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Merry Monday – The True Meaning of Christmas

Why it’s almost Christmas Eve, Mr. Scrooge!  

The Global markets are closed tomorrow and we’re bound to have a very slow day – if you are waiting for a Santa Clause rally on today’s trading, you are very likely to be disappointed.  Today is a day for relaxation and reflection.  Remember, the words of Jacob Marley, who said:

Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!

Marley was a man who worked and worked until the day he died and regretted it every day after.  If you don’t believe in an afterlife and you don’t believe in leaving behind the World a better place than you found it, at least find some time for yourself so people don’t call you "a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner" after you’re gone.  

I was inspired this morning by an old post on Barry’s site titled "Give and You Will Receive" listing 13 good ways we can all give every day.  

’Tis the season of giving and goodwill to all man and all that and my children just completed their annual ritual of wrapping up all the toys they are done with to give to children who need them more than they do.  

It’s a little thing, but if you want your kids to learn the benefits of charity, actually parting with things they like or liked and physically giving them to kids who clearly appreciate it is much more gratifying than writing a check to some anonymous organization.  

The same goes for volunteering some time (and money!) at a local shelter and helping some people come in from the cold for a nice, warm meal – it makes you appreciate your family dinner a LOT more! 

We went into the weekend long after taking advantage of Friday's dip to cash out our short positions.  Hopefully, we picked an opportune time to get bullish and the markets have recovered nicely off the open (as we ALWAYS sell into the initial excitement) and we'll see if stocks can keep the upward momentum in what's bound to be ultra-thin trading today – especially our precious AAPL – who need to get back over that $528 line we were watching last week.  

In Member Chat this weekend, Winston shared with us how his HOV trade went over the course of the year and it's a great review for those who like to build and stay with positions over the long-term.  Likewise our "One Trade" for 2012 has exceeded expectations and made it's full 58% return for the year and, as expected, most of us would have done better simply putting all our money into that one trade this year.  Hopefully we'll find another just like it for 2013 but the current uncertainty prevents us from jumping into anything until this cliff nonsense resolves – one way or the other

I suppose, in a way, AAPL is already our one trade for 2013 as we have a heavy position in it in our $25,000 Portfolio as well as, of course, our AAPL Money Portfolio but we'll try to find something a little more conservative than that – like our SEE trade idea from the weekend Member Chat – which is a lovely buy/write with a nice built-in hedge.  

As you can see from the Big Chart – not all that much damage has been done and we're still leaning bullish but we're also rapidly approaching that cliff and who knows what lies on the other side?  So cashy and cautious is how we're rolling into 2013.  We're still long-term bullish but, short-term, it's anybody's game and totally dependent on what does or does not come out of Washington.  

All we mortals can do is enjoy this time with our families and, oh yes, if you are so inclined – pray.  

Wishing you the happiest of holidays!

From all of us to all of you:  Thanks for 2012, it’s been a crazy start to the decade, but the century is young and, as long as we have the spirit to match it – what is there that we can’t accomplish together?

Looking forward to next year’s challenges and accomplishments to come.

All our best,

Phil, Ilene, Greg and the whole team at Philstockworld!   

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  1. Good morning!

    Markets close at 1pm so quick and hopefully painless today.  

    6:00 AM Overseas: Japan closed. Hong Kong +0.16%. China+0.27%. India +0.07%. London +0.23%. Paris -0.19%. Frankfurt closed.

    8:00 AM On the hour: S&P -0.35%. 10-yr -0.06%. Euro +0.21% vs. dollar. Crude -0.27% to $88.42. Gold +0.17% to $1662.85.

    Lawmakers in the U.S. see a container cliff," as the threat of a longshoremen's strike that could close 15 major ports along the Atlantic and Gulf coasts – including the port of New York and New Jersey – has the shipping, manufacturing and retail industries warning of a "devastating blow" to the supply chain. Like the fiscal cliff, the deadline is approaching fast: Dec. 29.

    Japan's Shinzo Abe increases pressure on the central bank to adopt a 2% inflation target with a veiled threat to knock away the independence of the BOJ if his demand isn't met. Though Abe is still a few days off from becoming the prime minister, his rhetoric has already had an effect on the debate of the role of the central bank in the nation. 

    The BOJ must double its inflation target to 2% or the government will pass a law forcing it to do so, says incoming PM Shinzo Abe. BOJ Governor Shirakawa seemingly already waved the white flag on this matter last week, but he's also on record as saying 2% is unrealistic given Japan had a 1.3% average inflation rate even during the bubble years.

    China's sovereign wealth fund is a leading bidder to buy a London office campus from Blackstone Group (BX) for as much as $1.29B. Government-backed funds from South Korea and Malaysia are also in on the hunt.

    It's more trouble for China Rongsheng Heavy Industries – the country's largest private shipbuilder -  which warns it expects to post a loss for FY2012. New ship orders for Chinese shipbuilders are off 45% Y/Y though the end of October, according to an industry group. Rongsheng fell 1.5% in Hong Kong overnight, and is off 83% over 2 years.

    The Fed is likely to stick with ZIRP through 2018, says David Rosenberg, in his chart-filled outlook for 2013. He's guardedly bullish on stocks, not because earnings or the economy are set to power forward, but because real interest rates are set to remain negative for so long.

    Retailers increasingly shift marketing messages and priceson the fly as they harness the enormous amount of consumer data at their fingertips. According to analysis from the WSJ, The biggest factor in this subtle manner companies offer different versions of their online deals to customers is the proximity of a rival's store to the tracked location of an online shopper. Staples (SPLS), Rosetta Stone (RST), and Home Depot (HD) were a few of the firms identified as actively shifting their prices online based on consumer data.

    Acer (ASIYF.PKplans to launch a $99 tablet which will undercut prices on Amazon's Kindle Fire and Barnes & Noble's Nook Color in global markets. Analysts note the move will help the company gain its footing in the hot Chinese market, but will also cut into Acer's margins. 

    It's not easy imitating Apple and Samsung: the WSJ reports Motorola Mobility (GOOG) is working on a high-end phone - codenamed the X Phone – but has had trouble incorporating features such as high-end imaging capabilities and a bendable display. The project is run by a former Google product manager; sources (possibly frustrated Motorola workers) say Google has filled Motorola with several dozen execs and product managers with no hardware experience. Motorola also reportedly has an "X Tablet" planned. (previous)

    "While more Android devices are being purchased, iOS devices are actually being used," writes VentureBeat's John Koetsier, after seeing Velti data that shows iOS (aided by the iPad) has grown its share of tracked ad impressions to 63%, even as Android grows to make up the lion's share of smartphone sales. Studies on mobile e-commerce activity and app store revenue also back up Koetsier's assertion. Hence the continued developer preference to write for iOS first and Android second. If Google wants to keep its traffic acquisition costs down, it needs to reverse this trend.


  2. Happy Holidays everyone

  3. Happy Holidays!!

  4. Happy Holidays to all!

  5. What, no FAS Money update???  Geez..    There, I was channeling our politicians and the NRA.  
    Have a Merry Chrismas everyone.  I've got to get down to prepping for Christmas Dinner in the next hour or two.  The mashed potatoes are squarely on my shoulders, and as my sister-in-law so elegantly put it, "The kids love my potatoes, yours better be good!".  Ouch, that's more pressure than trying to do a roll on expiration day.  Besides, my daughter is home and if she can't salvage my best efforts, she can mix an Old Fashioned that will make me believe it's all good.

  6. Phil / trading issue for me in January.  Per new parent company introduction of Compliance Science software, I cannot make any trades in the month of January.  ugh.  Most of my option positions have been rolled to April or beyond.  Most are spreads.  January FCX 31 puts should expire worthless but I have no prob taking the stock.  I have good amount of TZA April spreads.  GLD june 145/170 spread i guess I will wait on and roll in Feb if needed.  Same thing with AAPL april 530 calls (i took cover off).  its a very tricky time of year to not be able to trade esp with the fiscal cliff uncertainty. My gut tells me fiscal cliff issue will be resolved one way or another and I don't need to be 100% hedged.  I do have a large apple position so I may consider an AAPL disaster hedge in case something happens in January but earnings don't come out until Feb. i think so perhaps not necessary.  what do u think?  any advice would be helpful.  thanks.  

  7. Mashed Potatoes/Mjj – Fortunately, my girls love mashing potatoes.  Enjoy your dinner – looks like FAS Money is nicely on track with XLF at $16.38 this morning.  

    January/Terra – Can't make trades for a month?  That sucks.  I think we may take a sharp dip on the cliff (already did to some extent) but then a sharp recovery as they work it out.  I'd just stick with the TZA April hedges and not go crazy trying to short AAPL with Qs or whatever as they are not likely to diverge too much and, if AAPL does take off on earnings, you'll be eating those hedges.  Honestly though, if I couldn't trade for a month, I'd rather be in cash.  

    At the open: Dow -0.3% to 13152. S&P -0.28% to 1426. Nasdaq -0.25% to 3014.

    Treasurys: 30-year -0.11%. 10-yr -0.07%. 5-yr -0.03%.

    Commodities: Crude -0.16% to $88.52. Gold +0.11% to $1661.85.

    Currencies: Euro +0.17% vs. dollar. Yen +0.47%. Pound -0.01%.

    Market preview: D.C. lawmakers may be home for the holidays, but investors aren't taking a vacation from worries over the impending fiscal cliff, as stock index futures point to a lower start for today's shortened trading session. S&P futures -0.3%. European markets are edging mostly lower, while most Asian markets gained ground. No economic data scheduled for release.

    John Hussman compares Bernanke to a doctor who – facing a patient with a broken femur – vows to shove aspirin down the patient's throat until the bone heals. Eventually the bone may mend enough on its own for the patient to hobble around, but then he/she will need to be treated for liver failure. More troubling: We all know this, but countenance the Fed's actions in the name of "doing something."

    Retail watchers in the U.K. say companies are launching clearance sales online there before Christmas in an effort to offset lackluster sales in stores. In a game of chicken with consumers putting off their holiday season purchases, major sellers such as Marks & Spencer (MAKSY.PK) and John Lewis blinked first by slashing prices. The trend hasn't crossed the pond yet with department stores such as Macy's (M) and Nordstrom (JWN) still pushing hard for last minute foot traffic. 

    Retailers increasingly shift marketing messages and priceson the fly as they harness the enormous amount of consumer data at their fingertips. According to analysis from the WSJ, The biggest factor in this subtle manner companies offer different versions of their online deals to customers is the proximity of a rival's store to the tracked location of an online shopper. Staples (SPLS), Rosetta Stone (RST), and Home Depot (HD) were a few of the firms identified as actively shifting their prices online based on consumer data.

    A U.S. judge on Friday gave final approval to BP's settlement with individuals and businesses who lost money and property in the 2010 Gulf of Mexico oil spill. BP has estimated it will pay $7.8B to settle more than 100K claims. The order does not address a separate medical benefits settlement for cleanup workers who say the spill made them sick.

    Coca-Cola (KO) is reasonable valued after taking into account the company's strong financials, according to SA author Stock Gamer. Though growth numbers trail beverage peers, Coca-Cola's ability to outperform on margins sets it apart. The take on KO: Shares should be accumulated for stable income and "gradual" capital appreciation.

    Projections shows the movie industry will end the year with a5.6% lift in attendance after seeing two straight years of declines. Holding the line on ticket prices and a fresh mix of titles helped studios see the biggest yearly increase in attendance in nine years. 2012 winners: IMAX's box office tally, The Hunger GamesSkyfall, MGM's resurrection. 2012 losers: 3-D attendance, family movies, DVD sales on major releases. 

  8. Hard to believe this much trading going on.

  9. That's all for me for today as my brother and sister will show up soon and there will be kids running around the house waiting for the big guy's visit. No conducive to market watching. More exciting though as I don't get to see them as often.

    I hope everybody has a wonderful holiday!

  10. Phil
    TZA April $17/24  is this the April hedge  ?


  11. Hey Phil,
    So what do you think about FTR's recent dip? I can't find any news to explain it. Would you consider this a buying (or premium selling) opportunity? I already sold the Jan 14 $4.50 puts at $0.85 about 6 weeks ago and they are not doing too hot for me right now. Any advice would be appreciated. Thanks…and Merry Christmas!

  12. Good morning StJ!  I hope you are having a nice trip. 

    Trading/Shadow – All those guys who don't trade on Jewish holidays have the markets to themselves today. 

    TZA/QC – I like the $14/20 better for $1 at the moment – closer to the money.  If we head lower (RUT higher) we can add more downside hedge by selling maybe the $11 puts for $1 (now .40) and that hedges the bull spread and provides double cover if the market tanks.  

  13. Still more volume than usual, thought Jewish trade every day.

  14. FTR/Japar – They are not, on the whole, a very exciting company.  We like them at $3.50 because they are worth $4 but at $5 they are overbought as they really don't have much potential for expansion.  Essentially, it's a utility play with a nice dividend – nothing wrong with that of course.  I certainly like buying the stock at $4.23 and selling the 2015 $4 puts and calls for $1.80 for a net $2.43/3.22 entry, which makes their .40 dividend a whopping 16.4% in the cash entry.  If you already sold the puts, you can roll into the buy/write to scoop up the dividend (which is 50% of the price you sold the puts for annually so not bad).  

    The Jewish/Shadow – I guess they do.  

    Nothing too exciting going on so far.  

  15. VIX back at 18.68, TLT $122, Dollar 79.68 – people are getting nervous. 

  16. Happy Holidays everyone!  I am thankful to be part of this wonderful community, the discussions on this board are insightful as well as entertaining. 
    Phil, a big thank you for your guidance this year!  Listening to you and the other big boys here has made me a better trader.
    Now off to prepare some eggnog for Julfest!

  17. CLSN surging.  Guess someone knows something, or thinks they do.

  18. Phil / AA – i sold jan '13 $9 puts for about a buck in June and now 50 cents.  stock is 8.58.  i dont mind taking delivery.  div yield is kind of low though.  I cant trade in january keep in mind.  any thoughts on this one?  thanks. 

  19. Phil:
    Greetings from down south in Auburn, Alabama where I am spending Christmas with the majority of my family, and my mother who still is hanging strong after being diagnosed with brain cancer last year.  I wish all of you a safe and happy holiday with your families. Great post this AM Phil!

  20. Phil – ISRG has dropped suddenly the past few days – due to a research report written by Citron – saying the DaVinci is a product that no one wants and that is marketed through intimidation and is under the cloud of several lawsuits etc (my paraphrasing).
    Jan 2014 375 puts (stock now at 490~)can be sold at a ROC of over 60% (PM) and BE close to 350~.
    What do you think of the risk/reward and about ISRG < $400 ?
    Also – Happy Holidays to everyone – I love being on the board everyday, though I rarely post.  This board has basically taught me options trading over the past three years.

  21. AVEO has a little itch as well…..Insiders sopping up shares.

  22. You're welcome Wappler.  Great to have you on board.  Enjoy your holidays and we'll hit the ground running in 2013.

    CLSN/Albo – They are banking on good Phase 3 results.  

    AA/Terra – It's the same thing, you seem to WANT to gamble when you could take a 50% profit off the table.  AA will still be trading in Feb and there will still be puts to sell all the way out to 2015 – you won't miss anything going to cash except a potential profit or a potential loss – if you don't know which it will be – then you are just gambling with your money and, since cash is more flexible than having a loss over the next month – there's just not enough upside to letting things run for a month when your hands are tied.  

    Thanks DC and have a great time with the family.  Those bonus years together are a real blessing.

    ISRG/Partha – I know, I've been trying to figure out how much of that report is real and how much is a hack job but, bottom line is ISRG got unappealing to us at $550 and even made our long put list in July.  Still, they bounced back hard off $467 in August and held $480 in Sept and hit $550 again in October with all the same negative news out so I don't think you've "discovered" anything and you may find you're the last vulture to the corpse but you're paying as much as the first one (in premium) for bones that have already been picked over.  

    If anything, ISRG looks like a growth opportunity as they expand into more treatments.  As it takes them a long time to go through the approval process and then adoption and training – now is the perfect time for a hyena attack as, like with AAPL, they will take time to prove out their growth model, which leaves them open to short-term attacks as the funds try to scare out the retailers.  

    In Q3, ISRG sold 155 systems, up from 133 the year before.  Procedures grew 22% year over year on 2,462 machines Worldwide and revenues are up over 20% as well, led by a 24% rise in recurring revenue – meaning old machines are being used more often.  If ISRG is intimidating people into using their machines – they are amazingly good at it.  Obviously, lawsuits rise with number of operations performed – that's the nature of medicine.  

    So, I don't love them at $476 but I might at $376 – I don't see a lot of real reason to short them here although I wouldn't be at all surprised to see them go down after seeing how easily AAPL was pushed down on rumors and innuendo. 

  23. Happy holidays, all!  Wishing everyone health, prosperity and peace! 
    Started my membership in mid-Oct and have since then learned so much about options by reading the site's articles and postings, members' chats and suggested trades – as a bonus, the articles are entertaining as well!   Phil's long-term investing strategy makes really good sense as I've seen its effect on my GLW  positions.
    Phil – thanks for sharing your knowledge of the market!  I've worked as risk analyst for the investment dept of a $19B insurance company, and the scope and depth of your daily commentaries blows away what I have seen and heard from the PMs and even the chief investment officer!  Most of all, I will continue to be a member because you have your priorities right (from my POV) – it's not all about money and power.
    Ilene – I like the Market Shadows newsletter, esp. the sidebars providing background information on the topics. I like the new PSW  newsletter as well – will post comments there.
    Greg – thanks for answering my admin questions!
    PSW members – thanks for sharing your questions, opinions, suggestions and personal experiences in chat.  Great group!
    Iflan – thanks for the SODA play – learned the entire cycle of your long option play from initiation to cover/expiration!  One more tool into the brain cells.

  24. Phil – thanks.  I was talking about 60% ROC – on Selling Jan 2014 375 Puts … (not buying them).  But your analysis answered my question – I think its reasonable ROC and I will start a scale in here – fully prepared to double down – if needed during any "cliff" related events in jan.

  25. Phil,
    do you see any LT play for WFM?

  26.  Not to dampen anyone's well-deserved Chrismas spirits, but it seems that Assad has starting using a sarin-like poison gas against the rebels.

  27. Happy Holidays everyone.   Phil thanks for all you do.  You are truly amazing !

  28. Happy Holidays everyone! 

  29. Happy holidays Bai!  Thanks for kind words, hope that means you'll be participating a bit more in future as well.  

    Selling/Partha – Well that is a horse of a different color.   I like that idea a lot better. 

    WFM/Rms – I'm not a big fan at this price.  I shop there but paying 30 times p/e for a super-market just doesn't seem practical when SVU, with a p/e of 6 – can't find a buyer.  If WFM had a huge sell-off, to $60, then I MIGHT be interested but $90 is nose-bleed, although their trend shows how foolish it is to bet against them.  

    Asad/ZZ – Merry Christmas to them.  I'm not seeing anything to confirm that so far although NBC did pick up the blog you're citing – could just be market manipulation, hard to say. If it's tear gas, then really not that newsworthy but makes for great headlines.

    Thanks Albo – happy holidays to you too.  

    Wow, that was a quick day – like being in Vegas!  Not a very good one, just weak from start to finish but only 28M at 3:45 so can't even count it as a day.  

  30. Merry Christmas Everyone!

  31. Despite the AAPL crush, the Nas is up 15.5% for the year, outperforming the Dow and S&P.  

  32. Merry Christmas to all! Wishing everyone a happy and safe holiday.

  33. OK, one last trip to the stores for me.  

    Have a very Merry Christmas everyone – see you all on Wednesday! 

    - Phil

  34. Phil, a catchy tune for the new year you might enjoy. 

    Subject: Bugger the Bankers! British traditional

  35. I wish all of you guys a lot of joy and love into the holidays, Merry Christmas !

  36. Hi Phil and all the Gang have a blessed and happy Christmas

  37. Happy Holidays  Phil & everyone else here …

  38. Cap you're alive! Happy Holidays to all!

  39. Merry Christmas everyone!

  40. Happy Holidays!

  41. Merry Christmas!  Happy Holidays!
    Ron and Derek

  42. Good morning! 

    I hope everyone had a very merry Christmas and is rested and ready to take on the new year.  

    Not much going on this morning.  Most civilized cultures take this whole week off so trading is very slow.

    Only excitement going on is CNBC now says "Fiscal Cliff" 20 times an hour instead of 10.  

    Japan has been doing very well while we're closed and is back to 10,340 with the Yen way up (very weak) at 85.35.  

    So far, this hasn't done too much to the Dollar, which is still at 79.70 with the Euro at $1.32 and the Pound at $1.61.  Oil is $89.16 and gold is $1,656 with silver $29.95, copper $3.56, nat gas $3.31 and gasoline $2.74.

    Word is retail sales were fairly weak overall but we're waiting for data. 

     Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Richmond Fed Mfg.
    10:00 State Street Investor Confidence Index

    6:00 AM Overseas: Japan +1.49%. Hong Kong closed. China+0.25%. India +0.84%. London closed. Paris closed. Frankfurt closed.

    Lawmakers are becoming increasingly more fearful that the country going over the "fiscal cliff" in nine days. With the president and John Boehner – the two key negotiators – out for the Christmas holiday and Congress in recess, the will be only a few days next week to act before the deadline. "It's the first time that I feel it's more likely that we will go over the cliff than not," says Senator Joe Lieberman. "If we allow that to happen it will be the most colossal consequential act of congressional irresponsibility in a long time, maybe ever in American history," he says.

    "If people used to buy PCs every four years and are now buying them every five years, that could lower PC sales by 20 percent over time," says Bernstein's Tony Sacconaghi, quoted in an NYTcolumn discussing the lukewarm reception for Windows 8, which arrived as tablets were already pushing out replacement PC purchases. NPD believes U.S. retail Windows PC sales fell 13% Y/Y from the time of the Win. 8 launch to the first week of December, though that's better than a late-November estimate.

    As the nation's retailers, manufacturers and farmers brace for possible port closures, the International Longshoremen's Association is facing its first strike in over 35 years. The standoff is boiling down to a test of wills between some of the world's biggest cargo operators and one of the nation's strongest labor unions. "The shipping industry is trying to take back some of the power," says economist John Husing, "but they are up against a union that has abnormal power for its size and one that is in a very strong position."

    U.S. e-commerce sales somehow rose 53% Y/Y for the week of Dec. 17-21, says comScore – the research firm attributes this surge to free shipping offers, extended promotions, and retailer promises to have items delivered by Christmas. As a result, sales for the full holiday season are now up 16% Y/Y, better than the 13%reported last week, though still slightly below a prior forecast of 17%. Amazon's (AMZN) Q4 should benefit from the sales boost, but did the company sacrifice margins along the way?