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TGIF – Can Jobs Report Finish the Week Off with a Bang?

Non-Farm Payrolls are out at 8:30.

A mere 80,000 jobs are expected to be added due to the hurricane after 171,000 were added in the October Report, so it will be difficult for this report to disappoint.  The real key is whether unemployment is back over 8% or not and we'll also be keeping an eye on Hourly Earnings – to see if we are finally getting some wage pressure (doubtful).  

As you can see from our Big Chart – none of our indices are making any heroic moves as the mostly curl down to follow the declining 50 dmas, with the Nasdaq just days away from forming a very messy "death cross" that can give the bears a lot of encouragement to sell into the end of the year.  

Of course, what the Nasdaq does is all up to AAPL and we got back to $550 yesterday and we'll be looking for our $555 target this morning on the same no particular news that took them down in the first place (see Wednesday's post for more AAPL commentary).  On Wednesday, in Member Chat, we played the AAPL bounce by betting on the QQQ next week $64 calls at $1.50.  They have, so far, gained just 10% and won't be worth risking over the weekend if we don't get a move up this morning.

A better bet was our oil play (see yesterday's post and Wednesday's Member Chat), where we picked up the USO Dec $33 puts for $1.10, for reasons I outlined yesterday, and we did get our drop that led us to take the money and run at $1.55, for a very nice 40% gain in 24 hours.  

We haven't been trading much this week but we've been picking our spots very nicely, at least.  20 of those calls in our virtual $25,000 Portfolio cost $2,200 and made a quick $900 – you don't need to do too many of those to really boost your performance in a small portfolio

The Dollar continues to climb, now 80.53 in pre-markets, and that's putting downward pressure on commodities and equities but it's also building up a nice reserve of rally fuel for when (if) they solve that fiscal cliff in some way that weakens the outlook for the Buck.

Notice in the chart on the left that our 12% gain for the year puts us near the middle of Global Market Performance and we're not doing much better than Japan with France beating us and Germany just leaving us in the dust.  If that doesn't make sense to you – don't worry – it's not sensible – but it is the way the markets are so we need to consider that as we position for the new year. 

In fact, the Bundesbank has warned this morning that Germany may be entering recession, saying that the economy could contract in FQ4 and FQ1. The bank cuts it 2012 and 2013 GDP predictions to +0.7% and +0.4% respectively from prior forecasts of 1% and 1.6%. However, the bank expects growth to recover to 1.9% in 2014. It also lifts its 2013 unemployment forecast to 7.2% vs 6.8% this year.  The Bundesbank's deepening pessimism for the German economy, which follows the ECB cutting its eurozone growth forecasts yesterday, helped send the euro tumbling 0.3% to $1.2919 this morning and accounts for the move up in the Dollar (also, another earthquake in Japan).

Speaking of Japan, their Coincident Composite Index fell for the 7th consecutive month to 90.6 in October.  That has the Government downgrading their assessment of the data to "worsening" – an indication that Japan is, once again, already in a Recession.  Keep in mind that these are the countries whose markets are performing on par with our own.  Should Japan and Germany be much lower or should US equities be trading much higher?

Once we get past this fiscal cliff nonsense, I think we do have room to run as our numbers are certainly improving and, compared to Europe, Japan and China – we're golden!

8:30 Update: Speaking of golden – 146,000 jobs were added in November, 50% more than expected and, even more significant, unemployment dropped to 7.7% – the lowest reading since mid-2008.  There's no spinning this one – it's a great report.  You can't say the hurricane stopped people from filing claims as this is an EMployment report so, if anything, the hurricane would have stopped new jobs from being reported – not the other way around.  

More jobs means more demand for Dollars (80.60) and maybe more demand for oil ($86.75) but not for gold ($1,688) or TBills (TLT = $124.42) and, of course, our futures are flying – up well over half a point across the board (and great for our QQQ play).  More workers means more IPhones, of course, so should give AAPL a little boost as well and it's going to be a nice morning – now we'll just need to see what sticks….

A nice pop in the morning is a good chance to pick up some covers going into the weekend.  We discussed a nice TZA spread in yesterday's Member Chat and we should get a very nice entry this morning as the Russell tests the 825 line.  Hopefully, it will be insurance we never have to use but if we're not going to buy our insurance when the premiums are cheap – when will we cover?  

Have a great weekend, 

- Phil

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  1. Oil Lines

    R3 – 90.48
    R2 – 89.35
    R1 – 87.93
    PP – 86.80
    S1 – 85.38
    S2 – 84.25
    S3 – 82.83

    Yesterday high and low – 88.23 / 85.68
    Daily Fib Lines – 89.80/88.92 and 85.07/84.70

  2. More evidence yet against austerity:


    As one would have expected on the basis of the textbooks, the American economy, while hardly racing ahead, has fared considerably better than its British counterpart. Between 2010 and 2012, G.D.P. growth here has averaged about 2.1 per cent. For the U.K., the figure is 0.9 per cent. What may be more surprising—at least to those of you who have been listening to the deficit hawks—is that the United States, while sticking with Keynesian stimulus policies, has also managed to bring down the size of its deficit, relative to G.D.P., almost as rapidly as hairshirt Britain has. Back in 2009, at the depths of the recession, both countries had double-digit deficits. Today, the U.S. deficit stands at about seven per cent of G.D.P., and the British deficit is about five per cent of G.D.P. But with the U.S. growing faster than the U.K,. the gap is set to close. Next year, according to the latest forecasts from the Congressional Budget Office and the O.B.R., the U.S. deficit will be considerably smaller than the U.K. deficit: four per cent of G.D.P. compared to six per cent.


    Let’s go over that one more time. Having adopted the policies of Keynes in response to a calamitous recession, the United States has grown more than twice as fast during the past three years as Britain, which adopted the economics of Hoover (and Paul Ryan). Meanwhile, the gaping hole in the two countries’ budgets has declined at roughly the same rate, and next year the U.S. will be in better fiscal shape than its old ally.

  3. Good Morning!

  4. Looks like we'll be cutting it close with FAS Money this week again… All up to the job numbers I guess.

  5. Bertll / fees — I'd remind them that you could transfer your money out of your account overnight. If you don't have a linked account to do this with, I'd set one up. Then you can tell them you'll trade elsewhere while they get around to giving you an answer. I'll bet it doesn't take them as long as they say it will.

  6. I guess it's time for another Santelli's meltdown…

    Decent job numbers though and it looks like that sub 8% unemployment rate was not a fluke! 

  7. So much for FAS Money cutting it close… FAS looks to open around 111 now!

  8. Rainman:
    linked account?

  9. The ES may stall around 1421 – Serious resistance at 1432-33 (triple top on the weeklies)  :)

  10. dclark / linked — I'm not familiar with TD Ameritrade but there should be a way electronically link another account to your trading account so that you can perform an  Electronic Funds Transfer (EFT). 

  11. phil,
    good morning, would appreciate your thoughts re a bullish play on dvn similar to the types discussed in vegas a la T, CAT etc
    something long term where puts would help pay and monthly calls could be sold

  12. PP for this wonderful, spectacular, beautiful Friday in Paradise…..

  13. rainman
    TOS linked Acc. Yes this is correct open up webpage of TDAmeritrade go to transfers and there you set up a linked acc with your private account. Must be the same name as your trading acc. Alternative call Think or swim ext4 and they go through with it while you on line.

  14. Morning All – I'm reading that the jobs came from the usual service sector and that 500k+ people "stopped" looking for work.  

  15. Pharm – What? No Huey Lewis and the News?
    Dam, these guys are old….. ;)

  16.  Rain/yodi:

  17. dclark41
    Forgot to mention on ETF you can only set this up with a US Banking ACC outside the US only Wire I experinenced both!!!

  18. This might be the new direction for telcos:

    T-Mobile's not skimping on the big announcements at its Capital Market Days conference: it's now declared that it plans to move entirely to its Value Plans in 2013. These plans, which are readily available, net you a lower monthly tariff in exchange for an omitted device subsidy — in other words, bring your own phone, and you'll pay less for service. The new strategy would make the company's voice and data lineup more competitive, particularly for subscribers who don't mind paying full sticker price for their handsets, bringing over an unlocked device from another carrier or financing your new phone for twenty months.

    Some of these carriers might be waking up to people who switch every 2 years to get a newer phone for free….

  19. Quite a reversal on gold this morning….

  20. Good morning!

    Well, we couldn't have gotten better NFP numbers so we should get the most we can out of the market this morning.  All that matters is Dow 13,152, S&P 1,417 and Nas 3,009 – the 3 50 dmas we haven't beaten.  Finishing above on all 3 (and holding the NYSE and RUT, of course) is about the only way I'd be willing to forego more covers into the weekend.  

    Speaking of covers – the trade idea from yesterday's chat was the TZA Jan $16/19 bull call spread at .55 (should be .50 or less this morning), which pays 6x at $19 and TZA is currently $15 so +$4 is 26% and 1/3 of that is 9% so that means a 9% drop in the RUT gives you a 6x return on this trade.  

    As TZA is going to be lower than yesterday, it may be possible to pick up the $15/18 spread for the same .55 and that, of course, would be preferable.  I still like FCX Jan $31 puts (now $1.95) as a bullish offset but anything you REALLY want to buy if it gets cheaper works – like AAPL 2015 $400 puts at $49 that we were liking at $51 just yesterday morning.  Even with ordinary margin, it's an efficient sale as you collect $4,900 and use $4,100 in net margin but, of course, if AAPL drops $50 – the margin requirement will spike as well so not for the feint of heart.  

    XLF is going to test $16 and and that's going to push FAS up to about $111 and that puts our $109 short calls in FAS Money $2 into the money.  That's a shame as we sold them for $2 but the good news is we're aggressively positioned on the long side so all is well and we'll simply try again next week, probably selling the Next Weekly $112 calls for $2ish.  Obviously, it's fabulous news for our short calls – and we sold 3 of those for $1,350 vs just 2 of the calls for $400 so all's well that ends well on that set. 

    Speaking of jobs – Canada added 59,300 jobs in November vs estimates of 10,000.  Aside from indicating Canadian Economists drink far too much beer, that's like the US adding 500,000 jobs in a month.   Should push up the loonie and keep a lid on Dollar gains – which is good for the market today.  

    We have Consumer Sentiment at 9:55 and Consumer Credit at 3pm but sentiment should be decent other than cliff worries.  We'll see how AAPL handles $555 – that should let us know if we're topping or not and, of course, watch those levels. 

  21. Going to have to roll or close these short FAS calls.

  22. Austerity/StJ – Author sums it up nicely in saying "the economics of Hoover (and Paul Ryan)"  - this country dodged a real bullet in this election.

    FAS Money – let's sell 3 next week $113 calls for $1.90 and we'll hold off on stopping out the current weeklies as $16 should be a top for XLF.  

  23. The short QQQ calls are on the edge now…

  24. 1020,
    Looks like you were right on that ES resistance!

  25. chasw/ES   So Far!  Too bad I don't take my own "advice"…… :(

  26. Phil / beer — I think it was brain freeze, not beer. :)

  27. Elections / Phil – Apparently some people have not gotten the message yet though… 

  28. Covered back up my AAPL with short calls. Wasn't thrilled with the volume yesterday and we were rejected at 555.

  29. yodi:
    Perhaps I can get more details on how to do this over the weekend? If you are available? THX.

  30. Go FCX!  those Jan puts were great call Phil.  looking good so far.  

  31. dclark41
    No problem email

  32. stjeanluc/elections  …..and never will…..

  33. Fade the gap was the game today…

  34. AAPL the YOYO of the day!

  35. Long-term/Mill – I'd wait to see what happens next week but, if you are looking to sell front-month calls, then a set-up on T could be buying the stock at $33.67 and selling the 2015 $33 calls for $2.70 and the $30 puts for $3.80 for a net $27.17/28.59 entry and the key is that you make $5.83 at $33 so you have a nice cushion for selling calls – especially as T should find that $35 line challenging as it's the declining 50 dma.  So you can go right ahead and sell Jan $34s for .50 and, if you have 1,000 longs, you're in for net $27,170 and, in the first 42 days, you're collecting $500 on the short calls that are $6.83 over your net entry – that's a good thing. 

    With CAT, a similar set-up can be made but the dividend on CAT is pretty low so I'd argue you're better off with an artificial buy/write with the 2015 $75/87.50 bull call spread at $7, selling the $60 puts for $5.20 for net $1.80 on the $12.50 spread with a really low net entry at $61.80 (29% off) so you can go 2x on the spread (vs what you would have done for a buy/write) and sell the Jan $87.50s for $2.50, which is more than the $2 premium for a whole year in just 6 weeks.  

    Consumer sentiment went off a cliff.  Numbers this far off you have to question the data. 

    Dec Reuters/UofM Consumer Sentiment74.5 vs. 83.0 expected and 82.7 prior. 

    AAPL did not like it and RUT and Nas turned red.  Yet another great example of why we ALWAYS sell into the initial excitement. 

  36. Carrier subsidies/StJ – I never thought they would last this long.  

    FAS Money – I will keep hammering this point home.  It does not matter whether we win or lose our bets each week.  Our job is to sell premium, sell premium and, when in doubt, sell more premium.  Last week we were up $6,500 and this week we're up $6,983.  Don't focus on individual results, just keep selling premium because, like a casino, the math is in your favor if you just stick to the plan and keep playing.  

    $25KPA – All about AAPL now.

    $25KPM – Slower recovery as we're far more cautious but we were down $8,858 last Friday and now $6,698 so a nice recovery for those who couldn't stand the volatility of AAPL anymore.  

    In both $25KPs – the XLF spread is at .95 so we take that off the table as it's certainly not worth risking another 45 days to make that last .05.  

    AAPL Money – Stripped down to the basics now – we're long on AAPL and waiting for the $590s to make our next sale. 

    FCX/Terra – Yes, very nice so far. 

  37. FCX – Moody's was upbeat after Freeport McMoRan's (FCX +5%) big acquisitions even as its share price was pummeled, cutting its outlook to stable from positive but keeping its rating at Baa3, three notches above junk. FCX has more than enough capacity to handle the interest expense despite the added debt, and the Plains addition will boost short-term EBITDA and cash flow, the ratings firm says.

  38. WoW!  Sorry for the gnarly link…..

  39. -NIESR Estimates UK GDP Growth of +0.1% 3m/3m in Sep-Nov
    LONDON (MNI) – The UK economy barely expanded in the three months
    through November, according to the latest estimate from the National
    Institute of Economic and Social Research.
    Gross domestic product rose 0.1% in the three months through
    November on the previous three months, matching its October outturn in
    the NIESR series. This sharp slowdown in activity follows the 1%
    quarterly surge in growth in Q3.
    The Office for Budget Responsibility and the Bank of England have
    both said the UK economy could see a small contraction in the fourth
    quarter, with the BOE’s latest implied forecast for a 0.2% quarterly
    NIESR forecasts that growth will pick-up from its current slump.
    “We do not expect such an anaemic economic performance to continue
    into next year,” it says, predicting growth of 1.1% in 2013 and 1.7% in

  40. What an idiot 1020…. Taxes are already too high on the rich! They pay the lowest taxes in the last 100 years! Is there ever a time when taxes can be raised?

    Can you imagine the Tea Party in 1941? "I know we just got involved in WW2 but there is no way we are raising taxes to pay for the war – cut some programs like that Manhattan Project the President is keeping secret from us for example…." 

  41. Austerity – The sad part is that it seems politicians now don't care too much for austerity in good or bad times. 

  42. 1020 – I won't disagree with most of AF assessments at this point (YMI)t.  Sometimes even a dog can find a bone!  YMI's drug is stellar, I hope they are not waiting for  that mother of a deal….or maybe they are!  Net they have ~75M in cash.  Burning about 30M in cash a year, they should have plenty to get them through, which is where I see them taking this, as they are trying to collect as much as possible for a drug that is 'better' than INCY.  They are taking a risk, of course, but I see their risk as worthy of an investment since EVERY clinical trial has shown better data than INCY's drug.  IF you know you are better, why not go for it all.  That's my premise, and I am sticking to it.

  43. stjeanluc – That's why It's hard for me to understand why all the complaining.
    After all, we are in 3 wars;  Afghanistan$, the war on terror$$ and an economic war$$$……

  44. Thanks Pharm.  Now back to paradise…… :)

  45. 1020, Don't forget the "war on drugs."

  46. phil,
    tks for your thoughts.  help me with something i have difficulty with. 
    lets say i do the cat trade and in jan cat is 89 dollars i.e. above the 87.5 strike,   am i correct in then rolling the jan 87.5 calls up to the feb 90 or 92.5 ….rinse and repeat……….am i starting to get it………
    in the cat setup u rightly suggest i could do 2x vs the b/w.  would you sell full in the near month calls or just 1/2….tks

  47. jomptien – As long as prisons are "profitable" the war on drugs will be the longest war ever waged….. :(

  48. 1020, maybe its a "jobs" program along with the DEA

  49. Austerity / lnk – Read that article from Bruce Bartlett I posted last week. The problem is that people always misinterpret Keynes. He clearly said that government should spend more during crisis but save when times are good. Imagine we had not spent like drunken sailors between 2000 and 2007 before the crisis hit (even forget about the wars – just Medicare Part D (actually we could still have that but negotiate better prices) and the tax cuts that were not needed). How much better off would we be today to face that crisis.

  50. Phil,
      After a series of moves to rescue an SVU buy/write, I'm left with 1000 shares at net $2.49, 10 short JAN 2014 $3 calls and 40 short JAN 2014 $3 puts. Given your recent negative stance regarding the SVU deal, do you see a play to salvage this losing position, or would a shift to another horse make more sense (say Cisco or Chesapeake, for example)?

  51. Here come Boehner with the usual talking points: "We don't have a revenue problem…."

    Right now, we collect 15% of GDP in taxes when we collected around 19% before the crisis. How much clearer can the numbers be? We need to collect 4% more of GDP to get back even and that $600B a year! It's just disturbing.

  52. jomptian/DEA  Merge them with the ATF and you'll have a BFD…..

  53. millcreek
    Cat I just did a play as Phil suggested this morning
    Jan 15 Synthetic b/w  77.5/87.5 cost 4.96 x3
    Jan15 sell 60p @ 5.10 x3
    The above play you actually land up with a slide credit But you leave this play as your vehicle as it is a long term play.
    Now against this without any further margins I sold this time 2x only Jan13 90c for 1.48 as the 87.5 caller is now just about ITM. You can sell up to 3 monthly callers against the above set. But if CAT goes up a lot you just about reduce the profit on the long term vehicle. In Jan13 you observe your short caller he either goes worthless or you have to roll to the next better position.
    I trust this helps.

  54. Pharm:  Have you heard of or have an opinion on SGMO??

  55. Good things sometimes come to those who wait – the short FAS 109 Calls are now $1.57!

  56. 90% tax/1020 – Funny how they can get the facts right but then distort them to make a point that makes no sense.  The point of a 90% tax (and yes, one that kicks in over a relative $30M a year) is that ENOUGH IS ENOUGH and, at the point where you are making 1,000x more than the average person – it is time to step back and give someone else a chance to make money – rather than going for $300M or $3Bn so you can displace 10 to 100 additional would-be "job creators".  Those of us who have run businesses know very well that we hire more people and distribute more wealth in the earlier stages of growth – once the businesses are mature – the hiring slows and the cost-cutting comes into play and, rather than put the money back into the business, we tend to milk it and put cash in the bank.  Tax policy SHOULD discourage that – otherwise you end up with a top 1% that pretty much sits back and milks the economy – leaving little or nothing for anyone else (in other words, you have our current situation).  It's a shame people seem to have forgotten the purpose of tax policy – it's not about paying our debts or cutting our debts so we don't have to pay more taxes – it's about re-distributing wealth in a more equitable manner so more people have a chance to prosper.  That's the basics we need to get back to.  

    UK/Kustomz – That's good news. 

    CAT/Mill – Well, it does depend on your outlook but, yes, the general idea is to just roll them along (like FAS Money).  Don't forget, you have a huge upside on the longs so, even if you lose a little on a roll up – you're still banking it on the long end.  As to selling all or 1/2 – that's such a good spread that you don't need to sell full to make the money back so you just need to recognize it's greedy to do so.  The more you sell, the tighter your stops should be to keep you out of trouble and, of course, you can clearly see CAT has a channel of roughly $82-90 so it depends where you are in the channel when it comes time to sell.  Higher up in the channel – sell more.  Lower in the channel – sell less and wait for the bounce. 

    Dollar down to 80.30 kind of stopped indices from falling too sharply but what an interesting way to get to a flatline today.  Dow volume 40M at 11 so far.  

  57. phil,
    tks for the tutorial.

  58. XLF Spread / Phil,
    We bought back the XLF short Jan $16 Calls from the XLF bcs on Nov 13th.
    What we now have are the long Jan $15 Calls and the short Jan $15 Puts. While we may want to sell the long Jan $15 Calls based on what you think about XLF at $16, do we want to really exit the short Jan $15 Puts?

  59. Uplifting when you see a story about a lawyer with a conscience:

  60. 11:00 AM On the hour: Dow +0.2%. 10-yr -0.1%. Euro -0.32% vs. dollar. Crude -0.09% to $86.18. Gold +0.09% to $1703.35.

    The ECRI Weekly Leading Index rises to 126.8 for the week ended Nov. 30 from 126.3 previously. The annualized growth rate rises to 3.5% from 3.4%. The future inflation gauge dips to 102.5 in November from 103.6 previously.

     It's the BLS vs. the University of Michigan. Incessant chatter about the fiscal cliff looks to have had effect on consumer sentiment, with December's plunge bringing the number back to August's levels. The S&P 500 gives up some of its gains, now +0.1%.

    More on Consumer Sentiment: The 74.5 read wasn't just sharply below the 83 consensus, it was 5 points underneath the lowest estimate out there. It was led by a 13 point plunge in expectations to 64.6. Double-digit declines are very rare, say the report authors, and point to a "sudden pessimism" as the final surge of the holiday shopping season approaches. The XLYXRT, and XLP can't be bothered, all with moderate gains today.

    Retail analysts begin to have a nagging suspicion that online sales could be even higher than forecast this year after store and mall traffic was a bit of a disappointment over the Black Friday weekend. Increased consumer usage of smartphones and tablets is contributing as is the sudden surge in gifting of digital content this year. If the trend continues online winners could include Amazon (AMZN), Macy's (M), Williams-Sonoma (WSM), and Lululemon (LULU) – while retailers skewed toward brick-and-mortar selling such as Best Buy (BBY), RadioShack (RSH), and J.C. Penney (JCP) could suffer more than expected.

    Demographics drives spending: The Baby Boom Bump (NYT)

    FedEx (FDX +0.1%) says 19M packages will be moved through its network on December 10th, which will mark its busiest day in history. For the holiday period, volumes are up 10%. 

    More on the ECB nearly cutting rates yesterday: Chatter says the move was scuttled by Draghi, Weidmann, Asmussen, and Coeure. It's a big governing council, but aren't those the only votes that matter? Separately, in a speech today, Draghi worries lower rates could spark a weakening euro. Is this not among the things the EU needs?

    National Bank of Greece (NBG -3.3%) announces it will tender its Greek bond holdings as the government undertakes its buyback scheme. Athens plans on spending about €10B, offering 30%-40% of par for paper trading at even lower levels on the secondary market. For investors who bought during the darkest days, it's a windfall.

    Spot prices for benchmark hot-rolled steel have basically stagnated over the last two years, but recent increases of ~10% suggest customers are accepting somewhat higher prices due to a stronger market and to prevent the values of their own inventory from falling. Prices are expected to continue firming as the eastern U.S. starts rebuilding after Sandy.

    Moody's was upbeat after Freeport McMoRan's (FCX+5%) big acquisitions even as its share price was pummeled, cutting its outlook to stable from positive but keeping its rating at Baa3, three notches above junk. FCX has more than enough capacity to handle the interest expense despite the added debt, and the Plains addition will boost short-term EBITDA and cash flow, the ratings firm says.

    Las Vegas strip revenue rose 3.6% Y/Y in October after only increasing 1.2% in September. Analysts are still sorting out what kind of boost Las Vegas tourism saw from the Hurricane Sandy-related troubles in Atlantic City.

    Sears Holdings (SHLD) moves up 3.1% premarket after shares dipped below the $40 mark for the first time since January. Hedgeye's Keith McCullough thinks high short interest names such as Sears are scaring hedge funds in the current atmosphere. If that's the case, a short squeeze rally into year end could be on tap.

    Shares of Amarin (AMRN -20.5%) are getting hammered this morning on the back of yesterday's announcement that it was raising funds and will begin hiring a sales force to independently launch Vascepa. The news disappointed investors who had hoped the biotech would have a partner by now. The company has already undertaken extensive preparations to launch the drug, but had held off on the costly move of hiring its own sales staff.

    Cisco (CSCO -1.2%) mentions during its analyst day it expects long-term growth of 5%-7% – that modest target, the result of slow switch/router growth, explains Cisco's aggressive efforts to return cash. Total gross margin is seen holding steady, even though Ciscowants to double software sales over the next 5 years and forecasts a 9%-11% services CAGR. John Chambers says Cisco has gone too long without a major acquisition (NDS apparently doesn't count) – NetApp (NTAP) has been viewed as a possible target.

    Alcatel-Lucent (ALU) is reportedly considering using its fast-growing Internet-routing business and/or its massive patent portfolio as collateral for up to €1B of loans. The money will give the company time to implement €1.25B of cost cuts as it looks to turn around its fortunes. Other options ALU is exploring include asset sales and issuing new stock.

    Having just begun a probe on Google, Italian tax authorities now appear to be turning their sights on Facebook (FB +0.8%): a source claims regulators have been conducting checks at Facebook's Milan offices to see if it has been declaring its local income. Italy by itself isn't a large portion of Facebook's business, but the whole of Europe is, and continental tax regulators in general seem to bestepping up their tax probes of U.S. Internet giants. 

    Following yesterday's hearing, Judge Koh appears set to reduce the $1.05B jury verdict levied against Samsung (SSNLF.PK) in its California trial against Apple (AAPL). "I think it's time for global peace," said Koh, who plans to issue several rulings related to the trial in the coming weeks. Samsung is demanding a new trial, claiming it didn't get a fair shake due to the fact jury foreman Velvin Hogan wasonce sued by Seagate, among other issues. 

    Some Asian Apple (AAPL -1.8%) news: 1) The iPad Mini has launched to sparse crowds in China. The regular iPad controlled 71% of the Chinese tablet market in Q3, according to Analysys. 2) China Unicom (CHUtook over 200K iPhone 5 pre-orders in its first 2 days of availability. Unicom is fully subsidizing the phone to those who make a $947 deposit. 3) NTT DoCoMo (DCM) is facing more pressure to strike an iPhone deal (previous): the top Japanese carrierlost 40.8K subs in November to rivals SoftBank and KDDI. Apple's Japanese sales rose 113% Y/Y in FQ4.

  61. Is AAPL looking to test that $529 line again? The action on that stock is just unreal….

  62. Captured by Google Street View cameras (funny what's going on in this country at any given moment):  

  63. AAPL – I'd say a successful test of 516 – 520 (triple bottom) would be a good reason to buy……

  64. Phil – New Jersey?    ;)

  65. You're welcome Mill.

    FAS Money/Sank – Oops, that's my bad, I thought it was a bull call spread, not a short put/long call combo.  Silly me.  Still, fine to take it down as we can get back to cash into the new year and keep our eye open for more hit and run opportunities.  You are right, there is nothing wrong with letting the short puts expire since we don't think XLF fails to hold $15 through Jan expiration but $16 is a good time to take off the longs as we could be back at $15.50 before we break over.  

    Lawyer/Rustle – That is nice.  Good chart, thanks:  

    AAPL/StJ – Bad craziness.  And what a lot of time discussing them on CNBC.

  66. Hello Phil,
    I am looking to scale into a long term position on XLF, selling 10 XLF $14 2015 puts for $1.50 and then selling 2 FAS calls weekly when it makes sense to collect premium. Would you also add a 2015 XLF BCS? Would you wait until XLF pulls back to the low $15 range to collect more premium on sale of the puts? Or do you recommend a different approach altogether? Thanks much   

  67. What happens when rates do eventually start rising and the Fed suffers losses of tens if not hundreds of billions in losses on its bonds?  Print more money I assume.  I guess Japan is more likely to find out first.  Just all seems ridiculous. 

  68. My personal view of the market in the next couple weeks is that you might be at the most dangerous point of the year.  Right now data seems to be secondary to Fiscal Cliff talks.  If you're thinking of taking a position today, I'd hold off.  Two things will happen in the next couple weeks, fiscal cliff is avoided by deal or patch and market most likely will gap up quickly or we go over and market will get slaughtered.  And to top it off, McClellan Oscillator is neutral also.  So if you're net short or net long you can get killed.  And why hedge one position with another if you can just stay in cash.  I'd rather go short on an overbought market or buy in an exaggerated sell off when we are oversold.  The wind is at my back that way.  That's how I plan to play the next couple weeks.

  69. AAPL – where is the love? sheesh.

  70. XLF/Crussell – If you don't have any calls, you risk a substantial loss on the short FAS calls.  As you can see today – they move $2-3 a day in seconds and can move much more than that.  There's a reason we have long XLFs in FAS money – the provide proper coverage for our short sales.  I don't know why people think the spread in FAS Money is some haphazard thing and that any position they take in XLF will do just as well.  We arrived at that combo after years of trial and error – why would it kill you to just follow that?  

    Cash/Rustle – I agree with that.  If you don't need to be invested, there's no reason not to be in cash and have a nice vacation and then see what's up after new years.  

  71. Tax Software, Options Trading Results / Anyone,
    Hi, I use TurboTax to prepare my tax returns at the end of the year, and use tos for all my trading. Has anyone used the "Import" feature in TurboTax to download trade results directly from TDAmeritrade into the software, and process trading results in TurboTax? Have you used any other software to download and rationalize trade results first before exporting consolidated information into TurboTax?
    Thanks for your thoughts.

  72. Very boring now that the morning excitement is over.  Got the Fed next week so no reason to make big decisions until then (not that they are expected to say anything new, though).  

    AAPL sucking just over the $530 line.  Last Friday they were $585 and $570 the Friday before that.  $527 was where we were on the 16th (expiration day) and $547 on the 9th and $574 on the 2nd so a finish down here would be pretty low.  $505 was the dead bottom on the 16th and we hit $565 the next day so hard to make predictions of tomorrow based on today with this stock.

    Tax software/Sank – Too complicated for me.  That's what accountants are for.  ;)  

  73. sank1
    If you have a lot of trades (100s, 1000s) you need to use TradeLog, for a few trades TT is OK

  74. Earthquake hit NZ about an hour ago. Mother Earth getting a bit restless.

  75. FAS Money/ Phil: What are we doing with the Dec Wk1 $109 calls?

  76. FAS Money/Newt – We sold the next week calls and all we can do now is buy back the 2 this weekly $109s for $2.25 each and we'll take the .50 loss ($50) for this week on those.  

    Still just drifting into the close overall.

  77. Phil: Thanks.

  78. 3:00 PM On the hour: Dow +0.46%. 10-yr -0.2%. Euro -0.32% vs. dollar. Crude -0.47% to $85.86. Gold +0.16% to $1704.55

    Good numbers:  October Consumer Credit: Up $14.2B, vs. an expected +$12B. It's the third strong gain in a row. Nonrevolving debt (like personal loans and auto loans) led the increase again, up $10.8B, while revolving debt (credit cards) rose $3.4B to reverse course from September.

    U.S. retail sales of traditional video game hardware and software fell 13% and 11% Y/Y in November, claims NPD. Those might not be numbers to celebrate, but they're a nice improvement from October's 37% and 25% Y/Y drops. Healthy Xbox 360 sales, the Nintendo (NTDOY.PKWii U launch, and strong receptions for marquee gaming titles helped the struggling industry stabilize a bit.

    Whirlpool (WHR +0.3%) CEO Jeff Fettig says he believes that a U.S. housing market rebound and consumers' need to replace old appliances will boost sales over the next three to five years. However, Fettig does warn that tax increases could erode disposable income and pressure consumers more, which could continue to delay new purchases.

    Strubel Investment notes the horrid record of managements using cash for buybacks or M&A. Buybacks are simple – companies tend to do them when the share price is high (JPMorgan a classic example: It suspended purchases after the CIO loss with the stock near $30, and will rev them up again next year in the 40's). The top tax rates for dividends would have to rise to 70-80% to make them less valuable than the alternatives.

    Why do investors continue to pour money into EWJ and expose themselves to currency risk when the DBJP offers the same Japanese stock exposure, but hedged against the yen? Another of Dennis Hudachek's 10 Overlooked ETFs is the INDA, tracking the same Indian index as the INP, but with lower expenses. And don't forget IAU, basically the same exposure as GLD, but at 15 bps cheaper per year.

    "(Shorting) is a blood sport," says Carson Block, talking about his business in a great interview. He describes Muddy Waters as an investing club whose members are united by the common experience of "getting kicked in the teeth in China." Having moved from China to Singapore (Olam), he's now having a closer look at U.S. firms using "legal accounting gimmicks."

    The flap over fuel economy claims by automakers brings up an interesting point. While EPA testing is done at just below highway speed limits, drivers in the spacious Midwest are likely to topple that average quite a bit. editor John O'Dell notes cities drivers have a much larger economic incentive to drive an electric vehicle than a rural drivers based on that notion of non-efficiency. Perhaps doubly so after factoring in the trick of finding a charging station in the middle of Nebraska. 


    Argentine state oil company YPF (YPF +6.2%) says it is inadvanced talks with potential partners on the development of its shale assets, putting it on track to meet its investment goals and bring shale gas resources onstream after it was nationalized. YPF could complete a deal with Bridas Energy before year-end, and an agreement with Chevron (CVX) likely will close in Q1 2013. 

    Add UBS to the recent flurry of bullish calls on gold, citing next week's FOMC meeting and year-end commodity index rebalancing; gold is likely to be bought this time around as opposed to being sold in previous years. And though the effect so far on gold prices has been a dud, there's still the possibility the fiscal cliff could yield good things.

    Spot prices for PC DRAM rebounded a bit over the last few days following months of declines, buoyed by efforts to cut output in the face of slumping PC demand. Samsung (SSNLF.PK) and SK Hynix both plan further production cuts in 2013 – as it is, Samsung now only allocates 30% of its DRAM output to PC chips, which much of the rest focused on the fast-growing and higher-margin mobile DRAM market. Micron (MU) shares seem to have priced in some good news in recent weeks.

    $8B/year run rate or not, mobile is a problem for Google (GOOG), argues Goldman. Its reasons: 1) In spite of Android'sdominant smartphone share, iOS accounts for 60% of mobile Web traffic (thanks in large part to the iPad), and Google has to pay huge traffic acquisition costs to Apple for Mobile Safari search traffic. 2) Google's smartphone search ad prices are an estimated 30%-50% of its PC prices, and mobile is cannibalizing PC search. 3) The iPad still leads the tablet market, and it could produce a halo effect for the iPhone.

    Three lunchtime reads:

    1) Dividend ETFs may be first ‘fiscal cliff’ casualty

    2) Euro crisis is past its peak, EU commissioner says

    3) Dividends' unintended consequences

  79. DIA today $131.50 puts have no premium at .25 (.03 premium) and make a nice play into what looks like a bad close coming.  Risky of course but once the Dow goes under 13,100 – that can be the stop.  

  80. Sold some WFR        Z-Z-Z-Z

  81. Close going the other way now – best to take the quick loss (.20) on the DIA puts and live to fight another day.  

  82. So the Dow is up 0.5% for the week, NYSE is up 1%, S&P and RUT are down 0.5% and Nas is down 1.75% with AAPL down 10% (so 20% of that is all of the Nasdaq loss and also all of the S&P loss as it's about 4% of that index too).  

    82M traded on the Dow at 3:42 – a bit more than yesterday. 

  83. VIX 15.90, TLT $124.44 – no one seems to be panicking.  

    Dollar up at 80.42 with Euro at $1.2925, Pound $1.6032 after bouncing off $1.60 this morning.  Yen went all the way up (weaker) to 82.85 this morning but back at 82.43 now and Nikkei Futures at 9,550.

    Oil $86.08, gold $1,705, silver $33.15, copper $3.66, nat gas $3.55 and gasoline $2.6087 is back near the Oct lows of $2.55 so, overall, things are looking good into the weekend.  

    We'll see what the politicians have to say over the weekend but Boehner sure wasn't encouraging this morning.

    Have a great weekend everyone – not many more shopping days until Christmas.

    - Phil

  84. Boy am I behind on xmas, no lights, no tree, time to get crackin…have a good weekend.

  85. RUT goes up and NAS goes down after the bell. No direction on that !

  86. XMas/Rpme – Nothing like the last minute Christmas shopping.   More than 2 weeks to go – no shame in getting a tree this weekend. 

    After bell/Shadow – I wouldn't read much into it.  Dow volume finished at 124M and up for the week – that's all the summary Europe and Asia will need.  

  87. Crussel / FAS Money – If I am not mistaken, from my notes on this portfolio:  Buy 10 XLF Jan 14 Calls, Sell front month or weekly FAS calls against the XLF calls.  The combination of 10 XLF to 3 FAS (1/3).  Now I am not in the spread But my pea brain tells me to wait for XLF to retrace before starting (FAS will retrace also), get tp the lower channel of XLF to start.  When XLF gets to 15.50 or lower, I will start paper trading this to get a feel for it before committing funds.  As Phil sates (highlighted today) keep selling premium and learn to roll when necessary.  I sure want to understand the entire trade planned out over the long haul before committing funds.  If I missed something here or misspoke, I am sure Phil will chime in and set us both straight.

  88. Good morning!

    Fas Money/Jfaw, Crussel – That's about right.  The point is that 3 XLF bull plays will gain about the same as 1 FAS long so you are not likely to get in trouble selling front-month FAS calls against the XLF longs as long as you stay about 1/3.  From there, we are generally long-term bullish, not neutral, on FAS/XLF, so we take advantage of dips to sell a few FAS puts – not because we want to buy FAS, but because we A) have faith it will bounce back before we run out of rolls and B) because we almost always have offsetting short puts to mitigate the risk of the short puts.  We are also playing the channel on XLF, which has been rising (as we expected) and is now between $15 and $16.50.  While that's 10% and a 30% move on FAS up and down – it's still playable and helps guide our trading decisions.  It is also useful that XLF, as it did yesterday, tends to obey each .50 resistance line – which prevents us from getting suddenly burned on either short puts or short calls.     

    FAS Money is everything you should ever be practicing about selling short-term puts and calls for income played out at hyper-speed.  FAS makes moves during a single week that most stocks don't make in months – it's like training for options on a flight simulators that is constantly putting you in emergency situations to give you experience it would take years to get otherwise – that's another reason I love FAS Money – as a teaching tool!  

    At the close: Dow +0.63% to 13156. S&P +0.26% to 1418. Nasdaq -0.38% to 2978.

    Treasurys: 30-year -0.56%. 10-yr -0.19%. 5-yr -0.06%.

    Commodities: Crude -0.25% to $86.05. Gold +0.21% to $1705.35.

    Currencies: Euro -0.32% vs. dollar. Yen +0.04%. Pound +0.08%.

    Market recap: Stocks moved mostly higher after November's jobs report topped expectations, rebounding despite abig drop in consumer sentiment likely prompted by fiscal cliff fears. Renewed losses for Apple weighed on the tech-heavy Nasdaq; shares slid 9% this week. Treasury prices fell, pushing yields up; crude oil fell below $86. 

    Cullen Roche's three bearish signs in a sea of negativity: U.S. rail traffic is grinding to a halt; U.S. manufacturers' new orders have turned sharply negative; and Suez Canal traffic is turning negative. (But things could be worse: three bullish signs.)

    Some Chinese ADRs were among the biggest tech losers today, possibly thanks to ongoing de-listing fears stemming from the SEC's lawsuits against the Chinese arms of the Big-4 accounting firms. SPRD -8.2%YOKU -6.9%AMAP -5.7%. On the other hand, some Chinese solar names posted huge gains, likely on hopes JinkoSolar's $1B financing deal with China Development Bank indicates government support for the cash-burning industry remains strong. TSL +9.6%LDK +12.1%.

    Diamond Foods (DMND): FQ4 EPS of $0.05 beats by $0.02. Revenue of $223.9M beats by $4M. Shares -3% AH. (PR)

    More on Diamond Foods' FQ4: Though results beat depressed estimates, the nut vendor recorded a $10.4M loss on a warrant stemming from Oaktree Capital's $225M investment, and a $10.1M impairment charge for assets at a Fishers, IN packaging facility. Gross margin was 18.9%, down 190 bps Y/Y. No FY13 guidance in the PR. No CC until Diamond files its FQ4 10-Q; the company only says it will file "as soon as practicable." DMND -4.2%AH.  (PR) (restatement/results for first 3 quarters)

    Prices for just about anything solar-related continue to tumble. Digitimes reports the average price of cells with "mid-range" (16.2%-16.6%) efficiency has fallen to just $0.25-$0.30/watt – cell prices were around $0.48/watt at the beginning of Q3. Meanwhile,polysilicon contract prices have fallen to $17-$18/kg from $20/kg in Q3, putting it further below the variable cost of Western producers. The troubled industry received a piece of good news this week courtesy of the Indian government, which has set a goal of building 9GW of plants by 2017.

    Aided by a big product refreshEMC's storage system share grew 150 bps Y/Y in Q3 to 30%, estimates IDC. Whereas NetApp's (NTAP) share fell 30 bps to 11.9%, IBM's 110 bps to 11.7%, and H-P's (HPQ) 150 bps to 9.7%. Industry sales rose 3.3% – nothing special, but better than what the server and networking industries are doing. H-P is counting on new hardware and price cuts from its fast-growing 3PAR unit to lift growth; NetApp has also been busy updating its lineup.  (Q2 figures)

    Groupon (GRPN +22.8%) ended up staging a monumental rally/short-squeeze today, and it looks as if Google (GOOG)acquisition rumors were the trigger. Google famously made a $6B offer for Groupon a year before it went public; even after today's move, the company is presently worth just $3.1B. But Groupon's prospectsaren't looking as rosy as they used to. Volume was nearly 3x the daily average. (previous) 

    Apple (AAPL) and Google (GOOGhave teamed up for the reported $500M-plus bid for bankrupt Kodak's (EKDKQ.PK) patents, Bloomberg reports. The two companies – part of rival consortia this summer in an auction for the patents – are likely working together with a goal of neutralizing infringement lawsuits.

    Calendar Q4 iPad estimates need to come down, arguesMizuho's Abhey Lamba, in a note that may have contributed to the Apple (AAPL -1.2%) selloff. Citing "lackluster demand" for the regular iPad as the Mini cannibalizes sales, Lamba is forecasting FQ1 iPad sales of 20M and revenue "slightly below $10B" vs. a consensus of 25M and $11B. He also thinks H-P's (HPQ) Jan. quarter PC sales forecasts could be too high by $1B, and Dell's (DELL) FY14 PC forecasts by $3B. (IDC tablet forecast)

    As Apple (AAPL -1.2%) sold off again, the USPTO made a preliminary ruling to invalidate all 20 claims in an Apple multi-touch patent used in cases against Samsung and Motorola. Apple will doubtlessly appeal the ruling, which comes 6 weeks after the USPTO preliminarily invalidated Apple's "rubber-banding" patent. Meanwhile, the shipping date for thenew 27" iMac, already stated by Apple to besupply-constrained, has been pushed out to January. The 21.5" iMac has a shipping time of 7-10 business days.

  89. Barry's Succinct summation of week’s events:


    1) Labor Dept unexpectedly says Sandy didn’t have much influence on data in Nov as Payrolls gain 146k vs est of 85k which assumed more of an impact. The unemployment rate falls to 7.7% but not for right reasons as household survey shows job loss at same time size of labor force falls sharply
    2) Jobless Claims normalize at 370k after weeks of hurricane distortions vs est of 380k
    3) ISM services index up .5 pt to 54.7 vs est of 53.5
    4) Construction spending in Oct better than est led by residential area
    5) Vehicle sales in Nov total 15.5mm vs est of 15mm and the most since Feb ’08 due in part to post Sandy buying and easy $ subprime buyers coming back
    6) says avg 30 yr mortgage rate at record low of 3.36%, MBA said refi’s bounced 6.1% after previous 7 of 8 weeks lower
    7) Australia and Canada report better than expected job gains in Nov
    8) German factory orders in Oct rise 3.9% m/o/m vs est of up 1%, DAX closes week just below best level since Jan ’08
    9) Euro zone mfr’g and services index revised to 46.5 from 45.8, although below 50 for 10th straight month
    10) China’s mfr’g PMI slightly below est but rises to 50.6 from 50.2 and services PMI up a tick to 55.6 from 55.5. Shanghai index trades at lowest since Jan ’09 but closes week at best in 4 weeks
    11) RBA cuts rates to ’09 low of 3% as they have flexibility with rate still above CPI.


    1) Within payrolls, in addition to above mentioned on components of unemployment rate, two prior months revised down by 49k (mostly in public sector), avg hourly earnings up just 1.7% y/o/y vs last CPI # of 2.2%, participation rate falls to 63.6% and avg workweek remains unch (due to hurricane?)
    2) UoM Confidence in Dec falls to 74.5 from 82.7 mostly due to big fall in the Outlook (fiscal concerns?). Also, 1 yr inflation expectations rise to 3.3% matching highest since Aug even with continued fall in gasoline prices
    3) ISM mfr’g back below 50 at 49.5 as New Orders, Backlogs and Exports fall
    4) IP #’s from Germany, the UK and the Netherlands all weaker than est
    5) EU retail sales in Oct below est
    6) Italian MIB index ends week soft on Monti gov’t uncertainty
    7) China’s HSBC PMI services index falls to 52.1 vs 53.5 in contrast to state weighted PMI, 8)Both exports and imports in Nov for Taiwan well below est.

  90. SGMO/mjj – sorry, was out for most of the day.  The company's main drugs are against what is called zinc-fingered proteins.  These proteins use zinc to fold properly and therefore function  These types of proteins are involved in many different mechanisms, but their SGMO's latest stage compound targets the CCR5 receptor, of which HIV uses to enter T-cells.  MRK and PFE worked on this area with a small molecule (drug), and PFE now has a compound approved for HIV, maraviroc.  I am not as interested in them until they show better efficacy than maraviroc(PFE's compound).

    The rest is too early on.

  91. Decent end of the week with both the Dow and S&P over their 50 DMA. NASDAQ is hopeless with the AAPL sell-off. NYSE is technically the best average right now and interestingly enough, the Russell is stuck in a very narrow trading range. These last 2 indices are broader and yet, one moves up and the other goes nowhere… 

  92. Some very good charts in this article:


    So, productivity is rising, but it isn’t being evenly allocated; the top is effectively disconnected from the rest of the spectrum—slippage No. 2. One reason, especially pronounced in the past decade or so, is that fewer of the productivity gains are flowing to workers, and more are flowing to investors. Chart 3 shows what happened. From the end of World War II through about 1980, almost two-thirds of every dollar of income generated by the economy flowed to workers in the form of wages and benefits. Beginning around 1980, workers’ share began to slide and, in the past decade or so, has nose-dived, to about 58 percent. The difference went to shareholders and other investors—who provide capital rather than labor—in the form of higher returns on their holdings.


    Since then, men have been steadily withdrawing from the workforce—but, again, not uniformly. Ninety percent of college-educated men are still working. But a fifth of men with only a high school degree weren’t working in 2008, before the recession struck; today, a fourth of them don’t hold a job. Among men who didn’t finish high school, a third aren’t working. As a result of these trends, America today is pockmarked with neighborhoods where nonwork is the male norm.

  93. Busy week next week….

  94. Cool video, a few years old, I found it very interesting.

  95. Interestingly enough, we have 5 of the worst performing stocks (BBY, AMD, CLF, HPQ and CMG) in our Income portfolio and 1 of the best performing ones (F) so we have been shopping already! 

  96. Monsanto — not cool if these allegations are true.  Phil has cast aspersions against the company in the past.  Perhaps with good reason; the "green revolution" may be a fraud in more than one way.

  97. Footnote:  MON is up 29%+ year on year;

  98. Saw the Stones in Brooklyn tonight at the Barclay's Center. Great venue, smaller than the Garden and acoustically superior.  I was surprised — it was as good a show as I've ever seen, and I've seen 'em all — from Hendrix to Herbie Hancock, Ahmad Jamal to Led Zeppelin — including a Stones concert that wasn't half as good.  Geriatric jibes aside, they are at the top of their game, not at all a "tribute to their old selves" band.  Jagger sings with zero change in timbre or sustain from his youth, and, after 7 or 8 songs that were rather subdued from Richards/Wood on the soloing side, they began to "weave" and just rocked it. Jagger's must have one serious training regime, he was in continuous motion and never flagged — the musculature in his shoulders was evident.  Ron Wood played pedal steel on Honky Tonk Women, and the grins on those Wood and Richards once they locked into each other said it all.  
    In attendance were Chuck Leavell, Bobby Keys, Mary J. Blige, excellent backup singers, a super funky bass player,-- [Wyman has retired] and a Grammy-award winning choral group singing backup on "You Can't Always Get What You Want."  They played an epic Sympathy for the Devil and Jumping Jack Flash as a finale.  The production, lights, film clips, and cameras were a breakthrough setup technologically, as good as I've ever seen.  Pricey, but worth every penny: it doesn't get better than this. 

  99. Good week overall… Here is a P&L update on our recovery bets:

    SVU: -$4,550.00
    HPQ: -$5,980.00
    BBY: -$20,910.00

    We have a good chance with SVU if they stay above $2.50 and  HPQ should be fine but BBY is looking kind of weak now and the chances for a buyout for a decent price are coming down to this holiday season.

  100. Interesting that gold miners are not more correlated to the gold price – they own tons of that stuff:

    ef425b43f15942519e669cb7bee3ab66 Sunday links: things not worth the effort

  101. It's just incredible that you can piss away that kind of money so quickly…

    Today, Dykstra's post-baseball financial successes — once heralded on CNBC's "Mad Money" withJim Cramer -- seem far too good to be true. By last winter, a net worth estimated in court papers at $58 million had evaporated. Dykstra's life after baseball is the story of losses — financial, personal and, with his sentencing to prison, freedom.

    Great player, but obviously not well advised…

  102. Hi! 

    I hope everyone's having a nice weekend.  

    We spent the weekend getting set up for XMas with the tree and decorating and all so a nice, family time.  

    News pretty slow.  Egypt's market up 5% on news that Mursi backed down from decree that made him exempt from judicial review.  People are hoping there will be a peaceful solution there.  

    Looks like Monti may resign in Italy too.  Futures open soon, we'll see how they take it.  

    I was at the mall this weekend (Garden State Plaza) and was disturbed at how few actual bags were being carried by shoppers.  Lots of stuff on sale at stores but no bites.  

    Nonetheless, Big Chart looks encouraging if we get some follow-through.  If not though, then we're just being rejected at roughly 50% bounces and that won't look pretty at all so next week is very key. 

    StJ's labor charts make a good point – we've killed the middle class in this country and it will take direct policy intervention to fix it.  People have to decide what America they want to live in for the rest of this Century….

    Interesting best and worst list.  AAPL one of the worst – so strange…

    Video/Kustomz – I always like hearing Kaku speak.

    MON/ZZ – Good, I'm glad someone is exposing those bastards.  Stones sounds like it was a great show.  Always worth it to pay for experiences IMHO.  

    Income Portfolio chugging along nicely now.  

    Miners/StJ – It always amazes me how little credit they get for their reserves.  

    AAPL/Nicha – Technically they do look awful.  You have to believe in the fundamentals to play them.

    Dykstra/StJ – I used to see him gambling in AC at the high-stakes rooms many years ago.  He was a madman.  

  103. STJL/VXX,
    on my long drive to SoCal this weekend, I was thinking of your VXX trade idea (at least I think it was yours), about buying the 2015 $20 puts and adding to them on any spikes in the VIX and VXX. 
    It seems reasonable to expect that between now and 2015, we should get a couple of good spikes in VXX.  Have you considered selling a 2015 $15 put against your $20 to reduce the cost of your $20, and then upon any spike in VXX, you could both buy back the $15, close out the spread and then add more $20's at a cheaper price?
    What are your thoughts?

  104. Hey guys,
    Some Sunday evening fun:
    Saurav, my son's eight year old friend saw me trading recently and coming home to his family, he asked  "Mom, what's a traitor?"  His mom replied: "A traitor is someone who's unfaithful", at which point Saurov got extremely concerned and exclaimed: "Oh no, Uli is a traitor!".  "Uli is a traitor?  What do you mean by that?"  "He sits in a room with two computers and eight monitors and he says he trades!."  "Oh, then he is a TRADER, not a TRAITOR".  "What's a trader?". "A trader is somebody who bus and sells stocks to make a profit."  "Great idea, why doesn't our family do this?".
    Eight year olds, I just love them!

  105. AONE – Auto-part manufacturer Wanxiang has won the bidding for the assets of bankrupt battery maker A123 Systems (AONE) auctioned this week, for a reported $250M-$260M. AONE filed for bankruptcy in October after a financing deal with Wanxiang fell through.

  106. Good morning!

    Going to be hard to escape the giant sucking action of Spain (down 1.7%) and Italy (down 3.2%) this morning.  France and Germany are down about 0.5% and London is only down 0.25% and our Futures are down about the same a London so I guess that's the effect on countries not directly connected.  

    The Euro is holding $1.29 and the Pound is at $1.605 with 82.24 Yen to the Dollar, which is at 80.44.

    Gold is $1,713, oil is $86.36, silver $33.36, copper $3.70, nat gas $3.49 and gasoline $2.62.

    4:13 AM Asian and European stocks broadly diverge, with Asia rising amid mixed economic data out of China and Japan – which is back in recession – and Europe following Italy lower amid increased political uncertainty in the country. Japan +0.1%, Hong Kong +0.4%, China+1.1%, India -0.2%. EU Stoxx 50 -0.9%, London -0.2%, Paris -0.6%, Frankfurt -0.4%, Italy -3%, Madrid -1.4%. Euro -0.4% at $1.2905.

    The imminent demise of the Monti government and the thought of Silvio Berlusconi returning as PM sends Italian investors running into the mountains, with the shares plunging 2.2% and 10-year bond yields spiking 24.5 bps to 4.76%. Those of Spain jump 15 bps to 5.61%. The euro is -0.4% vs the dollar.

    The Shanghai Composite tacks on to last week's 4.1% gain,adding 1.1% in the wake of positive domestic economic data even asexport growth continues to disappoint. "The Chinese economy is now in a sweet spot and can stay in the sweet spot," says BofA's Lu Ting. "The current macro backdrop should bolster asset prices." Goldilocks?

    China's industrial production +10.1% Y/Y in November vs +9.6% in October and consensus of +9.8%; retail sales +14.9% vs +14.5% and +14.6%. Vehicle sales +8.2%. Non-rural fixed-asset investment, an indicator of spending on construction, plant equipment and other projects, +20.7% in January-November, the same as in the January-October, with consensus +20.9%. 

    China's export growth slows sharply to 2.9% Y/Y in November from 11.6% in October and comes in well below consensus of 9.6%. Imports flat vs +2.4% and +1.9%. Trade surplus narrows to $19.6B from $32B and vs $27.8B. Exports to U.S. -2.5%, with BofA economist Lu Ting saying the Californian port strike could have skewed the numbers. Exports to EU -18%.

    Italian banks take a beating following Mario Monti's announcement that he intends to resign, which would spark early elections. Banca Monte dei Paschi di Siena, the weakest of Italy's five systemic banks, -6.8%. UniCredit -6%, Intesa Sanpaolo -6.3%, Banca Popolare di Milano -6.5%, Banco Popolare Societa Cooperativa-7.4%. Italian 10-year bond yields are +28  bps to 4.81%. The FTSE MIB is -3.5%. 

    The Bank of England and FDIC unveil the first cross-border plan to deal with too-big-to-fail banks that start…failing. Senior management would be sacked, shareholders would be wiped out, and unsecured bondholders "can expect that their claims would be written down to reflect any losses that shareholders cannot cover," which didn't happen in the financial-crisis bailouts. (PR)

  107. VXX / Canuck – Not a bad idea, I'll look at it historically and see how that works out. I am already in the 2015 20 puts right now – not an official virtual portfolio so not posting.

    I think that Burrben is also doing the same trade.