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Monday Market Momentum – Changing for the Better?

As I noted Friday, we were due for at least a bounce:

It doesn't really matter why but, as of this morning, the Global consensus is that our fiscal cliff issue may not come to pass and that's cheering up the Global Markets and weakening the Dollar (now 81.08) to give us a little follow-through on Friday's bouncy action.  So much so that we should open on the way to our weak bounce lines and, hopefully, get past those and test our strong bounce lines this week.  I sent a detailed study to Members earlier this morning but the quick summary of our bounce zones is:

  • Dow 12,720 weak, 12,950 strong. 
  • S&P 1,375 weak, 1,400 strong.  
  • Nasdaq 2,900 weak, 3,000 strong. 
  • NYSE 8,000 weak, 8,100 strong.
  • Russell 790 weak, 805 strong. 

Certainly there is nothing at all to be impressed about with anything less than capturing and holding our weak bounce levels today and moving on to our strong bounce levels by Wednesday.  ANY failure of our lows (Dow 12,500, S&P 1,350, Nas 2,825, NYSE 7,900 and Russell 770) is a sign to flip even more bearish but we'll want to see all 5 weak bounces hold and then 3 of 5 strong bounces in order to not go into the holiday weekend with strong hedges (see last Wednesday's post for our Disaster Hedge updates).

Along with discussing our 5% Rule levels, we also had new trade ideas for AAPL and ABX in early morning Member Chat, so make sure you check that out as they are a couple of fantastic trades!  We've been doing plenty of bottom-fishing lately and now we're testing that bottom to make sure our fishing hole isn't deeper than we think.  That's why our most likely move into the bounce is not to add more long positions, which we'd have to chase off the bottom but to make sure we are properly hedged – in case those bounces disappoint us.

We're bouncing because we over-reacted to the Fiscal Cliff but before there was a fiscal cliff, there were terrible 3rd quarter earnings reports and, with 460 of the S&P now reporting, it is safe to say this was the worst quarter in 3 years with total earnings down 2.2% and total revenues down 3.6%.  

Only 38% of the companies reporting had upside guidance surprises despite 62.6% of the companies beating very low expectations.  Excluding the Financials and even including AAPL – the S&P actually contracted 4% overall.  Tech earnings were down 4.3% and Energy earnings were off by 19.8% despite persistently high gasoline prices.  

Other than Utilities, which plunged 5.58% so far this quarter as the $50Bn hurricane wrecked havoc with the Northeast, most sectors are still green for the year – even Energy.  The whole S&P is still up 10.29% for the year – better than most of the past 100 – and Financials, where we've concentrated our bullishness this year, are up 19%, followed by our second-favorite sector, Consumer Discretionary, which is up 16.96%.

It's amazing what spoiled little investors we have become to complain about a little give-back on these gains in the past 6 weeks but that's the new Fed-supported market – it's just never supposed to go down…


We have a holiday-shortened trading week with US markets closed Thursday for Thanksgiving and half-closed Friday (but don't expect me to work – this isn't Wal-Mart) so we can't expect much from it but at least the unrelenting negativity that has marked the month so far is fading and now we can count on being driven by some actual news, starting with Existing Home Sales and the NAHB Housing Index at 10 am.

Tomorrow morning we get Housing Starts and Building Permits – both of which may have been effected by the storm and Wednesday we get the MBA Mortgage Index along with Jobless Claims a day early and the November look at Michigan Consumer Sentiment along with Leading Economic Indicators, which could go either way and, surprisingly, Crude Inventories – as they usually move them on any sort of holiday.

Oil is back at $89 this morning on the Israel/Gaza war action as well as the weaker Dollar. That's up from $85 on Thursday, when the same thing was going on but it wasn't contract rollover day and we'll be loving the /CL (oil Futures) short off the $89 line with tight stops and then at $89.50 or $90 – until we get it right. We won't risk the short over the weekend but the conflict between Israel and the 11 kilometer-wide Gaza Strip (only 6km wide in the middle) doesn't merit this kind of bump.

Not much else to do but sit back and enjoy the mini-rally and then we'll see what sticks.

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  1. Good Morning!

  2. Our site is barely working.  

    Back-up comments over at Seeking Alpha, most recent article is from Friday and please click on the top left to follow me so you can always find us in case chat over here goes down (usually we can't get a message out).  

    Hopefully the issue here will be resolved soon but I've lost faith in our hosting service and the new cloud they put us on and we're going to be moving soon as this happens way too frequently!  

    - Phil

  3. PP

  4. Very telling, no?

  5. GLD/Pharm: Did you suggest a cover for the March 171's?

  6. GLD/newt – In this weeks 170s.  I have a full cover. 

  7. Good presentation on what needs to happen in the coming months….I wish they would have done this in 2009…we call it roads and electrical grids, they call it grid lock.

  8. Pharm, are you going to put something up that outlines your talk at PWSLV?    I got in on the very last part of it due to technical difficulties so missed most of it.  I'm particularily interested in how you pick your weekly short calls in the GLD calendar.

  9. Yes, I will start later this week with a round up.  Sorry, things have been quite hectic.

  10. Phil AAPL the play this morning was impossible to cover stk is 25@ up and counting good decission of you to hold on covers for the brave once do yo think we do cover some today sell calls !! TIA

  11. For you guys who are getting in, where are you getting in from?

  12. We're chatting here for now as my connection is spotty at best:

  13. Morning – I can get in from Los Angeles.

  14. San Diego is working fine via Time Warner.

  15. Seattle area is working fine

  16. Getting in from Toronto, but intermittent and slow.

  17. Finally able to refresh in a reasonable time from NJ…

  18. ST.paul  concast working

  19. Oops lost it again… Really frustrating. I tried to post the oil lines but I am giving up on that now!

  20. Not working too well.  It crashed for a bit and then makes me log back in on refresh.

  21. Milwaukee

  22. I'm in from Queens!

  23. Just got on from Michigan. Charter Communications

  24. signed on from Cleveland

  25. ok from Orlando, BrightHouse

  26. Good Morning!   If this post makes it…..just back from a week in NYC!   Great time, with medical and investment meetings, intermixed with a bit of entertainment.  Anyway, for the MoMo……no changes contemplated for the present.  Watching GMCR.  Have a good day!

  27. DMND / Phil – What are your thoughts on it now?

  28. Phil getting in sometimes from the headless! asked you before do we sell any covers on AAPL or are you waiting to get 560?

  29. OK, back to sort of normal.

    Covering AAPL – Very tempting to do so and we regretted last time not selling calls at $550 but this is a 5% move up and they are paused, as near as I can tell, at the 5% line ($555).

    Oil popped back over $89, now $89.42 – so much for our first line on /CL.  We don't want to be too quick at $89.50 – better to be sure it's failing than jump in too early.  $90 is a line we can short with more confidence.  Oops, while I wrote that we popped over $89.50 so we're not getting in the way of this move – opposite of a falling knife.

  30. Home builder sentiment index looking pretty good:

    Home builder sentiment in the US rose from 41 to 46, which is the highest level since May 2006.  With this month's increase, the index is also getting closer and closer to the fifty threshold for growth for the first time since April 2006.  In the table to the right, we break down each of the components of the NAHB survey.  As shown, 'Future Traffic' remains the most positive at a level of 53, followed by "Present Sales" at 49.  Finally, at a level of 35, 'Traffic' remains the weakest component of the index.  Part of the weakness in the 'Traffic' component may have been due to slow activity in the Northeast due to Hurricane Sandy.

  31. AAPL BCS / Phil,
    "Currently I like the 2015 $500/650 bull call spread at $37 so you net into AAPL at $537 (now $527) with 2 years to make $113 (300%) if they get back to $650."
    Not sure if you meant the 2015 $500/600 bull call spread at $37 this morning. The current $500/600 bcs is $42 and current $500/650 bcs is $58. Given the $26 rise in AAPL today as of now, I understand how the $500/600 bcs could have gone up by $5.
    Is the philosophy of this trade any different than the Long-Term AAPL trade you had suggested early October which has evolved, and the AAPL Money trade which is in a 2015 $500/700 bcs, selling the 2015 $400 Puts?

  32. The next Fib line for AAPL is 565. We have already reached the first one at 555 (38.2% retracement from 2011 low).

  33. Apparently austerity has not worked out so well:

    Oof. Well that isn't very good at all. Five years later, only America has surpassed its pre-recession output. For now, it appears to be on a steady, if disappointing, growth trajectory. Japan had the worst recession of the bunch but rebounded quickly. It has since struggled amid seismic disasters and various China troubles. Britain and the euro area have until recently followed very similar trajectories, but British output turned up nicely in the third quarter while the euro area officially re-entered recession.


    That might explain some of the elections results around the world.

  34. UK FTSE +2.4%
    German DAX +2.5%
    French CAC +3.0%
    Spain IBEX +1.7%
    Italy MIB +3.1%

    40 points in /ES since Fridays low.

  35. If AAPL can get those mini in stock they are going to fly - 
    AT 339 – talking a price point where people in the 1% might be picking them up for the whole family -
    Barrons article notes that volume should make up for margin compression -
    AT $700 plus for original – junior was not getting one for Christmas – although I got one for myself.

  36. Samz – I was in an apple store a week ago and they were flying off the shelves.  I saw a few ppl picking up a few as "stocking stuffers". 

  37. Phil / Hosting recommendation – As good as it gets.

  38. AAPL////// I was at Times Square Apple store day before yesterday.  There was NO WAY to fight the crowds into that store, it was so packed.  Then coming home yesterday I noted at the airport iPads, hundreds of them, set up in the waiting areas (tied down of course),  just to keep people occupied with games, etc. while they wait for their flights.  

  39. thanks AAPL, about time for a bounce!

  40. biodiesel
    Beware APPL is wining on Windows8 reception and if they dump the ad and go back to inform it may sell. Great entry!

  41. Seems like the west coast connections came back first – very strange.  

    Welcome back Lflan! 

    DMND/Rkyrom – I don't agree with $3, of course but Jefferies is one of the only firms I actually respect so we should take them seriously in their downgrade (and, of course, lots of people are – now down 12%).  I know that they are potentially a buy-out candidate now.  $56M of past profits were restated but the forward-looking business seems fine – and that's after the accounting restatements.  So I still LIKE them at $13.35 but I would LOVE them at $3 or $5 so, if you are scaling in, you can sell 2015 $10 puts for $2.50 for a net $7.50 start, which is 45% off the current price already and that makes the margin just net $1 to collect $2.50 – not bad!  

    $560/Yodi – Did I say $560?  I must have been depressed when I said that.  Still, that is the sensible thing to do and maybe we'll sell a few calls there – just so we don't feel like complete idiots if it goes the other way.  

    Homebuilder sentiment/StJ – Looks good.  

    AAPL/Sank – No that's the one I meant.  The $500s went way in the money.  Now net $59 as the $500 calls jumped from $113 to $134.50 and the $650s went from $62 to $75 but $113 and $62 nets $51 anyway, not $37 but I was just going by last sales and I guess it's been a while since someone sold a $650 but, of course, buying the calls first and then selling the $650s on momentum would have been a fantastic play.  Still a good $150 spread at $59 since it's $59 in the money and if you pair it with the short $400 puts at $45, you've got a $150 spread for net $14.  Also no, no different philosophy – you get great upside and very nice built-in protection.  The only thing missing is patience.   As you can see from AAPL Money – you can get sea-sick watching the balance – you just have to keep in mind it's a two-year bet.  Staring at the current numbers on a 2015 spread is like betting on your team to win the super-bowl and then freaking out about every play in the first game of the season…

    Austerity/StJ – I don't understand the madness that swept this planet making people think that was a good plan.

    Europe up huge (thanks Kustomz).  

    Minis/Samz – Those things are too cool.  What an amazing piece of technology – real Star-Trek stuff.  It seriously seems like a movie prop because you pick it up and you think no way it can do all that stuff and weigh that little.  

    Media Temple/Amalfi – Thanks.  Greg and Matt will be evaluating but I think I'll be more comfortable with LVLT or AMZN but we'll check them all out. 

    Airport/Lflan – Yes, I was at Kennedy and they have amazing amounts of IPads in the waiting areas and restaurants.  No other brands that I saw – just IPads.  I wonder what restaurant chain will be first to put IPad menus at their tables.  I would think MCD would like it but certainly it would be perfect for some place like CAKE or Fridays, where you can place the order from your table-top and save them lots of time.  

  42. Phil
    Hit like a hammer, ipads will kill tips, all you have left is servers, I hope your wrong!

  43. I wouldn't mind ipads replacing waiter/waitresses at some places I frequent. 

  44. Quote of the day:

     “Much like dieting, investing involves the trade-offs between short-term impulses and long-term choices.”

  45. Buying some FB puts for a quick trade.

  46. Phil / Airport — Fine to put menus on tablets but not the one at the front of the restaurant!  Avoided several restaurants in Vegas because of the overuse of tech.  Went up to the matradee and asked for a menu and they pointed me to the interactive tablet outside with 5 people at it that only shows one section of the menu at a time.
    It'll be better when you can order off the tablet and cut out half the waiting.

  47. Pharm / NOK – any more on those NOK buyout rumors?  Either way, stock starting to look better last couple days.

  48. Part of eating out is being served, ipad orders wil make the servers about the same as bussers after you leave. If the sevice is poor go somewhere else, fast food has tables.

  49. Phil, in line with what you have been preaching about oil traders,  Bloomberg UK this am quoted a trader ssaying that "it is easier to find OIL in the markets than in the ground" !  Sounded just like something you would say.  From ATL

  50. Being served/Shadow – I don't find waiting for the waiter to take my order and then having them get it wrong (and the ones who try to remember a whole table's order without writing it down and then come back with the wrong food should be immediately executed anyway) and then having to wait again so I can pay my bill – to be my favorite part of a restaurant.  All the waiter does is turn around and punch your order into a computer anyway.  They can still do a very nice service without both of you wasting time on the minutia of ordering.  

    Oil/Jacalyn – That is a very true saying. 

    $25KP – Let's sell 6 next weekly $560 calls for $10.75 – gotta start making some money here and we're 10% off the bottom. 

    $25KPM – Can't forget we're supposed to make money here too.  Selling 10 next weekly $63 calls for .96 to start whittling away that basis. 

    AAPL Money – Also selling 6 next weekly $560 calls for $10.75.

  51. Phil, I am considering a modification to my KMB position:  Currently hold 300 shares @ $60.  Sold (3) Jan 14 $80 Calls @ $8.20 and (3) Jan 14 $70 Puts @$2.90 last July.  I am thinking of buying back the Calls and going with monthly's.   The monthly's appear to generate $.30 at a near the money strike.  I'd like to not have KMB called away, but wouldn't cry a whole lot.  Of course I would feel a whole better being called away at $87.50 than $80.  Thoughts??

  52. AAPL – commentary oday from re oversold bounce: 
    "A large contributor to the SPX key reversal was the very noticeable key reversal in Apple, Inc. (AAPL) 527.68, after testing 500 with a low of 505.75 on 45.2 million shares, the highest since March 14 at 50.7 million shares, as it was advancing. Since the decline from 705.07 was almost a straight line down it would very unusual to see a V shaped bottom pattern. More likely, it will continue higher for a few days or even a bit longer and then retest 500 once again. AAPL makes a good indicator for the overall market, and we would be looking for another short entry when the rally from the key reversal looks complete."

  53. IRA Portfolio update!

    Last friday we had lots of stuff expire worthless.

    ACI NOV 7 calls expired

    MT NOV 15 calls expired

    RIG NOV 45 calls expired

    GLW NOV 13 calls expired

    Today we are going to be selling calls in all the underlyings which expired worthless.

    SELL 5 ACI NOV 7 CALL $0.40

    SELL 2 MT NOV 15 CALL $0.59

    SELL 1 RIG DEC 46 CALL $1.25

    SELL 1 GLW JAN 11 CALL $0.50

    Collecting a grand total of $493 on about $22,000 of cash deployed.  Think of it as collecting 2.2% of the value of your home, per month, for renting it out.  

  54. Pharmboy
    BMRN   what position are you in?

  55. I realize some places suck
    It goes with the area more or less. What I dislike is every idea is to save money and add to profits. At some point we all need to realize that what is left is service work and this will cut jobs. Actually when I could go out being pushed to leave bothered me, to me it was an outing experience. Too may people have brought it down to eating but don't like to cook. When out of town sometimes you end up at the wrong spot and sometimes wanting to go to the best place has it's crowd issues. Most people want to eat at the same time.
    Why not have places to meet everyones needs. As far as waiting for the check I along with many others I have seen, if it is taking too long, leave a tip and go to where ever they take the money. On a card you write in the tip then. If the service sucked not returning will solve the problem eventually, cold or poor food is faster solved by the same. Some people complain and smart management corrects or if needed replaces the bad help.
    Maybe the problem is $150 dinners are never worth it.

  56. BBY:  Buy-Write with selling Dec $14 returns 12.5% just in time for Christmas…..They should have listed this in the Sunday Paper insert.

  57. anyone notice the new options – going to have weeklies going out for 4 weeks at a time. 

  58. Pharm / ONTY - as of Friday's expiration my positions are all closed, thoughts on still playing this one vs other opportunities?

  59. Hilarious Video of what happens when Capuchin Monkeys get unequal pay.  And if anyone didn't believe in evolution before this, you will now:

  60. samzs I noticed but assumed it was just the broker adding them.

  61. AAPL having trouble punching thru 560…

  62. It is close to 14:30, are we going to have a weak bounce or just a bounce?

  63. New Shorty options – rolling 4 week structure.
    shadowfax – its CME or whatever exchange they rolled them out for 20 stocks and etfs
    Barrons is calling them "Shorties"

  64. On Thursday, the NYSE listed shorties options on Apple, Bank of America (BAC), BP(BP), Citigroup (C), iShares MSCI Emerging Markets Index fund (EEM), SPDR Gold Trust (GLD), iShares Russell 2000 Index (IWM), PowerShares QQQ Trust (QQQ), SPDR S&P 500 ETF Trust (SPY) and Select Sector Financial SPDR (XLF). All exchanges will follow.

  65. Phil,
    re selling calls short as in your 1:24 cmt above: AAPL Money – " selling 6 next weekly $560 calls for $10.75." where would you take a loss and close the sht calls: certain % loss, certain overall  mkt mov't, 'subjective mkt feel', etc ? Looking for general insights into managing calls sold sht (for added income) against a long position, realizing that the loss in the calls is related to the gain in the underlying – at least temporarily. 

  66. TNA up 5.4% AAPL up 6.4%  hope that is enough for Apple pie and ice cream.

  67. samz3700/shorties/interesting article on these new rolling options. Now to figure out how they can best be used.  

  68. Shorties / Samz – We mentioned that on Thursday when they first came out. Interesting in any case.

  69. Phil, play tomorrow for some follow thru?

  70. Hello All – Am I missing something?  I read that Tim Geithener doesn't think we will hit the debt ceiling until February or March(we are currently at $16.278T on a $16.394T cap).  He is also calling for Congress to get rid of the debt ceiling altogether in exchange for debt "targets", whatever that means.  I take it they will raid gov't pensions again? 

  71. Futures laging, dollar inching up with TLT, and I feel the end of the stick, today, shy of weak bounce. FWIW

  72. Dollar 80.90!  That's half the rally at least. 

    KMB/Mjj – They do pay a lot more per month than you are currently getting for the Jan calls but bear in mind you are also giving up $5 in downside protection (assuming you sell Dec $82.50s for $3.50).  Don't always assume a bullish scenario when selling calls and don't forget you're supposed to have some protection too.  Frankly, you can roll the Jan $80 calls ($8) and the Jan $70 puts ($2.15) to the 2015 $80 puts at $10 and the $75 puts at $6.15 and you gain $6 and drop your basis to $42.10/58.55 so your worst downside case is owning 300 more at $58.55 and, to the upside, you get called away on 300 with a $37.90 profit.  If you shut down now, you make $15.85 so it more than doubles what you've made so far and you get another $2.96 x 2 years of dividends as well, which is 7% of your cash basis just on the dividend.  

    Eating out/Shadow – To each his own there.  I love good service and NYC has some of the World's best waiters in placed that I think are certainly worth $150 – but that's another story.  I'm talking about basic-level restaurants where you don't have questions on the items and no one needs to explain the specials or describe how they lovingly captured today's fish in the gentlest of manners before chopping it's head off and simmering it in butter.  At MCD, it would be way better to just sit at a table and punch in an order and then the market would have to figure out up to what level of dining pads would be an improvement.  I think an electronic wine list with links to go to detailed reviews of each bottle would be a huge improvement in all but the finest of restaurants (Masa in Vegas has a sake sommelier, for example, who could never be replaced by a tablet).  Don't forget, most diners are business diners and yes, families who just don't want to cook – not looking for a 3-hour meal "experience" and they just want their food.  

    Insert/Mjj – LOL!  They should give you shares with each laptop purchase.  

    Weeklies/Samz – Yes, they are giving me a headache so I'm pretending they don't exist but it is nice to have next week so early.  

    Monkeys/Rustle – Sure, any two-year old knows when they are being rewarded unfairly.  Thank goodness women don't…  8)  

    AAPL over $560 now, we may have to take losses on 3 of our callers if they really pop. 

    Bounce/Shadow – Where are we?  Dow 12,766, S&P 1,383, Nas 2,995 (-5), NYSE 8,062 and RUT 789 (-1) – don't forget these are certainly not exact numbers since we begin by eyeballing the consolidation lines and then, with the Nas, we rounded up from 2,895 so really over there but we wanted to see the whole number at 3,000 and the RUT's proper level was 770 + 18, not 20 – we rounded that one up from 788 so really they are totally on the button and we have to give them credit for the effort or they'll begin acting like that monkey.  

    Making one bounce level for the day is all we can expect and holding it into the close (looks good at the moment) is a very good sign.  

    AAPL money and $25KP – The short calls are now $13.70 and I do want the protection overnight and the Dec $580s are $13.50 so let's not worry about them for now as it's only 6/10 covered so really we could roll to 10 Dec $595s at $9 for almost even.  Better safe than sorry for now.  

    When/8800 – As a rule of thumb, 50% down (around $16) but don't forget we're also locking in and protecting gains we already made on a $35 move today and we are SUPPOSED to sell premium and we have plenty of time to roll.  

    Follow-through/Rpme – Nice bullish sign to finish right at our weak bounce levels.  Only a problem when we get rejected there.  

    Debt Ceiling/Ink – Might mean they expect revenues to come in, maybe customs fees on imports for holidays.  As to getting rid of the debt ceiling – of course they should – it's a joke.  This will be about the 120th time they've raised it and there's a disruptive hassle every time lately that only serves as a platform for political grandstanding.  If you want to control the budget – pass a balanced budget amendment.  Clinton wanted a balanced budget (and he did balance his own) but Newt and company freaked out.  I think Perot favored it too at the time.  Clinton did sign the Omnibus Budget Reconciliation Act which automatically raised taxes to match spending but the GOP dismantled that as soon as Bush took power so they could run their unfunded wars.   Remember it was Cheney who said "Deficits don't matter."  

  73. Phil: What is this in reference to? $25KPM – Can't forget we're supposed to make money here too.  Selling 10 next weekly $63 calls for .96 to start whittling away that basis.

  74. Phil – I'm long AAPL 540 mar calls and short 580 febs.  Would you roll up at this point or stay in the position?

  75. AAPL 565, here we come…. 

    Looking at the chart, you can see a pause at the 555 line that then acted as support once we went over. And the march resumed after that. I am guessing we see some resistance at that level. But then who knows… trading with AAPL has been somewhat irrational lately!

  76. And BTW, the next line for AAPL is 595!

  77. And it's kind of crazy when you have a $500B market cap company up 6.6% in one day – that's over $30B!

  78. StJ – so that means you are going to buy or sell :)  

  79. StJ – I believe the market cap on AAPL increased by about 10% since the Friday low.

  80. The time to buy AAPL was when St.Jean said this two days ago:

    As I said yesterday, I see $509 as the next line for AAPL. That's a 50% retracement from the June 2011 lows. Quite incredible.
    That was nice call!

  81. All looking good into the close but just 88M on the Dow with 15 mins left.

    $25KPM/Newt – Sorry, that was QQQ next week $63 calls, now $1.12

    AAPL/Albo – The spread is too tight in time but at least you are vertical.  Those Feb $580s were $12.50 on Friday, now $32.50 so sucks that you didn't follow the 50% rule to lighten up on them.  Not much you can really do with them unless you want to move them to Jan $575s ($26) for $6.50 and cut their days (and accelerate the Theta decay) from 88 to 60 (31%).  As you can see – the time to make adjustments is when a position is going against you – like we did last week on AAPL – if you wait until it bounces – you're just chasing a move.  

    $30Bn/StJ – That's why you can't take a one-day move in AAPL too seriously.  Takes a while to fill in the support.  

    And a stick! 

  82. It looks like that they are going for 595 in the next 5 minutes!

  83. Phil
    Thanks for clearing up the levels, mostly I don't want a late sell off. We are in agreement with MCD, 90% of the time you stand there until they say we will bring it over. Wine your right also and when I traveled 5 days a week on a tight budget eating really sucked but that was 50% of why I gave it up.
    I am thinking jobs, more not less.
    Wouldn't it be better for microsoft to explain what all the flipping is about?Like we need more passwords, KISS, keep it simple stupid!

  84. Thanks, Phil.  Been out of touch all day.  What a day for AAPL !

  85. AAPL / Winston – I said that it was irrational… Besides day-trading you can't tell from one day to another now. Suddenly AAPL is the next big thing when last week it was the end of growth!

  86. STJ my line points to $600ish.

  87. Indeed, AAPL has been trading irrationally for the past few weeks.  Only today is AAPL trading  rational.  The P/E is still less than 12, and Christmas is coming. 

  88. Nice close missed the last %

  89. I love Santa when he brings apples!

  90. Iflan
    AAPL app $675 by xmas.

  91. AAPL / Shadow – I pointed out 595 earlier, but you can see a crowded area between 595 and 615. There are 3 lines there based on the 2012 and 2011 lows. Going back to July and August you can see that we have trouble in that area. But we are not there yet. I don't see 2 days of 6% gains without some profits being taken….

    As JRW used to say, look for confluence areas for support and resistance. It's not that complicated.

  92. Phil: Thanks.

  93. Transports almost back to 5,000 again (4,980) on a 90-point move.  

    Flipping/Shadow – What's that?    I am sick of passwords and now they make you change them at the drop of the hat and you can't use your old one and then you have to write it down and then that's exposed so what's the point?  

    AAPL/Albo – About time.

    AAPL/StJ – Just the end of the ridiculousness. 

    AAPL/Lflan – Don't forget the cash! 

    Wow, nice close!  All of last week's losses goine and another day like today and all of November's losses could be gone.  More likely, we'll have 50% follow-through tomorrow and, best case, we end the week at strong bounce levels. 

  94. I just think the Gods of AAPL are laughing at us all on this board. Total obsession for a few weeks, MOMO ports that suddenly go quiet, trades that need more rolls than a bun fight at the OK Corral and all the while anxiety levels increasing with every sickening thud of AAPL. Pity those who understandably cut their losses and ran at or about the $509 line. Today must be like rubbing salt into their wounds. There are certainly some lessons to be learnt here – but I'm blowed if I can find them. 

  95. STJ
    Confuence and a projected trend line same place.

  96. JRW size returns today, that's for sure. And as Phil said not so long ago, if you are not willing to double down when stocks you love go on sale – shame on you. 

  97. Winston
    Don't play AAPL but the salt to me is all those moves during the day and sudenly it's gap open again. (I spend my life noticing what the BOTS do, noted today!

  98. 3.5% today

  99. stjeanluc,
     Thanks, I bot AAPL @515 line.

  100. Woopsy, typo in the IRA portfolio update.  We are not selling NOV calls as they expired!  We are selling the DEC calls.  The prices quoted are correct though.

  101. Transports / Phil – What is worrisome about the Dow transports though is that it's still in a descending channel since the beginning of the year while the Dow is still in a slight uptrend. These 2 indices are supposed to be correlated. At this point it's hard to tell which one will lead the other!

  102. Phil / KMB :  Thank you for your thoughts.  I will kick it around but I am liking the roll to 2015.  

  103. APPL added approximately $35 billion in market cap in one day.
    Sbux is has a market cap of 37 Billion – 35 billion greater than the bottom 350 companies in the S&P 500.
    Emerson Electronic is 148 on the S&P 500 list and has a market cap of 35 billion 
    That's insane

  104. Phil-  Hope you're feeling better.  AAPL ran a lot higher than I expected today and I was short on the weekly $540's (against long December calls).  Luckily, I had only sold a few but the short call damage still outpaced the gains of my Long December calls.  I'm thinking of buying back the $540's for $27 (while cursing the lucky bastard who bought them from me for $3.70 on Friday) and selling next week's $600's for $2.80.  Any thoughts and/or suggestions for alternate moves that might be smarter?  Also, my long calls are December $620's and I'm thinking of keeping them for another week before turning them into a longer-term spread. 

    Btw, it's quite frustrating to watch the premium on my spread (initially) and then long-calls drop and drop and drop for the last month and then as soon as I sell weekly calls against it, BOOM!!!

  105.  "More likely, we'll have 50% follow-through tomorrow and, best case, we end the week at strong bounce levels."

    Phil- Sorry if this is a dumb question but do you mean 50% downward from today's gains (i.e. S&P goes down 1% tomorrow before returning to up-pattern the following day) or 50% increase from today's gains (i.e. S&P goes up another 1%, following through on today's 2% gains)?

  106. IRA Portfolio update!

    Looking to add some technology to the portfolio.  We need to decide between WDC and STX.  Does anyone have an opinion one way or the other?

  107. BMRN – None, the puts expired worthless.  In the MS portfolio, we were in the Jan 35/45 BCs selling the 30 Ps.  That one is a rocking…so don't come a knockin'….


    NOK – rumors de'jour.  I have the Jan15 calls.  If the Win8 phone gets any traction….they are on their way…..

  108. CraigZ:  After Phil pitched HPQ in LV, I have been looking at it with greater interest.  On a pure Buy-Write basis, not awaiting a better entry price, the Jan 14 $13 Calls are going for $2.17.  The monthly's look to return 2%+ to 4% per month depending on the strike which puts them into your target zone.  Just a thought.  

  109. Western Union – anybody have an angle on this?  Looks interesting at these levels.  

  110. Terrapin22-  I was also looking at them but decided to pass since Zacks has a strong sell on them.

  111. Phil
    I don't believe anyone called the drop or the turn in AAPl closer than myself. I hope all remember that a dead cat bounce ends with a dead cat.. I will again stick my broken neck out and say 6.5% was too much beating triple ETFs today. I se it retracing to $600 soon and if the cliff goes away may hit my $675 target by xmas. That said Apple has serious issues and the PSW view is too optomistic on a maturing company.

  112. Shawnk – morningstar has a buy on WU and $25 target.  Hmmmm.  wonder what Phil thinks.

  113. Shawdow-  If you HAD to guesstimate where Apple will be by the end of next week (11/23), what number or range sounds most probable?  I'm asking because I have short calls expiring that Friday.  Thanks in advance.

    Biodieselchris – Since you own AAPL, I wanted to share the following with you:

    "At our largest facility, located in Cupertino, California, Apple has significantly reduced single-occupancy vehicle use by providing employees with numerous shuttle options, including free bus service from train stations as well as bus service from local cities. Each day, over 1100 employees take advantage of our free biodiesel commute buses. Furthermore, electric vehicle charging stations are available, free of charge, to our Cupertino employees. In total, more than 10,000 employees participated in our Commute Alternatives program in fiscal 2011"
    Taken from:

  114. WU / Terra – P/E is low which can sometimes be a value trap, but they are making money and growing. Price/sales is also reasonable. And they pay close 4% dividend. On the other hand, they lowered guidance at the last earning report and got slammed 28%… Ouch! Technically painful. They are at a 3 year low. Another one where you might need patience…

  115. STJ – I'm holding you and your upside down charts for today's rally.  The CNBC guys were probably on the site and saw your charts, ran back and started buying…without noticing they were upside down ;) .  Btw, great call on the Apple bottom Friday.  You mentioned the $595 line today.  Could you please share your thoughts on the question I posed to Shadow (guesstimate of where Apple will finish by 11/30)?

    Iflan -  Since you're the original king of Apple, I'd be an idiot not to ask you the same question.  Welcome back btw.

  116. Service wherever
    Implimenting ipads will cause problems, they can be corrupted, cost too much if you consider the structure needed, and most important there are alternatives that solve all problems with 10+ year implimentation proof. Simple touch screens with macro programs, they limit access to choices, choices are per-programed into them, and detailed sub menues are limitless. This has been done in custom home and business instalations for a long time and is much more controlable by the management and therefore more applicable to the business plan no matter what that may be. They are also more dependable and easily substitutable to any situation in a continuous service atmosphere.
    Yes ipads or any computer could do the job but there are better alternatives if considering the big picture.

  117. Craigzooka – WDC vs STX – it looks like WDC is in much better financial shape with more cash per share ($14 vs $6), better debt/equity, and a little bit better product line. 

  118. shawnk
    Your question is way into it depends but based on APPL action today and it's history I actually believe it could be at $600 if all goes in it's favor. But war, the rpublicant's, and spinless dems could derail a hovercraft.
    I hope you can roll to a longer deadline if needed and avoid the sqeeze. January deadlines are safer, even December.

  119. AAPL / Shawnk – Tough to say where it will be 2 weeks from now. I mentioned 595 as a line, but for my money I see the 612/615 area as a stronger resistance area. I guess only 2 more 6% days and we'll be there… But kidding aside, AAPL is one of these stocks that could actually ramp up like that!

  120. Good morning!

    Asia and Europe with slight pullbacks but we're flat in our Futures and looking decent.  We knew it was going to be a tough week to go higher so we might have gotten it all in one day yesterday.  

    Moody's took away France's AAA rating, Foreign Investment in China fell again (11 out of last 12 months) but the most dangerous thing that can tank the markets is this asshole:

    Norquist Derides ‘Fantasy’ of Higher Tax Rates. A defiant Grover Norquist said Monday it was a “fantasy” that Republicans would agree to raise tax rates for the top two income brackets to reach a deal to avert a year-end fiscal crisis. “The fantasy is that Republicans would cave on marginal tax rates,” Mr. Norquist, a prominent anti-tax conservative, said Monday at an event sponsored by the Center for the National Interest. He concluded it was “a little tough to see a strong mandate” for President Barack Obama to raise taxes because the president won re-election by a smaller margin than in 2008. The comments, which reflect a strain of thinking within the Republican party, raise the prospects of challenging negotiations over avoiding the combination of tax increases and spending cuts set for next year.

    If we go back to projecting there can't be an agreement, then what was the rally for?

    Dollar 80.90, Euro $1.2813 (so we don't want to lose that line), Pound $1.5965, 81.40 Yen to the Dollar.

    Oil $89.08, gold $1,734, silver $33.15, copper $3.52 (finally over $3.50 is bullish), nat gas $3.74 and gasoline $3.738.  

    Good quote from Barry:

    I wouldn’t pay much attention to Wall Street’s assessment of politics,” said Barry Ritholtz, a money manager and proprietor of the Big Picture blog. “Let me remind you that the Street bet heavily on Romney, in both donations to campaigns and how they positioned their portfolios. They misread what turned out to be an Electoral College blowout of 332 to 206, and the sell-off since the election is as much about the mispositioned Street reversing themselves as anything else.”

  121. AAPL lessons/Winston – Scale into positions.  Don't sell puts against a stock that you don't really, Really, REALLY want to own at the net strike as a long-term investment.  Buy stocks where you believe in the VALUE so you are not influenced by the current PRICE.  Don't buy long-term investments and then freak out over short-term moves.  If you don't intend to put money into a roll or DD when the stock is moving against you – then you should have stopped out already…

    Transports/StJ – Not so terrible on the Transports but total failure to take 200 dma back since they failed it in May and recent rejection there at about 5,120 doesn't make it look like they are poised to rally.  

    You're welcome Mjj. 

    AAPL/Samz – What's really insane is they did it with just 29M shares changing over so $16Bn traded, even if it were massively imbalanced by 20% – would only account for $3.2Bn of actual cash flowing into AAPL (0.6% of market cap) to pop the price of all 940M shares by 7%.  That's why, until you sustain a move like this for about 2 weeks – it's very easy to erase (of course the same goes for the move down). 

  122. Thanks shawnk – a bit more functional now.  Gotta set stops around 50% losses on short calls or puts and have to have REALLY good reasons not to trigger them – especially when you have such a tight time-frame on the spreads. Weekly $540s started the day at $9 and climbed and climbed all day to $27 so even lightening up along the way would have been helpful.  Your problem is you think selling weekly AAPL calls is a good idea – it isn't.  It's a TERRIBLE idea.  I said this to people last week as to why we didn't cover – because getting paid $2.80 (for the next week $600s) to bet AAPL won't move $35 in a week is nothing more than playing Russian Roulette because AAPL has moved more than $40 in a week 8 times since July so 8 out of 20 weeks (40% of the time) AAPL can do exactly what it did to you yesterday yet your "plan" is to take 20 chances in 20 weeks and hope you never get burned – it's a TERRIBLE plan.  Even worse that you sold $540s against $620s and effectively created a bear call spread.  Meanwhile, your Dec $620s are $4.50 and 100% premium while your short caller is almost 100% in the money – that's not good.  You may want to consider moving into something like the AAPL Money position, that gives you more time to recover.  

    50%/Shawn – Yes, 50% deceleration of the previous day's move although bad news from France and Norquist seem to be killing that.  In a proper rally, you can expect to see 2.5%, 1.25%, 0.625%, 0.3% to get to a 5% move.  Sometimes they happen over multiple sessions and sometimes you have a massive day, followed by a less massive day and, of course, within each range there can be a 20% pullback before the next move forward.  Yesterday we stopped right at the 2% lines, which is a pretty bullish indicator that we're not done moving up but, as I noted, the weak Dollar made the whole thing a bit too easily reversible, which is why we ended up covering AAPL in the afternoon at $560. 

    Tech/Craig – I'm amazed the drive market remains strong at all.  STX looks stronger but I think WDC is more of a model of what STX should look like (weak), not vs. vs.

    WU/Terra – I think their core business is dead and they haven't replaced it. 

    AAPL/Shadow – I hope you're right on another 10% move.  

    Pads/Shadow – Let's see, if I have 8 waiters for 50 tables and pay them $30 a night that's $10,950 per waiter so if putting 50 pads at my 50 tables for $400 each costs me $20K – I only have to believe I am saving two salaries in one year to break even.  The software will be developed by someone like OPEN or some big restaurant co where it amortizes out very easily.  Also, you have to consider the cost of printing menus, training staff, cost efficiencies in the ordering process the ability to dynamically push specials and take things off the menu based on kitchen input.  

    HPQ getting slammed this morning on $8.8Bn accounting charge from $11.7Bn purchase of Autonomy.  Total disaster!  To some extent, they already took a hit on this deal (and replaced the CEO who made it) but, meanwhile, their earnings suck too with revenues down 6.7%.   Without autonomy, they are making $1.16 a share in a quarter so not bad for a $12 stock but won't stop it from going down on this news for now.  

  123. hpq and bby—which one is the bigger pos???