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Which Way Wednesday – Over or Under S&P 1,520 Tells the Tail

Dow 17,000 anyone?

It's only 20% up from here and it's now officially Jeremy Siegel's prediction for 2013 but, of course, Jeremy Siegel is always bullish but, as I noted in yesterday's post, always bullish is usually right in the markets.  In fact, maybe we're all not bullish enough.  Yesterday afternoon, in Member Chat, StJeanLuc brought up this Inflation-Adjusted Chart of the Dow from IntelligentBear and we can that, clearly, we're only about halfway into a real rally.  

At 14,000 we are exactly in the middle between Siegel's 17,000 prediction and the red support line on that chart at 11,000, that would make for a bearish correction of that same(ish) 20%.  So who should we listen to?   According to William Sherdon (from Barry), author of  “The Fortune Sellers: The Big Business of Buying and Selling Predictions,” the answer is NO ONE! 

That's right, they are ALL idiots.  And, by THEY, I mean anyone who tells you they know what the market is going to do.  As Barry notes, Sherden decided to test the accuracy of leading forecasters over a multidecade period. His conclusion: Forecasters stink!  His findings are summarized by Paul Farrell as follows:

1. Economists’ predictions are no better than guesses
2. Government economists often worse than guesses
3. Long-term accuracy is impossible
4. Turning points cannot be predicted
5. No specific forecasters are better than the rest of pack
6. No forecaster was more expert with specific statistics
7. No one ideological orientation was better
8. Consensus forecasts do not improve accuracy
9. Psychological bias distorts forecasters and their forecasts
10. Increased sophistication does not improve accuracy
11. No improvement over the years

This is why, at PSW, we teach our Members to BE THE HOUSE – not the gambler.  The only sure thing in this market is SELLING premium to other suckers who THINK they know what's going to happen next.  Since even the best of them are really no more accurate than a coin flip – the best thing to do is step on over to the other side of the table and SELL THE RISK to other people.  One thing we never run out of – in any kind of market – is more suckers to sell premium to.

That's why we love options – not for leveraging our own bets – although we do have fun occasionally, but for our ability to sell that leverage to others because there's always some fool analyst on either side of any bet, trying to convince the fools that follow them to pay us money to take more risks.  

Take BWLD, for example.  As you know, we've been killing it on earnings plays this quarter and, on Monday, QCMike asked during chat if I had a good trade idea ahead of BWLD's earnings.  My response was:

BWLD/QC – Too tricky to call in a bad spot.  Nervous investors have cleared out but maybe for good reason.  Nonetheless, you can sell the June $65 puts for $2.35 and that's a nice entry and you can sell the March $80 calls for $2.85 and just cover those up with the Jan $80/85 bull call spread at $1.90 and you've got a nice net $3.30 credit plus a free $5 spread to play with and your worst-case is an assignment way down at net $61.70 (20% off).  

Did I "predict" what BWLD would do?  Not really, we don't care.  What we did was find a range, between $65 and $85 on the then $77 stock, that allowed us to SELL PREMIUM to suckers who wanted to bet that the stock would move MORE than 10% on earnings.  COULD BWLD move more than 10% on earnings?  Sure it can – and you can also hit "00" on the roulette wheel and make 36:1 but, most of the time you don't and the house wins.   In fact, the house wins at roulette 37 times for each one time you win so, with a 2/38 advantage over you on every spin – you are effectively losing 5% of your bet every time you spin the wheel.

That means if you have $100 and you bet $5 20 times, it is extremely likely you will go broke before you get a win.  If you do happen to get a win, then all the House has to do is pay you and keep playing because, while you may get $180 back on one spin and feel like a big winner – we're playing that game with 37 other suckers who aren't so lucky and, over time, statistics tend to prove out in our favor.  

Selling options is no different for us.  Sure BWLD could have blown up or down on earnings but we can always adjust our position or, worst comes to worst, we can take our loss and move on and make up the losses on other sucker trades.  In this particular case though, BWLD went up 5% since we made the trade and is now dropping back 5% on earnings – right back to $77 and that will wipe out the short caller and the short putter and we get to keep their $3.30 PLUS whatever value is left on the spread we bought to cover the trade.  That's all it take to BE THE HOUSE!  

So, while we maintain the underlying philosophy of being the house, it is still fun to make a few predictions about the future but never confuse predictions with a strategy.  Our STRATEGY is to expect that no one, not even me, can predict the markets – especially short-term movement – so, while we may have fun GUESSING on short-term plays – our JOB is to make consistent long-term money following macro trends and selling the risk to others.  

President Obama laid out some long-term goals for his next 4 years in office last night but they aren't TRENDS if he can't get the proposed legislation through Congress.  As the WSJ notes: "The American people don't expect government to solve every problem," Obama said, while proceeding to offer a new government program to solve every problem.  That's not an inaccurate portrayal of last night's address but tough nuggies to the GOP if they expected less of a fight from the President – especially when CNN highlights how out of touch the GOP is with the will of the American People, 62% of whom cited affordable and improving health care as 2 of the top 4 things they want the Government to spend their money on – followed by Creating Jobs (36%) and Improving Public Education (24%).  Only 23% of the men favored spending more Government money on Defense (less than 11% of the total population) while women (52% of the voters) added Protecting the Environment (18%) and Helping the Homeless (16%) to the list of things the Government SHOULD be doing.  

Marco Rubio's houseEven Marco Rubio, this year's minority Republican chosen to rebut the President (based on the Rich White Male Party's belief that this makes them more appealing to the people they hate), had to say "So Mr. President, I don't oppose your plans because I want to protect the rich. I oppose your plans because I want to protect my (rich) neighbors."  OK, I may have added the word "rich" in front of neighbors but that's only fair because I'm a white guy and so was the rich white speechwriter, who thought having a Cuban guy say "neighbors" would make people watching on TV think he meant poor people.  

In fact, Marco Rubio is getting out of his $675,000 West Miami home so he and his family can get new, richer neighbors in DC, as he prepares for a possible 2016 run for the Presidency.  Isn't blatant hypocrisy hysterical?

Speaking of hypocrisy – so far, so wrong on my prediction of a pullback from these market levels and oil is hanging around $98 this morning – over our $97.50 shoring line (/CL Futures) but we're happy to short at $98 as well with a nickel stop over the line as we're pretty sure we might lose 3 or 4 nickels but we still think there's a very nice .50+ pay-off in our future – especially with inventories coming up at 10:30.  $98 isn't really all that impressive with the Dollar down at 80.08 and OPEC putting out a report warning of "political, price, economic, weather, environmental and geologicalstumbling blocks that could prevent U.S. oil production from meeting lofty expectations.

Also, the API Report (which we usually ignore because it's a BS Industry Survey – sort of like asking the foxes for a hen count) showed a very surprising decline in crude stockpiles last night – the first one this year and that's making the NYMEX traders all brave this morning and, if they are happy to pretend to want to buy barrels of oil for $98 between now and next Wednesday (March contract expiration), we are very happy to promise to sell it to them on the premise that we fully expect to be able to buy barrels for somewhat less than $98 between now and then – enabling us to fulfill our obligation at a profit.  

That's all futures trading is – it's not scary – it's simple!  

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  1. BWLD excellent work out PHIL

  2. Oil Lines

    R3 – 99.17
    R2 – 98.48
    R1 – 98.06
    PP – 97.37
    S1 – 96.95
    S2 – 96.26
    S3 – 95.84

    Yesterday's high and low – 97.79 / 96.68

  3. Good Morning!

  4. On that Option Monster app at the bottom they mention the BBY Jun 18 calls. I just checked them and OI is 37,000. That's 3x the March options and 30x the April options. The BBY Jun 12 puts also have an OI of 25,000 (same ratio as the calls compared to previous months). Of course we can't tell if these were sales or buys but someone is placing a big bet. And the deadline for the buyout is Feb 28! 

  5. Good Morning—great to be finally back home
    looks like I missed a number of great trades—--could I please have more today

  6. On the road to 10,000 hours there will be some bad moments:

    December 27, 2010

  7. PSW Atlantic City conference April 27-29 – We have 9 members signed up as of yesterday with qcmike and rperi on board now.  For anyone thinking of flying into Philly, qcmike and rperi are looking to share a car for the one hour drive to AC and I'm sure you could join them if the timing works out.  The deadline is next Friday Feb. 22nd to get to 10 attendees.  I'm hoping savi, jromeha and rexx get off the fence and sign up soon.  Email me with any questions.   Here’s the link to the main post.  Thanks!

  8. Hi Phil-TLT what are we rolling to?  Thanks

  9. are you shorting /cl at 98?

  10. “To fight this recession the Fed needs more than a snapback. Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble.” - clown posse Paul Krugman in 2002.

  11. Hello Everyone!
    Just dropping in to say Good Morning! I Got the Offer!! Financial Due Diligence Analyst for CNL! Perhaps you have heard of them Phil since you were big into the real estate industry? Any tips for starting my first real career? I had a contract position before this and before that worked at Publix. Opening a 401k in six months (when matching kicks in) in between I will open and add to an IRA for 2012 before deadline so I can get a small trading account going and start joining the trades instead of just watching and learning. 
    Keep the great stuff coming everyone!! I start Monday!

  12. dplatt- congrats!

  13. Damn Phil, you are my favorite writer!  Great article this morning and all month you have been on a tear.  Just want to let you know that it's appreciated, thanks.  

  14. dplatt:
    Congratulations on your new job!

  15. Congrats dplatt!

  16. Thanks Everyone!! :)

  17. Getting ugly now – fighting the Fed…. Fair warning, if we have to roll this is likely to become very margin intensive. Phil was talking about going 1.5x the number of calls. 9 short FAS calls uses a lot of Reg-T margin because it's a 3x ETF.

  18. Down we go again… Hang on!

  19. Marco Rubio – Since he has been a public servent since college and has 4 children, how did he afford a half million dollar house?
    It could be due to his wife being a bank teller and a former cheerleader…. ;)

  20. Phil:
    Could you provide a link to this week's auction schedule? THX

  21. Congrats dplatt! CNL is a great company.  I spent 5 years as the CFO of their Commercial Real Estate division.  Their 401k plan is through Fidelity and it allows you to trade options.

  22. stj/10,000 hrs – at 200 hrs, I can relate to Dilbert.
    Appreciate your keeping the  spreadsheets up-to-date – helps me follow the activity on the board when I get lost.  Also, I am willing to help you with the maintenance of the spreadsheet – just let me know how I can help anytime.
    dplatt – congratulations and now, you'll be trading options with real money!

  23. Congrats, J Platt, moving up like the market!
    Speaking of the market, where's my "massive stimulus" rally?  When Phil starts second-guessing his bearish instinct, I start selling — like right now.  Cash, the best hedge, according to PSW — liquid opportunity.

  24. Congratulations on the new job, dplatt~

  25. ZZ are you calling Phil a contrarian indicator? If he is then we are all screwed.

  26. clf down 17.5% at 30.26

  27. Dplatt – congratulations! and there has to be a nice CNL play out there for the rest of us. That company has been on a good run!  :-)  

  28. Once again wild swing following AAPL – down $10K as they go from 480 to 465!

  29. Pharm/SGEN Having made a nice profit on Mar calls (I never thanked you for that, so thanks!), I assume this pullback presents a good entry again. What would you recommend?

  30. terrapin22
    Hi, What is the reservation number for the rooms at Harrah’s Waterfront Tower thanks

  31. Jelu – I rather think I'm the contrarian indicator.

  32. What is rocking aapl ….going vertical

  33. Apple takeoff!  Good thing I held onto that one.

  34. SGEN/jel – June 30/35 BC ratio spread (2:1 or 3:2).  Selling 22.5or 25 Ps

  35. rustle123 - Abusing Mother Earth will have huge consequences…Payback will be a b*tch….

  36. Good morning! 

    1,523 on the S&P is the only number that matters today – wild and crazy!  

    That's 3 of 5 10% levels on the Big Chart and we know the Nas is artificially held back by AAPL, which is down from $591 at Thanksgiving to $465 this morning, so 21.3% and we'll call that a 4% handicap on the Nas, which means AAPL is costing it 128 points, which takes us well over 3,300 and that means the only thing we should be doing – in determining whether or not to raise our bar on the Big Chart – is review the Dow and decide if it has the gas to at least make 14,400.

    That's only 400 points up from here – 2.5%ish – so it won't take much but it's still going to take something more than nothing.  Ironically (for us) oil getting back over $100 could be just the ticket for the Dow as XOM is badly lagging at $88 (testing the 50 dma) and CVX is making it's 3rd attempt since September to pop $117 and $120 is only 20% over the 2011 highs, when CVX dropped $27Bn to the bottom line and, while they only managed to match that this year – nat gas and oil were cheaper on average, so improving prices would be great for CVX.

    Of course, we're betting against improving prices and the Dow earnings actually do point to an overall weakness in the industrial sector – even as energy stocks hold up pretty well:

    This is, of course, our "bearish" premise for at least a bit of a correction because we don't believe in $100 oil – no matter how weak the Dollar gets.  Also, Gold is giving us no indication that oil should be moving up on currency or geopolitical concerns so we have to assume it's nothing more than manipulation by the NYMEX pump crew and maintain our shorts and THEREFORE – by association – we have to discount two of the Dow's biggest components from being likely to help them get the index over the top.  

    IBM we already have bets on staying flat around $200 and CAT we're not expecting to pop $100 (now $97) and we know MCD ($94) is weak and MMM looks toppy at $103 and BA is stuck for a while around $75 until they solve their battery problem and AXP ($63), HD ($67), JNJ ($76), PG ($76), TRV ($80) and UTX ($89) have all had roughly 10% runs already this year and only HD is underperforming the Dow since Thanksgiving (by 4%) and that about sums it up for the major components.  

    So, I'm not bearish on the market but the Dow will give us some trouble going higher and usually you don't see one major index outperforming another by more than 10% so the key is for us to have realistic expectations.  

    We'll see how oil inventories go at 10:30 and, don't forget, we have our Fed Speak from Bullard at 11:10 but let's not wait and salvage the .30 we have left on the TLT $116.50 calls in our $25KPs and roll them out to March $117 calls at $1.08 for .78 and keep in mind that that's the loss we want to make up now.  

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:30 Import/Export Prices

    8:30 Retail Sales

    10:00 Business Inventories

    10:30 EIA Petroleum Inventories

    11:10 Fed's Bullard: U.S. Economic and Monetary Policy

    1:00 PM Results of $24B, 10-Year Note Auction

    At the open: Dow -0.02% to 14016. S&P +0.17% to 1522. Nasdaq +0.26% to 3195.

    Treasurys: 30-year -0.57%. 10-yr -0.27%. 5-yr -0.13%.

    Commodities: Crude +0.39% to $97.89. Gold -0.04% to $1648.95.

    Currencies: Euro +0.16% vs. dollar. Yen +0.05%. Pound +0.58%.

    10:00 AM On the hour: Dow -0.04%. 10-yr -0.26%. Euro +0.18% vs. dollar. Crude +0.23% to $97.73. Gold -0.14% to $1647.25.

    Market preview: U.S. stock futures point higher as the Dow and S&P look to build on recent gains that have taken them to multi-year highs. "This is a market that refuses to go down, and the trend suggests that we'll not only hit a new high on the Dow, but move well beyond it," says Sarhan Capital's Adam Sarhan. The S&P Mini is+0.2% and the Dow Mini +0.15%. Comcast rises 7.6% following its deal to acquire the rest of NBC Universal from GE, which is +0.7%.Later: Business Inventories, Fed's Bullard

    Jan. Retail Sales+0.1% vs. +0.1% expected, +0.5% prior. Ex-auto +0.2% vs +0.2% expected, +0.3% prior.  More on Retail Sales: A 5.7% Y/Y increase in building materials and garden equipment jumps out (HDLOW) while the sharp 8.3% increase in sporting goods (DKSCAB) may have something to do with increased gun demand. Once again, electronics sales (RSH,BBY) came in soft.

    Dec. Business Inventories: +0.1% +0.3% consensus and +0.3% prior.

    Jan. Import/Export Prices: Import prices +0.3% vs. consensus of +0.3% and -0.8% prior (revised). Export prices were+0.6% vs. consensus of +0.8% and -0.5% prior (revised).

    MBA Mortgage Applications: -6.4% vs. +3.4% last week.  More on MBA mortgage applications: Cash buyers need only apply? The seasonally adjusted purchase index falls 10% from the previous week. (full release)

    Yesterday's G-7 statement was meant to slow the pace of the yen's slide, not to signal concern over the currency's current level, according to a source within the group. "There was a concern it may overshoot." FXY +0.2% premarket. The yen's strength following yesterday's release and clarification had the Nikkei off 1% last night.DXJ -0.5% premarket.

    No currency wars here. The euro takes a mini-header asBild reports the ECB is worried the euro's strength will hurt the recovery in the EU periphery. Counting down to the denial …  The euro currently buys $1.3494, down from $1.3519 a couple of minutes ago.

    No currency wars here. Sterling renews its sharp 2013 decline as BOE Governor King has a "what me worry" attitude about the bank's forecast inflation is set to rise to 3%, and will stay above its 2% target until 2016. "This is not the result of easy monetary policy, nor does it reflect what's going on in the economy." When is King's retirement again? FXB -3.7% YTD.

    The big banks get a lot of headlines for slashing jobs, but one place they're adding is Mexico thanks to speedy economic growth, a hot stock market, and rising peso. At the same time, some are cutting back in Brazil as the economy and stock market stumble. Previous: ETF investors abandon Brazil (EWZ) for Mexico (EWW). Is a contrarian trade idea forming? 

    Are more gains in store for the banks after the President last night gave a push to the stalled Menendez-Boxer bill which would streamline the refinancing process for Fannie and Freddie borrowers? BAC +0.9%C +0.3%JPM +0.5% premarket (no trades for WFC). 

    Iran's oil exports may have dropped to below 1M bpd in January after a mini-rebound to 1.56M bpd in December, the International Energy Agency estimates, with the latest fall coming due to reduced purchases from China and South Korea as the West tightens sanctions even further. Iran's output fell 50,000 bpd to under a three-decades low of 2.65M bpd, and the IEA forecasts even more declines. 

    A senior TransCanada (TRP) executive says he expects final State Department approval for the Keystone XL pipeline expansion in two to three months, following a final U.S. environmental assessment. Meanwhile, TRP expects to file an application by year's end for its plan to ship Alberta oil to eastern Canada through a converted natural gas pipeline. 

    Gee, ya think?  Two large consumers of copper – one is Encore Wire (WIRE) – launch a legal challenge to the SEC's approval of a JPMorgan physically-backed copper ETF, saying the fund will inflate prices and distort supplies. The suit comes just as regulators are set to give (or deny) the go-ahead to a similar ETF planned by BlackRock.

    Japanese utilities are stepping up uranium imports on hope the government will allow more shuttered nuclear reactors to restart, according to Cameco (CCJ) CEO Tim Gitzel. It's not wishful thinking, says Raymond James' David Sadowski. Big consumers, the government, utilities, and even townspeople close to the plants are clamoring to get moving. Cameco makes up 20.4% of the URA ETF.

    This is why the puts pay so well!  Cliffs Natural Resources (CLF-13.1% premarket after shares are downgraded to Hold from Buy with a $38 price target, down from $48, at Deutsche Bank following its Q4 loss and falling revenues. The firm questions the timing of CLF's share issuance after a big dividend cut and since 2013 cash flow generation is likely to increase. Citi also cuts shares to Neutral from Buy. 

    Maybe CAT can go higher:  More on Deere (DE) FQ1 earnings: Net worldwide equipment sales +11%, with U.S. and Canada +18%, the rest of the planet +2% (though currency translation cost 3%). FQ2 sales are expected +4%, full-year sales +6%. "Persistent global economic and fiscal concerns warrant continued caution." Shares +4.3% premarket. 

    Margin pain on the horizon: Restaurants could get squeezed this year from a combination of higher commodity costs and frugal consumers, according to AlixPartners. Though traffic is forecast to rise 3%, the average ticket is expected to decline 4.7% with coupons, promotions, and discounts gaining favor. Chains that are expected to ride out the expected tough environment are those that can deliver healthy food fast. Chipotle (CMG -1.8%), privately-held Subway, and Panera (PNRA -1.5%) fit the bill.

    Should PepsiCo (PEP +0.1%) be worried? After Dr. Pepper Snapple put in a weak quarter Q4 and Coca-Cola saw currency headwinds and moderate growth trends tempers its results, all eyes in the beverage industry turn to PepsiCo – due to report Q4 numbers tomorrow. Though the company's snack business could surprise on the upside, Coca-Cola's market share gains in some emerging markets could foreshadow disappointment on the beverage side. (earnings preview

  37. Woo hoo!
      MEMC (WFR +5.6%) hits levels last seen a year ago after soundly beating Q4 estimates. An unexpected 3% Q/Q increase in solar division revenue – fueled by a 23% increase in sold solar project capacity to 91MW – drove the beat. Solar sales still fell 24% Y/Y thanks to weak wafer/module demand, while chip wafer sales were flat (higher volumes were offset by price drops) Q1 and 2013 guidance will be provided at MEMC's March 13 Capital Markets Day. (PR) (slides)

    Shares of Netflix (NFLX) have more room to run, according to JPMorgan. The firm takes its price target up to $206 from $180 and backs the Overweight rating on the stock it has lined up. NFLX +1.7% premarket to $181.01.

     Some Amazon (AMZN +2.8%) news: 1) Amazon and CBShave expanded their licensing deal to include Everybody Loves Raymond, the Star Trek franchise, and a slew of other CBS and Showtime-owned shows. The expansion comes 2 days after a deal was announced to show Under the Dome episodes to Prime Instant Video subs just 3 days after they air. 2) Amazon has met with Indian officials in an effort to change laws that prohibit the company from directly selling goods to local consumers. As Wal-Mart can vouch, this is easier said than done.

    Apple (AAPL) has slashed prices for three 13" MacBook models. The price of the 13" retina MacBook Pro with 128GB SSD has been cut by $200 to $1,499, and the 256GB model by $300 to $1,699. Meanwhile, the 13" MacBook Air with 256GB SSD has been cut by $100 to $1,399. Apple's 15" retina MacBook Pro models remain priced at  $2,199 and $2,799, but both have been given faster Intel Core i7 CPUs, and the costlier model now sports twice as much RAM. The moves follow a quarter where Mac shipments fell 22% Y/Y, and revenue 16%. (PR) 

    Three breakfast reads: 
    Green Mountain: Over $300 Or Under $10? The Next Few Weeks Are Key 
    A Different Take On A Warren Buffett Strategy 
    This Great American Auto Manufacturer Has 50% Upside

  38. OT but great read.  The "afterlife" of the Seal member who shot Osama.
    It's a story we hear over and over again, the govt abandoning their prized assets

  39. Thanks Yodi and congrats to all on BWLD. 

    BBY/StJ – Should be heating up with earnings/announcement coming soon (28th).  200 dma is $16.70 so watch that line.  

    Oil gave us a quick .30 so far (/CL) so the stop is $97.75 and we are THRILLED to make .25 as it lets us lose 5 nickels later as we try again at either $98 or $97.50.  That's all the Futures is – just try to live long enough to make a big score once in a while…

    LOL StJ.  

    TLT/Cturb – As above.  We held the line well at $115.50, which gives me hope but this week is too close to risk any more money.  

    Good call on oil Tommy.  Generally, we like to short each .50 if they are over our line (currently $97.50) but with .05 stops over and then we wait PATIENTLY for another major cross.  At the moment, of course, the big action should come on inventory and very possible we get a spike up so good to take the quick .25 now and wait for the next good entry. 

  40. yodi – here the main reservation number.  Harrahs is owned by Caesars.  1-800-CAESARS (1-800-223-7277)  

  41. SCO/25KPM/Phil – is there any adjustment for SCO in 25KPM out of interest?  I have been following this in paper and just wondered.  Thanks.

  42. PeterD / Weekly SPX Strangles

    What do you think about starting to sell SPX Strangles 15-20 days out to take advantage of more time decay? (and make the portfolio a bit more lively?)

    I was looking at the Mar1 weeklies with 17days to trade.
    Maybe short the SPX 1440P for 0.97 , short the SPX 1555C for 0.30.
    Delta is around 0.04-0.05 for both options. ProbITM is about 5%.
    There is also the SPXPM options to experiment with.

  43. Congrats Dplatt!  I take it you mean CNL Financial and not CNL the utility company…  They do a lot of stuff, including CRE, of course but mostly in the south so I didn't run into them much (and yes, NoCa is south to us).  

    Thanks Dennis!  I actually hate having such a good start to the year because it makes me want to pack it in until the next downturn as I'm generally bullish by nature – so I am happier in an up market (especially when we guessed it right).  

    Oops, oil already:  

     EIA Petroleum Inventories: Crude +0.6M barrels vs. consensus of +2.4M. Gasoline -0.8M barrels vs. consensus of -0.4M. Distillates -3.7M barrels vs. consensus of -2M. Crude +0.19% at $97.7.

    That's not at all supportive of $98 and not what API would have had us believe so another good short entry!  

  44. terrapin22
    But as I recall there was a booking number for members of PSW or am I mistaken?

  45. Phil / Oil Rollover
    Is it possible to explain this in a little more detail?  I'm unclear how it affect the price, where you get the data, and in general how I can "read into it" like you do.

  46. Crazy world DOW down AAPL up what can I say?

  47. CLF

  48. WDC – top of channel. may be good entry for puts today if you are so inclined. even the the lukewarm sector-bullish Fool article that mentioned WDC (and caused the small pop at open?), said that it was the weak man of the bunch, and expected to decline. And in another today newsitem, the "All Star Analyst Mark Miller" dances around it with  "in terms of the disk drive stocks, they've showed a surprising recent rally, especially considering that the TAM is going to be flat for this quarter and probably next, well below estimates at the beginning of last year." Surprising indeed. Not likely to be sustained.

  49. From Doug Kass:
    It is my contention that dealing with our debt and deficits (i.e., the fiscal cliff) is probably easier to resolve than most believe. As a matter of necessity, it must be accomplished by:

    cutting spending;
    reforming Social Security, Medicare and Medicaid;
    accelerating the pace of domestic economic growth;
    reducing government waste; and
    raising taxes.

    As a starting point, there is the U.S. tax code.
    There is so much waste and accumulated abuse of our tax code that savings are abundant if our politicians only looked under those rocks.
    As Ralph Nader has written, the U.S. tax code (all 7,500 pages of it) "is the victim of severe tampering and perforating by corporate lobbyists and tax attorneys and unattended to by inadequate IRS enforcement."
    One particular abuse that should have bipartisan approval and that seems impossible to defend lies inside an innocent-looking, green-trimmed, white, five-story building in the Cayman Islands: the Ugland House office on South Church Street.
    The unassuming but appropriately named Ugland House is currently the home of over 18,500 corporate entities that reside there for the express purpose of avoiding (though some might say evading) U.S. taxes. It houses hedge funds and other partnerships as well as some of the largest U.S. corporations extant — all of which benefit appreciably from the avoidance of current federal income taxes by assuming a Grand Caymans address of incorporation.
    Considering that the Cayman Islands have a tax rate of 0.0% and the fact that some of the largest U.S. corporations received billions of dollars from the bailout, one would assume the government would recoup some of this corporate welfare in the form of taxes. Instead, some of these corporations have not paid any federal income taxes for years.
    In late 2011, Citizens for Tax Justice analyzed the tax payments of 280 of the Fortune 500's largest companies. Seventy-eight of the 280 companies paid zero or less in federal income taxes during at least one year from 2008 to 2010. Thirty corporations paid less than nothing in aggregate federal income taxes over the entire 2008-2010 period.

    How are America's largest corporations avoiding so many taxes? A practice called transfer pricing. This accounting practice lets companies buy and sell products and services with their own offshore subsidiaries and set prices themselves, according to David Evans in the Bloomberg article "The $150 Billion Shell Game" from 2004.
    This practice is just as relevant nine years later. Corporations abuse the accounting practice by shifting profits overseas to avoid U.S. taxes. Their prices are set artificially high for imports and low on exports. In the U.S., the corporations are allowed to claim the high expenses on the imports and the smaller profits on the exports in their IRS filings.
    Profits earned through a foreign subsidiary of a U.S. corporation are not taxed until the cash is repatriated in a dividend back to the U.S. parent company. As a result, while the statutory federal corporate income tax rate stands at 35%, it is estimated that the effective tax rate of the largest publicly traded companies in the U.S. is closer to 20%.
    Regardless of one's party affiliation, the very existence of the Ugland House appears indefensible.
    Back to Nader, "Any significant push toward fundamental tax reform has to start by chipping away at the corporatized, commercial Congress which uses tax breaks, deferrals, credits and exemptions as inventory to sell for campaign cash in increasingly costly campaigns."
    If the basic purpose of taxation is to raise revenue needed for public services. Why should hardworking citizens underwrite corporations who skate the tax code? How does filling the coffers of profitable companies who avoid taxes through a labyrinth of skillful tax avoidance — including Bank of America (BAC), General Electric (GE), Oracle (ORCL), Cisco Systems (CSCO), Microsoft (MSFT), Apple (AAPL), Verizon (VZ) and so many other companies — and their ridiculously high-paid executives benefit the lives of everyday citizens?
    At most large multinational U.S. corporations the tax department is a well-oiled and systematic profit center. In 2010 GE earned $7 billion in the U.S. but paid no federal taxes to the U.S. government. Verizon and Bank of America didn't pay federal taxes either. Yet all three companies were provided with the resources, public services and infrastructure to conduct their business.
    By most estimates over $1 trillion of profit earned by U.S. companies sits in offshore cash and short-term investments in offshore holding companies and has never been taxed by the U.S. Two conspicuous examples include Microsoft and Apple, which hold $50 billion and $100 billion in cash, respectively, in offshore accounts.
    The ever-growing pile of offshore cash has introduced new potential risks to the balance sheets of these corporations at home. Companies are avoiding paying the taxes on the repatriation of their overseas profits but still have to fulfill the obligations to shareholders in the form of dividends, share repurchases, debt repayments and pension contributions. Given the easy borrowing terms of low interest rates here in the U.S., companies are taking on more debt instead of paying Uncle Sam in taxes.
    While corporations continue to hoard cash offshore, they are simultaneously improving margins by shipping American jobs and factories abroad. Corporate profits improve but tax revenue is hardly impacted by the process. This has contributed to the loss of more than 5 million U.S. manufacturing jobs and the closure of more than 56,000 factories since 2000, according to Sen. Bernie Sanders (I-Vt.).
    Sen. Sanders has introduced new legislation with Rep. Jan Schakowsky (D-Ill.) with the Corporate Tax Dodging Prevention Act (S.250) in an effort to stop American banks and corporations from sheltering profits in places such as Ugland House and other tax havens to avoid paying U.S. taxes. The act will also cease rewarding companies that ship jobs overseas with tax breaks. The Joint Committee on Taxation has estimated in the past that the provisions in the bill will raise more than $590 billion in revenue over the next decade.
    The legislation will certainly raise some arguments on Capitol Hill. The situation remains that the U.S. is the only major country that has substantial taxes on the repatriation of profits earned overseas. The GOP argues that the U.S. needs to move toward a territorial system for international taxation. Under this system, foreign-source income would be taxed only in the country where it was earned and not be taxed at all in the U.S. This approach would reduce the tax burden on U.S. companies and eliminate the disincentive for corporations to repatriate their foreign profits, according to the Brookings Institute 2012 article, "A Sensible Plan to Bring U.S. Corporate Profits Home."
    The major point of contention with this system is that certain profits would not be taxed at all in the U.S.
    The alternative proposition from President Obama is the international minimum tax. Under this proposal, all income of U.S. corporations must be immediately taxed, either by the U.S. or some foreign country, at a rate greater than or equal to this as yet unspecified international minimum tax rate. If a corporation reported profits in a country that collects no corporate tax, the U.S. would immediately tax those profits at the international minimum tax rate. This would help reduce the appeal of the tax haven, according to Brookings.
    Very few people actively support the current system of taxing the foreign profits of U.S. corporations. A combination of the two systems would provide the best compromise: a territorial tax system for the valid tax-collecting nations and the international minimum tax rate for those that collect little or no corporate tax (e.g. the Cayman Islands). At this point in time, however, compromise is a four-letter word in Washington, D.C. Sen. Sanders' new legislation proposition is a good start toward addressing the tax dodging of U.S. companies.
    What is the logic of this tax dodge by some of country's largest companies?
    Seagate's (STX) Brian Ziel's explanation in 2004, which is commonly stated by other corporations as a rationale for overseas subsidiaries that do not pay U.S. federal taxes: "The competitive benefits relate both to taxes saved on certain income earned outside of the United States and the ability to efficiently deploy assets around the globe to remain competitive" (Bloomberg).
    As I wrote in Barron's Other Voices last year, the average American has been the victim of screwflation over the last decade. Corporations have prospered and have increased their share of GDP at the expense of the middle class, which has seen its wages and salaries stagnate while the cost of the necessities of life has steadily increased. Those large U.S. corporations that have opportunistically reduced their tax bills through Cayman Islands subsidiaries and other schemes are the same companies that have sliced fixed costs (and have recently achieved 57-year highs in profit margins) by paring down payrolls and utilizing temporary employees in place of permanent ones.
    Perhaps before considering raising taxes on either the middle or even the upper class of U.S. wage earners, an explosive device should be detonated in order to destroy the rules that form the foundation of the ignominious Ugland House.
    Tax what the large corporations burn, not what they earn, by getting rid of the shell game operated in the Ugland House in the Cayman Islands and elsewhere.
    Citizens for Tax Justice estimates that tax havens in the Cayman Islands and elsewhere outside of the U.S. cost our government about $100 billion per year in tax receipts. Many of my hedge fund friends will no doubt push back from the notion of abolishing overseas tax havens, but we are entering a period of shared sacrifice in the four years ahead. Our legislators have hard decisions to make in reducing the country's budget deficit, but this seems one of the easier decisions.
    There is an additional concern that is being addressed in Washington, D.C.: the notion of carried interest.
    Carried interest is generally treated (preferentially) as capital gains in hedge fund and private-equity partnerships. The taxation of carried interest has been an issue for several years as the compensation earned by investors increased with the size of private-equity funds and hedge funds. Since private-equity firms tend to hold investments long term, the gains qualify as long-term capital gains, which have favorable tax treatment. Managers taking advantage of the maximum 15% tax rate on long-term capital gains have raised concerns. The view that managers are taking advantage of tax loopholes to receive what is comparably a salary without paying the ordinary 35% marginal tax rate is not sitting well with members of Congress nor their constituents. Taxing the gains at the marginal tax rate has drawn ire of several managers on Wall Street, but the move is necessary if Congress is going to close the tax loophole to address our country's budget issues.
    After dealing with numerous other tax loopholes, our leaders in Washington, D.C., can begin to seriously address the enormous systemic waste that has been built up over the years in the bulging bureaucracy of our government.
    Now there is some serious and heavy lifting!

  50. sorry guys – what are we doing with the Feb TLT's ? Crawling back to $116 – any more Fed juice  on the way ?
    From Phil // TLT/Cturb – As above.  We held the line well at $115.50, which gives me hope but this week is too close to risk any more money.

  51. CNBC turning into Fox News this morning! All these GOP guys one after the other… And that senator mentioning Ronald Reagan and Tip O'Neil:

    1. Reagan said that government was the problem while increasing spending dramatically (especially defense)
    2. The deal between O'Neil and Reagan was about raising taxes
    3. Reagan could not make it in the GOP today!

    How many elections do these guys need to lose to understand that they are not on the side of the average American. Idiots.

  52. Oil already fantastic with a quick spike back up to $98 and now down to $97.21 – gotta love those futures.  Still, we need more than that for USO ($35.22) and SCO (now $36) but the Dollar is back to 80.25 and maybe that will help out with a move back to 80.50.

    FAS Money and AAPL Money (same commentary) – Just when you feel like throwing in the towel is exactly when you should be pressing your bets.  It's a fine line between genius and bankruptcy, unfortunately, and I do play these portfolios more Conservatively than my nature, which would have been to press both on this mornings dip in AAPL and rise in XLF as neither are justified by my own value calculations.  But, as StJ notes – most people don't have enough margin to make those moves so we try to remain conservative – perhaps making less than we could but also, hopefully, losing less than we might as well.  

    Rubio/1020 – He's been in the Florida House since 2000 and was its speaker since 2006 and he "won" the Senate seat with 48.9% of the vote on a split ticket.  He's a total T-bagger so unlimited Koch money goes his way and his chief of staff was Cheney's policy adviser so this guy is hooked up to the max.  Keep in mind, this is the same guy who spent $100,000 of party money on personal items:

    Rubio billed the party for more than $100,000 during the two years he served as House speaker, according to credit card statements obtained by the St. Petersburg Times and Miami Herald. The charges included repairs to the family minivan, grocery bills, plane tickets for his wife and purchases from retailers ranging from a wine store near his home to Apple's online store. Rubio also charged the party for dozens of meals during the annual lawmaking session in Tallahassee, even though he received taxpayer subsidies for his meals.

    Auctions/DC – 10-year today at 1pm and 30-year tomorrow at 1pm.  

    $97.50 yet again.  

    Cash/ZZ – You're right.  It would be so much more relaxing to cash out now and take a break.  In fact, I am off to Las Vegas tomorrow night and will be in LA next week, hanging out with the Opesbridge boys – so a nice change of scene for me, if nothing else.  I do always feel like I'm on vacation when I'm out west since I get up at 3am anyway but, out west, the market is closed at 1pm and I have a whole day ahead of me.

    CLF/Tommy – Nice time to sell puts again.  In the Income Portfolio, we sold the 2015 $25 puts for 6.50 back in September, now $4.60, even after the big dip but maybe worth a shot if CLF nudges down a bit more.  

    Markets falling off now – maybe a blow-off spike up this morning? 

  53. Wombat/TLT:
    Phil at 10:20:
    "We'll see how oil inventories go at 10:30 and, don't forget, we have our Fed Speak from Bullard at 11:10 but let's not wait and salvage the .30 we have left on the TLT $116.50 calls in our $25KPs and roll them out to March $117 calls at $1.08 for .78 and keep in mind that that's the loss we want to make up now."  

  54. Phil / High Confidence Trade
    Phil, I was wondering if you had you're eye on any trade that was pretty high confidence, in the may expiration?  I was looking for something that pay's around 25% return on risk.  Maybe a ITM Bull CS with a OTM short putter.  Maybe TBT, C, BAC, SPX?  It's a bet that I have with a friend.  If I win, he pays me whatever I make.  If I lose, I pay him whatever I lose.

  55. Cramer must be losing his magic touch (8
    It’s our "one-time-only" best price, and when you take advantage of this offer, you don’t pay $249.95. You save $200 and you pay just $49.95.

  56. stjeanluc – Instead of typing, just paste this….  :)

  57. Did any one enter my AMZN play of 1/23/13 Just on two option plays position is up 1379.00 Still wayting for the Feb13 260p option of 6.30 to expire to enter the following play. please let me know if any one follows this play. THKS

  58. Laddoo //  !! Thanks man – don't know how I missed that. I went through the thread 3 times – yikes.
    Phil // Gogo Girls. All I have to say.

  59. SJL,
    How many elections do these guys need to lose?

    Irrelevant, in my view, since they are beholding only to the special interests that pay for their votes with a raft of favorable legislation, tax breaks etc. Until there is real campaign finance reform nothing will change.
    - Look at the watered down congressional answer to congressional insider trading; so anemic as to bear witness to the fact that our elected representatives do not feel inclined to even attempt to seriously camouflage their chicanery.
    -A certain senator from Az started out with campaign finance reform as a central tenet to his presidential bid and then dropped it when he was told unceremoniously that he wouldn't get anywhere (with either party) if he insisted on attacking the sacred cow of real politics. If medicare/social security is the third rail of politics, campaign finance is the neutron bomb.
    These guys are not going to give up their real wealth source, against which their salaries are insignificant, without a weaponized drone hovering about 6" over their heads. If there is to be change it has to come from the public – grass roots efforts. Constitutional amendment, criminal penalties in the form of real jail time.

  60. Forget about politics, was that the most awkward drink of water you've ever seen someone take or what?

  61. Yodi/AC Conference – here is the code.  For guests that will be calling in their reservations, they may call our Reservation Center at  1-888-516-2215. Currently, the name of the group is listed as Phil’s Stock World and the code to identify the group is SH04PS3.  

  62. jromeha – Me thinks that was in the script, because it looked awkward…. though I'm not sure what the point would be….

  63. Marco Rubio – The government is the problem!


  64. One more comment on Rubio – only in the Republican party do the guys who get caught in money scandals get promoted.  Why?  Because we (Big Business people) like to know our politicians are the kind of guys who "play ball."  When I'm working with a company that needs to get something done politically, even with my connections with the Dems – it is a lucky break when we have a Rep to deal with as it's so much easier to know that you can just write a check and get "good Government."   Not that it's not also true with many Dems but it's usually not as straightforward as it is when dealing with the Grand Old Party.  

    Fracking/Rustle – Not like our water is all that drinkable in the first place but, if my flesh stars melting in the shower – I may have to consider a move….

    Screwed Seal Guy/Burr – I read that.  Very sucky and, unfortunately, very typical of what happens to guys who come home.  It's criminal to pluck kids off the street at 18, 19 or 20 and train them for NOTHING that will help them get jobs after the army.  If you are in the middle of a war and don't have time to train them up front – then take the responsibility to do it later – that's not a tough goal to have, is it?  

    SCO/$25KP, Scott – I'm hoping we get a better sell-off by 2:30 but, if not, we'll have to roll out.  We're the $36/37 spread for net .42 and the $36 calls are now .45 so we spend .90 to roll them out to the March $36s, wait for the current $37s to expire (Friday) and then sell March $37s, now $1 and we maintain about the same spread for another month. 

    Oil/Burr – Weekend discussion.  I get the strip data here.  

    WDC/Scott – Interesting for a put but I don't hate them – I just don't like them so no particular reason to play.  

    Kass/Rustle – No link? 

    GOP/StJ – Interesting tactic they've decided to take – going even further to the right since losing the election.  

    May trade/Burr – You can buy the AAPL May $435 puts for $1,460 and sell the May $445 puts for $1,810 for a $350 credit against $650 in margin so that's 53% back on capital at risk and that's very useful if you are going for 25% as you can risk 1/2 of what you intend and keep the rest in case you have to roll.  I'm not a huge fan of bull put spreads, or any play where risk outweighs reward, but beats chasing things that have already had good runs and trying to predict where they'll be in 4 months.  AAPL, on the other hand, is ridiculously undervalued now and would be ridiculously undervalued then and we're getting a bonus $20 cushion on this one.  

    Cramer/Yodi – Wow, that's a really good deal (as long as you don't actually use it to follow his advice and lose thousands more!).  

    Useful link 1020!

    Rubio/Jrom – Yeah, that was strange.  I got the feeling someone had told him "the pellet with the poison was in the vessel with the pestle but the chalice from the palace held the brew that is trueand he couldn't get it straight.

  65. You read it here first….Spain is the next Germany….

    "Spain, where unit labor costs are falling due to recession and reforms, and where exports performance is strong, is on its way to become the euro area's next Germany," wrote analysts Joachim Fels and Sung Woen Kang in a weekly note on the global economy.

    ….. but … in a retort….

    "There is more to productivity and competitive position than unit labor costs. If there wasn't, we could observe Bangladesh's average wage cost of one dollar a day and conclude that it will overtake Germany in the export league table,"

    I love Morgan Stanley.

  66. Kass/Phil
    It was emailed to me.  Didn't have a link for it.

  67. Phil / AAPL trade
    I guess we could also do the May 435/445 Bull Call at 6.50.  Payoff of 3.50 would be the same 53%, but with limited risk.  Thoughts?

  68. Cramer Phil you should be a nice guy and let him sign up so he does not have to sell such a load of BULL

  69. whenever they say "Reagan and O'Neil" I say "always after me lucky charms"

  70. Pharm- aveo- sell? double down? Thx my friend. 
    Dplatt- just make sure you check PSW on your phone and not the company computer!lol. I've been talked to twice about this website…. My defense (which has worked so far) is I put in more hours than most…. 

  71. Oil poops, and then floats to the top….nice.  Just need a nice flush.

  72. AVEO….holding.  Will take stock if the Feb Ps are still ITM. 

  73. CSCO Trade
    Bloomberg guy just recommends selling the Feb 21 Straddle and buying the Mar 21 Straddle for 0.26 total.
    Premise is that they think CSCO will move less than 6%, and you get to own a Mar 21 for cheap with unlimited profit potential.

  74. Poop/Pharm – is that technical chart pattern? ;-)

  75. PLX is back to almost $6.  Phackrs…..They can KMA.

    YMI money should be in tomorrow.

    SGEN….selling a few June $25 puts.  JUST A FEW.

  76. SSGEN – try to get 1.35…they are taking 1.30.

  77. AVEO…I expect them to run up into July….so buy the dips…sell the rips…


    In TIVO-1, tivozanib demonstrated a statistically significant improvement in progression-free survival (PFS), the primary endpoint of the study, when compared with sorafenib. The FDA has accepted the tivozanib NDA for filing, and according to the timelines established by the Prescription Drug User Fee Act (PDUFA), the review of the NDA is expected to be complete by July 28, 2013.

  78. SEAL Shooter: "well nothing's too good for a vertran, yeah this is what they say; So nothing is what they will get, in this new American way…" E.V.

  79. Short Interest Hits 12-yr Lows.

  80. Spain/Pharm – They were just saying something similar about us re. jobs coming back, on Bloomberg.  Of course, it is the goal of Corporate America to turn us into a third-world country, where they can get cheap labor and pollute in an unregulated environment.  We're just getting there ahead of schedule.  

    Kass/Rustle – The problem is you sometimes lose spacing when posting like that – makes for a tough read.  

    AAPL/Burr – Same thing really – a bit better as you break even at $441.50.  Risk is same otherwise. 

    Cramer/Yodi – I already hear enough of my words on his TV show so, no thanks.  

    Oil working very hard to take back $97.50.  Will be psychologically damaging to trades if they can't hold that line into close (90 mins). 

    CSCO/Burr – That's reasonable(ish) but if CSCO goes up to $22, you owe $1 to your Feb $21 caller and your March call will be maybe $1.15 so it's not "unlimited" unless you then take a chance and don't cash your longs, in which case, you can get whipsawed on a correction after expiration.  Better to have some conviction and say CSCO won't go below $21 and, if it does, you don't mind working it off and selling 5 Feb $21 puts for .54 ($270) and buy 5 May $20/19 bear put spreads for .29 ($145) for a net .25 ($125) credit straight up and your worst case is owning CSCO at a lower cost than it is now while anything up is at least a $125 instant winner plus whatever is left on the long spread.  

    Longer-term on CSCO, this may be the last time you see them this close to $20 – ever.  The 2015 $20 puts can be sold for $2.75 and you can use that to buy the $22 calls for $2 for a net .75 credit so $19.25 is your worst case with an unlimited upside.  You can be more conservative and sell the April $21 calls for .75 and now you have a $1.50 credit and all the time in the world to roll the calls if CSCO goes up fast but they've hit all 4 of their last earnings and last Jan was a 10% beat and this year they are only looking to go +.01 (.48) despite very steady 5%+ growth all year, which should be .49 or .50.   

  81. Burrben
    CSCO not much to crow about . I looked at a play simular as Phil's  BWLD there is no premium in this.

  82. Why, yes it is scott…it is called Usurped Sucky Oblivion Pattern….or USO for short.

  83. Phil / CSCO
    Thanks, I like the latter trade.  But I was comparing 2014 with 2015, and it seems like 2014 is a better deal.  
    Jan14 20P are 1.60 with 338 days to go.  So if I sell 10 of them for a credit of 1600, I would make 4.73/day if expired.
    Jan15 20P are 2.73 with 702 days to go.  So if I sell 10 of them for a credit of 2730, I would make 3.88/day if expired.
    I'd have to sell 17 of the 2014's to make the same amount of cash credit, which would obviously require me to want to own that much CSCO (20K vs 32K worth).

  84. I wish my CRIS and ZLCS had a USO pattern…..

  85. Yodi / CSCO  -  Yeah, I didn't like it, just figured I'd post it since it was slow and it was on major tv.  
    I am in the latter trade Phil recommended.  I did some of the 15's and some of the 14's.  I like CSCO long term.

  86. ….unfortunatly, both CRIS and ZLCS have the "Typical Usual Repeated Drop" pattern….. ;)

  87. LOL 1020…. yes they do.

  88. Pharm – :)

  89. Burrben
    CSCO yes I like Phil's Jan15 play selling some Mar13 aswell

  90. O'Niel/Rexx – When an Irish guy is nicknamed "Tip" it's not usually because of his generosity towards waiters.  8)

    Oil with yet another nice dip.  See, you can make .10 – .25 over and over again with discipline – beats waiting all day hit a $1 drop that may never come….

    NEM/ZZ – GDX, ABX, HMY, NAK.  That is all.  

    Short interest/Pharm – VIX still at 13 though.  TLT really showing the "no fear" trade at $115.50 again.  

    The Treasury sells $24B in 10-year notes at 2.046%. Bid-to-cover ratio of 2.68, vs. a recent average of 2.9; indirect bidders take 28%, vs. a recent 33.4%. Direct bidders take 24.2%, vs. a recent 23.6%. 

    CSCO/Burr – But you are making the assumption that you will be able to sell $20 puts for $1.60 next year, aren't you?  What if CSCO is at $24 and you can only sell $20 puts for .90 (the current price of the 2014 $18 puts).  Then your net over 2 years is either $2.50 OR you take a larger risk and sell the $23 puts instead, just to make .50 more (not to mention additional fees) over the next 12 months.  Don't forget, when you sell puts, you should be choosing a net entry you would be HAPPY to own the stock at.  An extra $1 of downside protection is nice to have on a $20 stock.

  91. USO… waiting…

  92. Phil SCO Feb13 36c to e rolled to Mar13 36c present still cost .95 are we still hanging in????

  93. Phil
     Can you spell out what the auction results actually mean? I need a refresher course! Thank you.

  94. Phil, thanks for the explanation to Burrben.  I've often wondered about '14 vs. '15 puts and never considered that with the '15's you are locking in the entry price for 2  years instead of one--that's worth something.  Would you apply the same logic to ALU where the $2 puts are $.75 for the '15 and $.65 for the '14.  This difference is so small it seems like the '14 would be better.  Thanks.

  95. This market just refuses to lose.  Of course, this goes back to the POMO chart we looked at last week – it's non-stop and so are the markets.  

    Oil $97 – Woohoo!!!!

    For some reason, SA does not consistently publish hourly index levels anymore.  It's a shame because I liked having them for review on top of the news items.

    Early 2013 is notable for the diminishment of global macro uncertainty (presentation), says St. Louis Fed chief and FOMC voter Jim Bullard, and this bodes well for the U.S. economy. 

    Calling it "macro protection trading," Susquehanna's Chris Jacobson is seeing some take advantage of the low cost of SPY and Russell 2000 (IWM) options to get defensive. Popular is the "put butterfly" which works best in a slow grind lower. He's also seeing "calendar spreads" which protect against a selloff, but then make an owner a buyer if stocks fall too far.

    Must be a PSW reader!  There are still no audited statements, but Chimera Investment (CIM) has a fan in Leon Cooperman. His Omega Advisors took what was previously a nominal position up to a $57.5M stake in Q4 (13F). A new holding for Cooperman is a $106M stake in Freeport-McMoran (FCX) taken amidst the Plains Exploration acquisition. 

    The International Energy Agency cuts its oil demand growth forecasts for the coming year by a marginal 90K bbl/day, but warns that recent signs of recovery in global oil demand could be the result of one-off factors rather than a sustained trend. A sharp increase in Chinese apparent demand at the end of 2012 may have led to significant product inventory builds.

    Bank of America thinks the U.S. automobile sector could be set to kick into a higher gear even after posting a solid 13.4% gain in sales last year. Analysts with the firm lean on the demand issue of an aging U.S. fleet in making their bullish call, noting consumer buying to replace high-mileage vehicles should stay strong until 2018 before softening.

    Restaurant stocks underperform broad market indexes aftermargin pressure at Buffalo Wild Wings and a dour industry outlookfrom AlixPartners sets a negative tone. Notable decliners: BWLD-5.4%BJRI -3.7%CAKE -2.5%EAT -2.5%DRI -2.2%MCD -1.4%.

    Margin pain on the horizon: Restaurants could get squeezed this year from a combination of higher commodity costs and frugal consumers, according to AlixPartners. Though traffic is forecast to rise 3%, the average ticket is expected to decline 4.7% with coupons, promotions, and discounts gaining favor. Chains that are expected to ride out the expected tough environment are those that can deliver healthy food fast. Chipotle (CMG -1.8%), privately-held Subway, and Panera (PNRA -1.5%) fit the bill.

    The Macau Government Tourism Office reports the Chinese New Year is off to a strong start with total visitors to Macau growing 22% Y/Y over the last four day period. A mini-boom in traffic could help drive revenue higher for the local arms of casino companies Las Vegas Sands (LVS +0.7%), MGM Resorts (MGM-0.3%), Wynn Resorts (WYNN +0.3%), and Melco Crown (MPEL+1.8%).

    Shares of Crocs (CROX -0.7%) spike higher from negative territory after a SEC filing (13F) reveals that Leon Cooperman has taken a new position of 2.149M shares.

    Best Buy (BBY +4.1%) continues to drift higher without any concrete news out on the company or Richard Schulze's go-private plan. NBG's Brian Sozzi says the read-through from the sluggish electronics sales numbers pulled from today's retail sales report is that the retailer's competitive prices aren't doing much to push revenue higher. 

    Dell (DELL +0.8%) rises to $13.90 after sources tell dealReporter Michael Dell and Silver Laker might increase their LBO offer in response to growing shareholder opposition to the current $13.65/share deal. Count Topeka's Brian White among those who see a higher bid eventually arriving. - This is a bullish sector sign because we have a big LBO and THEN we have an "admission" that it's still too cheap.  

    ChannelAdvisor's January data could be helping Amazon (AMZN +2.8%) rally: the firm's clients saw a 34.3% Y/Y increase in Amazon same-store sales, up from 29.8% in December. eBay's (EBAY +0.2%) growth came in at 18.8%, down from December's 22.2%. In a positive for Google (GOOG +0.1%), search ad-driven sales grew 1% after falling 18% in December thanks to a migration to Google Shopping. Shopping engine sales (inc. Google Shopping) rose 7.9%, down from December's 15.5%. SA contributor Paulo Santos, a long-time Amazon bear, argues Amazon benefited from favorable comps. 

    Some Amazon (AMZN +2.8%) news: 1) Amazon and CBShave expanded their licensing deal to include Everybody Loves Raymond, the Star Trek franchise, and a slew of other CBS and Showtime-owned shows. The expansion comes 2 days after a deal was announced to show Under the Dome episodes to Prime Instant Video subs just 3 days after they air. 2) Amazon has met with Indian officials in an effort to change laws that prohibit the company from directly selling goods to local consumers. As Wal-Mart can vouch, this is easier said than done. 

    America Movil (AMX -9.1%) tumbles to new 52-week lows after missing Q4 estimates thanks to slowing growth, margin pressures, and forex. While AMX's pay-TV and mobile data service revenue respectively rose 33% and 20% Y/Y, mobile voice fell 1.7% and wireline voice 7.2%. EBITDA margin fell 240 bps Y/Y to 31.1%, thanks in part to 3G/4G investments and smartphone subsidies. 5.6M wireless subs and 1.3M wireline subs were added in the seasonally strong quarter vs. 4.1M and 1.6M in Q3, with strong growth in Brazil. (PR)

    Vonage (VG +11.6%) has soared after: 1) Beating Q4 estimates. 2) Announcing a $100M stock buyback (currently good for repurchasing ~1/6 of shares). 3) Establishing a new $145M credit facility, $43M of which has been spent on retiring debt from a prior facility. 4) Forming a JV with Brazil's Datora Telecom to offer VoIP services in the country. Vonage's ARPU rose $0.84 Q/Q in Q4 to $30.15, but it saw a net loss of 5.7K lines (compared with a 9.4K gain in Q3). Churn was steady at 2.5%. (PR) (transcript)

    BlackBerry (BBRY -6.1%) adds to this week's losses following critical reports from National Bank and Wedge Partners. NB has slashed its estimates, isn't happy with the delayed U.S. rollout of the Z10 and Q10, thinks cash/share might fall by over $1 in FY14, and foresees a major drop in high-margin services revenue as BB7 subs migrate to BB10 (previous). Wedge says it's receiving signs "U.S. carriers are not optimistic" about Z10 sales, and considers iOS/Android "simply too entrenched" within the country. 

    Apple (AAPL -0.2%) roundup: 1) Leon Coopermanliquidated his 266K-share stake in Apple in Q4 (13F). Coopermangradually built his position over 2 years. 2) Bloomberg adds its name to those reporting an iWatch is in development (previous). ~100 product designers are reportedly working on it. 3) Jefferies Peter Misek believes iPhone 5 build orders have been slashed to 30M from 40M, but thinks this is due to an upcoming iPhone 5S launch. Misek, whose track record with iPredictions is spotty, also expects a 4.8" iPhone, but not until mid-2014 due to display yield issues. 

    Three lunchtime reads:
    1) Where to join the 'great rotation' into stocks
    2) After clearing a major hurdle, Greece's outlook brightens
    3) Fed bank chiefs back money-fund overhaul

  96. Phil / CSCO
    No, I'm not making that assumption.  I'm just saying I would need to sell 17 of the 2014's right now, to equal the credit I would get from selling 10 of the 2015's.  
    I hear you about the difference in the "put to you" price of the 2015's vs the 2014's.
    I took a compromise.  I sold some of the 14's and some of the 15's, along with buying the naked 2015 22call as a proxy for long stock.  I'm looking to "plant a tree" here 

  97. How about that:

    With the S&P 500 up for six straight weeks and counting, there is a genuine skittishness on the part of investors that the market has gotten ahead of itself and is due for a pullback.  Two examples of the increased wariness regarding the market are the weekly Bespoke Market Poll, which has shown more bears than bulls for three straight weeks now, and the weekly bullish sentiment survey from the American Association of Individual Investors, which has declined for two straight weeks.

    Of course the 2013 rally is on top of a 15% rally before the beginning of the year!

  98. Nice discussion on stops from Trader Planet

    SCO/$25KPs – The Feb $36s are now .50 and can be rolled to the March $36s for less than $1.  That is our adjustment for now.

    $25KPs- Don't forget we doubled down to net $1.04 on 20 and our goal is to sell 10 for $1.05 (.95 was max so far today). 

    Auctions/DC – Long story but low bid to cover is low interest.  Higher rates is low interest (in buying notes, not the rate) less direct bidding (people at auction) is low interest vs. indirect bidding (Fed).

    Long Puts/Jet – Sure, if you are going to take the margin hit anyway, may as well get paid more for less when you can.  It's like having a beach house and you know you usually get $750 to $1,250 a month for a 3-month season and someone offers you $3,000 for the whole summer.  Can you do better?  Sure!  Will you do better – maybe.  Can you do worse?  Yes.  If, on the other hand, you had to choose between a person offering you $3,000 for the season or someone offering you $1,250 for the first month – then it switches the other way as you'd now have to do below average on your next two sales to underperform what the 3-month renter is offering.   So it's a dynamic and not the only factor to consider but something worth considering.   In the case of ALU – That's like being offered $2,500 for the first month – you'd have to be crazy to sell the whole summer and tell that guy no, right?  

    CSCO/Burr – I was not looking at it like you "need" to make the same amount.  If you "need" to make $2,700 by Jan 2015 and you sell the Jan $20s for $1,600, then you need to sell something for $1,100 next year to make your $2,700.  You don't need to sell 2x whatever this year.  Frankly, as a long-term entry on CSCO looking to make the same $2,700, I'd just sell the 2015 $22 puts for $3.90 ($3,900) and buy the $15/20 bull call spread for $3.40 and keep the $500 credit for a net $21.50 entry with a break-even at $18.25 and a $5,500 upside at $20 because, if I'm planting a tree and CSCO is below $18.25 and I end up assigned 1,000 shares – I'll be thrilled to sell the 2017 $17 puts and calls for about $5 and drop my net to $13.25/15.13 on as many as 2,000 shares and that trade still makes $3,750 if CSCO claws back to $17 in 2017 on about $5 of net margin, so still a nice annual return – even if it blows up (short of a complete melt-down, of course).  

    Oil jammed back to $97 for the close but barely.  Having a spot of trouble rolling barrels at the NYMEX I think.  

    Meanwhile, the pullback levels we were looking for were:

    Dow 13,850, S&P 1,502, Nas 3,160, NYSE 8,840 and RUT 905

    and the lows of the day were 13,594, 1,516, 3,187, 8,941 and 917 – so not even close to a real pullback even. 

    Rally/StJ – Yes but we also had a huge drop in Nov of 2011 – down to S&P 1,150 and we rallied to 1,422 and in 2010 we were down to 1,039 in August and rallied with little pullback to 1,344 in Jan so a couple of 300-point precedents and this past Nov we only fell to 1,343 so give me a call at 1,642, not 1,520 if you want to discuss how overbought we are!  


  99. FCX
    Speaking of them, they are above the 20 and 50 day, just below the 200 day now.  Climbing from a low of 30.54 to 54.54 now.
    3.5% yield.  Could sell the Jan15 30P's for 4.60, for a net entry price of 26.40.

  100. FCX/Burr – Missed our entry by a mile (20%) and I'm not sure I'd want to chase copper too hot and heavy but just selling puts if you REALLY want to own them long-term is OK for an initial entry.  

    2:59 PM The DJIA turns lower late in the session, now -0.5%, led by by 1.4% decline in McDonald's. The broader indexes are closer to unchanged, the S&P 500 -0.2%, the Nasdaq up a hair. 

    Deep-value investor Richard Pzena (PZN) remains bullish on the big banks, calling their improved situation nowhere near reflected in their share prices. Big-cap tech is also a favorite as it's now investor habit to price these top, cash-flow heavy businesses at a discount to the market. He notes finance and tech makes up 55% of his portfolio vs. 32% for managers identifying themselves as large-cap value.

    Where to Join the “Great Rotation” Into Stocks (Barron’s)

    EL-ERIAN: Expect More Confused And Incoherent Official Statements About Currency Policy

    More College Grads Equals Faster Economic Growth (Bloomberg)

    In Shovels, a Remedy for Jobs and Growth (NYT)

    Avoid the newspapers, suggests (webcast) Blackstone (BX) real estate head Jonathan Gray. There's been a solid recovery in commercial real estate. Hotel revpar is up 6-8%, office occupancies are up 1000 bps from 3 years ago. It's no mystery: Commercial real estate deliveries – net of obsolescence – have effectively gone to zero over the past few years.

    Nicely balanced TSLA article

    Cisco (CSCO +0.1%) is barely changed heading into today's FQ2 report. Shares are up 25% since a market-pleasing FQ1 beat was delivered and near their 52-week high, but still only trade at ~7.5x FY13E EPS exc. net cash. Street sentiment is split between those worried about higher expectations and soft IT spending, and those optimistic about margin improvements, rising software salesand the performance of faster-growing hardware segments, such as UCS servers. 

    Apple’s Tim Cook: Retail Philosophy, Acquisitions, and the Apple Ecosystem (MacRumors)

    Is Apple Really Developing Wristwatch Computer? (Bloomberg)

  101. Pharm / AVEO - afters months of accumulating, today it ran right to my disaster stop, took me all out, and then turned back up a buck immediately.  Reminds me of that DNDN flash crash that took everybody out a few years ago.  Wild rides in bio…

  102. Phil\  Thought you may like: Gun Control: The daily Show—action-stars—gun-control
    ps.  I hate this market!  About the only thing I like is appl and it's much too expensive too for me..  Anyway, appreciate the your bullishness since I refuse to leave the market until our levels fail.

  103. Phil
    FB   Facebook Are we going to roll the Feb 30 puts in the 25 KP aggressive

  104.  Best Buy?  Nasty…..

  105. Black/Arivera – He's great.  

    FB/QC – We're just going to roll them along with FB at $28.  If we end up in 1.5x April $27 puts and they don't drop another $1 – we make an extra $1,000 so why not?  

    Yet another very slow day at 101M with 10 mins to go on the Dow.  I guess they weren't waiting for Obama after all…

    DMND still flying, CHK coming back, GE with a good day, HOV stuck under $6 but a good bounce call off $5 last week.  

    AMZN with another big day.  PCLN holding $700.  

    BBY down suddenly as deal seems to be OFF!  Still, was only $12 last month and still $15 so not much reaction other than panic drop (another great reason not to use hard stops).

    AAPL Next week $470s are $6 and we can sell the Friday $465s for $4.25, which is what the next week $475s are going for so I'm thinking it would be fun to see how this works out.  Let's do 5 in the $25KPA as an excercize in Premium Decay.  

  106. Another slow day- Hopium hangover. Obama indeed. 

  107. Phill/AAPL sell the Friday $465 or next week $475? Calls, not puts, right?

  108. FYI for intrepid members who like emerging markets:  Fidelity lets you purchase via its website shares on about 20 markets.  They do not advertise it but if you call their international desk they also have the ability to route trades to another 20 or so markets including, for example, Indonesia, Thailand and Turkey.

  109. AVEO/mrm – this company is no DNDN…..Don't let them stop you out.  We will lighten up closer to date, but for now, enjoy the ride.   IT WORKS….

  110. Fidelity Intl/Ron – thanks for that, i'l be calling. i've been interested in Fiskars for a long time, but had no easy access to the Helsinki exchange.

  111. Daily Fitz Cartoon: State of the Union

  112. Dead Market
    "The market has certainly stalled out lately, but we didn't realize it was this extreme.  Over the last 13 trading days, the difference between the Dow's intraday high and intraday low has been just 1.35%.  This is the lowest hi/lo spread for the Dow over a 13-trading day period that we've seen throughout this entire bull market (since 3/9/09).  In fact, it's the lowest 13-day hi/lo spread since December 1986!  It's been more than 25 years since the Dow has had a tighter range over a 13-trading day period."

  113. AAPL/Jet – Those were calls.  Selling this week $465s ($4.25) to pay for the next week $470s ($6) as we have about $3.25 of premium that expires in 48 hours vs our $10 in premium (including how far out of the money) that has 216 hours remaining.  In theory – there are many ways we can win that one.  

    Emerging markets/Opes – That's cool.  

    CSCO up a bit but nice earnings, as expected.  

    At the close: Dow -0.26% to 13983. S&P +0.07% to 1520. Nasdaq +0.33% to 3197.

    Treasurys: 30-year -0.52%. 10-yr -0.27%. 5-yr -0.15%.

    Commodities: Crude -0.36% to $97.16. Gold -0.4% to $1642.95.

    Currencies: Euro -0.06% vs. dollar. Yen +0.01%. Pound +0.8%.

    Market recap: Stocks turned in a mixed performance, with the S&P eking out a late gain while the Dow continues to tread water around 14,000, dragged lower today by McDonald's and Coca-Cola. The broad market has now gone 342 trading days without a 10% pullback vs. the historical norm of 161 days. Gold settled at its lowest since August; Treasury yields finished at their highest levels in 10 months.

    Martin Wolf: The case for helicopter money (

    Recovery Sign: More People Are Quitting Their Jobs (CNBC)

    Buffett’s Favorite Valuation Metric Surges Over the 100% Level (Pragmatic Capitalsim)

    While prices for gold and silver drift lower, platinum's premium to gold surged to a 17-month high on concern supply may fall after Zimbabwe's government seized land from the country’s biggest platinum producer Zimplats, majority owned by Impala Platinum. Commerzbank analysts expect further production outages which could increase the platinum supply deficit on the world market.

    Steel manufacturers including U.S. Steel (Xwill suffer as China's appetite for iron ore slows, with high pension costs also a cause for concern, Blue Mountain hedge fund manager Andrew Feldstein says. He recommends shorting the company by being long its equity and short its credit by a ratio of one to six; he also promotes shorting Japan's JFE and Australia's Fortescue. 

    The $11B merger between American Airlines (AAMRQ.PK) and US Airways (LCCis on, forming the world's largest airline, according to AP sources.

    More on Whole Foods Markets' (WFM) FQ1: Slowing growth and margin pressure are the themes as investors punish the grocery store operator for not matching its track record. Comparable store sales were up 7.2% during the period and the company sets 6.4% as its estimate for FQ2. The firm's new estimate for FY13 revenue growth of 10% to 11% is just slightly lower than its prior guidance of 10% to 12%. Shares -6.8% AH. (PR) 

    Best Buy (BBY -2%) founder Richard Schulze is mulling whether to scrap plans for a buyout of the struggling electronics chain and instead (along with other investors) obtain a minority stake, theWSJ reports. Sources claim Schulze, who owns ~20% of Best Buy, hasn't yet secured enough financing for a buyout, which is leading him to explore his options. But no decision has been made yet. The report led Best Buy to dive in the final minutes of trading after rallying earlier.

    Tech guidance roundup: 1) Applied Materials (AMAT -earnings) expects FQ2 sales to grow 15%-25% Q/Q to $1.8B-$1.96B, above a $1.79B consensus. The company expects EPS of $0.09-$0.15 vs.a $0.10 consensus. 2) Equinix (EQIX - earnings) expects Q1 revenue of $518M-$522M, below a $524.9M consensus. 2013 revenue is expected to exceed $2.2B; the consensus is at $2.22B. 3) Angie's List (ANGI - earnings) expects Q1 revenue of $51M-$52M, above a $49.4M consensus. AMAT +2.8% AH. EQIX +1.9%ANGI+21.1% 

    Cisco Systems (CSCO): FQ2 EPS of $0.51 beats by $0.03. Revenue of $12.10B (+5% Y/Y) beats by $40M. $500M worth of shares repurchased at average price of $20.15. Shares +0.5% AH. CC at 4:30PM ET (webcast), guidance should be provided. (PR)

    Cisco (CSCO) guides on its FQ2 call for 4%-6% Y/Y FQ3 revenue growth and EPS of $0.48-$0.50, in-line with.a consensus of 5.5% growth and EPS of $0.49. Gross margin is expected to fall to 61%-62% from FQ2's 62.3%. Orders were flat Y/Y in FQ2, and book-to-bill slightly below 1. Investors are taking the news in stride, shares+0.1% AH. (webcast) 

     More from Cisco's (CSCO) call: FQ2 router sales -6% Y/Y, partly blamed on lumpy service provider orders. Switches were better, +3%. Service provider video (-1% exc. NDS) and security (+1%) were ho-hum, and collaboration (-11%) remains weak. Data center (UCS server) sales soared 65%. Wi-Fi was strong (+27%), but growth slowed from FQ1's +38%. Services +10% and still growing as a % of sales. Americas orders +2% (enterprise strength, federal weakness) and Asia-Pac +3%, but EMEA -6%. Cisco and EMC's VCE JV is on a $1B+ run rate. Shares -1.8% AH. (FQ1 data) (earlier)

    VMware (VMW -3.2%), Citrix (CTXS -1.7%), and Red Hat (RHT -1.5%). all of whom have made big bets on cloud management software, are closing lower following Rackspace's Q4 miss, which has spawned some growth concerns.  All 3 companies are nominally supporters of the OpenStack cloud infrastructure platform, which Rackspace helped create and strongly supports, though VMware is more focused on its rival vCloud platform and Citrix has its differencesas well. 

    Frontier (FTR-1.1% AH after fellow rural telco CenturyLink (CTL) misses Q4 estimates and issues light Q1 revenue and 2013 free cash flow guidance. Fitch has downgraded CenturyLink's debt to BB+ from BBB- in response to the company's new $2B stock buyback program, which (though accompanied by a dividend cut) the ratings agency believes will result in lower debt reductions over the next 2 years than it expected. CenturyLink has $20.4B in net debt as of Dec. 31. Shares -13.2% AH.

    Empire Military Errors: Inside the Battle of Hoth (Wired)

  114. Diamond:  Does that connote consolidation for a move higher, or just a protracted stalemate between hope & fear?  Or perhaps that's the same thing?

  115. zeroxzero – I think that the mixed market signals are concerning people and they are waiting for clearer direction (noted by lack of volume).  Either that, or they are waiting for Godot. ;-)

  116. OK, 3 out of 5 over the 10% line and if it was not for AAPL, the NASDAQ would be way over as well. Actually, the Russell is over a non-official 15% line now and the NYSE is only 45 points away. Looking at the volume bars, it is a bit light but not that bad actually. We had a couple of bad days because of the storm but we are close to a "mediocre" average.

  117. Phil / ABX – I have the Mar 30/35 BCS.  Cost basis is 2.55.  Currently 1.75 (-30%).  Would you roll or hold.  Are we on track?  Yes, 4 weeks to go (not likely to gain 10% to 35.00 in 4 weeks).  ABX is at 31.59, down 3% on earnings.  I can roll to April for 0.15 + commissions.  Just trying to stay on top of this trade and learn to roll at the right time.  TIA

  118. 1020 / Rubio -  I can't help myself!  It is my belief that every #$%%#$#$# in Washington is a crook.

  119. ABX – My mistake.  Earnings tomorrow!

  120. HPQ – As the number two PC maker this should be bullish for HPQ.
    Dell (DELL +0.8%) rises to $13.90 after sources tell dealReporter Michael Dell and Silver Laker might increase their LBO offer in response to growing shareholder opposition to the current $13.65/share deal. Count Topeka's Brian White among those who see a higher bid eventually arriving. - This is a bullish sector sign because we have a big LBO and THEN we have an "admission" that it's still too cheap.

  121. CTL – helluva drop on the weekly chart can see is right down to a trendline starting in Nov 2008.  Similar flash-drop  in May 2010.  talk about raiding stops..!

  122. Dollar up and oil STILL up!?!?!? So sick of this bs.

  123. Good morning!

    Dollar moving up this morning, past 80.50 now and oil coming back off $97.50 (/CL) is a good way to start our day!

    Gold getting slapped  down to $1,640 again but that's to be expected.  

    Silver $30.73, copper $3.73, nat gas $3.30 (will probably go lower, /NG) and gasoline $3.046 can also be played short below the $3.05 line (/RB).

    Looks like more Euro worries as Euro down to $1.333, Pound $1.550 and bad if they fail that.  93.55 Yen to the buck.  

    Seems like disappointing GDP figures from Germany!  

    Thursday's economic calendar:

    8:30 Jobless Claims

    9:45 Bloomberg Consumer Comfort Index

    10:30 EIA Natural Gas Inventory

    10:30 Daniel Tarullo testifies on Wall Street Reform

    1:00 PM Results of $16B, 30-Year Note Auction

    12:50 PM Fed's Bullard: U.S. Economic and Monetary Policy

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply

    8:29 PM Japanese stocks move higher in early trading, as investors shrug off weak GDP data and focus their attention on a central bank decision due out later in the day. The Nikkei Average rose 0.4% to 11,291, with the blue chips most active: Sony (SNE +1.3%), Fujitsu (FJTSY.PK +0.7%), Olympus (OCPNY.PK +1.2%), Hitachi (HTHIY.PK-1%) and Nissan (NSANY.PK -0.8).

    4:00 AM Asian and European shares are broadly positive, shrugging off GDP contraction in Japan, Germany and France. "Markets continue to test the boundaries of recent trading sessions, still unable to make a decisive move higher or lower," says trader Jonathan Sudaria. Japan +0.5%, Hong Kong +0.8%, China closed. India -0.2%. EU Stoxx 50 +0.3%, London -0.1%, Paris +0.3%, Frankfurt +0.1%, Milan +0.2%, Madrid +0.5%.

    German Q4 GDP -0.6% Q/Q vs +0.2% in Q3 and consensus of -0.5%. On year, +0.1% vs +0.4% and +0.2%. For 2012, GDP +0.7%. Q4 GDP contracted on quarter mainly due to relatively weak foreign trade,with exports falling much more than imports. Household and government expenditure rose slightly while gross fixed-capital formation in construction sipped and that for machinery and equipment dropped sharply. (PR)

    French Q4 GDP -0.3% Q/Q vs +0.1% in Q3 and consensus of -0.2%. On year, GDP -0.3%. For 2012, GDP records zero growth vs +1.7% in 2011 and government forecast of +0.8%. Economists expect GDP to contract again in Q1, which would put France into recession. Yesterday, Finance Minister Pierre Moscovici said the government might have to lower its 2013 growth outlook. (PR) 

    While France's GDP contracted in Q4, employment also continued to deteriorate, falling 0.2% Q/Q, which was in line but slightly "improved" from -0.3% in Q3. (PR) 

    Japan's economy contracted for a third quarter in the October-December period, with gross domestic product shrinking 0.1%, or a drop of 0.4% on an annualized basis. The results were in direct contrast to economists expectations for a 0.1% rise. Still, the contraction was smaller than the 3.5% annualized fall in July-September. The yen's reaction to the news was muted. 

    As expected, the Bank of Japan maintains the the size of its asset purchase program at ¥101T ($1T) by the end of the year and its benchmark interest rate at 0.0%-0.1%. Rejects proposal to make a pledge to maintain rates at around zero until it nears its 2% inflation target. Says economy "appears to have stopped weakening," which is an improvement on wording last month that the economy was relatively weak. (See GDP)

  124. Big Chart – Hopefully we do get enough of a pullback to test these gains – otherwise, it's hard to keep betting on a low-volume breakout to have support below it. 

    ABX/Jfaw – You're off target so of course roll.  The March $30s are $1.90 and the $35s are dead so you waited a bit long (or were too greedy with your spread) so I'd roll the caller to the April $31s ($1.65) and use the $1.50 to roll yourself to the July $28s ($4.25) for net .85 and then you've bought yourself 4 months and $2 in strike for .85 and you've got good protection from a caller that can be rolled to the July $33s (now $1.55) if all goes well and you're back in a much safer-looking $5 spread at $3.40.  If all does not go well, then you still keep the $1.55 from the new caller, sell May premium to another sucker and roll yourself lower and longer again.  

    HPQ/Jfaw – Yes, I think it's good for the whole sector.  Makes people re-think the values.  

    CTL/Scott – That's the problem with playing the dividend payers – if they cut dividends on you – you've got nothing.  I like to buy companies AFTER they cut dividend because a lot of funds have to dump them and a lot of people panic out but, in reality, most companies simply cut dividends to pay down debt or improve cash flow – the same way any business may hold back raises or bonuses for a year to get through a rough patch.  It may be a sign of trouble but, as often as that, it's a sign of responsible management.  

    Dollar/Jrom – Don't be "sick of it" – if you're up and you catch it, you can short oil, gold, silver, indexes….  Big Dollar moves are fantastic early drop indicators.  

    Europe down over 1% now.  

    Oil just failed $97 so that's the stop.  This is getting so predictable there's almost no point in trading anything else.  

    Dollar 80.655

    5:20 AM The eurozone recession deepens as Q4 GDP -0.6% Q/Q vs -0.1% in Q3 and consensus of -0.4%. On year, GDP -0.9% vs -0.6% and -0.7%. European shares are now mostly lower after being broadly higher earlier. EU Stoxx 50 -0.4%, London -0.2%, Paris -0.2%, Frankfurt -0.3%, Milan -0.8%, Madrid -1.3%. (PR) 

    In the last three years UK inflation has eroded a decade of economic growth, and worse is to come.

    Italian Q4 GDP -0.9% Q/Q vs -0.2% in Q3 and consensus of -0.6%. On year, -2.7% vs -2.4% and -2.3%. For 2012, GDP -2.2%. Italy's recession, which started in mid-2011, continues.

    Italy Tax Pledges Spook Investors as Economy Wilts: Euro Credit. Italian voters, being wooed by promises of lower taxes that are spooking investors, will get a reality check today with data probably showing the country slipping deeper into its fourth recession since 2001. 

    Portuguese Q4 GDP -1.8% Q/Q vs -0.9% in Q3 and consensus of -1%. On year, -3.8% vs -3.5% and -2.9%. (PR)

    Greek Consumers Most Pessimistic On Earth: 40% Have No Disposable Income

    EU Seeks Broad Transaction Tax to Curb Rules ‘Patchwork’The European Union will propose a far-reaching tax on financial transactions which could be collected worldwide as soon as Jan. 1 next year by the 11 nations that have so far signed up to participateThe plan by the EU in Brussels, to be outlined today, invokes “residence” and “issuance” ties to firms in participating countries, in a bid to prevent traders from escaping the levy by trading outside the tax’s zone, according to documents obtained by Bloomberg News. The plan says that to escape the proposed tax entirely, firms in other nations would have to entirely cease financial-services business with the 11 EU nations involved.

    Japan Refuses To Exit Triple-Dip Recession As Q4 GDP Disappoints Expectations Of A Positive Print. (graph)

    Sakakibara Says Japan Punishes Neighbors as Yen Falls Toward 98Japan is punishing its trading partners by guiding the yen toward levels that haven’t been seen in almost four years, said Eisuke Sakakibara, a former Ministry of Finance official. Japan’s currency has entered a range of between 88 to 98 per dollar, according to Sakakibara, known as “Mr. Yen” for his efforts to influence exchange rates in the late 1990s. An official from a Group of Seven nation said Japan will be in the spotlight at the Group of 20 gathering this weekend amid concern the yen’s slide has been excessive. “Guiding the yen lower is a policy that punishes neighboring nations,” Sakakibara, 71, said in an interview in Tokyo yesterday. Impressions overseas that Japan is trying to orchestrate further declines in the yen mean that “it will be criticized by the G-7, as well as the G-20,” he said.

    U.S. Funds Score Big by Betting Against Yen. Some of the biggest U.S. hedge-fund investors have made billions betting against the yen, exploiting Japan's determination to weaken its currency and boost its economy.Wagering against the yen has emerged as the hottest trade on Wall Street over the past three months. George Soros, who made a fortune shorting the British pound in the 1990s, has scored gains of almost $1 billion on the trade since November, according to people with knowledge of the firm's positions. Others reaping big trading profits by riding the yen down include David Einhorn's Greenlight Capital, Daniel Loeb's Third Point LLC and Kyle Bass's Hayman Capital Management LP, investors say. 

    Big Investors Lead Bets Against Junk BondsSome of the world's most sophisticated credit investors have been ramping up their bets against junk bonds even as retail investors have been pouring money into the asset class. The list of junk-bond bears includes GSO, the credit arm of Blackstone; Apollo Global Management; Centerbridge Partners; Oaktree Capital; and a host of credit and so-called "macro" hedge funds, according to executives familiar with the firms' investment activities.

    CITI(C): OPEC's Days Look Numbered.

    ACKMAN: 'If The FTC Misses Herbalife(HLF) It's The Equivalent Of The SEC Missing Madoff'.

    Obama Medicare rebate plan could hurt drug companiesPresident Barack Obama's decision to spotlight drug rebates as a way to save money on Medicare is likely to be opposed by the pharmaceutical industry, which could potentially lose billions of dollars in profits.

    Nvidia(NVDA) revenue outlook misses, PC and tablet chips slowNvidia gave a revenue outlook for the current quarter that missed expectations, pointing to a slowing PC industry and slower production of tablets using its chips ahead of the release of newer models.

    Barnes & Noble (BKSwarns it expects FY13 (ends in April) Nook Media revenue to be below prior guidance of $3B. Also, the division's EBITDA loss is now expected to be above FY12 levels – prior guidance was for a comparable loss. Last month, BKS reported a 12.6% Y/Y drop in Nook division sales for the holiday season, and IDC estimated the company's Q4 tablet share fell nearly 60% Y/Y to a mere 1.9%. Shares -4.2% AH. FQ3 results are due on Feb. 28.

    Apple (AAPL) isn't illegally bundling proposals within itsproxy since this only happens when proposals are combined in a way "that puts shareholders to an unfair choice," the company states in a response to David Einhorn's suit – Apple's Prop. 2 features 3 changes to the articles of incorporation, one of which relates to preferred stock. Apple also accuses Einhorn of trying to coerce the company into issuing preferred stock for his own benefit, and (in talks with management) of viewing shareholder approval as a "roadblock." (Einhorn's letter) (more) 


    citi panic euphoria

  125. Phil / ABX – Thanks.  Greedy – No… Inexperience – Yes!  Many hours of education to go.

  126. I'd like to enter a contest for the worst oil trader on PSW.  When I sleep, it crashes.  When I wake up and short it (just now at 97.50), I'm sure it will spike…
    I know what I'm "suppose" to do, but I tend to always do the opposite somehow!