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Tempting Tuesday – Baa, Baa to the Sheeple!

SPY 5 MINUTEWheeeee, what a ride!

As you can see from David Fry's chart of the SPY, we're all over the place but, notably, there's a method to the market's madness as high-volume selling is followed by low-volume buying – allowing the funds to dump out onto the retail bagholders at top dollar while the carnival barkers in the MSM tell the sheeple to buy those f'ing dips

Cramer said, in last night's show, that the Dow is composed of big international companies that were finally able to break free from concerns over Europe’s debt crisis. For the entire month of April, these stocks were held hostage to the Europe’s debt troubles. Cramer said most of these companies have no real ties to Europe, though, so the fears are overblown.

We ended up with what amounted to a frontsie-backsie day where all of the last month's winners, stocks that were unaffected by the weak euro and the miserable European stock markets, got pummeled, while the losers that had become risk free shorts because of an expected European decline were actually able to rally.

DBC WEEKLYWhat a moron!  Seriously – "frontsie-backsie"???  I guess he needs to treat his audience like they are 2 because bigger kids might realize that telling investors to ignore Europe would be just as idiotic as an Asian or European carnival barker telling the rubes over there to ignore America when making investment decisions.  Is it really possible, in this day and age, that people still believe America is immune to what is happening in the rest of the World?

Look at the downtrend in the Global Commodities Index – do you think you are immune from that?  I guess, to some extent we are, because CNBC's sponsors continue to use any excuse to pump up the PRICE of commodities, no matter how much DEMAND falls off (see yesterday's chart on gasoline volume consumption).  

As Fundamental investors, we can often be a bit ahead of the curve but we find the market usually catches up to reality at some point.  Cramer and his ilk know they can fool all of the people some of the time and some of the people all of the time (known as their "core audience") but even the mighty Corporate Media can't fool all of the people all of the time.  

Almost a month ago, I asked the question "Are There Any Dips Left to Buy?"  It turned out that, yes, there were quite a few, as the market went up for another week into the end of March.  My comment in that morning's post, with the S&P at 1,392, was:  

Has it already been a week since I said "Stop the Rally, We Want to Get Off"? As I noted in that post, we began our list of 12 Long Put Plays for members on Thursday of last week (near the end of what I called "A Weak Week of Denial") and some have already doubled while others, like (PCLN), have gotten even cheaper, which only makes us love them more.

I concluded that this rally was fake, Fake, FAKE and gave my reasons on Friday so no point in going over them again – now we're just watching and waiting to see what sticks as we haven't actually done a lot of technical damage (see Dave Fry's chart) – Yet!

In that morning's post (not including our many trade ideas in Member Chat – just the public ones), I put up the following trade ideas:

  • TZA (ultra-short Russell) April $17/18 bull call spread at .42, selling April $17 puts for $1 for a .58 credit – TZA is at $19.62 and, if it holds $18 through Friday's expiration, this trade idea returns $1.58 for a 272% gain in 5 weeks.  
  • TLT April $108/110 bull call spread at $1.15, selling $108 puts for $1.30 for a net .15 credit – TLT finished at $116.67 yesterday and, if they hold $110 through Friday, this trade returns $2.15 for a 1,433% gain in 5 weeks.  
  • CAT May $95 puts at .95, one of our Long-Put Ideas, are now $1.10 – up 15%
  • SQQQ June $10/14 bull call spread at $1.05, selling $10 puts for .60 for net .55 – now $110 – up 100%
  • DXD May $12 calls at $1.20 – now $1.35 – up 12%

That's not bad for 5 hedges, is it?  In that morning's Alert to Members, we added a short on oil at $107.50 and our trade at the time, aside from the Futures, was the USO April $41 puts, which we doubled down to 40 contracts in our $25,000 Portfolio (one of our 7 active virtual portfolios for Members) at net $1.49 ($5,960) and they topped out at $2.76 ($11,040) last week for a near double – we've since moved on to a May position we're building into and, on the Futures (/CL), we're looking to short off the $104 line this morning.  

We might have been right sooner but that was Friday and the following Monday the RUMORS began that the EU would put another $1.25Tn into the ESM (it was only $800M) and combine it with the extension of the $1Tn EFSF (it wasn't) and another $1Tn from the IMF (so far, MAYBE $600Bn).  That propped up the market for another couple of days – but it was still too heavy!   

On Wednesday (3/28), I asked if $3.5Tn was not enough to prop up the markets anymore, saying:  

Despite the bullish turn of events (which we anticipated last week) we're more inclined to cash out our bullish trades into the excitement and press our bear bets and TOMORROW, if we're still over our levels – THEN we will scramble to add some aggressive bullish trades to our virtual portfolios.  Again, I cannot stress enough that CASH is my preferred position because this market is tough to call and you need to be very flexible and very nimble to trade it.

That was also the day we began to make our case against PCLN, pointing out that, at $736, the market cap of Priceline had eclipsed the entire combined value of the airline sector.  I mentioned our other favorite shorts that day, which were CMG, GMCR and FXI at $37.25 that day and that index is still $37.05.  I think the big surprise from that post was the addition of the AAPL May $470 puts, which were $1.45 that day and a loss from our original $2.15 entry but we rolled them to the May $495 ($2.45) puts for $1 for a net $3.15 entry and yesterday those puts closed at $5.64 – up 79% from our too-early entry but better than a double for those who caught the trade late!  

Nobody lost out with our other pick that morning, which was shorting the oil Futures (/CL) at $107.50 and picking up the USO April $40 puts for .65 – this time for our smaller $5,000 Portfolio, where each $65 (100 contract lots) was $95 yesterday but we were long gone after topping out at $1.86 last week (up 186%).  

The following day we had the GDP release but I warned "Don't Get Excited, It's Just a Revision" and we updated our PCLN shorting strategy as we rolled into the July $520 puts, which were $5.50 at the time, now $7.20 (up 30%) but we ended up in a 2x position on the $560 puts and we finally exited that position at $11.70 yesterday in our $25,000 Portfolio for a very nice gain. 

It's not that we don't feel PCLN can fall further – we're simply not willing to ride out the bounce we expected and are getting this morning – THEN we can re-position for the next round.  My March 30th post was titled "March Goes Out Like a Lamb (to the Slaughter)" and on Monday, the 2nd, I warned the that the new quarter was "Not So Shiny."  We worked on Good Friday (6th) and that was the last time I did a review with public Trade Ideas in which we discussed progress on the Long Put List (published in Stock World Weekly that weekend) as well as TLT, CMG, PCLN, USO and SCO (from my BNN interview earlier in the month) which is right on track for the full 433% gain on that spread.  

The PCLN July $560s were only $6 that morning and, as I said, we took the money and ran at $11.70 but they did touch $12 for a clean double yesterday afternoon – not bad for 10 days!  We were bearish on natural gas at $2.32 (now $2, which is actually a better percentage move than oil) and our QQQ May $67 puts at $1.08 were $2.36 as of yesterday (up 118%) and I mentioned my targets for this sell-off were Russell 775 (same target as I had in the March 5th interview) and S&P 1,325.  

So far, the S&P bottomed out at 1,357 last week and the RUT hit 783 and we're now waiting to see if we'll be forced to go technically bullish if the indexes make it over our marks (see yesterday's morning Alert to Members or the chart from yesterday's post) to see if there is any reason to trigger our bullish spreads – which stand to do just as well as our bearish spreads did if we're going to move back to the top of the channel on more promises of free money raining down from Central Bank Heaven.  

Either way – be careful out there!  

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  1. Oil Lines

    R3 – 105.19
    R2 – 104.40
    R1 – 103.62
    PP – 102.71
    S1 – 102.05
    S2 – 101.14
    S3 – 100.48

    S1 acted like a magnet since 5:00 AM but they made a failed attempt at $104 in the last hour or so.

  2. Phil,
    Which oil futures contracts are you trading in TOS…/CL    OR     /clm2

  3. Unreal, those futures are….

  4. Whats up with /CLM2 ?

  5. Why exactly are the futures up today?

  6. GS beat and are looking to open higher, JNJ raised guidance so they also look to open higher. KO beat expectations are looking good before the open. MMR posted a narrower loss than expected. AMTD results were mixed. USB did better than expected.

    Good stuff tonight with IBM, INTC and YHOO.

  7. Phil,
      I have Apr $54 XRT sold calls. Would you suggest rolling to the Sep $56 calls about even, or is there a better play?

  8. Big Eeeeeeeeeehw on oil this morning…  It looks like they want to test $105!

  9. Phil – are we shorting at 104.50 or 105.20ish? I shorted at 104.5 but thinking about taking the small loss now and reentering after 105…

  10. Looking at earnings this week for possible strangles, it looks like the market is pricing smaller than average moves on releases especially on the big flyers. For example:

    FFIV – the average post earning move is about 12% and options are pricing a 12% move
    SCSS - the average post earning move is about 13.5% and options are pricing a 12.5% move
    VMW - the average post earning move is about 6.5% and options are pricing a 7.5% move
    PLCM - the average post earning move is about 12% and options are pricing a 9% move
    CMG - the average post earning move is about 7.25% and options are pricing a 6.25% move
    TZOO - the average post earning move is about 17% and options are pricing a 9% move

    These are dangerous numbers. I don't see this market as being less volatile than in the recent past. Is this a factor of a lower VIX? In effect, no good plays so far. 

  11. Don't know if we should use that little DMND rally (however fake it could be) to get out with a profit?

  12. Looks like with the dip AAPL has retraced the 23.6 fib from Oct low to recent highs.

  13. FU PCLN and CMG…
    now get back down again!!!

  14. Good morning! 

    $105 oil – Wow!  That's very impressive on weak data but Spain's 3-month bond auction didn't collapse and the bulls think that means it's safe to go back in the water.  I hope I don't have to explain to everyone here how people in Spain who are cashing out of the Spanish market as it collapses who aren't allowed to move more than $2,500 in cash are FORCED to buy short-term bonds so it's completely meaningless.  

    The Dollar is testing 79.60 and our futures are up about 0.7%.  Aside from the obvious lines on the Big Chart, we still want to see 3 of 5 of those 50% bounce lines hold up at:  Dow 13,000, S&P 1,395, Nas 3,075, NYSE 8,050 and RUT 815  -  The S&P and Nas are too far so it's up to the other 3 but they'd need a 2% up day to get there so not very likely.  

    Other data of note:  

    ICSC Retail Store Sales: -1.0% W/W, vs. +0.5% last week.+3.2% Y/Y, vs. +4.5% last week. The retail sales softened due to Easter over and amid unseasonably cool weather. - Have you heard a single word about this on TV?  Redbook Chain Store sales were up 4.6% but they say Easter helped    

    Mar. Industrial Production: Unchanged vs. +0.3% expected, +0% prior. Capacity utilization 78.6% vs. in-line with expectations, 78.4% (revised) prior.

    Mar. Housing Starts: -5.8% to 654K vs. 700K expected and 694K (revised) in Feb. Permits +4.5% to 747K vs. 713K expected and 717K in Feb. - Permits not a great indicator

    longer-term chart of housing starts  (from Bill McBride) shows they have improved a bit from the depths of the financial crisis, but remain well beneath the levels in the past we would associate with a recession. (earlier housing starts)


    NFIB Small Business Optimism Index

    Released On 4/10/2012 7:30:00 AM For Mar, 2012
      Prior Consensus Consensus Range Actual
    level 94.3  94.8  94.0  to 95.0  92.5 

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:30 Housing Starts

    8:55 Redbook Chain Store Sales

    9:15 Industrial Production

    Notable earnings after Tuesday's close: CREECSX,EWBCFULTIBMINTCLLTCSTXSYKURIYHOO

    At the open: Dow +0.56% to 12921. S&P -0.05% to 1370. Nasdaq +0.42% to 3000.

    Treasurys: 30-year -0.23%. 10-yr -0.13%. 5-yr -0.05%.

    Commodities: Crude +1.39% to $104.81. Gold +0.22% to $1653.25.

    Currencies: Euro -0.09% vs. dollar. Yen +0.26%. Pound -0.29%.

    Market preview: Heavyweight earnings results and a better mood from Europe are helping push U.S. stock futures up, with the S&P Benchmark +0.75%. That's despite the weakest housing starts in 5 months. Coca Cola, J&J and Goldman Sachs are moderately higher following results, while First Solar (+4.4%) shines brightly on arestructuring. Later: Intel, IBM and Yahoo earnings

    Eurozone inflation came in at 2.7% in March, unchanged from February but revised up from a preliminary estimate of 2.6%. (eurostat)

    U.K. inflation accelerated to 3.5% in March from 3.4% the month before. The Bank of England's inflation target is 2%

    BOE Governor King may be writing a new explanation letterin May after U.K. inflation unexpectedly rose to 3.5% in March (core rose to 2.5%). For the record, "temporarily" high inflation has been above the bank's 2% target for several years (above 3% for 28 months). Maybe his next letter could define when temporary becomes ingrained.

    Germany's ZEW Economic Sentiment Indicator increases by 1.1 points to 23.4 in April, surprising expectations for a drop to 20.3.

    The IMF uses its 2012 World Economic Outlook to lift its 2012 global growth forecast to 3.5% from a prior 3.3%, and its 2013 forecast to 4.1% from 4%. The agency is also predicting U.S. GDP will grow 2.1% in 2012 and 2.4% in 2013, up from prior forecasts of 1.8% and 2.2%, respectively. The modest hikes are the result of a belief the eurozone (expected to decline 0.3%) has stabilized.

    The Bank of Canada leaves its benchmark rate unchanged at 1%, but has a hawkish message. "In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." The loonie is flying, +0.8% to $1.0085. 

    In domestic campaign mode, Angela Merkel turns the screws on Spain, blaming high debt for putting countries' fates in the hands of financial markets even as evidence mounts that competitiveness may be of more import, and austerity policies areself-defeating

    Spain sells €3.2B of 12 and 18-month bills, the 12-month paper priced to yield 2.62% vs. 1.4% one month ago, and the 18-month 3.11% from 1.71% a month ago. The auction beat hopes for €3B in sales – as good as any of an excuse to buy sharply sold-off Spanish shares. Madrid +0.8%.

    With gasoline hovering around $4/gallon, the President this morning is expected to announce proposals to crack down on higher oil prices, including increased penalties for market manipulation and allowing for an increase in margin requirements. Wouldn't phone calls to the FOMC, BoE, and the ECB be easier? WTI crude +0.8% to $104.22.

    Trading at 3.3X EBITDA, Freeport McMoRan (FCX) is cheaper than any other base metals producer with greater than $10B market cap, reports Bloomberg, suggesting the company as an acquisition target. Another metric: The company sells for $652/metric ton of copper equivalent reserves, about half the average for similarly-sized firms focused on copper mining.

    A 10% drop in Apple (AAPL) is more than enough to get some analysts rushing to declare a buying opportunity. Baird says its checks indicate March quarter iPhone demand was solid, and that iPad sales may have exceeded the firm's forecast of 12.4M. Mizuho asserts Apple could deliver EPS of $11-$11.25 next Tuesday (consensus is $9.58), with iPhone sales getting a boost from inventory restocking.  (Raymond James)

  15. So Obama speaks about stopping the manipulation of oil and the big banks give him a big FU and raise the price.

  16. We get our daily swing with SCO and FAS….

  17. Oil likely up in an attempt to spike out the shorts ahead of Obama – great chance to DD on our May $39 puts at .92 in both portfolios.

  18. SCO/$25KP – Let's buy back that $34 caller for .73!  

  19. AAPL / Joemayo – Looks like that indeed. There is a Fib line around $577 and it bounced right off. We'll see what happens now.

  20. $25KP / Phil – The $34 option is a put unfortunately…. 

  21. Euro rejected at $1.315, Pound rejected at $1.595 as we expected and now we'll see if they can hold $1.31 and $1.59.  

    Dow got rejected right on 13,000 in the Futures.  AAPL making a comeback so let's watch that $600 mark as bullish for the Nas, who got over 3,000 again.  

    Good time to grab the TZA spread from yesterday.  

    Now SBUX is finally selling?  

    Gold down to $1,644, VIX 18.24, TLT $116.60.  

  22. Took the morning oil pop as an opportunity to snag an entry on the May39 USO's at .91

  23. Buy program kicked in..and getting sold into…bulls look determined today to squeeze.

  24. TOS/Jasu – Always (/CL), which is the front-month contract.  I think they are just trying to squeeze out the shorts ahead of Obama's speech because, without manipulation – what's left to keep oil prices up?  

    CMG making a nice, fresh bearish horse after we got off PCLN! 

    GS Red, JNJ red (wasn't it obvious medical devices for them were weak?) – KO was very nice though (up 2%).  

    XRT/Kevin –  We rolled to the $57 puts and we're happy with that target.  The $54s are $7.15 but I don't like giving inflation 6 months to catch you in September.  You can roll your loss to the June $57 calls ($4.75) or 2x the $60s.  We offset our roll with the short BBYs, which didn't work but the concept was sound – sell puts against a retailer that should do well if retail sales continue to be strong for a bullish offset. 

    Oil/Jrom – I would stick with only the crosses below .00 or .50 lines.  $104.50 just held and we're bouncing back to $104.75 and maybe a re-test of $105 but hopefully a reject at the weak .75 line will signal a good cross of the .50 line on the 2nd attempt.  And yes, you should absolutely take a nickel loss or, at most, a dime if your entry is broken the wrong way.  You have to go into these things EXPECTING to lose a few nickels before you get lucky and catch a .25 or better move.  

    Wheee on BWLD!  Our last play (3/27) on them was selling the May $95 calls for $4.10 and buying the June $100 puts for $10.40 and/or the June $75 puts at .95.  The $75 puts are already $2.60 and the $100 puts are $17.50!  

    SCO/$25KP, StJ – Oh damn, I thought it was a vertical!  Well that sucks – hopefully Obama gives us some lovin'.  

    Oil and gold flying in opposite directions – that's unusual. 

  25. Almost feels like painting being done by the big boys at the end of the quarter.  I don't see any news that justifies this.

  26. SCO $25KP / Phil – It was originally a 31/39 vertical selling the 34 puts. We might have cashed in the 39 calls a bit too soon as they are just $0.10 now on their way to worthlessness…. More opportunities to short oil I am sure!

  27. Rustle123 – I agree.  I have yet to see any cause for this run up.

  28. Since when was a reason required? :)

  29. Phil WMT 4/11 we set up a play buy 3x Jun 55p @ .38 now .17 sell Sep 55p 1.15 now .75 sell 2x Jan13 55p @ 2.15 now 1.65
    any one watching this play I trust it is on course?

  30. I'm not inclined to do anything with the portfolios at the moment.  Want to see what sticks.  

    Boy did we lock down that IWM Money – $40 change from yesterday to today – that's BALANCED!  

    Oil getting hung up at $104.75, now we need it to fail $104.50.  

    RUT testing 810 and the Dow is over the 50% bounce so 25 to go on the NYSE and 5 on the RUT and it's time to pick up some upside trades – Monday's are already way up:  

    DDM May $67/70 bull call spread is $1.80 already (was $1 Monday) and the BTU May $26 puts are .60 for net $1.20 off the .10 trade idea.  That's how fast these things move so there's no need to go crazy with aggressive upside trades.  

    BTU we always like so the Jan $25 puts can be sold for $2.85 to raise cash. 

    FCX is noted above as a good value and Jan $30 puts can be sold for $2, which gives a 20% cushion before they are in the money. 

    The TNA spread still works, the May $56/61 bull call spread is just $2.55, up .55 from Monday but made cheaper with the sale of the above two offsets. 

    If you stop out at Dow 13,000, that's  a good indicator.  The S&P still needs to take back 1,384 from the last failure and it's all the way to 1,395 now to make that 50% bounce so also good spots to watch with 1,372 a good danger line for bullish plays there too.  

  31. Hi Phl:  Any thoughts on TJX?  Is this a momo or just a good stock? 

  32. Phil,
    your thgts on covered calls on  BA ( MAy 75s for .51  vs Aug, 77.50s for 3.30). I am long @ 76 (bot on a brkout that itself broke dn – fundamentally re supplier/production problems with Dreamliner and structural skin problems with bread& butter 737.

  33. Does anyone know when Obama speaks and what he could be heard on? CNBC will cut him or ignore him.

  34. WMT/Yodi – If it ain't in one of the virtual portfolios – it's up to you to watch it (and even if it is, really).  I don't remember what the hell the point of that trade was other than to just sell premium.  Let's see, you paid net $1.14 for the 3 June puts and sold $5.45 on the long puts so we must have been bullish with a hedge.  Now we have a .63 loss on the June puts and a $1.40 gain on the short puts for a very nice net .77 gain on the credit spread.  At some point you have to decide if you are willing to risk owning the Sept and Jan short puts naked but, for now – it's on track.  

    10:00 AM On the hour: Dow +0.76%. 10-yr -0.08%. Euro -0.21% vs. dollar. Crude +1.59% to $105.01. Gold -0.58% to $1640.05.

    Data out of Europe reveals that car registrations trended lower for the 7th consecutive month in March to reach 1.45M – a mark 7.7% lower than a year ago. Germany and the U.K. were the only two markets to see a gain in registrations for the period.

    Among 4 trends in central banking looked at by Kate Mackenzie is a move towards nominal GDP targeting (and away from inflation targeting). The RBI took the baton last night, focusing on slowing GDP and cutting rates even as inflation remains high. The Fed and the BOE have shown their inclination towards this line of thinking as well.

    A new era of bad money (MSN Money

    Market Correction? Try Perma-Crisis (Harvard Business Review)

    SEC Chairman Mary Schapiro, responding to critics who say it doesn’t give much consideration to the economic impact of its decisions, says the agency has expanded the role of economists in the process of writing regulations. The House Oversight Committee hearing is bound to be contentious; its title is “The SEC’s Aversion to Cost-Benefit Analysis.”

    How Shape-Shifting Banks Foil Dodd-Frank Act (Bloomberg)

    Banks Seen Dangerous Defying Obama’s Too-Big-to-Fail Move (Bloomberg)

    The IMF calls on the ECB to lower interest rates and continue using unconventional policies (loan freshly printed euros for suspect collateral). Olivier Blanchard – the Fund's chief economist – says he's unconcerned with German inflation worries, and the nation needs to think of the entirety of the EMU, not just itself. (earlier)

    Reserves of U.K. shale gas could total up to 1,000 tcf, according to new data from the British Geological Survey, and eventually launch the country into the rarified air of other natural gas giants like Russia, Qatar, Iran and the U.S. But it's not yet commercially viable: "You'd need vastly higher energy costs, perhaps as high as $200/barrel or more," the BGS says.

    Boeing (BA +0.9%) announces that the first 787 to fly partially-powered by biofuels took off from Everett, Washington on its way to Tokyo. Japan's ANA was the carrier for the notable flight that will emit an estimated 30% less CO2 than a run from a comparable airplane.

    Mastercard (MA +1.4%plans to launch a "daily deals" offer through issuers and other programs. Analyst Peter Krasilovskysums up the dizzying array of deal offers flooding consumers in the space Groupon (GRPN +1.4%) hoped to keep a tight hold on, warning "let’s not pretend they’re all off in their own little corners by themselves…they&rsqu… all converging together."

    It’s Official: Google Today Is Just Where Microsoft Was in 1999 (Forbes)

    Web freedom faces greatest threat ever, warns Google’s Sergey Brin (Guardian)

    Taiwan's HTC, a high-flying mobile success story as late as last summer, fell 6.2% on the Taipei exchange after the companyunexpectedly replaced CFO Winston Yung with ex-Goldman partner Chia-Lin Chang, with no explanation being given for the move. HTC shares have already been hammered by the company's high-end smartphone share losses at the hands of Apple and Samsung.

    After spiking near yesterday's close on a report it's looking to hire strategic advisers, Research In Motion (RIMM -1.6%) is underperforming in early trading. Though the report claims RIM is willing to license its OS to third parties (interest might be limited given the alternatives), and explore options for monetizing its messaging software and patents (MSFT is said to be interested in the patents), it's added RIM "doesn't plan to sell itself." (previous

    Nokia’s (NOK -0.6%) comeback attempt has “failed to convince telecom operators in Europe” despite its new line of Lumia phones, Reuters reports: Skeptics say the phones are "overpriced for what is not an innovative product, cite a lack of marketing dollars put behind the phones, and image problems caused by glitches in the battery and software of the early models."

    One could look at the slump in Apple shares, down ~9% since their April 10 high, relative to the much smaller drop in the S&P 500 as a bullish indicator. If the world’s biggest stock slumps while everything else treads water, maybe the market is stronger than thought. Or as momentum stocks take it on the chin, the market could be headed for a longer and deeper correction. Take your pick.

    John Cassidy on Inequality 101: The Picket Fence and the Staircase (New Yorker)

  35. May $124 DIA puts - $0.73   DD  or Roll Up Strikes it's $0.50 to get to the $127 (at $1.25 now they peaked to $3 yesterday.)
    What do you think? Is it time for a move or sit and wait a bit more…

  36. Obama / Phil – Do you really believe he can harness the manipulation of the oil market? I trully wish he can do this for the sake of the global economy but the oil futures dont look very impressed for the time being.

  37. dollar to zero oil to 200…oh my this bear is beaten and battered…just as I thought this market was begining to act right….no problems now next stop Dow 15000!!

  38. Why is the market flying today? AAPL? IWM? PCLN? Ganja?

  39. FTSE just under our 5,750 goal (5,741) and may be the first index to make it's 50% line after the Dow.  NYSE is close at 8,045 too and RUT at 811 is on it's heels.  Europe is up over 1.5% so we're still behind them but the Dollar is staying on top of the 79.60 line on what we presume to be Euro pumping by the BOJ and the SNB – not sure that will last past 11:30  but, if we're going to get those 50% lines, the Dollar's gotta give up 79.60.  

    TJX/Arivera – They seem priced about right if they hit their growth numbers, which are pretty aggressive.  They are in a spot where I wouldn't be with or against them.  Surely there are cheaper retailers – like WMT. 

    BA/8800 – Me love them long time!  Never too beaucoup for BA – did you see their biofuel plane in the news above?  The only problem with BA is there could always be a bomb or an accident that drops them 30% overnight so you never really want to be in a position where you're not HAPPY to double down if something goes wrong.  As an entry on BA, I'd sell the 2014 $55 puts for $4.10 and buy the $60/75 bull call spread for $8.80 for net $4.70 on the $15 spread and to hell with the dividend ($1.76).  Since you are starting out almost 100% in the money ($73.97) and stand to make $10.30 at $75, you can certainly sell some May $75s for $1.37 as just 6 of those sales puts you in a free spread and, if BA pops $75, you can just buy more longs. 

    Obama/Shadow – Doesn't matter when, details are already out


    Washington (CNN) — Under pressure to bring down the high price of gas, President Obama and Attorney General Eric Holder will outline a proposal Tuesday to increase federal supervision of the oil markets in an effort to clip the wings of speculators who are profiting off the volatility of the oil market.

    The president's $52 million plan would let regulators force energy traders to put more of their own money into trades and boost the penalties on manipulators who are found to be speculating unlawfully, according to a senior administration source who would not comment on the record in advance of the president's remarks.

    The president will call on Congress to:

    • boost spending on technology to improve oversight and surveillance of energy markets.

    • increase by six times the money spent on surveillance and enforcement staff of the Commodity Futures Trading Commission to better deter oil market manipulation.

    • increase from $1 million to $10 million civil and criminal penalties against firms that engage in market manipulation.

    • in an effort designed to limit energy market disruptions, give the Commodity Futures Trading Commission authority to increase the amount of money that a trader must put up to back a trading position.

    The Obama administration plans to increase access to the commission's data so the White House Council of Economic Advisers can examine and analyze trading information, which the administration can do on its own.

    This effort is likely to be seen as a political move designed to draw contrasts with the Republican Party and especially presumptive presidential nominee Mitt Romney on energy issues. House Republicans are unlikely to pass a measure that seeks to impose more limits on Wall Street at a time when they are seeking to limit regulations on the finance industry. At the same time, Republican leaders are calling on the White House to open more domestic land for oil and gas exploration.

    The White House is pinpointing Wall Street for the high price of gas, which could afford the president an opening to criticize Romney and his ties to the world of high finance.

    And what Dpast said!  

    DIA/Itrade – Good call!  It's May so no rush unless you get your price.  I like the roll up to the $127 puts ($1.21) for .52, they were $3 on the 10th so let's do that in the $5KP and $25KP.  

    Harness/Dpast – I'd rather if he reigned it in.  It can be done but it would require appointing the right people at the CTFC AND funding them.  I'll bet the Reps filibuster this one to death.  


  40. Phil -agree with your call on STX. Thanks. In this mornings post you had TLT April $108/$110 for $1.15. Where are you seeing that? Both April and May BCS’s are about $2.00. Thanks

  41. TLT/Crussell – We were reviewing old (30 whole days) positions – that one is long gone.  

    79.575.  That's the breakdown in the Dollar the bulls needed – timed perfectly for the EU close. 

    Gold with a big bounce off $1,634 back to $1,653 – so annoying.  Nat gas $1.95!   $104.50 hanging tough on oil but gasoline is down to $3.24 from $3.36 yesterday.  

  42. Yay Obama!  I have been working for almost a decade to get to this point.  Finally the President of the United States is talking about oil manipulation!  

  43. Winston / PCLN
    Would you please write to me at so I may ask you a question?
    Thank you.

  44. There is trendline resistance @ 81.42 and support @ 80.60. Also 81.28 should be this bounce top, above that would be a rising breakout.

  45. Once again, those little bears were right.
    J B T M F D.

  46. Wow, Europe finished up about 2.5%!  

    $104.35 looks like the last support before a nice drop in oil (/CL).  

  47. PHIL the fact that anyone needs to bring oil price manipulation (could it be anymore obvious) to anyone's attention is a sad commentary on the pathetic state of our leadership the last 10 years..i remember the coffee pit 15 years ago three brothers…at least that was funny.

  48.  india slashing interest rates with inflation still very high..they will work out well

  49. Phil
    Yesterday I took a stab at the QQQ trade you suggested (buy Apr $64 calls). I held through a drop at the close and then caught the upward movement this AM. I bailed (early) because I simply didn't trust the NAS would hold the gains at the open let alone drive up to where it is now. Not a big deal because I didn't lose any money on the trade, but I want to know what indicators (very short term) I might have used to foresee the move up that I missed? I have a tendency to exit winning trades too early.

  50. Not too many barrels left to roll into Friday's contract expiration:  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    May'12 103.15 105.07 102.66 104.42 11:33
    Apr 17


    1.49 121186 102.93 104387 Call Put
    Jun'12 103.61 105.50 103.10 104.84 11:33
    Apr 17


    1.47 69617 103.37 265092 Call Put
    Jul'12 104.10 105.91 103.55 105.21 11:33
    Apr 17


    1.40 24663 103.81 137505 Call Put
    Aug'12 104.40 106.17 104.00 105.55 11:33
    Apr 17


    1.37 17699 104.18 88969 Call Put

    595Mb on order in what will soon be the front 3 months but May is the start of summer driving season so the traders can hold out hope.  

    79.68 on the Dollar, recovering steadily since EU close.  

    810 on the RUT (/TF) is a good shorting line with tight stops as will 13,000 be on the Dow (/YM), now 13,029.  

  51. Italy cuts 2012 gdp by -.8%..RAISES 2013 by +.2%…hahahaha…italy raises 2013 debt/gdp ratio to 121.6% from 116.1%…BUY!!!!

  52. Angelcur- are you still good with MIL?

  53. From Kena: Liquidity is still up.If liquidity goes below last Tue. the mkt will go dn..If above mkt will go up..By

  54. Manipulation/Angel – Yet I've been pushing this issue for years.  I used to work with lobbyists but that was useless under Bush and writing about it publically was a change of tactics for me but it's been much more effective in getting these issues into the national conversation.  Look at the power these speculators have – CNBC instantly had 4 guys on screen all saying that the President was wrong and speculation isn't a problem, etc. etc…  That's going on on every TV station and will be in all the papers tonight – many millions spent by PR firms and lobbyist to crush this proposed legislation before it gets any traction.  Still, a huge victory today just to get Obama on the record like that – will make it much harder to brush it under the table.  

    QQQ/DC – Those momentum trades are really just for playing a bounce.  We pick those up rather than ditching our short positions (or long going the other way) if we're expecting a weak bounce and intend to try to ride it out – that's all they're for.  We had a quick .15 yesterday and that was up 10% and that was thrilling for a day trade.  The indicators are the same ones I always look at – Dollar, Euro, Yen, Pound, gold, silver, copper, nat gas, gasoline, oil, AAPL, TLT and, of course, our indexes.  When I see a confluence of events that make me think we're hitting an inflection point, then I look for whichever index or commodity has the best base-line to play off with the short-term internals to get us where we want to go and, from there, I then look to see if there's an ETF that will give me a close track without too much premium and enough delta at a reasonably-priced strike that also has a strong inflection point to play off so we can be reasonably assured that the downside will be limited if the market moves against us.  Just use that and you'll be fine!  ;)  

    Italy/Angel – Are they bad enough to distract us from Spain?  Also, don't forget those French elections on Sunday:  


    Behind the political heavyweights, the middleweights – far-left revolutionary Jean-Luc Mélenchon, of the Front de Gauche, and far-right firebrand Marine Le Pen, of the Front National – are slugging it out for third place.

    Mélenchon, who has vowed to tax earnings over €360,000 (£300,000) at 100% and rails at "Anglo-Saxons" and their "stinking money", has been the most pugilistic. The former socialist described Hollande as being as useful as "the captain of a pedalo in a storm" and has pulled no punches, particularly when referring to Le Pen, who he has described as a "filthy beast spitting hatred", a "bat", a "dark presence" and "half-demented". When she challenged him to his face, he repeated the insult. "Half-demented … that at least leaves the other half," he said.

    While Le Pen's father, Jean-Marie, called him a voyou (yob) for attacking his daughter, Marine hit back, describing Mélenchon as "a fat bourgeois who plays being a man of the people".

    Another insult was more subtle: "In front of the cameras Mélenchon will hurl threats and insults, but in reality he's charming, affable, almost a little boy," she said.

    Le Pen, who wants to pull France out of the "mad and murderous spiral" of European monetary union, has also shown an acid tongue. At the weekend she described Hollande and Sarkozy as "Siamese twins" and described their rallies as "a school for fans" and "puerile".

    Hollande caused a storm after allegedly insulting Sarkozy when during a lunch with journalists he envisaged his rival's election strategy. "He will present himself to the French and say: 'I'm a president who's done nothing for five years, I'm a dirty bloke, but re-elect me because in this difficult period, I'm the only capable one.'"

    He then upset former colleague turned rival Mélenchon, who is also representing the Communist party, by saying: "There are no communists left in France … or very few". He has, however, studiously avoided mentioning Sarkozy by name, even in jest.

    "If I sometimes hold back my humour, it's out of pity for the incumbent candidate," Hollande said.

  55. What an impressive upswing on the Dow!   

  56. Bonds continue to hold the line.

  57. again tlt down .15 dow up 1.5 something has to give right?

  58. Phil… any thoughts on SLB?  How would you play it?  or would you?

  59. Half done with the day and only 47 m  shares traded on the DJIA. Average daily volume for past three months 140.5 m. . Can we really get excited about this move?

  60. @Felipe
    What are the possibilities that AAPL wild fluctuations the last few days are all about hedge funds and other heavy AAPL holders moving it up and down based on a strategery of  pinning it to Options Expiry last friday?

  61. AAPL over $600 means it's over for the bears for now.  CMG down to $430 but oil holding $104.50, PCLN back to $717, Dow up $200 for the day.  

    Meanwhile, let's not be too impressed by bouncing Europe until they actually catch up to us:

  62. SLB/Peedle – Don't forget they service GAS and oil and consumption numbers are down on both and it doesn't help SLB if companies charge more, they make their money on servicing the wear and tear that comes from use.  They bottomed out around $40 in the crash and if they get down around $55 again (they were there in September), I would be excited to sell puts below $50 but I'm just not feeling it at $70 – nor would I bet against them because they are a great company.  

    Excited/DC – Good point – worst volume in ages is our best day – what a crock!  

    AAPL/Flips – Yep, $600 is a nice pin for AAPL at this point.  

  63. Does anyone see something called ZVZZT that is going up and up and up.  It says "Test Test" as a description and it's screwing up hi/lo indicators as well as other things.  

  64. ZVZZT is an SM… whatever that means!
    SuperMontage also abbreviated simply as SM is an integrated trading system used in an American stock exchange NASDAQ.
    [edit]Test stock symbols
    The SM system works behind the scenes but on rare occasions, it can be seen at work when a test symbol such as "ZVZZT" runs across the ticker.[1] In 2002, will begin its SM implementation which name appear on the user's presentation device (PD) and application programming interface (API) as "SM TEST STOCK II."[2]

  65. Phil, ZVZZT is one of the nasdaq test symbols.

  66. Phil, ZVZZT is listed by schwab as up 2,370% with low or .95 and high of 155 but gives no information on the security.

  67. From Springheel Jack: Updated ABC Bear Flag Scenario

  68. 11:38 AM Europe melts down in reverse, closing sharply higher with Spain selling €3.2B in short-term bills as good an excuse as any for buying recently beaten up shares (Greece sold short-term paper throughout the entirety of the collapse in its finances). Stoxx 50 +2.8%, Germany +2.7%, France +2.6%, Italy +3.4%, Spain +2.4%, U.K.+1.8%. Euro flat at $1.3139.

    12:00 PM On the hour: Dow +1.3%. 10-yr -0.09%. Euro -0.15% vs. dollar. Crude +1.52% to $104.94. Gold +0.25% to $1653.75.

    1:00 PM On the hour: Dow +1.55%. 10-yr -0.14%. Euro -0.13% vs. dollar. Crude +1.55% to $104.97. Gold +0.2% to $1652.95.

    Treasurys are mostly unmoved by major rallies here and across the pond, the 10-year just getting its nose above 2% again, and the long bond +2 bps to 3.15%. Fed Funds futures - a couple of weeks ago pricing in rate hikes in 2013 – are now seeing no action until mid-2014. 

    The President's plan to chill supposed oil manipulation: Increase by 6-fold the surveillance and enforcement staff at the CFTC. Increase spending on surveillance technology. Increase civil and criminal penalties for manipulation from $1M to $10M. Give the CFTC authority to increase margins (presumably now only the domain of the exchanges). Crude +1.25% to $104.35.

    Italy will miss its fiscal targets in 2012 and in 2013, says the IMF, with this year's deficit falling to just 2.4% of GDP vs. 1.6%, and 1.5% next year vs. a hoped-for balanced budget. Likewise, the debt/GDP ratio will also come in high. The news is a blow to PM Monti, currently basking in international praise (but slipping at home) for his reform efforts.

    Spain's turn: The IMF says the country will miss its fiscal targets this year and next, predicting a deficit of 6% of GDP vs. 5.3% in 2012, and 5.7% vs. 3% in 2013. The Fund doesn't see Spain getting down to a 3% deficit/GDP ratio until 2018

    Following the news forces one to acknowledge, but hopefully not take seriously these deficit/GDP targets and projections (III). Their import, however, may be in their political statement, and perhaps it's no more than coincidence the IMF releases worrisome figures for Spain and Italy on the same day it's calling for easier monetary policy from the ECB. 

    Goldman Sachs (GS) remains cautious about the "fragility" of the economic recovery and mixed investor sentiment, with the eurozone debt crisis at the top of its concerns, CFO David Viniar tells analysts on an earnings call. M&A activity "has not yet gained momentum," while CEO confidence hasn't recovered

    Bruce Bartlett conveys skepticsm about the focus of policy makers on small businesses and the perceived crucial role they play in the labor market. Writing in the NYT, Bartlett notes that half of all workers are employed by large companies and that job-creation by start-ups fell to under 2.5M in 2010 from 4.7M in 1999.

    Average cash levels jumped to 4.7% from 4.2% this month among fund managers surveyed by BAML, with nearly 25% overweight cash (6% in March). The biggest "tail risk" is no surprise, with 38% believing it to be Europe. A higher percentage (56%) expect a negative surprise from France than from Italy, Greece, or Portugal.

    The London Metal Exchange may let its members clear contracts in the yuan when it sets up its own clearing house, reflecting China's status as the world's biggest consumer of many base metals. However, the Chinese market needs to fully internationalizes or there needs to be convertibility for there to be a discussion about trading in the renminbi.

    A judge throws out a $330M lawsuit vs. Sirius XM (SIRI) from Howard Stern and his agent for not paying stock awards for helping the firm beat its growth aims. The judge rules that subs from XM Satellite Radio, which Sirius bought in 2008, could not be counted when determining the awards. Sirius is +3.5% but what does this mean for Stern's future?

    Yay!!!  MEMC Electronics Materials (WFR +10.9%) rides the coattails of sector rival First Solar higher after FSLR decides to dramatically restructure itself. The company – which makes polysilicon wafers and builds solar plants – has outperformed the Market Vectors Solar ETF (KWT) by nearly a full percentage point YTD amid the solar stock shakeout. 

    First Solar (FSLR +9.7%), down 84% from the start of 2011 as of yesterday's close, is now up strongly on news of its restructuring plan; CEO Mike Ahearn justifies the move by claiming First Solar's Euro ops are "no longer economically sustainable." The announcement was preceded by a downgrade to Neutral from Goldman, which argues collapsing prices for silicon solar panels mean First Solar's thin-film panels are no longer "the clear low-cost leader."

    Amazon's (AMZN) has finally reached e-book distribution deals with some major Japanese publishing houses, reports The Asahi Shimbun. It's added Amazon has been squabbling with local publishers over the right to set retail prices (that sounds familiar), among other things. Progress remains slow: Jeff Bezos only promises that a release date for Japanese Kindles will be announced by year's end.

    Apple (AAPL +3.4%) is rebounding with the market (and then some) on the back of bullish analyst commentary (III). Cowen's Matthew Hoffman is joining the fun by suggesting FQ2 iPhone sales could be 4M-6M units above his forecast of 32M, which itself is above a consensus of 30.5M, thanks to strong international demand. However, he's only forecasting 28M FQ3 iPhone shipments, as demand slows down ahead of a new launch.

    Three lunchtime reads:

    1) Google today = Microsoft in 1999

    2) How shape-shifting banks foil Dodd-Frank

    3) Jeff Saut: Be conservative, not conventional

  69. Thanks Diamond (and Jack):  

  70. Note our 1,395 line on the button at the day's end.  Isn't that interesting as it's predicted by the 5% Rule based on the drop to 1,357 from the 10th.  See, you don't need charts when you know where they're going to be a week in advance!  ;)  

  71. I know people have been waiting for the gold miners to rip up for months as it kept heading lower… but GDX and GDXJ but seem to be basing on firm support… I like the chart… just don't like gold (slight problem!)
    Still, it looks good.  Anyone tracking these?  Thoughts?

  72. Phil – i didn't let go of the DDM may $70. What do you think of selling the $71 against it now for 1.30?

  73. AAPL returning with revangence !!!

  74. GDXJ/ peedlew22  The GDXJ 22 line looks like it has held for the past 5 years.  May sold 21.63 for .60  could be a solid trade, although I am not in it.

  75. Painfully annoying testing of $103.35.

    Dollar 79.666 – Lloyd must be near! 

    AAPL $604.  DMND up 4%.  NFLX up 4% – I don't get that one.  VLO up 2.75%.  YRCW down 2%, RIMM down 1.5%.  

    VIX back to 17.95, TLT $116.40.  

    Super Montage/Peedle – Interesting.  All I know is that when one symbol's "test"activity begins to crowd out all the other ticker action – something is getting messed around with…

    GDX/Peedle – I like FCX or ABX and that's it.  Why gamble on the group when half of them are nothing but shell scams and half of the ones that are left are like wildcatters, that could go up or down 50% a year for no particular reason.  

    ABX is a good buy at $41.60.  They crashed to $26 in 2009 but you can initiate an entry with the short 2014 $35 puts at $4.55 and, if a net $30.45 entry (26% off) isn't enough for you, you can add the 2014 $40/55 bull call spread at $4.85 and now you are in the $15 spread for net .30 and the worst case is you're in at net $35.30 (15% off).  

    FCX ($38) is mostly copper but 25% gold and they crashed down to $17.80 in 2009.  You can sell the 2014 $28 puts for $3.70 for a net $24.30 entry and the 2014 $30/40 bull call spread is just $5 so net $1.30 on the $10 spread that's $8 in the money to start and worst case is you're in at net $29.30 (23% off).  

    DDM/Morx – Well good job then!  If you came in at $2.75, like we did, then what's the point in covering it into a $1 spread for net $1.45?  If you just take the $1.90 now, you're down .85 and done with it.

  76. Up 200 pts!?!?!! What a crock of sh!t….

  77. There goes $104.35 with 30 mins to the NYMEX close – now things might get interesting…

    Otherwise we're at highs and we have to respect that if we finish up here.  

  78. GDX/peedle – there are several charts out there that suggest the index is in a support pattern, but the trend it down.  Consolidation here, in my mind is not good until the upper trend can be taken out.  Nothing more than a swing trade.  ~49.50 needs to be taken out in my mind.  mrm noted yesterday that if 48 was lost, then $32 could be in the cards.  I think Gold has another leg down (JMHO).

  79. Phil – I know they can do whatever they want but do you like shorting into the close?

  80. Oh, and Cramer just said gold remains 'compelling'.  Short.

  81. How the heck do you see this stuff Phil?  I've been trading for 30 years and even after you said it I didn't see how you knew $104.35 was the line for oil.  Didn't stop me from playing it as I learned to trust your instincts over mine so thanks again.  

  82. DJIA/ 57M shares traded, 3 mos. daily average: 140.5 m..  NO VOLUME!

  83. FU PCLN!!!!!!!!!!

  84. FU AAPL!

  85. CNBC obsessing over this Obama/Speculator issue.  Note that they are attempting to redefine speculators as investors when clearly that's not what the President was talking about.  

    Shorting into the close/Jrom – No because we're technically in good shape after hitting our 50% lines (assuming we hold them) and then Asia has catching up to do and Europe can have another up day as they have miles to go before they hit their own 50% lines and that means we can gap up over ours tomorrow so I don't see the point in trying to force anything when we are EXACTLY between the top and bottom of the month's range.  

    How/Bruce – Maybe I can blow up the chart later and annotate but there was a dip early on at about 9:45 that tested there.  I notice those things because the move back over $104.50 triggered a stop on the short from $105 and then we had a really slow grind back and tested it again at the EU close and again an hour later so you don't have to whack me over the head more than 3 times in a row before I call something support.  What I considered a positive sign (for the bear position) was the way we then rattled around between our original $104.50 resistance and the new $104.35 support and that then means that breaking below after some consolidation would become more meaningful.  Notice how we made our .25 drop and now we're right back at $104.35 again but this time, it's acting as resistance, which is a great sign that they're getting progressively weaker.  

    Dow looks like it will make it to 60M by 2:30 – that's something anyway…

    PCLN/Jabob – Thanks for reminding me.  In the $25KP, we want to get back in 5 of the July $560 puts at $7.50 or less, now $9.30.  

  86. Apparently, no shortage of paper in China either:

    According to our calculations, China was responsible for 52% of new M2 creation globally in 2011, as we show in Chart 1. This is not a recent phenomenon – in the-three year period after the global financial crisis began (2009-11), 48% of new M2 globally was in Chinese yuan (CNY; Chart 2). Global M2 is approaching USD 50trn, and China will get us there.

    China additional M2 creation versus RoW - Standard Chartered

    PBoC vs ECB vs Fed - money creation - Standard Chartered

    This can't end well…

  87. CNBC Investors / Phil – It seems that CNBC's definition of an investor is someone/something who holds a position for more than 1 millisecond! Bots are people too… 

  88. Down goes AMRN……that is good.  We will initiate something when they get back to 6 or 7.

  89. we still here?

  90. All that shimmers in this world is sure to fade, Away again – Fuel

  91. morx .. just sitting back…

  92. China/StJ – And today they announced a doubling of their trading band – crazy.  

    2:00 PM On the hour: Dow +1.56%. 10-yr -0.11%. Euro -0.06% vs. dollar. Crude +1.41% to $104.83. Gold +0.11% to $1651.55.

    3:00 PM On the hour: Dow +1.5%. 10-yr -0.11%. Euro -0.02% vs. dollar. Crude +1.31% to $104.72. Gold +0.13% to $1651.85

    So what explains today's big rally, with the Dow now up ~200? Apple is rebounding, but its fall yesterday didn’t hurt the broader averages much. Banks are cranking up the dividends, but their earnings are mostly lower Y/Y. Spain auctioned off short-term debt, but it had to pay through the nose. Maybe it's technical, as the S&P moved above its 50-day MA, or maybe it's history: stocks typically rally after Tax Day

    IBM and Intel (INTC) are due to report Q1 earnings after the close, with IBM's EPS expected to have grown to $2.65 from $2.41 and revenue to have edged up 0.7% to $24.77B. (See also) Intel's EPS is seen falling to $0.50 from $0.56 and its revenue slipping 0.1% to $12.48B as the moderate growth in the PC market continues to weigh. (See also III

    Yahoo (YHOO) is due to release Q1 results after the bell, when it is expected to report unchanged EPS and revenue of $0.17 and $1.06B respectively. Investors will be focusing on the earnings call, when they hope to hear more from CEO Scott Thompson about how he plans to revive Yahoo's revenue with a leaner company.

    "(It's) an artificially controlled market," says Bill Gross, explaining why he won't be a bidder at Spain's sale of 2 and 10-year notes on Thursday. The auction, he contends, is an inside job with the banks in control. He adds this doesn't mean Pimco wouldn't be a buyer of Spanish bonds in the secondary market. 

    The Bank of Spain approves all Spanish banks' plans to boost their capital, but says some will have difficulty executing said plans. In sum, the banks need to set aside €29.1B in loss provisions and raise an additional €15.6B in capital (on top of the €9.1B raised in 2011). It's a total of €53.8B, not far from February's €52B estimate.

    "We caution against mistakenly categorizing speculation as a form of manipulation," says the CMEresponding to the President'sproposals this morning. "To use margin requirements to control cash prices is misplaced … (this) would make the markets less efficient, less tied to fundamentals … push hedgers out of the market … (and) make oil more expensive for all consumers."

    ResCap, Ally Financial’s struggling mortgage subsidiary, fails to make the latest $20M interest payment due to bondholders, though it's not yet a default thanks to a 30-day grace period. Ally faces mounting pressure to make a decision on the fate of ResCap, which has been a drag on the rest of its business and stalled its IPO plans.

    Groupon (GRPN -0.9%) isn't taking part in today's rally. MasterCard's daily deals announcement could be playing a role, as might a bearish note from Ascendiant Capital. The firm, which rates Groupon a Sell, lowered its PT to $11 from $14 on a belief the company's Q4 restatement will increase opex and uncertainty.

    click for ginormous graphic

  93. just to answer the question re DDM. My thinking was that i had bought back the caller for .57c  plus the 1.45 would have gotten me down to .73c and i sold one MCD put for 2.25 for 3 DDMs so IF it went to 71 i'd be even. Plus another if or 2.
    But i am out now and a little exposed if we continue on the upward trend.
    As always your input is much appreciated.

  94. looks good, pharm. i'll be right over.

  95. FAS Money – Back at $103 is even on the April $100s so no crisis just yet.  No change in outlook so we'll roll 'em along if we have to (and sell more puts).  

    IWM Money – TNA at $58.50 but I'm loving the RUT short off 815 so not worried yet.  

    $5KP – Whole lotta nothin going on over there.  

    $25KP – We may have some rolling to do but there's no positions I don't like.  We'll need an aggressive bullish trade if we're holding these levels tomorrow morning. 


  96. Sitting back/Pharm – Yep, a boring day while we move back to the middle.  

    DDM/Morx – Well those make the net better but still no point in taking your $1.90 May $70 call and getting $1.30 now, which leaves you in at net .60 or whatever with the others – but then you are bullish on DDM for that last .40 and you're risking .60 if DDM goes the other way.  If you are genuinely bullish and think the Dow will be over 13,300 in May, to get DDM to $71 – then sure, it's betting .60 to make up to .40 but, as I said earlier, I would just be thrilled to get most of the money back off the hedge.  

    AAPL $608 – Nice comeback!  

  97. Pharm,
    Is that kool-aid or a beer?

  98. Pharm…I've already made the move to the Booker's bourben:)

  99. Volume just 72M at 3:30, plenty of room for a stick – or an anti-stick.  

  100. l4 – I am a bartender by night…..pick your poison, I pour them all.  Laced with drug of choice makes for an entertaining cocktail!


    Stick, no, anti stick, stick, anti stick…or just bipolar!

  101. Knob Creek for me, sage.

  102. Check this out:  


    The Federal Reserve‘s routine survey of primary dealers ahead of a policy meeting this month included more “topical” questions about what economic changes would need to happen to warrant more monetary stimulus that would expand the central bank’s balance sheet.

    One such question was: “Holding the 2014 inflation projection constant, in your view how much would the Q4-2014 unemployment projection have to change to prompt additional accommodative balance sheet policy before the end of 2012?”

    It’s widely expected that the Fed won’t introduce a new easing measure next week, but investors are on the lookout for hints about future moves, especially with Operation Twist ending in June.

  103. ….and the horse you rode in on….
    Pharm – Turn that frown upside down, get out and enjoy our chamber of commerce day!  :)

  104. CNBC headline – Whitney Reverses Citigroup Call: Financial Crisis Over?
    One word – REALLY?!  I can't say I am surprised by CNBC but you're right Phil, you apparently can fool all of the people all of the time with the BS.

  105. largest company in the world trading like a small cap yoyo

  106. ronresnick – I sent you a mail. Winston.

  107. VIX moving up into close – 18.25.  

    NY Times Guide to cheating on your taxes:  


    So what’s the easiest way to cheat on your taxes?  Run your own company.

    What’s the most ridiculous loophole?  There are too many to count.

    Travel in Europe has become ridiculously expensive.  

    For JRW – 14 Sports Car Wrecks.  

    Speaking of wrecks

  108. Phil: What do u think of WPRT ?

  109. Dow volume 82M with 5 minutes to go at 13,122 – it's the last 5 mins that tell the tale….

  110. I do believe that is a Soul Asylum Album, 1020.  And the Commerce of our Chamber is empty from what I can tell. 


    Veil of Tears…..from that noted Album.

  111. There goes RUT…

  112. wow what would cause us to go up 200 points today…must be magic!!!

  113. Commerce - Pharm, then I pass to you, the tissue I used last week….. ;)

  114. Phil /   Can you help me get a handle on shorting oil as it goes down thru an even dollar, or a .50c line, or like today when it finally crossed the 104.35 line?  I'm doing fine scaling in as it crosses above those lines as resistance, but I'm not having any success going down thru them.    TIA

  115. RUT taking a quick dip back under.  

    AAPL $610 – up 5% is good for 0.75% of the Nasdaq's gains today so let's call everyone up about 1.5% sans AAPL.  

    WPRT/Etrad – I don't follow them.  It's a good business but they don't make any money despite solid growth – that's a little worrying.  They don't have a lot of cash but they're burning it and paying dividends with borrowed money – that's something I REALLY hate.  

    INTC and STX flew up into close, both making new year highs.  

    Dow volume up to 111M but not much damage done at the end.  RUT took a big dive and the closing imbalances are pushing S&P and Nas down along with the RUT.  Now we'll see how they all react to earnings.  INTC not making people happy on the initial news – also a big Nas component.  

    Magic/Sage – As I said yesterday – you have to BELIEVE!  

  116. RUT still falling

  117. Believe Phil, and I was touched, by the hand of God.  Salvation!  


    One of my favorite bands.

  118. INTC Not happy

  119. Oil/2Can – Forget $104.35, that was simply a strong resistance that formed up today – it happens sometimes.  On the whole, our .50 lines are still strong and the .25s are weak so it's simply a matter of playing those crosses WITH DISCIPLINE.  


    So we had no reason to enter short at $104.50 this morning as oil popped right over it and you have to expect bounciness at $104.50 and the trick is to see what kind of a range it's establishing so you can begin to scale in.  Notice that although oil went back and forth on the $104.50 line – it did have a .15 range from $105.65 back to $105.35 and that in itself becomes playable.  Also you can see how it trended weaker until it broke and, once below $105.35, we got a nice ride down to $104.10 on the first one and $104 exactly on the second ride. 

    Also, notice the volume, there wasn't much interest in themoves up after 11:30 – all things to give you a little more confidence in your betting.  There's no magic system here though – it's practice, practice, practice until you get a feel for it and, of course, lots and lots of reading to see what rumors are driving the moves (and always keep one eye on the Dollar and the other eye on gold, copper, gasoline, Euros, Yen, and Nat gas as well as XOM and VLO). 

  120. Good afternoon. I remain on vacation and the AAPL portfolio remains in cash. I dare not advise you how to trade AAPL ( or anything else for that matter) while I’m so out of contact with the markets and so in contact with water sports. Good trading!

  121. Thanks Phil,  I didn't actually frame the question correctly.  I was playing the 104.35 to 104.60 channel today, and that worked well, but the thing I have a problem with is catching oil on the way down.  I always feel like I'm chasing, and so I try to enter above the current price a nickle or two, but if the price is dropping I usually miss the fill.  Then It's down another dime, and I'm trying to enter a nickle above that price, and so on till I'm really chasing and I give up.   Is there a way to scale in on the way down past a .50 cent or an even dollar line, or do you just sell at the market when you feel like it's going on past your line?

  122. Looks like INTC beat, but not enough as they are down in AH. Looks like IBM missed as well and they are down $5 AH. Not looking good for the Dow tomorrow.

    YHOO beat and they are up over 2%. 

  123. CREE being taken to the woodshed after a bad miss on revenues.

    ISRG up big on big beat – both earnings and revenues.

  124. And finally both STX and CSX beat and are also up AH.

    That's it from earnings central…..

  125. From the CSX report:


    Revenue in the quarter improved 6 percent from the prior year to nearly $3 billion, driven by increased volume, pricing gains and fuel recovery. Overall volume was up 1 percent in the quarter when compared to the same period last year. Increased shipments in merchandise and intermodal more than offset declines in the company's coal business.

    Don't know if a 1% increase in volume is great, but sure is better than a decrease! Apparently coal shipment must really be down. Might be too early to jump in these coal producers.

  126. Phil, on this:
    PCLN/Jabob – Thanks for reminding me.  In the $25KP, we want to get back in 5 of the July $560 puts at $7.50 or less, now $9.30. 
    How do you decide the strike on the July puts you want to buy?  I figure since it's buying premium, you have a rule of some sort?

  127. CSX/stj – that was a beat b'c they raised prices

    The railroad saw smaller increases for metals, forest products and food and consumer products. CSX charged higher rates in all those categories.

    Overall, what I see is not impressive at all.  I also cannot see (filing keeps timing out) the cost of revenue, or where their "beat' came from?  We know trucking was down, and some things were shifted from that to train…so, time again, is on our side…I just need to remain solvent.

  128. Oh dear, Buffett and cancer not what you want to hear in the same sentence.  Although early-stage prostrate at his age is not a big deal at all.  Article has so many hits it's slowing down the WSJ.  

    Have fun Iflan – So far, you haven't missed much…

    Chasing/2Can – Mostly you just have to learn to let it go.  I only like to play oil when it's too high and I can have a little conviction about the selling.  I can go weeks without playing it if it's low in the channel (been a while).  So I'll play a cross below $105 or $104.50 or $104 or $103.50 (our old shorting spot) but ONLY the crosses below or a test of the line from the other way with very tight stops.  At $103 or $102.50, I have no interest in shorting because it's a bouncy area.  As to making an entry – you need to be very well aware of your loss limits but let's say you think $105 will reject and you want to play $104.95 – then you can start with 1x at $104.95 and add another at $105.05 for 2x at $105 and then add another at $105.15 and maybe 1 more at $105.25 and now you have 4x at $105.20 and, if you finally stop out at $105.30 you lose 4 x .10.  

    Knowing you intend to lose $400 to test your theory that $105 is the top is how you set your stops. Of course, losing $400 means you need a .40 1x win to balance it out or a .20 2x win so that's kind of a lot to let yourself lose – which is why you are actually better off just taking the $100 loss on 1X if it pops over $105 on you as that's easy to make up by being right for a dime the next time.  That's why it's MUCH easier to play a cross below as you enter from $105 to $104.95 and you get the hell out if it goes back over $105 and then you wait for a better set-up (preferably with more momentum).  

    If you find that the line isn't behaving – DON'T PLAY IT!  That's the biggest mistake people make – playing non-ideal set-ups because an ideal set-up will MAYBE give you a 60/40 winning percentage but a non-ideal is a coin flip at best.  If you run 60/40 100 times and make and lose $100 each time, you will make $2,000 over the run of good entries.  If you would rather play more often and add another 100 coin flips, you will reduce your odds on 200 attempts to 55/45 and you'll make the same $2,000 with twice as much work.  There's no point to forcing entries.  

    That logic goes for sports betting and poker too!  People get impatient and want to play so they enter bad hands or people feel obligated to bet on their home team when the odds are not that great, in lieu of making an obvious bet in another match-up.  Don't fall into that trap.  

  129. CSX/StJ – A lot of auto shipments is saving the rails too.  Cars take up a lot of space and require lots of cars – good for the rails.  

    PCLN/Jordan – Based on the performance of a contract we know we like from recent experience in that case.  The time-frame of the July contracts is still valid for us, we got in at $6 but not likely to get back to it (and if we do, we'll roll or DD) and the markets were looking strong so a break up from where we were had a good chance of filling $7.50 so it was a reasonable target to make for a general call as I saw little reason NOT to buy it again IF we got to that price.  The real work comes if we fail to get there and now we have to evaluate other strikes.  

  130. Thanks for the tips on oil Phil.  Another 9800 hours, and I'll have it in the bag. : )

  131. At the close: Dow +1.51% to 13117. S&P +1.52% to 1390. Nasdaq +2.04% to 3049.

    Treasurys: 30-year -0.1%. 10-yr -0.08%. 5-yr -0.02%.

    Commodities: Crude +1.28% to $104.69. Gold +0.09% to $1651.25.

    Currencies: Euro -0.11% vs. dollar. Yen +0.6%. Pound -0.2%.

    Market recap: In the tug of war between Europe and earnings, earnings won today's round in a big way, as stocks powered higher and the Nasdaq posted its best gain of 2012. Apple shares, which had dropped for five straight sessions, jumped 5%. Action was more sober in the bond market, where the 10-year yield eased above 2%. NYSE gainers led losers more than three to one. 

    Notable earnings before Wednesday's open: ABTAMLN,ASMLBKHALHBANNYBPNCSTJTXT

    Notable earnings after Wednesday's close: AXPCCK,CVBFCYSEBAYFFIVLRCXMARNEQCOMSLMSTLD,SWK


    Warren Buffett (BRK.ABRK.B) has been diagnosed with Stage I prostate cancer. The cancer is said to be not life-threatening.

    It's all about the debt, writes the crack team of Hoisington and Hunt, and the extent to which the U.S. accumulation of such has been put to use unproductively has them maintaining their bullish Treasury stance. Might the debt be inflated away? Not likely. "The increase in interest rates associated with higher inflation would be one for one … To start down this road … would be foolish, impractical, and improbable."

    The Bundesbank gives the rack another turn, urging troubled EU governments to set aside growth concerns and focus on budget cuts. "Putting too much weight on short-term, demand-side risks misjudges the root cause of the current crisis," says the bank's Andreas Dombret. Perhaps the Buba has misjudged.

    John Paulson's short of Europe just got a bit more interesting. He reportedly is short EU sovereign debt, but the FTreports it's German paper he's shorting as he believes the eurozone debt crisis will deepen enough to threaten that stolid stalwart's creditworthiness. Now that's a contrarian play worthy of the man behind The Greatest Trade Ever.

    "It's like investing in gold in 1997," says bond man Jeff Gundlach of his favorite investing idea – natural gas – which DoubleLine is accumulating in one of its funds. On the question of QE3, he says we're already doing it – it's called Operation Twist – and when it's over he expects equities to struggle. Stock valuation in general right now? The PE on major indices should be in the single digits. Q&A here. Blog here

    On Tax Day, Betsey Stevenson and Justin Wolfers look at how the government spends through the tax code: “Would you support giving millionaires with mansions 25x more than the typical family? That’s effectively what we do: Middle-class families get an average benefit from the mortgage interest deduction of $139, while families in the top 1% get $3,752.”

    Short sales surpass foreclosure deals for the first time, as banks become more agreeable to selling houses for less than the amount owed on their mortgages, according to LPS data. Short sales accounted for 23.9% of home purchases in January, vs. 19.7% for sales of foreclosed homes; a year earlier, 16.3% of transactions were short sales and 24.9% involved foreclosures. 

    Helping Citigroup (C +3.2%) rally today is an upgrade to Hold from long-time critic Meredith Whitney. Whitney praises Citi's improving operating metrics and low valuation, and says she's impressed with the rebound in the bank's equity trading and FICC ops demonstrated by its Q1 report. “She’s starting to sound a little like Dick Bove," quips Pete Najarian. (earlier)

    Intuitive Surgical (ISRG): Q1 EPS of $3.50 beats by $0.35. Revenue of $495M (+27.6% Y/Y) beats by $30M. Shares+5.1% AH. (PR)

    Intuitive Surgical (ISRGguides on its Q1 earnings call (webcast) for 2012 sales growth of 19%-21%, above a consensus of 18.5% and the company's prior guidance range of 17%-19%. Da Vinci robot procedures are now expected to increase 25%-27% from 2011 levels, compared with prior guidance of 24%-26%. ISRG +5.8%AH. 

  132. One of the auto industry's most closely guarded secrets – the big cost of batteries for electric cars - 
    has spilled out, as Ford (F) CEO Alan Mulally indicates battery packs for its Focus electric car costs $12K-$15K apiece. Ford is currently promoting its new $39,200 Focus EV, with a 23 kilowatt-hour battery pack.

    CSX (CSX): Q1 EPS of $0.43 beats by $0.05. Revenue of $3B (+6% Y/Y) beats by $70M. Shares +2.5% AH. (PR)

    More on CSXQ1 earnings beat on both revenue and a per share basis, despite anemic coal volume growth due to slumping demand. Net earnings still managed to rise by 14% Y/Y however, as the railroad reported an 8.5% increase in intermodal volume, which helped to offset the decline. Intermodal volume accounts for about 35% of CSX's overall business, while coal volume accounts for about 25%.

    Cree (CREE): FQ3 EPS of $0.20 misses by $0.01. Revenue of $284M (+30% Y/Y) misses by $16M. Shares -8.3% AH. (PR

    More on Cree (CREE): FQ3 misses across-the-board on declining revenue. Adjusted net income declined 50% Y/Y, despite being offset by better cost controls and a large tax benefit. The company also warns for FQ4, now seeing its EPS coming in around $0.20 – $0.26 per share on revenue between $295M – $315M. Street estimates were for an EPS of $0.28 on revenue of $323M. Shares-6.3% AH.

    IBM (IBM): Q1 EPS of $2.78 beats by $0.13. Revenue of $24.67B (flat Y/Y) misses by $100M. Company expects 2012 EPS of $15, above consensus of $14.93 and prior guidance of $14.85. Shares -1.7% AH. (PR)

    Europe down 2%!!!  More on IBM's Q1: Services backlog stood at $139B, down from $141B at end of Q4. Services revenue +1% Y/Y (+3% in Q4). Hardware -7% (-8% in Q4), hurt by 25% drop for mainframes and 4% drop for storage (share loss to EMC?). Software +5% (+9% in Q4), affected by slowing growth for middleware and Tivoli. Total analytics revenue +14% Y/Y. Americas and Asia-Pac revenue up slightly, Europe -2%. Gross margin rose 120 bps Y/Y to 45.7% (helps explain EPS beat). IBM -1.8% AH. (PR)

    Seagate Technology (STX): FQ3 EPS of $2.64 beats by $0.54. Revenue of $4.45B (+65% Y/Y) beats by $70M. Shares +1.8%AH. (PR)

    More on Seagate Technology (STX): FQ3 blows awayconsensus estimates on a surge in revenue. Earnings soared over 65% Y/Y, after emerging from last year's flooding disaster in Thailand relatively unscathed. Going forward, the company says it expects demand to continue outstripping supply for all of 2012 and likely some of 2013, which should keep prices up. Shares +3.4% AH.

     In its conference call, Seagate Technology (STX) guides Q4 revenue  higher, now expecting to earn upwards of $5B, above Street estimates of $4.94B. Adjusted gross margin will exceed 34.5%. The company says the desktop drive market will remain constrained through the fall, while the enterprise and mission-critical market segments seem to have almost fully recovered. Shares +3.6% AH.

    Intel (INTC): Q1 EPS of $0.53 beats by $0.03. Revenue of $12.91B (flat Y/Y) beats by $70M. Company expects Q2 revenue of $13.1B-$14.1B vs. consensus of $13.4B. Shares -1.7% AH. (PR)

    During its Q1 earnings call (live blog), Intel attributes the decline seen in PC CPU sales (even as PC shipments rose) on inventory cuts caused by hard drive shortages. It predicts inventory replenishment will begin in Q2 and accelerate in Q3, aided by Intel's Ivy Bridge launch. The chip giant adds it's seeing some low-end price competition, presumably from AMD - that could explain Intel's slightly soft Q2 gross margin guidance. INTC -2.8% AH.

    More on Intel's Q1: Gross margin of 65.1% exceeds guidance of 64%. However, company expects GM to decline to 63% in Q2, and is leaving 2012 guidance unchanged at 65%. Capex and opex forecasts also unchanged. PC CPU division sales fell 2% Y/Y, a reversal from Q4's 17% gain. Server CPU division sales fell marginally after rising 8% in Q1 (Romley timing likely played a role).INTC -2.5% AH. (PR) (CFO comments - PDF) 

    Yahoo (YHOO): Q1 EPS of $0.24 beats by $0.07. Revenue (ex-TAC) of $1.08B (+1% Y/Y) beats by $20M. Sees Q2 sales (ex-TAC) of $1.03B-$1.14B. Shares +2.6% AH. Conference call scheduled for 5:00 PM Eastern. (PR

    More on Yahoo's Q1: Midpoint of Q2 revenue guidance range above consensus of $1.06B. Q1 display ad revenue -4% Y/Y, unchanged from Q4. Search ad revenue -8%, worse than Q4's 3% drop and likely affected by lower cost reimbursements from Microsoft. Free cash flow was $196M, below net earnings of $286M. $71M worth of shares were repurchased. R&D expenses were 19% of revenue – expect that figure to drop due to layoffs. YHOO +2.3% AH. (PR)

    During Yahoo's Q1 earnings call (live blog), Scott Thompson said Yahoo is shutting down 50 properties as part of its restructuring, though he doesn't specify which ones. He adds Yahoo is in "active" talks with Asian partners partner about asset sales, following February's breakdown, though valuation differences exist regarding Yahoo Japan, and that he wants Yahoo to grow ad sales "at or above the market rate" – that's far from the case right now. YHOO +2.7% AH.

  133. The recent decline in Google's (GOOG) ad click rates, one that has many investors on edge, could have something to do with the company's acquisition of display ad bidding platform AdMeld, which closed in December. Display ads generally carry lower rates than search ads, and the addition of AdMeld's inventory may be driving Google's total rate lower. However, other explanations (III) also exist.

    In spite of promises to keep the unit at arm's length, Google (GOOG) wants to hold onto Motorola Mobility's (MMI) phone ops because it "wants to have its own iPhone business," sources tell BI. The goal isn't to create additional Nexus phones, but an integrated hardware, software, and services experience similar to Apple's (AAPL). Unsurprisingly, Android partners are "furious" over Google's plans. But given what's known about Larry Page, maybe they shouldn't be surprised.

    More on Google/Motorola: Sources also claim Google islooking to spin off Motorola's set-top box business. Google originally wanted to retain the unit, in part due to the less-than-enthusiasticconsumer response to Google TV. However, cable operators, terrified of Google's online video ambitions, reportedly "threatened war" with Google unless it ditched the business.

    Ugly chart of the day: The recent trend in federal tax receiptssuggests the economy is not "getting stronger," as Tim Geithner maintains; if anything, it looks like the opposite

    Lobby more, pay less in taxes (Sunlight Foundation)

  134. So Italy is going to miss their budget deficits, debts are rising according to CNBC and futures a basically even right now.  Talk about extend and pretend, when does reality hit???

  135. I need a screen shot in windows 7, the snipping tool isn't giving me what I want. Any help out there?

  136. Phil

    looks like the maximum premium recapture by sellers of SPY puts and calls would occur if they can close out Friday at SPY 139, even with today's close.


    • Thx D

    • If I'm not mistaken, I heard Cramer say 'financial gangster rap' tonight on Mad Money. He sounded more cynical at the moment than usual.

    • tim also said that the us economy was strong enough to withstand higher gas prices..this man is worse than john snow..good god we are quoting a guy who you wouldn't hire to run your company 

    • Believe/Pharm – I believe in Tim Capello.  (and in Bulleit when Knob Creek is not on the list)

    • Interesting presentation to check out.  Basically the guy is saying Operation Twist is QE3, although a bit difficult to understand as OT was supposed to be sterilized.
      It may explain the "B T F D " mentality of the market so far. Flipspiceland may have a point after all

    • Good morning! 

      Asia was up but not too exciting – 2% on Shanghai and Nikkei, 1% Hang Seng with India flat.  

      China Home Prices Fall in More Than Half Cities TrackedChina’s March home prices fell in 37 of 70 cities tracked by the government, posting the highest number of declines from a year earlier as officials reiterated plans to maintain curbs on the property market. The drop compares with 27 that registered a decrease in residential prices in February, according to data today from the nation’s statistics bureau. The bureau switched from a national average to individual figures for the 70 cities at the start of last year. “The falling trend in prices reflects government policies, and these are unlikely to change this year, which is discouraging buyers,” Dariusz Kowalczyk, a Hong Kong-based strategist with Credit Agricole CIB, said in an e-mail. “The housing market is the main risk to China’s soft landing, one that we think will be controlled by the government but also one that needs to be closely watched.”

      China Raises Financial Companies' General Reserve Requirement. The Ministry of Finance has raised the general reserve requirement for financial companies, including banks and trust firms, to 1.5% of their risk-weighted assets effective July 1. The current general reserve requirement is 1% under rules issued by the ministry in 2005.

      Europe, on the other hand:

      EU shares are mixed in morning trading, while Italian and Spanish 10-year debt yields are again falling sharply despite Italy saying it will miss its budget deficit targets and frankness from Portugal's prime minister. Euro STOXX 50 -0.7%, London +0.1%, Paris -0.7%, Frankfurt -0.2%. Spanish yields -16 bps at 5.72%, Italy -8 pbs at 5.39%. 

      Merkel Adviser Feld Says Debt Crisis May Worsen, Bild ReportsThe euro area’s debt crisis is reigniting and may cause more turmoil this year than in 2011, Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers, was quoted as saying by Bild. The European Central Bank’s efforts to stem the crisis are only having a short-term effect and the French presidential election is causing uncertainty, the Berlin-based newspaper said in an e-mailed summary of an article for today’s edition.

      The BOE's Monetary Policy Committee voted 8-1 to leave its QE program at £325B ($426.4B) at its meeting earlier this month, but was unanimous in its decision to maintain interest rates at a record low of 0.5%, the minutes show. Sterling +0.35% vs. the dollar. 

      The U.K. unemployment rate for December-February unexpectedly falls to 8.3% from 8.4% prior and vs. expectations of 8.4%. The number of jobless -35K to 2.65M. (PR

      Britain faces £50bn more spending cuts and tax rises to cover elderly care, warns IMF. Britain faces another £50bn of spending cuts and tax rises to cover the costs of age-related care and put the national debt under control, the International Monetary Fund has warned.

      EU Report to Show Rocky Road Ahead for Greek Recovery.  In the report that runs to more than 40 pages, officials list a litany of problems facing the Greek economy, whose recovery is key for the future of the euro currency."Greece suffers from a lack of capacity to implement policy, manage public finances, collect taxes, open markets to competition, make public procurement work efficiently and innovatively, pay suppliers, or offer timely judicial review to its citizens," they write in the document seen by Reuters.

      Italy delays by one year its plan to reach a balanced budget in 2013, citing a weakening economic outlook, according to a draft document due to be approved by PM Monti today.

      Spain's Surging Bad Loans Cast New Doubts on Bank Cleanup Plan. Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances. Non-performing loans as a proportion of total lending jumped to 7.91 percent in January, the highest level since 1994, from less than 1 percent in 2007, according to Bank of Spain data.

      Spain's Wiling Economy Still Held in Franco's GripSpain’s economic woes are triggering renewed fears over a potential default in the euro area, and much of the blame belongs to labor laws that date back to the dictatorship of General Francisco Franco. Unless the government succeeds in changing them, it’s hard to see the country returning to healthy growth even if it manages to stay solvent.

      Portugal's PM says no guarantees of return to markets on time-FTPortuguese Prime Minister Pedro Passos Coelho said on Wednesday there were "no guarantees" that the country would meet its commitment to return to the international capital markets before September 2013.

      Notice what is really going on – Top 1% dumping their losses on bottom 99% right before your eyes:  Spanish Banks Gorging on Sovereign Bonds Shifts Risk to TaxpayerSpanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors. Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy dataGerman and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. 

      Euro-Region Weakness Tests Maersk Competition Armistice: Freight. Europe’s container-shipping operators need a pause in the slowdown afflicting the region to bolster the truce they’ve called in their fight for customers.

    • Oil (/CL) right at $104.50 line but bouncy so far although Dollar just broke over 79.90 so I like the short with the Dollar heading higher.  Euro failing $1.308 and Pound rejected at $1.60, now $1.597 (Pound was up due to BOE not easing more).  

    • Never got a break below $104.50 and now up to $104.71 – I guess they are going for $105 again ahead of inventories (1MB net build expected).  I'll be loving oil shorts at 10:30 if we're up this high – nice "sell on the news" set-up.  

    • Morning Phil,
      Strange things going on on the YM future. Some stupid system (or trader?) is doing large buy and sell market orders and suffers a lot of slippage (10-20 points on 800 contracts, I wish I had that money)
      European Banks are down 2.3% again – yesterday up 5.5% – what a ride…

    • QE3/Dpast – The problem with Twist is the same thing as the con job going on in the EU – all they are doing is bailing out the Top 1% bondholders and sticking the taxpayers with the bill.  Some of the charts in that presentation are frightening:  




      This chart clearly indicates that Twist does not stimulate demand (which is a good thing actually):


    • Phil,

      You’re thoughts on the best portfolios/plans for growth in an IRA as well as growth in a margined account that can be overseen daily, preferably after hours or every few days.

    • OT/ Phil – Totally agree with you. Just trying to find a reason for the resilience of the US markets so far, and OT doesnt seem like a plausible reason as there is no Fed balance sheet increase. Maybe there other financial mechanics that i am not aware of. 
      On a different note, Spain is totally getting raped. Another -3% down.

    • Been saying it for months that QE3 has been secretly and not so secretly going on unremittingly,  putting the lie to every word out of theBernank's and Timmay's mouth.