Evans outlines his "7/3" rule, saying the FOMC should only raise rates if unemployment falls below 7% or core inflation rises above 3%. As his models see neither happening anytime soon, he says more accommodation is clearly appropriate. 

    Fed's Bullard Says Monetary Policy May Be at a Turning PointFederal Reserve Bank of St. Louis President James Bullard said monetary policy may be at a turning point and the Fed should be cautious about stepping up accommodation as the U.S. economy rebounds. 

    "We don't need any more monetary morphine," says Dallas Fed chief Fisher. "The real problem in our country is job creation … and we need to get better fiscal policy to complement what we at the Fed have done." More Fisher juxtaposition of QE and narcotics here.

    Don’t be fooled by the money illusion (Market Watch)

    Weak Recovery, Job Cuts Seen Ahead Of French Election. France will see a slow economic recovery and unemployment will keep rising until the middle of the year, national statistics agency INSEE said on Thursday, less than five weeks from a presidential election.

    Spain's Borrowing Costs Up Amid Fresh Deficit FearsSPAIN’S BORROWING costs rose above 5.5 per cent for the first time since January as investors fretted about another escalation of the euro zone crisis amid signs of further economic weakening even in Germany. Investors, already nervous about Madrid’s deficit and weak growth prospects, pushed Spain’s benchmark 10-year bond yields up 14 basis points (bp) to as high as 5.53 per cent. Italy’s borrowing costs also rose with the yield on its 10-year bond breaking through 5 per cent

    Portugal Town Halls Face Default Amid $12 Billion DebtPortugal’s town halls face default amid 9 billion euros ($12 billion) of debt unless the government provides aid soon, said Fernando Ruas, president of the nation’s association of municipalities. “At a company we call it insolvency,” Ruas said in a telephone interview from Lisbon on March 21.

    China's Stocks Drop on Earnings, European ConcernsChina’s stocks fell, extending the benchmark index’s biggest weekly loss in four months, as European manufacturing weakened and concern intensified slowing economic growth is hurting earnings

    Credit Swaps in U.S. Rise by Most This Year on Global Concerns. A benchmark gauge of U.S. company credit risk rose by the most since December on declining confidence in the global economy as reports showed manufacturing contracted in Europe and China.

    Detroit's Credit Rating Downgraded by Second Agency. Another blow came to Detroit fiscal health today as a second bond rating agency downgraded the city’s credit rating. Fitch Ratings cited the potential for the city to run out of cash and “a lack of progress in resolving an acute situation” as reasons for the downgrade

    Copper Bear Streak Extends as Manufacturing Shrinks: CommoditiesCopper traders extended a bearish streak into a second week on mounting concern that demand is weakening after manufacturing contracted from China to Europe

    Oh Please!  Global spare oil production capacity is running "ridiculously thin" at less than 2% of demand, potentially offsetting the impact on overheating oil prices of any further increases in supplies, says Barclays head of commodities research Paul Horsnell. Any further announcements of increased Saudi supply are unlikely to have much of an impact on oil prices from here on, he adds.

    Chinese Economy Already in ‘Hard Landing,’ JPMorgan’s Mowat Says (Bloomberg)

    Chinese Dream Turning Sour? (The Diplomat)

    General Motors (GM -1.5%plans to announce within the next couple of weeks the closure of one or two European factories after seeing its operations on the continent lose billions, according to the WSJ. Plants in the U.K. and Germany are reported to be on the chopping block

    Boeing (BA -1.5%) and Airbus (EADSY.PK) face a serious headwind with their plans to increase production due to the growing financial duress of cash-strapped contractors. Industry consultant PwC reports that 21% of aviation industry suppliers can't support the production pace that Boeing and Airbus aim to achieve. A potential solution to the problem is to have airliners shoulder some of the development costs, but can they afford it? 

    SanDisk (SNDK -0.8%) has initiated a price war among flash memory card makers

  228. Phil


    SanDisk (
    SNDK -0.8%) has initiated a price war among flash memory card makersreports Digitimes, with price competition especially fierce for low-end cards, and cards sold in emerging markets. Concerns about price and margin pressure (as well as industry oversupply) dogged SanDisk earlier this year, though shares have rebounded thanks to bullishness regarding smartphone/tablet demand.

    RadioShack (RSH -0.2%launches a franchise growth pactunder a master development agreement to expand its global footprint across 10 Southeast Asian countries. Under the deal, Berjaya Retail – also the franchise developer for 7-Eleven stores – is expected to open at least 1,000 locations within 10 years.

    Baker Hughes (BHI) has tumbled 10% since yesterday's disappointing forecast, and today Barclays analyst James Westreduced his EPS estimates on the oilfield equipment company for the second time in three days. While maintaining an Overweight rating on BHI, he now prefers Halliburton (HAL), as it trades at just 8.5x his 2012 estimates, vs. BHI’s 12x. 

    Nike (NKE): FQ3 EPS of $1.20 beats by $0.03. Revenue of $5.8B (+15% Y/Y) in-line. Shares -0.4% AH. (PR)

    More on Nike's (NKEFQ3Gross margin was 43.8%, down 200 bps Y/Y due to higher commodity costs, but up 110 bps Q/Q. SG&A expenses rose 10%, trailing revenue growth. Futures orders for products to be delivered between March and July totaled $9.4B, +15% Y/Y. North American sales +17%, China +21%, and other emerging markets +30%, offsetting weakness in Western Europe and Japan. $239M worth of shares were repurchased. NKE +1.1% AH. (PR)

    Micron Technology (MU): FQ2 EPS of -$0.23 misses by $0.03. Revenue of $2.07B (-8.4% Y/Y) beats by $50M. Shares +0.1%AH. (PR

    Teavana (TEA), the most heavily-shorted stock in America,gains 3% AH after KeyBanc's Edward Yruma starts coverage with a Buy and $28 PT. Yruma praises Teavana's 19% operating margin, and thinks it could expand further as loose tea sales grow. He also think EPS growth will exceed 25%, and compares Teavana favorably to other "lifestyle-focused retailers" such as Lululemon and Zumiez.

    Global smartphone sales will grow another 46.5% this year to 688M units, predicts UBS, and thus account for 41% of the 1.69B mobile phones expected to be sold. However, revenue growth is expected to be just 21% - evidence of how much of the unit growth will come from cheap Android phones aimed at developing nations. UBS also sees 156.5M iPhone sales in Apple's (AAPL) FY13 – more than twice the 72.3M sold in FY11.

    U.S. consumers will watch 3.4B online videos involving paid content this year, and just 2.4B on physical media, estimates iSuppli. By contrast, 2011 saw 1.4B paid online views and 2.6B physical views. However, physical formats are expected to bring in $11.1B in revenue in 2012, far above the $1.7B brought in by paid online video. Thus, the web's cannibalization of the DVD market presents a huge challenge for studios, in spite of their growing online sales

    Netflix's (NFLX -1.1%U.K. launch has exceeded expectations, says Reed Hastings, adding his company's near-term goal is to sign up 10% of U.K. households. Netflix faces competitionfrom Amazon's (AMZN) Lovefilm, and perhaps from BSkyB (BSYBY.PK), whose channels have first rights to movies from the top 6 Hollywood studios, and which has announced plans for a streaming service. Antitrust regulators are investigating BSkyB's movie stranglehold.

    "Google has forgotten why we loved it," bemoans Gizmodo's Mat Honan in a lengthy piece that bashes the changes pushed byLarry Page. With much of the Internet's knowledge now residing in personalized services and apps whose information is off limits, Google (GOOG) feels it has to both depart from its search-centric roots, and get its hands on more user info. But in doing so, Google is violating its users' trust, and damaging the quality of its core product.

    Intelligence Community Can Keep Data On Americans With No Ties To Terrorism For Up To 5 Years.The U.S. intelligence community will now be able to store information about Americans with no ties to terrorism for up to five years under new Obama administration guidelines. Until now, the National Counterterrorism Center had to immediately destroy information about Americans that was already stored in other government databases when there were no clear ties to terrorism.

    iPhone 5 Release Date 2012: Apple Orders 4.6-Inch Screens For Second-Quarter Launch (International Business Times)

    Why being relaxed makes us spend too much money (Wired)

    Top 10 reasons why Darth Vader was an amazing project manager (Geek Wire)


  229. Well they fixed the downturn by ditching the Dollar – 79.75 all of a sudden with the Euro flying to $1.323 and Pound $1.586 and, if they go up together like that without a big Yen move, then it's the Dollar dropping that's causing the other two to rise and not vs. vs.  Game off on shorting, of course, with the Dollar below 80. 

    This should goose the EU open – we'll see if it sticks.  


  230. Big Chart – Not too much damage as long as we hold our Must Hold lines, which are still about 2.5% down from here.  Any move back over the 2.5% lines will now be bullish.  

    Back in the day/Rustle:  


  231. Good rules JMM.  

    Global warming/Peedle – Don't get me started!  Here's the thing (and this is how the Liberals mis-position the argument) – It DOES NOT MATTER why we have global warming.  We DO have global warming and we NEED to do something about it.  If your house is on fire, you NEED to put out the fire – not stand around and argue about who caused it.  We have one planet – we do not know how to leave it for a better one.  We can only survive at certain temperatures.  If it's even REMOTELY POSSIBLE that we are causing an imbalance that can render the planet uninhabitable then EVERY POSSIBLE EFFORT must be made to do something to stop it.  If we are not doing it ourselves but it is even REMOTELY POSSIBLE that we can somehow improve the situation, then EVERY POSSIBLE EFFORT must be made to do something to fix it.   Yes, study, study, study until we are sure but, meanwhile, it would be intelligent, in the very Darwinian sense of the word, to error on the side of caution because – if the "Al Gore crowd" is wrong – then all we do is pollute a little less while the evidence against them mounts and you can once again pollute to your heart's content but – if the climate deniers are wrong – then we destroy all life on Earth through inaction.  How is this even an issue for intelligent people to discuss?  


  232. Phil/ Global warming – bravo!


  233. Phil,
     
    I see you slept in late again today. You're waking up, and I'm ten minutes from going to bed………
     
    Since we are seriously BH (compared to AH), may I ask two very simple questions, if I can keep them to two sentences each?
     
    (Douglas)


  234. I'm headed to bed so I'll just post a question and a comment.
     
    comment 1:
    from your post March 20 at 1:23pm
     
    "Very well said by Barry:  
     
    I had a conversation with a friend recently about Wall Street."……..
     
    The "5 Rules" are an excellent tutorial for all people in the early part of the trading experience (like me), so Thanks for posting it.
     
    Comment 2  -  You've probably seen or at least heard of a TV series (about 9 or 18 segments) called Million Dollar Trader. I recently watched  all of them on utube.   Hell's Traders…….I would play, as long as I can wear my large headphones with my iPod cranked, so I can ignore the "Phil Yelling" part  :)
     
    This will definitely be the Official Stupidest Option Question you will ever be asked, but:
     
    In one of your articles this week you answered somebody by saying (paraphrase):  If you are comvortable that your option will decay at 1/24th per day before expiry, your trade might work, but it has potentially terrible risks".
     
    My question: Assume an option has 24 days left. Also, assume the price of the underlying (and lets keep it simple, and assume it is a stock) stays EXACTLY THE SAME


  235. TNA/Diamond – I'd rather buy TZA longs than sell TNA calls because the short calls can really burn you if the RUT does shoot higher.  TZA is at $18.39 and a 5% drop in the RUT would run them up 15% to $21.15 so the May $18/22 bull call spread at $1.05 is a nice way to go short on the RUT.  You can offset that with a short put on something you would want to buy if it got 20% cheaper, like DMND May $20 puts for .95 or JPM Jan $30 puts at .98 or XOM Jan $57.50 puts at $1.15 or you can just hold the bull call spread, which can pay back 4x anyway and IF the RUT goes up and TZA drops $3 to $15, THEN you can probably sell the $13 puts for $1 and that's getting to the point where the ETF (NOT ETN!) is worth owning anyway.  

    DB/Lionel – I was under the impression that they were not going to have a hard time skirting the new regs but other banks won't be so lucky and that could cause some to sell assets – although it's not like this is a surprise to anyone.  

    CAT/TX – Good job!  There are two ways to look at it, you can scale out, like getting half off the table and setting stops on the remaining quarters or you can just dump out and pick a fresh horse off the list – one that's gone the wrong way and is now a better deal than when we started.  That's the idea of the list.  We catch a few wins and use that money to take a poke at a few more (with stop-losses, of course) and, hopefully, we'll be in the right place when the right time comes along and the market plunges.  

    UVXY/Alik – I would just stay miles away from all of those things.  It took me a couple of years before I even trusted the ultra-ETFs – new products come and go and, unless you are an arb player – they're usually not worth messing around with.  

    VXX/Bob – VXX is an ETF, not an ETN and is not likely to blow up like TVIX but TVIX may cause a panic out of VXX.  Sounds  like you have a lot of money in that spread and it is an aggressive position so it depends on your risk tolerance.  VXX is at $18.58 and was at $21.50 on Monday morning and there are 28 days (4 weeks) to April expiration.  Our premise in the $25KP was that the VIX was not likely to stay this low but it wasn't that the VIX was not going to stay low for 5 days.  If you believe volatility will pick up over the next 28 days, then 18.58 on VXX is a good entry because, just 14 days ago, VXX was at $26.  The May $19 calls are $2.10 (+.85) so really, if you don't believe VXX can move up to $23 by April or $23.85 by May – then of course get out – why be in a trade you don't believe in?  Otherwise, for .85 we have 56 days in which something may happen other than the market going up every day.  

    Cool Etch a sketch site (changes every time you click on screen) :

    NYSE/Scott – They only have to bring up key leaders like AAPL to push a whole index higher, regardless of what the rest are doing.  

    AAPL/Maya – 1.8% is not really enough of a dividend to make me tie up $600 per share of cash.  As someone noted, if you can afford 10,000 shares of AAPL ($6M) and all you can do is get $106,000 in income – you need to seriously rethink your choice of Financial adviser.  If I want a $106,000 income from AAPL (bullish) then I can sell 20 2014 $450 puts for $48 (net $96,000 in margin) and buy 40 2014 $570/670 bull call spreads at $40 ($160,000) for net $64,000 in cash and then I could sell 20 April $600 calls for $21 ($42,000) which puts me in with just net $22,000 in cash and $96,000 in margin and I'm collecting $42,000 in premium in my first month so chances are I can do much better than $106,000 a year but I've still got $5.85M in cash on the side to have fun with.  

    The worst downside case here is I end up owning 2,000 shares of AAPL at net $472 ($944,000) so I'm risking just 15% of my $6M to make as much as $500,000 if all goes well (doubtful) with a realistic chance of making at least $200,000 selling premium over a year.  THAT is why I don't like owning the stock – you are tying up 6x more than you need to to get the same or better results!  

    Meanwhile, Dollar all the way down to 79.57 with Euro at $1.327 and Pound at $1.587 so not likely they'll go up more than 0.024 and 0.013 respectively and that means 79.50 should hold and that means we can poke at Futures shorts again at Dow (YM) 13,030, S&P (/ES) 1,395, Nas (/NQ) 2,750 and RUT (/TF) 825.  

    Oil is at $106 but always scary to short oil on a Friday so not as attractive as the indexes (assuming 79.50 holds, of course).  


  236. Question/Newbie – I assume there was more to that sentence?  


  237. Marketwatch: "TVIX has an indicative value of $7.62."  Pretty sure I know where it will open!


  238. Phil / VXX – actually it IS an ETN; I'm dumping mine at the open and won't touch ETNs again this lifetime!


  239. 2nd fat finger-I'm convinced my keyboard is messed up—so before anything bad happen's, I'll try to finish the dang sentence.
     
     
    " stays EXACTLY THE SAME"_____does the value of the option (assume plain jane Call) decay linearly over the 24 days, or does it have a strong convex "curve" to it, loosing value the fastest in, say, the first 5 days, as opposed to the last 5 days?  Again, assuming the price of the underlying stock did not move a penny in the 24 days.


  240. You guys are all nuts. You're up at 4am? Jeez………
     
    Phil, I'm going to bed now.  PLEASE feel totally free to delete any or all of the posts I've made in the last 45 minutes, if any of them are too stupid, or otherwise not worth having up on the board.
     
    Thank You
     
    Over and Out


  241. Rails/Pstas – Still disturbingly low volumes.  If not for our exporting petroleum, they'd be in terrible shape.  

    RSH/Gbase – I like them but they'll be spending a lot to expand in Asia and there won't be any returns for quite a while so they're probably going to lay around the bottom for a very long time as the market tends to punish companies who try to grow their business by spending money.   As long as you are SCALING IN for the long haul, I do like them with that nice 7.7% dividend.  

    Which came first/Pstas – That's a false premise because, once upon a time, Government was business.  All business is is a breakaway of certain things that used to be provided by Tribal Leaders/Kings, etc. to their subjects.  It's all deck chairs on the Titanic – once upon a time, the strongest caveman would bash in the skulls of anyone who crossed him until he was left with compliant subjects and he would direct them to work for him and he would divide up the goods and services produced.  Since that kind of leadership tends to be capricious and since several pissed off guys can kill one strong one – systems evolved where groups led a tribe but it was the same thing, only slightly diffused.  

    That then led to Feudalism and again, the peasants were not pleased with their lot and they revolted and that led to certain reforms but, in reality, any periods in which individual people were able to fully benefit from the fruits of their labor were few and far between as the Corporations that spun off from the ancient governments spawned more and more corporations and they become their own little kingdoms and go to war to subjugate the meek until they once again become top dogs and capriciously take as much of the work product as they possibly can from the tribe before they revolt.  

    There is no difference between big business and government other than the fact that it's possible, for very brief periods of time, for people of conscience to take control of Government and put the brakes on the greed of business.  I certainly have never seen business get together and reign in the greed of Government – it's just another loophole to exploit for a "good Capitalist."  

    Good clip 1020.  Here's another one, our man Nigel Farage ripping EU President Herman Van Rompuy to shreds:  


  242. Corporate Citizens/ZZ – I think you fail to understand that I include Corporations in the top 1%.  They are, after all, people according to our very wise Supreme Court and they are very rich and powerful people but where do you draw the line between the Kochs and Koch Industries?  You don't – it's a joke.  When you are talking about that top 0.1%, they are the people who control the Corporations – their interests are 100% in line with the Corporations – to attempt to split hairs by saying "it's not the top 1%, it's the Corporations" does nothing but blur the issue.  I would be thrilled if the bottom 99% of our Corporate Citizens would wake up and realize they are being every bit as screwed by the top 1% as our ordinary human citizens are but most of our Corporate Citizens have those rigid, Conservative brains and they are as fooled as any Fox viewer into believing that their interests are somehow aligned with the top 1%, who made 93.7% of all income gains over the past 4 years – Corporate and Personal.  

    AAPL/Mr M – With inflation, it's an obtainable goal but I'm not convinced the economy is in inflation mode yet.  

    Turk/Scott – Not enough time in the day to deal with guys like that.  I give up talking to gold bugs – we need the counterparties anyway.  

    VXX/MrM – You're right, Yahoo has them listed as an ETF but they are not.  Well, short-term, they do correlate pretty well but, long-term, they clearly decay (see 1-year and 2-year views).  

    Decay/Newbie – Actually, the last 25% of an option is usually slow to fall apart and 10% can last until the last half of the last day.  It depends how far out of the money it is, etc.  I just find it useful to use the straight fractions to determine my expected prices over time.  Not too stupid at all, have a good night! 

    Friday's economic calendar:

    10:00 New Home Sales 

    3:50 AM Asian markets track U.S. losses, though India is up after an RBI official signaled looser monetary policy is on the horizon. Japan-1.1% to 10011. Hong Kong -1.0% to 20687. China -1.1% to 2350. India +0.7% to 17320.

    India's central bank is moving toward a looser monetary policy, says deputy governor Subir Gokarn, though he's not sure yet when that will happen or at what pace.

    Two years to the day after Pres. Obama signed the Healthcare law, Americans are still almost evenly split about it, with just 50.5% in favor. Democrats hoped some of its early benefits would boost support for the bill, but results have been mixed. Around 2.5M more young adults have gained coverage, but a plan to help the sick and uninsured has flopped.


  243. Getting a nice pullback now with the Dollar back at 79.64, the Dow even failed 13,000 already and the RUT is right on the 820 line again.   See, it's worth getting up early if you catch one of these!  


  244. Phil,
     
    How are you trading at this hour?  Futures?


  245. Farage loses me at the first sentence::  "The man that would lead 500,000,000 people".
    What a ridiculous notion, what arrogance, posturing and simply idiotic statement to think, let alone say, that one man can "lead" 500,000,000 people. 
    The most brilliant, charismatic, benevolent and connected men in the world can barely lead their own lives, let alone 500,000,000. 
    That is crazy stupid to even attempt it.
    Bust it up, stop with the one world government b.s.  There is no one alive or to be born, that will EVER accomplish that.


  246. Companies/government/chicken/egg
    The London Company (also called the Charter of the Virginia Company of London) was an English joint stock company established by royal charter by James I of England on April 10, 1606 with the purpose of establishing colonial settlements in North America.[1]
    The territory granted to the London Company included the coast of North America from the 34th parallel (Cape Fear) north to the 41st parallel (in Long Island Sound), but being part of the Virginia Company and Colony, the London Company owned a large portion of Atlantic and Inland Canada.
    [Wikipedia]