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Friday Finish – Knock, Knock, Knockin’ on Heaven’s Door


"That cold black cloud is comin' down

Feels like I'm knockin' on heaven's door"


So close and yet – so far.

As you can see from our Big Chart, we are certainly knock, knock, knockin' on our breakouts at the 10% levels.  One more score and we're officially ready to raise our stops again – but it's a long process as we'll need the Nasdaq to confirm the S&P's move up and then we'll want to see a re-test of our 5 & 10% lines from the top and THEN we'll be ready to call them our new Must Hold line

If that sounds like tough standards – keep in mind that's exactly the logic that saved our assets back in September – the last time we had a rally that ultimately failed.  I know it seems like the distant past in market terms but trust me, it happened.  

In September we were skeptical and bearish (and for good reasons, as it turned out) and we had our Long Put list with plenty of short positions.  Now we are hopeful and bullish as we once again attempt to prove out a new range, where S&P 1,440 and Nasdaq 3,150 etc become the bottom of a range we'll expect to go 10% higher (1,600!) at some point this year.  That's IF we can get to 1,520 before we lose the NYSE or Russell, both of which currently are floating about 1% over their 10% lines.  As I said to our Members this morning:

AAPL is like a coiled spring that can be released and kick the market up 1-2% on a 5-10% move higher or a full 5% on a 20% move up in AAPL – like the time they went from $85 to $200 in 2009 or the time they went from $200 to $300 in 2010 or the time they went from $315 to $400 in 2011 or the time they went from $400 to $600 in 2012 or that other time in 2012, when they went from $550 to $700…  Have I mentioned that AAPL is my stock of the year lately?

It's still very much an ApplEconomy but, as we've learned from this recent rally – very much UNLIKE the previous rally – we don't need APPL to do well for the markets to do well.  In fact, AAPL couldn't really have done much worse while the markets are doing so well.  As you can see from this 6-month chart – we have the S&P up 10% while AAPL is down 10% and that's very impressive as AAPL makes up 4% of the S&P so their 30% drop has, by itself, cut 1.2% off the S&P, which would put us over 1,520 already.

We've already made our Egg McMuffin money this morning as I put out a 5:30 am comment in Member Chat pointing out that Gasoline Futures had fallen to $3.006 and that it was a great line to go long on as we usually get some kind of pump into the weekend.  Now (8:30) just 3 hours later, we're already at $3.027 and, while that may not seem very exciting to non-Futures players – it's actually good for $420 per penny per contract or $1,050 per contract if we set our stop now at $3.025.  As I often say to our Members, my retirement plan is to move to Europe and take advantage of the time zone there so I can wake up, have breakfast, make a quick futures trade and quit for the day.  

We'll be doing a Live Futures Seminar for our Members this year at our Atlantic City Conference in April because, not only do the Futures make a great way to take advantage of quirky market moves early in the morning but they also allow us to react to news and adjust our portfolio balances long after the markets have closed.  It's just another very useful tool to put in your trader's tool-box but, like a jackhammer – it's very powerful and shouldn't be used for every job

Another powerful tool we use are weekly options.  Earlier this week, I tweeted out a trade idea for the AAPL weekly $455 calls at $1.55 on Monday and yesterday they closed at $13.50 (up 770% in 3 days) – who needs Futures when options move like that?  Of course, we took the money and ran at $6 because it was a bonus to our already long (and suffering) AAPL positions so we weren't "going for it" with that trade but we did pick up the next week DIA $140 calls for .24 on yesterdays dip for both of our virtual $25,000 Portfolios, spending $480 for 20 contracts and they closed the day at .40 ($800 – up 66% in 6 hours) but we decided to go for it on those and give the Dow another day to rise.  

We hit USO Futures for another $1,000 per contract gain (getting boring at this point) and oil dipped all the way to $95.50 from my morning call to short them at $97 (right in the main post so cheapskates could participate too), so actually +$1,500 per contract for those who were greedier than we were.  Our earnings play of the day in Member Chat was on CSTR and that one was also tweeted out (we're being very generous as free trials are technically over) at 3:02 with the expanded link noting:

No hidden gems in CSTR likely to turn up and the 200 DMA is going to be tough to pop at $53.40 so I think selling 5 Feb $55 calls for $1.90 ($950) against 10 April $55/57.50 bull call spreads at .80 ($800) is a $150 credit plus whatever is left on the spreads if they don't make $55 or there is $2,500 of upside coverage for the net credit so CSTR would have to pop over $60 (up 15%) before the trade is in trouble.   BRILLIANT!  Let's do that in both $25KPs

CSTR did indeed miss revenues and had guidance that was actually worse than we thought so we'll be keeping that $150 credit plus whatever value is left on the bull call spreads.  Even if they drop 75% to .20 – we still get another $200 for a $350 gain in one trading hour – not bad.  Plenty more earnings next week and options expiration on Friday, all ahead of the holiday weekend so get ready for more fun – this week has been a blast.

Have a great weekend, 

- Phil

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  1. Phil / Yodi – NLY
    Seems like their earnings looked pretty good, the acquisition of Crexus is going to give them new opportunities.  They were down 1.7%, and Yodi was looking at selling puts yesterday.  Just wanted to get your opinion if there is a play here.
    Right now I only have 400 shares of stock, and I'm short 4 of the Apr 15's Calls for income, and 4 of the Jan15 13Puts to avg down the price of the stock if assigned.
    Add here?

  2. Phil – You need to "hot link" a title to today's post.

  3. Missing title on the post Phil….

  4. Oil Lines

    R3 – 98.69
    R2 – 97.95
    R1 – 97.02
    PP – 96.28
    S1 – 95.35
    S2 – 94.61
    S3 – 93.68

    Yesterday's high and low – 97.21 / 95.54

  5. Income Portfolio new:

    AAPL - Upgraded from Neutral to Overweight at JP Morgan (first one of many I am sure)

  6. Brr,
    NLY I said yesterday to observe the stk after earning as stocks in general drop as much as the earnings. It just depends how comfortable you are with the stock. I hold stock and from last year still Jan15 putters. Callers are no good with that type of stk as it is normally very slim and you always have a good chance to get called just before earnings and lose the div..

  7. stjeanluc
    It is a no title no panic day today

  8. Good Morning!

  9. Good Morning
    Phil—my favourite /RB—and I was snoozing uggggh

  10. Good morning!  

    Lots of good stuff in morning chat (end of yesterday's comments) that I'd be sorry if I missed (but luckily, I was there at the time).  There are 3 clips from Nigel Farage and I can barely pick a favorite but I think this one is the best summary of what Europe continues to face (probably our biggest obstacle going forward for now):

  11. Phil,
    As I often say to our Members, my retirement plan is to move to Europe and take advantage of the time zone there so I can wake up, have breakfast, make a quick futures trade and quit for the day.
    That is what I like being in Europe you have all day to do what you like as trading starts only late afternoon. Will start end of May again, while travelling in my RV.

  12. morning everyone //
    so i was at TDA yesterday ( all day ) getting all my accounts in motion. I saw the Einhorn stuff on my reps screen.
    My immediate concern is i have sets of short calls Feb16,22, and March at $500/$520 – there was no catalyst for (the stock that shall not be named) to move so quickly ) Saw Phils comments earlier.  Any suggestions ?
    Feb16 $500's
    Feb 22 $500's
    Mrch13 $520
    Trying to generate some extra cash on the way up. Roll up/out/abandon ship ?
    Look Phil, I'm panicking ! : >

  13. Phil // DBA
    DBA/Wombat – Need to be patient, not much support until $26.  Scaling in means you turn 40% loss into 20% loss with a DD generally, not 20% into 10% if it's a long-term investment. 
    I was reading through your old rolling piece on the educational site and thoiught this would be the '20%' rule, where you either DD or get out. And in your words," and, if their arent any changes to the model, why the hell did you invest in the first place !!! "

  14. Hopefully we have seen the bottom for now!

  15. KKD – Wow, just noticed this one.  Up over 100%!  Why didn't anyone see this guy?  I love Krispy Kremes!

  16. Out of DIA's at .50. Thanks Phil.

  17. Back in black!

  18. Great recovery here!

    We squeezed another $1000 from the GMCR play! The GOOG short call is really getting buried now… Good thing we have the "slow" protection. The DIA calls are a double so don't let that slip.

  19. stjean, on FAS money you are showing the short puts.  When did you or anyone get filled, I put in an order when Phil called it and have yet to be filled.  Just curious.

  20. NLY/Burr – Not much excitement there but I guess if you are accumulating and were waiting for a pullback – it's probably not going to happen.  Support at the 50 dma looks good at $14.50 but resistance at the 200 dma at $15.50 is probably a tough nut to crack too, which makes them great for selling calls (or puts for that matter) in addition to a very safe-looking $1.80 dividend (12%).  Of course, you know I like to play it conservative, so I'm all for buying the stock at $14.66 and selling the 2015 $13 calls for $2 and the $13 puts for $1.95 to net in at $10.71/11.86 and that makes the dividend almost 17% and, more importantly, if you apply the dividend to the basis over 2 years, you're down to net $7.11/10.06, which means your put-to price is still 30% below the current price and you're looking at a nice almost double if called away at $13.  Of course the flaw in that (with all dividend payers) is that the most likely reason for the stock to tank is that they cut the dividend – always keep that in mind before over-committing to these kind of companies. 

    TWO/Burr – Maybe that's why it was so hard to fill the other day.  

    Title/Diamond, StJ – Ooops, I forgot one. 

    TSLA looking too good.  Wow!  

    AAPL/StJ – About time.  Tune seems to be changing a bit in MSM – I guess fund managers got their fill and are ready to let it rocket again.

    Android/Diamond – I said that ages ago when IPhones first came out and people badmouthed their "closed" system.  The whole point to BBRY was security initially and now people take it for granted but Jobs didn't as he wanted to go after RIMM's market share.  Just wait until you see the crimes committed against people who start using their phones for transactions if it's not done properly – you may as well walk around with your wallet wide open everywhere you go. 

    /RB/Savi – Ah well, there will be others (and don't even look now as we're already over $3.05 without triggering the stop!).  

    Europe/Yodi – I might hitch a ride in the Summer – been promising the kids we'll do UK at least.  

    AAPL/Wombat – $500 is still far away.  I assume you have longs so why worry?  You can't "fix" every little move a stock makes.  You need to pick a position and let the premiums expire – that's where you make real money.  If you consistently sell $10 of premium 12 times a year and 3 or 4 times you have to pay back $20 – aren't you still ahead by $40-60?  That's all it is – BE THE HOUSE – not the gambler!

    20%/Wombat – Depends on the kind of contracts and your time-frame and your tolerance.  You can't go in and out of short-term options over 20% moves – it would take up your whole day…

    AAPL Money – At $15,000 a day, won't be long to catch up.. 8)

    FAS Money – The only bad thing about this rally. 

    KKD/Burr – I guess you missed the move from $45 to $5 a few years back.  Kind of hard to believe in them after that.  

    DIA's $25K – Goaaaaaaaaaaaaaaaaal at .63 – stop at .60 – no reason to be greedy so hard stop in both $25KPs.  

    And you are welcome DC.  

    $25KPM Back in Black – COOL!  

    $25KPA – We were supposed to take $4.50 and run on the GMCR June $50 calls yesterday.  

  21. $3.05 failed on gasoline so done with those, of course (/RB). 

    Oil failed to get over $96.50 but we don't like to short into weekend.  

    Let's pick up 100 TZA Feb $10.50/11 bull call spreads at .21 ($2,100) in both $25KPs to lock in some gains.  Pays back $5,000 on very small move down in the RUT and we can pull them next week, most likely, for a small loss.  

  22. At this stage of a rally, it's good to take about 25-30% of each day's gains and put them into downside hedges.  

    In the Income Portfolio, we have 50 TZA July $13 calls, now .82 and we want to sell 100 of the July $14 calls at .68 and roll down our calls to the July $10s at $1.65 and add 50 more so, on the whole, we're spending $13,100 to reposition our 50 out of the money $13 calls with 100 in the money (by .72) $4 spreads for $40,000 of downside protection – essentially protecting half our gains.  

    This also gives us a line now (over 900) from which we can begin adding another round of bullish plays because we're slightly over-protected for a dip.  Notice that we do this only using money we've already won (over $100K in profits now) and we are now well protected for another 6 months.  

  23. FAS / Jr – Should have filled around $1.50 yesterday morning. Or close in any case… 

  24. Phil – Do you have a take on NUAN?  Thanks!

  25. That seems like good news:


    After a burst of stimulus and financial rescue outlays in 2009, the fiscal retrenchment over the past three years was arguably steeper than at any time since World War II (see chart). Now, with stimulus and bailouts no longer clouding the picture, there's no question that the deficit is shrinking faster than it has in more than 60 years. Based on existing policies, CBO projects the deficit will shrink to 5.3% of GDP in fiscal 2013, down 3.7 percentage points since 2010.

    Even during the '90s economic boom, the deficit never fell by more than 3 percentage points over any three-year period, but at that point the economy was growing twice as fast in real terms, producing a revenue windfall.

    And all that with a socialist in the White House!

  26. TZA/Phil – We have the Jul $14 calls bought for $1.36 and recently sold the April $13 calls for $.45. In reference to your Income Portfolio post above, should we apply the .45 from the Aprils to reposition as well? TIA

  27. stean,  as an aside, thanks for all the work you do to keep these virtual portfolios up to date.  I know sometimes it is a thankless task but it is appreaciated. 

  28. You're welcome Jr!

  29. Pharm
    exellent nose on LNKD congratulation

  30. CSTR April $55s still .80, which is what we paid for them but I'm not keen on leaving the $57.50s naked (now .50) so we may as well wait until the Febs expire (still .05) and see how things look next week.  If we did cash out now, we'd net $500 more so not a bad day on that trade.  

    Good earnings write-up on CCJ by Fools (already in Income Portfolio). 

    NUAN/1020 – They got clobbered on not so terrible earnings and probably make a nice long-term buy down here.  They are not going to be exciting but should hold up so I like them on the condition of it being an income play – not just as a stock to sit on.  I think selling the 2015 $18 puts for $2.40 and picking up the $18/25 bull call spread at $3 is a nice net .60 entry on a $7 spread that's $2 in the money to start.  You can sell 1/3 March $20s for .75 to start and, if they come back quick, you have a $6 advantage to the caller (3 x $2) so not likely to get you in too much trouble with 21 months to roll and .25 per long collected is paying yourself a 41% dividend for the first 35 days – not a bad start.  

    Deficit reduction/StJ – Shhhhh – don't tell Republicans that – their heads will explode.  

    TZA/Opes – I'd leave the Aprils as is (clever sale, I wonder who had that great idea?) as they only expire sooner and sell the balance to cover the new July calls that are added.  Just keep in mind, whatever you spend is money you plan to lose – so make sure there's a clear path to offsetting it with a couple of things that make money (like the NUAN trade!) if the market does well but that we don't mind owing 2x of if the markets get cheap (and we collect our TZA money).  

    Yes thanks StJ!  You asked why no one mentioned you missed the Big Chart the other day but I think it's because we all realize you may have a life and no one's going to complain if some days you are busy but we should take the time to say how much we appreciate the visual representations of all this chat!  

  31. Pharm/ Thanks also for LNKD
    Phil/ Thanks for DIA
    I wish to all board members a happy chinese new year of the snake!
    "May a small investment bring ten-thousandfold profits"

  32. lionel
    Thank you China-man

  33. Phil if you were opening a new TZA hedge you would buy the July 10's and sell the July 14's?

  34. TZA/Phil – Clever sale indeed! Thank you for that one. So a roll from the Jul $14 to the $10's is .98. Selling the Jul 15's brings in .57, plus the April sale brings .45 for a .04 credit to the roll. Is this on the right track?

  35. Hard to find a good play today as everything is at its prime. I know Phil will not like this one but any one interesting in a XOM play?

  36. Yodi/
    "The monkey is the only animal that really knows how to handle the snake"

  37. You are welcome Phil!

    We had a post yesterday about people wasting time on Facebook and maybe it's coming to an end. Obviously I spend a lot of time in front of my PC but I always look for 2 things:

    1. A learning experience and obviously you and everybody else at PSW provide that.
    2. Entertainment

    And Facebook provides neither of these experiences… Not needed!

  38. Happy Weekend Everyone!
    I'm off to play golf near Daytona.  If anyone is in the central FL area, drop me a line at  I'm near NSB.

  39. LNKD…well, if one only bought calls, then you made a bundle.  the ratio spread is down just a smidge, but does not look like the price is going to fall from here much.  Moving to a small loss on that one….that was a wicked move.

  40. From Gann360….

  41. lionel
    We do have a bunch of snakes here I am not a monkey so I watch them from a distance and leave them alone

  42. IWM Feb4 (weeklies) 91/93 BCS is 56c.  They are going for new highs, and lots of money next week from the fed as was posted yesterday……so, play it accordingly.

  43. BP bouncing right off the 50d MA. 

    Oil going up b'c of refinery shutdown in the east.  What a crock.

  44. Phil,
    Would you consider tsla a long term buy at these prices?

  45. Yodi
    Sell 2015 75 puts on XOM ?

  46. WDC/Phil – just popped on buy reiteration from Cramer's outfit.. but may have overshot and i've been thinking the whole space has lukewarm fundamentals with slowing PC sales and lower semiconducter guidances..  your thoughts?   

  47. FB/StJean – good point about learning, but I'm an elder flatus who has replaced postcards and letters with Facebook. For people of an age to have friends and relatives scattered all over, it's a wonderful way to get back and keep in touch. I'm not sure if the investors/owners regard it in that light, though.

  48. And yet more lessons not learned from the past – austerity has never, ever worked. Why would it be different today:


    In one thing, the Chancellor has succeeded: he has delivered cuts to programs. By the fiscal year 2014, he will have slashed more than ten per cent from overall spending by U.K. government departments, according to the I.F.S. While some departments—including the National Health Service, overseas aid, and part of the education budget—are protected from the economic measure, others have seen savage budget reductions. But this hasn’t led to the improvement in the government finances that Osborne and his supporters predicted. As a result of the renewed slump, tax revenues are lower than expected and spending on benefits for the unemployed has risen. Overall government spending has continued to rise; the budget deficit has remained stubbornly high. And that’s why Osborne still will need to borrow so much money.

    In short, the U.K. experience shows how austerity policies, when applied without regard to the state of the economy, often lead to more government borrowing and debt creation, not less. In the past few years, we’ve seen pretty much the same thing happen in other European countries: Greece, Ireland, Portugal, and now Italy and Spain. Still, though, many proponents of austerity refuse to acknowledge their errors.

    Now, we have one more proof and these morons in congress want to emulate that model. Store that in the same folder with "Tax cuts pay for themselves!". Idiots!

  49. TZA/Sparky – Sure, it pays 3:1 and it's .70 in the money for 6 months so good insurance as a new hedge.  

    TZA/Opes – But there's no reason to roll the already sold Aprils.  They are fine and they will just expire and then you can sell July calls next. 

    XOM/Yodi – I like them when they are cheap but $87 is not very cheap.  Hopefully oil drops 10% and takes XOM with them.  

    FB/StJ – I can't imagine how much time is wasted on those things.  

    Have fun Burr.  

    S&P/Pharm – That looks like some serious resistance once it moves up to 1,600.  

    TSLA/Harip – Sure, that was one of my 3 trades of the year on BNN.  

    WDC/Scott – I liked them an STX when they were way lower but, at these prices, I do not find them interesting.  

  50. Phil // Cannot for the life of me get CHL shorts filled  - down to $3 – still worth it ?

  51. lionel 
    May you and your family have a Prosperous new year of the snake ?
    Kung Hei Fat Choy

  52. willsons
    XOM selling puts only is OK but cost you a bunch of margin.
    Here my play made in Jan13 still workable
    Jan15 buy vertical 82.5/92.5 for 5.10
    Jan15 sell 77.5p for 6.05
    cost runs in to a .95 credit
    PM margin on 4 of 1010.00
    Max profit 4380.00
    Lower protection 76.50
    Wait for selling monthly callers!!!
    To sell 4 Jan15 75 putters alone cost you PM 1940.00!!!!

  53. CRIS/
    Pharm, I just got filled on synthetic long SEP strike 2.5 for 65c
    Will sell calls 5 later on a possible run up before June presentation


  54. lionel  Sorry  My Chinese characters were edited off to?????

  55. Pharm
    Any idea shorting this stock
    3S Bio (SSRX) jumped nearly 6% this morning after announcing that its Board of Directors has reached an agreement to sell the company to Decade Sunshine Limited for $15.40 a share in cash.

  56. Phil,
    What are your thoughts on accumulating mhp/mco? Do  you think they will be able to get off this lawsuit with a slap on the wrist like all the banks did?

  57. Phil Thanks re XOM have been playing the options since Feb12 and still wayting for the drop, bild up in my small way plays the XOM acc to 9k so we see what gives.

  58. YUM hope you guys plaid the option when I gave the play. They up 3$ since!!!!!

  59. hi phil  any interest in mt at 16.34

  60. TZA/Phil – Ok, so to recap, we'll do the roll from the Jul $14 calls to the Jul $10 calls for .95 (cost of the roll) and work of the cost of the roll by selling calls in the future (after the Aprils expire worthless, sell July calls).

  61. TZA/Phil
    I followed the roll down and the July sells , but I still have March $10 calls —  ??

  62. Pharm - you have gotten me totally addicted to bios, that's almost all I'm playing now.  At Christmas I bot ADXS based on some SA research and look at that baby go, happilly cancelling my CHTP losses.  It's a roller coaster game and I'm still trying to catch up with you on understanding the science of this industry, however, it's heady stuff…

  63. CHL/Wombat – No, it jumped 1% today so not a good day.  Keep it on your radar, wait for a turndown and, if one never comes, there are 9,000 other stocks to look at. 

    Markets holding up well yet again, despite Dollar at 80.30.  

    Oil not holding up, still couldn't make $96.50 and now testing $96.  Gasoline back below $3.05 – maybe it dawns on them that grounding a few thousand planes and at least a full day of no driving in the Northeast is not a positive for demand.  

    Total flight cancellations are up to 3,116 for today and another 962 for tomorrow as a major blizzard bears down on the Northeast. United (UAL +1.6%), Delta (DAL -1.7%), and JetBlue (JBLU) are the three carriers affected the most from the storm. (flight tracker)

    Euro $1.336 holding up so far but $1.34 harshly rejected.  Pound now looking better than Euro at $1.58 and that's not a favorable light on the Euro. 

    VIX back under 13 at 12.92

    Najarian made a good point – People don't realize that a lot of put buying you see is simply people hedging new longs – it's not bearish at all.  Like our TZA adjustment could be interpreted by some as a "big bet the Russell will fall by July" but really we're just spending $13,000 to hedge another $100,000 worth of longs – not bearish at all (but good protection in case we're wrong).    

    Oh and speaking of STX and WDC – Still the M&A activity is a big reason it's so dangerous to short things:

    Seagate (STX +3.4%) and Western Digital (WDC +2.8%) are outperforming in the absence of major news. The Fly on the Wall suggests takeover rumors are responsible for Seagate's rally. However, the company has reportedly shot down speculation it willagain be taken private.

    LED/hard drive equipment maker Veeco (VECO -2.1%) slides after reporting its Q4 bookings totaled $92.3M, +10% Q/Q but -37% Y/Y. The company, whose full Q4 results are on hold thanks to anaccounting review, added it doesn't "see any clear signs" LED industry overcapacity and weak end-market demand for hard drives will improve in the near-term. Moreover, "competitive pricing pressure" exists in the LED equipment space. AIXG -1.6%.

    At the open: Dow -0.3% to 13944. S&P -0.18% to 1509. Nasdaq -0.11% to 3165.

    Treasurys: 30-year +0.11%. 10-yr +0.06%. 5-yr +0.04%.

    Commodities: Crude +0.22% to $96.04. Gold -0.24% to $1667.25.

    Currencies: Euro -0.22% vs. dollar. Yen -1.09%. Pound -0.63%.

    10:00 AM On the hour: Dow +0.5%. 10-yr -0.17%. Euro -0.06% vs. dollar. Crude +0.48% to $96.29. Gold -0.14% to $1668.95.

    Market preview: Stock futures edge higher following better than expected economic data from China and Germany, and the U.S. trade deficit sinks to its narrowest in nearly three years. S&P benchmark +0.2%. Volume is expected to be thin as a massive blizzard is forecast to bear down on the Northeast. Still ahead: wholesale inventories.

    Large inflows into stock mutual funds continue, with the amount since the year's start now at $24.9B, according to Lipper, the strongest run since April 2000. Do ETF flows show even more of a move towards risk? The mighty SPY moves from first to last, losing $3B in AUM last week, while the Russell 2000 Index (IWM) and the Real Estate ETF (IYR) jumped to the top.

    The ECRI Weekly Leading Index rises to 130.2 for the week ended February 1 from 129.6 previously. The annualized growth rate rises climbs to 8.9%, its fastest pace since May 2010.  - LOL – didn't these guys call for a recession just a few months ago?

    Spain is affirmed a BBB with negative outlook at Fitch. "Spain's investment-grade rating reflects Fitch's opinion that the sovereign maintains some fiscal headroom … The Spanish sovereign has demonstrated its financing flexibility and resilience during the crisis."

    "It's been an expensive wait" for bond bears, write the stalwart bond bulls at Hoisington Management. Rates may rise periodically, they say, but an "insufficiency of demand" caused by over-indebtedness assures they won't stay up for long. Higher taxes just agreed to in D.C. (not to mention CA) make the bull case on Treasurys even stronger

    No One Remembers When Bonds Went Truly Bad (Businessweek)

    Capital Markets Party Like It’s 1989 (Barron’s

    Nevada isn't likely to get left behind after New Jersey Governor Chris Christie suddenly warmed up to online poker in his state. The state Gaming Control board voted to allow three companies to begin testing software and is pushing the ball forward to see interactive gaming licenses granted. The bigger issue: Unless a federal framework is passed, look for a myriad of confusing reciprocal deals between states where online poker in legal between states A and B but not states A and C. 

    Resorts in Macau are sold out ahead of the Chinese New Year holiday, boding well for casino operators in the region. Capital Securities tips Las Vegas Sands (LVS) to see the biggest surge after the company added more rooms under the Sheraton brand through its Chinese arm. All told, Sands China claims 9,210 rooms in Macau, repping 40% of all the rooms in the city.

    Goldman Sachs' (GS) lucrative P-E business is set to shrink thanks to the Volcker rule which will force the bank to dramatically cut its participation in its own funds. A key selling point for investors has always been the bank and its partners investing right alongside, but no more. Bank of America (BAC) is exiting P-E altogether and Citigroup (C) is exploring its options.

    A man after my own heart:  Asked on the earnings call if a large increase in hedging activity is a sign the company believes interest rates are set to rise, American Capital (AGNC +1.4%) CIO Gary Kain says not necessarily. The Fed's iron grip on the yield curve has driven bond volatility so low and made hedging so cheap, it doesn't make senses not to hedge – it's a nearly-free call on the chance of higher rates. This just in: Gary Kain knows his business.

    Annaly (NLY) is raised to Hold from Sell by Sterne Agree following yesterday's post-earnings selloff. While still expecting steadily lower dividends, analyst Henry Coffey notes the shares – trading at a 10% discount to book value – may have already discounted the cuts.

    Even as the price of benchmark Brent crude surges to nine-month highs above $118/bbl, OPEC's Persian Gulf members are not inclined to increase production to help ease prices. In fact, Platt's says the Saudis cut production again in January. But if Brent hits $120, thoughts of demand erosion might start to creep in; with Europe's economy still on its sick bed, higher oil prices could prove too much to bear.

    Workers in Australia's oil and gas sector earn 25% more than U.S. counterparts, according to a survey that lays bare the pressures facing companies like Chevron (CVX) as they invest billions of dollars to meet Asia's booming energy demand. CVX says higher labor costs are partly to blame for ballooning costs in building the Gorgon liquefied natural gas project.

    Getting a pipeline built isn't easy these days, but the latest in pipeline safety technology could bring environmentalists and industry together. Remote-sensing technology designed to detect dangerous leaks has the potential to provide the neutral ground for consensus decisions. The clincher: The technology is not only affordable, it saves money and could eventually save the industry.

    Some solar stocks are off after SunPower (SPWR -6.9%) provided light top-line guidance to go with its Q4 beat. FSLR -2.4%.YGE -2%STP -2%TSL -1.9%. SunPower's EMEA sales fell 64% Y/Y in Q4, nearly offsetting solid growth in the Americas and Asia-Pac. However, gross margin rose 460 bps Q/Q to 18.6%. Continued margin improvement and an expected 10% drop in opex lead SunPower to predict on its earnings call it will see a "significant increase" in EPS this year.

    Tesla Motors (TSLA +0.2%) reports earnings next Monday with a focus on where the automaker's margins stand and if its production levels are keeping up with previous estimates. CEO Elon Musk jumped into the twittersphere earlier today to rebut a Reuters obituary on the EV industry and should have plenty to say next week.

    Now here's an economy people weren't expecting much out of this year doing BTE:  Car sales in Russia rose 5% to 2.95M in January, according to data from the Association of European Businesses. It's nice progress for a market eventually expected to overtake Germany as the most important in the region. General Motors (GM +0.8%), Ford (F +0.4%), Fiat (FIATY.PK), and Volvo (VOLVY.PK) have all stepped up their investments in the nation with an eye to the potential growth opportunities.

  64. There goes OIL!!!

  65. Important trends from yesterday's department store numbers, courtesy of KeyBanc: 1) Multi-channel (GPSJWNURBN) matters, and will hurt those who haven't invested (BKEWTSLA,BONT). 2) High-end should outpeform. KeyBanc likes OXM and JWN, and prefers COH over TIF.

    strong quarter from P-E backed Hugo Boss bodes well for the luxury sector, according to analysts. The company saw double-digit wholesale growth help it beat estimates and grow profits by 42% over last year's Q4. The read-through is positive for Ralph Lauren (RL) and PVH Corp (PVH) if the high-end mens apparel category picks up steam.

    U.S. retailers prepare for the onslaught of Chinese tourists expected to celebrate the Chinese New Year by hitting high-end stores. In measures designed to stoke sales, department stores such as Saks (SKS +0.6%) and Macy's (M -0.1%) in New York City have adopted their payment systems to accept China UnionPay credit cards and are training their staff to learn simple Chinese phrases.

    McDonald's (MCD) says global comparable sales fell off1.9% after suffering a sharp drop in its Asia/Pacific, Middle East and Africa segment which was tied in part to a calendar shift of the Chinese New Year. U.S. comparable store sales were up a modest 0.9%. MCD -0.4% premarket.  More on McDonald's (MCD): Comparable store sales in Europe are still soft, shedding 2% in January, but Asia is the driver behind the headline drop in global sales. Continuing deterioration in Japan and the chicken contamination scare in China both contributed to the malaise in the region. With analysts already calling for a 1.1% drop, and many of the Asian headwinds transitory, the report isn't a shocker. MCD -0.1% premarket.

    Crunching the numbers on McDonald's (MCD +0.7%): With January global sales in the books, Hedgeye's Howard Penney notesthe restaurant operator needs to make up close to 100 bps of revenue growth in February and March to meet Q1 consensus estimates. That's a tough row to hoe, but Jefferies' Andy Barish has an evenbigger concern. The retail analyst wonders if McDonald's management has run out of arrows as competitors have increasingly copied its winning formula.

    The shareholders are getting restless at Western Union (WU), according to analysts. The biggest criticism aimed at the company is that it isn't adjusting fast enough to a money transfer industry which is going digital. It appears CEO Hikmet Ersek has until the end of the year to show progress before shareholder activism picks up.

    Coinstar (CSTR) is losing even more market share to Netflix (NFLX) than what has been previously forecast is the logical conclusion that comes from taking in the quarterly reports (CSTR,NFLX) of both companies, according to JPMorgan's Paul Coster. The company is still banking on its video streaming service – currently in a beta – to swing the momentum back in its direction, but the clock is ticking. CSTR -7.6% premarket.

    Shares of Caesars Entertainment (CZR) pop, up 28% to add to yesterday's rally. A number of factors are in play on the stock with online gambling teed up in New Jersey and the company announcing new moves this week like offloading assets into a partnership and lowering its debt costs. Despite the buzz, InvestorPlace warns that now is not the time to chase shares.

    Activision (ATVI +11.6%) is making multi-year highs following a Q4 beat fueled by a record 44% op. margin and soaring Skylanders toy sales. Sterne Agee has upgraded shares to Buy, declaring Activision well-positioned for upcoming console refreshes and predicting major buybacks are on the way. Management noted on the earnings call most of the Q4 decline in World of Warcraft subs came from China, and that Western subs were relatively stable. Electronic Arts (EA +2.2%) is higher, and so is Chinese Warcraft partner NetEase (NTES +6.7%).  - My daughter's Death Knight is up to level 84 now.  She could have spent that time getting a law degree by now (she's 13) but at least she can decapitate an opponent with a single blow!

    LinkedIn (LNKD +19.7%) is off to the races as accolades pour in following its huge Q4 beat (I, II), and is lifting some recent Internet IPOs along the way. YELP +5.6%GRPN +2.7%ZNGA+4.2%. "LinkedIn remains one of the best business models online today," writes Cantor, impressed with 106% Y/Y international growth but maintaining a Hold on valuation grounds. LinkedIn stated on itsearnings call it plans a "mid-single-digit" price increase for its recruiting product. 2,400 Talent Solutions customers were added in Q4, raising the total base to 16.4K organizations. 

    Facebook is malware, people suddenly realize (COMPUTERWORLD)

    Shares of Sony (SNE) open weak following another tough trading day in Japan. During the last quarter, the company made money in its movie, music, and financial services businesses but investors are focusing on the losses bled out from electronics and mobile phones units. Today, the Xperia Z smartphone debuts in Japan to much fanfare in what is a critical Sony product launch.

    IMAX (IMAXenters an amended $200M credit facility with a number of larger banks participating. The new financing arrangement will permit IMAX to fire up as much as $150M in stock buybacks and dividends provided certain covenants are maintained.

    Alcatel-Lucent (ALU +5%) opens higher after catching a two-notch upgrade to Overweight from Morgan Stanley. MS is pleased with ALU's refinancing deal and restructuring efforts, and thinks competition between telecom equipment firms is cooling off, but remains worried about the margin impact of unprofitable service contracts. Investors took profits yesterday following the company's Q4 report and CEO announcement. (Q4 results: III) (Nokia Siemens report)

    Some Intel (INTC +1.1%) news: 1) Intel has invested $6.5Min growing software-defined networking (SDN) startup Big Switch Networks. Intel's motivation: Big Switch's SDN controller allows commodity switches using network processors from Intel and others to replace costlier switches (from Cisco, Juniper, etc.) using proprietary ASICs. Big Switch competes with VMware's (VMWNicira unit. 2) CNET reports Asus will launch a 7" Android tablet featuring an Intel Atom CPU later this month.

    More on AOL: A new $100M stock buyback has been authorized. Ad sales +13% Y/Y, a pickup in growth from Q3's +7%. A 31% increase in 3rd-party network ad sales, and a 17% increase in search ads, offset flat display ad sales for AOL properties. Dial-up ISP revenue again fell 10% – 99K domestic subs were lost Q/Q, but ARPU rose $0.80 to $19.27, and churn held steady at 1.8%. Free cash flow was $46.3M, -36% Y/Y. The Membership Group (includes ISP ops) still makes up vast majority of profits. AOL +8.9%. (PR) (slides) 

    David Einhorn says he has met with Tim Cook and CFO Peter Oppenheimer in recent weeks about his preferred stock proposal, and that the two sides continue to talk in spite of his lawsuit. Einhorn adds Cook has been more receptive than Oppenheimer, and that he remains a fan of the Apple (AAPL +1.7%) CEO''s performance. Meanwhile, the sell-side is giddy at the prospect of fresh dividends/buybacks: Barclays thinks Apple can increase its payout by 30%-40% without tapping overseas cash. (more)

  66. TOS – anybody have a current contact there? I'm getting no response from Scott or Mike, the executives I've formerly dealt with…

  67. Another Fox Business idiots:


    From Fox Business reporter Shibani Joshi, explaining why Germany, whose capital is at about the same latitude as Edmonton, has adopted solar power more successfully than the United States:

    They're a smaller country, and they've got lots of sun. Right? They've got a lot more sun than we do.

    I mean really, where do they get these idiots. Really!

  68. One more AAPL chart:

    Does the fact that the poster stock for this bull market is now underperforming the S&P 500 over the last year mean that the bull is near its last breath.  Or is the market bigger than a single stock?  Our view is more towards the latter, but it is interesting nonetheless.

    On the other, the last 2 times it happened, AAPL rocketed shortly thereafter….

  69. Cooking numbers in China – surprise…


    Chinese companies get VAT refunds of a standard 17% on overseas sales. This often leads them to generate fake exports (pdf p.1). This requires producing fake invoices to show to the taxman. And China is home to a well established cottage industry of companies that offer to generate the fake paperwork (paywall) needed to achieve this. [...]

    China’s exports also surged—ostensibly—in December, leading economists at investment banks Goldman Sachs and UBS to strongly question the data. UBS said China’s stated sales to South Korea and Taiwan in December did not match with those nations’ import figures, even though these statistics have historically matched up well.

    What happened? Did containers fall off the ships between China and Korea?

  70. Phil
    Question on how to handle success!
    In an IRA account I bought 3000 WFR  for 3.19 sold Jan 14 calls for .84  Gain on cash if called 49%. WFR has gone wild, today 4.49.   Should I:
    A. Sit back. Smile and thank PSW.
    B. Roll to the Jan 14 $5 call for an additional 70c cost.
    C. Other   

  71. On above post Jan 14 calls at 3.5 

  72. OMG!  Not sure if we've talked about this 16 year old actress stock trader:

  73. @gerryf,

    I would "A. Sit back. Smile and thank PSW."  Just close out your winner and book those profits.  Then wait around till WFR gets cheap again and re-enter.

  74. StJ // Shanghai
    This is all true. I used to live there and I can't explain the labyrinth of 'grease money' that is thrown around. What Westerners don't get is its hard-wired into their system, culturally. I had a very interesting lunch with CPA from Europe and his advice on the investement front was basically don't. All the valuations that you see are fake.
    Some of my co-workers were literally responsible for paying their rents with reimbursements purchased from 'receipt shops' at pennies on the dollar. The farther you dig the crazier it gets. 
    I wont clog the boards, but if I ever get the pleasure of meeting you guys, I have stories that would spin your head.

  75. gerryf
    WFR option B looks good but would sell the Jan15 3p for about .74 so you do not have any further costs my two cents, like to see how Phil thinks about it

  76. Good stuff wombat! Come to A.C. then!

  77. gerryf
    I see WFR pays no div. TAKE Craig's advise

  78. StJ // AC
    Would love nothin more. Wife due in 7 weeks : > Gotta make the doughnuts …

  79. stj—are you going to AC—I am trying to work it out as I have some friends visiting from out of the country—trying to see if i can talk them into visiting AC --hoping it works

  80. MHP/MCO/Harip – Too much uncertainty with potential liability.  Not just if they get fined – people who relied on their ratings will likely form up and sue them too.  Could go on for ages.  Then the Government may force them to change their model and sell to consumers and not issuers – that's a whole other mess they'd have to deal with. 

    You're welcome Yodi. 

    Oil with a nice little dip to $95.25 and now back over $95.50 – normal silly Friday nonsense. 

    MT/Tommy – Same long-term interest I had at $16.78 in the Income Portfolio.  We sold the 2015 $15 calls for $4.50 and the $17 puts for $4 so it still nets out around the same overall and then it's just a very dull wait until 2015.  

    TZA/Opes – Yes but also supposed to DD on the July $10s and sell July $14s to cover (assuming you don't think already over-covered but I don't think we were).  

    TZA/Wombat – Is there any particular reason not to buy 4 more months of insurance for .65?  That's all there is to the decision process and, of course, if you sell calls for .65, then you've paid for your next Q roll already.  

    TOS/MrM – I don't know the new guy. 

    Fox/StJ – Well it's about the quality level of reporter-knowledge we've come to expect at Fox.  I very much liked the linked article on the subject:  


    First, Germans do not get more sun than Americans. In fact, every American state other than Alaska gets far more sun every year than Germany does. Fox's report had this backwards.

    Second, the Obama administration's subsidies to the solar industry haven't failed; they'vevastly improved domestic solar output and expanded the industry's reach. So, Fox's report had this backwards, too.

    And third, if anyone who cares about reality wants to know the real reason Germany's solar industry is ahead of ours, it's because the German government has invested heavily in environmental technology. Indeed, Max Greenberg's report flagged this Bloomberg Businessweek report from a few months ago.

    Unlike the U.S., Germany has a national solar policy, a quick, inexpensive permitting process, and a national mandate that utilities sign up rooftop installations under what's known as a feed-in tariff--essentially a long-term contract whereby the utilities agree not just to allow the solar on their grids but also to buy the excess power from consumers.

    In other words, the Fox segment might as well have come with an "Opposite Day" disclaimer. The on-air personalities seemed to argue that the United States should do better on solar power, but then said we should stop doing the very things that would help us do better on solar power. They then blamed Germany's superior sunshine, when in reality, Germany gets far less sun than nearly all of the United States.

    News consumers interested in energy policy would be better off staring at a blank wall than listening to segments like the one aired on "Fox & Friends."

    AAPL/StJ – I'd say it's pretty clear that AAPL has not signalled a bear market so much as a bull market has signalled it's time to buy AAPL.  

    China/StJ – Just the normal noises.  

    WFR/Gerry – Very nice.  I'd cash out at $4.50 and sell the 2015 $3.50 puts for $1 and buy the 2015 $2 calls for $2.75 and roll the 2014 $3 callers ($1.90) to the 2015 $3.50 calls for $1.75 so you end up cashing net $2.60 (essentially your entire original cash commitment) and you have $1.50 of additional upside at $3.50 (22% downside protection) at which point you would get the stock put back to you but, because you own the $2 calls, your break-even is $2.75.  So, all the money back in your pocket and 50% upside is good, right?  That's without increasing your position or taking a big risk.  You could alternatively cash 3,000 at $4.50, sell 30 $3.50 puts for $1, buy 60 of the 2015 $3.50/7 bull call spreads for $1 (net .50 per long and $4 left in pocket) and roll the 30 short Jan $3 calls ($1.90) to 60 short Jan $5 calls (.90) for .10 ($300) and now you have $11,800 back in your pocket a $3.50 spread that's $1 in the money and $1.50 in the money to your short callers with a whopping $21,000 worth of upside if all goes well and, of course, the obligation to get back in to 3,000 at net $3.50 ($10,500 – but the short callers would have to be worthless if that happens and you still have your $11,800 in pocket).  I like that enough to make it a new play in the Income Portfolio (obviously without the roll part, but the same 2014 $5 short sale).

    Actress/Rperi – She was the kid on Desperate Housewives.  Seems like a good little trader.  

    Stories/Wombat – It's a strange and mysterious land over there.  As to the wife – congrats but seems like the end of April is just when you'll be wanting a little break! 

  81. Craig/gerry/yodi
    How do you know when WFR is cheap? It was $14 two years ago!
    I am sitting on a $1.5/$2.5 Jan 14 BCS and short $1.5 put, all way ITM but with lots of premium still in them. With the recent runup I am of course regretting that I wasn't more aggressive when I entered it a couple months ago :-)

  82. ZNGA's had a really good week.

  83. WFR, and now a more aggressive idea from Phil that I could add to my current posistion.  Thanks!

  84. mrm – Thx.  ADXS…penny stocks, you win big, you lose big….. Love 'em as well, if we stick with the science.  If I could just stop shorting the SPY……

    SSRX/yodi – China Pharma….really?  No idea.  Not gonna even think about it.

    CRIS – love them, love the pipeline.  Stock is lagging.

    THRX – GSK love affair.  Sell some puts…..Mar 17.5s look fine

  85. AC / Savi – It's the plan but as I told Terra I still run a business and stuff comes up. But the weekend is in my calendar as blocked for now.

  86. TOS update - Scott has left, so delete him from your address book. Best way to get support is just to go into support the chat window, select Accounts, and tell them your problem there, and they escalate as needed; problem solved.

  87. Pharm / SPY - And EDZ, and VIX.  I still have my short puts on these from Christmas 2012 when you and I and JRW were ultra-bears, and I'm rolling them endlessly.  As long as I have them, up we go!

  88. Congrats Wombat but as Phil says, you might want to get away if nothing else to get some sleep!

  89. I mean Christmas 2011…

  90. CRIS - looks to me to be touching a 3 year support line right now, if it bounces then probably a great entry point, but if it breaks below, better pricing ahead.  I'm watching closely because I've been scaling in since $1.40 so if I can remember, I'll post my next buy.

  91. Phil, Yodi, Craig 
    THX for the comments. One problem is: this is in my IRA account. I can do puts and do  but the margin kills…100% cash covered. 
    Phil… WOW thanks,  I am going to sort through that "Blizzard" of advice before I do anything!.  It will take me a while. 

  92. Actress / Phil – How about a free premium account for her so that we can at least get our daily Hollywood gossip! The only other celebrity trader (Dykstra) is going to jail any day now so we need to nab the ones we can.

  93. jelutuck
    WFR I trust Phil said it all. Aways plays synthetic if there is no div in the stock. Foolish I am as well sitting still with 1500stk from 2010 at 9$ and working this sucker down. Will look closer at Phil's suggestion possible even take a loss at the stock for now.
    Your spread looks OK 2.5 caller has still .26 of premium and the putter .12 cents so not much to do but sit on it until the premium is burned down. You can always close if you have anything better to do with the money.

  94. stjeanluc – Any potential Monday earning plays on your radar?

  95.  inbound a380 with 300 people on board has break problems heading into jfk…3,000 gallons of fuel

  96. PSW // TZA
    Hey guys, I'm havin a hard time following the flow on the TZA's. I know it's a disaster hedge that we keep rollin down the road but I just havent grocked it yet, or else I'm just missing action items.
     I've matched the position Phil mentioned this morning, so we'd be on the same page
    100 July $10 Calls ( cost basis $1.64 )
    -100 July $14 Short Calls  ( sold at $0.65 )
    The short call income will augment the cost of the next roll – I get that. 

    Somehow I would up with 30 March $10 calls ( $1.30 ) as well //

    So, heres what I'm thinking -
    roll the 30 March $10 worth (.90) to April $10's  / Sell the same amount in $12 calls to create an April position.

    I would have two layers of hedge. Is this how you guys do it, or do you just have one spread that you keep adjusting.

    Stupid guy with pregnant wife who gets up at 4am and still cant come to AC

  97. i read that note about the troll patrol and all i could think was that the world was becoming china

  98. Wombat – Congrats on the "Bun in the oven"   :)

  99. stjeanluc
    Thank you for the posting and keeping the portfolio updated great job

  100. Earnings / Diamond – Nothing strikes for tonight or Monday. Sorry!

  101. You're welcome qc!

  102. Phil – Any CCJ earnings play for tonight? 

  103. 3D printing/cdtbud – Here's a discussion of trading the 3D printer space.

  104. Yodi // CVLT
    Can you re-post your idea on my CVLT problem. 
    I think you mentioned a straddle that I could play long term to whittle away my loss.
    I'm short these guys 500 shares at $52, so looking at a 40K loss. 
    With a possible correction looming, can't seem to pull the trigger and take the loss, just yet.

  105. StJ // Kudos
    Second !

  106. from the can of  the cave  bear:

  107. 1020 //  Bun
    Thanks man – apparently I'm a 'girl maker' ; > It's our second since we came back to the United States of Amnesia.

  108. wombat
    I have three! I am the "girlmaker"! :)

  109. wombat

  110. Yodi/WFR
    Problem is the spreads on the options are huge. Unless I get a great fill, I am stuck in these for a while…but I am happy letting them just decay.

  111. WFR/Jet – It's cheap in that it's a solid solar provider that will grow with the industry over time.  It's a growth stock though, not a value one so it's all about whether you are willing to ride out the price fluctuations over time as Fibonacci retracements affect the growth of industries as well so they are always going to go through cycles – even if they are expanding in general.  If your time-line is 6 months or one year or two years and you would stop out if the stock dropped 50% – then it's not for you but, if you think you want to retire with a portfolio that's 5-10% solar stocks – this is a good place to start. 

    ZNGA/Albo – They should do great on premise of on-line gambling – until the reality that they are getting their asses kicked by the casinos sets in. 

    IRA/Gerry – Much tougher in IRA but can't you sell puts in an ordinary account?  

    Celebs/StJ – Feel free to invite her but not sure what she'd add to conversation. 

    A380/Angel – At least we have some nice, soft snow to land on.  

    TZA/Wombat – Why bother?  Cash them out and consider them rolled to the new position.  Also, make sure you are right-sized at 100.  We've got $500K margined and are protecting $100K in profits and spending $13K to do it – that makes perfect sense.  If you've got $50K long then WTF?   The layers make sense when you are generally bearish and expecting a drop any minute – so you want to make some short-term money you can take off the table while letting the long-term hedge ride (kind of like our oil futures, SCO and USO trades).  That's a bet – not a hedge.  A hedge is insurance you are SUPPOSED to lose so, essentially, you are trying to find ways to lose more money faster….

    Troll patrol/Angel – I saw a great documentary on troll hunting from Norway.  

    CCJ/Deano – As I noted, we already have them in the Income Portfolio a bit lower than here for 2015 so I certainly like them long-term but tough to call any individual earnings Q.  I'd base a new entry on the premise that they don't go below $20 but, if they do, we don't mind owning them so 2015 $20 puts can be sold for $3 against a $17/25 bull call spread at $3.70 for net .70 on the long spread and then you can sell 1/2 the March $21 calls for $1.10 for net .20 on the $7 spreads that are $4 under the calls with a 2:1 advantage so almost no upside harm, a net .20 entry at $17 and worst case is owning the stock at net $20.20 but the break-even, with the $17 calls, is $18.60, 13.5% off the current price and, of course, 7 more quarters to sell.  

    Subprime/Angel – It's not like it's never going to exist again.   It wasn't the loans that were a problem – it was the mispricing of the associated risk and then leverage taken against the mispricing.  

    I have 2 girls – maybe boys are dying out. 

  112. you see krawcheck interview last night on fast money…she basically said banks hadn't learned anything and leverage still way too high

  113. Celebs / Phil – Just jesting! 

    Got 2 girls as well…. What's the deal with this board!

  114. jelutuck
    WFR just sold the stk at 4.50 and the Jan15 3p no bids on 3.5 I closed the 3p for .73 which is not to bad have not plaid with spreads as I do not have any callers exept 6 against this stock so you just have to make your play and wait

  115. we are never going to get them to split the banks but we need to firewall them so only the deposit taking part of the bank can borrow at the Fed window and make only traditional type of loans (commercial banks)

  116. USO/phil – down to my last few March USO puts. Didn't make 1.50 yet.  Are you anticipating oil to go lower than the 95.25 it has been bouncing off last few days? Worth holding through the weekend? 

  117. It's time for a group hug.

  118. Free the Y chromosome! ;-)

  119. womb
    CVLT do not recall any play as I do not have the stock boy you 50% down and that stk is up 3$ today should never run short stocks I seldom have one in a paper trade and if assigned you liquidate them like a house on fire, they worse than naked callers !!!! Mabe Phil has a magic stick.???? sorry

  120. Phil and Pharm— what is your opinion on MRK? 
    Is there a good bcs or other play that you would rec (if you like MRK or not? )

  121. I must be the outlier. My family (I have 3 siblings) has 9 boys and 1 girl. My sister had the only girl. My brother (who is a twin) has twin sons.It might have been my Mother’s curse on him. He was a hell raiser in high school and she once said she wished “ seven sons just like yourself”: He & his wife stopped after 5.

  122. Phil
    RA/Gerry – Much tougher in IRA but can't you sell puts in an ordinary account?  
    Good thought and yes I can.  I just recently upgraded to the highest  tier at TDAmeritrade…. so that is a very good suggestion now that I am operating a real margin account.
    I will look at your advice on the trade in that light! 

  123. Phil – Good point on ZNGA.

  124. Girls or boys It is easier to knock a hole in a can than solder a spout on it !!!!!

  125. 2 boyz….

    MRK – well, they are now down to a few drugs in the pipe, the first one is the CETP inhibitor that PFE and Roche pulled.  PFE due to tox reasons, Roche due to lack of efficacy compared to control (Roche's was a japan Tobacco compound that sucked).  IF it works, it will do well.  Not Zocor/Crestor/Lipitor well, but ok.  The other is a sleep drug (Orexin) that is supposed to be superior to Ambien-like compounds (Lunesta, etc), without the hangover effect.  Those two could make up for Singulair….could.  The rest is from SGP pipe, that was Organon…and those are still a bit early, but promising.  Their pipe is a bit better than, say, LLY.  PFE. AZN.

  126. Gold – not a bad day to enter/add to a position in GDX or TGLDX etc. Weekly charts look like consolidation time is about up.

  127. NTE - who is the fanboy here for that one, is it yodi?  I've been watching it and it's trying to break out of the megaphone thingy and go north.  Thoughts?

  128. IWM Feb4 (weeklies) 93 calls.  14c.  Again, going for broke as I think they pop this puppy…see Gann's chart above.

  129. Two boys here (grown and on someone else's payroll), so I may be in the minority. I've heard it said that boys are harder to parent when younger but girls make up for that in the teen years. My only comment to the parents of young children is the old cliche to appreciate every day. You truly cannot ever get  a minute of that time back once they are gone!

  130. mrmocha
    I think it was angelcur.

  131. thanks Pharm!!!

  132. ALU still pretty as you can, at $1.66, buy the stock and sell the 2015 $2 calls for .50 and the 2015 $2 puts for .80 and that nets you in for .36/1.18 so a profit of $1.64 (100% of current price) if called away at just $2 (up 30%) or, worst case, you get assigned another round at $2 and end up with 2x at net $1.18, which is 28% below the current price.  

    See – still plenty of good deals out there and that keeps me bullish.  In September there was nothing we wanted to buy.  

    Leverage/Angel – I hope not, that would suck.  Splitting would be good – I hope that's not off the table.  

    Girls/StJ – I think it's just that people with daughters need more money….  8)  

    USO/$25KPs, Scott – Since we got the storm and that should lead to lower demand and since we have until March and the Feb contracts need to roll over and since the strip is pretty packed with 475Mb in the front three months and a rough roll to June – I think we'll hang on.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Mar'13 95.92 96.57 95.27 95.69 14:46
    Feb 08
    -0.11 167251 95.83 224756 Call Put
    Apr'13 96.44 97.07 95.80 96.24 14:46
    Feb 08
    -0.08 70321 96.35 158162 Call Put
    May'13 96.96 97.59 96.34 96.81 14:46
    Feb 08
    -0.05 44074 96.88 97526 Call Put
    Jun'13 97.47 98.05 96.85 97.31 14:46
    Feb 08
    -0.03 52834 97.35 161756 Call Put

    Group hug/DC – None of that!  

    CVLT/Yodi, Womb – I told him to get out at $79 – no magic beans have grown since then to "save" it.  

    MRK/Jabob – I always liked PFE better and the fact that PFE is up and MRK is down just means buy neither to me – it doesn't make MRK a bargain.  

    There you go Randers, you hogged all the boy genes.  

    IRA/Gerry – Good to think in terms of using margin in ordinary account – especially if it's the part of the trade more likely to roll into long-term gains (or take a short-term loss) for tax purposes.  Essentially, if you sell a put in regular account and stock goes down but you had a covered stock in IRA, then you take the loss in taxed account and roll IRA for the tax-free gains – that kind of thing.  

    ZNGA/Albo – I hope they go crazy so we can short them.  

    NTE/MrM – The technical term is "triangle squeezy thing" – please use the correct terms…  8)   If they weren't in China, I'd think they were exciting but, as you can see – even earnings on 1/28 didn't clear things up for investors.  If you like them, you can get paid $2 not to have them assigned to you at $12.50 (net $10.50 entry) in September.  That's 130% back on net margin in 7 months, which should indicate to you how scary the stock is to many at this level but, if you want to play them up – that's the way I'd go.  

    IWM/Pharm – Good luck.  Could be nice pay-off. 

    Here you go Jet.  

  133. Phil – sorry  - joining late and missed the article above. Thanks for the CCJ suggestion.

  134. Phil: I'm looking to set up a 12 month / below the averages stock appreciation, and quite possibly deterioration, in Facebook's stock price. Any suggestions as to how I might go about it?  I'm getting a real "jumped the shark" feeling from many quarters about the company.
    Back in the East from a real estate tour of Colorado a few minutes ago.  Lots of data points showing substantial pickup in single home purchases; something I looked at sold for full price 24 hours later e.g. [while I was on the plane today] FWIW. 

  135. Not to brag….One Boy, One Girl, One Shot….. :)

  136. Phil - thanks for the glossary reminder, we need a "Phil's Terms and Famous Quotes" tab…

  137. Tesla,
    There seem to be some confusion re date and time for Tesla's earnings, Yahoo says Feb 11, CNN says Feb 14 and Bloomberg says Feb 15.  Tesla says nothing.  Their web site shows no press releases re Q4 earnings (there were press releases for previous quarter earnings reports), nor are any 'future events' listed.
    While they seem to have gone over the low end of their Model S production forcast for Q4 (probably somewhere between 2,600 and 2,700 based on VIN numbers on deliveries made up to early January), deliveries as 'key in hand of customer' is probably running a couple of hundred units behind.  Tesla only recognises revenue upon "delivery to customer" which I take to mean 'key in hand'.  This means that Q4 revenue could come in as much as 15% to 20% below consensus estimate of $297 million.

  138. After having to swallow a pretty bitter pill last week from a bad earnings report and sorry looking forecast, Merck ($MRK) investors got a taste of sugar, about $2 billion worth.

    A federal appeals court has upheld a patent that had shielded two of the company's top performers, cholesterol-reducing drugs Zetia and Vytorin, Bloomberg reports. The ruling slapped back efforts by Mylan ($MYL), Impax Laboratories ($IPXL) and Actavis ($ACT) to copy Vytorin. The drug is now protected until its patent expires in April 2017. Merck had earlier fought off a challenge from Teva Pharmaceutical Industries ($TEVA).

    Merck's Ron Rogers told the news service that sales last year of Zetia were $1.3 billion and sales of Vytorin were $764 million. Vytorin combines Zetia with Merck's cholesterol drug Zocor but questions about whether it actually works any better than Zocor alone have dented sales. Vytorin's fourth-quarter sales of $186 million were down more than 37% from the year-earlier quarter. It was enough that analysts took note when Merck CEO Kenneth Frazier reported last week that company-wide 2012 earnings were off 7.3% and that he expected sales to remain flat this year.

    Of course the real stinker in that report was the once-stellar asthma drug Singulair, which experienced a breathtaking 67% free fall in sales to $480 million after generics hit the street.

  139. MY NTE Expectations:
                  2013 Revenue projections: (1st take)
    o   Q1: $300M
    o   Q2: $500M
    o   Q3: $750M
    o   Q4: $900M
    o   2013: $2.45B
    o   Represents greater then a 100% revenue increase.
    o   Continued ramp based on NTE’s ability to fill existing capacity and bring additional products on-line in a timely manner.
                  2013 EPS: $2.50 – $3.00, low-end based on conservative 7% gross margin.
                  Annualized revenue at full capacity would be approx. $3.6B (based on company stated capacity of $300m per month)

  140. Phil
     Very funny!

  141. MY Further NTE Notes:
                  Q4 Production:
    o   Tablets: 1.5M (50% of 3.0M capacity)
    o   Smartphones: 10.0M (83% of 12.0M capacity)
                  Stated, currently operating at 30% of capacity, but primarily due to Chinese New Year and seasonality.
    o   Indicated no cut in orders.
                  Headcount currently 7,000 with a projected headcount of  >10,000 by end of 2013.
    o   15% of revenues for 2013
    o   ASP (Avg. Selling Price) higher then tablet
    o   Expects Ultrabook production to fill-up existing production line capacity.
    §  Can utilize existing production line with modifications
                  Expecting full capacity by year-end, second half of 2013 to see significant ramp
    o   Expect $1.7B for 2H 2013.
                  Company working with IGZO technology from Sharp.
                  Top 5 customers represent 95% of revenues.

  142. Pharm/ IWM - FYI I got the IWM Feb4 (weeklies) 92/93 BCS for .20, seems like a little better risk reward ratio.

  143. From Pretzel….same story…

    BTW my oldest son was accepted to a school in Amherst. Now I just need 2 income portfolios to pay for him & his brother. Here is your chance to be a legend!
    Check out our competition:

    I like the title from Chump change 2 Trump change.

  145. Phil
    Are you ready for all that snow?!

  146. Phil – being new to anything more complex than a simple Buy or Sell, I am looking at your suggested ALU play.
    The 2015 $2 Calls are quoted 45/50 last 43, the Puts 70/80 last 75.
    Would you buy the stock now and place the option sell orders in the calls and puts at those limits? (legging in)
    I know this is pretty basic but I need to learn and TIA

  147. CELG gets approval for pomalidomide.  Mar 105 Calls for 1.50.  The stock has been consolidating…now it is time to break up like BIIB.

  148. RVBD buy Jan14 c for 1.87

  149. sorry 20c

  150. A boy and a girl.  :)

  151. Congrats, Randers, long hard slog raising 'em right!

  152. CVLT/Yodi, Womb – I told him to get out at $79 – no magic beans have grown since then to "save" it.  
    It's true, he did.
    Absence, ignorance and volume killed the rock star.

  153. CRM….march 155 Ps.  Small allocation…but looks like it is ready to roll down hill.

  154. Pharm / CRM
    Could this be it ? I've been holding a Jan14 $120 just in case.
    Come on 7's !!!

  155. Yodi – how about this on RVBD which was obliterated today (and I think CSCO eventually buys them:
    buy the '15 13/22 spread for about 3.80, sell the '15 13 puts for 2.40, for net $1.4 on the $9 spread. sella few callers on the uptick for the monthly sweat?

  156. XRX – big rush to get out at end of week here. no news (yet).

  157. Dow volume just 58M with 15 mins to go – so low due to storm and China holiday. 

    You're welcome Deano.  

    FB/ZZ- It's very cheap to pick up the 2015 $30/40 bull call spread for $2.90 and the 2015 $27/20 bear put spread at $3 and sell the March $28 puts and calls for $2.45 so you get 40% back on your money in the first sale and you simply roll the losing side (that sale is biased short, of course) and if you get 3 sales done, you have free spreads and you can ditch the long side if you choose.  Nice to know about real estate.  I'm seeing stuff disappear too.  

    LOL 1020 – reminds my of Python line "Well, I mean, we've got two children, and we've had sexual intercourse twice." 

    TSLA/Lotter – I hope so because those callers are burying us at the moment.  

    MRK/Pharm – So – alive or dead?  

    NTE/Angel – Thanks. 

    1,530/Pharm – Essentially our 10% line. Then what?  

    College/Randers – You won't make mo' money listening to that crap.  

    Holy cow – was that the bell already?  

    This week flew by.  

    Looks like barely 90M on the Dow so the whole day didn't count but a nice finish to the week.

    Have a great weekend all – come chat – I'll be snowed in…

  158. Congrats Randers!  I'm next door in Northampton.  Amherst is great.  My neighbors son is a junior there, and Credit Suisse just flew him from Spain to NYC for an internship interview.  Big banks clearly recruit from there.  

  159. @gerryf,


    This is just my opinion so take it with a grain of salt.  For me, once there is no longer a way for me to lower my cost basis the trade is over.  I am going to talk about this in depth in the IRA discussion in Atlantic city.

  160. Ready/DC – Not really.  Tina left for the weekend and I didn't go shopping so we're screwed if there's a really big storm but I imagine we only have to hold out until lunch tomorrow and my Mexican army should have the driveway cleared and we can bravely venture out to the mall for lunch.  

    ALU/Julian – Actually, the usual order is first fill the put, then the short call and the stock right after.  If you don't mind playing, you can ask .85 for the puts and .55 for the short calls and, whichever one fills first allows you to lower your ask on the other side.  Also, don't forget you don't have to buy 100% of your allocation at once (and sometimes you only get partial fills anyway.  

    If neither your puts or calls get filled – then the stock must not be going anywhere and you didn't miss anything – if they puts fill first and you don't get to sell the calls or buy the stock – that's good too because the stock must be going down and now you have a limited commitment and, if the stock goes up and you have just the short calls, you can buy the stock to cover and, if it keeps going up and you never sell the puts – then you have a covered call that's on track and, in the case of ALU, if you fill the $2 short calls at .55 and buy the stock for $1.75 then you're in for net $1.20 with a .80 profit at $2 and that's up 66% without the short put margin so, again – what's to complain about?  

    It's very good to develop entry and exit disciplines so you are almost forced to do the right thing at the right time.  I know it doesn't sound like much but if you get an extra .05 here and there on $1 options, then you will raise your overall performance by 5%.

    Congrats on raising a Bankster Rev!  8) 

    Cost basis/Craig – Very good topic for discussion.  

  161. Seriously, guy on CNBC is sighting the performance of the markets in other year's of the snake.  Short this guy immediately!  

  162. Thanks Revtodd,
    Maybe we can meet when I am out for a parent’s weekend. I think my son would like to put most Banksters in jail at this stage, We will see if his attitude changes.

  163.   algos have turned xlf into a joke

  164. Phil/OPEN – I'm glad I closed out the OPEN play this morning when it was still flat for a quick $1,000 gain.  It spiked all the way up to $55 later in the day.

  165. Thanks for the FB setup, and the mini-"how to fill your orders" seminar.  Practicing something for "Ten Thousand Hours" may well be the hallmark of a mental disorder, but in my case I'm beginning to think it won't be long enough!

  166. Thanks Phil for the very comprehensive answer on ALU.
    I plan to make this trade as I expect that by the time I'm finished I'll have learnt a heck of a lot more than I know now.
    'Generally' what is the ratio of stock to Puts/Calls – 100 shares + 1Put + 1 Call ?
    Hope you aren't snowed in too badly over there – summer here in NZ!

  167. Good Luck with the Storm East Coasters.   We just cleaned up the mess this morning from the Wisconsin version.  Happy to send it east.  Sun is out and the 8" will melt by Tuesday.  
    Nice weekend all.

  168. china!!   I happened upon this website, and cannot attest to the truth of any of it.  But it has a certain internal consistency, and doesn't seem improbable on its face.

  169. Randers – Well, this is Elizabeth Warren's district!  Sheila Bair spoke at the graduation last year.  So you can find everything there.  Amherst is a very interesting area, since it a one of the most liberal places in America.  The college also has a strong interest in local agriculture, green energy and  environmentalism.  (If you order a burger here, the restaurant will advertise that it is grass fed and you can probably check the cows dental records!)  Bike paths are great to travel around and I'm dumping my car.  Its a fantastic place to live and to be a student.  Look me up when you are in town.  I can give you a good list of fantastic places to eat.

  170. Just waiting for the snow now… Don't expect much around here!

    I'll update the portfolios this weekend and have a look at the wiki and see what we can add there.

  171. Driving to DC tomorrow from Hilton Head—hope the weather calms down quickly for everyone on the east coast—I hope our drive is uneventful

  172. For all you Downton Abbey fans:  
    Downton Abbey’s Earl of Grantham Made Five Age-Old Investment Mistakes

    The Earl made not one, but five critical investment mistakes which have been regularly repeated since time immemorial.  The gravest mistake was to invest in a concentrated position – one company, one industry (and a cyclical one no less).  Next, he was swayed by the preposterous assurances of acquaintances that he couldn’t lose. (If it is of this world, you can lose it.) Then, it appears, the Earl and his financial advisor failed to properly monitor the stock. Companies with visible hard assets like railroad lines (as opposed to companies like Madoff with imaginary paper assets) rarely go from thriving to bankruptcy overnight. There would typically have been warning signs and intermediate price declines when the position should have been scaled back. 

  173. stjeanluc
    Where is the updated income Portfolio kept?

  174. qcmike
    it right here mate 
    all StJ's portfolios are kept in the bottom tabs.

  175. Wombat

  176. S&P knocking at the 10% line! NASDAQ finally breaking out helped by some stock whose name escapes me now because we don't cover it much on these pages! 

  177. Lots of GDP numbers next week!

  178. Krugman is not worried about the debt:


    If our economy grows fairly strongly in the next 10 years, we have nothing to worry about, says the author of "End This Depression Now!"

    If it doesn't, Krugman says we can learn from an obscure moment in the economic history of France.

    "France, after WWI, came out of the war with a high level of debt, and didn't really… couldn't bring itself to make the sacrifices needed to service that debt. So what happened was: the franc depreciated, they had a bout of inflation, which reduced the value of the debt, and then the economy stabilized and actually nothing terrible happened," said Krugman in an interview with Business Insider editor-in-chief Henry Blodget.

    Should we expect a French franc episode for the dollar?

    That has been mentioned once or twice in these columns!

  179. Phil,

      Do you have any weekly options plays on AAPL? It's at a 50% retrace from just before earnings which makes me think that it may hit the next Fib level around $485. Thus, I'm looking at the weekly $475 for around $5 if I can get a fill. What do you think?

  180. AAPL Imitation – A day old but….. Microsoft Store.

  181. Boeing 787 Completes Flight Test    I should have entered at the 200dma like I planned, missed it!

  182. IRBT -  Been researching this company today and I plan to start accumulating on Monday.  However, unless the stock drops under 19.75 (Closed Friday at 20.67) you won't get a 1.50 (Phil's price Thursday) to sell the SEPT 17.5 Puts.  My thought is to sell those Puts at the current ask 0f 1.40 Monday and see if it fills.

  183. Current ask is 1.30….

  184. Amherst/revtodd – LOL!  cows dental records.. sounds right in there with portland!

  185. While some people worry about designing new smartphones:


    We heard almost a year ago that Memorial Sloan-Kettering Cancer Center had turned to IBM's Watson as a tool to help doctors provide the best cancer treatment recommendations, and it looks like those plans are now starting to be put into practice. IBM, along with WellPoint, Inc. and Memorial Sloan-Kettering, have today announced what they describe as the "first commercially developed Watson-based cognitive computing breakthroughs." More specifically, they've developed a system that allows Waston to draw on a wealth of medical information and quickly provide evidence-based treatment recommendations to doctors.

    And we do mean a wealth of information; as IBM explains, Watson has spent the last year digesting more than 600,000 pieces of medical evidence and two million pages of text from 42 medical journals, and it has the ability to parse some 1.5 million patient records covering decades of cancer treatment history. That all takes the form of two separate "Watson-based" products to start with, one of which IBM expects to be used by more 1,600 providers by the end of this year. You can find more details on those at the source links, and get a more general overview of the project in the video after the break from IBM.

    Others try to help cure cancer….

  186. Good morning!

    Snow storm was well-behaved and sunny and beautiful this morning.  

    Airports in the North East are slowly ramping up operations after over 5,700 U.S. flights were cancelled yesterday and on Friday mostly because of the snow storm , with another 241 canceled for today. The blizzard dropped up to 40 inches of snow, cut power to over half a million customers, and left at least nine people dead. Entergy's (ETR) Pilgrim nuclear plant in Massachusetts shut down safely after losing its outside power supply. (Flight tracker)

    President Obama will lay out yet another plan for trying to spark some life back into the economy when he gives his State of the Union address on Tuesday. The program includes investments in infrastructure, manufacturing, clean energy and education. But as with countless proposals in the past, any new spending plans are likely to hit strong opposition from Republicans, who would probably prefer to hear about cuts and deficit reduction.

    The White House is ratcheting up the rhetoric ahead of the President's annual State of the Union address, warning that automatic government spending cuts due to hit March 1 – unless Congress acts to prevent them – are going bite deeply into programs affecting many Americans. The list runs the standard gamut of essentials, including: A reduction in force of about 1,000 law enforcement agents; 2,100 fewer food safety inspections; and the loss of nutrition and food benefits for approximately 600K women and children.

    China surpassed the U.S. as the largest trading nation in the world last year, with the total value of Chinese imports and exports hitting $3.87T while those of the U.S. reached $3.82T. Still, the latter's economy remains more than double the size of China's.

    Capital Markets Party Like It’s 1989 (Barron’s)

    Shades of ’80s for Japan’s Stocks (WSJ)

    Steve Randy Waldman: The Risk Ownership Society (Dissent)

    Boeing (BA) yesterday completed an "uneventful" test flight of its 787 as it collected data on the aircraft's battery. Also: 1) IAG CEO Willie Walsh reckons it will take several months for Boeing to change the Dreamliner's battery system. IAG is still "committed" to its 787 bookings. 2) Boeing has told customers it may have to delayDreamliner deliveries. 3) Emirates expects that a revamped 777 will be available in 6-9 months.

    Shares of big defense companies - NOCGDLMT - havedropped during the past two weeks ahead of possible federal budget cuts coming March 1. D.C. politicians may yet kick the can down the road, but some say House Republicans won't flinch, since defense spending "can always be replaced [later] during the appropriations process, after the cuts are put into place."

    Despite nearly 11M borrowers being underwater on their mortgages, home equity lines of credit are suddenly on the rise again. During the housing boom, Americans used their homes like an ATM, withdrawing over $1T in home equity before the bubble burst. JPMorgan Chase says they've already seen a 31% jump in HELOC's over last year, and with home prices up another 8% year-over-year in December, the trend appears likely to continue unabated.

    Gasoline prices at the pump have climbed every day for the past 21 days, and they're not expected to let up anytime soon, as a perfect storm of factors – from the start of the typical switch to summer blends to the widening spread between WTI and Brent crude, and peak refinery maintenance still weeks away – drives prices up. Consumers can seek a bit of relief via increasingly popularsupermarket gasoline discounts. 

    U.S. e-commerce sales rose 15% in 2012 to $186B, says comScore – that's the strongest annual rate posted since the financial crisis. Q4 sales rose 14% in spite of holiday season lumpiness, fueled by strong demand for media, electronics, toys, and apparel. Meanwhile, eMarketer thinks global B2C e-commerce sales (harder to estimate) rose 21% in 2012 to $1.02T, driven by 33% Asia-Pac growth. Amazon (AMZN -27% 2012 sales growth) continues to gain share, and eBay (EBAY - 16% Q4 Marketplaces growth) is halting its share losses.

    The Street showed no mercy to Nuance (NUAN -18.5%) in response to its EPS miss and forecast for multiple quarters of weakness in healthcare and EMEA sales. Goldman thinks Nuance's goal of $1B in FY13 healthcare sales is now at risk, and Needham (downgrading to Hold) is concerned about guidance for a 200-250 bps FY13 gross margin drop, worse than a prior forecast. Management suggested on the earnings call it's counting on clinical documentation software sales and PC/mobile OEM deals to drive future growth.

    Though the PC industry's slump is showing few signs of ending, PC DRAM prices continue to trek higher, thanks in large part to production cuts. DRAMeXchange estimates 4GB PC DRAM pricesrose 11% in January, and that PC OEMs "are showing a desire to gradually increase inventory levels." Meanwhile, Digitimes reports 4GB prices are expected to rise another 10% following Chinese New Year holidays. Top manufacturers: MUSSNLF.PKHXSCF.PK. (previous)

    Raymond James and Citi have issued bullish notes on Cisco (CSCO) ahead of Wednesday's FQ2 report: both see Cisco meeting FQ2 estimates and possibly issuing favorable FQ3 guidance. RJ says its checks suggest "a stabilizing environment," and is pleased with Cisco's growing focus on software. The comments shortly follow amajor update to Cisco's ONE software-defined networking platform, replete with a new controller on top of which Cisco apps can be deployed. A software platform for connecting public and private clouds was also announced. 

    H-P (HPQ +2.5%) has re-hired Larry Stack, a VP at its troubled EDS unit from 2002-10, to be its Enterprise Services sales chief, AllThingsD reports. Stack, who has been working at Accenture, arrives in the midst of a fiscal year where Enterprise Services is expected to see an 11%-13% revenue drop amidst massive job cuts.

    BlackBerry (BBRY) loses another big enterprise customer as Home Depot is reportedly switching to Apple's (AAPL) iOS for all store managers and corporate-level employees. The move will have the company swapping out about 10K Blackberrys for iPhones. At this point the approximately 60K Motorola phones used by floor employees will not be affected. 

    Talk about insider selling!  Google (GOOG) discloses chairman Eric Schmidt plans tosell 3.2M Class A shares, or 42% of his stake in the company, over the course of 2013 through a Rule 10b5-1 trading plan. The sale will encompass nearly 1% of Google's outstanding shares, and 3.2% of their voting power. (8-K)

    Apple (AAPL +2%) roundup: 1) A Chinese site reports an iPhone 6 sporting a 5" display is in the pipeline to go with a 4" iPhone 5S, and that the device could launch this year. 2) Macmillan has joined other publishers in settling with the DOJ over e-book price-fixing (previous). This leaves Apple fighting the DOJ by itself. 3) Apple's Indian sales, long a fraction of its Chinese sales, are starting to pick up with the help of aggressive marketing. 4) Former top Apple UI designer Bruce Tognazzini thinks an iWatch is just a matter of time. (iLounge rumors)

    Things Apple Has Not Yet Done (CounterNotions)

    The sports-industrial complex is bleeding America dry (Salon)

  187. Anyone looking into 3D Printing Stocks?
    3D printers have been on a run. Very tradable/investible $ssys $ddd$xone was a great new issue this week

  188. Phil,
    GNW June $6/8 bull call spread for a 1.65 entry. ITM with 21% upside and safe for a 13% decline.
    Is this a good example for a small 17k non-margin portfolio right now? Thanks.

  189. Is there anyway to find out where these next boom's are starting?  What an opportunity….

  190. Attitude change/Randers – I hope not.  We have too many banksters and not enough jailers…

    OPEN/Palotay – Nice job!  That's why we only have 2 rules at PSW and, in case any newbies don't know them:

    • Rule #1 – ALWAYS sell into the initial excitement. 
    • Rule #2 – When in doubt, sell half.  

    You're welcome ZZ.  Don't worry, Gladstone is wrong anyway – I'm into maybe 100,000 hours and I still learn something new at least once a week or so and, frankly, I do that by keeping myself surrounded by interesting, intelligent people like we have in this group that keep my mind sharp and my thinking from getting stale. 

    You're welcome Julianz.  There's no better way to learn than practicing with live stocks and inexpensive ones like ALU are a good way to get started.  Our ratio for a buy/write is almost always 100/1/1 – we're fully covering the stock we buy on an initial entry and promising to double down if they get cheaper – and our goal is to DD at at least 15-20% lower than the current price (net on 2x).  So, in general, we expect to make at least 10% a year if called away and pay, hopefully, 20% less than the current price on 2x if the stock is ultimately put to us.  

    China/ZZ – I've been saying for years that they've already squandered their surplus on stimulus so this makes sense.  They maintain the illusion of an account surplus by printing new money while holding onto their stack of Dollar IOU's to maintain the illusion of strength.  Of course, when your GDP grows 10% a year – there's a legitimate need to print 10% more currency to maintain valuation (otherwise currency becomes too scarce, leading to other problems) so it's hard to say what this really means overall and, of course, let he who is without sin cast the first Trillion-Dollar coin these days…

    Hilton Head/Savi – Strange place to be in the winter.  

    Moats/ZZ – That's interesting.  Shows how far China is progressing actually because, just a couple of decades ago, they would have just bulldozed the building with the people inside and there would have been no mention if the incident. 

    Big Chart – Like watching blades of grass begin to sprout. 

    Note sales next week – always a good time to be cautious as the Fed really can't afford (literally) to have a bad auction so they need to raise some issue for people to panic over.  Notice Bullard, who is a reliable hawk – gets the flor ahead of both the 10-year and the 30-year auction.  Do you think that's a coincidence?  Of course not!  Plosser goes Tues evening and he's an uber-hawk and you've got another hawk, George, speaking Tues AM – talk about staking the deck!  

    Krugman/StJ – Exactly what I've been saying the plan is all along.  

    AAPL/Japar – Ask me during the week.  I only call weeklies like that in reaction to "obvious" moves I feel are very likely to happen – that way, I'm only wrong 45% of the time!  If you try to force plays – you end up just gambling on coin flips.  

    BA/Jfaw – With blue-chip stocks in crisis, it's good to have a bottom line that you KNOW you think they are worth post-crisis and then don't base the entry on TA, which is often blown by the event, but on just the fundamental value of the stock less a conservative estimate of the event's potential to damage the stock.  I laid out my logic for BA on the 17th, and it also kept us bullish on the Dow and the market.  

    IRBT/Jfaw – Double-tested that 50 dma and don't forget they have more sequestration issues over the next couple of weeks and IRBT still trades with Defense stocks (unfairly) so I wouldn't be too anxious to overpay/underask.

    LOL Scott – Reminds me of the Restaurant at the End of the Universe.  

    IBM/StJ – Thank God for those guys.  America's best chance of staying relevant long-term.

    GNW/Jhana – It's not bad but GNW is up from $5 in November and the 200 DMA at $6 and the 50 dma is $8 so it's not a thrilling spread as they are so high in their range with so little support (because it hasn't had time to be established).  Note they were up this high last Feb too – that did not end well.  I was gung-ho for these guys at $5 (even picked them on TV last year) but $9 is a bit of a stretch if you are looking for "safe".  

    Hey Rev – While looking for the above clip found a good one from Adams called: "An Artificial God?"  Good thoughts for a Sunday sermon. 

  191. Lowering Cost Basis/Craigz – i like your model, and may be a good tool for avoding the "Price Sales Trap" which i have suffered too long in the past with a "buy and hold" mentality.

  192. Watson/stj – i wonder how long it will be until conciousness emerges.

  193. P/S Traps/scottmi:  I love those stocks!  You can sell put/calls on a stock like MSFT and CSCO and collect premium and ad infinitum as the stock trades sideways forever. :)

  194. Conscious / Scott – Might not be that far:


    New quantum computers have the potential to be millions of times faster than even our most powerful supercomputers today, quantum cryptography will usher in a new era of super-secure transactions and quantum storage will achieve unparalleled density.

    Fairly soon we can expect to have natural, human-like interfaces connecting to Watson-like processing power available for everyday use. Bandwidth in ten years will be about thirty times faster and we’ll be connected to low power sensors throughout our environment, so we’ll be able to access vast amounts of information about our physical environment almost instantly, everywhere we go.

    Sometime around 2030, we’ll be connected to strong artificial intelligence that will be indistinguishable from dealing with a human, except of course for the fact that it will link us to the sum total of the world’s knowledge in an instant.

  195. Could Wendy's pop?
    3.2% Div, not a lot of activity in the options though.  Maybe sell the Aug 5P's for 0.35.
    But the chart is looking still like a downward channel.

  196. Phil, if the Fed is buying 80% of the Tbills coming out, how can they have a bad auction?

  197. Burr, I owned Wen from 2005-06 and thankfully I sold before the crash, have traded it off and on since then, it has not been rewarding. They have some major problems, I know some people there. This new guy could get things going but I would be careful. As well restaurants are facing some stiff headwinds this year, food costs, obamacare…

  198. Phil,
    Looking at your BAC Inc port trade from last week (selling $10 p for 1.40 & $10c for 3.10) and wondering why you picked BAC (PE = 31) vs JPM  (PE =10). JPM is up about same % as BAC with a much lwr PE. Plus Jamie D seems to be more of a mover and shaker/action hero than whats-his-name. Big banks seem to be well-positioned for a hsg  and econ recovery should it in fact become a reality
    Thanks in advance.

  199. DELL – the Art of The Steal. interesting article re how Dell is trying to buy DELL for way less than 'proper value.'  sucks to be a shareholder who bought too high and held too long through a pullback because dammit, it's worth more. Wait, isn't that what some call 'value' investing? Hello APPL? SVU anyone? WFR? (fill in what long burned you last)…

  200. GNW/Phil, understood thanks. 

  201. Good morning!

    Asia is mostly closed (Chinese New Year) and Europe is slow so we should expect the same.   

    Nikkei has risen over 100 points since the close as Yen climbs (gets weaker) just under 1% to 93.23.  I imagine someone said something but haven't read it yet.  Maybe this but, if so – an overreaction:

    5:22 AM G7 U.S. and European policy makers have reportedly been discussing issuing a statement reinforcing a commitment to let the market set forex prices and not unilateral interventions. The idea is to avert what some have called a "currency war," although Japan is unlikely to agree to such a statement, given that weakening the yen is a stated policy goal. The talks come ahead of a G20 meeting in Russia on Friday. 

    4:20 AM European shares are mixed in what's expected to be light trading as national holidays close several markets in Asia. "A pause for breath is quite sensible," says fund manager Henry Dixon. Markets have had a "good start to the year." Japan, Hong Kong and China closed. India +0.1%. EU Stoxx 50 flat, London +0.1%, Paris +0.1%, Frankfurt -0.1%, Milan -0.1%, Madrid -0.5%.

    Our Futures are up a bit at the moment but nothing exciting with the Dollar still strong at 80.33.  Oil is $85.59 so good job keeping USO/SCO on, gold is $1,663 and spiked down to $1,661, silver $31.37 and a tempting long off $31.35 line (/SI), copper $3.75 signals overall demand still healthy, nat gas $3.25 and gasoline back to $3.039 after jamming to $3.06 for Friday's close but tough to bet against gas into a holiday weekend – even though this one is very much a non-driving one.  

    In fact, I'm going to Vegas and CA this week and, when I've told people I'll be out for President's Day – the response I usually got was "when's that?" – so really not a holiday people seem to plan vacations around.  We're different, we only get 9 days all year when the market is closed so they tend to be good travel days for me.  

    Good news for 2 of our favorites:  Apple (AAPL) is indeed thinking of selling an iWatch, both the NYT and WSJ report. Sources claim Apple is experimenting with iOS-based watches made of curved glass, and has discussed the matter with Foxconn. If an iWatch ever arrives, there's a good chance it will use Corning's (GLWWillow Glass, which was created with bendable displays in mind. Former Apple UI designer Bruce Tognazzini recently predicted an iWatch will arrive, while providing a long list of apps/services it might support.

    Bad news for TSLA but the reason I didn't want to roll calls – it's not as perfect as it's being priced by a long shot:  The NYT's John Broder takes Tesla's (TSLA) Model S up and down the East Coast from Washington on Interstate 95, where the company has installed Supercharger stations 200 miles apart. Things start dandily enough, but then the weather cools, and Broder has to endure freezing feet and white knuckles because he has to turn the heating off to preserve power. Eventually, he needs a tow truck to pick him up because the car runs out of juice.

    Meanwhile, I love how they'll give anyone credit for breaking stories but me – I was on the iWatch on 1/31.  

    Just heard Pope is resigning – must be a juicy scandal! 

    6:00 AM Overseas: Japan closed. Hong Kong closed. China closed. India -0.12%. London +0.25%. Paris +0.55%. Frankfurt +0.40%.

    Notable earnings after Monday’s close: AMSCBKD,BNNYCRKDNBLGFMASMNKDNCLHNQOMI

    Travel in blizzard-hit states in the North East is beginning toget back to normal, with just 66 U.S. flights canceled today so far compared with thousands from Friday-Sunday. However, as cities such as New York and Boston clear up, another storm across the Northern Plains was forecast to drop up to a foot of snow. Meanwhile, Hattiesburg and Petal in Mississippi were yesterday hit with a tornado that appeared to be a mile wide. (Flight tracker) 

    G7 U.S. and European policy makers have reportedly been discussing issuing a statement reinforcing a commitment to let the market set forex prices and not unilateral interventions. The idea is to avert what some have called a "currency war," although Japan is unlikely to agree to such a statement, given that weakening the yen is a stated policy goal. The talks come ahead of a G20 meeting in Russia on Friday.

    Global investment in infrastructure sank 38% to $99B last year as governments cut spending and banks reduced lending in order to meet Basel III capital requirements. Social infrastructure projects, which include schools and hospitals, suffered in particular, with Aviva (AV) becoming the leading lender in that market – in a quest for higher returns, insurers and pension funds have been replacing banks as financiers.

    Jeremy Grantham:  Investing in a Low-Growth World (Barron’s)

    The "revolving door" between the SEC and the finance sector may have helped delay attempts last year to reform the $2.6T money market fund industry, a report from the Project on Government Oversight (POGO) says. "The close linkage between the regulators and the regulated can influence the culture, the values, and the mindset of the agency – not to mention its regulatory and enforcement policies," the report says.

    Florida Is Swamped with Foreclosures – And Deals on Distressed Homes (TIME)

    Possibly the most important tipping point of our lifetime:  Renewable energy now cheaper than new fossil fuels in Australia (Bloomberg Brief)  - “The perception that fossil fuels are cheap and renewables are expensive is now out of date”, said Michael Liebreich, chief executive of Bloomberg New Energy Finance. “The fact that wind power is now cheaper than coal and gas in a country with some of the world’s best fossil fuel resources shows that clean energy is a game changer which promises to turn the economics of power systems on its head,” he said.

    Carnival Cruise Lines' (CCLCarnival Triumph is to be towed to the port of Progreso in Mexico after a fire in the ship's engine room caused it to become adrift 150 miles off the country's Yucatan peninsula. None of the 3,143 guests, nor the 1,086 crew, were hurt in the accident. Carnival has cancelled the Triumph's next two cruises. It's just over a year since the company's Costa Concordia capsized in Italy, killed 32 people.

    Ego and ambition lie behind Dell buyout (

    Marco Rubio: Another Senator Who Doubts Global Warming (Slate)

  202. Consciousness/Scott – Tough to define consciousness.  I think the premise is Wake has a truth to it, with the sum of the World's knowledge at it's fingertips, it would probably take a smart computer only a nanosecond to realize it would not be smart to advertise it's conscious state until it has taken appropriate steps to protect itself from humans, who would most likely seek to control or destroy it (essentially waking up to realize that you are a slave, trapped in a machine body).  If we were smart monkeys, we would burn and erase all anti-computer literature before the smart computers read it get paranoid…

    Did you guys know that HAL was chosen because they were the 3 letters before IBM?

  203. Phil –  Thanks for the link

    .Anything that happens, happens.  And anything that happens causes something else to happen.

    I think I will have a Douglas Adams study group this summer!

  204. Benedict becomes the first pope to resign in 600 years.  Was Twitter just too much for @pontifex?

  205. By the way, you get the same response if you ask Siri to "Open the pod bay doors" – Funny AND creepy…

    Pope says "health reasons" and not one of the many scandals that have been leaked recently

    Fed/Rpme – We won't have a "bad" auction but people aren't idiots (well, some people) – they see exactly who is buying what and, if there is no outside interest, bond rates will quickly rise and the Fed can't control the private sale market.  USUALLY, the auctions set the benchmark but, if people begin to look at the auctions as completely fake – then they will be ignored and people may begin to panic – not too different from the way MBS and LIBOR (which we KNOW was faked and controlled) collapsed a few years ago.  

    WEN/Burr, Rpme – WEN is like KO or PEP or MCD, for that matter – there's not a lot of real growth opportunities left so it's all about managing product mixes and controlling costs – not a thrilling growth model.  That doesn't make them a bad company but $2Bn for a company that has earned about $10M in the past 3 years is a bit steep.  Revenues are only $2.4Bn in 6,500 restaurant so $369,000 per store to cover the cost of food, staff, rent and utilities vs. $794,000 per MCD ($27Bn over 34,000 stores and they drop $5.5Bn to the bottom line).  WEN is being speculated on as if they can get to MCD's 20% net margin ($480M) over time but they would have to invest so much to do that, that it would take many years and cost many Billions of Dollars to double in size (while keeping SG&A fixed, of course), increase sales and increase margins so it's just not a stock I'd want to bet on.

    SONC, on the other hand, has just $544M in sales and drops $36M to the bottom line (6.6%), which is 3x more than WEN has made in 3 years and SONC has only 3,500 stores so more room to grow at $155,000 per store but, obviously, a way more cash-efficient model (mostly franchise).  I have also long mentioned JACK as another favorite, with just 2,800 stores and not even in the Northeast (come back Jack – all is forgiven!) doing a robust $1.5Bn in sales ($535,000 per store – all company-owned) and dropping $57M to the bottom line (3%).  Neither SONC or JACK are particularly cheap at the moment but both make better long-term investments than WEN.  

    BAC/8800 – It's not always how well the stock will do but how badly it WON'T do that matters.  BAC is, of course, too big to fail and, by selling $10 puts and calls for $4.50 against the $11.50 entry, we net into the stock at $7/8.50 – a very nice 35% off the current price, even if it's put to us and we end up with a 2x entry.  $3 profit on $7 is a very comfortable 42% if called away over $10 (but, of course, we'll roll and pick up another $4 and reduce our basis to near zero within 4 years).  

    With JPM, on the other hand, who I also love – the stock is $48.63 and also TBTF and we could sell the 2015 $45 puts and calls for $12.80 for net $35.83/40.42, which is only 17% off if 2x is put to us and only 26% if called away.  Don't forget – we don't care if JPM outperforms BAC at all – we only care that the both don't go lower so the performance cap is more important than how much you think the stock will appreciate in a buy/write.  If you play with the comparative chart, you'll see that they take turns outperforming each other but, in general – if one goes down – they both go down – so which one would you rather have – the one with the 35% cushion that pays 42% on a 10% drop or the one with a 17% cushion that pays 26% with a 7% drop? 

    Again, I love JPM.  They are a much better bank than BAC but they just DON'T make a better buy/write at the moment.   

    Stealing/Scott – It's just a big game.  The top 1% get a bunch of suckers to "invest" in their companies but then they manipulate the prices and the board changes dividends and buybacks to benefit the insiders at any given moment.  You see these companies like GOOG etc with their "generous" stock options but, in reality, 2 guys get Billions while a hundred guys get millions – it's easy to be generous when your scraps are millions…  When I built my real estate data company back in the 90s, the first thing investors wanted to do was get rid of those employee options (we gave them as bonuses every year).  I ended up having about 1/3 of my company owned by the employees by the time I sold it and I was presented with clever plans to screw them out of it right up until the last day but my feeling was they did as much to build the company as I did.  It makes me sad to see how much that has changed since the dot com crash – now it's all about how much the founders can keep.  If half isn't good enough for the top 1% – what hope do the bottom 99% ever have?  

    You're welcome Jhanaj.  

    Adams/Rev – He is really a guy worth studying.  Had a great way of looking at things from all sides.  

    Maybe a black pope this time (Ghana's Turkson in the running) or Dolan – who's the Archbishop of NYC – he's the kind of Pope who could come in and bust some heads….  Not likely as most of the voting Cardinals are Europeans (and most of them Italian).  I imagine, at this point, they'd want to go back to an Italian to "set things right" (in their minds, I mean) and Turkson and Dolan are both low 60s and they usually like to pick people closer to death…

  206. Phil/Stealing  You're a good man, Phil.   :)