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Friday Fade – March Goes Out Like A Lamb (To the Slaughter)

Good morning sheeple!

After being jammed into equities all month on an endless string of empty promises, I'll bet you're wondering what to do next.  

Well, isn't that the problem?  You shouldn't be waiting for someone to tell you what to do with your money – it's ridiculous.  The whole industry of Financial Advisers is ridiculous – swarms of leeches who prey on your confusion and take 1% of your money or more PER YEAR.  Did it ever occur to you that 1% of your money per year is HALF of your money after 50 years in their care?  

That's right, you work hard to make money, you sacrifice to save it and then you PAY someone else to take it from you and play with it.  Isn't that silly?  We pointed out on Monday that the average performance of even the best Financial Advisers is WORSE than flipping a coin yet still, the vast majority of people in this country let other people handle their investments – that's not even rational…

Of course, the Financial Community does their best to keep the whole thing as confusing as possible and the regulators pass rules that herd small investors into very narrow ranges of choices, most of which are funds that collect fees of some sort.  How is it that our Grandparents did quite well for themselves just buying AT&T and putting it in a draw for 30 years – getting their dividend checks and benefitting from the growth of the company?  Was Grandpa that much smarter than you?

No, he wasn't – he simply wasn't influenced by the Big Business-backed Mainstream Media who sell investments the way they used to sell cigarettes – telling consumers that many products that are dangerous to your financial health are actually good for you or, in the very least – will make you "cool".  

Unfortunately, by accident or by design, investing and economics are not taught in our schools – other than to the business majors who end up going to work for the companies whose sole purpose in life is to get their hands on your money and rape you for fees – isn't is interesting how things worked out that way?  All the "sophisticated" investors work AGAINST you and all the unsophisticated investors – the perennial bottom 99% – simply go to work and, if they accidentally accumulate enough money to save, they are ill-prepared to make good decisions which creates a "need" for Financial Advisers, who will then set about relieving the workers from about 1/2 of whatever they save through fees.  

SPY 5 MINUTEI spend a lot of my time teaching people how to break the cycle of dependency on the advice of others (and yes, I realize that's ironic but someone has to do it).  At Philstockworld, we follow the model of "Give a man a fish and you feed him for a day but teach a man to fish and you feed him for life."  We want to teach people to "be the house" not the gambler and to make those slow and steady profits over time that can build true wealth.  

While a lot of people are turned off by the market manipulation – we love it.  We love it because it's blatant and obvious and, most importantly, predictable and that allows us to profit from it.  

All week long we've been nailing our oil calls and yesterday was no exception as I said in the morning post that oil would be selling off sharply – due to Fundamentals we have been discussing for ages – and I even outlined our in-progress SCO trade – the same one I gave out on TV on March, 5th – which was already up to net $260 per contract yesterday (up 246% from our net $75 entry) and is at net $3.25 as of yesterday's close, which is now up 333% since March 5th but up 25% since YESTERDAY MORNING!  

Now I say the markets are fixed and there is an identifiable pattern that I can teach you to pick up on.  It is possible that I'm wrong and they are not fixed and I am just psychic – but I have taught hundreds of people to be just as "psychic" based on my premise that the markets ARE fixed AND predictable – so I will choose to stick with my delusion, thank you!  My "vision" at 9:44 in yesterday's Alert to Members was:

Watch the dollar, over 79.50 will not be good for market and of course oil futures are a go below the $105 line.

USO At 10:32 we had the Natural Gas report and my comment in Member Chat was: "Nat gas crushed on 57 bcf build!  Bad for oil too so you might want to widen the stops."  At 11:21 I noted: "Wow, Nat gas down to $2.17.  Euro holding $1.325, Pound holding $1.585 with a bounce back over $1.59 already and Yen perking up (down/weaker) at 82.36 so not over for the bulls yet."  

At 11:44 we decided to shift bullish as I said: "Volume is still low and we may get a save into tomorrow or sometime tomorrow but, unless it makes up A LOT of ground – we're still going to look toppy. Over Dow 13,000 in Futures is a bullish sign (now 12,988) and I think the RUT can be played bullish over 820 for a bounce but, coming down from 840 means still very bearish until they pop 825 and not impressive until over 828."

At 1pm, we began to take profits in our virtual $25,000 portfolio ($6,000 cashed in yesterday) and my comment to Members at the time was: "$103 was good money on oil for Futures players – I hope you took it and ran."  I was actually early there as oil slipped another .87 but a $2,000 per contract gain in a single day on oil futures is a lot and we already had a lot of USO puts from the $25,000 portfolio so we hadn't gone bullish yet but, at 1:46 I warned our Members: "Oil has every reason to bounce off $102.50 back to $103.50 (the 50 dma) – if it doesn't, the 200 dma is at $95!"  By 2:02 we stopped out of our USO April $41 puts at $2.25 with very nice 73% gains and we were done – until this morning as we now have our expected bounce back to $103.50!  

I reminded Members at 2:46 that the action was right in line with our "conspiracy theory," saying:  

It's what we expected, they can't do all the window-dressing in one day and this sell-off was very likely a big fund taking advantage of the pumpers and selling into them ahead of the EOQ so they are forced to buy all the crap he's selling.  Once Mr. Seller exhausts himself, the pump-bots can take back over.  

Those RUT (/TF) Futures turned out to be excellent bounce plays – 826 already puts the stop at 825 – congrats to the players!  

As you can see from the chart above – that was one VERY profitable trade!  We are out in the Futures as we flipped bearish in early morning Member Chat as we hit our 835 goal again and we're back to very cashy and very cautious into the weekend and we'll be adding back some more short positions into our $25KP during today's Member Chat as well as going over our Long Put List as we're still a little skeptical of all the bull that is being slung at the markets this week.  

What's our biggest concern?  It's still those pesky bottom 99% consumers and the fact that they simply don't have the money to support a 30% run-up in the market – unless, of course, actual earnings and revenues don't matter anymore – then we can carry on with our rally.  And we might – we've seen it happen before and, if the Fed is promising endless supplies of free money – it's even a little bit rational to run stock prices higher ahead of the inevitable inflation.

HOWEVER – we are not going to see inflation until we see WAGE INFLATION and Personal Income was up just 0.2% in February vs. 0.4% expected and 0.3% prior so the bottom 99% gets half of what was expected but higher gas and food prices forced Personal Spending UP 0.8%, a 300% increase over January's 0.2% as the bottom 99% sink deeper and deeper into debt to keep running on this insane economic treadmill.  

It's not just the US consumers that are under duress – German Retail Sales fell 1.1% against expectations by Economorons that they would be up 1.2% – almost a 200% miss!  That's the 4th decline in 5 months but don't expect it to matter today as there are windows to be dressed, you know.  That's not even the worst number out of Europe.  The IMF is warning that, In emerging Europe, the share of loans classified as nonperforming—many of them household mortgages—have exploded from 3% before the crisis to 13%. As can be seen in the chart below, levels in some parts of the Baltics and Balkans are already at par with previous financial crises elsewhere – illustrated on this shocking chart:  

Yes, cash is good, CASH IS KING!

If the markets run up today, you know we'll be shorting into the hype but, if they fail to run up today – look out below

Have a great weekend, 

- Phil

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  1. Oil Lines

    R3 – 108.92
    R2 – 107.31
    R1 – 105.35
    PP – 103.74
    S1 – 101.78
    S2 – 100.17
    S3 – 98.21

    First line under $100 in a while. But the wild moves yesterday are given us some very wide lines…

  2. pharmboy/PP
    I guess you posted an older version of PP…..and there is no AAPL in it ! :-)

  3. Good morning, nothing new,


    IWM    81.94,  82.12,  82.34,  82.67,  82.94,  83.18,  83.33,  83.55,  83.74,  83.97,  84.20,  84.36  and 84.64

    And for those conspiacy theorists, here is Goldman Sacks trading algo:


    Good hunting !!

  4. Sheepdog cartoon
    Actually the dog is thinking: Why is it that generations of my family have herded these dumbass sheep? It is almost as if we were deliberately bred for the job.

  5. Good morning! 

    LOL JRW, love that cartoon.  

    In the $25KP, let's pick up 20 DIA Apr $130 puts at .95 and 5 in the $5KP.  

  6. Good stuff JRW!  :)

  7. All in cash in this portfolio!

  8. By the way, speaking of the above lemonade cartoon – last time I was in Cold Stone it cost $25 for 4 of us to get sundaes and I told the kids that was ridiculous and we wouldn't go there as often.  Yesterday we ate out next to Cold Stone and, on the way in it was dead and on the way out it was dead – they used to have lines out the door almost every night.  As with many businesses – I think they have finally pushed prices up to the point where the consumers have said "no mas".   Could be bad for CMG if it's a general trend (they just bumped prices) – I'd like to hear from people who go there if they see any traffic differences.  

    Dollar over 79 is not giving us a great open.  Sure we're green but lower than pre-market and not looking so tough.  Europe is up about a point but yesterday we noted the EU markets were 2% below us and then we had our stick save that put them almost 3% under so they NEED to gain 1% today, just to stop from breaking further below us.  

    I just put up that quick DIA April $130 put trade (.95) in the above comment and we'll be HOPING they can jam the markets higher so we can DD at a cheaper price but I wanted to get that in quickly because I'm worried that we'll close lower with the Dollar holding 79.  

    Chicago PMI is 62.2, which is down a bit from 64 but New Orders and Employment and Prices Paid – DISASTER!!!!  

    Chicago PMI: 62.2 vs. 63.0 expected, 64.0 prior. Employment 56.3 vs. 64.2 prior. New orders 63.3 vs. 69.2 prior. Prices paid 70.1 vs. 65.6 prior

    At 9:55 we get Michigan Consumer Sentiment and that was 74.3 last time but this is a REVISION, not a new survey and will possibly be revised up and has been a terrible indicator in the past (as they only survey people who are home, and have phones to answer with, etc – so it's a survey of the top 50%+).   

    At the open: Dow +0.4% to 13199. S&P +0.42% to 1409. Nasdaq +0.48% to 3110.

    Treasurys: 30-year +0.07%. 10-yr +0.02%. 5-yr +0.01%.

    Commodities: Crude +0.71% to $103.5. Gold +0.75% to $1667.25.

    Currencies: Euro +0.37% vs. dollar. Yen -0.35%. Pound -0.25%.

    Market preview: Stock futures hold on to modest gains, with the S&P benchmark +0.4%, after consumer spending rose more than expected last month. European markets rally on a deal by euro zone finmins to boost their firewall. RIM turns green after it says it would consider a sale of the company. 

    The dollar performs a full LoBagola in March, rising sharply through mid-month, but returning today right back to its starting point. Key to the turnaround were quick reversals in yen and euro weakness, likely helped by just a bit of wobble in risk markets and Fed chatterbeing interpreted as more easing on the way.

    Feb. Personal Income and Outlays: Income +0.2% vs. +0.4% expected, +0.3% prior. Personal spending +0.8% vs. +0.6% expected, +0.2% prior. PCE core price index +0.1% in-line with expectations, +0.2% prior.

    Taking a 2nd look at the consumer outlay/income reportshows spending beating expectations by rising 0.8% while income missed, climbing just 0.2%. Not only that, but spending the previous month was revised higher, with income revised lower. The savings rate fell to a near 3-year low. Yep, all is back to normal.

    Prices at the pump creep higher again, the average price for regular rising to $3.925/gallon as of early this morning. The price is nearly 11% higher Y/Y and at another new record for March. Gasoline ETF: UGA +18.9% YTD.

    Though the overall housing market remains bleak (or perhaps because of it), the rental income generated by U.S. landlords is soaring, and has reached its highest share of GDP since the '70s. This, in turn, is fueling a strong rebound in multi-family apartment construction, though construction levels are still well below where they stood during the housing bubble's peak.

    Jeremy Siegel must've thought his prediction of Dow 15,000 made last month had already grown stale, as the Wharton professor now sees 17,000 as his 2013 target. Valuations are attractively low, he says, making this "one of the cheapest stock markets I've seen." But he also sees a possible rate hike coming out of the Fed's April meeting.

    Despite a big decline (8%) in March, the Shanghai Composite closes its best quarterly gain in a year, up 2.9% from Jan. 1. The conventional wisdom has clearly shifted from a moderate, but healthy economic slowdown to something more than that, with even Beijing lowering its growth forecasts (which have a habit of coming true) to below 8%.

    Eurozone finmins have agreed to boost the so-called "firewall" to about €800B. The amount comes from €500B in new money for the ESM, €200B already committed through the EFSF, and some fancy maths regarding Greek loans. It's less than the €940B that had been tossed about in recent days. 

    Germany's Social Democrats – the opposition party -threaten to block passage of the EU fiscal pact and expanded firewall. Not anti-bailout by any means, the party wants the new laws to focus more on economic growth, less on austerity. Though in the minority, the SD's support will be required for Merkel to win passage of the bills.

    The Spanish cabinet approves an austerity budget for the country: All government ministries will have to cut spending by 16.9% and civil service wages are to remain frozen (but no job cuts announced). Not included is an increase in the VAT, but yet-to-be-detailed corporate tax hikes are in store. Madrid +0.7%.

    More on the Spanish budget: The government revises itsdeficit target goal for 2012 to 5.3% of GDP. It's less than the 4.4% demanded of it, but not as high as chatter from earlier this month that had heads exploding all over Brussels. Of course, all of these numbers are just projections.

    Norway's $610B sovereign wealth fund, the gorilla in European equity investment, plans to cut its exposure to the continent to 41% from 54%, while raising its stakes in Asia and emerging markets. "They might be late," remarks Roger Nusbaum, "but what if they're early." 

    The USDA reports that U.S farmers plan to increase corn plantings by 4% Y/Y this spring to 95.9M acres. Though it marks the highest level since 1937, the early nature of the report before weather and prices takes its toll on plantings has to be factored in. JJG +3.5%,CORN +3.7%.

    The Obama administration strikes a deal with five states bordering the Great Lakes to speed up the approval process to build offshore wind farms in an attempt to leapfrog right over public opposition to the projects. Supporters of developing the wind farms say the winds on the vast lakes provide a large untapped source of clean energy.

    Iran, along with big customers China and India, are skirting sanctions by swapping oil for local currency and goods. While sanctions fans boast about this "Junk for Oil" program, others say trade being driven further underground boosts opportunities for corruption and oil money being used for illicit purposes.

    Dendreon's (DNDN) prostate cancer vaccine Provenge isunder scrutiny again from longtime gadfly Marie Huber. She alleges that the studies by the company leading up to FDA approval for the drug are suspect and says she will present her finding to EU officials as they consider Provenge.

  9. Research In Motion (
    RIMM) is up 3.1% after Thorsten Heins announces a management shakeup, restructuring plan, and strategy shift to go with a poor FQ4 report (III) and the discontinuing of guidance, and leaves the door partly open to a sale. Analyst commentary is bleak (IIIIII), noting RIM's huge competitive woes and inventory issues. "We see little likelihood of RIM succeeding as a standalone ecosystem," says Nomura, reflecting the views of many. (transcript)

    Research In Motion (RIMM +3.1%), volatile in early trading following yesterday's drama, is trying to downplay reports it plans to abandon most consumer markets. The company still wants to go after "targeted consumer segments," says sales VP Patrick Spence. During RIM's earnings call, Thorsten Heins suggested partnerships will be key to bolstering RIM's consumer standing. Good luck. 

    Nothing on AAPL?  No wonder they are fading….  

  10. PHarm-pivot points? date?

  11. YTD performance of country indices…

    Venezuela still rules, but look at poor Spain. I wonder what is behind that weakness…..

  12. Good Morning AAPL traders!   The portfolio is in cash as of yesterday based on my uncertainty about short-term direction.   Foxconn forefront in the news, but AAPL was pushing too high anyway.   I may sell some short-term out of the money calls or puts to earn premium up to earnings, but for now I'm happy with cash and watching. 

  13. Iflan – I couldn't sell yesterday. Would you suggest waiting or getting out now?

  14. Phil:
    Do you think the effect of more QE will start to wane as the sheeple begin to realize it just isn't working that well? Or, on the other hand, are we still in the fantasy stage where more free money is more free money and we continue to disbelieve the facts? I am trying to stay balanced with a lean short, but when is the Bernanke going to come in and save the day?

  15. Since Pharm is not around, here are the lines for the indices – in order from R3 to S3 with PP in bold.

    IWM – 84.73 / 83.97 / 83.53 / 82.77 / 82.32 / 81.56 / 81.12

    SPY – 142.20 / 141.35 / 140.80 / 139.94 / 139.39 / 138.54 / 138

    DIA – 132.76 / 132 / 131.56 / 130.80 / 130.36 / 129.60 / 129.16

    QQQ – 68.75 / 68.34 / 68.02 / 67.61 / 67.29 / 66.88 / 66.56

    AAPL – 624.53 / 620.54 / 615.20 / 611.21 / 605.87 / 601.88 / 596.54

  16. StJeanLuc –  You should change your name to StSwissArmyKnife  :)

  17. FAS Money – A stop needs to be on 6 of the Jan $15 short calls at $2.  That leaves us with 20/10 and we can roll our callers to 2x if we have to.  On the whole, I don't think we've got any worries of that happening.  This is the most bearish I've been on Financials in ages.  

    IWM Money – Let's take $10.30 and run on the Jan $77s.  We already made a ton on the $68s and now we're adding $2 more to the pot and we're bearish on the RUT so let's go for it!  

    $5KP – Fine 

    $25KP – Super fine.  What a fantastic example of the wisdom of waiting until we roll or DD a position before joining in.  I mentioned when we were down $25K that it was a great time to enter, that position makes $11K in less than 2 weeks!  I'm not inclined to do much today unless oil shoots up and gives us good entries on USO again other than adding 10 VXX April $15/18 bull call spreads at $1.30.  

  18. iflan:
    You did a remarkable job with that account. Congrats!
    Do you think that earnings have to be fantastic to keep moving AAPL higher, or do you think that AAPL players need time to digest and accept that AAPL can go higher from here before the price begins to appreciate further? I get the feeling because of high expectations and the lofty price that AAPL may experience a flat quarter or two before the stock moves higher in the second half of the year.

  19. Go Venezuela – That Chavez is some economic mastermind!  Vietnam, Saudis, Pakistan – all the countries Conservatives have no respect for are kicking our asses…  Even Germany and Japan used to be our enemies while our traditional allies – the people who "think like we do" are the laggards…  

    Spain/StJ – Worse than Greece when push comes to shove – and it will soon. 

    AAPL/Iflan – So happy to see CASH in that portfolio.  Down another point already…

    AAPL/Nicha – You're risking a melt-down event next week (if no clear signs of QE) – I don't even think it's worth the risk of trying to protect it.  

    More QE/DC – It's already waning.  It's already baked into the 30% move in the market since October and still we are waiting.  It was coming in November, then January, then March for sure, now April – Godot!   On top of that, now they are (supposedly) pumping $3.5Tn into a $60Tn global stock market – they've already dumped $8.5Tn into a $30Tn market beginning in 2009 to get us back to $60Tn so how could $3.5Tn have anywhere near the same effect now?  The "law of large numbers" begins to take hold. 

  20. The PP on my screen are today… everyone else's not right?

  21. Pharm — I can see it and I'm using IE!

  22. pharm
    I see your post at 9:13 and sometimes I don't get your paste in.

  23. Here comes the Dollar – popping 79.10 – not good for equities or commodities, of course.  $103 about to be tested on oil (/CL) and a strong short if it breaks but not worth chasing USO.  

    Nas pulling a nice fade behind AAPL $598!  

  24. New IWM Money position:

    I am going to reformat this spreadsheet this weekend to match the FAS Money portfolio. And probably match the $5KP to the 25KP as well.

  25. Foxconn/iflan – Well, from the cute “I Love Foxconn” t-shirts being worn by workers, apparently we got the story all wrong. It IS Happy Town here. All kidding aside, iflan – and I trade AAPL with you with comfort alterations, how do you (a man of medicine) and me (a unionist) square the reality of what underlies our gains – via stock or derivative? FLA is a phony front – its conclusions are meaningless at worst and tamped down at best. Please don’t let PD impede (lol) a reasoned response with an argument about relative conditions there versus here. (ok. Go ahead, PD). Seriously, we can agree that AAPL is not the only or worst offender, but they are and should be or made to be an example, no?

  26. Any idea why the market has headed down since consumer sentiment?  Is the dollar the "excuse"?

  27. Spain / Phil – Did you see the chart of the IBEX I posted yesterday? Not looking good. Not sure where the Must Hold line is there but it looks like we are below…

  28. SPY bouncing off the pivot…

  29. if AAPL April-580's are only 8.70, does that mean the market is expecting them to announce earnings after April 20th?
    Is it worth taking a chance on the position solely for the proposition they might "announce" to announce earnings by the evening of the 19th?

  30. Weasle
    Some large holder is getting out, the sell off is very orderly since Tuesday except 3 hours yesterday afternoon.

  31. Pharm- the chart I see has a date of 12/23/11 and if DIA was in the low 20's those puts I bought this morning would be looking mighty juicy.

  32.  pstas / Pharm / chart — Wow, that's strange. The second row in the grid labled "date" shows 3/30/2012 here. Maybe you have a caching problem pstas? Perhaps clear your exporer (which are you using?) cache and refresh?

  33. AAPL/Phil…I'm happy to see the account in cash  as well!    Thanks.     nicha/  I'm not comfortable in AAPL longs at this moment.   dclark/  I would give greater than 50-50 odds that AAPL goes down after earnings, no matter what they are.   I will undoubtedly be in cash at that time.  NF**X/  I'll leave the philosophical discussions to Phil.  He's much better at that than me.  Phil…..I have a technical question for you……If AAPL announces earnings on 4/20 it would undoubtedly be after Friday close.  But many places it will state that options expiration is not then, but rather the day following (Saturday).  So what is the final price that determines the value of an expiring option?   Is it Friday at 4 p.m., or is it sometime after that, such that after-hours trading could affect the option prices?  This could be very important for someone holding expiring options on an expiration Friday. 

  34. The PP is from Google documents….I will reload….

  35. Pivots/pstas
    If the pivots don't get posted, or you need some on a different ticker (CMG is pivoting pretty well), this easy link will give them to you.

  36. Long Put List Update with my original 3/15 commentary (rather than rephrasing it – you get the idea) and possible roll suggestions (or new entries):

    Anyway, it doesn't matter WHY the market is going up, we just have to buy stuff and hold it until these levels crack (which may be tomorrow or Monday but still, we have to be patient).  Assuming no big collapse tomorrow, we will redraw the Big Chart over the weekend and the 10% lines will become the Must Hold lines with some possible adjustments and our top 10 list that has now run it's course for S&P over 1,360 will give way to a new top 10 list for S&P over 1,400 and, no matter how silly it seems – we need to follow the market.  

    HOWEVER, we can use that low VIX and insane attitudes to place a few outlying bearish bets, like yesterday's Long Put List.  I mentioned PCLN in the above post but here's the list and the idea is to buy things that are CHEAPER than they were when I picked them and to take profits when they work and then switch to a fresh horse of the ones that are CHEAPER again.  That way, we keep betting on the things that went up even further than where we felt they were overbought.  PCLN, CMG and LVS are tops on my list with PCLN and LVS both plays on China slowing while CMG is just annoying.  Here's the whole list: 


    • AXP (was $12, now $56) July $49 puts at $1, now .76 – down 24% – roll to $52.50 puts ($1.38) for .62
    • BIDU (was $11, now $139) June $100 puts at $1.05, now .55 – down 47% – roll to $115 puts ($1.60) for $1.05
    • CAT (was $24, now $113) May $95 puts at .95, now $1.50 – up 58%
    • CMG (was $40, now $401) June $300 puts at $2, now $1.10 – down 45% – roll to $330 put ($2.25) for $1.15
    • FAS (was $8, now $103) July $60 puts at $2, now $1.70 – down 15% 
    • GE (was $6, now $20) Sept $19 puts at $1, now .94 – down 6%
    • GOOG (was $250, now $620) Jun $500 puts at $2.80, rolled to June $540 puts for $2.65 on 3/20, now $4.10 – down 18%
    • HD (was $18, now $50) Aug $43 puts at $1, now .72 – down 28% – roll to $46 puts ($1.22) for .50 
    • IBM (was $70, now $205) Jul $155 puts at $1.05, now .70 – down 33% – roll to $180 puts ($1.65) for $1
    • ISRG (was $80, now $531) July $375 puts at $3, now $2.50 – down 16% – roll to $430 puts ($4.70) for $2.20
    • IWM (was $35, now $70) Aug $65 puts at $1.25, rolled to Aug $71 puts for .85 on 3/20, now $1.67 – down 20% – roll to $76 puts ($2.70) for $1.03
    • KO (was $40, now $70) Aug $65 puts at $1, now .50 – down 50% – roll to Aug $70 puts ($1.20) for .70
    • LVS (was $2, now $55) June $50 puts at $1.85, rolled to June $55 puts for $1.50 on 3/20, still $3 – down 10%
    • MA (was $120, now $425) July $320 puts at $3, now $2.60 – down 13% – roll to $350 puts ($5.40) for $2.80 
    • MMM (was $42, now $89) July $77.50 puts at $1.10, now .90 – down 27% – roll to $82.50 puts ($1.62) for .72
    • PCLN (was $150, then $30, now $650) July $520 puts at $7.10 (see yesterday's post re. adjustment history), now $5.40 – down 24% – roll to $550 puts ($7.60) for $2.20
    • QQQ (was $26, now $66) July $61 puts at $1, still $1 – even 
    • V (was $42, now $117) Sept $95 puts at $2, now $1.90 – down 5%
    • XRT (was $15, now $61) June $59 puts at $1.90, now $1.60 – down 16% – roll to $62 puts ($2.75) for $1.15

    We'll touch base on these on a regular basis but make sure you understand these are SPECULATIVE shorts.  We pick a few and the market goes up and we lose 50% and we pick a few more next month and we lose 50% and a few more next time and we lose 50% and then it's July and the S&P is at 1,500 and all we need is a nice 150% gain on something and we've got our losses back.  If we never win – then we'd damned well better have some bullish bets that are making good money to offset it because these are now the hedges as we are forced to be bullish until the Fed runs out of money or that asteroid hits the Earth – whichever comes first…

    Keep in mind the trick is to SCALE into shorts and DIVERSIFY the risk so that a winner can help fund your rolls on the losers.  Also keep in mind that when we roll or DD a position – our primary goal is to get 1/2 back out even.  That puts up back to a smaller entry with more cash on the side that we can put into the next roll – if necessary.  What we're doing is we keep putting ourselves "in the right place" and, eventually, if we catch it at the right time – we have very strong put positions that can catch a major sell-off.   

  37. A good summary of the patent war between Apple and Android…

    In the short run, the tech giants could save themselves considerable legal fees and distraction if they were to lock their lawyers in a hallway of conference rooms and refuse to release them until they had crafted a series of comprehensive cross-licensing pacts. This process eventually resolved similar litigation in the desktop computer field. Such a solution “is still probably what will happen here,” says Stanford’s Lemley. “But in the meantime, these companies have paid their lawyers more than $400 million” over the last several years. “It’s not clear what they’re getting for that money.”

  38. Phil,
    Your thgts (esp since yo are now a year older and wiser) on shorts in Italy and Spain ETfs (with stops in case of EU bailout proposals)? low option volume.

  39. lflantheman Experation of options Happened to me before the caller can still call for the option on Saturday!

  40. Thanks Pharm

  41. Foxconn/NF – Beats not working.  I think it's great of APPL to utilize their position to force social reform in China (after all, they hired the people to review FoxConn's practices – albeit with some external pressure).  Now if only someone would do that in America…

    Why/Weasle – Same play as yesterday, some fund taking advantage of the BuyBots to make an exit but now the volume dies down and up we go.  

    And what Shadow said.  

    Spain/StJ – Terrible but all dependent on EU bailouts and they can pop just like they did in November, when everything was "fixed".  

    AAPL/BDC – I don't see a firm date yet but I did hear ON 4/20, which would be the morning after GOOG's evening if true.  

    AAPL/Iflan – I believe it counts until 5pm Friday but no one will announce at Friday's close – it would be AM if anything.  

    Patents/StJ – That's a silly writer.  What they get is freezing out 1,000 other companies that can't afford to spend $400M between them to go through patent litigation so they stifle outside competition while fighting among themselves.  Since they ARE allowed to sit in a room and work out deals during litigation (which would be collusion if done outside of litigation) – it's all just an investment by the top 1% to make sure the bottom 99% can't possibly compete on an even level.  This is how the laws of the land are used to enforce the dominance of the top 1%…

  42. Foxconn: "Foxconn/NF – Beats not working."
    Wow.  Expected better than that.  Oh well.  In America, we have free trade unions.  Maybe AAPL could advocate for same in China – or – even better – grant voluntary union recognition for all Apple store employees in the States.  

  43. Phil, if your revolution includes locking up all the lawyers, I'm in. I can bring guns and money.

  44. Why isn't RIMM on that patent chart?

  45. Phil - "The whole industry of Financial Advisers is ridiculous".  Amen.  After reading all the pundits encouraging me to bet on the Santa Clause Rally that didn't come, and then this week reading all the "quarter end window dressing" articles and then gitting bit by AAPL yesterday when that window shattered, I have vowed to only read Kimble and Cobra and the other charting sites and just completely swear off all the 'finance' Websites, they are mostly wrong most of the time.

  46. mrmocha
    Nothing like being alone with one's thoughts.

  47. Speaking of being alone with one's thoughts… Is this thing on? <tap> <tap> <tap>….zzz

  48. Rain / lottery - they were saying something similar on the radio today while driving to work, that it would take less than $200 million to buy all the combinations for the current $500 million lottery and guarantee a win.  The reason a Soros or Trump wouldn't do it is the risk of splitting with other winners.  Funny stuff…

  49. Pharm – do you know how the FDA meeting about CV went yesterday?

  50. HALO/Pharm – do you track Halozyme at all?

  51. Italy and Spain/8800 – Too much danger of EU bailout popping them against you.  If anything, I'd scale in very carefully but you have to want to roll and DD like it's PCLN…

    Unions/NF – Had unions.  They are kind of extinct and generally powerless, which is why workers in this country feel like they have no rights.  It's been drummed into us for generations now that Unionism is Communism – we hate strikers, protesters and anyone else who stands in the way of glorious Capitalism… 

    Cody/Pharm – Good point:  

    Remember when I used to dispute all those analysts who said we were already in a “tech bubble” last year by writing about how we’d know we were finally hitting bubble phase when social networking and app-related IPOs started hitting the markets and doubling on their first day?

    …   So as I like to do when the markets seem to be at an important juncture, as I think they are right now, let’s ask the question — Who’s more scared right now, the bulls or the bears?

    Lawyers, guns and money/Pstas – I'm with you!  

    Patents/Rain – I don't think RIMM really innovated much in the last few years.  That's the problem, they milked their proprietary model and got smoked by everyone else.  

    Analysts/Mr M – To me, it's like standing near the shore in the ocean and trying to determine what's happening with the tides by watching the water rush back and forth around you – it's useless conflicting information but, over time and if you step back and look at the bigger picture – a pattern does emerge and you'll see a trend.  It's just that you can go broke betting on the back and forth nonsense while you wait (and advisers will charge you a fee while encouraging you to bet on every wave), so you have to teach yourself to NOT listen to the day to day noise and wait until YOU have a clear understanding of the bigger picture – that's when you can find an opportunity you are comfortable with.  

    Lottery/Rain – Wow, worked well for them. 

    Why are the DIA April $130 puts still .92?  That's very annoying, I keep waiting for them to get lower so we can add some…

    Oil back to $103.50, Dollar back under 79.10, Gold almost $1,770 and that's a good shoring line (/YG) if the Dollar goes back over 79.10.  

  52. Phil – A long time ago I believe you mentioned that if we mentioned we were members here at TDAmeritrade we would get a discount on trades.  Am I remembering correctly?  If so could you remind me how to get the rates again and what they were?

  53. TDA/JJ – We used to deal with scott at thinkorswim dot com but I believe they changed the rep on us and I'm not sure who the right guy is now – hopefully someone does. 

    Boy, if we're going to flatline like this – I'm going to leave early! 

  54. TLT is not flat…. look it going… lower.  What happened?

  55. PHIL
    This is the guy at TOS
    Mike Barwacz
    Trade Desk / Sr. Manager
    866-839-1100 x 6815
    773-244-6815 direct
    312-435-3232 fax

  56. AAPL traders:   If you don't like sitting on your 'AAPL money' as cash, I think you can fairly safely sell some premium. ……if you do it with far OTM calls and puts.   In other accounts (not the 50k port)  I'm selling some 550 puts and 650 calls one to three weeks out .  I think AAPL will stay in this 100 point range up to earnings, not moving more than 50 points either way, and not knowing which way it will move.  I consider this a high probability trade ……….short strangle. 

  57. Phil / tides- great mental picture!  I am a news junkie so it is proving hard to wean myself of Yahoo! Finance and so forth, but it truly is "noise" as you describe.  I'm slowing learning to find peace in weekly charts 8) .

  58. lflan – what do you think if shorting April $625 calls at $8?

  59. CV & FDA – I think VVUS has problems.  ARNA should be fine as they addressed it in their trials.

    HALO – not much.  I will have to do a deep dive on them and see how good they really are.

  60. nicha……Too close.  That's why I'd go to 650 or higher, and only up to earnings.  .   And I wouldn't think those 625s  would be rollable either.  Under the right circumstances AAPL could shoot to 700+ post earnings and take your shirt with it.  Any play you make on AAPL right now needs to be high probability and out within 3 weeks.

  61. HOV just got plugged on CNBC

  62. nicha,  up to earnings I think you are safer shorting the puts than the calls.  Thought AAPL is pulling back a bit I don't think it will get to 550 pre earnings.   But I think safer to sell 550 puts than 650 calls .  I'm doing them both as a strangle because I think it will work and because it doubles the premium I recieve. 

  63. Iflan – your target for AAPL for next week? Thank you.

  64. Phil an options and volitility question, in your experience woulsda big spike in the vix cause all options to rise in price thus making being long actually a better play than say selling premium that might be countered by a sharp rise in the VIX?

  65. 580 to 620  

  66. Iflan – here is my dliemma. I sold the April $575's this AM for an average of $33. I still hold the $625's short. Any suggestion to recover the $7K loss?

  67. emunster - thanks.  The extension has changed to 206815.  I left a message since Mike is out today

  68. MegaMillions over $600M!  

    11:00 AM On the hour: Dow +0.16%. 10-yr +0.02%. Euro +0.10%vs. dollar. Crude +0.53% to $103.33. Gold +0.53% to $1663.65.

    11:35 AM European shares surge in the last hour of trade to close with sharp gains. Stoxx 50 +1%, Germany +1.1%, France +1.3%, Italy+0.4%, Spain +1.1%, U.K. +0.4%. For the week: Stoxx 50 -1.9%, led by Spain, -3.4%.

    12:00 PM On the hour: Dow +0.41%. 10-yr +0.06%. Euro +0.24%vs. dollar. Crude +0.43% to $103.22. Gold +0.53% to $1663.75.

    1:00 PM On the hour: Dow +0.42%. 10-yr +0.02%. Euro +0.25% vs. dollar. Crude +0.7% to $103.5. Gold +0.84% to $1668.75.

    And this is WITH oil exports!  Canadian GDP rose 0.1% in January, inline with expectations. Y/Y growth slowed to 1.7% from 1.9% in December. Manufacturing led the way, +0.7%, while oil & gas extraction slumped 0.9% amid less need for natural gas.

    Isn't this great – I write something in the morning and then it's a national conversation:  Your Financial Adviser Might Be a Lemon (Time)

    Why Wall Street Hates the Lazy Portfolios Strategy (SmartMoney)

    Is Wall Street Full of Psychopaths? (The Atlantic)

    Marx at 193 (London Review of Books)

    Morgan Stanley bear Adam Parker pours cold water on the S&P 500's recent breach of 1,400: "Corporate fundamentals are currently strong, but large economic dislocations remain… softening U.S. economic data, deterioration in Europe, ineffective policy in China… Don't pay a higher multiple for today's corporate earnings!" Parker also has warned about the impact of rising gas prices.

    Forget the Great Depression, says Jim Grant, Bernanke would be wise to study the devastating downturn of 1920-21 in which GDP fell 23.9% top to bottom. The response? The Fed allowed rates to rise, the government balanced the budget, and … "something wonderful happened: Markets cleared, and a vibrant recovery began." Grant's opus against the Bank of Bernanke here.

    Why Ben Bernanke isn’t declaring victory for America’s economic recovery (Telegraph)

    Who Captured the Fed? (Economix)

    The ISDA is at work overhauling the sovereign CDS contract as the Greek experience unmasked flaws in the existing framework. The CDS contract needs to "reflect (the) financial reality" that governments don't always default, they restructure, says BNP's Nic Beckmann.

    WTF???  The Bundesbank will no longer accept bank bonds from Ireland, Greece, and Portugal as collateral, the first EU central bank to exercise this right recently granted by the ECB. The Buba currently has €500M of the paper pledged to it and will spend the next weeks notifying banks that new arrangements will be necessary.

    The conventional wisdom on China's weakish economic data to start the year says much of it is to do with the New Year celebration. Research by ISI Group says the seasonal adjustments too strong, and that business conditions are even worse than reported. March data (coming soon) will be key.

    India's current account deficit in 2011's final quarter hit $19.6B, a near doubling from 2010 (nice visual here). "The trade deficit widened and capital inflows fell far short of financing requirement, resulting in significant drawdown of fx reserves," says the RBI. Indian shares last night, +2%EPI +2.7%.

    Analysts expect a weak upcoming earnings season, but that may not be such a bad thing, Justin Lahart writes: “If a profits slowdown is coming because companies have reached the limit on margin expansion, and now have to hire more workers to keep up with sales, investors should really celebrate what is happening… Earnings growth is nice, but a healthy economy is even nicer.”

    Grim Housing Data Shows We Have Not Hit Bottom (The Fiscal Times)

    The biggest brokerages are targeting an ever-wealthier clientele to boost revenue and profitability, but a new study concludes a growing number of multi-millionaires are taking their money elsewhere. The share of high net worth customers' assets held by the top four brokers - MSBACWFC and UBS - has dropped to 45% from 2007's 56% peak.

    Bespoke reveals its newest list of bargain basement stocks trading under $10/share with positive valuations and fundamentals as well as attractive price charts: ACETAXTIBZERT,FCFGCAJRNLFMOVEPACRRFRTRUTHSCLNSUNH,SUSQTQNTXOXO.

    Crocs (CROX +1.6%) edges higher after CEO John McCarvel gives a positive interview to USA Today. McCarvel asserts Crocs' casual footwear leaves it well-positioned in Asia (expected to be its largest market by the end of 2013), and notes counterfeit Crocs stores have emerged n the region. He adds the shifting of some of Crocs' manufacturing from China to Vietnam lowered its production costs a bit.

  69. Goldman ups the Building Products group to Neutral citingimproving sales trends and easing commodity prices. The firm's top pick in the space is Buy rated Owens Corning (OC +1%) given its pricing power, and its least favorites remain Sell rated Whirlpool (WHR +0.5%) and USG (USG -1.8%given weak fundamentals.

    A warning from the NIH on the negative effects of metal can chemical bisphenol A on children has caught the attention of parents and threatens the fortunes of both producers as well as the $60B a year can-making industry. Though regulators haven't acted yet, companies such as Campbell Soup (CPB +1.8%) and H.J. Heinz (HNZ +0.7%) have already jumped the gun by taking steps to remove the compound from their products. In the line of fire: SLGNBLLCCK,DOW.

    Trading is halted in Global Payments (GPN -9.1%) as the credit card industry investigates a data breach that affected Visa and MasterCard. GPN shares had dropped as much as 13% when trading stopped in New York pending further news.

    A number of payment processing stocks are getting tossed around after news breaks that Global Payments could be the culpritbehind the security breach of credit card data. Decliners: HPY -2.5%,MGI -0.8%NEWT -1.4%FLT -0.7%UEPS -2.0%.

    Whole Foods Market (WFM +0.6%) says it will no longer stock "red-rated" species of fish that are believed to be over-fished or are caught through methods that can damage the marine environment. Among the seafood disappearing from WFM shelves will be octopus, gray sole, skate, Atlantic halibut and Atlantic cod caught by trawls.

    Shares of ImmunoGen (IMGN +4.1%) lose traction after shooting up over 12% on positive results from partner Roche for its experimental breast cancer drug. The rally got cut short in part by theopinion that the market value on IMGN is "significantly" too high based on the small 5% royalty tied to Roche's drug.

    Told you so!  Valero Energy (VLO -4.2%) is the S&P's leading loser so far after Credit Suisse cuts 2012 earnings estimates, citing "weak retail margins, VLO-specific refinery maintenance and weak ethanol margins. With a potentially sluggish patch for the economy, refiner shares could consolidate here."

    Deutsche Bank says EOG Resources (EOG +0.8%) islikely to beat expectations and raise production and cash flow estimates when it reports earnings next week. The firm adds that its 40% liquids growth rate vs. guidance of 30% remains intact and raises its price target to $130 from $127. 

    Disney (DIS +1.4%) gains on an upgrade to Buy on valuation at Lazard Capital, citing secular positive program fee growth, and a strong net cash position that can be used for repurchases or acquisitions

    Shares of Sirius XM (SIRI +4.3%) show a pesky gain after reports swirl around that Liberty Media (LMCA +1.1%) is closing in onadding to its ownership stake in the company and vying to gain "de facto" control of some Sirius' licenses and assets via an investor agreement between the firms.

    More on UBS' Buy rating on Lululemon (LULU +2%): The firm says it's positive on Lululemon's competitive advantages in product innovation, marketing, and management, and expects strongsame-store sales growth to minimize the impact of margin pressure. It also thinks reaching the 150-175 store level will be a "tipping point" for growth.

    In spite of minimal industry-wide growth, sales of chips designed for mobile devices rose over 20% in 2011 to $35B,estimates ABI Research. Booming smartphone and tablet demand is boosting sales of many types of chips, including baseband processors (QCOM), applications processors (TXNNVDA), NAND flash memory (SNDKMU), RF components (SWKSTQNTRFMD), Wi-Fi chips (BRCM), audio codecs (CRUS), and motion sensors (INVN). (earlier)

    Wall Street is upbeat about yesterday’s presentation by Intel (INTC) discussing its new Romley server microprocessors. Stifel Nicolaus is "convinced Romley could be Intel’s most successful server/storage/networking processor yet," and the company's next server-class CPU based on the same architecture "could surpass Romley in performance and revenue."

  70. WSJ saying "Obama clearing the sanctions against Iran"

  71. AAPL short strangle- lflan – excellent play. Balanced I'm in. Perhaps you should add viable for PM accounts as the margin issue could be a ballbuster in a big move either way.

  72. Big box retailers decide to go small in the face of a "seismic shift" in the habits of strapped consumers to purchase less and shop online with Best Buy (BBY -3.0%), Wal-Mart (WMT +0.4%), and Target (TGT +0.4%) all opting to emphasize small-format stores and online initiatives. The trend is also deeply rooted in demographics as on-the-go households see a reduced need to load up on appliances and consumer goods, according to analysts.

    "Free cash flow is king," goes the title of BAML research determining free cash flow/enterprise value as a superior screening metric. Among the S&P 500 firms with the best readings are short-seller favorites GameStop (GME) and Best Buy (BBY) along with 2 health insurance companies (HUMWLP) dogged by uncertainties about healthcare reform. (h/t/ Ploutos)

    Though Amazon's (AMZN) margins have been hurt by the cost of supporting Prime shipping, RBC's Ross Sandler believes Prime will be a long-term positive for Amazon, following a survey. Sandler, who estimates Amazon has 15M Prime subscribers worldwide (in spite of reports of just 3M-5M), says his survey indicates Prime users increase order activity by an estimated 153% after signing up (though average transaction size is likely also lower).

    RIM looks increasingly fragile, but Town Hall Research steps up with a Buy rating on another troubled smartphone company, Nokia (NOK +0.5%): "Long term, the company is now poised to slowly reestablish itself as a meaningful player in smartphone markets around the world." RIM is where NOK was a year ago, with its recovery not yet clear, but a rebound is "now on the near horizon for NOK.”

    A new USPTO filing suggests Apple (AAPL) is developing an advanced 3D camera. The filing describes a camera that would use multiple sensors and "microlenses" to create 3D images more accurate and detailed than current solutions. The commercialization of the technology would likely have implications for image sensor suppliers OVTI and SNE, depending on the cost of the solution and whom Apple chooses to partner with.

    Three lunchtime reads:

    1) Grim housing data shows we have not hit bottom

    2) JPMorgan: Best of the major financials

    3) Inflation: Still nothing to see here

  73. Another Fed Stimulus Program Ending Soon ?
    click for larger chart


    10 Indicators to Watch for Another Spring Slide
    Jeffrey Kleintop

  74. From Barry:  


    The following chart should be viewed and compared with the table that follows immediately below the chart.

    Click to enlarge:



    Individual cycle charts follow the jump . . .

    Read the rest of this entry »

  75. nicha…I don't know what trades you made.   You must specify calls or puts.     bobhu….good article, and good reason to stay away during earnings.  

  76. Excellent article here that touches on many important points. It may have been linked to here before. About how the US is becoming a 3rd world country (or developing many of the same characteristics.)

  77. WTF is right on the ECB not taking Portugal, Ireland and Greek debt as collateral.  That is downright scary!

  78. Mega Millions $640 Million
    If no one wins tonight the next drawing will be for over $1 BILLION !!!

  79. Iflan/AAPL – I followed the AAPL portfolio. I  bought 10 April $575 calls for an average of $40.58 and shorted 10 April $625 for $12.60. I sold -the $575's this morning for $33 and still HOLD the 10 short $625's at $8 now. My current loss is $5000 as of now. Any advice on recovering this?

  80. Here we go, the 2:15 buy express is about to start moving.

  81. AAPL /lflan – My volatility studies show AAPL between 582 and 618 next week based on the current price so good guess! I post a new weekly spreadsheet every week with these numbers.

  82. TLT/Bob – Money coming out of bonds – maybe setting up for big buy at the end of the day.  This is good, finally some evidence that $114 is a playable top.  Maybe some leak of major QE?  

    TOS Rep/Emunster – Great, thanks!  

    May as well get back into USO with 10 April $40 puts at $1.20 in the $25KP.  They were $I.66 yesterday and bottomed out around .90 this week so a good DD or roll spot there if oil goes higher.  

    VIX/Sage – Yes, a move up in the VIX will boost all option prices, generally.  It actually means you get the most bang for your buck with puts because, when the indexes drop, the VIX goes up and the premiums of the puts go up and the stock moves in your direction.  That's also why we prefer to sell puts into a drop – we get to sell the most premium that way.  Buying calls, on the other hand, gives you the worst deal as the VIX tends to go lower as the market goes up so the premium bleeds out of your calls pretty quickly – which is why we like to sell those too!  Obviously, if you want to be bullish – nothing beats selling puts – especially if the VIX is currently high already.  If you want to be bearish when the VIX is low – buying puts is most efficient.  

    600M MegaMillions tickets bought so far.  Now $640M and growing.  Could be a Billion if no one catches it today!  

    LOL – and what Itrade said! 

    Iran/Deano – I don't see it.  

    3rd World/JMM – I know, sucks doesn't it?

    Dow volume just 55M at 2pm – what a joke! 

  83. The Only Way is Premium: Phil's put sales make a lot of sense, but sense in the market is in short supply right now. Complimentary ideas could be selling back/ratios for a credit. I just put on a GS Jul 12 125/130 back ratio for a $3.50 CREDIT. That means buying the Jul 12 125 Call and selling 2X the Jul 12 130 Call.
    A strong upward move on GS requires rolling 1X the short Jul 12 call (whilst pocketing a $5 gain on the 1X 125/130 Call spread. Layeriing another back/ratio on top as GS ratios is also an option.
    But at least you get paid for a decline in the price of GS and you get paid for a modest move up in the price of GS. Now what's not to like?

  84. This chick will not leave me alone!  


  85. Phil – Iran – right now its just on the homepage as "Breaking News"

  86. Pharm / Umpel

    Make the elipse fit price history and then draw a vertical line through time at the right edge of the elipse !!

  87. Nice dip on oil below $103.50!  

    Iran/Deano – Ah, I see it now.  No article.  What does "clears" mean – on or off?   Oil is acting like they're off but I doubt it.  

  88. Hi Iflan — what do you think of sell 560 put next week for 95 c to collect premium over the weekend. thx

  89. Phil: "Spain/StJ – Worse than Greece when push comes to shove – and it will soon. "
    H'm.  Could be, of course. But spent 10 years running a company in Spain — ending in 2006, so not ancient history — and while the Spanish econ numbers, primarily their success in outdoing even the U.S. in leveraged real estate speculation, look truly grim, I'm not sure about the "it will soon", as I can't see any reason for imminence.  
    There's an old saw — or maybe I just made it up — that the more you know about something, the less willing you are to predict a result.  One item:  Spain has, and has always had, a huge "black economy."  Most people generally won't pay more than 1/3 of their income in taxes, no matter what the tax rate.  Spain has 1/ a 16% VAT on most products, 2/ a 43% marginal income tax rate for over E 53,000, 3/ a "patrimony tax" of 2% per annum — yup, that's your net worth, nothing to do with gains or losses, that will take it right down to zero if you don't keep pace with your investments [I knew you'd like that!].  And now they're going to raise VAT to 18% [it excludes food and other essentials, taxed around 4%].  The tax authorities have cracked down substantially on offshore banking [CHF] over the last few years, but I would guess that a significant number of transactions are totally off the radar screen — I'm not talking about buying a used computer from a buddy, I'm talking about high-end real estate transactions that have a "declared" price and a black component paid separately and elsewhere.
    Lastly, Spain still has largely rural roots.  A friend once commented, "when Americans lose their jobs, they sit home and hope the government sends them something.  When a Spanish is unemployed, he goes back to the family plot and eats." All of which is to say, I cannot say you are wrong — on the contrary, your correct predictions are often very profitable — but I would ask why you think a Spanish meltdown of some sort will happen sooner rather than later.  Or ever.

  90. Strange that VXX has been anchored to 16.60, even as the market has fluctuated a bit.

  91. BTU/Phil -does your outlook on nat gas suggest selling BTU Jan $25 puts at 2.70 to be nice or are we not being paid enough at this level of VIX?

  92. "President Barack Obama is moving ahead with tough new sanctions aimed at squeezing Iran's oil exports after determining there is enough crude on world markets to take the step without harming U.S. allies, The Associated Press has learned.

    Obama's move allows the U.S. to go forward with sanctions on foreign banks that continue to purchase oil from Iran. The sanctions aim to further isolate Iran's central bank, which processes nearly all of the Islamic Republic's oil purchases, from the global economy.

    U.S. officials hope ratcheting up economic pressure will both push Iran to abandon its disputed nuclear program and convince Israel to give sanctions time to take hold before pursuing a military strike on Iran's nuclear facilities."

  93. UR a sneaky man JRW….very sneaky!  Have a great weekend!

  94. Phil - (Reuters) – President Barack Obama on Friday determined there is enough oil in the world market to allow countries to cut imports from Iran, U.S. congressional and administration officials said, allowing Washington to move closer to sanction countries who still buy Iranian oil.

  95. While on the subject of Europe, there seems to be increasing divergence in economic performance between the Peripherals and France/Germany, the latter of which have been treading water for the last few years.  Any play there?

  96. Zero – the play is called…..wedgies…

  97. Hi Phil – Do you have any updated suggestions on SVU?  Greatly appreciated!

  98. PCLN gift vouchers: Continuing on the theme of back/ratio writes. While the business model seems ripe for an implosion, the market makers increase price targets, and the analysts analyze – the stock price seems to have a life of its own in the rarefied upper layers. Although it requires a sharp intake of breath, the PCLN Jul 12 720/780 Call back/ratio can be sold for a CREDIT of $5.00. 10 contracts require a buying power of about $84,000. If PCLN happens to reach $780 at July opex then after counting your $60,000 the roll of the short 1X Call should be manageable. And if conventional wisdom is correct and PCLN behaves itself then you get $5,000 for taking the trouble to place the trade.

  99. Spain/ZZ – Have you not seen the austerity budget they just passed.  It's cutting about 20% of Government spending NOW!  They already have 20%+ unemployment and 50% youth unemployment – that better be one HELL of a black economy to fill that hole.  As I said earlier, difficult to bet against an EU bailout but Spain may actually be too big to rescue. 



    • Obama Clears Sanctions Against Iran

      The White House cleared the way for tough new sanctions on Iran Friday, saying a cutoff of Iranian oil wouldn't significantly harm world markets. 12 min ago

    Enough oil/Deano – And he's right, there absolutely is and the reaction on the NYMEX confirms it – selling on the news. 

    BTU/Scott – I like them at net $20ish but there is a chance that Nat gas companies will be literally PAYING commercial businesses to take gas out of the pipes this summer – that's just not going to be good for coal.  On the other hand, as a long-term investor with $30,000 to spend buying 1,000 shares of BTU, what do I care if I sell 10 2014 $25 puts for $5 (net $20) and then have to DD at $10 for a $15 average entry?.  That way, you can collect $5K now, have $35K set aside to buy CHK and, if they go up, you make 25% against the $20K commitment (only $2,500 in net margin on TOS) and of course you can still roll it or whatever but the bottom line is you buy 1,000 at net $20 so that's your goal amount and any additional shares you get to buy cheaper is a bonus.  That's what a good hedged entry is – you will almost be disappointed if BTU DOESN'T fall below $20 and give you a cheaper entry. 

  100. AAPL bake: to complete a troika of ratio/writes, the AAPL Jul 12 600/650 back/ratio can be sold for a $3.57 CREDIT. For 10 contracts requires $51,000 of buying power. So a 100% return in July, with the proviso that you need to roll the 1X short 650 call. But AAPL can't keep going up, can it?

  101. mr stick again?

  102. Phil:  It might be that big: today's headline, La Vanguardia, Catalunya's principal newspaper: 
    El Gobierno anuncia una amnistía fiscal para repatriar capital no declarado

  103. Interesting – AAPL is now a lead weight on the Nasdaq – they can't go anywhere without it.  

    Peripherals/ZZ – All too crazy with random bailout news.  I prefer shorting here because trades on this side of the pond don't seem to believe a melt-down in Europe would affect us (or China for that matter).   They did the same thing in 2008, when Asia was clearly slowing down and then the banks failed in Europe and our market STILL went up for a while – it didn't matter until it did and then it suddenly mattered a lot.   Northern Rock was September, 2007 – nobody pulled back…..

    SVU/Ink – You have to believe they'll survive long-term but, at $5.80, you can buy the stock and sell the 2014 $5 puts and calls for $3.30 for net $1.50/3.25 and then the .35 dividend is 23%

    PCLN/Winston – I have faith in the puts.  On the AAPL play, you're risking earnings twice.  

    Spain/ZZ – They are counting on repatriation to fix their GDP?  Worse than I thought!  

  104. TLT/Phil – I bought the TLT April $110/111 BCS you suggested yesterday as a cash earner.  Would you buy back the $111 calls down here for a profit?
    "TLT/StJ – Yes but there's virtually no chance we lose and it's not taking up any margin so it's a matter of waiting PATIENTLY for 22 days to make 25% on our .80 – is that a bad thing?   In fact, that's not a bad spread if people want to make 1% a day for the next 22 days (the TLT April $110/111 bull call spread)… " 

  105. Stick
    It seems as though Mr big seller is done, money flow is marginally in, volume is very low, last trading day of quarter, and the dollar is stable. Maybe 60/40% esp. if AAPL recovers since oil is done for the week. Nobody cares about anything else!

  106. DIA – In the $5KP, let's add 3 April $131 puts at $1.17 and, in the $25KP, let's spend .30 to roll up to the $131 puts and another .30 if we get an opportunity on the $132s (now .40 at $1.57).  

  107. TLT/Aussie – Oh sure, I think it's worth the risk with 3 weeks left.  They are up over 30% from yesterday so a good deal.  

    Such a good idea, in fact, that let's take out the TLT April $111 calls for $2.20 in the $25KP and let's add 5 April $110/111 bull call spreads in the $5KP for .70.  That's $350 to make $150 in 3 weeks.  

  108. If this isn't a flush the stick is broken!

  109. AAPL/Phil: You are right. Although the July 12 $650 Calls at $23.70 roll to the Aug 12 $670 Calls, and then to the Oct 12 $700 Calls – which is almost impossible if we believe the rationale of those who know more than we do on AAPL. And between July and October I have the chance to layer on a BCS financed by a corresponding Put sale for a zero entry, and I still get to ponder on my profit from the 1X $50 from the original BCS. Not forgetting that if AAPL does crumble I still get to keep the original credit. It seems too good to be true.

  110. All – What would you do if you won the lottery tonight?

  111. Jabo / stick - AAPL has painted a perfect downtrend line all day that points right to 600 at close, wouldn't it be fun to watch them ramp it to 610 in the next few minutes just to freak out everyone that's been selling calls in the way down!  I expect anything is possible these days..

  112. BTW the QQQ 68 calls are a only a penny if you're a stick believer…

  113. lottery question/nicha
    Become a Republican

  114. rustle – ROFL….very nice answer!

  115. LOL Rustle!  

    OK guys – I gotta go – Have a great weekend everyone – see you Monday.  

  116. Oh, turns out the winning numbers will be:  3, 47, 6, 8 , 19 and 30 (in case anyone's playing).  


  117. HAVE FUN, Phil.

  118. Enjoy Phil!

  119. Looks like AAPL is looking to pin at $600 today…

  120. Enjoy your birthday weekend, Phil.

  121. have a great weekend Phil!
    If I don't win…
    FU lottery!!!

  122. Iflan/AAPL – I ended up with 5 short of each: $575 Puts and $625 calls. Will close both in the next week or two.

  123. Lottery- I guess if I won it would make me a Democrat since I would be spending everyone else's money. :)

  124. Phil – I am going to play those numbers. Don't expect a cut if I win :)

  125. Issac did't learn, AAPL didn't fly, and the big guy came back! Monday doesn't look hot either.

  126. PCLN and CMG down????

  127. Iflan or Phil
    I have an Aapl April 580/585 BCS, up a few hundred bucks. Would you recommend I just cash out and wait until after earnings? Thanks for all your guidance on Aapl. It’s been good.

  128. Phil and everyone this is my last day for awhile. I cannot thank you enough for all the wisdom and learning.
    With a chance to make 400% I have to go. Still work full time but biz has been slow.
    Recently my clients just referred me to three new accounts. If I make say $30K commission  per new account I split it with the house and get $15K.  However my buy out increases  4 times the 15K or $60K .That's how I get to 400%, Being much closer to 70 than 60 it would be nice to retire and and be a full PSW member.
    My goal here was to lean how to preserve what I have and make a consistent return so I would have the confidence to retire. Thanks to you Phil I know it can happen.
    Working full time and keeping up with you guys is wearing me out but I  still love it.
    My goal is to take 2 years to  build my retirement up to within 90% of what it was 5 years ago,  retire,and  become a full member at PSW.
    Also I am a past conservative who has become a middle of the road fence sitter and am in danger of becoming a liberal. That may not be so bad but being in the middle is more fun as I can piss both sides off at the same time,
    Thanks for a great experience and keep planting trees.
    Rick (RIP to you Phil)

  129. Good luck Rick!

  130. Wow….. a big wheeeee on Groupon AH!

  131. Truly scary that they might have to rule on a law and might not not understand it…


    Whether they were playing devil’s advocates, or simply unaware of the differences between insurance and other many other products, this fact seemed to elude the justices.

    “If people don’t buy cars, the price that those who do buy cars pay will have to be higher,” said Justice Antonin Scalia. On a basic level, this gets supply and demand backward. But as Brookings Institution economist Henry Aaron noted, even if you give Scalia the benefit of the doubt, he still betrayed ignorance of health-policy basics.

    “This response was and is bad economics,” Aaron wrote. “It is true that every commodity is produced along what economists call a ‘cost curve’ — raising output may lower average or marginal unit costs by spreading overhead or achieving economies of scale, but it may also raise costs by forcing up the cost of inputs or incurring diseconomies of scale. None of this occasions concerns about fairness or free-loading or, to use the economist’s term, ‘externalities.’ But the cost shifting that occurs when uninsured patients fail to pay their bills does; it causes one group — the insured — to have to pay part of the cost of services others use.”

    Beyond that, as health policy expert Kevin Outterson noted, the justices based many of their questions on the assumption that all insurance functions identically. Justice Samuel Alito in particular compared health insurance to burial insurance.

    “If a healthy person stays out of the pool, the average costs for those left in the pool are higher,”Outterson wrote. “That’s not true for underwritten insurance products (such as life or auto).”

    These facts are key to judgments about the uniqueness of the health care and insurance markets. They’re also key to understanding what the consequences of striking the mandate are if they deem it unconstitutional despite that uniqueness.

  132. Good luck Rip!!!  God bless!

  133. lottery: If I won the big lottery payday, I would hire the best investigating team in the country to probe how it happened that I won without buying a ticket!
    Also, I would hire Warren Buffett's CPA team to figure out how to avoid paying taxes like he does.

  134. Best of luck, Rip – We'll see you back here, I'm sure.  Godspeed.

  135. Good afternoon.  ?Evening?    Sorry I was out of the loop this afternoon.   Look like we're right re AAPL thus far.  Down another 10 points.    See you Monday!   

  136. Will anyone buy me 5 tickets for the lottery?  I'm in FL now and it's not here.  I'll paypal you the $$, just send me the numbers before it goes off.

  137. hey Phil ,
    how low can nat gas go?  does it start to get interesting doen here?

  138. Good luck RIP!

  139. Online tool reveals how politicians will affect your wallet:

    And here is the full article:

  140. Health Care- I have been searching for on over view on the subject and finally found the following Cato Institute report which looks at pros/cons of various systems. Granted , Cato has a bias but the details are very informative Cultural/social norms play a very significant role (even within the EU) so it should be no surprise that we are debating such an important subject as insurance mandates.
    This issue has been demagogued by all sides (particularly here from the left) . It is a very complex subject with no easy answers.
    By the way, the just for fun, I figured that the 2700 page Obamacare bill referred to in the Supreme Court arguments would constitute a book of standard 8.5"x11" paper 12" thick. How could there possibly be any disagreement or problems simmering away in that?

    The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World
    Critics of the U.S. health care system frequently point to other countries as models for reform. They point out that many countries spend far less on health care than the United States yet seem to enjoy better health outcomes. The United States should follow the lead of those countries, the critics say, and adopt a government- run, national health care system.
    However, a closer look shows that nearly all health care systems worldwide are wrestling with problems of rising costs and lack of access to care. There is no single international model for national health care, of course. Countries vary dramatically in the degree of central control, regulation, and cost sharing they impose, and in the role of private insurance.

  141. Regulation- from Jim Grant:
    Here's an idea: Let's try capitalism for a change.
    Rather than the bureaucratic monstrosity called the Dodd-Frank Act, for instance, why not hold the bankers personally accountable for the solvency of the institutions that employ them? Until 1935, bank stockholders would get a capital call if the company in which they had invested became impaired or insolvent. It was their problem, not the government's. In the same spirit, suggests the New York investor Paul J. Isaac, let the bankers forfeit a portion of their past compensation—say, that in excess of 10 times the average manufacturing wage—if they steer their employer on the rocks. And let them surrender not just one year's worth but rather seven year's worth—after all, big banks don't go broke all at once. Proceeds would be distributed to the creditors, as in days of yore. Bankers should not only take risks. They should also bear them.
    The solution to regulation is more thinking like this. I could boil down banking regulation to about 3 pages One page to outline insured deposits; another page to outline capital requirements; the last page as above- executive and owners liability. Banks would be free to dabble in soybean futures or Persian rugs but the owners take the hit. The industry would be reformed overnight.

  142. Mike Luckovich: Supreme Court decision

  143. From Barrons- Abelson- mainstream media oil
    The chart is the handiwork of Bespoke Investment Group. It shows the glaring disparity between this year's extraordinary build of crude inventories, topped by the latest weekly jump of 7.1 million barrels, and the average stockpile going back to 1984. As Bespoke comments: "Although crude oil inventories were already above average to start 2012, the spread between actual and average inventory levels has done nothing but go up this year…There have only been five other years since 1984 where crude stockpiles were higher at this time of the year than they are now."
    While the seasonal peak for inventory build is some six weeks away, what that graph says to us is that barring an attack on Iran, crude and pump prices are headed for a fall, and maybe a big one.

  144. Cook More Popular than Jobs at Apple – Enjoy your time on Earth, gang, because by the time you're cold your employees and stockholders will already have forgotten you!

  145. pstas/ “Critics of the U.S. health care system frequently point to other countries as models for reform. They point out that many countries spend far less on health care than the United States yet seem to enjoy better health outcomes. The United States should follow the lead of those countries, the critics say, and adopt a government- run, national health care system.
    However, a closer look shows that nearly all health care systems worldwide are wrestling with problems of rising costs and lack of access to care.”
    Typical right-wing truthiness.  Of course, all health systems are wrestling with problems – doh!  The salient facts, as I understand them, are that European systems cover most of their people, that they cost half as much as the US “system”, and that outcomes are far better.  My physician colleagues agree we need a single-payer system, but the Supreme Court, a captive branch of the 1%, may throw out the poor substitute we have.  

  146. Health care costs
    Of course every country struggles with this. Populations are aging and economies are in decline.
    The recent health reform bill in the UK has been enormously controversial, not least because it allows greater commercial intrusion into the National Health Service, but no one there on any side of the argument wants a system similar to that enjoyed by the US. The way US health reform should have worked was for Congress to look at all the best and worst of all the health care systems in the world, and then have crafted something uniquely American that would be the best of all.

  147. Q2 Opens Mostly Bullish  - Stock Trader's Almanac

  148. Late Saturday Night post:
    TZA / Money Outflow?
    This site:

    discusses "money outflow" of $44 Million in TZA.  The article was written or posted on March 30-Friday.
    Can anybody comment on what this means?
    Does this "outflow" affect the price of the shares?  Is it something that is reflected in daily trading volume?
    I'm a total novice, but I don't understand the concept of "money outflow".
    My assumption has been that once the ETF is issued, and it trades daily in the seconday market, and ignoring any splits, the total # of shares outstanding remains static.
    I can understand that when the share price is low, the overall capitalization of the fund goes down, if there are a fixed number of shares outstanding, just like any Corporation share, such as Ford?
    I am also unclear about how statistics like this come from, or where they can be found.
    In Summary, does this $44 Mil "outflow" affect the tracking accuracy of the ETF, or the price of the shares (the "demand") in the market of the shares??  Is it something that in would any way affect small time TZA traders such as myself?

  149. Kongen- Interesting comment re: your colleagues. The report I referenced discussed considerable detail about 13 different national programs. Which of these does your group endorse and why? 
    Also, which members of the Supreme Court are "captive"? All of them? Are you implying some or all are on someone's payroll? If so, which one's are and what is  your evidence to support that contention?

  150. Here are a couple of quotes from the Cato report. Is this what you mean by "right wing truthiness"
    At the same time, too many Americans
    remain uninsured.
    Although the number of
    uninsured Americans is often exaggerated by
    critics of the system, approximately 47 million
    Americans are without health insurance at any
    given time.

    Obviously there are problems with the U.S.
    system. Too many Americans lack health
    insurance and/or are unable to afford the best
    care. More must be done to lower health care
    costs and increase access to care.
    Both patients
    and providers need better and more useful
    information. The system is riddled with waste,
    and quality of care is uneven. Government
    health care programs like Medicare and
    Medicaid threaten future generations with an
    enormous burden of debt and taxes.

  151. From [fomerly Weather Underground, but they finally chickened out when success beckoned]"
    "Ice coverage on the Great Lakes was just 5% this past winter, the second lowest on record, behind 2002. The lack of Great Lakes ice this winter probably added a few degrees of warmth to the unprecedented "Summer in March" conditions observed in Michigan last week--an event the National Weather Service in Detroit called "perhaps the most anomalous weather event in Michigan since climate records began 130 years ago." We can anticipate that areas surrounding the Great Lakes will see an increased incidence of warm spring weather due to decreased ice cover on the lakes.

    The loss of Great Lakes ice has allowed much more water to evaporate in winter, resulting in heavier lake effect snow near the shore, and lower lake levels. Lower water levels have had a significant impact on the Great Lakes economy. Over 200 million tons of cargo are shipped every year through the Great Lakes. Since 1998, when water levels took a severe drop, commercial ships were forced to light-load their vessels. For every inch of clearance that these oceangoing vessels lost because of low water levels, $11,000 – $22,000 in pro?ts were lost per day. Hydropower plants have also been affected by low water levels; several New York and Michigan plants were run at reduced capacity, forcing them to buy higher priced energy from other sources, and passing on the higher costs to consumers."   [Italics mine].  
    There might be retrace of nat. gas prices if a serious hydro flow problem develops nationwide, which would be consistent with the warmth and low snowfall of winter across the U.S.  With gas so hammered, it would be a cool play  - all it would take is a correspondingly hot summer running those A/Cs across the U.S. well into autumn.  When considering that climatological or geological events probabilities are calculated in human lifespans, I'm guessing that the trend is your friend, so there might be less water this summer, and there certainly will be a bumper crop of insects that survived the warm winter chewing up the crops. Illinois predicts a 5.2% increase in the cost of producing corn in 2012.  Could be a long hot summer.

  152. Oh crap, it's Sunday.  I was all ready to get trading.  Dag it!

  153. For those interested in the build-a-berkshire workshop, we have developed an application to gather all of your information.

    Instructions for the application:

    Before you can use the application you must have a GMAIL account.  Just log into the application like you are logging into your gmail account.  Once logged in you should see a Welcome message with the email you are currently signed in under.  The application itself It consists of three panels, Personal Information, Sector Expertise, and Work History.  Any other instructions are inside the application.  If you have any questions post them here and I will happy to respond.

    the Application is at

  154. NUAN- anyone here familiar with the technology? How does this relate to AAPL's SIRI? I just started looking in to this but my understanding is that the SIRI software resides on the device but the NUAN software resides on the network which allows SIRI to function as it does?
    Also, NUAN seems to be  doing well in the health care field with voice recognition/record keeping, etc. Any insight from our medical members on how this may be working and where it may go?

  155. Zero- Lake levels- I don't dispute your premise but would caution drawing too much from recent Great Lake levels. I am no expert but having spent many years on and around Lake Michigan I can say that levels fluctuate a lot over relatively short time frames. This chart plots mean levels back over 100 years.

    As a kid in the late 50's/early 60's, the beaches were wide enough to lay out full baseball fields. A few years later, beaches were almost gone and waterfront homes were literally tumbling into the lake and small fortunes were spent shoring up beakwalls. A few years after that,levels receded again such that  I had to push my boat out of it's slip as the bow was resting on the bottom. Plenty of variation.

  156. craigzooka – tried filling in the form, it doesn't seem to work for "what sector" if you don't choose one of the existing ones, and same story with work experience…not sure if it's me or the form but I couldn't get it to work…

  157. I highly recommend this great interview by Charlie Rose of Republican Alan Simpson and Democrat Erskine Bowles about their bi-partisan Simpson-Bowles Deficit Reduction Plan and the incredibly difficult time they are having any sort of Congressional, Presidential and public support for it.    It kind of sad that there are so few politicians like these two men left in Washington, but its also inspiring to hear them talking about being hopeful that they will eventually get the people of America to come around and support this resolution.  Charlie Rose has to be bar-none the best interviewer in the country right now and this interview shows this in spades.

    BTW, Alan Simpson is awesome in this interview.  He sounds like Clint Eastwood and his folksy colloquialisms and his rants are simply hilarious.  Republicans like him are literally a dying breed — a common sense realist.

  158. Pstas:  I quite agree that, in terms of Michigan lake level, the time frames are short: in 2002, it had record volume.  I'm just guessing not as short as a single year – I know that the weather/chaos problem is accurately described by the butterfly-in-the-Amazon analogy, but I'm talking about a short term trade, not a global warming/cooling prediction. Unless you give up the notion of cause-and-effect entirely in the noise surrounding the event, I'm thinking that that 2011 may carry on.  The strongest argument is already a fact on the ground — lots more bugs.  I checked 'em out.  From High Plains Journal:
    "Insect overwintering survival. During winters with extreme lows that are not as cold, it is possible that some wheat pests may survive the winter a bit more easily, and become a problem earlier and in a larger scale than in more "average" winters, said Jeff Whitworth, K-State Research and Extension entomologist."
    And there's quite a variety of insect threats:
    "“In the spring, true armyworms are a threat about the time heading starts to occur. Wheat is very attractive to the armyworm and thick, vigorously growing fields can attract high infestations. Occasionally, when wheat starts to mature, armyworms will move up from leaf feeding and cut the wheat heads from the plant stem. Since this type of damage can have serious consequences on yield, close field observations are required. In the fall, fall armyworms may be a problem in seedling plants. Fall armyworms feed on the young plants and eat the plants to the ground, causing a loss of stand. Damage of this type may occur from emergence until a bad frost or freeze eliminates the threat…”.     And then there are aphids, greenbugs, beetles,  grasshoppers,  Hessian flies, and the like, along with  plain old drought to contend with.
    Lastly, with or without bugs, a dry summer will also take out the citrus.  And there's drought out there.  Brazil is dry this winter, hurting ag production.  Just saying.
    Monday, March 26, 2012  European Crops Hurt by Freeze Face Drought -
    And here's a farmer-as-opposed-to-US. Dept. of Ag. view, on cold and infestation:

  159. Kinki:  The Allan Simpson piece is great.  I saw it on Friday, and can agree that it is extreme partisanship, rather than "Road to Serfdom"  Republicans or "Socialist Police State" Democrats that is the real threat to Americans of both all stripes down the road.
     Phil quoted Jefferson as having made a slightly Maoist "periodic revolutions are necessary" comment about American Democracy at one point. It's not impossible that the next ten years could bring it on, depending on the national economic trajectory: "I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical. Unsuccessful rebellions, indeed, generally establish the encroachments on the rights of the people which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions as not to discourage them too much. It is a medicine necessary for the sound health of government."   Letter to James Madison on January 30, 1787

  160. KO – Following Kraft's rebranding move, Coca-Cola has decided to rebrand it's international Cherry Coke product line to "Laqueesha Tasty Stuff"  says VP for International Sales. "This bold new brand  revitalization should reach a whole new consumer segment…"
    (kraft link:

  161. More bugs means more pesticides? May not be especially attractive from a trading perspective as MON, for example is already pricey and herbicides are only a 1/4 of their business. Are you thinking something else?

  162. pstas:  You're already ahead of me.  I don't know if it means buying CWT pr CTWS. both with a 3.34% dividend, sell orange juice futures, short XRT because, after a family pays it's food and gas bill, there won't be much left for Sonny to take to Abercrombie's, or load up on an ADM bull spread.  I was rather hoping Phil would make a few suggestions. 

  163. Scott:  KO's decided to lose it's cherry, now that's original —  "LaQueesha", a name their focus group determined it could be pronounced in Spanish, Chinese and Arabic.  Unfortunately, it has a certain phonetic similarity to "Al-Aqsa", the mosque in Jerusalem adopted as the name of a certain Palestinian group.  Oughta be a bit hit in Tel Aviv.

  164. Jefferson- given his time, surely he was referring to revolutions of the guns and pitchfork variety. Today, he might speak more metaphorically regarding periodic revolutions as it is hard to conjure an image of today's proletariat waddling up to man the barricades with a bag of Cheetos in one hand and a Starbucks latte in the other while weighed down with a backback filled with a Macbook Air Iphone; Ipad  and vitamin enhanced water bottles while possessing less knowledge of ordnance than the local street corner gang banger.
    I see the partisanship of today as a natural progression. The New Deal left had their heyday in the 60's/70's which was off set to a degree by the Reagan / conservative resurgence. The pendulum swings and we will eventually settle somewhere in the middle without resorting to violence.

  165. KO/Zero – LOL! and we think Kraft blundered.  "LaQueesha" delivery trucks are probably the next drone targets. Let us all feel patriotic as our tax dollars launch at these targets of opportunity..  you know THIS administration won't hesitate. 

  166. craigzooka  
    Hi What does a Poor German living in Mexico do if he does not have a Gmail account ? Thanks

  167. Good morning! 

    I hope everyone had a nice weekend.  I had a great time and am ready to put in 4 days this week (we're closed Friday) but, unfortunately, that's Non-Farm Payrp;; day so we could get a big move we're not open for. 

    Our Futures have given up all of their pre-market gains.  Asia was up a bit and Europe is mixed:

    7:54 PM S&P 500 futures +0.5%, encouraged by China's official PMI print, which rose to an 11-month high even as the HSBC read continued to show contraction. The Australian dollar responds as well,+0.8%.

    Official Chinese PMI, which highlights larger factories, 53.1 in March vs. 51 in February and forecasts of 50.5, marking the fourth straight month of gains. However, HSBC PMI, which measures smaller factories, 48.3 in March (flash reading was 48.1) vs. February's 49.6, marking the fifth successive month of contraction.

    6:00 AM Overseas: Japan +0.3%. Hong Kong -0.2%. China closed. India+0.5%. London +0.5%. Paris -0.2%. Frankfurt +0.4%.

    Meanwhile, there's only one bit of news that pretty much say it all:

    Eurozone unemployment ticked up to 10.8% in February, compared with 10.7% in January and 10.0% in the year-earlier period. As per usual, the lowest rates were in Austria (4.2%), the Netherlands (4.9%), Luxembourg (5.2%) and Germany (5.7%), and the highest were in Spain (23.6%) and Greece (21.0% in Dec. 2011). (eurostat statement .pdf)

    How can people possibly think this is OK?  You can't conveniently pretend Europe is one Union (like the United States) when the PIIGS owe money but then pretend they have nothing to do with each other when unemployment is out of control.  This is no different than 10.8% US unemployment and then you could break it down and say NYC only has 4.2% and Texas only has 4.9% but how does that help Detroit with 21% unless NYC and Texas are going to be funneling cash to Detroit to compensate them?  To some extent, Germany is doing that but that's about their debts, not subsidizing their operating budgets.


    Eurozone Final Manufacturing PMI 47.7 in March (confirming preliminary estimate) vs. 49 in February. That's the 8th consecutive month of readings below 50, which signals contraction. "New orders shrank at a faster rate than in February, leading to falling output and further job losses," Markit says. (PR

    German PMI fell to 48.4 in March from 50.2 in February, slightly beating estimates for 48.1 but still well within the range indicating contraction in the manufacturing sector.

    You know, I played a lot of poker over the weekend and it reminded me that you can't bluff every time – at some point, you have to be holding some real cards and cards like this are a reason to fold, but the Global economies just keep on bluffing…

    Even as some European banks eye early LTRO repayments, others are using acrobatics to avoid, or at least delay, facing potential capital problems. The moves include unorthodox structures designed to improve capital ratios, and complex transactions that help struggling customers temporarily avoid loan defaults. The tactics appear most prevalent in Spain.

    Australia's AIG/PWC March PMI falls to 49.5 from 51.3 previously, led by a 3.5 point drop in New Orders to 48.2. "The relentless pressure from the dollar, weak domestic demand and a flat commercial and residential construction section continue to inhibit manufacturing performance," says Innes Wilcox from AIG. Sydney+0.8%.

    The Q1 BOJ Tankan survey of manufacturers -4 vs. -1 expected, -4 previous. Expectations for June seen at -3 vs. forecast of +2. Shares in Tokyo +0.9%. Dollar/yen flat at ¥82.86. [

    Monday's economic calendar:

    10:00 ISM Manufacturing Index

    10:00 Construction Spending

    12:35 PM Fed's Pianalto: ‘The Fed and the Economy: Striving for Balance’

    So you won last night's Mega Millions lottery, right? (winning numbers here) Or more likely you received an inheritance, earned a fat bonus, or cashed in stock options. A few of James Altucher's tips on how to turn sudden wealth into permanent wealth: don't change your lifestyle for at least a year, don't put more than 2% of the money in any one thing, focus on your health first.

    Bernanke Is Rewriting History and Making the Same Mistakes Again.

    Corporate pension funds have more assets in bonds than equities for the first time in a decade, a sharp shift from just 5 years ago when the amount in stocks doubled those in fixed income. "A lot of lessons have been learned," says a strategist. Markets have a way of doing that. Will new lessons be taught in coming years?

    Pimco's Total Return ETF (TRXT) has raked in $264M since its March 1 launch, second during the month only to the new (Feb. 24) iShares Treasury Bond Fund (GOVT) with $297M. Both have proved a decent store of value for money sitting out of stocks, and bond ETFs overall continue to garner far more assets than their equity cousins.

    Keep this in mind with lots of data we'll be seeing this month:  Japan auto sales surged 78% in March from a year earlier, the seventh consecutive month of growth as government subsidies drive demand for fuel-efficient cars. However, the number is misleadingly high, as sales in the year-ago comparison period were depressed by the March 11 earthquake and tsunami.

    Massive Bond Purchases By The ECB Are The Worst Kind Of Bailout.

    "Contagion may … re-emerge at very short notice … and re-launch the potentially perverse triangle between sovereign, bank funding risk and growth," goes one of two confidential analyses prepared for EU finmins at Friday's meeting. The LTRO, they say, provided merely a reprieve with governments and banks needing to use the calm period to take action.

    Germany's Reluctant Hegemony and Misguided Calvinism. If the purpose of monetary union is to tie down a "European Germany" with silken cords, the Kohl-Mitterrand legacy has gone horribly wrong.

    OECD’s Padoan Sees Euro Area as Biggest Threat to GrowthThe euro area remains the biggest threat to global growth as imbalances still need to be addressed, Organization for Economic Cooperation and Development Chief Economist Pier Carlo Padoan said. “The weaknesses of the euro area are still a source of concern.”

    Leaked EU economic analyses on Europe’s banks (FT)

    A Financial Sleuth Finds a World of Abuses (Barron’s)

    Spain Record Home Price Drop Seen With Bank Pressure: MortgagesSpanish home prices are poised to fall the most on record this year, leaving one in four homeowners owing more than their properties are worth, as the government forces banks to sell real-estate holdings. Home prices will decline 12 percent to 14 percent.

    The Spanish Riotcam Has Arrived.

    South Korean Exprts Fall 1.4% on Weakness in Global Demand. South Korea’s exports were less than analysts forecast in March, sliding 1.4 percent from a year earlier on weakness in global demand. Imports fell 1.2 percent, leaving a trade surplus of $2.3 billion, the Ministry of Knowledge Economy said in an e-mailed statement today. The median estimate in a Bloomberg News survey of 13 economists was for a 1.3 percent gain in exports. - They simply are calling everything wrong – reality is not matching up with optimistic forecasts.

    Sina (SINA -1.1%), Tencent (TCEHY.PK), and other Chinese Internet firms have been "punished" in an unspecified manner for enabling the spread of unfounded rumors about a coup d'etat in Beijing, reports state wire service Xinhua. Chinese authorities have long been uneasy about the ability of Sina's Weibo and other web messaging platforms to spread uncensored information and opinions.

    China Arrests Six for Web Rumors; Microblogs Ban Comments. China closed 16 websites and detained six people for spreading rumors that military vehicles were entering Beijing, as microblogging websites disabled their comment features for three days. The authorities detained the six for “fabricating or disseminating online rumors,” the state-run Xinhua News Agency reported today, citing city police and the State Internet Information Office, without naming the detainees. The websites were closed for spreading rumors that “something wrong” was going on in Beijing, Xinhua said. Speculation of a coup spread on the Internet on March 20, helping spark the biggest jump in credit-default swaps for Chinese government bonds in four months. The Communist Party holds a congress later this year to pick the next generation of leaders who may run China for the next decade and the lack of a transparent process may escalate the risk and impact of rumors. Sina Corp.(SINA) started a 72-hour suspension of the commenting function on its popular microblogging site today, citing a need to clear up rumors and illegal information, the company, whose Twitter-like service has more than 300 million registered users, said in a statement. Users opening Tencent Holding Ltd. (700)’s microblog site saw a similar notice.

    More on the Chinese government's Web crackdown: Sina (SINA) and Tencent (TCEHY.PK) have been forced to shut down commenting on their microblog services until 8 a.m. Tuesday, and state there will be a "centralized clean-up," following the recent spread of coup rumors. In addition, Xinhua is reporting 16 websites have been shut down and six people detained over the affair.

    Talks between Iran and world powers are due to take place on April 13-14, Hillary Clinton confirmed yesterday while in Riyadh, although she expressed skepticism about Iran's intentions and warned that the window "will not remain open forever." Clinton also discussed with Saudi Arabia and other oil producers ways to ensure stable prices.

    Could be good for coal stocks today:  BHP Billiton (BHPdeclares force majeure at its coal mines in Australia's Bowen Basin due to prolonged union strikes and heavy rain. BHP's seven coal mines in the Bowen Basin supply around one fifth of the world's metallurgical coal, or coking coal used in steelmaking. The force majeure call isn't a surprise, but could still drive prices up.

    Initially refusing to meet with French presidential candidate Francois Hollande, Angela Merkel's camp has begun makingbackdoor connections with his advisers as his victory becomes more likely. Item #1 on Hollande's agenda is renegotiation of the EU fiscal pact, a move Merkel believes could prove fatal to Europe's financial architecture.

  168. The EU has not stopped providing 
    illegal subsidies to Airbus (EADSY.PK) , the U.S. said on Friday, so it will request the WTO to rule on the matter. The U.S. has said previously it would seek sanctions of $7B-$10B on EU goods; any WTO approval for such a move could take a year, and analysts expect the sides to reach a deal before then. 

    The anatomy of a 72% Q1 gain for a stock on its deathbed: Everyone unloaded by Q4's end, having lost a ton and not wanting the embarrassment of having it on their books. With no one left to sell, the news gets a bit better, the shorts start to cover, the news gets a bit better, and the "rest took care of itself," writes Josh Brown, describing BAC

    Goldman Sachs Frantically Unloads Its Stake In A Company With Ties To Sex Trafficking.

    Groupon(GRPN) Reports 'Material Weakness,' Restates Quarterly Revenue. Groupon Inc. (GRPN), the largest provider of daily deals online, reported a “material weakness” in its financial controls and said fourth-quarter results were worse than previously stated because of higher refunds to merchants. The revisions reduced revenue in the period by $14.3 million to $492.2 million, the Chicago-based company said yesterday in a regulatory filing. Groupon had reported $506.5 million last month.

    Groupon (GRPN) is "not a coupon company," writes Rocky Agrawal following the firm's Q4 restatement, it's "essentially a sub-prime lender that does zero risk assessment." Agrawal slates Groupon for a variety of sins and estimates it has $500-$750M in off-balance sheet liabilities. He also reckons the stock could head to zero within 36 months

    Facebook (FB) shares change hands at $44.10 in their final SharesPost auction, as the company shuts down private-exchange trading ahead of its IPO. The closing price translates into a valuation of $104B, or perhaps $110B+ after factoring IPO dilution. Separately, SharesPost rival SecondMarket is laying off 10% of its staff, as it copes with both Facebook's offering and a broader pickup in tech IPO activity.

    The cost of affluence (Guy McPherson’s Blog)

    Not just an economist, Keynes was an investing star, outperforming the U.K. stock market by 8% annually over a 22-year period running an endowment. Keynes didn't hit his stride, though, until ditching a "macro" style for "bottom up" stock-picking. "Eccentric, unconventional and rash in the eyes of average opinion," says David Chambers after a study of the master's portfolios. 

  169. Congrats on the opportunity Rip, you are wise to take it.  Too many people who have less than $1M and could be out EARNING $100K+ (10%) spend their time trading instead, which risks the $1M while their earning power diminishes.  You are wise to make money while you can, it's easy enough to add a few percent with careful, long-term investing on your portfolio while you bring in fresh cash for later investing.  I look forward to seeing you again next time you "retire."  

    Big Chart – NYSE right on that 2.5% line, where 8,250 was also critical on our last chart so we'll watch them closely.  Overall, a good picture was painted and the first day of the quarter is almost always bullish so the ball is the bulls' to drop.  

    Lottery tickets/Burr – I got you $5,000 worth – sorry, you didn't win.  Will send you bill!  ;)  

    My numbers were off by a mile, my friend just had a baby and those were the statistics…  

    Health care/Pstas – Yes, countries that spend half as much as we do on health care are having trouble paying for it.  How does that prove we DON'T need to do something about health care?  I don't understand how you can base your views on something that proves the other side's point….

    Cook/MrM – If I were Jobs, I'd be infuriated at the way the stock price took off after my death – that's just insulting…

    TZA/Newbie – Outflow is just sentiment, less people playing the bear side but doesn't affect the RUT.  Not sure what the share mechanics are but it's not a stock, whatever they do, they balance it to reflect the RUT so everything can't be static.  Those are all good questions which come under the TMI category for me but, if you are going to "specialize" in TZA trading – I think you probably should get yourself comfortable with the mechanics of it. 

    Captured court/Pstas – If anything, they are captured by their own ideology.  If you put your Grandpa on the Supreme Court – you KNOW how he's going to vote on pretty much every issue – it doesn't matter what the facts are or what new information is presented – things are the way they always were and will be for most older people.  That's the court – not only are they old but they've already made thousands of decisions, many of which were life and death, over their careers – to expect them to have an epiphany and change their long-held views is a huge stretch, at best.  So the Court isn't at all impartial – it's partisan and that's set by whoever is in power when it's time to pick the judges.  

    OK, time to work!