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Testy Tuesday – Fed Fails To Mention QE – Again


Bernanke gave a whole speech last night titles "Fostering Financial Stability" at the Federal Reserve's Stone Mountain, Georgia conference and didn't say one thing about more quantitative easing – not even a hint.  Without an endless supply of MORE FREE MONEY from the Fed – what is going to hold our markets up at these inflated levels?  

Goldman Sachs immediately covered their assets, putting out a note indicating "A number of factors reinforce our desire to be more cautious about the data in the near term:"

  • First, our US forecast has continued to embody a relatively flat 2%-ish type GDP growth trajectory, so the notion that acceleration is now coming to an end is consistent with that forecast view.
  • Second, we have become more confident that the weather has played an important role in some earlier data strength. The payback here may have begun, but there is probably more ahead. There is also rising focus on the US "fiscal cliff" at the end of this year, as Alec Phillips has described.
  • Third, in the current post-bust setting, even modest slowing in growth feels more dangerous than normal. Fiscal policy is consolidating and conventional monetary policy has been exhausted in many places. And with plenty of leverage in parts of the global economy, slowing growth quickly also raises questions about debt sustainability in places. As a result, financial risks can re-emerge more quickly than normal as growth slows.

And, as pointed out by Business Insider – Goldman Sachs can't possibly be wrong.   Not because they are smart, nor because they are amoral, evil, greedy, manipulative bastards (allegedly) – but because they talk out both sides of their Corporate mouth so they can always point back at something to "prove" they called it.  Kind of like Cramer's daily flip-flop scam only with more people.  

Occupy FascismBusiness inside points out that while Jim O'Neill is on CNBC standing behind Peter Oppenheimer and Abby Cohen's bullish calls for the retail suckers who watch TV for investing advice, the official firm stance of David Kostin (Chief Equity Strategist) and Stuart Kaiser, who put out the above note – is, in fact, BEARISH.  

That's the funny thing about Corporations, they want to be treated like people when it comes to bribing the politicians of their choice but when they do something that would land people in jail, like promoting a position on TV that they are actually dumping – then they want to be treated like a company that can't possibly be held responsible for the actions of it's individual workers – no matter how senior their positions.  

We're flip-floppers and damned proud of it.  We like to play our trading ranges and, when we are high in the range, we go bearish and, when we are low in the range, we get bullish.  Even at our most bearish or bullish we tend not to go past 70/30 one way or the other and we were happy to take some profits off the table yesterday in our virtual portfolios as we hit our initial goals for the sell-off and expected a bounce.  

We did not, in fact, get much of a bounce and now we'll see if the Russell can hang on to 800 today but I doubt it and, as I predicted last week, that means we're probably on the way to my 775 target on that index (see March 5th interview), which lines up with 12,500 on the Dow, 1,310 on the S&P, 2,850 on the Nasdaq and 7,750 on the NYSE.

As I noted to Members yesterday, our 5% Rule gives us a very clear set of lines that would define a bullish recovery and those are currently Dow 13,060, S&P 1,396, Nasdaq 3,070, NYSE 8,105 and Russell 817.  As you can see from our Big Chart – they all have their work cut out for them today to get back to their levels and, with Europe down 1% this morning and no QE on the menu – it's not looking very likely.  

Don't forget, Treasury still has $66Bn worth of notes to sell this week so we NEED to panic people into bonds or rates will go up and that will open a whole other can of worms we don't want to deal with.  There are still plenty of well-trained dip-buyers out there but I see ICSC Retail Same-Store Sales up just 0.5% this week (ended 4/7), DESPITE the Easter weekend (which wasn't until 4/24 last year).  That's a TERRIBLE number folks!  

That probably explains why the Small Business Optimism Index fell 1.8 to 92.5 in March, down from 94.3 in February.  “March came in like a lion, with Main Street seeing significant job growth in March — but it appears to have gone out like a lamb, and with no cheer in the forward-looking labor market indicators," said the report.  One can only assume they must have read my 3/30's "Friday Fade – March Goes Out Like a Lamb (to The Slaughter)" or maybe we just have our pulse on the real sentiment of small business – as opposed to these bozos on Wall Street or in the MSM.  

Small business optimism dropped in MarchAfter a promising start to the year, nine of ten index components dropped last month, most notably hiring plans and expected real sales growth each taking a significant dive, in spite of owners reporting the largest increase in new jobs per firm in a year.  Reports of positive earnings trends lost 4 points in March, falling to a net negative 23 percent. Not seasonally adjusted, 14 percent reported profits higher (down 2 points), and 43 percent reported profits falling (up 4 points).  This does not bode well for earnings season!

As usual, Redbook's Chain Store Sales are stronger than the small businesses as consumers rush to the sales that only large distribution networks, cheap Chinese goods and minimum-waged workers can provide.  Month over month, Redbook sales were up 0.8% – still not impressive for Easter and, of course, it remains to be seen if any of these sales are coming at a profit – as it's become more and more difficult to entice consumers to spend $20 at the stores instead of at the pump.  

Food prices are also eating into those discretionary consumer Dollars and the USDA says there is no end in sight to that nightmare as Global corn stocks drop by 4.3M tons due to rising demand for feed from – you guessed it – CHINA!  Overall, demand for corn was down 3M tons so not that big of a difference but that never stops oil speculators from rallying and I'm sure we'll get a pop in corn to add to the woes of the Global consumers.  Don't forget, in 2/3 of the World, food is 50% of the household budget!  

Speaking of food, our beloved SVU finally got a chance to blow off the bears with the ACTUAL EARNINGS after being endlessly beaten down by rumors that are now clearly ridiculous.  They are already up 17% ahead of the bell and should open around $6.25.  We just put up a pre-earnings trade idea on them last week in Member Chat which should be looking good this morning:

SVU – 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%

Of course SVU is also in our Income Portfolio, where our 2014 target is $7.  Congrats to all the SVU faithful today and, I believe, to the bearish faithful as well as we look to pass the halfway mark to our sell-off targets.

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  1. Something finally worked for me. I bought SVU last August and sold the Jan2013 $5 calls for $2.70. I bought the calls back yesterday for $1.15 thinking that SVU might have a decent report. With SVU reporting a good quarter, I'm now thinking I can sell some covered calls again either today or tomorrow. Maybe the $7.00 calls.

  2. Oil Lines

    R3 – 105.26
    R2 – 104.04
    R1 – 103.25
    PP – 102.03
    S1 – 101.24
    S2 – 100.02
    S3 – 99.23

  3. PP

  4. I'll post the earnings calendar each morning as well to be able to track it:

    SVU reported this morning and they beat by $0.03 – reporting $0.38 per share. They are up over 10% in pre-market trading. AA reports tonight and they are expected to miss… Since Friday, the consensus estimate has been lowered from a loss of $0.04 to a loss of $0.05 with the whisper number being a loss of $0.06. This does not bode well.

  5. Phil: adjusting put spreads
    I have 15 LULU apr 72.50 puts covered with 10 Apr 70's how would you recommend adjusting the long puts to next month while they still have some value. I know to do something by tomorrow but not sure what. My premise is that this stock will have pullback but perhaps I should be going out to July.  TIA

  6. never stops?
 initiated with an Outperform at Cowen

  7. stjeanluc- thank you for all your hard work with keeping up with things- your help is greatly appreciated!!!!

  8. SVU up 16% so far this morning in premarket. Interesting how good news always leaks, as the price had been making some nice moves up on down days for the general market preceding SVU earnings. Still, can't complain. Nice pick, Phil.

  9. Good morning Phil Question I still hold 2x 600 Apr AAPL short calls sold for 20.10 now 39.22 and possible higher after open the same are covered by 3x Jan13 570 long calls bought at 90 now 112.00 Thinking of rolling the callers to Oct 695 what do you think? thanks

  10. Now as to WFR, HOV, FTR….

  11. Gosh darn it….my puts did not fill yesterday…

    Weight-loss stocks Arena Pharmaceuticals (ARNA) and Orexigen Therapeutics (OREX) are on the radar of traders after rival Vivus (VVUSlands a 3-month PDUA extension from the FDA for Qnexa. The decision pushes back the target date for the agency to consider the closely-watched drug's safety plan to July 17 from April 17. Premarket: ARNA +2.6%, OREX +2.3%, VVUS -7.9%.

  12. Wow, now VVUS is up 16% from the lows this morning…..and above yesterday's close. 

  13. In my new house I will have a padded room added for me with PCLN and CMG wallpaper ;-(
    How could these anal idiots come out with buy recs AFTER the stock runs up 60% in 3 months?
    Where were they when the POS was under $500???

  14. Finally had some good timing re SVU.  Bought more stock and sold Oct $5 puts yesterday.  Chart action lately seemed similar to HCBK last Nov. when it hit new lows before rebounding and I regrettably did not double down.   

  15. Thanks/stjeanluc
    Echoing jthoma's sentiment, thanks for all you do.

  16. Pharma – this should be interesting – all of the street's "experts" predict VVUS approval and ARNA's rejection. Im just hoping it can make it up to $5 before I take half off the table. Still kicking myself for not doing that last time!

  17. Alerts on the TNA calls at $1.50 and $2.00

  18. Might have to pull the plug on the DMND experiment soon… 

  19. Morning All – ZH reporting that BB CEO resigns

  20. Good morning! 

    Got a bunch of Momo upgrades today and the Nas is up but no one following just yet.  AAPL $642 is closing in on $600Bn, which SHOULD be some sort of resistance around $650.  CMG and PCLN flying as they got their daily upgrades and, as I said yesterday – we have to remember to long the Nas for bounces but now we're stuck with the RUT and IWM at $80.10 and the weekly $77s at $2.20 is just .10 in premium and you keep a stop at $80 and risk .10 or .15 on a bullish cover. 

  21. Same thing with DMND here… We have alerts at $2.00 for the VXX 18 Calls and $3.00 for the VXX short put.

  22. On the $25KP, the 10 USO puts left got taken out by our stops at $1.60. We sold the other ones at $1.80.

  23. jro – yes, very good read.  Although looks like 66% approval, others reject.  The last person thinks rejection based upon the MACE (Major Adverse Cardiovascular Events).  I think that coupled with the CNS effects of topiramate in non-epilepic/bipolar individuals presents a huge risk to daily health.  The weight-loss effects are hands down the best with Qnexa….but the long term adverse events do not warrant approval in my mind.  But, I am just a lonely island in a vast sea.

  24. Pharm – is there trouble in CLDX?

  25. Phil,
    I have some short SVU jan 7.5 puts slightly under water after todays report.
    any suggestions?   still  don't mind owning them at 5.10 net,  hang tight?? Thinking also of adding a BCS

  26. More and more that AAPL chart looks like a penny stock charts … at $600! Unreal. But then again as I posted yesterday, just about everybody has it in their portfolio now. It seems that we have seen this before!

  27. Tuesday – 4-10-2012
    Dr. John L. Faessel
    Commentary and Insights
    Quote of the Day
    The fact that we are here today to debate raising America's debt limit is a sign of leadership failure.  It is a sign that the US Government cannot pay its own bills.  It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government's reckless fiscal policies.  Increasing America’s debt weakens us domestically and internationally. Leadership means that 'the buck stops here.'  Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.  Americans deserve better.
    ~ Senator Barack Hussein Obama ~
    March 2006
    Turnaround Tuesday?
    No rush to sell…
    Yesterday, the market gapped down in the face of Chinese year-over-year inflation of 3.6% and a lousy “jobs” report that I commented on yesterday. Volume was the lowest since the first of the year and well below average. There is no real dumping and running for the hills.
    The McClellan Oscillator, my favorite overbought / oversold indicator, is OVERSOLD at minus 234. That’s the second lowest probe since Jan. 1 and the fourth deepest low in the last 12-months.
    The stochastic is in oversold territory (SlowK is at a deep 3.62; this indicates a possible market rise is coming. The Bollinger Bands are also indicating an oversold condition. Yesterdays low TICK was a negative 1045 and that’s not really indicative of any ultra-short-term oversoldness.
    Looks to me that while were quite oversold with McClellan at minus 234, a deeper probe, at least intraday, could set up a "turnaround Tuesday". It's almost a sure thing that we test yesterday's lows. In the event we sell off a bit more it will make the "low" more substantial. Net, net – we’re setting up for a bounce lest Spain implodes or the Israelis go after the Iranian nuclear sites. Of course that's always out there.
    You will
    Obviously, the economy stinks and the 8.2% unemployment number is totally bogus. I see where US congressman is going to "attempt" to replace that idiotic metric. Good luck! (Disgusting)
    To me the current news flow makes me think we’re in Venezuela. I can hardly believe it, but I can. And I saw it coming. What a catastrophe we are experiencing.
    Business remains solid in the USA as corporate America has hunkered down cutting costs and getting mighty lean as the Dow Jones Industrial Index recently posted four year highs. The companies in the S&P 500 index posted record sales and profits last year exceeding the totals of 2007, before the recession and financial crisis. And there's sitting on record cash of a couple $trillion. Amazingly, last year companies generated an average of $420,000 per employee versus $370,000 per employee in 2007. Let’s remember again that the market’ fundamentals say stocks are super 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.
    Notable quarterly commodity highlights: Gasoline futures were up 24% while natural gas plunged 28.9%. The Dow Jones commodity index finished the quarter down 2%. Also notable is the S&P 500 (SPX) finished the quarter up a whopping 12%. Most notable; Gasoline prices since Obama took office have risen by 103.79%.
    EuroLand Bond Yields are advancing smartly again
    Greek 10-year yields 21.04%
    Italy 10-year (gross) bond yield – 5.57% – off from highs of 7.26% on 11-24.
    Spanish 10-year (generic) bond yield – 5.89% – off from highs of 6.7% on 11/24.
    Yesterday the S&P 500 (SPX) closed at 1382.20
    50-day moving average support is at 1371.
    The 200-day moving average support is at (SPX) 1270
    Let’s remember the pivot point Breakout that occurred on March 16 was at 1369.
    Short term ‘price’ support in the (SPX) is at 1382.
    Slightly longer out it’s at 1378 / 1379.
    Short term ‘price’ resistance is at yesterday’s high of (SPX) 1387.
    Stiffer resistance is at the neck-line of 1393.
    Monday’s key indicators and metrics:
    ·           McClellan Oscillator is OVERSOLD at minus 234
    ·           The Treasury 10-year yield 2.04%
    ·           Natural Gas (Globex) 2.107
    ·           VIX – 18.81

  28. I guess European banks are not lending…

  29. CLDX/morx – they are holding support at $4.25ish.  This one is going to be a fun ride up and down, but they have a nice little pipeline, and one drug is from SGEN.  I have only a 1/4 position, so they should be fine for now. 

  30. And may cartoon of the day:

    Tom Toles

  31. Pharm – what do you think of adding to the 1/4 position? say Aug 4 puts sold for .65+?
    Maybe another round of Aug 3/4 or 4/5s?

  32. CLDX – etrade shows them at 3.35 while TOS shows 3.55. Anyone know why that would be?

  33. Good article about how corporations are now basically freeloading on the rest of us through loopholes and exemptions:


    But far from living up to this rhetoric, the GOP leadership has presided over an explosion of new tax loopholes and pork-barrel spending. "It's worse now than it was under the Democrats," says Stephen Moore, president of the archconservative Club for Growth. "The Democrats invented the game, and Republicans perfected it."

    Conservatives in Congress, especially, have seized upon tax policy as a way of doling out favors to supporters while maintaining a facade of "smaller government"; tax breaks boost corporate bottom lines as effectively as pork-barrel expenditures, without requiring the Treasury to cut a check. Since 2000 alone, Wall Street's tax bills have dropped by a third. As a percentage of the gross domestic product, corporate taxes are now at their lowest level in 20 years—and their second-lowest level since the Great Depression. Nearly 95 percent of corporations pay less than 5 percent of their income in taxes. This despite a tax rate that officially stands at 35 percent.

    "The corporate income tax bears no relation to income—it's a bunch of special-interest provisions," says Gary Hufbauer, a fellow at the Institute for International Economics and a former tax policy analyst in the Nixon, Ford, and Carter administrations. Corporate America, he says, has gotten the message: Taxation is little more than punishment for not promoting your interests on Capitol Hill. "If you do not lobby," says Hufbauer, "you are going to get taxed."

    The entire article is worth a read and it looked like one of Phil's rant!

  34. Oil is flying back to $103 as the Dollar tests 80.  

    France is down 1.8%, FTSE down 1%, Germany down 1.1% so I'm not buying this rally but clearly CNBC and the rest of the MSM are in pumping mode and it will only take a kind word from the Fed to get us off to the races again so cash, Cash, CASH is King!  

    Of course we like shorting oil (/CL) at $103 or if they break below $102.50 and gold is still a go below $1,650 (/YG).  

    In fact, in the $5KP, let's add 5 USO April $39 puts at .65 and let's DD on the April $40 puts in the $25KP ($1.20).

    No losing our minds on a run up either, same bounce levels as yesterday in effect: 


    5% Retracement Rules:  

    • Dow falls from 13,300 to 12,900 (400) so 20% bounce (weak) is 12,980 and 40% bounce is 13,060 – now 12,970
    • S&P falls from 1,422 to 1,380 (42) so 20% bounce is 1,388 and 40% bounce is 1,396 – now 1,385
    • Nas falls from 3,128 to 3,032 (96) so 20% bounce is 3,051 and 40% bounce is 3,070 – now 3,053
    • NYSE falls from 8.300 to 7,975 (325) so 20% bounce is 8,040 and 40% bounce is 8,105 – now 8,004 
    • RUT falls from 841 to 801 (40) so 20% bounce is 809 and 40% bounce is 817 – now 805.


    I left the levels from 3:33 yesterday in as it gives you a nice benchmark vs where we are now (all worse but the Nas)

    At the open: Dow -0.22% to 12901. S&P -0.26% to 1379. Nasdaq -1.08% to 3047.

    Treasurys: 30-year +0.31%. 10-yr +0.16%. 5-yr +0.06%.

    Commodities: Crude -0.34% to $102.11. Gold +0.04% to $1644.55.

    Currencies: Euro -0.16% vs. dollar. Yen -0.53%. Pound +0.2%.

    10:00 AM On the hour: Dow -0.12%. 10-yr +0.14%. Euro -0.10% vs. dollar. Crude +0.18% to $102.64. Gold +0.05% to $1644.75.

    "Recent market aversion to small caps is a yellow flag," writes Robert Sinn, noting a favorite indicator – the ratio of the DJIA (DIA) to the Russell 2000 (IWO) – has moved above 1.40, a level when breached that has often led to significant market sell-offs. 

    Only seven stocks in the S&P 500 hit 52-week highs yesterday, while 11 traded to new lows – the first time this year more stocks hit new lows than new highs on a given day. It’s "another sign that the market’s short-term momentum is stalling out as we head into earnings season,” Bespoke says. Still, yesterday's selloff looks more like a healthy consolidation than the start of a crash, Barry Ritholtz writes.

    The IMF is set to sharply lower its long-term forecast for China's trade surplus, according to sources. Who cares, right? Certainly politicians in D.C., Brussels, and Brasilia as they will no longer be able to wave the IMF forecast of 10% trade surpluses into the future in Beijing's face at every opportunity.

    Spanish home sales fell 31.8% Y/Y in February against a 26.3% drop the previous month. It's the largest decline since last summer.

    Behind China's unexpected March trade surplus was a surprise (to some) slowing in imports. With the excuse of the Lunar holiday out of the way, it's another sign of slowing domestic demand there. Iron ore purchases -9.1%, steel product -20%, both Y/Y. Increasing was the value of oil imports, +20% Y/Y, thanks to high Brent crude prices.

    The yen retraces even more of its February to mid-March weakness after the BOJ did not announce new easing measures overnight. Market chatter was rife with rumors of action, and inaction forced yen shorts to cover. Dollar/yen -0.5% to ¥81.05, the lowest level in over a month. FXY +0.5% premarket. 

    SNB interim chief Thomas Jordan reiterates the bank's readiness to buy foreign exchange in unlimited quantities to support its CHF 1.20 floor against the euro. He also confirms the SNB was in the market Thursday as the euro briefly fell below 1.20 and says he can't exclude an offer underneath that level. Euro buying CHF 1.2028.

    More from the SNB: Since the central bank imposed the 1.20 floor on the euro, its reserves have barely grown, suggesting its resolve has yet to be tested. "We have not been impressed by the recent ceiling management," says a currency strategist. If the SNB is truly "resolved," expect to be impressed soon. The cross remains slightly above the floor at CHF 1.2022.

    European companies borrowed more from the bond market than they did from banks in Q1, according to Dealogic – a rare phenomenon. One key reason: Investors perceive corporations as better credits than sovereigns, so while government paper is supported by the ECB, real money is seeking a haven – and a solid return – with businesses.

    European investor confidence drops to -14.7 from -8.2 in March, according to Sentix. Its gauge of expectations declines to -9.3 from -2.3. It's the first tumble for the survey in 4 months as a bit of reality intrudes on the sugar high from the ECB's LTRO

    Funny how CNBC doesn't report on the World's 5th largest economy… French manufacturing output slides 1.2% in February after a revised drop of 0.1% in January. Overall industrial production increased 0.3% as brutal temperatures increased fuel consumption. Separately, the Bank of France says the economy posted no growth in Q1 after expanding just 0.2% in Q4. Paris -1.6%.

    Or the World's 12th largest: Spanish bond prices continue to tumble after the 4-day Easter break, the yield on the 10-year note +17 bps to 5.93%, the highest level since early December. The 2-year yield +21 bps to 3.19%, even with the ECB offering banks near-free funding for 3 years to hold it. Banco Santander (STD-3.9% premarket. Madrid -1.4%.

    Goldman Sachs recommends buying shares of high-end home builders Toll Brothers (TOL) and PulteGroup (PHM) after its internal survey showed wealthier consumers more confident about the economy and home prices vs. six months ago. Survey sentiment also showed consumers are more willing to spend on home improvements. TOL +0.9%, PHM +0.8% premarket.

    Leerink Swann weighs in on the delay the FDA imposed on Vivus (VVUS) over approval for its Qnexa weight-loss drug, saying the firm should still have "firstmover advantage" for the highly-anticipated drug. Shares of VVUS have trimmed their premarket loss to -0.2%.

    Best Buy (BBY +3.7%) CEO Brian Dunn resigns that postand his board position, with "no disagreements" relating to operations or procedures, but a "mutual agreement that it was time for new leadership." G. Mike Mikan is named interim CEO. 

    Shares of Sony (SNE) trade 7.6% lower premarket after the company reports that it will see a bigger loss for the past financial year than originally forecast. The company pins the slow sales of TVs in the U.S. as a major factor that pushed earnings lower.

    Facebook (FB) hopes that the purchase of Instagram helps it solve its China Syndrome with government authorities in the nation holding a tight rein over access to social networking sites. Instagram's relatively clean slate as a platform void of political movements could help it squeeze through censorship filters as Facebook expands its influence in China.

    A group of California students suggests equity offers the solution to high college tuition and the student debt issue. It suggests public universities – in lieu of charging tuition – take 5% of students' salary for the first 20 years after graduation. Isn't that called the state income tax?

  35. CLDX – I have them at 4.33 in TOS….

  36. Phil, by the time your oil thoughts were posted, oil was already down to $102. That was a bit too quick to act on it this time…

    Also, in the $25KP, we are out of the USO puts are they were stopped out in the afternoon. And they are already back to over $1.40.

  37. Not sure anyone got USO at .65. Somebody is shadowing you Phil! Nice call. :)

  38. RUT is now below 800….

  39. Stjeanluc, I thought the VXX  were stops at $2 and $3 and the 21 put was triggered yesterday at 3.

  40. USO / Dclarck – Oil moved so quickly that there was little chance of getting these prices unless you read Phil's mind. 

  41. Phil – 10 yr at 1.99%.  You are dead on sir about the the need to sell US paper and these market drops that lead to lower yields.  Sad and amusing. 

  42. Hemas – Correct the 21 Put did trigger at $3.00. Thanks.

  43. stjeanluc
    When I looked the price was well in the .70's! Oh well, it seems to be the gift that keeps giving. I'm sure there will be other opportunities.

  44. Missed the 0.65 on USO puts although I put an order for 0.73. Now it is 0.86. Is it worth chasing?

  45. And now the VXX Apr 18 calls have hit $2.00 so we are out of VXX altogether!

  46. Good Morning Phil and all,
    I sold TZA  $17 May 19 puts that are up 40%. What is the advice for managing this trade PSW style?  Should i just sell it and be happy or roll it?

  47. SVU/Aug – Congrats.  I'd be more conservative with the cover.  We got a nice pop, it's good to lock it in.  You can always roll higher later.  

    LULU/Lincoln – I don't know what you started with but, if you are bearish, they have an analyst meeting on the 11th and I'm not sure when earnings are but it's going to be tricky to play.  I'd buy back the $70 puts (.37) and roll the April $72.50 puts (.83) out to the May $75 puts ($3.45, + $2.62) and sell the May $70 puts for $1.58 so you are spending net $1.04 to widen the spread to $5, raise your strike by $2.50 (and at the money) and buy another month of time and, frankly, if you don't believe in the trade enough to do that – then take your losses and get out.  

    PCLN/Jabob – At least they are running out of people to give them upgrades.  

    SVU/JMM – Thanks but they are fading fast!  Gotta be patient on the rest – every dog has their day…

    AAPL/AAPL – I'd take the 3x $22 ($66) and run as your loss on the 2 $600 calls is only $40 so you WON!  Wasn't that the plan?  Yes to the roll, although I wouldn't go so far out – just to maybe the June $640s ($41) as you WANT to burn premium.  If AAPL breaks $650, then you cover long again – now you've got the system down, you shouldn't worry about it but it doesn't do you any good to make a nice play with bullish covers if you then refuse to take the profits off the table.  

    VVUS/Phar – Great call, sucks you missed the fill. 

    Wallpaper/Jabob – You can get a whole bunch of burrito wrappers and use them for the wallpaper – that would be cool!  Notice that, despite the run-up on PCLN, our puts haven't gotten cheaper enough to bother rolling.  That's telling although somewhat aided by the VIX marching to 19.40.  

    Wheeee on gold!  $1,636!   Dollar at 80.09, lower than it was when gold was $1,650.  Probably that's it for this bear run so tight stops!  

    SVU/Terra – The trick is to ALWAYS sell into the excitement and take advantage to reduce the position back and lower your basis.  

    SVU/Sage – Don't know the date but, if close, take advantage and roll them out in time and, if already out in time, I still have long-term faith.  

  48. Imagine a world where Apple stock didn't go up and actually went down.  What level would the Nasdaq be then.

  49. spain now down -12.1% ytd.
    german 2y not yld below japan's for first time

    "What could have been a trend in job growth is more likely a blip," said NFIB Chief Economist Bill Dunkelberg, who authored the report. "The mood of owners is subdued--they just can't seem to shake off the uncertainties out there," he said.

    Businesses surveyed by the NFIB cited building inflation pressures as "the number one business problem," with worker compensation costs rising to their highest level since 2008. A net 21% of the respondents expect to raise their prices in the coming months, NFIB said. A positive trend in profits that had materialized in earlier months appeared to " fizzle."

    According to the report, only one of the index's 10 subcomponents rose during March
    aapl keeping market from abyss again
    italy -3.7%

  50. Breaking silence and going bearish (burritos and pharma) – While I didn't give up stock trading for Lent, it is my busy time of year through last Sunday.  I went bearish on Holy Week, shorted CMG and waiting for at least a good slap on the wrist if not an outright crucifixion.  I shorted some high fliers that seemed overbought compared to fundamentals, including some pharmaceuticals:  INFY (loss 3.5%), AMLN (gain .45%), PCYC (gain 2.5%), THRX (gain6.5%), SZYM (gain 16.3%).  
    I'm holding on to all my short puts (BHI, CSCO, FCX, JPM, MCD, OXY, TWO, VALE, XOM), but not in any other long positions.  Hedging with VXX spread.  Trying to keep it simple.  Good to be back, I read most of what you all had to say (thanks to all frequent posters), and will stop lurking.  

  51. Those USO puts down to $1.26 now (Phil's) – I'm looking at DIA April $128 puts at $1.15…

  52. ……and what if AAPL misses lofty earnings expectations-even slightly?

  53. revtodd64:
    Welcome back! Hope the Lord is with you on that CMG short!

  54. Being that the McClellan has to be close to -300, good day to take some short profits and look to get back in on a bounce in the markets.

  55. FAS Money – Very nice.  We'd like to sell calls on a run up but not happening so far.  

    IWM Money – Well now we should buy back those April $60s (.80) and then see which way things break.  

    $5KP – No reason to DD but we can roll the May $24 calls (.60) to the May $22 calls ($1.15) for .55 and that's worth doing.  


    • DMND – Time to sell the June $25s ($1) and use that money to roll down the $22.50s ($1.40) to the $20s ($2.55) for net .15 overall.  
    • XRT – Looking good for a change.  
    • BBY – Meet the new boss.  
    • SCO – Right on track 
    • SQQQ – Closer to track
    • FAS – Those April calls are hanging tough at $10,000 – even though they are almost 100% premium with 10 days left.  
    • VXX – Calls stopped out I think.  $21 short puts looking good as we topped out at $2.76 yesterday and now $1.99.  
    • GLL – Waiting for the big one.
    • PCLN – Just waiting
    • DDM – Those got cheap fast!  Now $1.20 and do we even think we need upside protection?  Yes we do because we have $10K to gain from FAS if we don't go up so what's losing another $2,400 if we get that wish?  As we don't intend to add more bearish bets, there's no point in pushing this protection and we don't plan on getting bullish anytime soon so just watching and waiting at the moment.  

  56. Pharm/ VRTX
    Are you going to buy back the $40 callers (BCS JUL 35/40) or leave the call spread as it is?

  57. Phil thanks the AAPL play well understood with the caller rolled to Jun 640 However selling the cover as every one is talking AAPL to 700 would this not be foolish to go nacked on the new 640c Jun, as well loose on the up beet?

  58. VXX / Phil – The short puts went over $3.00 yesterday so we are out of them as well.

  59. out of my dia puts and some tza

  60. VRTX/lion leaving as is for now. 

  61. Phil: adjusting spreads
    thanks for the answer re: lulu put spread.  With spreads in general what factors lead you to buy back the current month short puts or  calls vs rolling the long position out first and letting the current month shorts expire, before  covering the longs ?  TIA

  62. Morning Phil. I have TZA protection we discussed last month: currently April 16/21 Bull Call bought at $3.04, with April 18 putters sold at $1.56. I was thinking of rolling the Bull Call to the May 18/24 for $2.10, selling May 19 puts at $1.31 and letting the April 18 putters die. Your thoughts?

  63. Pharm,
    what is your opinion on vphm? Looks like it got clobbered today

  64. OMG, Magnum….PCLN puts are…(cough, cough) green……

  65. McClellen/Rustle – I think you have to be careful relying on indicators like that in low-volume, manipulated markets as the data gathered to feed the indicator is false, which gives you a junk output from a usually reliable indicator.  We were drastically overbought but the WAY they got us to overbought kept the oscillaror in check (just like it dropped the VIX to ridiculous lows) but the McO now flashes oversold but that's like saying a 500-pound guy who loses 100 pounds is too thin – still a long way to go before getting to the right weight.  

    LOL StJ!  Very sad but true.   Loopholes article simply sad.  

    USO/StJ, DC – C'est la vie.  

    10-year/Ink – That auction is tomorrow at 1, followed by the Beige Book at 2 and then Bullard at 4 and Yellen at 7:30 should be the best chance we have for a QE boost this week so let's remember to take some long flyers tomorrow afternoon.  

    USO/Pat – Not worth chasing.  There's always another opportunity with oil. 

    VXX/StJ – How can we be out of the short $21 puts?  

    TZA/Star – Congrats!  They are, as we say in the biz, on track and you can put a stop on 1/2 like we did with USO yesterday but, as long as you are confident that, should they fail, then you roll to the July $17 puts (now $1.45) and then the Oct $14 puts (now $1.30), etc – then why accept "just" 40% when you are on track.  Maybe now that RUT is at 792 you set 800 as a stop line and then drop it 10 more for each 20 the RUT drops from here on out.  

    AAPL/Rustle – Essentially it is now responsible for 100% of the Nas gains for the year.  

    NFIB/Angel – Not good (see post above). 

    Happy Easter Rev!  Glad to see you resurrected in chat…  ;)  

    Europe not looking pretty – France down almost 2.5%, Germany 1.7%, UK 1.5% heading into the close!  

  66. Anybody have IWM lines below 79.10??

  67. Bought some DIA calls as a hedge.

  68. aapl crutch not looking good this could get ugly is aapl rolls

  69. VXX / Phil – These 21 Puts went over $3.00 yesterday 3 times over the course of the day and we had a stop at $3.00. They hovered around there between 12:30 and 15:00 mostly so it was not a spike. Volume on them is huge today (1000 contracts traded at 10:50 AM – over 10 times yesterday's volume all day!), but they were thinly traded yesterday and that probably didn't help.

  70. VPHM – Watson gets approval for the generic version of VPHM's drug.  That is never a good thing… Vancocin generated $280M for VPHM, so over 50% of their revenue.  Again, not good, as generics usually eat up to 90% of a patented drug.


    This is the same argument for VVUS and OREX, IF they get approval.  Who's to say that someone cannot do a bioequivalence study and do the same thing to them.  These drugs are out of patent life, it is just use patents or formulation patents.  Easy end around to pull off with the right stuff.

  71. dont worry italy and spain don't matter!!!! buy!!!!

  72. Phil, you are quite euphemistic about the Euro close:
    Eurostoxx 50 -2.96%
    Dax: -2.5%
    Eurostoxx Banks Index – 4.8% (now on December pre LTRO1 level !!)

  73. Where are the buying bots!  No dippers today?

  74. SPX is at the 50 DMA…. The level charts are looking ugly now!

  75. Pharm - eighteen months of gains wiped out in one day for me on TTNP as they announce an offering; I'm pondering a DD, any opinion?

  76. Phil,
    any ideas to lock in the short profit by buying some weekly IWMs or DDMs or DIA Calls?

  77. AAPL/Yodi – If you are worried, rather than tying up all that cash in the naked calls, how about a cover of 2x the Jan $650/730 bull call spreads at $30 ($60) – that puts less at risk on the long end, you still have $80 of upside coverage over $650 and the net delta on the spread is only .16 so a $30 (5%) drop in AAPL will only cost you around $4.80 on the longs while wiping out your callers.  Of course you get the same poor performance to the upside but you get the whole idea of how you work your way into those gains as you roll the callers towards your spread.  Having the long spread doesn't preclude you from buying more protection if AAPL goes over $650 – it does, hopefully let you take your damned profits off the table with some piece of mind, rather than dithering and watching them melt away because you didn't sell into the morning's excitement (not even half?).  

    VXX/StJ – That's a shame, I didn't see them go over but I was busy and also wasn't really paying any attention to the BS afternoon rally other than reading the news to see if there was any basis to it, which we decided there wasn't.  

    Factors/Lincoln – All depends on the stock, the overall market and the various trends and expectations.  If you're not sure, the same profit rules we use for any short put or short call position apply – protect your gains!  

    TZA/Jbur – Why would you pay the April $21 caller .77 if you don't believe TZA will finish over $21 in 10 days?  That makes no sense at all, does it?  If you think TZA is done with its run (I don't) then why not just roll the April $16 call ($4.30) to the July $21 calls ($2.95) or higher (if you are more bearish) and take $1.35 off the table and wait to see how it goes.  Same goes for selling puts – if you think TZA topped out here, then why on earth would you want to sell May puts that are even higher than the April puts you sold last time?  

    These are not random numbers or roulette numbers where it doesn't matter where you place your bets.   You should BELIEVE in a price target and make your plays accordingly.  See above notes on our virtual portfolios – I don't sell puts or calls because we get to a day on the calendar – I sell puts when we get to my low target and I sell calls when we get to my high target.  In between, I'm perfectly content to sit back and read (gather information) while we wait for the markets to pick a direction.  It's not that complicated, I have targets (listed above) I have bounce targets where I set stops (lower now as we sell off more) and, other than that – I don't feel compelled to do anything since I have a plan and we're on it.  

    PCLN puts/Pharm – First of the seven signs…

    IWM/Button – That's where the 5% rule works wonders.  We're at 800 (IWM 80) on the RUT so 1.25% is 10 and that makes each 10 significant with 20 (2.5%) and 40 (5%) more significant than 30 and 50 on the way down.  On the whole, you can expect the RUT to treat each 5 is if it has some kind of support as even 0.625% matters on heavily-traded indexes.  

    EU close/Pentax – I was looking at the WSJ – I guess delayed a bit.  

    European shares close sharply lower, with some of the loss being catchup for yesterday's day off, but the rest from continued sovereign debt concerns – the yield on Spain's 10-year +22 bps to 5.98%, a 4-month high. Stoxx 50 -3%, Germany -2.4%, France -3.1%, Italy -5.1%, Spain -2.9%, U.K. -2.2%. The euro -0.2% to $1.3080.

    This could get ugly for us folks!  

  78. Phil, your downside target on RUT still 775 (from morning alert)?

  79. Please DO NOT tell the Chinese but after four months of rolling EDZ, it's green for me for the first time all year.

  80. Interesting tweet from Zerohedge:
    "last year gold was the margin call liquidation trade. this year it will be AAPL"
    I dont dare imagine a panic sell out of AAPL..

  81. mrm – Neuroscience….YIKES!  If you are even….I would move on.  I think they could bounce lower then maybe put UR toes back in.  Opiold addiction is their lead, and I think this area is over done.  JMHO.

  82. SPY bounces right off the pivots of 137.4x and then straight down to 136.65.  OH NELLY!  It has been a long time coming.

  83. From SHJ, vroom vroom….FXE

    Targeting 126. Bought $126 Jun Puts.

  84. $25KP Update – The SCO calls are now over 20% and the short puts are over 80%. The FAS calls are looking really good now with FAS down $4.00. The 100 Calls are at 64% and the 99 calls are over 20%. The XRT short calls are also over 40% to the good.

    I think that we need to be careful not to lose these good gains…. The portfolio is now over $9K as we stand.

  85. TZA/Phil: Thanks for reply. In no way do I think that TZA is done with it's run. I believe TZA has a ways to go and was looking for a way to improve the position, perhaps giving it more than it's 10 days to expiration. I gather what you are saying is don't fiddle with it and let the trade ripen since it hasn't come close to it's max profit yet.

  86. Pharm / TTNP - thanks, I recall buying them because they were related to your PhD thesis, so a bit of an homage to your expertise 8) .

  87. As for BBY, new boss, old boss, same results. Caught in the market downdraft!

  88. Pharm / SGEN - ugly week, eh?  Looking to roll my JUN options to SEP…

  89. Locking profits/Pat – Same drill as usual except this time we'll remember to play the Qs.  QQQ weekly $65 calls have just .12 premium at $1.70 so using those with a stop at QQQ $66.50 and then again at $66 would be the way to go but, like this morning – I don't see any reason to expect more than a small bounce and – sometimes – it's good to let a percentage of your gains be your cover (setting and adjusting stops) and not mess around with buying on both sides every time we tick down a bit.  

    RUT 775/Tarp – That was my target from March 5th – still no reason to change it as nothing fundamentally has changed since then.  That's the point at which I expect the Fed or the Administration to step in, of course – if they don't –  things can go another 10% down very easily.  

    Wow, Nas 3,000 better hold!  

    $25KP/StJ – Looks on track to me. 

    TZA/Jbur – If you want to add a May position, add a May position but don't squander the bird-in-the-hand April profits to do it.  

  90. Phil – in my mix the DDMs are down 60%, closed the shorts this morning for 1.15 but i am left too bullish. would you recommend a hedge or exit DDM and look to get back in at the "bottom"? I'm abt 70% cash. thanks

  91. dpast, margin calls force you to sell…AAPL is just a stock.

  92. Phil

    Oh my…..!!!
    The Bernanke better get in front of a mike.

  93. TTNP – PhD thesis….I am a DMPK/Tox…..I davel in all areas. 

    SGEN….very ugly, but the sell off goes with the market.  I will continue to add to the position. I have the April $20 Ps sold, and will either roll down a bit, or go with them for more shares, selling the June 22.5 calls.

  94. PLX is green though….

  95. Phil- Your put list is obviously beautiful today!!!!!!!!

  96. ZLCS is where we bought them a few weeks ago, YMI is a better price than my entry.

  97. Arizona leads the way again in idiocy:

  98. V and MA reversing yesterday's silliness.  

    Gold popping again as we expected, back to $1,642 with the Dollar at 80.13 so watch 80 on the Dollar as we're getting past the 3-year auction and that's a chance for them to say something dovish between now and tomorrow's auction.  

    QQQ weekly $65s are $1.53 so a stop at $1.50 risks .03 to make whatever in case we bounce here.  

  99. volume surged on that last aapl swoon…normally it just made intraday low… watch closely…if it takes out that low would be change in character

  100. Why is gold going up……people should be running from it….

  101. IMAX getting closer to 22, very nice.  Would love to see that go into the teens again and get ready to load up on it for summer.

  102. Phil, Need your expertise in closing or rolling this position.
    EDZ Apr $15 call buy 2.60  10 contracts
            Apr $22 Call Sell 1.17  10 contracts
            Apr $14 Put Sell 2.13   17 contracts.
    your help appreciated as always….jal

  103. Lets hear a big wheeeeeeeeeeeeeee for all of us who have been trying to ignore the upmarket for the last 3 months- it was a long and painful ride up fighting it.

  104. Phil/EDZ – Hi Phil, I have 10 EDZ April $16 Puts I sold in January for $2.26.  Should I just get out now and take the small loss?

  105. 11:00 AM On the hour: Dow -0.59%. 10-yr +0.25%. Euro -0.17% vs. dollar. Crude -0.88% to $101.56. Gold -0.62% to $1633.65.

    11:37 AM European shares close sharply lower, with some of the loss being catchup for yesterday's day off, but the rest from continued sovereign debt concerns – the yield on Spain's 10-year +22 bps to 5.98%, a 4-month high. Stoxx 50 -3%, Germany -2.4%, France -3.1%, Italy -5.1%, Spain -2.9%, U.K. -2.2%. The euro -0.2% to $1.3080.

    12:00 PM On the hour: Dow -0.95%. 10-yr +0.37%. Euro -0.34% vs. dollar. Crude -1.42% to $101. Gold -0.26% to $1639.65.

    Feb. Wholesale Trade: Inventories +0.9% to $478.9B vs. consensus of +0.6%, +0.9% (revised from +0.4%) in January. Sales+1.2% to $409.4B. Inventory-to-sales ratio at 1.17 vs. 1.15.

    George Soros once said markets have a way of predicting the future because they create it. The 10-year Treasury yield just dropped below 2% again, a near 30-point decline in a handful of sessions since the Fed minutes squashed expectations for imminent QE. Falling equities and bond yields since that moment may change some minds at the FOMC.

    Unthinkable not long ago, German 2-year yields at 0.10% have fallen below those of Japan at 0.11% (U.S. is 0.30%). There's still room to go further out on the curve, where German 10-years yield 1.66% vs. Japan at 0.96%. (h/t Hedgefund play)

    Spanish finmin de Guindos vows to stick with the government's ambitious spending cuts, as he announces a €10B reduction in health spending on the heels of €27B already indicated. Separately, the central bank chief says the nation's banks may need more capital if the economy misses its forecast of a 1.7% contraction this year.

    As expected, snap elections look to be set in Greece for May 6, with PM Papademos expected to meet shortly with the President to formally request such. The 2 major parties – both essentially supporting the bailout regime and used to overwhelming support – have seen their combined polling drop well below 50%.

    Wow, this is scary!  The wife of Bo Xilai – the once-powerful, now sacked Communist Party chief of Chongqing – has been taken into custody as a suspect in the murder of U.K. businessman Neil Heywood. The intrigue around Bo's ouster has led to ideas of political instability in China, and even rumors of a coup.

    J.P. Morgan's 15 companies it views as potentially the next Apple, sporting "secular growth opportunities, a strong market position and attractive valuation":  NTAPAMZNLNKDDISCMCSA,TRMBQCOMACNBRCMVMW, TBIX, QLIKANSSINTUCREE.

    Southwestern Energy (SWN +0.7%) moves up as chatterpercolates that the company is in play as a takeover target.

    Chinese aluminum production rose 18% through February, confounding a January prediction by Alcoa (AA) CEO Klaus Kleinfeld that the country's capacity would be sharply cut. Alcoa and Norsk Hydro (NHYDY.PK) – responding to market barometers like plentiful supplies and falling prices – have made production cuts, but China has its own set of signals. 

    Shares of North American Palladium (PAL +4.4%) stir up a gain after the miner announces Q1 production of 41.76K ounces of palladium at an average cost of $380/oz. The company also affirms its 2012 production guidance for 150K-160K ounces of the metal at a cost per ounce ranging from $375 to $400.

    Crude oil touches a 2-month low of $100.83/barrel as it follows risk markets downward. USO -1%BNO -1.7%. Another economically sensitive commodity, copper falls back to mid-January levels at $3.65/lb. JJC -1.8%. Freeport-McMoRan (FCX) gives up big early 2012 gains to slip into the red on the year.

    Best Buy (BBY -2.3%) reverses the 4% gain it had in the wake of CEO Brian Dunn's resignation. The CNBC effect at work? Or are investors accounting for the damage that's happened to the retailer in the entertainment business? Herb Greenberg crows thatthree of his five worst CEOs are now out.

    S&P upgrades Macy's (M -2.2%) credit rating to BBB from BBB- with a stable outlook. The agency says the actions reflect its view that the company will see performance gains off of strong merchandising and solid execution. Less than a year ago, Macy's came back from a two-year sojourn to junk status to return to investment-grade.

  106. Lighting manufacturer Cree (
    CREE +7.2%) says it hashalved the cost of its LED streetlights and hopes the new lower prices will sway local governments to adopt the new technology. Cree's new outdoor streetlight will sell for under $200 when bought in volume, comparable in cost to traditional lighting using high-pressure sodium vacuum technology.

    Research In Motion's (RIMM -0.8%) latest SEC filing implies that the BlackBerry maker's hardware division is now losing money, according to Jefferies analyst Peter Misek. Hardware gross margin fell to 20% on a GAAP basis in RIMM's FY 2012; assigning operating expenses based on revenue, Misek says, implies hardware operating margins fell to -8%.

    Shares of Yelp (YELP +4.8%) follow up on yesterday's rally after the Facebook-Instagram marriage was announced with another steady gain. The tidy premium Instagram commanded has helped focus investors back on Yelp's attractive 67M page views a month and its gradual ascendancy to verb status (Yelp this restaurant to see if it's rated high). 

    "The market can drop 400 today and Apple (AAPL +0.8%) will close up," writes The Fly, who says the action reminds him of Dell in 1998 – going up $3/day while the rest of the market cratered. Eying a chart of his GARP (growth at a reasonable price) index (of which, Apple is a member), he thinks it looks top-heavy and ready to fall.

  107. TRGT – misses its Phase 2 endpoint.  Well….that company has a ton of cash, but nothing to do with it.

  108. Phil – you like shorting /yg at 1660?

  109. Phil,
    after coming back from the depths of dead short land I have a small gainer holding Long MAY 17 VXX calls and short APR 22 calls, part of me wants to close this as a major gain albeit over 2 months it has just been a GI issue, so the small gain not worth the price, really What woulkd you do wiat and let the 22's (.74) expire in 10 days or get out while the getting's good so to speak and hold the 17s (4.025)?

  110. I think I noted a week ago that the move in Treasuries was a false move……that is when I went long TLT……I am out, for now.

  111. wrote some April 22 puts on IMAX for .60.

  112. Another indication that the market might be turning over…

    The chart below shows the High-Yield Bond ETF (JNK) breaking below its March low with a sharp decline the last eight days. This is negative for stocks because junk bounds and stocks tend to move in the same direction. Notice that the Correlation Coefficient (JNK, $SPX) has been mostly positive the last six months.


  113. DDM/Morx – As I said in the $25KP notes, as a hedge, there's no reason to change them as they are still effective and were almost $3 last week so not even a need to move them.  Once you cash out the bear positions though, then it's time to roll and, as these are May calls and still $1, they can be rolled down to the May $65 calls ($3.20) for $2.20 more and $1.20 of that can be picked up with sale of the $60 puts but you don't want to sell the $60 puts right away so we wait for either a bounce or for the $55 puts (now $.50) to go over $1.20 and then we sell those plus some calls for $1 and then the roll was free and then we can spend another dollar or so to roll even lower.  If you don't like that plan – take the loss now and get out as they're down more than 50% and you don't intend to put more money in.   And, of course, if you don't intend to put more money into a trade, you should really be stopping it at 20% but 50% is OK on a hedge.  

    Put list/Jthom – Bad luck to look.  Have to wait for 775.  

    Arizona/Rustle – Next women will be considered pregnant whenever a man has impure thoughts about her.

    “Considering that it’s anti-choice nuts we’re talking about, it’s safe to assume that they’d simply prefer a situation where all women of reproductive age are considered to be pregnant, on the grounds that they could be two weeks from now.  

    Mother Jones adds…  opening up the window for the gestational age to begin before conception can hurt the parents in the long run.

    Gee – ya think?  

    Dow volume 70M at 1pm – finally a little action – all down, unfortunately…

    Gold/Pharm – Expectations of QE saving the market going higher and stocks (even Momo's) no longer looking like a good way to play it so gold is the default (oil shaky too).  

    3-year auction went off OK, not great and the Fed should be a lot more concerned about that than anything else. 

    IMAX/Rustle – See, PATIENCE!  

    EDZ/Jasu – Way late on adjusting those.  50%.  50%.  50% – DON'T LET YOURSELF LOSE 50%!!!  Clear?  Now the $15s are .50 so what's the point.  Essentially you're just cashing them out and hoping the $14 puts expire worthless and then you have a decent $1.30 profit on the trade but, had you cashed out the calls when your bull call spread was still .75, you probably would have gotten $2 back from the $15 calls and would be looking at a $3 profit.  If you must cover the naked $22s you are better off buying them back for .05 than wasting money initiating a new trade just to cover it.  As to a new position – we discussed that yesterday. 

    Wheeeeeeeeeeeeeeee!  (for Jthom) 

    GRPN $13.40 – double wheeee!   See Kwan, that could have been us crashing and burning as people realized how silly our business model was (Kwan and I were looking to make a similar app).  

    EDZ/Ink – I wouldn't.  Europe is crashing and burning, we're looking like we'll be down 2% for the day and today is the day you want to capitulate on EDZ (one day after I re-picked them in the main post too)?  The July $13s are $1.85 – do you really have that little faith?  

    Gold/Jrom – Sure, as much as I liked shorting them at $1,650 – just watch that 80 line on the Dollar (/DX) as gold can go higher if that breaks down.  

    VXX/Sage – Same as above comment on EDZ – TODAY you want to chicken out?  The $17s have no premium at $3.50 vs the huge premium on the $22s at .80 now.  How silly is that?    You can roll the April $17s out to the May $22s ($1.92) and take $1.58 off the table and then see how expirations go if you are worried the VIX will fall back but I'd just watch the $20 line and be happy as long as they hold it.  

    LULU falling nicely. 

  114. From Forexlive…
    Fed’s Fisher toning it down today

    • Sees ‘excess liquidity’ in US
    • His earlier comments were a history lesson
    • US employment growth ‘insufficient’

    The last one is out of Bernanke’s textbook and a somewhat dovish sign from a very hawkish man.

    QE QE QE..Hasn't helped in the past but WTF lets do it again…for old times sake..

  115. Phil…currently long STD,entered a year ago as a dividend play.Have sold some calls along the way,but now wonder about Europe and this bank.Any thoughts that may improve my position?Are they cooked,should I buy some puts[premium]?Thanks for your help.

  116. Muddy Waters saying FSIN may be riddled with Fraud per ZH

  117. As I said yesterday, AAPL seems to be a crowded trade now and that can be dangerous:


    When investments win with such consistency, as the term structure trade has, positioning is vulnerable to becoming one-sided. The same dynamic can easily be said of AAPL, where more than 90% of analysts rate the stock an outperform, despite the fact that it has risen 56% this year.

    This is a great company, of course, but the powerful feedback mechanism of fast profits has motivated investor behavior and it is likely that we have a vastly crowded trade in which a great deal of risk is changing hands each day. The chart below captures this. Via Trade Alert (great product!), we show that 70% more vega traded in AAPL than it did that in the SPY on Thursday 4/5. Not to be a downer, but this just does not strike us as a healthy sign.


    The last point we would make is that AAPL implied volatility and its stock price have exhibited positive correlation recently. This may imply that the vol community is constrained in its capacity to keep selling volatility, especially as the stock moves up. As we showed in the chart, these are big vega risks and when implied vol moves around like it does in AAPL, vol traders can easily be marked out of positions. This dynamic comes at a time when the strong growth in VIX ETNs may also be creating demand for volatility that is difficult for the vol community to supply.

  118. Maybe retail is really in trouble:

    The bottom line is that while Best Buy is no doubt facing some firm-specific challenges, the big story is broad sectoral decline of this sort of retailing. Under different circumstances, Circuit City going bankrupt would have been good news for Best Buy, and Borders' liquidation would have been good news for Barnes & Noble. But when your competitors go bust because your entire industry segment is collapsing, you have a different kind of problem on your hands.

  119. EDZ / Thank you Phil! 


  121. At that rate, I would borrow more! 

    And so it's no surprise that at times like this, short-term bond auctions in Switzerland continue to get priced at negative yields.!/TradeDesk_Steve/statuses/189645189185404928

    Savers are giving the SNB money to same money "capital preservation me up" *SWITZERLAND SELLS CHF710.2 MLN 182-DAY BILLS; YIELD -0.251%

  122. Boy did Ford take a sh*t today.  I'm tempted to buy back the calls.

  123. Hate missing a day like today till now checked Phil's QQQ 65s, bounced off low of March 19, got in at 1.38. Appl is down a little and oil holding over $100.

  124. Would you still enter the EDZ even though it's .70c? I didn't want to chase but wish i had!
    My Apr 15 puts are "on track". Thanks

  125. Phil- My only disagreement is it is MY responsibility to choose to take profits or not- you can only do so much for any of us even though my clients for 35 years expected perfection and judgement from the " high water mark" at all times.

  126. Gold/Pharm – whyever do you think people should be running from it? it's already taken a hit, and now there is even more anticipation for more QE.. from everywhere. Why wouldn't it be going up again?

  127. YCRW/Phil – is there anything too them still or just shall we just watch until the next reverse split?

  128. TVIX - on days like today it's just too much fun!

  129. Pharm - quick, sell ARIA 15 puts!

  130. Rogue trading will lose popularity in China:


    A Chinese rogue trader who 'cheated' investors on her way to losing £10m in gold trading has been sentenced to death today.

    The 30-year-old Wang Caipang was handed the sentence by a court in Wenzhou in east China after she borrowed the cash between January and October 2010.

    Caiping, who must first serve two years in prison, borrowed huge sums of money promising to buy equipment, invest in property and open credit guarantee firms, but instead used the cash to speculate in futures and gold trading along with her elder brother, Wang Guanglin, who is still at large.

    Makes you wonder how they would deal with our bankers!

  131. Allmost bailed on the backslide but for the rest, I expected a bounce yesterday and we didn't get one, without one today would break all the rules.

  132. Rogue Bankers/Stj – how they would deal with our bankers: "Blindfold or cigarette, Jamie?"

  133. what do expect from AA earnings.
    I have call options which are down. Should I hold or fold.

  134. targets QQQ 66.32 20% today, 66.62, and 66.82.

  135. CMG is turning up, buy the dip, buy the dip!

  136. PHil – are you still seeing 2% down today?  And on which index, the DOW or Nas or SPY?  Would like to pick up those QQQ's, but sensing we're not there yet…

  137. ARIA/mrm – LOL.  I will sell, holy moly, someone bought 5K 11/10 bull put spread…..WOW!  No thanks.  I have enough drugs on my plate to swallow.  Or as Soul Asylum notes….

    At the end of the track is a shack
    When you die, that's where you go
    Down the lines, up from this pit at the end of your rainbow
    That's one too many flights of stairs
    One more stair and almost there
    One more dose close
    Keep coming back to haunt you,
    Got no place left to go
    And they'll strip your car to the bone
    We did a scene, checked out a gown
    The Justice started laughing
    I guess that's what you get for laughing
    One last laugh and lived to tell
    One more pomp and circumstance
    One more fool to follow
    Another finger down my throat
    It's a bitter pill to swallow

  138. Little help in understanding why the EUR isn't lower…
    Forex live
    Shades of Japan for EUR/USD

    Subtitle: When good things happen to bad currencies
    In the bad old days, like a month ago, USD/JPY used to go down the worse the news in Japan got. 
    Japan is a huge net exporter of capital and when things go badly at home, capital tends to flow back home and out of overseas investments to sure up the domestic books.
    That same phenomenon is happening in EUR/USD to some degree. European banks, in particular, are pulling in their horns. They are shedding overseas investments, selling subsidiaries and returning capital from far-flung international operations as they concentrate scarce resources on markets closer to home.
    As capital flows back to Europe, EUR/USD tends to find a bid, even amid bad news.  Even if money is flowing out of emerging markets, like Brazil or developing Asia, the liquidity in the markets is concentrated against the dollar, not the euro.
    That means there will be a bid in USD/BRL for instance, as banks pull money out of that market and a subsequent bid in EUR/USD as the euros are repatriated.
    Helps explain why EUR/USD seems unnaturally bid at times. It is.

  139. Kustomz;  Thanks, very helpful.

  140. Gold/scott – QE is off the table…show me where it says it will happen….

  141. AA / Spiyer – The whisper number suggests that they miss tonight but then again there was that story that aluminum production was up in China contrary to expectations. I guess it's a crap shot right now!

  142. STJ – AA – Well,  I would think that all of these auto numbers coming back good would maybe positively affect AA?

  143. some one just decided to raise some cash

  144. Phil,
    Is the volume light for this hour?

  145. AA / lnk – You would think. I don't have production numbers but the suggestion was that there was over capacity. We'll see though. I am not playing tonight's earnings though. 

  146. Volume on the Dow is now equal to the entire day yesterday but it's not really that great for such a down day. That's surprising. Maybe panic has not set in just yet.

  147. On the level charts, the NAS has now failed the Must Hold line, the Dow is below the -5% line, NYSE is approaching the -2.5% level, SPX is right at the Must Hold and the RUT is in a free fall also approaching the -2.5% line. Ugly!

  148. QE/Pharm – QE is off the table?  Oh well then, everyting must be fixed now!  Whew!  ;-)  Then again, where does it say the fed has to tell us before, during or even after they do anything…

  149. A picture is worth a 1000 words…

  150. Stj:  Don't be naive about China.  They're not going to kill her.  Two years in prison first?  This is a country with government officials driving "Execution Vans" around the country, where they take your organs out while their fresh — before they give you the lethal injection.  She is a "commoner", and much admired, so they will use her incarceration and death sentence as a "teaching tool" to get control over the underground finance business.

  151. AAPL portfolio:   We remain in CASH!  

  152. For after market…
    Phil--since it is a slow day…
    How would you respond to the guy who keeps hammering the anti raising taxes to me every week (who sent me this article of proof)???

  153. They're moving the dollar

  154. Phil,
    Thanks for all the hand holding today and sorry but it seems it has been soooo long since I have been closing real winners but I have another for your.
    alright I had a BearPS in DIA APR 127/ 122 I covered the 122's as it seemed today may keep running , I still like being long the 127s but think overnight I coulld get clipped would you sell say the APR125Puts for .8 on  half for protection or am I just making this trade more complicated than it needs to be and I should just take half off?

  155. Looks like they are setting up to stick

  156. China / Zero – I hope for her!

  157. Shit is about to meet the fan, they better try harder here otherwise bulls are toast.

  158. Phil / KORS – This one is still way ahead of itself and its peers on numerous metrics.  which puts would you recommend?   

  159. Kustomz/Shit

    You mean like this?

  160. STD/490 – I know I didn't tell you I thought Spanish banks were the way to go…  I don't like them or any financial at the moment.  I'd take the money and wait for us to go bullish again on FAS Money and join in that play or maybe look to go long XLF if they sell back to $13.50.   Sorry I can't be more helpful on them but my last comment on them was from 1/26, when people were buying them for some reason ($8.85) and Scott asked me what I thought – so I said:  

    STD/Scott – I often wonder if their symbol makes them somewhat less desirable?  I think with the Portugal and Spain issue, it's like one of those old hand grenades you find in a surplus store – do you really want to take it home and pull the pin because the burned out vet behind the register told you it was "safe"?

    If full-blown QE comes back – THEN you can jump on the STD (and other financials) bandwagon but, at the moment – they are still on the most likely to fail list due to Spain's shaky economy.  

    Retail/StJ – What do I keep saying?  

    You're welcome Ink. 

    SNE/Angel – I think that was after hours.  

    EDZ/Morx – EEM was $33 in October and is still $41.27 so 20% more to fall but they are on the 50 dma so either a bounce here (doubtful) or a bad break.  With EDZ at $14, they have a nice 30-60% to run on a move down in EEM so I still like them and you can play the May $13/16 bull call spread at $1, which pays 200% at $16 and is $1.20 in the money to start so you don't even need an offset.  You can sell the $13 puts for .95 to turn it into a nickel trade or sell 1/2 for .95 to knock down the price and then those can be rolled to 2x the $11s (now .25) most likely and, if you don't like that – why the hell would you be buying EDZ in the first place?  

    Perfection/Jthom – Always nice to have something to shoot for…

    YRCW/Scott – Remind me on the weekend or a less busy day.  They are in a situation where you have to get forensic with their financing to figure out their chances.  

    China/StJ – LOL – but first she has to serve two years?   That's adding insult to the eventual, final injury.  

    AA/Spiyer – Oh we gave them up at $10.50.  I don't think it's a good environment for them but a lot of the damage is baked in now and I will  be interested in a long-term position again if they get down to $8.50 or so.  

    2%/Jerconn – We're there now, aren't we?  SOX are down 2%, Transports are down 2%, the rest around 1.5% without much strength to show.  Look at the S&P (or any of them), those bars are getting longer each day and the volume is increasing so we are falling faster and gaining mass as we accelerate.  So it's similar to Newton's 2nd law but mass (volume of stocks) is a variable but the formula is the same, if you add mass to a body in motion that is already being acted on by the gravity of bad news – you can increase the rate of acceleration while, at the same time, making it more difficult to alter the direction or slow the decent of the object.   

    This is something people don't realize about "catching a falling knife" – which is something we like to do but we only try to catch a DEcelerating falling stock or index – never one that is ACcelerating.  The S&P was down 5 points on the 3rd (0.035%), 15 points on the 4th (1.06%), flat on the 5th, down 17 yesterday (1.2%) and now down 21 today (1.5%) and with much bigger volume, so we have a linear progression where we can expect the S&P to keep rolling downhill and gathering more and more mass as it goes until it finally hits a floor firm enough to hold it – OR – a force strong enough to turn it acts upon it.  

    The longer the Fed lets it go without taking action – the less effective the action ultimately is so I expect them to act sooner, rather than later and that's where my original 775 target on the RUT came from, which is around where it was in mid January, when the S&P was at 1,310 BUT AAPL is a big booster to the S&P so maybe 1,320 or even 1,330 (if AAPL holds up) is going to be the right number but that's still 30-40 points down from here or about 3% more.  

    Euro/Kustomz – Plus the SNB is supporting the Euro.

    Volume/Exec – 95M at 3pm is the best we've had in a while but still nothing to get excited about.  

    Thanks for chart StJ – Must hold lines not holding says it all.  Now we know when we can get bullish again (3 of 5 over).  

  161. For CMG, we raise our comp forecast to +12% (up from +11%) in 1Q12 and take up our EPS estimates to $9.29 (+$0.06) in FY12 and $11.81 (+$0.09) in FY13. We raise our price target to $500.

  162. looking at the put list from Mar 30, HD, KO, CMG, ISRG are still within 3%+/- of their 52 wk high. Is it better to grab one that hasn't fallen much or go for the worse ones ie add mass? FAS, CAT, MMM…

  163. PCLN MINUS $24.  I am so tempted to make an actual profit but I am going to hold overnight.

  164. Romney vs. Obama, as Santorum drops out.….oops, wrong link.

  165. 1360 seems incredibly significant here for SPX

  166. Restickulous(TM) anyone? 

  167. Im going to second Morx's question, which ones from your put list do you still like. I did CMG, PCLN, KO, and BIDU, all have now become profitable today :)

  168. Huge calendar spread went through on TOL.  May/June 19 Puts.

  169. Taxes/Jabob – Oh come on – all that chart proves is that you get just as much of a revenue pop with 28% capital gains (we went from 25 to 70, when it was lowered to 20%) as you do from 20% (70 to 130, not even a double) or as you do from 15% (50 to 130 then back to 70).  When the graph they use as an "example" only proves there's no correlation – it's not even worth reading the blathering text, is it?   Warren Buffett said it best when he said, in all his years of investing, he never heard anyone turn down a profit because they wanted to avoid being taxed on the gains.  What does happen is that, when you lower capital gains – you drive investment dollars into things that produce capital gains and AWAY from things we would have collected more taxes on.  So instead of a guy like me trading for myself and paying 35% taxes on $10M in income, I set up a little hedge fund and make the same $10M and pay $1.5M taxes instead of $35M and then some idiot like this guy makes a chart and says to other un-critical idiots:  "See, our capital gains collections went up!"  Meanwhile, regular taxes take a 230% hit for each $1 gained in capital gains revenues.    All you end up doing is this:  

    When was this country most prosperous?  

    Obama making my case at the moment…

    DIA/Sage – Yep, just making it more complicated!  If you take half off you have CASH, which I hear is nice.  You can use that CASH to buy a new position WHEN the Dow confirms it's making it's next leg down.   Keep in mind that if you simply tread water and hold onto 100% of your money when the markets drop 20% – then you are able to buy 125% more stock at the bottom than someone who rode it down and lost 20%.  

    KORS/Terra – Aside from the fact that I avoid Chinese ADRs like the plague, I would point out that their "peers" are also insanely overpriced jokes so what you are doing is essentially going to a pre-school and picking the tallest toddler for your NBA team because they are "way ahead of their peers".  This is the danger of burying yourself in one sector or group – you tend to get tunnel vision and lose track of the bigger picture – like we have blue chips going on sale right here in America – companies that actually post quarterly financial statements and have news you can follow in real-time.  

    Bernstein/Jabob – Not quite the result they hoped for today.  

    Long Put List/Morx, Jrom – The idea is to take the money and run in what has been a very bouncy environment and switch to companies that haven't dropped – yet.  CMG being the most attractive of those 4 along with PCLN.  BIDU good too if China begins to fall apart but EDZ covers that. 

    PCLN/Button – Yes, that's battered short syndrome – we get beaten up for so long that we're tempted to accept any small act of kindness from the stock.  

  170. CNBC showing this whole Obama speech because the GOP thinks it hurts Obama but listen to the crowd – they love it – and those are Boca kids!  

  171. Its rumored that Rick Santorum received his own personal Etch-A-Sketch from Mitt Romney today.  

  172. TASR, HOV & WFR all positive on a big down day!! They have sure been hit hard over the past few months though.

  173. KORS -  i was trying to short them.  I meant the stock is way ahead of itself.  buy put.   

  174. KORS/Terra – Oh, that's totally different but I still won't touch most ADR's – long or short because the Chinese market is a joke.  You missed the obvious short at $50 but if they break their 50 dma at $42.75 then you can play below that but look at the ridiculous gap up they goto from $33.50 to $45 in Feb – is this really a stock you want to short other than a speculative put?  

  175. My plan next time will be to enter the $25KP portfolio when we are in a $30K hole. And close it 2 weeks later… Would have work like a charm this time!

  176. Phil— see CAST.. another CHINESE one that ???  halted trading since March 30th—wow

  177. RUT sitting on LOD

  178. LFlantheman / Phil –  What do you guys think the chances of AAPL holding 615 by Apr20 Expiration?  

  179. stjeanluc- if you miss all the pain you don't enjoy the gain- just have more money-LOL!

  180. getting the usual last 5 minute selloff

  181. 1:00 PM On the hour: Dow -1.27%. 10-yr +0.38%. Euro -0.13% vs. dollar. Crude -1.25% to $101.17. Gold +0.84% to $1657.75.

    1:05 PM The Treasury sells $32B in three-year notes at 0.427%. Bid-to-cover ratio of 3.36, vs. a recent average of 3.52; indirect bidders take 40%, vs. a recent 35%. Direct bidders take 7.8%, vs. a recent 7.4%.

    1:21 PM Treasurys add to their rally after a solid auction of three-year notes. The 30-year yield now -0.085 to 3.11%; 10-year -0.08 to 1.97%; five-year -0.06 to 0.85%.

    2:00 PM On the hour: Dow -1.41%. 10-yr +0.42%. Euro -0.08% vs. dollar. Crude -1.25% to $101.17. Gold +1.01% to $1660.55.

    3:00 PM On the hour: Dow -1.53%. 10-yr +0.4%. Euro -0.23% vs. dollar. Crude -1.14% to $101.3. Gold +1.08% to $1661.65. 

    National home values increased 0.5% in February, according to Zillow, bringing the Y/Y decline to 4.5%. The rental market continues to shine, rents rising 2% Y/Y. Apartment rental REITs: ESS +18.2%AVB +15.5%,EQR +7% Y/Y.

    The Fed will need to "initiate our somewhat lengthy exit strategy sometime in the next 6-9 months," says Minneapolis Fed chief Kocherlakota, adding conditions will warrant raising rates as soon as later this year. "Funniest thing said today," tweets ZH.

    Risk indicators for Spain – bond spreads and CDS spreads – in the past moving in tandem with other risk indicators like the VIX or the SovX, have widened mostly on their own of late. Perhaps the other spreads will catch up, or maybe – with large debt auctions looming and banks already holding more sovereign debt than they ought to – Spain is about to stand on its own. 

    Spain has exposed the limits of the ECB's LTRO, writes John Plender, adding the program only reinforced a dynamic of weak EU banks propping up overstretched sovereign borrowers. Bank balance sheets are now in even worse shape as lenders pledged so much collateral as security for ECB loans. It's "back to make do and mend in the eurozone." 

    It was a bad day for European bank stocks, as shares of several fell as much as 8% on renewed concerns that countries like Spain and Italy won't be able to pay their debts. The yield on Spanish 10-year bonds spiked to nearly 6%; in U.S. trading, STD -3.5% andBBVA -3.2%. UniCredit (UNCFF.PK-8.1% in Italy. Also: DB -3.3%,BCS -5.3%UBS -4.2%.

    Just in time to fund the Romney campaign:  Private equity juggernaut Bain is looking to raise between $6B – $8B for its 11th global buyout fund. With co-investments, the fund to grow to $8B – $9B, compared to the $12.7B raised for its most recent buyout vehicle. Buyout firms have struggled over the past few years to raise cash in a brutal fundraising environment, as pension funds and endowments cut back heavily on private equity investments.

    Also on the Long Put List:  Casino stocks fail to hold morning highs attained after the Nevada Gaming Control Board said February statewide gambling revenue jumped 5.7% to $932.2M; on the Vegas Strip, revenue rose 3.3% to $530.7M. Shares of Las Vegas Sands (LVS -5.1%), Wynn (WYNN -2.1%) and MGM (MGM -2.8%) were unable to maintain gains in the face of the broader market selloff. 

    March sales of construction excavators in China look ugly, plunging 47% Y//Y to 23.3K units, with Caterpillar (CAT) sales off 51%. The numbers may not bode well for CAT Q1 earnings (report date 4/25), or the DJIA, over which the stock has a large influence.

    Time to push commodities!  Gas prices are set to rise, according to EIA forecasts. Retail gasoline prices are expected to average $3.81 in 2012 and $3.73 per gallon in 2013, up $0.26 and $0.14 respectively from last months estimates. The energy agency adds that prices are likely to average $3.95 a gallon from April to September, with a peak called for in May at $4.01 a gallon.

    Citigroup adds Valero Energy (VLO -2.9%) to its Top Picks Live list as it sees the company benefiting from discounted prices at Gulf Coast refineries. SA author Alex Shadunksy agrees, calling the stock undervalued on three key valuation metrics.

    While remaining concerned about the long-term picture for U.S. thermal coal, Barclays believes coal shares look “ripe for a near-term rebound" during the Q1 reporting season. Coal stocks could bump higher given some early signs of stabilization in both met and thermal coal prices, and companies likely will highlight capacity cuts during their reports. 

    Bernstein Research's Sara Senatore thinks that "best of breed" restaurants have gained loyalty from consumers who traded down during the recession to make ends meets. Despite overall casual dining demand trends that are sluggish, she makes a case for limited-service names Yum Brands (YUM -2.0%), Starbucks (SBUX-1.1%), and Chipotle (CMG -2.4%) – as she moves up her price targets and earnings estimates for all three companies.

    Canadian Pacific (CP +0.3%) raises its Q1 forecast on record operating profit, now saying it expects to earn between C$0.80 – C$0.83 per share. The Street consensus is for an EPS of C$0.65. The company notes strong growth in grain, coal and industrial and consumer product shipments, particularly in energy.

  182. Phil,
    I had a really good day today. Thanks for pre-warning. KA-BOOM!!

  183. Alcoa (AA -3%kicks off earnings season after the close, and its results “will show the limits of even the most ruthlessly efficient organization in the face of a challenging economy.” Analysts will want to hear more about Alcoa’s biggest problem: China. Increased output has created an aluminum glut that’s been squeezing Alcoa’s smelting margins.

    DreamWorks (DWA -1.2%) gets a new lease on life after India's Reliance Entertainment agrees to continue providing financing. The new funding will allow the company to pick up the pace of its movie making, which has become increasingly idle as funds dwindled. Sammy Pollack of ETF Analysis notes the stock is trading at all time lows and may be worth a second look.

    Facebook (FB) is eying IPO dates of either May 17 or May 24, reports CNBC, which also says the roadshow has been shortened to 10 days. The schedule is fluid and dependent on an SEC review of the Instagram acquisition.

    Hewlett-Packard (HPQ +0.6%) is the Dow's only gainer after news it will start offering cloud-based computing services, competing with the likes of Amazon (AMZN) with its new Converged Cloud tool to give companies access to computing power over the internet as an alternative to buying expensive servers. 

    Worldwide tablet sales are expected to double to 118.9 units in 2012, says Gartner, mostly thanks to soaring demand for the iPad, which may grab 61% of the action. Gartner says Microsoft (MSFT) could nearly triple its share of the market by 2016, thanks to business IT departments' preference for Windows. 

    Amazon (AMZN -2.1%plans to add a feature to it apps for Kindle and Android devices that allows users to make purchases using the firm's one-click purchasing feature. The move should help Amazon attract better apps and content by empowering developers to charge for digital content and subscriptions. 

    Three lunchtime reads:

    1) Private equity that's publicly traded

    2) Energy: Refined out of existence

    3) Markets misread Friday’s jobs report 

  184. AA actually beats by a wide margin – shows a $0.10 profit as opposed to an estimated $0.04 loss! Where do these analyst come from to miss that much… 

  185. Revenues beat as well and the predict continued growth in demand. Let's see what guidance is for the next quarters earnings but the stock is up AH.

  186. $25KP/StJ – I keep telling people that.  Best to watch and wait for us to have losing positions that we DD on – those usually work great.  Meanwhile, went from -$7,000 to +$35,000 in less than a month – that's pretty good!  Still plenty of time to get our double for the year.  

    CAST/Jabob – Yep, that's why I stay away.  You never know when your CEO will be arrested either. 

    AAPL/Burr – I wouldn't bet on it.  A very small disappointment in earnings (most likely margin contraction) can send them down 10% so I sure wouldn't sell puts or risk a vertical into earnings – if that's what you're thinking.  

    You are very welcome Chas!  

    AA did good, back to $9.75 pre-market.  Don't know what all the fuss was from the analysts.  Just trying to chase people out I guess.  Too bad, I would have loved to get back into them had they gone the other way. 

    At the close: Dow -1.64% to 12717. S&P -1.7% to 1359. Nasdaq -1.81% to 2992.

    Treasurys: 30-year +0.75%. 10-yr +0.42%. 5-yr +0.24%.

    Commodities: Crude -1.28% to $101.15. Gold +1% to $1660.35.

    Currencies: Euro -0.21% vs. dollar. Yen -1.%. Pound +0.15%.

    Market recap: This just in – the European sovereign debt crisis has not been solved. Spanish bond yields surged, and markets in the U.S. and Europe reacted with their worst losses of the year. If Spain spins out of control, the worry is the European crisis will mushroom again and we can kiss the YTD stock gains in the U.S. goodbye. NYSE decliners routed advancers five to one.

    The IMF says the outlook for global commodities is looking "pretty grim." It warns that the price of oil and other commodities are expected to decline this year and next on the back of weak global economic underpinnings, and that “sizable” threats to world growth could force a further fall. (.pdf

    Alcoa (AA): Q1 EPS of $0.10 beats by $0.13. Revenue of $6.01B (flat Y/Y) beats by $240M. Shares +4% AH. (PR)

    Mattress Firm Holding (MFRM): FQ4 EPS of $0.56 beats by $0.37. Revenue of $188.6M (+47.9% Y/Y) beats by $11M. Shares+9.5% AH. (PR)

    Standard Microsystems (SMSC): FQ4 EPS of $0.05beats by $0.22. Revenue of $89.8M (-11.2% Y/Y) misses by $2M. Shares +0.3% AH. (PR)

    click for giant graphic

  187. This doesn't look bullish unless you are a contrarian!

    No Mr Stick for a save at the end either! How does that play in Asia tonight? On the other hand, we could see reprieve around some of the 2.5% lines. And the NASDAQ is around the 50 DMA as well.

  188. That sounds like a good plan for taxes from Bruce Bartlett:


    Prof. Michael Graetz of Columbia Law School has proposed what I believe is a MacArthur-like solution to tax reform. He would abolish the income tax for the vast bulk of Americans and replace the revenue with a 12.5 percent value-added tax. People would pay their taxes when they buy things and wouldn’t need to worry about keeping records or filing tax returns at all.

    The brilliance of the Graetz plan is that no tax expenditures need to be repealed. He would simply give every family a tax exemption of $100,000, which would eliminate the income tax for 90 percent of those now filing returns. For lower-income people who currently have no net income tax burden or who earn an income tax credit, Professor Graetz proposes a rebate (too complex in its details to spell out here).

    The current income tax would be retained with a top rate of 20 percent to 25 percent only for those with incomes above $100,000. But many of them already lose important tax preferences because the mortgage-interest deduction is capped for homes worth more than $1 million under current law and the alternative minimum tax already takes away the deduction for state and local taxes for those in high-tax states like New York.

    And he has the usual kind words for my favorite politician:


    Politicians hide behind grandiose plans for wiping the slate clean because they know that support for every specific tax expenditure is very high. In practice, saying that one would eliminate all tax expenditures is meaningless, nothing more than a gesture that avoids confrontation with the constituencies supporting tax expenditures.

    Perhaps the worst offender, in this regard, is Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, who promises a sharp reduction in tax rates while still balancing the budget. He says that his tax cuts, which would reduce revenues by $10 trillion over the next decade over current law, according to the Tax Policy Center, would be paid for with base-broadening and loophole-closing.

    But Mr. Ryan steadfastly refuses to name a single loophole that he would eliminate; he ordered the Congressional Budget Office to assume that federal revenues would rise to 19 percent of gross domestic product from 15.5 percent by 2030 under his plan.


    Mr. Ryan’s political calculation is simple. He knows that taking away the tax exclusion for employer-provided health insurance would greatly increase its cost and probably cause most businesses to drop coverage; repealing the mortgage-interest deduction would raise the cost of housing for homeowners and would very likely cause a further drop in home prices; abolishing the charitable-contributions deduction would decimate churches, universities, museums and every other tax-exempt organization; and rescinding the deduction for state and local taxes would vastly raise the tax burden in most states.

    Mr. Ryan knows perfectly well that the most popular tax expenditures will never be repealed but pretends that they all will in order to make his phony-baloney numbers add up. The fact is that the vast bulk of tax expenditures, in dollar terms, are immensely popular and deeply imbedded in the economy and society.


  189. @stjeanluc
    In places like Los Angeles with normal house $400k-700K it will just raise taxes on people making $100-$150K.
    Yes, they aren't poor.
    But do you really think they are rich? With cost of living in  Los Angels?
    That what's annoys me the most in those talks.
    People don't want to understand that $120K in Topeka, Kansas isn't the same as $120K in Los Angeles if you just starting and want to buy house.

  190. Ain't that the truth…although houses in Topeka, Kansas, are going for a lot more than you think… parents still live there (I grew up there) and I am flabbergasted by the housing prices….yes, you might get a bit more land, but sheesh….

  191. LFlan / Phil  -  From what I read the AAPL earnings call isn't until Apr 24th, 2012, and options expiration is Apr20th.  That's why I asked.  I have a Apr 600/615 BCS on.

  192. jthoma / TZA
    "Lets hear a big wheeeeeeeeeeeeeee for all of us who have been trying to ignore the upmarket for the last 3 months"
    we weren't "wrong", we were just "early"……….  :)
    I now have a decent chance of breaking even on my TZA (shares) that I bought at $21.87 and have held WWWAAAYYY too long.

  193. Burrben…….I see the probability that AAPL will be above 615 through April expiration as high (greater than 80%).  I think the stock will run up some more next week.  But don't bet the farm on it.  You will note that the AAPL portfolio is in cash right now.  Did you get those numbers from yesterday's transactions stj?    Thanks. 

  194. GRPN/Phil – I don't have any regrets then about letting them do the crashing and burning. Glad I focused my attention elsewhere…

  195. AAPL / lflan – I will update the portfolio now. I didn't publish it this morning because you were all in cash.

  196. stjeanluc…..Hello!     Thanks again.  Say, this AAPL port is getting boring.   I'm thinking about a PCLN/CMG…..(MOMO) portfolio.   I think there is $ to be made there, eh?      :) 

  197. Newbie/Weeeeeee,
    I too have been shorting since early Jan, but I cannot say "Wheeeeeeeee" yet, but at least I can say "Wheeew"

  198. Spain has reached a tipping point, in that any government that the Spaniards vote in to replace the current "austerity team" would be less fiscally demanding.  And rates are reflecting that.   Demonstrators are carrying signs that say "We won't pay your debt."   

  199. I experienced this first hand: Mumbai Is World’s Least Affordable Home Market.

  200. Pepe Escobar of the Asia Times [reproduced in Al Jazeera] takes a slightly left-ish view of the Spanish budget predicament:
    "Spain is hostage to the Three Harpies – the European Central Bank (ECB), the European Commission and the IMF. The mainly Brussels/Berlin axis of austerity fanatics has made it sure after the general strike that the "reforms" are untouchable."
    "Make no mistake; these European Masters of the Universe hate democracy and protest like the plague. For them, Spaniards on strike are the equivalent of terrorists. The usual, shady, anonymous sources of the European banking lobby in Frankfurt will keep stressing, not so subtly, that national sovereignty is garbage; what matters is their diktat."
    "So the concept of "democracy", in Europe, is now a travesty; what matters is to install bankers as heads of state – as in Rome and Athens; impose a reactionary social and labour counter-revolution; and intervene at will to service the Lord, also known as 'the market'. "

  201. you know zero those harpies tried to screw up odysseus (the greeks ) too..they (the spaniards) should put some wax in their ears..and a pie plate over their asses

  202. Zeroxzero/ Leftism
    I cant see any leftish opinion in Escobar's quote.
    Just prevalent Euro-bashing, so en vogue at the moment.
    May be what Escobar can't seem to come to terms with from his Brazilian outpost is that Spaniards just voted for "Austerity".
    The majority of Spaniards and Greeks remember pre-Union Spain and Greece and they dont want to go back there.
    Now out of all European political class the Federal Spanish government demonstrates strong leadership.
    But they need the three harpies to coarse the Spanish regions to work along with them.
    May be Escobar should look closer to home to find some travesty of democracy in one of the most inequitable country in the world…

  203. Cramer says buy CMG!!!
    FU CRAMER!!!!

  204. Hi Phil,

    At the risk of getting a bang on the ear for not paying attention over the past few months, I have a question – maybe a few questions – about handling and adjusting long term positions.

    I get it when it comes to rolling short term positions, when it’s nearing expiration, and have been managing that reasonably well – more thanks to your cool and savvy instructions and your spot-on timing than to my own understanding, I might add. But handling long term investment positions, and adjusting them to improve the position (or knowing when to not do anything), has me totally bamboozled.

    I’ll give you three sample positions – forgive all the extra price data which you probably don’t need to figure things out — and given your answers, I should be able to work out some rules from them going forward with regard to some other trades I've got going.

    • One is ACI: I have ACI Jan $12.50 buy/write at net  7.65/10.7, bought back last November, selling Jan 13 12.5 calls and puts for 4.92 and 2.91 with the stock at $15.  Yesterday ACI closed at 9.99 – calls were .89 and puts 3.65.

    My impulse would be to buy back the calls and sell some more later when the stock comes back. (Did this a few times with a long-term position in AA and it’s worked out fine.)

    • Another is: HOV Jan $1.5 buy/write at net .42/.96, again last November, selling Jan 1.5 calls and puts for .49 and .64, with stock at 1.55. Yesterday stock is 1.99 – calls were .65 and puts .30.

    Since HOV has surged and now looks like it’s not going anywhere good the temptation is to adjust somehow – perhaps roll the puts down?
    And here’s another example of a trade that looks like it should be adjusted since it down over your rule of 50%.

    • 5 BTU Jan 14 30 Put sold @ 7.92, now $8.34 — down $207 (5.22%)
    • 10 BTU Jan 13 30/45 BCS @ 5.45 (8.06/2.61) now 2.84 — down $2840 (52%)

    My instinct is to roll the spread down and perhaps even bulk up on a lower put sale to offset any costs and maybe even gain some profit – but I’m not sure what’s the right move.

    So these are some of the conundrums I’m looking at which to me are showing big gaps in my fundamental education. As a grasshopper I’d be grateful for enlightenment.

    Apologies for the long question but I’m just not getting the hang of when, where and how to adjust when the positions are long term and the market is making big moves which I feel I should be able to use to my advantage. Again then, maybe I should just be patient – it’s worked a lot of times rolling FAS — but I’d like to understand the “why” so I’m not baffled when I look at the figures and wonder if I’m doing the right thing or not.

    As always, thanks in advance – and great to hear your comeback on the “end of capitalism” ball I threw. Made perfect sense. Pity the electorate en masse is such a slow learner.

  205. Joe Kennedy II on the high cost of oil speculators:
    What would be a reasonable limit here?  1/3 of trading is 8 investment banks in oil futures.  Only 1/3 of trading is industry hedgers.  Would limiting the size of trades by non-industry traders reduce excessive speculation, bring down price of oil, and still allow PSW to make a small fortune?  What would work?

  206. Good morning!

    Looks like we're getting a big bounce pre-market.  No reason for it but we're up 1%+ in Europe and our fgutures are up about 0.66% on a Dollar dive to 79.75 with the Euro slamming to $1.315 and the Pound at $1.593 with the EUR/CHF testing the 1.20 line they say they will defend at all costs and just 80.78 Yen to the Dollar.  

    This is interesting because it seems the main catalyst driving the Euro and Pound higher is the SNB buying frenzy (they buy Euros and Pound to prevent Francs from getting stronger – below 1.20 to the Euro) but it looks like the Franc was getting bought on it's own – not against Euro weakness prior to this insanity.  It seems that, because of the SNB's stated policy, you can cheaply manipulate the Euro and Pound by buying Francs (relatively thinly traded) and forcing the line the SNB pledges to defend (1.20) which triggers them to buy huge amounts of Euros and Pounds – it's an interesting exploit and we'll have to see if someone is doing that and what the Swiss do about it (this is the problem with stating your "rules" – it allows outsiders to manipulate you).  

    Oil is $101.59, gold $1,657, silver $3.6545, copper (/HG) $3.666 and a good play higher off the $3.675 line if you want to play a recovery, nat gas is $2.04 and gasoline at $3.248 is also playable over the $3.25 line (/RB).

    The RUT (/TF) is at 788.7 and would be playable (and confirm a move up) over 790 but very tight stops and only if the Dollar fails 79.75.  

    Overall, I don't see the BOJ putting up with this (Yen 80.82) so I'd look for the Dollar to move back up but, if the Euro holds $1.31 and the Pound holds $1.59 – that's going to be bullish but, if they fail, then I'm not sure this early pop will last.  

  207. Speculators/Rev - Good 60 Minutes this week on the energy market.  Really does a good job outlining how speculators have taken over and decoupled prices from fundamentals.  Speculation should be banned altogether from commodities (including us).  The position that they add liquidity is BS – let the CTFC add liquidity like the Fed if need be but there's plenty of people who really need oil and plenty of people who sell oil to keep a liquid market.  If you want to speculate on oil – buy XOM, not barrels of oil that you're never going to use.  That's like not buying CMG but buying 1,000 $8.50 burrito contracts for $850 and then we open a Burrito ETF that orders from CMG and we speculate that burritos will go up to $9 in the future so the ETF buys 1Bn burritos, leveraged at just $850M and doubles CMGs anticipated sales and CMG says they can't keep up with demand and have to raise prices to $9.50, which then causes a buying frenzy in the CMG ETF as burritos jumped from $8.50 to $9.50 in months so another 1Bn burrito contracts are sold at $9.50 and now CMG is looking at 2Bn burrito orders and the Burrito Trading Commission declares that we are facing a global burrito shortage and the price of burritos shoots up to $10.50 – etc, etc.    

    See how idiotic it is?  It works even better when the speculation sets the price of a necessity because you have a captive population and you can force them to pay more for the same burritos – no matter what the actual demand.  If CMG was selling 1Bn burritos at $8.5Bn and speculators buy 2Bn burritos worth of contracts for $1.7Bn and drive the price of burritos up to $10.50, then CMGs same 1Bn burritos now fetch $10.5Bn so it make perfect business sense for CMG to speculate and drive the burrito futures up because now they make $2Bn a year more selling the same burritos and all they have to do is roll those contracts forward (never actually delivering the burritos) and their $1.7Bn investment (and they only have to goose it now and then, not buy all contracts) pays for itself over and over again.  

    Good buys on that oversold list like BA ($71.79), CSCO ($19.70), HPQ ($23.48), VZ ($36.87), WMT ($59.61) and XOM ($82.83) – we can look at some short puts on them later while we have a good VIX (been a while).  

    VAT Tax/StJ – That's my idea.  

    AAPL/Burr – Ah, that's different then.  There has been debate about the date but, if so, then I do like selling April Premium but keep in mind you can't risk a roll to May so stops should be tighter than usual.  

    Spain/ZZ – Shaping up to be a Greek-style disaster very quickly. 

    Cramer/Jabob – No, that's a good thing!  Usually when he steers in his sheeple like that it's the very top and they've almost run out of suckers.  

    Positions/Zip – You can't give me too much information.  On ACI, I agree they are too cheap but coal won't come back until nat gas comes back and you didn't enter the position to take risks, did you?  You have a $7.65 basis on ACI but you WILL be forced to buy another round at $12.50 and the $12.50 calls are now .90 and the $12.50 puts are $3.70 but look – the 2014 $10 calls are $2.50 so if you roll the $12.50 caller for a $1.60 credit, you drop your net to $6.05/9.90, which is still a very nice 65% upside if called away at $10.   You can lower your risk profile further by rolling the Jan $12.50 putter ($3.70) to the 2014 $10 puts at $3.10 for .60 and then your basis is $6.65/8.33 and you're back to not worrying about ACI at $10 – or $8 for that matter…

    HOV is at $2.04 so I'm not really seeing an issue there.  Why fiddle with things?  I guess you can buy back the calls and turn it into a pure up play and, as long as they hold that $1.90 line (200 dma) I'm all for it but what if we collapse on a black Friday or Monday and they are back at $1.20 – won't you feel silly for wasting .65, which is 30% of the stock's price.  All HOV has to do is hold $1.50 and you make over 200% – why is this not good enough for you?   I guess I don't say GREED KILLS enough these days – I'll have to start repeating that mantra.  

    BTU is the same issue on coal.  The $45 callers are pretty shot but the short puts have enough premium and time to recover where I don't think I'd change those.  Your Jan $30 calls are $3.35, so net $2.80 on the long spread and you can roll to the 2014 $20/28 bull call spread at $4 for $1.20 and that turns your net into a net $1.27 credit on the spread and drops your break-even to about $24.50 and that's how I'd play it.  

    Notice in all 3, we use no cash because we save our cash to DD or whatever for an even bigger drop.  If we don't get that bigger drop, then you make 65% on ACI and 200% on HOV and 500% on BTU – can you live with that?  If we don't drop then you have lots of money on the side for new, DIVERSIFIED, opportunities and, if we do get a big drop that puts even these adjusted trades in trouble – assuming you still have faith – THEN we'll be getting some very cheap prices to DD into.  

    This is a Buffett-like patience game and I learned this from the day I was born with my Grandfather who was born in 1903 and had 60 years under his belt ahead of me.  If your time-frame is decades then, from your perspective, opportunities come up all the time.  If your time-frame is years – then all these little blips seem like emergencies but they are not.  The plan of these long-range positions is to buy with a 20% discount.  If the stock drops 20%, we can usually roll ourselves to a 40% discount and THEN – unless the Fundamentals have changed – we are usually very happy to double down at 40% off or at least roll to a position where we'll be forced to double down at 60% off.  

    Since we plan on selling calls year after year after year, with a stock like HOV or ACI, as they get to penny stock ranges – the only issue is really, will they survive and how much money can you make selling puts?  With HOV at .96, if you can sell $1 calls for .05 each month, your ROI is 60% a year until you get called away at $1.  Is that something to be worried about?  ACI is the same if you can get .50 for $10 calls (May $10s are .80), etc.  When you are making Long-Term plays you need to have Long-Term plans and keep things in perspective.  

  208. Burrito Trading Commission?
    you crack me up

  209. gasoline price today in Minneapolis = $3.67