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Whipsaw Wednesday – Down and Up We Go

Wheeee!  Isn't this fun?

As you can see from Doug Short's S&P chart, we have a classic "cobra about to strike" pattern in the S&P and, while this means absolutely nothing – it's just as valid as any of the other technical BS you'll hear from other analysts

If you zoom out to a longer-term view of the S&P, what you see is we are near the top of a rising channel that has held firmly in the S&P since early 2009 and has taken us from a spike low of 666 past the 100% gain of 1,332 a year ago and now on the way to 1,500 – which is 100% gain of the consolidation off the great drop and still short of the Oct 9th, 2007 closing high of 1,565.  

The only thing holding us down at the moment (other than AAPL), is very low expectations for 4Q earnings, as well as 2013 guidance.  BUT, coming through the last couple of months of Fiscal Cliff worries and very negative sentiment numbers from consumers, investors, financial officers and CEOs – isn't it possible that the outlooks we've been getting have been too gloomy and we're in for an upside surprise?  

I was in the mall last weekend and it was packed.  I've been getting reports from our Members, who are a group of very sophisticated investors with high-level backgrounds from all sorts of business sectors, that the economy is picking up and conditions are improving.  I'll trust their opinion over the talking heads on CNBC any day!  

AA had pretty good earnings and projects 7% demand growth next year.  That translates into roughly a 7% growth in Global GDP.  Even if you discount the relationship of aluminum to GDP by 1/3, you're still looking 5% global growth and AA forecasts Global demand to double by 2020 – that's a pretty solid long-term trend.  WDFC is another good indicator of global health and they say they can do 10% better in 2013 and STX just raised guidance and announced they bought back almost 10% of their shares last quarter as an average price of $28 a share seemed stupidly cheap to them (now $31).  

David Fitzsimmons - The Arizona Star - 113th Congress - English - congress, republicans, house of representatives, boehnerNot only are we seeing some healthy early earnings indicators but M&A activity is picking up and that's the kind of thing that can send the shorts running for the hills because nothing is worse than waking up in the morning and finding the stock you shorted popped 30% overnight as someone made them and offer or, even more annoying, that the stock you shorted popped 10% overnight because someone made on offer on someone else in the sector.  This is one of the reason the VIX, which, in part, indicates the demand for puts, has plunged recently.  

Of course, those of you who listen to the Conservative Media probably believe the country is going to Hell in a hand-basket.  I myself watched Fox news the other day and found myself wanting to run out and buy some assault weapons before they take away my rights so they can march right into my home and tax me to death.  It's a terrifying World Fox viewers live in, no wonder they are so bearish.  And, of course, if Fox viewers are bearish then Murdoch's WSJ is bearish and I would challenge you to find any good news on the entire front page.  Nothing?, the 15% recovery in Consumer Credit since 2010 should be seen as a bullish indicator as it shows confidence – especially as it's concentrated in auto loans, which are a huge plus for the economy but it's not spun that way by the Journal.  How about the fact that Japan and China rebounded this morning (up half a point), or that the government can save $542Bn in Medicare and Medicaid spending by simply coordinating medical care for seniors and the poor.  Well, of course you'll never hear that from the WSJ – that's essentially the whole point of the dreaded Obamacare program…

As you can see from the chart on the right, the US spends not 2, not 3 but more than 4 TIMES as much money on health care for the very old than other industrialized nations.  What's really sad here is that our outcomes are no better.  We spend 18% of our GDP on health care – twice as much as other industrialized nations overall and that means 9% of our GDP, $1.44Tn, is wasted in the system.  That's money that could be going back into our economy in more productive ways, making everyone a little more economically secure (except health insurance companies and Big Pharma) and probably leading to less stress and healthier citizens overall.  

Christopher Weyant - The Hill - Watch Out for the Right Hook - English - President, Barack Obama, Hillary Clinton, fall, Secretary of State, concussion, fight, football helmet, staff, Congress, Senate, Boehner, GOP, Republicans, Democrats, 2013, gun control, debt ceiling, Hagel, nomination, budget cuts, We'll probably never know because maintaining the status quo, no matter how much it's killing us, is what Congress is all about and we'll have to go back to ignoring that circus if we want to make any bread in 2013.  

As Paul Krugman points out, all the President has to do to disarm the GOP in the debt ceiling non-issue is to have treasury mint a $1Tn Platinum Coin and we're good for another year.  Yes it's a loophole but so is Congress holding America hostage by threatening to force us to default on debts we've already incurred – THAT THEY ALREADY APPROVED.  Immature and reckless – we already lost our country's AAA rating last year while the Republicans threw their little temper-tantrum – not this time.  As Krugman points out, what's worse, minting a coin to pay our debts or allowing the GOP to crash the economy?  

It’s easy to make sententious remarks to the effect that we shouldn’t look for gimmicks, we should sit down like serious people and deal with our problems realistically. That may sound reasonable — if you’ve been living in a cave for the past four years.Given the realities of our political situation, and in particular the mixture of ruthlessness and craziness that now characterizes House Republicans, it’s just ridiculous — far more ridiculous than the notion of the coin.

While the $1Tn coin is essentially Obama's nuclear option against Republican idiocy, that's the entire point of a nuclear deterrent – to force your opposition to come to the table and negotiate responsibly.  Should that fail, Krugman (a Nobel Prize-winner, don't forget) believes that this bomb can be detonated without any fall-out while I'm not so sure but that fall-out, if any, will likely be inflation, which is one of our major bullish premises for 2013 anyway.  

The Fed's Jeffrey Lacker agrees with me on that point and he feels the Central Bank's current path has us well on the road to inflation already.  “We’re at the limits of our understanding of how monetary policy affects the economy,” Mr. Lacker said, “Sometimes when you test the limits you find out where the limits are by breaking through and going too far.”  As the economy continues to muddle along, shadowed by the threat of another government breakdown, the crisis of high unemployment is only slowly receding. But in trying to address those problems by suppressing interest rates, the Fed risks the unleashing of speculation and inflation.

It’s very unfair to think of me as not caring about the unemployed,” Lacker said. “It just seems to me that there are real impediments, that just throwing money at the economy is unlikely to solve the problems that are keeping a 55-year-old furniture worker from finding a good competitive job.”

Perhaps not but I don't see how letting the economy go into free-fall is going to help much either.  Keep in mind that Lacker is the lone dissenter on the Fed Board – he's right about inflation, it's coming – but how else are we going to pay off those Trillions in debts?

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  1. Good healthcare chart from Phil this morning:

    Basically no huge premium for healthcare in the US (we even seem to be competitive in the 40-50 year old) but clearly we have an end of life problem. I guess one of the reason Medicare might be in trouble. Or maybe we need more control over the Medicare spending. Negotiating drug prices would be a start for example!

  2. MoMo portfolio/stjeanluc….what is the present cash balance in this portfolio?  Thanks. 

  3. Income Portfolio news:

    BA - In the news again with more incidents on the 787… although there are reports that the recent incidents will have no material impact on results. I guess they probably expected teething problems with a new aircraft (and one with so much new technology).

  4. MoMo / lflan – We are at -$24,207.

  5. While it look like nothing is getting done, Congress has already chipped about $2.4T from future deficits:

    Mostly spending:


    Not out of the woods yet, but some steps forward.


  6. Phil, there is a nice article about the Chinese grandpa modeling womans clothes :)

  7. stjeanluc/MoMo……I'm changing tack in this portfolio starting today.   And with the following general rules of trading:  No AAPL will be traded here (Phil has that covered elsewhere).  No margin will be used.  We will hold long puts or calls, sometimes spreads, but nothing complex.  We will look for some degree of balance (bearish and bullish plays) but will lean toward the overall market trend (if there is one).  No more than 10% of the portfolio will be placed on  any single play, and stops will be used to assure no more than 3% portfolio loss on any single play.  The portfolio name remains unchanged, as we are looking for momentum plays. 

  8. Phil, last year we saw the Sabrient Dozen at the begining of the year, are they doing it again?

  9. lflan,
    Let me understand……are you steering away from apple in the MOMO…..or will there be AAPL trades as well.
    Yes, I've been following your AAPL trades, as well as Phils. Currently in the AAPL 2015 BCS 500/650 with a sold Put at 360.
    Losing your perspective on AAPL will be like losing my security blankee…..Won't you reconsider your decision?
    Phil, no disrespect intended…..patiently waiting for your next AAPL covers to bring in more premium. Thank you

  10. Sabrient – yes, they have their picks…..

  11. jasu1…..I'll be willing to comment any time on AAPL, but I'm excluding it from the virtual MoMo portfolio for 2 reasons:  One, Phil has a virtual portfolio on AAPL only.  Secondly, I think there are better places to invest, at the moment.    AAPl seems misguided right now, what with the maps debacle, and a rumor this a.m. that they are considering putting out a cheap iPhone.  Jobs would roll over in his grave watching their behavior right now. 

  12. MoMo virtual portfolio:   Buy FB Feb (monthly) 30 calls 10 contracts for 2.00 each.

  13. Good thing we tossed the 119 Calls yesterday!

  14. MoMo virtual portfolio:  Buy SODA  Feb (monthly) 47.50 calls 8 contracts for 3.00 each.

  15. MoMo virtual portfolio :  Buy DECK Feb (monthly)  35 puts 10 contracts for 2.10

  16. Good Morning!

  17. MoMo virtual portfolio trade:   Buy AMZN Feb (monthly) 265 call   1   for 13.90

  18. Good morning!  

    Lot's of interesting news this morning, worth a look in yesterday's comments.  

    As I noted above (and yesterday), there's simply no reason to get bearish up here (above the 4% lines) and it would seem silly to consolidate up here (at the RUT all-time high), just to ultimately fail.  Why do we consolidate?  Because we reach a point at which bulls and bears each believe the market will go the other way in fairly even numbers.  As the volume is very low the past few days, we give less weight to the move from up 5% to up 4% than we do to the very strong, high-volume move from 0% (new year's eve lows) to 5% (Monday's highs).  Now it's only Wednesday and the media is declaring a bear market but that's nonsense – look at the S&P chart above – there's no bear there!  

    We are climbing the proverbial wall of worried, fueled by QInfinity, of course but you don't discount that any more than you discount the gas in your car in order to prove you can't possibly be moving – QE is here, it's $85Bn a month pouring into the economy – deal with it. 

    We have major impediments still of the Debt Ceiling, Sequestration, Tax Increases, Entitlement Cuts and, of course, Europe, China and the slowly recovering US Economy – all good reasons not to be gung-ho bullish but the path can be cleared, one by one, as we deal with these issues – just as it was in Europe last year, as they outgained our markets by a very wide margin.  

    This morning the Dollar is up 0.4% to 80.75 but the markets are holding up a little (not AAPL) and oil is up to $93.60 and gold is $1,660 with silver $30.24, copper $3.69, nat gas falling to $3.16 and gasoline still at $2.77.  

    The Euro is weak at $1.303, the Pound failed $1.60 and now $1.5995 as the ECB conference begins tomorrow and rumors are they will be cutting to negative deposit rates (now 0.25%) – silly as that seems.  You need 87.7 Yen to buy a Dollar so also super-weak but all this weakness means we could turn back up next week and reject the Dollar at 81 and spark another rally if the ECB isn't as doveish as people think they will be.   

    Obviously, we've been finding lots of bullish plays this week and our portfolios are all bullish so I guess I'm bullish – despite all the worries.  We're not going to be idiots about it, if our levels break, they break and we'll cover but the markets remain impressive against this very negative news flow and the data comes in every day as more and more companies report earnings so now is the time we need to pay attention – not just to the reports but to the reactions to the reports – and that will give us a clue of how to play this Q. 

    At the open: Dow +0.37% to 13378. S&P +0.31% to 1462. Nasdaq +0.34% to 3102.

    Treasurys: 30-year 0%. 10-yr +0.04%. 5-yr +0.04%.

    Commodities: Crude +0.33% to $93.46. Gold -0.09% to $1660.65.

    Currencies: Euro -0.29% vs. dollar. Yen +0.8%. Pound +0.33%.

    U.S. stock futures start to wake up a bit after being fairly flat earlier, with the S&P +0.1% and Dow +0.2%. Alcoa's (+2.75%decent start to Q4 earnings season has been boosting sentiment at home and in Asia and Europe as well. The aluminum company's upbeat outlook "is encouraging because it suggests demand is picking up on a global scale," says economist Peter Cardillo. Later: EIA Petroleum Inventories

    S&P 500 Market Valuation And Historic Returns 

    Economists Use Shoddy Data (Slate)

    Washington is fixing the debt crisis (

    The Good News about Big, Bad Government Debt (The Fiscal Times)

    Greek austerity is going too far, Charles Dallara warns (The Guardian)

    The U.S. mall vacancy rate declined to 8.6% in Q4 from 8.7% in Q3 and the cycle peak of 9.4% in 2011 Q3, according to Reis. The strip mall vacancy rate fell to 10.7% from 10.8%. Rents barely budged. Disappointed with the middling improvement, Reis' Ryan Severino notes vacancy rates are barely declining even with minimal mall completions occurring.

    More on Mortgage Applications: Purchase index +10% vs. -14.8% lats week, Refinance index +12% vs. -23.3% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) at 3.78%.

    How much of the acceleration in home price gains is the result of one big player? Blackstone (BX) is buying homes at a furious pace, now having spent $2.5B for 16K properties, up from $1B in October. The firm is quickening its buys, alarmed by the rise in prices (which its own purchases appear to be causing).

    Among Doug Kass' 15 surprises for 2013 will be new Senator Elizabeth Warren spearheading the introduction of a financial transaction tax. Combined with weak capital markets, reduced M&A activity, and narrow net interest margins, its makes the XLF and GS sells.

    Conrad Black: The positive side of America’s new malaise (National Post)

    Morgan Stanley (MS +1%) is planing to cut 1.6K jobs from its investment bank (about 6% of total staff) over the coming weeks,reports Bloomberg.

    Bank of America is downgraded to Hold from Buy at Credit Suisse which says the share valuation has gotten ahead of itself. Downgrades on BofA were popular until early last year. From what we can find, today's lowered rating is the first since last April. BAC -0.8% premarket.

    PNC Financial expects Q4 EPS to be cut by $0.47 thanks to recent developments regarding mortgages. The company is taking a $70M charge due to this week's foreclosure-abuse settlement. Extrapolating recent developments from GSE repurchase requests, PNC provisions an additional $254M. Shares -1.3% premarket.

    Insiders think that with Eddie Lampert manning the CEO position at Sears Holdings (SHLD) more asset sales and spinoffscould be in the offing. Though the plan sounds enticing for investors, a fly in the ointment for fetching top dollar for real estate assets could be if J.C. Penney (JCP) starts a firesale with its own stores.

    Shares of MGM Resorts (MGM) move up 2.3% in premarket trading after the door opens for the casino operator to help build its first casino complex since developing the gigantic $9.2 CityCenter on the Las Vegas Strip in 2009. Earlier, MGM China jumped 7% in Hong Kong trading. 

    ArcelorMittal (MT-5.1% premarket after announcing plans for a combined offering of common stock and mandatorily convertible subordinated notes to raise ~$3.5B; proceeds will be used to reduce debt. Also, the steel maker will restart one of its blast furnaces at its plant in Dunkerque, France, due to increased customer demand.

    Automobile sales in India fell 12.5% Y/Y to 141K due to high interest rates and steep fuel prices, according to The Society of Indian Automobile Manufacturers. The forecast for sales in 2013 in the nation has now been lowered all the way down to the 0%-1% range after being as high as 9%-11% just a few months ago. Key sellers in India include General Motors (GM), Ford (F), Hyundai (HYMLF.PK), and Maruti Suzuki (SZKMF.PK). 

    United Continental (UALreports consolidated traffic fell in December by 4% compared to a year ago. Key metric passenger revenue per available seat mile improved, while capacity fell off during the month due in part to superstorm Sandy.

    Aviation experts feel the bumpy launch of United Airlines' (UAL) fleet of 787s won't affect the carrier's operations over the long haul. They note mechanical problems for new planes in service aren't uncommon and the 787 is catching more scrutiny than normal due to its high-profile history.

    Raymond James downgrades McDonald's (MCD) to Market Perform from Outperform as the firm views the industry cautiously as a whole and can't find any visible catalysts for the restaurant operator in particular. On tap: McDonald's global sales will be heavily scrutinized after an initial report from Japan came in weak.

    Constellation Brands (STZ): FQ3 EPS of $0.63 beats by $0.08. Revenue of $767M (+9% Y/Y) beats by $15.17M. (PR)  More on Constellation Brands' (STZ) FQ1 report: Wine and spirit sales up 6% on an increase in volume with Crown outperforming the U.S. beer industry. The company reaffirms its free cash flow target of $450M-$500M for FY13 and says it sees EPS of $2.10-$2.20 vs. consensus of $2.07. (PR)

    A little speculation is all it takes:  Skullcandy (SKUL) pops 5.4% premarket on a Bloomberg report discussing takeover speculation following a 66% ravaging of the shares since its July 2011 IPO. 

    What inflation?  CBS (CBS) says it sold out its Super Bowl advertisement slots with key 30-second spots going off for as much as $4M a pop. This year for the first time the halftime show will be available for live streaming, presumably giving CBS another avenue to squeeze out some revenue. What to watch: Internet sensation Psy will be featured in a 30-second spot for Wonderful Pistachios in an all-or-nothing marketing bet for the snacks brand. 

    Verizon Wireless (VZVOD) says it expect to report 9.8M smartphone activations, "with a higher mix of Apple smartphones," for Q4. That figure is up 29% from the 7.7M smartphones activated a year ago, and 44% from the 6.8M activated in Q3 (46% of them were iPhones). Verizon's Y/Y growth rate is easily above that of AT&T (T -previous), which is more iPhone-dependent, but its Q/Q rate is slower. The smartphone sales, together with strong indirect channel growth, will lead to a slight Y/Y drop in EBITDA service margin. VZ -0.5%.AAPL -0.7%. (CEO remarks: III)

    Level 3 (LVLT -3.5%) opens lower following a downgrade to Neutral from D.A. Davidson. The firm cites valuation, and a belief EMEA and wholesale sales were flat-to-down in Q4. Yesterday, Dan Rayburn reported Level 3 has won a CDN services deal with Apple to handle a share of its software downloads, including iOS/iTunes content, in the U.S. and Europe. The deal is said to be smaller than the one Apple has with Akamai (AKAM).

    The upgrades are coming fast on Amazon (AMZN). Goldman Sachs resumes coverage with a Buy and $315 price target, Merrill raises its price target to $300, and Benchmark hikes its price target to $310 from $260. 

     The future according to Google’s Larry Page (Fortune)

    Apple CEO Cook Makes Second China Visit as Stores Double (Bloomberg)

    WSJ once again claims Apple working on less-expensive iPhone, this time for late 2013 (9TO5Mac)

    "It isn't easy being red," tweets Patrick Chovanec, after a web sensor for Weibo (SINA) "snaps," posting a rant (now deleted, of course) about the difficulty of interpreting the dictates of the states while not drawing the outrage of users. "If we don't delete your post, the alternative is that your account will be banned.

    Obama’s Nominations Mean Military Is Being Downsized, But Covert Operations Are Gearing Up (Washington’

  19. DECK/Lflan – still over rising trendline. some analysts say buy the dip, others downgrade to neutral but still with 45 target. nothing special re volume. AccDist shows some distribution… what are you looking at that says "short it"?

  20. scottmi/DECK    Very simply, it's just moving steadily downward over the past 5 days, and the long-term trendline (one year) is clearly not up.   I'm looking to ride the wave as long as it lasts.  The way I've set up the trade I would let it stop out if the put price drops to 1.30 or less. 

  21. I had the wrong lines for oil earlier this morning:

    R3 – 94.75
    R2 – 94.27
    R1 – 93.62
    PP – 93.14
    S1 – 92.49
    S2 – 92.01
    S3 – 91.36

    Yesterday's high and low – 93.8 / 92.67

  22. Health care/StJ – I guess it's easy to be competitive in years when people usually aren't sick so not sure how much of a plus that is.  Also, we're still 50% higher than what others pay under 40 and that really ads up too but the insanity clearly begins at 55 and never stops.  I know when my Dad was dying, the bill for his dialysis was $70,000 a month – that's just ridiculous!  There's something just completely wrong with a system where it's even possible to charge people that much for health care.  Even the basic care items like giving birth are ridiculous here:  

    Why are we such suckers?  Why do we put up with this?  As a country, we are being totally ripped off on health care to the tune of $1.6Tn a year.  Obviously there are very profitable hospitals and other health care providers in other countries – even at a 50% discount to US prices so this is just a completely irrational system that needs to be drastically overhauled – the sooner the better as it's a major cause of our national debt.  

    BA up 3% today – ROFL – that didn't last long.  

    HLF had a huge pop earlier but calmed down now around $40.  Dan's a bit late to the game – should have been reading PSW when they were $25 and saved himself $123M…

    Dan Loeb's Third Point Takes 8.2% Stake in Herbalife

    Oops, oil inventories already with a massive build, as we expected.  Can still short /CL when it crosses below the $93 line and the USO Feb $34 puts are now .97.  

     EIA Petroleum Inventories: Crude +1.3M barrels vs. consensus of +1.6M. Gasoline +7.4M barrels vs. consensus of +2.3M. Distillates +6.8M barrels vs. consensus of +1.1M. Crude -0.42% at $92.80.

  23. Good Morning
    Phil--Feb 34 uso puts are at about .98  bought at 1.22—-would you double down here?   Thanks

  24. be careful with DECK

    - from LimitBuyer

  25. Phil you were right but it shows you even crooks with pyramid scheme can make it in the US but AAPL is somewhat down today? Does anything make sense ?

  26. Phil,  AAPL not really budging from your $523 line (a bit below) – what does this say about future near-term direction…feels like consolidation but waiting for earnings?

  27. Healthcare costs by age…….We've known this for a long time.  Most health care dollars are used during the last 2 years of one's life.  My personal assessment of this phenomenon is that is has to do with our inability here in U.S. to accept death.   It is, of course, a part of life.  But the vast majority of families of dying patients will not or cannot accept this.  Most want "anything and everything done" to keep grandma or grandpa alive.  It borders on the ridiculous.   I've been asked, for example, to place dialysis catheters in patients in their 90s with cancer, so that their life could be further prolonged.  Many times the family has coerced the elderly patient into the process of extending life, though the patient may have other ideas.  The process is very common.  Just leads to $$$$$$$…………….then the inevitable……….end of life. 

  28. Phil,
      I have the Feb USO puts at $1.22. Would you DD at $.97?

  29. MoMo portfolio:   I'm putting a fairly tight stop on the DECK  Feb 35 puts.  We got these at 2.10 and they are now @ 2.15.  I'm putting a stop-loss at 1.80, GTC.  Yes, very tight, but I think it's warranted on this particular position. 

  30. Iflantheman – So where in this world is death readily accepted?……

  31. MoMo portfolio earning dates:

    DECK – 1/24
    SODA – 2/6
    FB – 1/30

  32. ….better yet, where in modern society is death readily accepted?….

  33. Yes stjeanluc, and thanks.  Also AMZN looks to be 31 Jan.

  34. morning guys – interesting start.
    Phil – thanks for the AA push, but why the tepid response ?
    StJ – I used to work Hospice for years, theres an AVERAGE of people ( at least Americans ) spending 70% of their entire life savings in the last 6 months of their lives.
    I can dig up the data, but it's staggering.
    Also of note, a friend sent me a BB article last night on WAG now carrying iPhones with StraightTalk.

  35. Debt decreases/StJ – Gee, isn't that $3 of spending cuts for each $1 of revenue increases?  Man, that Obama is just such a tax and spender!  

    Grandpa/Rpme – I couldn't even bring myself to read that one.  

    AAPL now having trouble getting back over $523.  Lflan wise to avoid it.  

    Sabrient/Rpme – I have no idea, it's just a thing they posted, hopefully Ilene will be able to check.

    AAPL/Jasu – You're right, it's an annoying mess.  Hopefully by 2015 it will sort itself out.  

    Cheap IPhone/Lflan – I don't know about that – it's what they did with the IPod and everyone dumped the stock and said they'd cannibalize their own sales and crush their margins, etc – it never happened.  When VHS players first came out, they were $2,000 and then they were $1,000 and then $500 and then $99 and then DVDs came out and followed a similar path and then MP3s and then we went to a phone cycle, which we're still in but now we also have a tablet cycle and next I think we'll have the Flattop cycle (Panasonic's 20"), which I predicted years ago because there's certainly a market for touch laptops which weigh 50% less.  Who knows what comes next but that's how tech goes and AAPL plays this game better than anyone – I don't see how people can possibly take this as a negative when there are 6.9Bn people on the planet who still don't have IPhones (and only 6.5Bn people who don't have IPods) – they still have a long way to go before they even saturate the Global Top 10%.  

    If AAPL can make a $99 IPhone that will be free with a data plan for the other 6.9Bn people on the planet and the margin is 30% – isn't the point, as with the IPod, really to sell apps anyway?  By the way, do you guys realize Newsweek quit publishing their print edition and now ONLY markets their magazine on-line.  7-11s and local newstands and post offices used to get a cut of those deliveries, now AAPL does.  This is another huge trend for them that will be good for Billions of more Dollars.  

    FAS Money – Back over $17 so I'm very glad we killed those short $119s (FAS now $134).  Just gotta wait this out because the puts sure aren't attractive to sell.  

    $25KPA – SHLD up 2.5% today at $41 already so on track.  BBY losing ground and, sigh, AAPL.   I figure if the rest of the market is moving, they'll catch up eventually.  I thought we bought those USO Feb $34 puts but I guess we never did so let's add 10 at $1.  

    $25KPM  - Yawn.  Waiting for Qs to top out so we can sell again.  Let's add those USO Feb $34 puts here as well.  

    AAPL Money – Next time I say "GET THE F*CK OUT" maybe you'll take me seriously…  Still, what a ride!  

    USO/Savi – I would hope for .78 to make an even $1 net and the only bottomed out at .92 this morning.  If that doesn't happen in the next week, then you'd rather roll back in time than DD anyway.  The idea is that, if it happens quickly, we can assume it's a spike against us and we have a month to correct but if it happens due to slow erosion, then you are off track and need to buy time and position.   As is often the case, a poor oil report doesn't get a big sell-off until we see a poor nat gas report to match (as it confirms low demand for energy in general).  

    DECK/Pharm – I don't see anyone wearing Uggs anymore.  Of course, the winter is kind of mild – which isn't good for them anyway.  

    AAPL/Yodi – Doesn't make sense but, as I note above, it's very easy to misunderstand what AAPL does because they are a big-picture company.  People trading stocks and managing funds are top 1%'ers, who think a $99 phone isn't worth selling because they don't understand what a small percentage of actual global sales they and their friends really make up.  A lot of CEOs don't get it either (Howard Stringer is a great example) and mis-price and mis-package their products and then wonder why they can't make money anymore.  I used to get paid a lot of money to tell people like that what idiots they were – it was kind of fun…

    AAPL/Jercon – That $523 line was the weak bounce line (20% retrace) and $531 was the strong bounce (40%) and if we're rejected at the weak bounce then it's a very bad sign and if we break back below $518 – EXTREMELY BAD.  But the Nas is up 0.4% despite the AAPL drag so we should give this little drama a chance to play out but, on the whole, I'm disappointed that we're not popping over $531 by now.  

    Ridiculous/Lflan – Not to get into it again but I think I mentioned here that only one of my brothers wanted to keep my Dad alive towards the end (last two months) and my mom, my 3 other brothers and my step-sister, not to mention my Dad, had all accepted it was no longer worth keeping him alive but the one brother who wouldn't accept it did keep a ridiculous level of measures in place to keep him alive – at an incredible expense.  These decisions should not be left up to the family, there do need to be "death panels" at hospitals who, with the patient's input, of course, should make those decisions.  

    USO/Kevin – See answer to Savi above.  

    Accepting death/1020 - Pope Benedict delivered an anti-euthanasia message this week, saying that people must accept death at 'the hour chosen by God.' And then he rode away in a heavily armored, bulletproof car.

  36. Here is a sleeper and you can  drink a Rum and coke with it!
    buy 300 stk @ 37.00
    Sell Jan15 straddle 35/35 @ 7.37 x3
    Yield on stk 2.76%
    Return Max at 35$ 1448.00 1.06% per month
    Net cost aprox 6,000.00
    Margin TOS PM 555.00
    Buy Jan15 vertical @ 3.76 x3
    sell Jan15 32.5p @ 2.37 x4
    Return 2000.00 at Max 40
    if the same as today 1115.00
    Capital invested 180.00
    Margin PM TOS 522.00
    In both cases you still can sell one or two monthly calls without any further margin, that is if you like to swet a little bit.

  37. MoMo portfolio trade:   I sold the DECK  Feb 35 puts for 2.05 each, 10 of them,  and bought to open another AMZN Feb 265 call, for 14.45

  38. Forexlive  Yay for Europe

    UK FTSE +0.8%
    German DAX +0.4%
    French CAC +0.3%
    Spain IBEX +1.7%
    Italy MIB +2.1%

  39. KO / Yodi – What strikes for the Jan 15 BCS? I am guessing 35/40

  40. Phil/death  I think it's an individual's responsibility to make up a living will, spelling out their wishes for the end of life. It would help to resolve a tough decision for the family to make at an emotional time. There will always be questions when a brain injury is involved, but in any case, quality of life should be the first and most important issue to consider……

  41. KO. Yodi – Sorry, 32.5/40 based on your prices…

  42. STJ sorry must have sliped 32.5/40 Jan 15 KO

  43. Is MA ever going to stop going higher???
    FU BBY!!!

  44. BA:  It's simple, buy the F*$#@ng dips you F*&^%$ng idiot!!!

  45. Portugal..Crazy cuts..
    LISBON: The IMF has identified 4 billion euros of possible spending cuts in Portugal, focused on large-scale layoffs of public sector workers and reductions in pensions, business daily Jornal de Negocios said on Wednesday.
    Jornal de Negocios said the IMF report, which will be discussed by the government in coming months, included a series of recommendations. Among the possible cuts it outlines was a cut in civil servants of between 10 and 20 percent, which would save between 795 million and 2.7 billion euros.

    The report also found that an across-the-board cut in pensions of 10 percent would save 2.3 billion euros, although it identified various alternatives, including only cutting future pensions which would save 600 million euros.

  46. X Phil suggested the other day sell Jan 15 22 p are still looking good today @ 4.20

  47. BBY / Phil – Not such a great day as Jabo points out. Should we cut our losses in the Income portfolio? If you recall, Schulze has up to 2/28 to come up with the money and that's also the day they release earnings which is kind of ridiculous as they keep on pushing back that date looking a little desperate (and also time it with earnings). Unless earnings are spectacular which I doubt they will be, there could be some panic. That could of course play in Schulze's hands as he could then swoop in for cheap but shareholders will be at the short end of the proverbial stick! 

  48. Good list:


    Top 10 Reasons to be Bullish in 2013

    1) Congress and the Administration have spending, taxes and the budget deficit completely under control. Fiscal imbalances have been solved and won’t be a problem for the economy or markets anymore.

    2) S&P500 earnings are declining and everyone knows stocks go up when earnings go down.

    3) Hedge funds have their highest stock market exposure since just before the last time the S&P500 tumbled 50%. 10,000 hedge funds controlling $2 trillion can’t be wrong.

    4) NYSE margin debt of $327 billion is the highest since Feb 2008. Forthcoming margin calls like those of 2008 are bullish, because leveraged investors will be forced to liquidate into a declining market.

    5) Taxes are going up and government spending growth is going down – which Keynesian economists agree stimulates economic growth, corporate earnings  and the stock market.

    6) Bernanke has deliberately squeezed investors into equities and the Fed has a perfect contrary record at preventing the last two 50% S&P500 bear markets during 2001-02 and 2007-09. Don’t fight the Fed.

    7) Goldman is in bed with the Fed and bullish GS bigwigs say buy cyclicals. Don’t fight the squid.

    8) Apple’s gargantuan $160 billion market cap loss (-24%) since September 19th is a generational stimulative event, since AAPL was a top 10 holding of 800 hedge funds and mutual funds at the end of Q3 2012.

    9) Even if the market somehow goes down, every other portfolio manager will be down too – so your fund’s investors won’t care and won’t redeem their money.

    10) 90% of market strategists and analysts polled by Reuters have a higher end-2013 market forecast. The sell-side consensus is always right and since they anticipate bear markets with pinpoint precision – this is an enormous  green light.

    For those who appreciate the subtle sarcasm of course!

  49. STJ, like Jabo always says, FU facts!!

  50. Phil, I think the pope was referring to Notre Dame at half time of the BCS game before he left in armoured car:)

  51. Here is one for the more stronger at heart.
    X will it stay above 22.6 until Jul13 ?
    Buy Jul13 Vertical 22/25 @ 1.75
    sell Jul13 20 p @ 1.05
    cost .70
    If stock holds 25 or better, your return is 235.00 or aprox 63% in six month
    Low protection 22.6
    Margin 153.00 PM TOS

  52. WSJ – one interesting article on that front page was the intro snippet on the Swiss Franc.
    I just read Micheal Lewis' Boomerang on vacation (finally). It was interesting reading about what happened in Iceland, Greece, Ireland and Germany with the extra-year hindsight I have by reading it now versus EOY 2011 (about when it came out I believe).

  53. Pharm or Phil IS there still any hope for MAKO I need a jurk in the knee or a bullet in the head. TIA

  54. hemas03 – good one  :)

  55. AAPL – is there anyone left to shake out..?

  56. AAPL / Scott – Nothing to do and wait for earnings now!

  57. Scott you can only shake the tree and see if there are still any  AAPL falling down!

  58. BBY:  I have a  Jan14 13/18 ND 3.22 and beyond the 50% mark.  Suggestions?

  59. Anyone interested in FXF?

  60. AA/Wombat – They were pegged to rebound this year by most so wasn't so exciting and CEO comments were still cautious but, as option SELLERS, flat is just fine with us and I like AA at $9.14, selling the 2015 $10 puts and calls for $3.30 for net $5.84/7.92 which makes a very nice 71% if called away at $10 and is a nice 13.3% discount if it's put to you (2x) and, of course, if we get up to $10 we can sell some front-month calls to pick up a little extra.  Feb $9s, for example, are .34, so .20 in premium which, 10 times a year, is $2 – a pretty nice dividend you can pay yourself, even if you only sell calls once in a while.  

    KO/Yodi – Not much of a discount on them at this price but no reason to think they'll go lower either.  KO not much of a jumper, so a great one to sell short calls against.  I would even consider selling the 2015 $40 puts at $6.50 because who's going to mind being "stuck" with KO at $33.50?  If you combine that with the short $35 calls at $3.90 then you have net $26.60/33.30 and that makes the $1.02 dividend 3.8% while you wait and a 31.5% profit if called away at $35 (as long as KO is over $40) but, of course, rollable at that point.

    Europe/Kustomz – Spain and Italy really flying.  Unfortunately, looks like their buyers were the ones buying over here as we're tapering off without them.  

    Living will/1020 – It's hard to know how you'll feel at the end.  I doubt my Dad would have said in advance he wanted to quit but, after about 6 months in the hospital – he was done with it and he made it clear to us but my brother wouldn't let it go and our choice was let him keep my Dad alive (and Dad was out of it by then) or override him and have him blame us forever after.  So, like I said, really there should be an ethics committee that decides these things.   You can call it a death panel but some things should be done by professionals, who can make reasonably detached decisions.  I'll admit, in those last couple of months, my Dad did wake up a few times (that I saw) and we did have a few good moments (I was there almost every weekend) and I'm glad I had them but the other 95% of his day, he was in pain or unconscious – neither the family or even the patient are qualified to decide what's "worth it" but it's easy enough to train people to be experts.  

    MA/Jabob – We gave up shorting them in the fall when they held $400, $500 seemed even sillier but now $530.  Of course, that huge expansion in Consumer Credit is a good clue as to why they keep going.  How bad could the economy be with MA &V at all-time highs?  

    X/Yodi – MT had a nice dip today because they are raising capital to cut old debt and restarting a furnace – I don't consider those bad things.  They pay a .64 dividend and, for $16.78, you can buy the stock and take advantage of selling the 2015 $17 puts for $4 and the $15 calls for $4.50 for net $8.28/12.64 and that makes the dividend 7.7% while you wait to see if you get called away with an 81% profit.  That one is so nice we should add 10 to the Income Portfolio (small in case we have to DD and a very nice $6,720 profit if not).  

    BBY/StJ – They report December sales on Friday – I think we may as well see what they have to say.  Schulze has until 2/28 (earnings day too) to make a buyout offer, last year he offered $24 and BBY turned him down because they thought this season would begin to bear out their turnaround plan.  So far, it's all bear and no turnaround but we'll see.  

    LOL on that list.  

    BBY/Newt – Well, you are hoping they get bought before they go BK at this point.  The $13s are $1.55 and you can sell those to another sucker and roll your calls to the 2015 $10s at $3.20 and that adds $1.65 to your bill but the problem is that, if the do get sold, you can't roll and you only get $3 back on your net $4.87 basis so you'd have to do that AND DD and I don't think you want to make that commitment so maybe just buy back the caller (.35) and hope for the best.  

    FXF/BDC – They are doing their best to keep the Franc low.  Hasn't been working yet but most likely they'll hug $105ish until something blows up.  

  61. Phil / All,
              Good afternoon! In the TZA 13/17 April BCS as a hedge. Bought at .90 now the BCS is around .60 with TZA closing in on 12.00. Any thoughts on maintaining or rolling to a BCS closer to being ITM and further out? Thanks! 

  62. MA went from 300 to 150 a long time ago, but one thing to mention given it's inexorable rise is that eventually it can give back 50% very easily. You just never know when.

  63. Two 90% up days in a row, the market is up on avg 12.8% over the next 3 months, 100% of the time. (Jeff Saut)

  64. Phil/living will – This would work well only when the patient can't speak for themselves. I can't imagine saying "time to go" when they're still alert and aware.
    Even still, what could a committee say to this person?….. Move it or lose it?

  65. Phil: thanks.

  66. MoMo trade:  BTO 3 Feb (monthly)  95 puts NFLX for  8.35

  67. up 100% of the time? How many data points? link….?

  68. iflan - why so bearish on NFLX
    not a good chart to short?

  69.      Oh boy, now I can really have my  2 cents.  I got a letter from the U.S. Dept of Labor and they have chosen my household (ha, just me and the wife)  to participate in a survey every quarter to measure price changes of purchases in order to calculate the CPI. I am expecting a call in the next few weeks from a Census Bureau representative.  I bet you just thought those people just worked every 10 years.  They will not only be asking me about prices, but also where I shop.  Does anybody really think the CPI accurately reflects the true cost of inflation?  Here is the list of items being surveyed:   Missing is energy, meat, rent. Except for a few , most of this cr*p is made in China


    Items that will be asked about in the survey
    Purchases within the past:

    Dishes, Glassware or Flatware
    1 Year

    Refrigerators or Home Freezers
    1 Year

    Washers or Dryers
    1 Year

    Stoves, Ovens, or Microwave Ovens
    1 Year

    Vacuums or Other Electric Floor Cleaning Equipment
    1 Year

    Small Kitchen Electric Appliances or Clothing Irons
    1 Year

    Heating or Cooling Equipment, or Home Safety Devises
    1 Year

    Household Decorative Items including Clocks or Lamps
    1 Year

    Non-Electric Kitchen Utensils, Cooking ware, or Bakeware
    3 Months

    Indoor Plants or Fresh Cut Flowers
    3 Months

    Canned Fruits or Vegetables
    2 Weeks

    Frozen Fruits or Vegetables
    2 Weeks

    Dried or Other Processed Fruits or Vegetables
    2 Weeks

    Frozen Prepared Foods, Chips, Nuts or Other Snacks, or Soups
    2 Weeks



  70. bio…NFLX popped early this week after a deal was announced with Time Warner re rights to some TV series.  Since then it has moved back down to and below Friday last close.  I think it goes lower.  But more importantly, I need a short to balance the MoMo trades a bit, and NFLX seems a good candidate for same at the moment.  We'll keep a short string on the trade. 

  71. Self proclaimed republican buys a Chevy Volt and loves it (and then evaluates his other GOP opinions).
    A good read.

  72. Thanks Phil great ideas on MT and KO hope some of the members will jump on it

  73. I think AAPL needs some Helium ballons no I pad

  74. Anyone have an opinion on PBR as a buy/write candidate?

  75. yodi…What do you think about a long straddle or strangle on AAPL near earnings.    Don't you think it will either pop or drop significantly enough for a payoff? 

  76. WFR up another 4% today and about to reach $4.  Would seem like a point of resistance, but above that not much stopping it to $4.50. Patience paying off on this one.

  77. TZA/Bdon – Well the $13s are $1.04 still so the trick is to unlock that money before it dips below .90 so you can spend .36 to roll out to the July $14s and you still have a $3 spread for net $1.26 and time to roll the April $17 caller (currently .42 and the July $25s are .42) or, if they expire worthless, then (and you have to visualize this being April and the current April calls being the then July calls) you can sell something like the $14 calls for .80 and spend .80 to roll your $14s down to the $11s (April $11s are now $1.75 so net .15 to roll to the lower spread if needed) or roll out in time again to October and just maintain the cheap insurance.  Obviously, the assumption is that this is insurance and, somewhere, you have some longs that would be doing quite well if the RUT is flat or up for another 6 months.  

    MA/BDC – Has to be a pretty wide-scale consumer panic like 2008 for that to happen.  20%, maybe, not 50% – there's nothing actually wrong with them – we just didn't think the recovery to date merited this much excitement in them but V and MA confirm the outlook.  

    Comittee/1020 – I don't know exactly, I don't have the philosophical or ethics training but that chart clearly illustrates that it does need to be done if we're ever going to reign in health-care costs.  I wonder if you had people vote on "would they be willing to live 6 months less to get a 10% tax cut for life" what the "alert and aware" people would have to say about that?  That's another part of the problem – we're not the ones paying $70,000 a month (and that was JUST the dialysis) to keep my Dad alive – we just "won" the health insurance lottery and my Dad got much more than his fair share of his money back from the insurance company (probably nearly $1M in his last year).  Interestingly, my Dad still had a going business and, had they managed to save him and kept him going another 5 years – he probably could have earned another $1M and paid $400K in taxes and employed a few people, but should that even be a consideration the hospital gets to make?  Very tricky deciding these things once you decide to decide.  

    You're welcome Newt.  

    CPI/Stock – That's very interesting.  Shows what nonsense their inflation measures are.  I'm sure a lot of the answers will be n/a and that means that, even within their survey sample, their error rate must be higher than intended as not all people are going to have opinions on all items.  Also notice the bias of the survey because if your last refrigerator was a Viking for $3,000 but this time you bought a GE for $800 because you can't afford a Viking anymore – they will end up noting that the price of refrigerators went down, even if that GE fridge is up from $650 when you bought the Viking.  

    Well that little mid-day dip was fun – back on a bullish track with 71M traded on the Dow at 2:30.

    Volt article/BDC – Very god one – this will be the first comment I'm going to tweet (our new feature I forgot to mention).  I like this:

    As a result of owning this car, I pay a lot more attention to where I get my news, and how much I trust what I hear/read/see. If you know the sky is blue, and the news sources that you trust so much tell you the sky is orange, you have a problem.  News sources I once trusted, probably to my own ignorance, such as Fox and Drudge Report, have not only distorted facts about electric cars, specifically the Volt, but they have told lies  In fact, Matt Drudge in my opinion has directly libeled GM and the Volt, and should have been taken to court and sued for millions…  my distrust of the news now goes way beyond just the electric car, as I am now forced to scrutinize almost everything else I see reported. Thankfully, my critical thinking ability has been reinvigorated. I can’t say the same the same for most Americans.

    You're welcome Yodi – your idea actually so thank you.  

    AAPL $523 – again.  

  78. Rperi / WFR,
    I agree!  This site has been great teaching how to build positions as the stock drops with put selling.  My first buy on WFR was late 2009 near 11!!.  Amazingly by doubling down twice, the last time selling $2.00 Puts for $0.57 and having the stock put to me.  I have been selling calls regularly against the position and now I am showing a significant profit of over 22% and plan to hold the position for the long term, continuing to sell calls.  Prior to joining this site I would have sold the position at a huge loss on the way down.  Like Phil preaches you have to understand the value not just the price.

  79. lflantheman
    AAPL has become a hot patato for me I am actually bullish on it but do not have an answer why they not even go up with the tide. If they do have a resonable report the stock should go up as the air has gone out of selling the stock. But for me I will sit back and do nothing until earnings. You could burn your fingers either way.

  80.  This was on Seeking Alpha today.
    H-P (HPQ +1.9%) trades higher after Bernstein's Toni Sacconaghi gives the company a sum-of-the-parts value of $29, 88% above Tuesday's close.

  81. On Phil's sugguestions of stangle and staddles I set up a play on PM very much more relaxing I know IFLAN is not for long plays but here it is. I even hold the stock for many moons.
    Sell Jan15 87.5c/85p @ 19.50 and I sit back and let them smoke themself to death

  82. PBR/Mjj – Not sure what their ratio of gas is but I think they've already been through a rough patch and are probably oversold at $19.62.  Since the lows of $17.50 held up (with 2 runs to $20+ following), I think I'd go for the 2014 $18/23 bull call spread at $2.10 and sell the 2015 $15 puts for $1.75 for net .35 on the $5 spread.  TOS says net margin of $1.65 plus the $2.10 for the spread is $3.75 of cash and margin to make up to $5 for a 133% return on cash and margin and, if they hit $23 at the end of this year, you pocket $5 and then your worst case on the short puts would be owing PBR at net $10.35.  If PBR takes off over $20, you also have the option of buying the stock for $21 (example) and selling your long calls for a profit of $1 (.65 delta) when they run out of momentum and that would leave you in a buy/write at net $16.25/15.63 when the stock's already at $21 and back over the 200 dma (although the dividend sucks so only worth it to raise potential gain to $6.75).  

    WFR/Rperi – I miss them.  

    WFR/Button – Very nice.  That's the idea of the thing – we "accidentally" end up owning a lot of things that get very cheap and then we can own them forever with a very low basis and draw an income through dividends or call selling.  

    HPQ/Albo – I agree with that one.  

    PM/Yodi – Another one I would hope to buy at a lower price. 

  83. Phil PM I got it at 58 so how low can you go, the play I set up is for more cash.

  84. HLF is most entertaining.

  85. Look, there's a DECKer…

  86. Biotechs….on a tear! 

  87. AVEO – Selling Feb 7.5 puts.  I already have the April $10 puts sold as well, but I will be happy to own them back down here….

  88. HLF is one manipulated stock….

  89. Pharm/SGEN: Comment from yesterday which I think you missed: Great run lately! I am also u/w on Mar$30 calls – what do you see from here? BTW, thanks for your SGEN tips – it has been a great horse so far!

  90. ARRY – Covered stock with Feb $5 calls.  They can have it up there again.  Can also juice the trade by selling the $5 Ps.

  91. SGEN/ceegee – sorry….do nothing.  I think they come in.

  92. How do I get the darn HOV Jan $1.50/2.50 bull call spread to fill at the full $1.00 value?  I have been trying for a week and still can't get it filled.  With 9 days until expiration will I have greater success next week?

  93. Phil,  regarding your MT Income Portfolio idea above, Barron's and Reuters indicated on October 31 that MT  announced that it would "propose" dropping its annual dividend to .20 per share in 2013.  I don't believe that this has yet been voted upon and approved by the MT board.

  94. rperi Hov
    Try to close them seperate possible never get the full value

  95. PM/Yodi – Oh, I thought you meant a new entry here. 

    HLF/Kustomz – Now the SEC is investigating all these shenanigans, probably not the company's business practices but the actions of Ackman and Loeb – who have subtracted and added Billions of Dollars of market cap by making public statements about the company that neither one of them can likely prove.  I'm sure there will be wrist slaps for everyone and then it's on to the next victim.  

    In his Q4 letter to investors, Third Point's Dan Loeb outlines his thesis for taking a stake in Herbalife (HLF). Loeb points out that the research his firm conducted showed no evidence of any pyramid scheme, and the beating the stock took at the hands of Ackman created an attractive entry point to buy the shares. By applying a modest 10-12x earnings multiple, Loeb suggests the stock's worth between $55 – 68 per share – translating to 40% – 70% upside from current levels.

    AAPL $518 but, don't forget, we expected them to get slammed during the CES as all their competitors have the floor.  Seems silly to cover AAPL when the rest of the market is moving higher and we're holding our 4% lines but it's going to be another nail-biter as AAPL tests lows.  

  96. rperi…..that won't happen.  I would put it in at 98c.  Otherwise, you will have a double call away and be charged twice by the broker.  Not worth the extra charges….do the math to see if it is better to take a few cents less, or just let it be called by you and then from you.

  97. Some big guy relentlessly selling to meet Phil's target of 518 on AAPL

  98. Pharm
    Any take on MAKO are they ever get out of their knee jurk again? TIA

  99. Love that Tweet thingie Phil…..good coverage for the site/board!

  100. yodi – device has been hammered, but small steps into MAKO could be fruitful.  Like a WFR trade….or NUVA….

  101. Thanks Pharm, Yodi.

  102. Speaking of NUVA….backfilled that gap from the spring of 2012…now back to $23?  June 17.5/22.5 BCS, selling the 15 Ps for net 65c or so!

  103. Thanks Phil on the PBR readout.  With your MT recommendation, I'd say today has been a really good one.

  104. Thanks Pharm I was thinking of cutting my losses on that one

  105. NUVA…60c for the whole thing….nickle better.

  106. AAPL: tempting to sell Jan15 450 puts.

  107. Anyone get into VOLC?  Missed the move down.

  108. Phil,
    I have some AAPL Feb 540 (cost-$49)and 545s ($46) in a bcs (540/600 & 545/625); does it make sense to roll down during this hopefully temp weakness?

  109. AAPL should have reported a loss last Q instead of an $8Bn profit, then they'd be up 20% like AMZN instead of down 20% for earning more money in a Q than AMZN has all-time.  

    HOV/Rperi – Just ask .05 more for the calls and offer .05 less for the short calls and, whichever fills first, you can afford to go .05 less on the other.  Although, this far in the money, you'll probably have to wait to the last day because each side wants .05 more than they deserve.  Make sure your broker pays the net when they expire and doesn't whack you with a  double assignment, just in case.  

    MT/John – I think they shook that news off as far as price action goes and we're not really in it for the Dividend but worth keeping an eye on.  

    Hall of fame/1020 – I'm surprised Don Mattingly made such a poor showing, he was great.  307 lifetime with MVPs and gold gloves and a total team leader – compared to these steroid monsters they have to choose from, he should be a shoe-in.  Sad to think baseball is so tainted now that the players we watched all those years can't even be represented in the Hall of Fame – what do you say to the kids when Roger Clemens is erased?  It's like having to explain who Pete Rose was and why he isn't enshrined, even though he has more hits than Ty Cobb and was one of the most important people in the game for 2 decades.  

    Loss/Pharm – TOS pays out the net, you need to check with your broker as to their policy.  

    AAPL $517 at the bell.  Hopefully they are flushing out the weak hands.  Nas up 0.3% despite AAPL down 1.5% – putting a 0.3% drag on the index.  

    MAKO/Yodi – They seem like a good company, but clearly out of favor.  Worth looking into.  

    Tweets/Pharm – I think it could be fun to highlight good comments.  

    You're welcome MJJ – I'll be happy when this "consolidation" ends.  

    123M on the Dow today – still light volume. 

  110. AAPL/8800 – With all these AAPL questions, I'm worried we may be the only people in America buying it!  Sure, if you're not gooing to roll down when they're low, when would you?   The Feb $540s are $15.50 and the $600s are $3.50 so net $12 and you can spend +8 to roll to the June $500/545 bull call spread at $20 but, as I keep saying to people, I don't like the spreads as much if you have no intention of selling short calls because AAPL is unpredictable and dangerous and technically very weak so, if you can't sell front-month calls, you can't trade your way out of trouble and hope (which you are doing now) is not a valid investing strategy.  

  111. AAPL….There is only one thing that will make me go long AAPL before earnings, and that is a stock price well below 500.   Hmmm……………….we may just get there.    

  112. Mattingly / Phil – I am not much of a baseball fan (or Yankees fan for that matter) but this guy was the complete package and a consumate professional as well with no private life antics, no drug scandal. Hard to believe that they'll keep Donnie Baseball out of the hall of fame… Idiots! Who do you want your kids to use as a model – Mattingly or Canseco? 

  113. Pharm:  My "Farmfund" up 27.7% YTD, I pushed it to 40% leverage, which is a touch greedy, but I spread it around 11 positions, average position @ 8% of the total w/ no options in sight — these stocks already have sufficient option-like characteristics.  Six trading days, amazing, domo arigato gozaimasu!!
    Stops??  I don't need no stinking stops!!  My general take on stops is that they're another gimmick for the high speed guys to take your money, and if you set 'em far enough away [good luck with that] they're even more pointless.  Brass balls, a bad temper and a sharp eye. seem to work better, although far from ideal, admittedly.

  114. YUM – Sold YUM Jan 14 62.50 Puts for 6.15.  As I mentioned last night about taking the MM fills, my limit order was above the Ask.  A good fill. My BA play did not fill.  We'll see if it comes back to me.  If not, there is always another investment.

  115. Phil / VZ – Do you like VZ at 43.00 for an entry? They are currently hanging at support. Jan 15 40/47 BCS for 3.05 and sell the Jan 15 35 Put for 2.95 to pay for it?  VZ reports on 1/22.

  116. Chugging along but Russell hit our 10% line!

  117. Good morning!  

    Big Chinese trade surplus getting us off to a good start with Asia up about half a point and Europe up a quarter-point.  Nothing thrilling but not down is good – especially if it pops the RUT over 880.  

    Chinese trade surplus +61% M/M to $31.6B, well above consensus of $19.6B. Exports +14.1% Y/Y vs +2.9% in November and expectations of +4.6%. Imports +6% vs flat and +3.3%. Export growth to U.S. and EU improve to +10% and +2.3% respectively. 2012 trade surplus with U.S. +8.2% to $218.9B. China says survey of 2,000 companies finds that export orders had increased, providing a good prognosis for Q1

    Analysts express caution about reading too much into China's huge export beat. "It's well known that monthly year-on-year changes of trade data are volatile," says BofA's Ting Lu, who also warned that a Californian ports strike could have distorted the data. IHS Global says the volatility of the figures in 2012 "points to weak fundamentals on the demand side."

    New loans from Chinese banks -13.2% M/M to 454B yuan ($72.9B) in December, below consensus of 550B yuan. A broader measure, aggregate financing, +20% to 1.6T yuan. The figures give bank lending a share of aggregate financing for 2012 of 52%. That's a record low and highlights the increasing importance of the less-regulated shadow-banking sector, which has sparked fears about rising credit risks.

    China's forex holdings rose by the lowest amount in nine years in 2012. Reserves +$128B to $3.31T in December from $3.29T in September and $3.18T in December 2011. Consensus for the latest figure was $3.32T. M2 money supply +13.8% Y/Y in December vs expectations of +14%.

    At some point, the Dow has to catch up, I think it may be time for a long Dow play if RUT is over 8800 – we need to review the index again once earnings are in.  We did an extensive review of the Dow components on Sept 25th, when the Dow was at 13,400 and, at the time, I predicted they only had 78 more points left to gain before they topped out in value.  The Dow topped out at 13,661 in October – so our logic was good.  We did another review live in Vegas, one component at a time, as we analyzed them for long-term potential and we found plenty to be bullish about with the Dow back at 12,800 but now we're back to close to our predicted 13,478 and we have to wait for the reports (because I don't pull these numbers out of my ass) to get a better sense on if 13,600 is makeable now but, back in September, my conclusion was:

    So, we're just finding $78 of likely improvements in the near future and that's just 4.4% – not exactly rally fuel is it? No wonder the Dow is having so much trouble getting over the Must Hold line – it's already exhausted. But, on the other hand, we don't have any particular reason to short it at the moment so we'll just have to watch earnings very, very closely in the weeks ahead.

    Dollar back under 80.50 despite Yen over 88.  Euro back to $1.31 (barely) and Pound $1.605 needs to confirm at $1.61 – whichever one crosses first (up or down) will give us a good indication of direction.  EUR/CHF is back to flatlining again so we'll start watching it again.  Seems like an even $1.21 is their current goal.

    Oil very excited at $94.40 (and NOW we should be able to DD on USO puts and a good futures short below $94.50 on /CL) and gold $1,664, silver $30.50, copper $3.71, nat gas $3.15 and gasoline, unfortunately, $2.80, which is ridiculous after yesterday's build. Here's a note from Raymond James targeting $65 oil later this year:  

    The RJ house call for commodities on both oil and gas are, one, we think that supply in the U.S. on the oil side has been growing pretty robustly, and we could add an incremental 3 million barrels over the next five years. Secondly, on the demand side, what we see is – or what we know is – that the U.S. economy is not growing rapidly. There's risk to potentially going into recession if we fall off the fiscal cliff. And we know Europe is having their own macroeconomic issues, and there are big concerns about China slowing down. So we think that higher supply in the U.S. and weaker demand globally could come together and manifest itself in the most obvious sign of exploding oil inventories in the next six months, and those higher inventories then will push oil prices down. So using our bottom-up, play-by-play oil model, we think to get going with the slowdown you need to see pricing average $65 for 2013.

    On the gas side, we know last winter was extremely warm, causing prices to collapse. It would have been worse had we not seen up to 10 Bcf/D of coal to gas switching on the power side. Industry did its part by dramatically curtailing most dry gas drilling in 2012. And now, heading through into this winter, we think that better year-on-year comps on the gas storage side will firm up an improving gas picture. Weather data has not entirely cooperated though so far, so some industry players are suggesting that supply finally could roll given the lower spend levels of 2012, though our model…

    They were one of the few firms that agreed with me last year, when I said $100 oil wouldn't hold but $65 may be a little extreme – I'll be thrilled to get low $80s and hold that with gas below $2.50.  

    We have that ECB meeting today with some expecting a rate cut below 0.75% but that would push the deposit rate below zero and I can't see them doing that, especially with the economy over these stabilizing.  

    We're done with our own 30-year auction at 1pm and then maybe some action.  Also:

    Fed Hawks Fly After ECB MeetsCentral bankers on both sides of the Atlantic could stir the markets Thursday.

    Thursday's economic calendar:

    8:30 Jobless Claims

    9:45 Bloomberg Consumer Comfort Index

    10:00 Wholesale Trade

    10:30 EIA Natural Gas Inventory

    12:45 PM Fed's George: Economic Outllok

    1:00 PM Results of $13B, 30-Year Note Auction

    2:00 PM Fed's Bullard: U.S. Economic and Monetary Policy

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply

    8:00 PM Fed's Kocherlakota: “U.S. economy with Marketplace Money economics”

    Bullard is key, he's speaking directly on Monetary Policy and he's a bit hawkish but nothing like Plosser, Lacker or Fisher although George and Kocherlakota are both more hawkish than he is, so it's going to be that kind of day. 


  118. YUM/Jfaw – Nicely played and good discipline.  If you only take the fills you get at your price, you can save yourself 10% a year before you begin.  

    VZ/Jfaw – They are up almost 100% since 2010.  Granted that was oversold but $45 is going to be a tough nut to crack and they're just not exciting up here.  I was a big fan in the low $30s but we're up 50% from that too.  IF the market pops – then VZ or T will be nice, solid growth plays – just like KO or MCD – but, just like them, not terribly exciting to play.  

    Big Chart – Note we're into 10% moves from bottom to top now and we never got that full V-shaped recovery that would have made us more comfortable about breaking out to new highs across the board but RUT 880 may change our minds but only if it's followed by a strong Dow move, at least back to 13,500 (1%).  

  119. And guess where AAPL is….

  120. And now $531 but rejected there.