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Monday Musings – New Quarter Not So Shiny

I played poker this weekend.

I entered a few tournaments in Atlantic City, made it to a couple of final tables but didn't win any.  It did remind me that a bluff can only get you so far – at a certain point, you have to actually have the cards in order to win.  As I pointed out to Members this morning – the Global Markets have bluffed their way through the first quarter and now comes earnings season and it's time for the economy to show it's cards and now we'll see who ends up with all the chips!  

Just this morning we got this disturbing data:  

These are NOT cards you want to be playing with unless you are forced.  That's the thing, GS, JPM, MS, Fund Managers, etc – they HAVE to play.  Since they have to play whatever cards that are dealt – they do the logical thing – THEY BLUFF!  Although what's scary about the Banksters is that, when they bluff, it's like the dealer bluffing because they control so much of the game and their only real goal is to get you to play so they can rake your money (see Friday's post for more on this scam).  

Europe is CLEARLY in a Recession, yet no one is willing to call it.  Asia has been contracting all year and there's nothing too exciting about the US data either (only when compared to the crash) yet the markets are partying like it's 1999 – as if there is literally not a care in the World.  Yet US Corporations – the same ones that are supposedly doing so great – have dropped the equity participation of their pension funds to decade lows.

We've already discussed record levels of insider selling at US Corporations and, as you can see from the chart on the right, volume is drying up as the markets rally – indicating the "smart" money is heading for the exits as those fools rush in to hold the bags.  Speaking of bagholders – congrats to all of our GRPN shorters as that company is finally imploding as the Company reports "Material Weaness" and restates their quarterly revenue.  Gee, maybe they aren't worth $10Bn with $3Bn in revenues and no profits…

Don't worry though – it's almost time for Facebook's IPO and shares of that soon-to-be-disappointment traded at $44.10 in their final SharesPost auction, which gives them an implied market cap of $104Bn.  Meanwhile, China has been busy cracking down on their own social media sites like SINA and Tencent, arresting 6 people and closing 16 websites for "fabricating or disseminating on-line rumors."  I call dibs on the "Free Mark Zuckerberg" T-shirt franchise!   

Meanwhile, China may be right to put a stop to this who "Web" thing as Hackers used the infamous Internet to steal 1.5M North American Visa accounts this weekend.  GPN, the provider that was breached, is/was the Nation's 7th-largest and handles/handled $120.6Bn in volume.  The data was only just stolen, the repercussions from this will cause ripples throughout the industry.  Global Payments had been on Visa's list of compliant processors as late as Friday afternoon. It was listed as having met Visa's standards as of July 31, 2011.

Now they want us to have credit cards with RFID chips in them that BROADCAST our information – gee, what could possibly go wring with that plan?  Both MA and V are on our Long Put List (see Friday's Member Chat for most recent update) and are still playable.  These issues are likely to lead to a Senate Investigation and possibly some new security rules and, of course, we're not so thrilled with the outlook for Global Consumers anyway – certainly not enough to give MA a p/e of 28.32, which makes V look like a bargain at 20.90.   For one thing, smart phones are going to chew into traditional CC business by next year. 

As you can see from our Big Chart, we have still not done any technical damage to our major indexes and that's keeping us from being gung-ho bearish at the moment.  The NYSE over 8,250 is going to be a bullish sign, as would the Russell retaking and holding 840 (but 836 is our shorting spot on /TF Futures).  The 820 line on the RUT will be our first bad break of the week as it will also be the 50 dma so that, 8,200 in the NYSE and $102.50 on oil are going to guide our technical trading for the moment.   

The Dollar was all the way down to 78.90 again pre-market but, as we move closer to reality, it's flying back to 79.40 and that does not bode well for our open.  That suits us fine as we did follow-through with our plan on Friday and added a bunch of short positions into the closing rally because – as I said in that morning's post – we don't care IF the markets are rigged, as long as we can see HOW they are rigged and place our bets accordingly.  

Let's be careful out there. 

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  1. Ahh, the smell of oil burning in the air, light winds blowing, and the Kentucky Wildcats tamed to a tiny little kitten….go Jayhawks!

  2. Oil Lines

    R3 – 103.97
    R2 – 103.77
    R1 – 103.48
    PP – 103.29
    S1 – 103
    S2 – 102.81
    S3 – 102.52

    We are at S3 already. As usual, lines on Monday are not always reliable as they use Sunday night's action.


    One of the worst hit industries in the UK is construction, which is a traditional driver of growth after a recession but has barely recovered from the crash.
    Balfour Beatty, one of the UK's largest building firms, said it needs to make cuts among its 12,000 services staff.
    It warned that reduced public sector spending on infrastructure and maintenance coupled with low levels of commercial property development were hitting profit margins.
    Hundreds of construction firms and architecture practices are known to have laid off staff after a rehiring program in 2010.
    Unemployment in the UK has risen for the last year, in contrast to the US, which has maintained several large scale public spending programs to promote employment and maintain consumer and business confidence.
    The US economy is expected to grow at 2.9% in the first quarter and maintain that level of growth through the summer months, according to the OECD.

  4. Why is amzn down 4 pts. R they speculated to buy RIMM

  5. USO- I did not get filled on the put play on Friday on the spike up. You still like April puts- perhaps a lower strike or do you still like the 40's?

  6. Spyer:
    /Merrill Lynch downgraded (NASDAQ: AMZN) from Buy to Neutral saying estimates are too high.

    For an analyst ratings summary and ratings history on click here. For more ratings news on click here.

    Shares of closed at $202.51 yesterday, with a 52 week range of $166.97-$246.71.

  7. Good morning, nothing new,


    IWM    81.94,  82.12,  82.34,  82.66,  82.82,  83.18,  83.31,  83.55,  83.74,  83.97,  84.20,  84.36  and 84.64

  8. Monday – 4-2-2012
    Dr. John L. Faessel
    Commentary and Insights
    Quote of the Day
    “You need as many people in your city coming out of high school and out of college with the state of mind of entrepreneurship. I think that's the single strongest correlate to quality GDP growth and quality job growth.”
    ~ Jim Clifton ~
    CEO of Gallup Inc.
    Author of
    The Coming Jobs War
    Today’s market driver; EuroLand contraction worsens…
    The Eurozone Manufacturing Index [PMI] is at 47.7 in March vs. 49 in February. That's the 8th consecutive month of readings below 50, which signals contraction.
    Importantly for the USA , the Institute for Supply Management's Purchasing Managers Index, [ISM] a key index of USA manufacturing, remains in an expansionary range. Estimates are for a reading s of 52 to 55 through the rest of the year. The March ISM reading is due out this week.
    For an excellent read on why the Euroland mess isn’t going to get better for as far as the eyes can see, link to the article in the Atlantic; Europe’s Real Crisis.
    “The Continent’s problems are as much demographic as financial. They won’t go away soon.”
    Longtime readers of ON THE MARKET know that I’ve mentioned the developing Euro Land demographic time bomb for years advising that the spending balloon will end badly… When, and how ugly, is the question.
    Stocks soar in face of a “Wall of Worry
    The S&P 500 advanced near record 12% and the Nasdaq 18.7% in the face of huge big picture uncertainty.  High gas prices, a China slowdown, near record unemployment, ballooning government debt, Euroland / Italy / Portugal / Spanish defaults plus the winds of war blowing from Iran have kept a lid on investor sentiment while stock have continued their near record ascent. Add a US government that’s trampling the Constitution has many (me included) wondering about the future of the country and the world for the first time ever. The mess festers…
    The McClellan Oscillator, my favorite overbought / oversold indicator, is in Neutral at minus 82. Bullish investor sentiment* is somewhat mixed with some studies just off new cycle highs has kept us on the long side. Amazingly, since October the McClellan has moved ONLY into the low reaches of the overbought zone (with a high of only 170 – registered in January).
    Fundamentals suggest the market is cheap – real cheap…The Standard & Poor's 500 (SPX) P/E in Q4 of 2011was 14.1, down from a recent high of 24.9 in Q4 2008. The (SPX) P/E is still within a range not seen since the early 1990’s.
    Importantly , the Institute for Supply Management's Purchasing Managers Index, [ISM] a key index of manufacturing, remains in an expansionary range. Estimates are for a reading s of 52 to 55 through the rest of the year. The March ISM reading is due out this week.
    EuroLand Bond Yields remain well off highs, but are advancing again
    Greek 10-year yields 20.21%
    Italy 10-year (gross) bond yield – 5.03% – off from highs of 7.26% on 11-24.
    Spanish 10-year (generic) bond yield – 5.25% – off from highs of 6.7% on 11/24.
    The S&P 500 (SPX) closed Friday at 1408.47
    Short term ‘price’ resistance is at Fridays high of (SPX) 1411
    Stiffer resistance is at the just recently posted cycle highs of 1419
    Short term ‘price’ support in the (SPX) is at 1394
    Important trendline support off the December and March’s lows is 1385
    50-day moving average support is at 1362.
    The 200-day moving average support line has begun to bend up and is now at (SPX) 1267 after an 8-month downtrend.
    Last Friday’s key indicators and metrics:
    ·     McClellan Oscillator is in Neutral at minus 82
    ·     Natural Gas (Globex) 2.126
    ·     The Treasury 10-year yield 2.22%
    ·     VIX – 15.50

  9. Pharm – Two words:  Anthony Davis
    Good luck – though I don't think there will be any combine tipping in Lawrence tonite…..

  10. Phil/Earnings

    Is it a bluff or reality. 
    I will tell you this…..our industry has never been so bad.  Contractors in our area are dropping like flies and the light at the end of the tunnel is getting dimmer not brighter.  We have a real mess on our hands.

  11. exec/earnings
    What industry is that?

  12. exec
    Last year 1 house was started between my house and town, part of the siding is done, but now no signs of anything. Jackson had 1 start but it is going to be a mega million place, other than that the rest of building permits were garages or remodels.

  13. Stjean
    “Brevity and conciseness are the parents of correction.”
    Hosea Ballou Quotes

  14. The AAPL portfolio is all in cash now!

  15. DXD Apr $12's almost no premium.

  16. Good morning!

    Dollar took a run at 79.50 but was harshly rejected.  We get ISM at 10 along with Construction Spending and Pianalto speaks at 12:35 on "The Fed and the Economy: Striving for Balance" – so lots of little market movers today but, on the whole, nothing to get excited about although it's a low-volume week so no reason they can't keep us elevated.  


    Monday Apr 2


    ISM Mfg Index
    10:00 AM ET

    James Bullard Speaks
    10:00 AM ET

    Sandra Pianalto Speaks
    12:35 PM ET

    8:55 AM ET

    Factory Orders
    10:00 AM ET

    FOMC Minutes
    2:00 PM ET

    John Williams Speaks
    4:05 PM ET

    ISM Non-Mfg Index
    10:00 AM ET

    John Williams Speaks
    11:00 AM ET

    Weekly Bill Settlement

    Jobless Claims
    8:30 AM ET

    James Bullard Speaks
    9:10 AM ET

    Treasury STRIPS
    3:00 PM ET

    Money Supply
    4:30 PM ET
    Good Friday

    Markets Closed, Banks Open

    SIFMA Early 12:00 PM close

    Consumer Credit
    3:00 PM ET


    We have short-term notes to sell this week, that's not usually a big deal.  The big numbers are ADP on Wednesday and NFP on Friday but we're closed Friday – although the Futures are open so certainly worth being here in the morning that day.  

    SPY DAILYThis chart indicates bulls are deluding themselves, we failed the long-standing uptrend for the second time and we need a strong week to get it back and, so far, no good.  That 142 line on SPY is S&P 1,420 so anything less than that by week's end is a big bearish indicator.  RUT and NYSE are shaping up for fails at 8,200 and 820 so watch those lines but, if they can push the Dollar below 79 then a bounce in all of our indexes is not out of the question and above those levels we have to remain technically bullish.  

    VIX & VXX are not about the same at 16.25 and 16.85 so this will be interesting.  AAPL had a nice bounce this morning to $607 and, without that, where would the Nasdaq be (flat at the moment) – or the S&P (down 0.1%)?

    TLT spiked down to $111.80 and rammed back to $113 so that was exciting.  Cramer is giving me a headache with his pump job this morning – his volume increases as his credibility falls seems to be the formula…

    Our ISM is GOOD!  Not great but not as bad as Europe and that should be able to get us back to green this morning – now we'll see if it sticks: 

    Mar. ISM Manufacturing Index: 53.4 vs. 53.0 consensus and 52.4 prior. Prices index 61.0 vs. 61.5 prior. Employment 56.1 vs. 53.2. Inventories 50.0 vs. 49.5. New orders 54.5 vs. 54.9

    At the open: Dow -0.2% to 13185. S&P -0.11% to 1407. Nasdaq flat at 3092.

    Treasurys: 30-year +0.41%. 10-yr +0.22%. 5-yr +0.11%.

    Commodities: Crude -0.67% to $102.33. Gold -0.19% to $1668.75.

    Currencies: Euro -0.4% vs. dollar. Yen -0.77%. Pound +0.06%.

    10:00 AM On the hour: Dow -0.31%. 10-yr +0.22%. Euro -0.36% vs. dollar. Crude -0.3% to $102.72. Gold +0.23% to $1675.75.

    Market Preview: S&P Benchmark futures are flat after the 500 climbed 12% in Q1, its best start to the year since 1998. More poor PMI and unemployment data out of Europe is raising fears about recession, while Chinese PMI was mixed. Avon +18.5% but down from earlier highs following its rejection of a $10B offer from Coty. Express Scripts +4% after the FTC OKs its merger with Medco. Later:ISM Manufacturing Index, Construction Spending, Fed's Pianalto 

    Feb. Construction Spending: -1.1% to $808.9B/year vs. consensus +0.7%, 818.1B in January (revised). +7.4% Y/Y.

    The S&P 500 surged 12% in Q1, after an 11% advance in last year's Q4; so all is well with stocks, right? There's little convictionbehind the rally, as investors have yanked ~$15.6B from U.S. equity mutual funds this year while billions of dollars have continued pouring into bond funds, and trading volume is down ~15% Y/Y to the lowest levels since 2007.

    Pumping gold: After recently expressing optimism on stocks, Dr Doom Marc Faber returns to form by warning of the consequences of huge government debt and runaway money printing. "Somewhere down the line we will have a massive wealth destruction," Faber says, although he still thinks that equities, gold and distressed properties in the south are good bets.

    John Hussman remains bearish, again noting record-high corporate profit margins, and their tendency to revert to the mean. He estimates the nominal return on the S&P to be 4.1% over the next decade, a slim margin over 10-year Treasurys that has only been seen near epic market peaks or during the 90s bull run. There's a lot of room between those 2 outcomes, what's a punter to do?

    Public pension funds' search for better results by choosing alternative investments has been a boon for management fees, but not for returns. States sticking with traditional stock and bond investments are faring better than those that have turned to PE, real estate, and hedge funds. 

    Kicking the can becomes an art form in Spain, where banks are helping out struggling bullfighting companies by starting loan programs to allow an already over-indebted populace to finance their season-ticket purchases. Default is avoided for the bull-fighting companies, but now the banks, already awash in bad property loans, have a new chunk of unsecured debt on their books.

    "Spanish equities not deliverable to the ECB under LTRO,"chides Andrew Yorks, noting the divergence between Spain's bond spread to Germany (doing fine) from the performance of the country's stock market (not so fine). The IBEX -7.8% YTD.

    Gambling revenue in Macau rose 24% Y/Y to $3.12B in March, as players from mainland China continued to fuel growth, though not at as quick a pace as the year before. Growth was in line with forecasts from analysts, who will be watching the impact on revenue from the opening of Las Vegas Sands' (LVS) new casino project later this month.

    An alliance between Samsung, Fujitsu, NEC, Panasonic, and NTT DoCoMo (DCM) to develop 4G LTE baseband chips has been cancelled barely 6 months after being announced, reportedly over a failure to agree on JV terms. Qualcomm (QCOM), which is believed to control over 40% of the baseband market, must be pleased, though given how many similar efforts have fallen flat, it may have never been too worried to begin with. 

  17. Lost in all the commotion surrounding the 
    security breach at Global Payments (GPN -3.7%) is its FQ3 report that comes up short on earnings due to higher expenses. GPN reports EPS of $0.83 excluding non-recurring items, $0.01 worse than consensus; revenues rose 16.9% Y/Y to $533.5M vs. $529.4M consensus. GPN reaffirms FY 2012 guidance.

    Buffalo Wild Wings (BWLD -4.6%) and Panera Bread (PNRA -1.3%) sell off after Raymond James cuts the rapidly-growing fast-casual chains to Underperform. DineEquity (DIN -2.2%) and Darden (DRI -1%) have also been downgraded. 

    IMAX (IMAX +0.8%) trades higher after the company reportsQ1 box office receipts of $121.3M - nearly double last year's first quarter haul. Ticket sales for The Hunger Games and Wrath of the Titans: An Imax 3D Experience helped fuel strong sales for the period.

  18. Hi Phil,

    Two smallish hedges I’m on the wrong side of that I’d like your advice on.

    SPY APR put spread 125/135


    TZA APR call spread 38/26

    I thought for sure we’d be dumping by now so thoughts on rolling would be appreciated…

  19. Phil,
    MSFT – 2014  $30-$35 Bull Call Spread together with the $25 Putter – Net cash in $0.30
    If stock doesn't move one cent in the next 21 months it would still be a 600% return on cash! 
    Your thoughts

  20. BTFD is a living breathing phenomenon.
    Resist at your own peril!!!

  21. Construction/JMM, Exec – Without turning that sector around, I don't see any way we have long-term economic strength.  I think a lot of people in the housing sector have been hanging on based on promises of an imminent turn-around that just keeps failing to materialize as do the banks, who are sitting on Trillions of Dollars worth of CRE and residential properties that they think will fetch more than they paid for them and help them avoid putting losses on the books.  If that dam breaks – we still have a major leg down in real estate.  The Fed knows this, that's why they keep talking about the need for a housing fix – that's one hole even the Fed won't be able to fill if it begins to harm the banks (mark to fantasy has prevented that – so far).  

    USO/Pstas – We're at $103.32 now and $103.75 was our shorting spot so, if you can get the price, I still like it. 

    FAS Money – $109.90 on FAS means we're running out of premium on our short $106 callers.  Don't forget we stop out 6 of our XLF Jan $15 short calls if they hit $2.  All we can do is wait and see if they can pop $16 on the next attempt otherwise as we're not getting good prices on short puts to sell.  

    IWM Money – 8:2 bullish is fine with TNA at $63.50 and we'll watch that 840 line on the RUT to see what happens.  

    $5KP – That's a DD on GLL at $1.05.  

    $25KP – Down "just" $11K!  More importantly, only $1,337 of realized losses and the rest can all be fixed.  

    • DMND – Fine 
    • XRT – Will they ever come down?  Waiting on earnings, of course. 
    • BBY – Got bad news last week but they are still $23.54 and we sold $25s so fine between now and June
    • SCO – Fine 
    • SQQQ – June is a long way off
    • FAS – What the Hell is going on here?  Sometimes it's good to step away for a few days so you can get a fresh perspective:
    •      We're short 10 April $100s and FAS is at $106 – dangerous
    •      We're short 10 April $99s and FAS is at $106 – dangerous 
    •      We're long 10 July $72 puts with $3 to collect – that's EZ money
    •      We have the long Oct $105/115 bull call spread (20) just in case the first two blow up in our face.  
    • Hey, come to think of it, that's all pretty clever!  If anything, I'm tempted to sell 10 more of the short puts but, otherwise, a fine spread.  
    • TLT – We love it!
    • VXX – Spread is fine, we can always roll the short $21 puts if nothing blows up over the next 3 weeks.  
    • GLL – Same DD at the $5KP at $1.05
    • DIA – Good for now.
    • USO – Only 10 because we intended to DD on a move against us but, so far, still $1.20 and certainly not worth rolling to $41 puts ($1.90) for .70 more.  Generally, we like to roll for .50 or less and a DD would be around .80-90 so we just have to be patient on this one.  If we DD or roll, THEN I will like that trade as a starting point in the $5KP but, otherwise, too dangerous.  

    Let's add 5 PCLN July $530 puts at $5.80 in the $25KP

  22. Phil
    In the past I was able to save the week schedule of important events, now I can't, is there a solution?

  23. Good luck Pharm, from here in Lexington!  I'm just hoping for limited fire damage…  Go Cats!

  24. Construction – I am certain that once we get going, the going will be tough – for years to come….
    When talking to those who are waiting to get back to work, I tell them to consider looking/training for a new vocation. 
    Time marches on…..

  25. …Oh, and XHB looks like a good short….

  26. Pharm - picked up a few MNTA APR 16/17 BCS for .35 this morning, just a dice roll…

  27. Forgot to mention – of course oil (/CL) is still a short off the $104 line or $104.50 if we get that.  

    Gold (/YG) $1,685 is also a good shorting spot.  Keep in mind with both gold and oil, we are still waiting for the next Iran rumor.  

    Hedges/Haschade – It's good to know what you spent on them but SPY is at $141 so you need a 10% move to win the $135/125 bear put spread and it's now about net .25 so not much to save is there?  50%.  50%.  50% – FIFTY PERCENT!!!!   At what point MUST you take action on a vertical spread so as not to be in a position where it's no longer fixable?  Come on – take a guess…  So there's nothing to fix but the July $140/130 bear put spread is $2.50 and that makes $7.50 if the S&P drops $11 (8%) and, if it's a proper hedge and your bullish plays will make at least 3x $2.50 if the S&P holds $1,400 – then it's good insurance.  Also, if you get out when it falls to $1.25 – there will be all sorts of ways to make a good adjustment.  

    TZA is the same, you are miles out of the money with a worthless spread.  I love the July $14/25 bull call spread at $3 with TZA at $17.50 as you are $3.50 in the money and, if TZA falls $3 to $14.50, then you can probably sell the $14 puts (now .80) for $2.40 (the price of the $17 puts) and that's a net $11.60 entry on TZA, which is a great entry and $11 on TZA is 40% down, which is roughly 13% up on the RUT to 935 so this is just a bet that the RUT doesn't go over 900 by July with a 300%+ potential upside.  THAT'S A HEDGE!  

    MSFT/CSL – Gotta love that with MSFT currently at $32.20.  So good all should be aware so I'll repeat it:  MSFT – 2014  $30-$35 Bull Call Spread together with the $25 Putter – Net cash in $0.30.  Good catch! 

    Weeks events/Shadow – I think that's because other people posted it as a JPG and I just cut and paste from Econoday – you can use the original or do what I do, which is use CaptureWizPro, which is super-easy and cost about $29 for the full version.  It lets me grab anything I can see on any of my 3 screens in about 10 seconds – maybe there's something free out there but I love this little program.  

    Dollar 79.14, I'm expecting 79.10 to hold up but Euro bounced off $1.328 and Pound off $1.60 so they need to fail.  Yen fell from 83.2 to 82.1 since Sunday's open and the Nikk dropped from 10,225 to 10,090 – still lots of crazy stuff driving FOREX.  

    Silver just popped $33 – someone is betting on inflation/instability today.  Copper $3.897 also flying.  Nat gas though, DOA at $2.10 and not even holding that.  Gasoline doesn't care – $3.355, up from $3.28 at the open and oil just crossed $104 as the Dollar tests 79.10 so we can't short oil until we get a nice rejection somewhere now.  

  28. Phil/Construction
    Of course the general economy can never flourish without a revival in the construction industry, because so many other businesses depend on construction. As the article above mentions, this includes commercial buildings and projects, and architects and their staffs, but much more. Consider that if you build a new subdivision in Florida, once you get people living there, you open up the possibility of a nearby supermarket, perhaps with an outlying bank, gas station, Chinese takeaway, and dollar store, and then you have all those people laying tile, carpet, selling fridges and washers, the obligatory 2 palm trees for the yard, laying turf, weekly mowing in the summer rainy season, more visits to doctors and dentists,  increased census in local hospitals, more Medicare money coming in, more people renting docks for their boats, more people eating in crummy franchise restaurants, and it goes on for ever.
    Without a construction recovery, the only industries that really flourish are guns, crime, and law enforcement.

  29. bloomy european financial services/bank index -5.5% ytd…xlf +22%!!!

  30. Pharm – AEZS / KERX will there be a bottom feeding opportunity on these or are they one note songs played out?

  31. Knock knock - anybody home?

  32. KERX, what a crappy company

  33. Has anyone looked at CYAN?  I have been following it since it was in the $3s and looking at the financials, looks like a good micro cap company.

  34. FU PCLN!!!!

  35. MSFT Trade  - Looking at the 2yr chart on MSFT it seems we are way above the 200 and 50 dma, and close to a 2yr high with a breakout from mid-dec on the stock.  Doesn't that trade seem extremely bullish given the premise that we "feel" this rally is overbought and bad news is just lurking to take us lower?  
    I like the 25putter though….

  36. Europe closing up about 1.5% so we're lagging so far.   They're up because our ISM was good – kind of silly but what can you do?  Also good news:  

    U.S. auto sales for Q1 are expected to come in at four-year highs after the U.S. economy improved and financing terms eased up a bit. A survey of analysts sees March sales of 14.75M vehicles – below February's mark of 15.1M but still 10.9% higher than sales from a year ago. Industry watchers say automakers have hit the "sweet spot" with lowered incentives and double-digit sales increases pointing to improved profits. 

    Construction/JMM – Not to mention Realtors, Mortgage people and Banksters who are in that loop and the local governments who need those tax revenues.  Amazing how we can ignore the crisis in that sector.  

    EU Banks/Angel – Wow, that is tragic.  Do you have a link?  

    11:00 AM On the hour: Dow +0.03%. 10-yr +0.26%. Euro -0.31%vs. dollar. Crude +0.8% to $103.84. Gold +0.68% to $1683.25.

    11:38 AM European shares close with mostly big gains following a sharp late-day (seemingly U.S.-led) rally that erased losses of 1% or more. Stoxx 50 +0.9%, Germany +1.6%, France +1.1%, Italy -0.3%, Spain +0.5%, U.K. +1.9%. Euro -0.2% to $1.3310.

    Treasurys ignore the better economic news, yields falling a bit more even as stocks stage a small rally following the ISM number.The 10-year -3 bps to 2.18%. Perhaps they have their eye on continuing bank and sovereign issues across the pond. Spanish banks: STD -2.1%BBVA -2%. European financial ETF: EUFN -1.1% 

    The ISM gain is led by big jumps in Production (58.3 vs. 55.3) and employment (56.1 vs. 53.2). The Prices index remains strong at 61.0, with natural gas pretty much the only product falling in price. Alan Greenspan's old favorite, Supplier Deliveries, declined to 48 from 49, a bit of non-confirmation of the overall print. (PR)

    Jobs Data Reveal Unexpected Good News (WSJ)

    17 Scary Numbers From the First Quarter (Morningstar)


    The number of IPOs worldwide fell 43% Y/Y to 174 and the amount raised dropped 63% to $16.5B in Q1, with declines in every major region. In the U.S., 36 companies raised $5.5B, representing a rise of 50% in the nmber of deals but a fall of 60% in dollar terms. Bankers reckons the atmosphere for new offerings is improving.

    Don’t Trust The Wise Men Of Finance (Forbes)

    Pres. Obama will sign the JOBS Act into law this week, but Groupon's accounting fiasco might dampen the festivities. A provisionof the law allows companies to iron out disagreements with regulators behind closed doors before going public, which might have prevented investors from learning about GRPN’s early accounting questions.

    Authorities are set to crack down on eight financial firms that weren't part of the recent deal over problematic foreclosure practices, which are allegedly still being used in the industry. Last week, a senior Fed official recommended fines for the companies, including for HSBC's (HBC) U.S. bank division, MetLife (MET) and Goldman Sachs (GS).

    WOW!  Dunkin' Brands (DNKN +1.1%) and Coca-Cola (KO -0.1%)ink a multi-year marketing deal to convert Dunkin Donuts and Baskin-Robbins restaurants to Coke products. The transition begins this month and should be completed by August. 

    Dow Chemical (DOW -0.1%plans to lay off close to 900 employees and close factories in Illinois, Portugal, Hungary, and Brazil amid weak demand for the its products in Europe. The company says it will take a $350M charge in Q1 to account for costs related to the actions. 

    Germany's Q-Cells (QCLSY.PK), which used to be the world's biggest manufacturer of solar cells, will file for insolvency after a court ruling prevented it from carrying out a plan to swap debt for equity. Q-Cells is the latest victim of the crisis in the industry, and joins peers such as Solon, Solar Millennium and Solarhybrid in going out of business. 

    Lawrence Solomon: A world awash in oil (Financial Post)

    Investors who might want to have a flutter on the 2012 elections are set to be disappointed, as the CFTC is expected to announce today that it's going to prohibit betting on the polls via "political event contracts," the NY Times reports. The agency is likely to say that such trading amounts to gambling and could influence the election. 

    Roth Capital downgrades Keryx Biopharmaceuticals (KERX -66.4%) to Neutral from Buy after the firm bombed with Phase 3 testing of its perifosine colon cancer drug. Analysts with the Roth take their price target on KERX down to $4 from $10 – which still stands well-above the current trading price of $1.67.

    Samsung (SSNLF.PK) has been gaining smartphone share in the U.S., Europe, and Asia, says Canaccord's Mike Walkley. Walkley believes Samsung had 28.2% of the smartphone market in Q1, ahead of Apple's (AAPL) 22.4%. Each company had a little over 23% in Q4. Meanwhile, RIMMNOK, and HTC continued to lose share, while QCOM gained chip share and also benefited from growing LTE phone shipments. (previously

    Research in Motion (RIMM -2.8%) U.S. sales “continued to deteriorate” in March, Pacific Crest says, with RIM’s days of inventory now “well above 30 days, which we believe is more than 3x what the carriers would normally target… the highest DOI levels we have ever seen." Sales in Europe also look lower, "likely lead[ing] to subscriber losses in the next one to two quarters."

    The Cliff Theory: How Handset Makers Die, why Mobile Phone  Companies Collapse so Rapidly (Siemens, Motorola, Palm, Nokia, Blackberry and Windows Mobile) (Communities Dominate Blogs)

    There's an "internal Apple project" to build a physical game controller for use with iOS devices, reports AnandTech, which adds there's no guarantee the project's results "will ever see the light of day." Offering a physical controller would be a radical strategy shift for Apple (AAPL), whose developer partners have helped upend the gaming industry with titles relying on touchscreen controls and motion sensors. 

    Apple (AAPL +2.3%) rallies after Topeka Capital's Brian White decides to one-up his many bullish peers by starting coverage with a $1,001 PT (no typo). White, who made plenty of positive remarks about Apple while at Ticonderoga Securities, praises Apple's brand for being "able to touch the soul of consumers of all backgrounds." He also thinks China and a TV set could help out some. 

    A Republican meteorologist looks at climate change (MPR)

  37. Hi Phil — Aapl any new on them today or it just a strong bounce--or early preearning run

  38. How to make a grand in 15 minutes? Buy PCLN calls at the LOD and then sweat it out.  Sorry Jabo, I'm went to the dark side and am changing directions on some of these momos for some quick day trades (which is likely a sign of the apocalypse).  Now short GRPN and AMZN instead of PCLN and CMG.

  39. MSFT/Burr – I think the business cycle is coming back for them – at least over the next two years and inflation should take care of the rest.  You can't really not buy Office when you have a business without jumping through hoops as other people send you docs in office and if you don't have it – it's a huge pain.  That's a big moat for MSFT and Windows isn't going anywhere and XBox is huge and their mobile stuff shows promise.  The company doesn't suck – certainly not enough to have a current p/e of 12 that should drop 10% next year with about $60Bn in cash on just a $270Bn market cap.  

    Wow, gold $1,685.50, oil $104.35, silver $33.23, copper $3.92 but nat gas still $2.10.  XLF trying hard to get to $16 – that's a big breakout.  Dollar lost 79.10 and just tested the 79 line, now 79.015.  

  40. KERX – OUCH……glad we were out of them.  Lots of pumping on SA on them.

    MNTA/mrm – nice!

  41. KERX/mrm – for now.  Not going to even look.  I have SGEN and CRIS on my radar…and YMI is coming right behind.  (Do I really need to mention PLX?)

  42. VRTX as well….

  43. SPX 1440 today, why wait?

  44. AAPL portfolio:   I have sold 10 April 600 puts for 9.50.   This is a strong move upward. 

  45. 835 on the RUT again (/TF) for you brave shorters (836 is the actual line). 

  46. BOTS still buying the RUT for the brave shorters, maybe latter.

  47. The world is saved…Dow 14k here we come. 

  48. Phil – Didn't get in on Friday on the Apr 40's. For new entry should I look at May or a higher strike?

  49. Pharm - INFI is just a monster, looking forward to when the CRIS chart looks like that!

  50. mrm – yeah, tell me about it.  I did not think that INFI would do that….they own their Hedgehog inhibitor, CRIS does not…that is the only 'material' difference.

  51. 1,3285 is right about the spike high on the Dow from the 16th.  S&P is over 1,420, Nas topped out at 3,135 on the 27th, NYSE needs 8,326 (from Monday, the 19th) and it was 848 on the RTUT on the 27th (Tuesday).  

    Volume at 12:45 is 45M on the Dow, not very impressive so far.  

    Dollar 78.98, still very weak.  

    USO/Yshen – 3 weeks is plenty of time.  Iran peace talks the week before expiration so I still like the April $40 puts, now $1, but still not cheap enough for a DD. 

    12:00 PM On the hour: Dow +0.5%. 10-yr +0.24%. Euro -0.03% vs. dollar. Crude +1.49% to $104.56. Gold +0.55% to $1681.15.

    Cleveland Fed President (and FOMC voter) Sandra Pianalto is seeing more evidence the economy is in a self-sustaining recovery, but she is not at the point of even thinking about withdrawing extraordinary monetary stimulus as it could be another 4 or 5 years before employment reaches what she considers to be the "maximum" level. 

    Tech stocks may drop at least 10% after meeting resistance levels formed by the retracement of losses after the dot-com crash a decade ago, analysts at ING Groep and Mig Bank say. Nasdaq’s acceleration "is unsustainable in the short term,” Mig's Ron William says. “The index is testing a key historical price level at the halfway mark of what it lost since the crash." 

    "The ECB takes decisions by majority vote, but the (bail-out funds) need a unanimous decision," says a member of the Bundestag's finance committee. The attitude helps explain Germany's support for the expanded firewall even as it stands against central bank ease – the country has a level of control over rescue funds it can never have over the ECB.

    As of yesterday, when Japan's corporate-tax rate dropped to 38%, the U.S., with 39.2%, had the highest official rate in the developed world. However, that doesn't really tell the story, as the rate many firms pay is much lower; some like GE are adept at not paying anything, and others like AT&T (T) and BofA (BAC) got refunds last year.

    Farmers are expanding plantings into previously off-limit conservation lands as high prices make crops more profitable than re-upping with the Conservation Reserve Program. The idled land will take years of investment, plowing, and fertilizer application before becoming productive enough to be profitable again.

    The IPO market for VC-backed start-ups is enjoying a bit of a recovery, with 19 companies raising $1.5B in Q1. That marks the strongest start to a year since 2007, and VCs hope things will get even better given the improving market environment and theimpending presidential approval of the Jobs Act. (see global IPOs)

    Starbucks (SBUX +1.5%) says it will triple the number of its stores in China in the next three years, jumping from 500 currently to more than 1,500 in 2015 in more than 70 Chinese cities, as expansion through smaller cities is “most definitely” a viable way to grow. China offers the “highest financial return” among all markets, Asia Pacific chief John Culver says.

    Three lunchtime questions:

    1) Should you copy the 'Ron Paul Portfolio'?

    2) Insiders sell, but who's buying?

    3) Can the U.S. consumer keep spending? 

  52. When one looks at the last 5 min of SGEN during the past week or so, someone buys like crazy into the close…..I still think SGEN closes that gap from November at $21.6X or so, then things will get interesting.

  53. Charles Biderman: The Problem with Rigged Markets
    Friday, March 30, 2012

    "Even Wile E. Coyote had to come back down to earth sooner or later", says Charles Biderman, founder of TrimTabs Investment Research. In his opinion, the prices of stocks and bonds – enabled by excessive financialization of our economy and central bank money printing – have been defying gravity for a dangerously long time.

    If we continue to do all we can to preserve the status quo — to maintain "phony" asset price levels as Charles calls them — at best we will restrict overall growth and handicap the economy.

    The problem isn't so much the unfairness and malinvestment evident in a rigged market. As Charles shrewdly asks: what happens when the market becomes un-rigged?

    We've never experienced the unwinding of an entirely manipulated financial system, so we can't predict for sure. But at this point, a painful collapse of our markets and loss of the US dollar as the world's reserve currency seem entirely plausible…

    Read the rest here.


  54. Thx to whomever mentioned TOT.  Nice play.  I also bought the underlying stock.

  55. PHil – I didn't get in on the DIA April $131 puts last week, now they are down to .85 and the 132's at $1.15  - which would you recommend? 

  56. Pharm, the premiums are just stunning right now, I can buy PLX NOV 2.50 calls with a quarter of premium…

  57. mrm, yessiree.  Ain't it fun with a low VIX, until you are on the wrong side of the trade.  I have been buying more stock lately because of all the back and forth.  Oh, except for the momo's. 

  58. Phil/Construction

    I agree that housing is an issue, but that is not the issue that our company faces.  We do primarily public work, infrastructure, treatment plants, roads, etc.
    The issue we face is that government agencies just don't have any money.  The money they do have gets consumed feeding the monster bureaucracies that they've created.  It really is interesting to watch.  They understand that they've grown fat and sassy.  The directors and commissioners will openly admit that they can't get anything done because the monsters they've created prevent anything from being accomplished.  I can go on a long litany about why and how they go about doing nothing, but what's the point, anyone that is part of the government or has worked with the government knows what the game is.
    What is really interesting is that even though everyone knows what the problems are, it is a matter of self preservation.  Therefore, even though they know there is tons of waste, pension and perks are out of control, money is being squandered away on ridiculous items, and that this course of action is unsustainable, they are all riding out the wave and hoping that they get there's before the wheels come off.  This is one of the reasons the stimulus never worked as advertised.  The dirty little secret is that even though the stimulus was sold on "shovel ready jobs"….."roads and bridges".."jobs…jobs….jobs…..the truth of the matter is only a small percentage of the money actually was spent as advertised.  Much of it was siphoned off to perpetuate the ongoing bureaucratic black holes that chew up dollars faster than they can be printed.
    Here in Cleveland it's sad but almost comical to watch.  I recently attended a pre-construction meeting at City Hall.  You would have thought you were entering a maximum security prison with the amount of security going on.  Once in, people wandered around in droves laughing and joking like they were at a cocktail party.  It reminded me of the movie night of the living dead….bodies everywhere just roaming around aimlessly with no apparent purpose.  The meeting was attended by a bunch of clueless participants that all had something on their wish list which they wanted added to the project but didn't have any funding to pay for.  The real kicker was the City Councilman that attended to inform us how important is was to have " people of color" working on the job because he didn't want to get a bunch of phone calls, and that he doesn't like to have to come to the job because his shoes cost $200 and he doesn't like to get them dirty.  I'm not making this up.
    Anyway……it doesn't appear to me that the construction jobs issue will be solved until serious changes are made.

  59. SQQQ – someone just loaded up on the Jun 10/9 BPS.  38c.

  60. Amazing how much petroleum products we export now…

    “The U.S. has become the fastest-growing oil and natural-gas producing area of the world,” Edward L. Morse, Citigroup’s New York-based head of global commodities research, and half a dozen colleagues wrote in the report. Greater output from Canada and a rebound in Mexico point to bigger increases in North American production “than all of OPEC can sustain.”

  61. Phil,

    LOL, nice post on Martenson !!

  62. stjeanluc,

    Do you have any historical data like this for the last 10 years?

  63. If Roche is going to buy ILMN…then someone needs to step up to the plate for GPRO.  Options are thin, and this goes against the rules of PSW, but the May 70 Calls are a good trend trade.  A few at 1.30.

  64. EW looks like another good one for a bullish play, although someone did a calendar play on them buying Aug 70 Ps, selling the May 70s. 

    The entire dynamic of the U.S. East Coast markets may be about to change.
    OPIS has heard from multiple sources that Sun has received serious bids on its 355,000 b/d Philadelphia, Pa. refining complex and that ConocoPhillips has at least one, and possibly two, qualified offers for its now idle 190,000 b/d Trainer, Pa. refinery.

  66. Someone just hit SELL in SLV.

  67. DIA/Jerconn – I'd go for the $132 puts at this point but, if we pop these levels tomorrow – we could go pretty far up from here so be careful.  

    Construction/Exec – I imagine any public work must be shot at this point and ain't going to come back for a very long time.

    Interesting that FXI has barely budged with all this excitement over China.  

    1:00 PM On the hour: Dow +0.53%. 10-yr +0.26%. Euro -0.10% vs. dollar. Crude +1.51% to $104.58. Gold +0.55% to $1681.15.

    2:00 PM On the hour: Dow +0.58%. 10-yr +0.15%. Euro -0.11% vs. dollar. Crude +2.15% to $105.23. Gold +0.49% to $1680.05.

    A useful chart shows the policy doves overwhelmingly in control of the votes on the FOMC. The hawkish crew – Fisher, Plosser, Kocherlakota – is sitting out the votes in 2012. 

    From Mish – "We Owe HOW Much?"  

    After a decline in volatility to multi-year lows amidst maybe the best Q1 ever for stocks, some traders see Q2 shaping up differently. June 55 calls on the VIX (VXX) traded 30K times early today and June 42.50 calls 15K. With the VIX at $15.23, these bets will pay off only if volatility soars.

    That Spain will come up short on its budget targets and GDP estimates is not a risk; it's a certainty.

    They might hold the keys to the purse strings, but female CFOs – all other things being equal – earn around 16% less than their male counterparts, a new study from consulting firm GMI shows. The survey took in 1,900 CFOs, of whom only 150 were women. "It’s a pretty strong argument that men and women are not being treated the same," says GMI. 

    Old idea of mine:  Traders at major banks have apparently become enamoredwith Bitcoin, a P2P digital currency that's worth $4.88 on online exchanges. One attraction is that thare is an absolute limit of 21M Bitcoins, meaning that new ones can't be "printed." Bitcoins are even gaining acceptance at a growing list of businesses. 

    GE's $1B investment in its domestic appliances ops, which includes bringing jobs back from abroad, is "as risky an investment as we have ever made," says CEO Jeff Immelt. However, unit CEO Chip Blankenship says that while overseas production brought a one-off cost benefit, "we found over time that wasn’t that sustainable a business model."

    Total (TOT +2.4%) says its natural gas leak in Scotland is costing $2.5M/day and the cost of stopping the leak could be as much as $200M, with neither being a threat to the firm's finances (the company earned about $10B over the last year). 

    Sony (SNE) will offer a set-top box and Blu-ray player supporting Google TV (GOOG) in France in September, reports a French paper. Earlier reports claimed the devices would arrive by summer. Though a slew of Google TV partnerships were announced at CES, Sony is for now the only OEM selling hardware that supports the platform, which Eric Schmidt predicted would be on a majority of available sets by summer. 

    Off sharply premarket thanks to the Chinese government's crackdown, Sina (SINA -1.5%) has rebounded. Helping its cause isDeutsche, which notes Sina and Tencent (TCEHY.PK) got off lighter than many other firms, and users are still able to exchange opinions while restrictions are in place. The firm adds significant Weibodefections are unlikely given "there is no other online/offline media that offers customized content subscription in China."

    82% of new iPad (AAPL) owners are "very satisfied" with the product, according to a ChangeWave survey. This compares favorably with the 74% reported for iPad 2 owners. 75% of respondents say the new iPad's retina display is what they "like best" about the device, while hardware and data plan costs are by far the biggest gripes. New iPad sales got off to a hot start, though Wedge Partners recently aired concerns about U.S. demand. (previously)

  68. USO April $40 puts now .86 so that's a DD in the $25KP and let's get 5 for the $5KP.  

  69. Data / JRW - I could certainly pull the data, sort it, do some automatic calculations and do a lot of stuff with it but what would you need to see. This one has last week, last month and YTD performance. Over 10 years there would be a lot of different stats. Also, a lot of these ETF are not 10 years old…

  70. DIA April $131 puts now .87 and we can roll them up for .33 to the $131 puts ($1.20) so let's do that in the $25KP.  In the $5KP, we have 3 $131 puts to roll up for .32 and $130 puts (.65) that will cost .55 to roll up so let's do that and add 2 more at $1.20 for 10 April $132 puts in the $5KP.

  71. Buy BOTS slowing!

  72. In that Biderman interview, I did find it interesting when he said that share buybacks have caused more dollars to chase all other stocks helping them propel higher. 

  73. USO – nice.

  74. Hey Phil,
    Is selling puts at ACI for Jan 13 for $1.60 a good entry? they pay 11c dividend per quarter so that would be a 5.2% dividend per year if I get assigned at $8.4.

  75. Lots of earnings Weds and Thurs:  


    April 04, 2012

        Ticker Actual   Consensus Yr Ago  
    Conference Call (Telephone) AYI   0.62 0.45    
    Conference Call (Telephone) MON   2.11 1.87    
    Conference Call (Telephone) MSM   0.95 0.78    
        Ticker Actual   Consensus Yr Ago  
    Conference Call (Telephone) SHLM   0.44      
    Conference Call (Telephone) ANGO   0.07 0.15    
    Conference Call (Telephone) BBBY   1.33 1.12    
    Conference Call (Telephone) HWD   0.16      
        MFRM   0.19      
    Conference Call (Telephone) MG   0.13      
        PBY   0.12 0.16    
    Conference Call (Webcast and Telephone) PSMT   0.69      
        RELL   0.10      
    Conference Call (Telephone) RT   0.16 0.24    
        SMSC   -0.17 0.26    

    April 05, 2012

        Before The Open Ticker Actual   Consensus Yr Ago    
    Conference Call (Telephone) CarMax KMX   0.39 0.39    
        China Gerui CHOP   0.40 0.23    
    Conference Call (Telephone) Constellation Brands STZ   0.38 0.35    
      ENGlobal ENG   0.03 -0.02    
    Conference Call (Telephone) Pier 1 Imports PIR   0.48 0.48    
    Conference Call (Telephone) RPM Inc RPM   0.02 0.01    
    Conference Call (Telephone) Schnitzer Steel SCHN   0.33 1.10    
    Conference Call (Telephone) SemiLEDs LEDS   -0.25 -0.03    
        After The Close Ticker Actual   Consensus Yr Ago    
    Conference Call (Telephone) AZZ Inc. AZZ   0.82 0.73    
    Conference Call (Telephone) WD-40 WDFC   0.54 0.53  

    Next week is the official beginning with AA after the bell on Tuesday.  JPM and WFC report next Friday, first big banka although CBSH not too small anymore ($3.6Bn) on Thurs morning.  

  76. ACI/Obur – The $10s, I take it?   I like BTU many times better but that's not a bad entry for ACI.  

  77. Oil flies up while 'new energy' firms like WFR and AONE get crushed…

  78. And there goes SGEN….run baby run, faster…oh, I don't even like that song.

  79. scottmi
    I am convinced that oil will crush this market before Fall. They are crushing everything.

  80. Speaking of data, I have updated my volatility charts:

    I have added the a weekly sheet for this week and updated the monthly sheet with Friday's prices to track the predictions. So far, besides the VIX instruments, most stock seem to behave as predicted. Interesting that one of the high flyers SHLD came down hard last week and is no below the volatility band!

  81. stjeanluc / Data

    Just annual for total bond market and NYSE Comp or Russell 2000 since 2000, thanks !!

  82. Now for a bold one, IWM needs to get over 84.70 by Wenesday. Autos may perk the market tomorrow, but oil will kill sales soon, and another build Wed. may just tank the markets, but inventories are rigged too!

  83. Phil,
      After several adjustments to an HCBK buy/write (original buy at $11.00, selling Jan 12 $12.50 puts and $10 calls) I'm left with the shares and sold APR $7 puts and $6 calls, with a net of $7.54. I don't see much prospects for improving the situation much, but perhaps you do. Just take the loss and put the money to better use somewhere else?

  84. OB is getting out of calls and full puts in case you didn't notice. The buy BOT has stopped.

  85. Let me see what I can do JRW…

  86. JRW,
    What is your trade now?

  87. P bar in MRX.  We are so f'ed.

  88. chasw / Trade

    I'm in cash now as they have expended a lot of energy getting here and I have a strong trend line at IWM 83.66 which I did not think would be breached, so waiting !! But without news, tomorrow should be up !!


  89. Phil
    Do you think last week's big seller is done? Looks like last week since 3:00 and the only healthy volume rise that I watch today was XLF. Last weeks selling was much stronger than today's buying in IWM. Last 30 minutes is pump and dump.

  90. Pharm – by f'ed you mean with MRX or in general with all of these P-bars appearing all over the place?

  91. Blow off top or on to new highs?  

    If we do head down from here, it's an ugly double top but, if we break up from here – it's a nice breakout after two months of consolidation!  

    Autos/Shadow – I don't know.  This time, the auto companies are offering financing to anyone with a pulse and many families have been sitting on cars since 2008 that they would have normally turned in so it's very possible that high gas prices are pushing people to trade in a gas guzzler for an economy car this time around.  

    HCBK/Kevin – If you want to stay in them, then it's just a matter of rolling out.  You win on the short puts so you can wait to sell new ones but the short $6 calls are $1.35 and you can roll them out to the Jan $7s at .85 and sell the $7 puts for .75 for net .25 in your pocket and you raise your call-away by $1 but still well-protected and you still get your dividend.  

    78.965 on the Dollar.  We have Fed minutes tomorrow and no QE there as well as Motor Vehicle Sales, which should be strong and Factory Orders, which is the most likely miss.  What I think is more likely, is disappointing data from Europe (not that it matters).

    Volume is a total joke at 64M at 3:30.  Possibly we'll sell off now into the close as this joke of a pump-job is erased.  

  92. lnk – latter.

  93. JRW
    My upper trend lin was to 83.70 are you looking at that as support now? I also think like you on tomorrow may be up except the seller seems to be back.

  94. Seller/Shadow – It's not one guy, most likely but a different fund each day that picks an opportune moment to sell.  As I said above, I'm voting for a sell-off into the close based on the overall clues (low volume, weak dollar, double top, lack of any actual reason to go up) so we'll see.  Actually it looks like it started already but you never know until they ring that bell. 

  95. Ring that bell….that is when volume actually picks up, b'c suckers cant sell their option positions except some indexes. 

  96. shadowfax / 83.70

    Maybe not today, but after a higher day tomorrow, it will be , imho !!

  97. Phil
    These funds seem to sell using the same program. You would think they would try to be different. Money is going out faster than it came in today. XLF has a $16 brick wall.

  98. NRA at its best….

  99. JRW
    My trend length points to Wednesday change and a gap up open tomorrow but you know  timing is the key and that is the secret plan. They sucked a few more sheeple in today!

  100. Pharm- I see you at least had the good sense to wear ear protection. :)

  101. Was this at our beach 1020?

  102. Shadowfax/Sheeple – I fear that it is the wolf in sheeple's clothing that is being sucked in!

  103. Same programs/Shadow – That's what the 5% Rule is all about.  They all TRY to write unique software but the reality is there are basic market forces at work that tend to shape them (there are only so many ways to dam a river) at a basic level and then the "flourishes" that are applied are usually done by committee and between the tendency of people to focus on round numbers and the many, many roundings that go in inside the program – they all tend to converge at certain key points.  All we have to do is identify those convergence points and it's pretty easy to map out the rest. 

    NRA/Pharm – The really funny thing is his friends don't laugh at him (maybe not a good idea when he's holding a gun). 

    Well, pretty lame gains compared to Europe – we'll see how Asia reacts this evening. 

  104. 106M so 40% of the day's volume in last 30 mins (and mostly in the last 5) and it was all down.  Since the morning was down on heavy volume, on the whole, I'd say today we had more down volume than up but all that matters is the print, right?  

  105. Winston
    Hope your right! Just in case your wrong and the shit hits the fan I loaded up all my small gun brass and seems time to practice, don't want to get caught with my pants down like PHARMBOY!!!!!!!!

  106. 2,709,009 shares a nickle low @16:06, I take the gap up open back today was double top!

  107. AAPL close is out of sinc blowing over bollinger upper band! Are the fools going to AAPL as a safe place?

  108. Wanna fund a drug company….I have a target

  109. shadow….aim, fire

  110. shadowfax / tomorrow and Wednesday

    I agree, gap up likely !!


  111. Now a couple Fed guys say no more easing. They know who is boss and backing up is their job, Ben gets off easy.

  112. pharmboy
    We must support our surviving industries, only 1 American car has interest, and that is probable made somewhere else. Good for car corps but not so good for the unemployed. If you find a need for a good sniper rifle ———-  hunting gun let me know!

  113. Hi,
    Please provide your valuable guidance for my BCS learning
    I think that to get the max value of the BCS, the BCS has to be either move deep in the money during its life cycle or both legs expire in the money. when a BCS is recommended here I assume that the motive is to get as much as out from it in the little possible time. BCS are selected well out in time (at least a month) to give the flexibility to roll or DD. Does the chances for profit increase when a Put is paired with a BCS?
    For a plain BCS without a Put what are the different ways that at least 25% percent can be made without waiting till the expiry and without any sharp movement supporting the spread or letting the premium burn on the short leg while the stock move sideways?
    If our premise (increase in stock price) is correct then how does a BCS behaves during its lifecyle? I guess both the legs move somewhat parallel and the gains move slowly or remain the same.
    Does my question make sense? Let me know and I will try to provide more information or clarification.


  114. At the close: Dow +0.37% to 13261. S&P +0.71% to 1418. Nasdaq +0.9% to 3120.

    Treasurys: 30-year +0.23%. 10-yr +0.18%. 5-yr +0.11%.

    Commodities: Crude +2.11% to $105.19. Gold +0.4% to $1678.55.

    Currencies: Euro -0.1% vs. dollar. Yen -1.02%. Pound -0.15%.

    Market recap: Stocks kicked off the new quarter with solid gains after better-than-expected manufacturing reports from the U.S.and China helped calm eurozone concerns. All 10 S&P sectors rose, paced by materials and energy. Crude oil pushed past $105, and copper jumped 2.5%; Treasurys edged higher. NYSE advancers led decliners two to one.

    The bulk of the decline in Treasury prices should be over after their worst quarter in 2 years, according to a Bloomberg survey of 21 primary dealers. Expiring tax cuts, the kicking in of mandatory budget cuts, and $100 oil will team up to brake the economy and take a lot of the pressure off of bond prices.

    Obama Warns Supreme Court -Obama said a Supreme Court overturn of the health-care law would be a prime example of the judicial activism that conservatives have derided

    Not everyone at Goldman is on the same page with the recent call for a once in a lifetime opportunity for long-term equity investors, so the firm's bearish David Kostin seeks to clarify: He agrees with the long-term thesis, but his 1250 S&P 500 target reflects short-term tactical risks. Stocks "will remain below average over the next year due to stagnant economic growth and high uncertainty.”

    The SEC is likely to soon bring charges against Goldman Sachs (GS) over a MBS deal and it may a classic pile of crud called the Fremont Home Loan Trust. What makes it fraudulent is Goldman may have known the loans were even worse than advertised. One example: Goldman claimed 0.01% of the mortgages were underwater, but an audit found 23.5% were at the time the deal was pitched.

    ‘Even a 1-Trillion Euro Firewall Wouldn’t Be Enough’ (Spiegel Online)

    Got money offshore? IRS starts new amnesty program (Market Watch)

    "All indications suggest that the key spring selling season has gotten off to a solid start," writes Wells Fargo, basing the conclusion mostly on anecdotal data. Of particular interest are sales gains not being dependent on incentives. Holding things back are conservative appraisals and tight underwriting, both of which should subside over the course of the year.

    Copper climbs to a one-month high after upbeat readings onU.S. and Chinese manufacturing activity, the latter reading "taken as a sign that the hard landing scenario pictured in the past few weeks may indeed not come to fruition," RBC Capital says. May copper rose $0.096, or 2.5%, to settle at $3.921/pound, highest settlement since Mar. 1. FCX +3.2%.

    Why Gas Prices Are Out of Any President’s Control (NYT

    What’s keeping US gas prices aloft (FT Alphaville)

    The biggest trade of the year for 2012 is "ag," says Dennis Gartman. “Agriculture and the ability to ship the agriculture around the world – those are the two things to pay attention to.” With Europe in a drought, and American farmers producing a bumper crop this year, Gartman recommends owning anything to do with agriculture and the shippers who move corn. His favorite picks: Diana (DSX) and DryShips (DRYS).

    Restaurants getting fat? After Raymond James analyst Bryan Elliott strikes a cautionary tone on the sector with 4 downgradeson big names, D.A. Davidson's Bart Glenn stays on the same themeas he notes that a basket of 23 restaurant stocks trade at a pricey 17.8X 2013 profit estimates. Despite the gloomy outlook and the economic overhangs he sees, the analyst still has BWLDCMG,RRGB rated as Buys with some upside potential. 

    Baird raises its price targets for coffee brewers due to lower coffee prices, citing increasing earnings visibility, solid demand trends and muted Q1 earnings expectations. It raises Starbux (SBUX +1.5%) to $65 from $58, Peet's Coffee (PEET -0.8%) to $95 from $76, and Caribou (CBOU -2.5%) to $23 from $22.

    Shares of lithium ion battery maker A123 Systems (AONE-9.8%) sink to a new 52-week low and remain hovering near $1, continuing the fallout from last week's recall of modules and battery packs installed in luxury electric vehicles manufactured by Fisker Automotive. Fisker recently has secured more than $1B in new financing.

    Frontier Communications (FTR +2.6%) finishes the day higher after Nomura upgraded the shares to Buy on valuation earlier today, citing potential progress on refinancing its debt portfolio. 

    Trade association SIA provides more more evidence the chip industry is rebounding: it estimates sales were flat Y/Y in February after falling 2.7% in January, and rose for trailing 3 months. UBS responds to the news by asserting chip stocks still have room to run in spite of this year's rally, and recommends chipmakers with PCand smartphone exposure. Bernstein is a fan of analog names TXNand ADI. (earlier)

  115. The SEC is taking yet another look at Groupon (GRPN) following the company's first revisions as a public firm, though it's not yet a formal investigation. (last summer's probe)

    Groupon's (GRPN -16.9%) mammoth drop wasn't merely due to the company's restatement, but the way the news reignited long-standing concerns about Groupon's management and accounting. This is, after all, a company that had to drop a controversial expense-accounting practice following an SEC investigation, and whose CEO risked derailing his company's IPO by firing off an emotional memo during the middle of its quiet period. (more)

    As Google (GOOG +0.7%) CEO Larry Page nears the one-year anniversary of his second go-around leading the company, reviews of his record are mixed at best (IIIIII), but the stock is a laggard vs. its peers: GOOG has gained about 9% Y/Y, but Amazon +10%, Microsoft +27%, Apple +79%.

    Why Google Might Be Going to $0 (Tech Crunch)

    The plaintiffs in an e-book price-fixing suit levied against Apple (AAPL) and book publishers argue in a new filing they have enough circumstantial evidence to establish an antitrust conspiracy existed. The filing comes amidst reports the DOJ could soon reach a settlement, one that would allow Amazon (AMZN) and other e-book retailers to again set prices. That could be a negative for publishers enjoying huge margins under the current setup.

    Bye Bye BlackBerry. How Long Will Apple Last? (Forbes

    Barclays' Anthony DiClemente throws cold water on hopesthat an iTV will revolutionize the television industry. While expecting the device itself to be great, DiClemente doubts Apple (AAPL) will be able to convince TV network owners to provide content on an a la carte basis, not when pay-TV providers are coughing up ~$30B/year in affiliate fees. Reports have already emerged Apple is struggling to secure TV content for this reason.

    The bizarre calculus of emergency room charges (LA Times)

    Diagnosing the Republican Brain (MoJo)

  116. Dollar 78.84 now (9:15) – goosing the Futures back to green.

    Big Chart – Technically bullish.  If the RUT is over the line (840) it's time to BUYBUYBUY until we fail again.  Dow is still the laggard.  

    CMG/StJ – Incredible. 

    BCS/Pat – Selling a short put doesn't so much increase the chance of a profit as it does increase your profit OR loss on the trade BUT, if you REALLY like a stock and REALLY want to own it at the net price – then why not?  Let's say I like MSFT.  I could buy the stock for $32.29 and just cover it with 2014 $30s at $4.90 for net $27.39 and I make $2.61 if I get called away.  Very dull.  I could just sell the 2014 $27 puts for $2.50.  That puts me in at net $27.50 and I make $2.50 if MSFT is over $27.50 – better but not thrilling – margin is also just $2.70 so way better than buying the stock.  Also, net entry of $25 is very appealing.  So, if I REALLY WANT to own MSFT at net $27.50 – then I have $2.50 for free to play with.  I can buy the Jan $25/30 bull call spread for $4 and that's net $1.50 in cash and now my upside is $3.50 if MSFT holds $30 to Jan and $27.50 to Jan 2014.  

    As to rushing your gains – well, it has to go your way, doesn't it?  Bull call spreads are NOT good for cashing out early in general as you get locked into the trade if you don't have good margin (and good timing to use it with).  You are far LESS likely to make quick money on a straight bull call spread but it depends on what underlying you select.  Mostly, a bull call spread is about burning premium – you sell more than you buy and it helps to have the stock move in your favor, of course but, in the MSFT example above, the net delta on the bull call spread is just .22 so a $5 move up in MSFT (15%) is barely going to make you $1.  On the bright side, a $5 move against you will only cost you $1 and that means you have plenty of time to react before the net drops 50% and makes it too difficult to roll, which is why we like them – they need less hedging. 

  117. From Cramer's 'Mad Money' Recap:
    In the "Executive Decision" segment, Jim Cramer sat down with Richard Gelfond, CEO of big-screen theater purveyor IMAX (IMAX), a company Cramer said may finally be poised for substantial growth.
    Gelfond said that IMAX has been growing 30% a year for the past three years and now has a backlog of 250 theaters. He called the company's recent growth "meteoric," noting that IMAX only has 225 theaters in China, a country with enormous growth potential.
    When asked about the company's business in more detail, Gelfond noted that IMAX is able to transport moviegoers in a way that traditional theaters just can't; that bodes well in a tough economy or when gasoline prices may prohibit a real-life cross-country vacation. IMAX is now able to easily switch between 2D and 3D movies, and Gelfond noted that a movie doesn't need to be 3D in order to be great "as long as it's IMAX."
    IMAX is also becoming a more stable company, said Gelfond. The ups and downs of movie releases are becoming less and less of a factor, he said, as IMAX builds a stronger and stronger network of recurring revenues from its theaters. Gelfond also said that IMAX is committed to its theaters in museums around the world. Those theaters, which use older film technology, are being upgraded to digital, said Gelfond, which will reduce the cost of a $35,000 film release to just $150 for a digital release.
    Cramer said that he was a fan of IMAX, especially given the company's growth prospects and the fact that its earnings are no longer dependent on Hollywood's next blockbuster release.

  118. The Socialist Brain of a Liberal Democrat
    As opposed to the rigid and bigoted Republican / Capitalist / Conservative brain, a Liberal / Socialist / Democrat brain is hard to map because it undergoes perpetual reshuffling of its centers and synapses. Generally it can be characterized by a compassionate concern for not taxing the rich enough, combined with generosity in spending other people's money.

    A liberal brain is known to have a well-developed "blame-America" synapse, a benign "Smarter Than Thou" tumor, a Global Warming Panic Center, the Entitlement Synapse, Moral Relativity Gray Area, and a "P.C. Lobe" responsible for speech codes, multiculturalism, racial quotas, and alternative lifestyles. The underdeveloped areas of a Liberal Brain usually include those that handle common sense, personal responsibility, sense of humor, patriotism, and work ethics.

    The eternal motivational force that keeps a liberal going is typically a daily doze of Starbucks coffee combined with the dialectical struggle of the opposites – the feeling of being a victim of oppression and the feeling of guilt for oppressing the others at the same time.


  119. Chart / Phil – Here is another one that doesn't look sustainable. I mean, we love AAPL, this is starting to look scary!


  120. Phil / BCS – Thanks for the lesson, the very reason for joining the team.

  121. Phil / BCS – thanks for your lesson and example. very valuable as always. It helps us to understand the trade/position better and plan for future action.
    How do you select the short side of the BCS? I guess it depends upon the risk/reward, liquidity at stike prices, resultant cost of the BCS and the net delta that you are looking at, since there is no issue with prices moving in your favor and and going above the short leg (or is it since you have to then wait for the expiration to get the max benefit..?)
    Sorry to take your time.

  122. Phil / WMT Trade
    You asked me to keep you updated on the WMT trade idea, on what to do with 200K.  I put together a Google Spreadsheet that keeps all the information updated.  The short caller has more than doubled in price, and the roll to the Sept 62.5 just went over $1 today.  From the last discussion, this was the point where the roll should be executed, and possibly a Jan14 50put sold or another BCS bought.  I only took a small position in this trade since I was cautious of the uptrending market and didn't fully understand why we are pairing a long term BCS with selling a short term call…but I'm really trying to grasp this concept.
    Here is the sheet.
    Help with next steps is appreciated, since it's not going quite the way I would have hoped.

  123. Pharm - yeah, I told the wife it would not be a good idea to post the twins pic on the net….. :)

  124. Well pastas, at least we know that it is survival of the fittest, and since conservatives will use guns, the theory relativity (using lasers or phasers as my boys like to say), will disintigrate the bullets. C u on the other side.

  125. Phil or JRW,

    Is there any chance that I might see any sunshine on my TZA shares sometime this month?  750-775 rut looks farther away every day. Dyin’ by a thousand cuts here.
    Would it be too stupid late to buy some TNA (shares) now to stop the bleeding?
    PLEASE DO feel free suggest any options plays as if the Poster had that option. I don’t (yet). So if you have any recommendations not requiring options, feel free to post those ideas, and any options ideas as well.
    Other people probably learn from your TNA/TZA Opt tutorials, and I save them all for future use.
    Thank You

  126. Good morning! 

    Dollar holding the line at 78.85 so far and our futures are flat after Hong Kong up 0.8%, Shanghai up 0.47%, India up 0.82% but Nikkei down 0.6% in Asia and Europe dead flat at the moment.  

    Euro $1.333, Pound $1.602, 82 Yen to the Dollar.  Oil $104.70 (rejected at $105 all night), gold $1,679 (rejected at $1,685), silver $33.02 (holding that line), copper $3.943 (finally rejected at $3.95), nat gas 2.13 (still awful) and gasoline $3.375 (awful in another direction).  

    Almost no news at all – just waiting on data (and the Fed):

    Tuesday's economic calendar:

    Auto sales

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    10:00 Factory Orders

    2:00 PM FOMC minutes 

    Australia leaves its key rate unchanged at 4.25%, but signals it may resume cutting interest rates as soon as next month if weaker-than-expected growth slows inflation. (RBA statement)

    The U.K. will probably avoid a recession this year but the government needs to do more to increase lending in this "weak" economy, said the British Chambers of Commerce in a new report. The London-based group forecasts full-year growth of 0.6%, less than the government's 0.8% prediction. 

    10 'Facts' That Should Worry Europe's Equity 'Fiction'.

    Japan's Monetary Base Slides for First Time Since 2008: Economy. Japan’s liquidity supply dropped in March for the first time in more than three years, fueling politicians’ complaints that the central bank should be doing more to end deflation.

    People's Bank of China Governor Zhou Xiaochuan said China's goal is to gradually reduce inflation and that the country is using interest rates combined with other measures to achieve a soft landing. Zhou, speaking on a panel at the Boao Forum for Asia in China today, said using interest rates too much may increase capital inflows.

    Five Years After Crisis, No Normal Recovery: Reinhart and Rogoff.

    Choices Shrink for Subprime SetA shakeout in the storefront-loan business may make credit even tighter for millions of borrowers with less-than-stellar credit histories.

    Foodstamp Usage Remains At All Time High, Record Number of Households Receive $277 In Poverty Assistance Monthly

    Pimco's Total Return Fund pulled in $1.7B of investor deposits in Q1, a nice turnaround from Q4 when investors withdrew ~$3B. The $252B fund is up 2.9% for the year, not exactly an impressive yield but good enough to outperform 97% of similarly managed funds. As a point of comparison, Vanguard's Total Bond Market ETF [BND] is -0.65% for the year.

    How a Failed Deal Got Goldman Entangled in Sex Trafficking. It’s another day of nightmare headlines for Goldman Sachs. “Goldman fund to exit company owning sex traffic site,” reads the Reuters headline. “How Goldman Sachs Invested in Child Sex Trafficking,” Jezebel’s headline proclaims. At pixel time a search on Google for the phrase “sex traffic” coupled with “Goldman Sachs” produced more than a half a million hits.

    Exclusive: The $1.3 Billion Bond Deal Haunting Goldman(GS)What went into the 2006 Fremont Home Loan Trust from Goldman Sachs that has the SEC so bothered?

    Australia LNG Boom Threatened by U.S. Shale Exporters: EnergyAustralian liquefied-natural gas projects by companies from Royal Dutch Shell Plc (RDSA) to Woodside Petroleum Ltd. (WPL) and valued at about $100 billion are at risk from rising costs and cheaper U.S. exports. Natural gas trading at a 10-year low in the U.S. and discoveries in Africa also threaten to slow the development of Australian LNG ventures following the approval of eight projects to meet surging demand from China, Japan and South Korea.

    Tanker Rates Seen Reversing Rally as Oil Glut Expands: FreightThe fastest expansion in oil cargoes since 2004 is exceeding demand and filling up storage tanks from Egypt to Japan, creating a glut that threatens to reverse the biggest gain in shipping rates in five years. Tankers will be carrying 488.8 million barrels by April 14, 3.9 percent more than the week earlier, estimates Oil Movements, which has tracked cargoes for 25 years. Rates for very large crude carriers, each holding 2 million barrels, will drop 58 percent to average $19,750 a day, the median of six analyst forecasts compiled by Bloomberg shows. Shares of Hamilton, Bermuda-based Frontline Ltd. (FRO), the largest operator, will fall 46 percent in 12 months, the average of 19 predictions shows.

    Preferred Sands LLC is said to be a frontrunner to buy Sunoco's (SUN) Philly refinery, according to sources, with Preferred Sands' parent company confirming it made a "very substantial bid" for the 335K barrels/day refinery. Sunoco has said it will idle the plant on July 1 if it hasn't been sold by then.

    U.S. Investigates Possible Internet Threat to NYC. U.S. law enforcement and counterterrorism officials are trying to figure out the significance of recent occurrences on websites believed to have close links to al Qaeda, including a graphic some fear could be an attack threat directed at New York City. The graphic contained a picture of the Manhattan skyline superimposed with a Hollywood-style caption that says: "ALQAEDA – coming soon again in New York." It was posted on Monday by a site called the Ansar al Mujahiddin Arabic Forum, or AMAF, a militant web forum which allegedly has close connections to the Afghan Taliban and a key militant leader in Jordan.

    Sina(SINA) Drops to 5-Week Low After Suspending Weibo Commentary. Sina Corp. (SINA), which runs the Twitter- like Weibo service in China, slid to the lowest in five weeks in New York after the company suspended user comments on its microblogging platform. Sina dropped 2.1 percent to $63.66 at the close on the Nasdaq Stock Market, the lowest price since Feb. 27.

  127. pstas – yup, that is exactly how we liberals are!  Now excuse me while I cook my granola, get my bike helmet, and go off to my do-gooder job of enabling homeless people to avoid personal responsibility by giving them a bunk and breakfast, all so I can feel superior.  Wow, you have seen through to my soul, and I wonder what in the world I can now preach during Holy Week.  I may have to forget the whole self-sacrifice theme on Good Friday and the hope for all people crap on Easter, and just stick to the great themes of Republican religion as outlined by Santorum these days, you know, survival of the fittest, gay-bashing and an ongoing war on women.  Praise Jesus and pass the ammunition.  Geesh!

    Average Price today is $3.86

  129. With increasing AAPL bashing coming from various and sundry quarters, including St.J's recent charts, I'm going all in selling as many 2014 600 puts as my broker will allow.
    This time it really is different.


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  131. IMAX/Diamond – If the market doesn't crash by next week, it's time to buy IMAX.  We don't want it to get away from us but we talked about adding it as a buy a few weeks ago and, so far, no harm in waiting.  

    Socialist Brain/Pstas – And the fact that you believe that is witty gives us additional insight into the Conservative brain…   :)

    AAPL/StJ – I don't think AAPL is unsustainable just because it makes a pattern but, on the other hand, it's certainly exhausted itself and is due for a pullback but I'll be one of the suckers buying if it gets to $450.  

    Your welcome Jfaw! 

    BCS/Pat – What's our job?  To SELL Premium.  How much do we want to sell?  As MUCH as possible.  So, in general, I'm looking to sell the most premium I can relative to the amount I buy on the lower call but then we're also influenced by our price target during the time period and our level of certainty.  Generally, I'll start by looking for a call I'd like to sell and THEN look to see if I can buy a reasonably priced call below it.  Also, if I can't make 50% without the put sale, I'm not going to like it as much since I figure I can be wrong half the time so I'd better be making 2:1 bets to stay even.  The more confident I am about REALLY wanting to own the stock on a pullback, the lower the odds on the BCS I'm willing to accept but almost never less than 3:2 (33% potential gain) as there are lots of ways to make 33%, including just selling the puts.  

    WMT/Burr – So the main question is, how confident are we that WMT stays over $55 through Jan?  We planned on paying .73 to roll to the June $60s and those are now $2.10, vs $3.85 for the $57.50s so it would have been good to take action before the roll passed $1 so now I would say the best way to play is to add 25 2014 $60/$65 bull call spreads for $2.20 roll to 50 (2x) June $60s for $2.10.  That covers you for an additional $2.80 of upside and your net sale of $1.86 is now .98 per long so you have your original spread at $7.77 with $2.33 to gain at $55 and the new spread at net $1.22 with $3.78 to gain at $65 and you are then good to $62.33 but you MUST take action when/if WMT goes over $62.50 and holds it (probably adding another round of calls).  Had you done that when the roll went over $1, or had you executed the roll – we'd be a lot further ahead of the game.  Since we're on the subject, our next target roll is to the Sept $62.50s, now $1.60, which is net .80 and we don't want to let $1 get away there either.  The closer calls have a +23 delta so we can expect the roll to also be in trouble right around $62.50.  

    TZA/Newbie – It would be good to know where you entered them but when you buy a stock, or an option for that matter – you have to have a stop of some sort in place.  Ultra-ETFs are just as volatile as option contracts and, like option contracts, they tend to decay over time so the longer you hold them, the worse they get.  I do still think the RUT goes down and TZA is at $17 and was $16.50 and you didn't scale in there and the 50 dma is $19 so that's gotta be your goal, which is up $2 or 12%, which is a 3% drop in the RUT to about 810.  The trick when you are behind is having realistic expectations of what you will be lucky to get back to and mapping that out IN ADVANCE should guide the stops you set going in in the first place.  


    ban2 / Phil / JRW
    TZA options

    If Phil or anybody would like to help me understand a couple simple Options concepts…….
    on Wednesday @ 5:15pm
    ban2 wrote:
    "someone thinks this train is going to derail by July opx?chk out TZA July 56C  — open interest for over 5800 contracts!?Maybe you want to DD — we're not even @ 18 yet "?___

    ban2 – That's rather fascinating. Maybe you (and others)  can help answer a few questions in more depth.
    I think there must be something wrong with my math, but if there isn't, then that Strike implies a change in the Russell of how much………….?
    Here's the math I've done. Somebody please point out what I'm doing wrong. This can't be right>
    July  Strike 56 C
    Assume current TZA value of 18
    So ratio 56/18 = 3.11
    So for TZA to go from 18 to 56 is an increase of 211% ? To be ITM the TZA would have to TRIPLE?
    Dividing the 211% by 3………..>>  that implies a change in the Russell of down 70% ?  in 4 months?
    I must be missing something here.

    Obviously somebody (large fund?) is really playing for the increase in price of the Call itself, not betting on a true -70% change in the Russell, and obviously not planning to actually Exercise at $56.  Is that right?   Why would somebody buy such an extreme OTM Call? Are they just betting on a lrage crash in the Rusell, which would drive the value of all TZA Calls at all Strikes up?

    Is there a "Greek" that can be used to derive an approximate theoretical value  for a 4 month out OTM Call Strike/Month combination?   Vega, Delta, something like that? (I don't know Greeks at all).   Or Black Scholes theory maybe?

    holy crap, i think my calculator just caught fire……. actual total exercise cost would be 5855 contracts times 100 shares times 56 dollars = $32.79 Million Dollars? ?  Is my calculator melted? For one strike in one month? Is that possible, to have that much theoretical "control" in play? That much money?
    Is there some kind of "industry assumption", or even a known formula, that describes  "where" all the total money in a given strike/date/symbol like this is likely to go?
    In other words, X percent is used to Exercise the options, X percent get re-sold for a profit, X percent  get sold for a loss, and X amount that expire worthless?

    Thank You

  133. Phil / TZA
    Yes, setting a stop is a practice that I USUALLY  adhere too.
    On the occassions when I don't,   I typically get hurt.
    I have to learn to take my losses small and quick.
    I do understand your answer.   My Entry was January 23 at $21.87.
    Thank You