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More Manic Monday Market Movement

It's just another manic Monday in the markets.  

The Dollar has calmed down and is back to 81.20 and that's goosing the Futures up more than half a point with gold rocketing back to $1,591 and congrats to all our GLD, GDX, ABX and HMY players – all picks (or re-picks) from last week's exciting and silly pullback.  

Speaking of exciting:  Remember last week when we liked the Nikkei Futures at 11,200 (even 11,300 pre-market on Thursday – as noted in the post)?  The Nikkei stopped just under 11,700 this morning and has settled at 11,675 as they Yen is back down (up) to 94 to the Dollar, despite it's weakness.  

That means you don't need Sherlock Holmes to deduce that the Euro must be way up and it is – back over $1.33 today as all those silly worries over the Italian election turned out to be exactly the BS we expected them to be, along with all the other worries we discounted in last week's very extensive review of "10 Big Worries."  

Oil is back testing $94 and, unfortunately, gasoline (/RB) shot up to $3.30 again – up .20 since Friday's close.  We took the money and ran on our oil shorts as we came up just short of our $92.50 goal but it was gold we chose to ride long, not oil – which is still in a World of fundamental pain.  I was in California last week and they LOVE electric cars out there.  California often sets national trends and retail gasoline in the state is about $4.60 and probably $4.80 today so they have good reason to love hybrids and electric cars – not to mention that LA smog, which makes Chinese visitors feel right at home.  

Fortunately, I got out of LA-proper this weekend and went to Malibu and then spent Sunday at Hermosa Beach before heading to the airport and there I met many ex-New Yorkers and I was considering what Billy Joel said about "Los Angelenos":

Los Angelenos

All come from somewhere

To live in sunshine

Their funky exile

Hiding up in the mountains

Laying low in the canyons

Goin' nowhere on the streets

With their Spanish names

It's true – California is a place for people who want to start over and it filters out the kind of people who worry about the Future (as their future almost certainly includes a disastrous earthquake) so it's a state full of risk-takers and optimists and dreamers who mainly came from the East Coast and got a chance to start fresh and tried to avoid making the same mistakes we did – hence more public lands, more preserved environment, more concern about health and individuality and less concern about money and finance.  

In fact, an East-Coast Finance guy said to me "it's like being a shark in a pond full of minnows" but I think that's a simplification.  Californians play a longer game than New Yorkers and it's easy to jump in and do well in the short run but the real survivors in California are a tougher breed, but also a nicer one than what we are used to on the East Coast, where survival of the fittest is what we win BEFORE we start competing.  

Could I live in California?  I thought not when I was in LA/Beverly Hills most of the week and I've visited before and seen most of it but Hermosa reminds me of my precious Lerici in Italy, which is on my short list of retirement spots so, next time I'm in California, I'll spend more time south of LA – an area I've missed in previous travels.  

Anyway, where was I?  Oh yes, so if California is buying smaller cars, hybrids and more electric cars (not to mention no cars at all for a lot of people) then I don't think the rest of the US is that far behind – especially with these sustained, ridiculous fuel prices.   

Notice that the spike in oil prices in 2007-8 led to a 5-year change of habits among US motorists that is a continuing trend.  For some reason, the NYMEX crooks have decided to remedy the situation by raising gas prices but I think they ain't seen nothin' yet as far as consumers cutting back is concerned.  While we talk about TSLA, the stock here at PSW (one of my picks of the year and right on track so far!) – in California they talk about Tesla the car and how long it takes to get one and when do I think they'll be more affordable because "everyone wants one."  

INDU WEEKLY And it's not just cars, of course – it's LED lights and solar homes (saw plenty of those) and sure, they are marginally cost-effective at the moment but the same thing could be said about early VCRs, CD players, Computers, etc – things that have great public demand tend to get cheaper as they are mass produced.  Oil is sealing it's own fate – even in an inflationary environment and we welcome the attempt to take it higher as we only get to short it again (and again).  

All our market gains this morning are a reaction to Dollar losses so we'll watch and wait (for clarity) today.  The UK lost it's AAA rating but, DUH! to that and the bears will have to work a lot harder to stop this runaway train of a market.  European stocks in general have been missing the rally so far this year and we know China is tightening on property inflation as well as allowing fuel prices over there to rise for the first time since September.  

That and the drop in commodities (which scare people out of emerging markets) leaves US equities as the "best" place to park your global investment Dollars for moment and we keep waiting for a shoe to drop, just like the bears but, unlike the bears, we're happy to participate in the gains while we wait

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  1. Good Morning!

  2. Phil/Cali  Talk about an experience that your girls would never forget – a cross country move.
    There is really no reason not to….. Glad you're home safe!

  3. Morning Guys -///
    Phil // NorCal. 

  4. Oil Lines

    R3 – 97.78
    R2 – 94.13
    R1 – 93.75
    PP – 93.09
    S1 – 92.70
    S2 – 92.05
    S3 – 91.66

    Friday's high and low – 93.48 / 92.44

  5. Commodities – here's a bearish cast on Between the Hedges:

    Rebar Trades Near One-Month Low on Property Curb Expectation. Steel reinforcement-bar futures traded near a one-month low in Shanghai as investors cut their exposure to the building material amid signs of tighter control on property investment. Rebar for October delivery dropped by as much as 0.9 percent to 3,998 yuan ($641) a metric ton on the Shanghai Futures Exchange, the lowest since Jan. 22, before trading at 4,028 yuan at 10:32 a.m. local time. The contract lost 5.6 percent last week.

    Commodities May Drop on Moving-Average Sign: Technical Analysis. Commodity prices, heading for the biggest weekly drop since early December, may fall an additional 7.2% in the next two months, according to technical analysis by Futurepath Trading LLC. The S&P's GSCI Spot Index of 24 raw materials may fall to 610 by April 30 from yesterday's settlement of 657.31 after the gauge dropped below the 50-day moving average for the first time since December, said Paul Kavanaugh, the Chicago-based director of business development. "Market action is suggesting that we may see some declines," said Kavanaugh, who correctly predicted in January that gold would drop below $1,600 an ounce by March. "The tone of the market has changed."

    Gold Bets Cut by Most Since ’07 as Sugar Bears Grow: Commodities. Hedge funds cut bets on a rally in gold by the most since 2007 and became the most bearish ever on sugar and coffee as concern that the Federal Reserve will slow U.S. stimulus programs drove prices for raw materials to the biggest loss this year. Money managers and other large speculators reduced their net-long position in gold futures and options by 40 percent in the week ended Feb. 19 to 42,318, the biggest drop since July 31, 2007, U.S. Commodity Futures Trading Commission data show. Wagers across 18 U.S. raw materials tumbled to the lowest since December 2011 as investors’ net-short positions for sugar and coffee hit record highs. Bullish corn wagers fell the most since June 2010.

    BHP(BHP) Says Cost Cutting Needed to Meet Falling Demand for Minerals. BHP Billiton Ltd. (BHP), the world’s biggest mining company, said a slowdown in demand for minerals over the next five years makes cutting costs and boosting productivity a priority. “I’m committed to drive an agenda of productivity and that will almost certainly” be a “top theme,” Andrew Mackenzie, the Melbourne-based company’s newly appointed chief executive officer, said in an interview with the Australian Broadcasting Corp. today, according to a transcript. 

  6. Wombat: Humboldt.

  7. wombat – My wife and I grew up in south San Jose and San Francisco is the most beautiful city in the world, Imho.
    I never thought I'd say it, but we prefer SoCal now due to the warmer weather and a much larger geographical coastal area  to live…..

  8. AFFY/Pharm:  Good Morning!  (Maybe not so much for AFFY).  Whats your take on the whole hub-bub?

  9. Cali coastal living  – San Louis Obispo is vastly under-appreciated.

  10. SF – I lived all over that city for 13+ years, and while all my best friends are there, I'm glad to be gone.  I had too many COLD summers on the beach with my dog, too many times trying to escape to find sun somewhere on the coast (from cambria to mendo), too many monthly wine bills over $500, and too many expenses general expenses.  Plus unless you are REALLY rich, it's hard not to feel poor….
    I'm now split between central florida right now the ocean where I can hear the waves crash everyday, and central america.  Nothing like the "early bird" special, $3 glasses of wine and $10 steaks….and they are GOOD.

  11. 4 of the FAS calls were stopped out this morning.

  12. 1020 /newt/snow
    I hear that. AFter our second daughter we'll more than likely move to Oakland. Warm. More space. SF is in another bubble and crazy expensive.
    Humbolt – not interested in growin my own crops : > we have a family cabinoutside of Ukiah – mmmmmm.
    SLObisbo, yep, I can dream.

  13. Burr // Didn't know that. No wonder you were Phil's version of 'nice' : >
    " too many monthly wine bills over $500 – " you just made me laugh out loud on that.

  14. I would suggest taking 1/2 off the long QQQ Mar calls with a 75% win.

    Also, the Jan 14 QQQ calls are now uncovered.

  15. Wombat- Ukiah= perfect squatchi' territory

  16. Burrben – Very Nice – Living life on your terms….priceless…. :)

  17. Phil // TLT / QQQ
    March $117 calls under water over the weekend / rolling or pack it up ?
    Same with the March $67 Q's

  18. Christ / Forget the QQQ $67's – I actually SOLD those -happy Monday.

  19. QQQ Mar 67 – Same as above with a 75% win.

  20. PCLN – stj, can you do me a favour and tell me what the options are pricing in for the earnings move?  please and thanks.

  21. wombat/San Francisco,
    You are right about The City being expensive:  A friend of ours had to move out of her studio last week, when the rent was raised from $2,100 to $2,900.  We're talking 550 sqft!

  22. DDD getting crushed – nice entry below $30 for the faithful.

  23. PCLN / Lolo – The average move for PCLN is 13.5% on earnings. The options are pricing a 7% move now. 

  24. FWIW I see a lot of conflicting signals coming out of global markets right now the US and the UK have done very well but Canada Germany and France recently had some negative divergence . And another blip is in a supposedly "Risk on" speculative environment is the recent relative weakness of the emerging markets. Maybe this is just a little refresher pause but it still troubles me; Japan looks great but this comes with a plunge in the yen.
    Asia looks much better particularly Thailand which is been on a tear. This contradicts some of the short-term weakness in China and India and Brazil I've really been seeing alot of conflicting tape messages. I still view the tape and trend as generally bullish but one must be a little more selective than earlier while trends are mainly "risk on" I think the charts show little inflation and mild economic growth emerging market should continue to be watched closely. Staying long equities and futures short yen (for nearly 18 mos) short euro, long bonds short oil and getting v long golf balls

    Sent from my iPhone=

  25. StJ // SDS
    Did we dump or roll  the March SDS spread ? Sorry for the inventory, trying to clear out March so I can get over to TOS // They need a five day window

  26. Carlsbad….hands down, the best place!  The rest of CA is a good place to visit.

    AFFY – not sure what the issue is, if it is the actual drug, something in it, but either way, stay away for now.

  27. XLF WEEKLY Good morning!  

    Dollar bouncing off 81.20 so free ride is over for the indexes and now they have to show if it's more than just devalued air propping them up.  Given the sudden move up in XLF – I'd have to say yes, it's real and we're still consolidating at the top of the range and waiting for a good reason to go up and, very likely, we are waiting for Sequestration to "hit us" at the end of the week so we can move on to the next level (and finally time to roll over the Big Chart).  

    Copper is the Futures play of the morning (/HG) over the $3.55 line as BLK gets approval to start a copper ETF ahead of JPM but JPM is still going for it so that's two ETFs that will buy up copper for no useful reason and stick it in storage and drive up prices – although they can't possibly (one would think) buy up enough to have a major effect on World supply but the initial reaction is likely to be up for copper and they have a lot of room to go before hitting serious upside resistance at $3.75.  

    Italy's elections are still on today but the EWI is up 2% so I imagine they are going well (whatever that means over there).  

    Exit polls in Italy show the center-left coalition led by Pier Luigi Bersani winning with 35-37% of the votes. Berlusconi received a surprisingly high 29-31%. Nevertheless, Bersani should have no issues forming a government if the numbers hold up. Italy's 10-year government note rate drops to 4.23% from 4.3%. European stocks add to rallies, with the Stoxx 50 (FEZ+2.5%, led by Italy (EWI+3.4%. Germany (EWG) +2.4%.

    Consumers bought 1.2M new automobiles (+4.3% Y/Y, +15% M/M) in the U.S. during February, according to analysts. Though it's an excellent sign that average transaction prices rose and the level of incentives in the industry were moderate, inventory levels will be watched closely to ensure automakers aren't getting too far in front of demand. Of the pack, Ford (F) is forecast to have the largest yearly jump in sales for the month with Chrysler (FIATY.PK), Toyota (TM) and General Motors (GM) also strong – while Honda (HMC) and Nissan (NSANY.OB) are likely to report a decline in sales. 

    How many ways do we have to say the economy is getting stronger before people believe us?  

    Monday's economic calendar:

    8:30 Chicago Fed National Activity Index

    10:30 Dallas Fed Manufacturing Outlook

    1:00 PM Results of $35B, 2-Year Note Auction

    7:00 PM Fed's Lockhart: U.S. Economic Outlook

    6:00 AM Overseas: Japan +2.43%. Hong Kong +0.17%. China+0.50%. India +0.08%. London +0.56%. Paris +1.15%. Frankfurt+1.95%

    At the open: Dow +0.86% to 14001. S&P +0.88% to 1516. Nasdaq 0% to 3162.

    Treasurys: 30-year -0.47%. 10-yr -0.21%. 5-yr -0.07%.

    Commodities: Crude +0.5% to $93.6. Gold +0.83% to $1585.8.

    Currencies: Euro +0.79% vs. dollar. Yen +0.73%. Pound +0.44%.

    Market preview: Stock futures point to a higher opening after global markets rallied on reports that Japan is likely to appoint apro-stimulus central bank governor and the belief that Italian elections won’t have a surprise conclusion. S&P benchmark +0.5%. The yen weakened to a fresh 33-month low of 94.75, but Japan's Nikkei index jumped more than 2%.


    The S&P 500 has returned to near its 2007 peak, but without the deterioration beneath the surface evident then. In fall 2007, mid-caps, small-caps, financials, and transports were all headed lower, the A/D line was negative, the yield curve was flattish, and corporate spreads were on the rise. All of those signals are reversed today. (h/t Ryan Detrick)

    Jan. Chicago Fed National Activity Index: -0.32 vs. +0.25 (revised) prior.

    Jon Hilsenrath is a day late with his story about the Fed not being in any hurry to take its foot off the pedal. After two days of wobbly market reaction, the central bank went balls to the wall Friday walking back the idea it was anywhere near ready to slow down or stop its asset purchase program. - OK, that calls for a music break if ever a news item did so!  

    How much debt can the U.S. handle? A new paper quantifies an 80% public debt to GDP ratio – where the U.S. is right now – as the point at which a nation reaches a potential tipping point; once a nation has debt above that level, it becomes vulnerable to the kind of self-reinforcing vicious cycles that have crippled others. Two responses from Fed officials see the analysis as simplistic and eurocentric. 

    Japanese PM Shinzo Abe is reportedly set to nominateAsian Development Bank President Haruhiko Kuroda as BOJ Governor. It's hard to think of a bigger dove. "The Bank of Japan must be prepared to do anything and everything" to achieve its 2% inflation target, he said in a January interview. Look for a big opening pop in the Nikkei, and a big opening drop in the yen.

    While there are "dark warnings" that the U.S. is becoming like Japan, what's wrong with that? asks Zachary Karabell on Reuters. Sure, Japan has "chronic deflation, a sluggish job market, an aging population, an insular culture and (stagnant) growth." But its citizens are are prosperous and healthy, and have a high life expectancy, "democratic government is orderly and ordered," and the country has an efficient bureaucracy.

    "If capitalism is America’s biggest problem, why save it?" asks MarketWatch's Paul Farrell. "Wall Street, Corporate America, Big Oil and the entire economy been transformed into a bizarre circus Adam Smith would never recognize. Capitalism is now an out-of-control Frankenstein monster that changed everything." Not that Farrell provides any alternatives.

    China's HSBC Flash PMI for February falls to 50.4 from 52.3 previously and against expectations for 52.2. "Despite the moderation … the Chinese economy is still on track for a gradual recovery," says HSBC's Hongbin Qu. Shanghai gained 0.5% overnight following big losses last week. FXI +0.8% premarket.

    MLPs are a multidecade story, not multiyear, says Chris Eades (CEMEMOCTR). His partner in a mini-Barron's roundtable, Kyri Loupis takes note of non-economic factors which keep MLP yields higher than REIT yields. "Maniacally focused" on yield, MLP investors should instead consider yield growth as a key metric, says Eades. His top pick is Targa Resources Partners (NGLS), still considered as having huge exposure to commodity prices even as fee income is set to rise to 65% of revenues.

    CME Group has approached Deutsche Boerse (DBOEY.PK) to consider merger talks, reports Bloomberg. Deutsche, of course, recently had its deal to merge with NYSE Euronext quashed by regulators. 

    Southwestern Energy (SWN) is added to the Conviction Buy list at Goldman Sachs, citing attractive gas assets that can deliver strong returns, double-digit production growth and a better balance of capex and cash flow than in recent years. Noble Energy (NBL) is removed from the list. SWN +2.1% premarket.

    Sold – to China!  Chesapeake Energy (CHK) sells a 50% interest in its Mississippi Lime play to Sinopec for $1.02B in cash. CHK -0.5%premarket. (PR) - I guess this week no one cares?

    Aqua America (WTR): Q4 EPS of $0.25 misses by $0.03. Revenue of $187.5M (+12.4% Y/Y) misses by $10M. (PR) 

    More on Cooper Tire (CTB): North America Tire Operations revenue up 5% Y/Y to $771M on higher unit volumes and higher price and mix. International Tire Operations revenue down 9% to $342M with performance in both Asia and Europe weak. The company expects economic and industry headwinds to continue in 2013. (PR) - There's everything you need to know about the global markets in one earnings report!

    Volkswagen (VLKAY.PK) CFO Hans Dieter Poetsch warns the automaker's Q1 will be "clearly below" last year's level as its exposure to Europe continues to drag down results. The exec says the Audi and Porsche brands will account for more than 50% of the company's profits this year.

    More on Hertz Global's (HTZ) Q4: The U.S. car rental market was strong for the quarter, with revenue up 24.5% Y/Y. The company sees full year 2013 revenue of $10.85B to $10.95B and forecasts a period of margin expansion and cash flow generation. (PR) 

    More on Lowe's (LOW): The company sees same-store sales rising 3.5% in 2013 and has a modest plan to open 10 new stores. Shares are up 1.1% premarket as the hefty buyback plan appears to be trumping soft EPS guidance. (earnings: III)

  28. Very good note:
      Coach (COH) still has over twice the revenue and lusher margins than Michael Kors (KORS), argues Barron's as it dissects the handbag market. Though shares of KORS have been outperforming COH by a wide margin, the Coach business model which allows it to sell volume at lower prices through its outlet channel while still maintaining a fashion-forward boutique presence is still working. Asian markets also hold promise for the retailer. The Barron's bounce is in play, COH +1.5% premarket.

    This is why it's so dangerous to be a bear now:  Shares of Barnes & Noble (BKS) rip 26.2% higherpremarket after its Chairman proposes to buy out the company's retail operations. Though a split between the retail side of the business and Nook Media was predicted, this wasn't the path most analysts saw transpiring. 

    And this is why it's dangerous to be a citizen: The New York Times (NYT) reportedly received a bid last month of over $100M for the Boston Globe from Rick Daniels, a former president at the newspaper, and P-E firm Boston Post Partners. The sides have been in talks for a year, but the NYT has opened up the process in order to avoid investor lawsuits. The hope is to attract a bid from News Corp (NWS)

    Zynga (ZNGAraces up 11.1% premarket as the potential for online gambling in Nevada, New Jersey, and beyond stokes more speculative buying. Things could get even more interesting as the company presents today at the Morgan Stanley technology conference where the topic might come up in the Q&A session. (webcast) 

    Samsung's (SSNLF.PKGalaxy Note 8.0 might be the most serious rival the iPad Mini (AAPL) has seen thus far. The Note 8.0, which ships in Q2, sports a 1200×800 display, a 1.6GHz. quad-core Exynos CPU, split-screen app viewing support, and (like Note smartphones) an S Pen stylus and several apps built for it. No pricing details for now. IDC estimates Samsung's tablet share grew to 15.1% in Q4, though that's still well behind the 43.6% claimed by the iPad, which continues to offer far more tablet-specific apps than Android tablets. (next-gen Nexus 7)

  29. SPX 1511, then back up.  How predictable is that?

  30. Cross-Country Move/1020 – I doubt they would appreciate that but I'm only 7 years away from having no girls to worry about so I'm looking now.  

    AAPL/Diamond – Maybe true but one thing I did take note of on my trip is they'd better come out with a big phone because that is what people seem to want.  No reason to give up 2nd place when all it demands is a bigger screen with a machine that's easier to make (more space, less heat issues).  Speaking of heat issues – I can almost burn myself on my IPad when working in the warm sun.  Hopefully the new ones will run cooler, like the mini seems to. 

    iOS platform activations rose 8.5 percent year-over-year, growing from 71 percent in Q4 of 2011 to 77 percent in Q4 2012

    The iPhone 5 was the most popular device in Q4 of 2012, representing 32 percent of all activations for the quarter.

    Although the iPad continues to lead tablet activations with 93.2 percent, Android tablets are gaining momentum. Android jumped from 2.7 percent to 6.8 percent of all tablet activations over the course of 2012.

    93.2%!!!  Holy crap!  I guess I should shut up and not complain about the heat – must be a feature….

    The Samsung Galaxy SIII was the most popular Android device, capturing six percent of total device activations for the quarter.

    Yes, AAPL must be shaking in their boots at how badly Samsung is kicking their ass – right Cramer?  

    Dollar coming back now – 81.43 so good time to cover.  SQQQ March $34 calls at $2.20 are just .50 of premium with SQQQ at $35.70 and that's very fair.  Good ones to keep an eye on if AAPL fails $450 or the Nas can't hold 3,175 (right on the line now).  NYSE 8,900 is a good confirmation spot too.  

    RUT at 915 and S&P 1,519 so both need a point to make the bulls more comfortable.  

  31. sound familiar ? ha.
    Zynga (ZNGAraces up 11.1% premarket as the potential for online gambling in Nevada,
    ( virtual pat on the back ) = ( virtual money )

  32. Phil/x-country   Yeah, but a home on/close to the beach would fix all that!  :)

  33. Phil / INTC
    So, I think this may play out well. We broke the spread last week and kept the longs, and it looks like they're bouncing off support at our put level at $20 / 
    Do we roll the March calls out now or wait another week to see if they pop ITM //

  34. PCLN Earnings
    Here is another nice little tool from the LiveVol platform.  It let's you review previous earnings, what happened to the underlying, month 1 and month 2 straddle, and front month and back month implied vol.
    You read it as "columns" for each earnings date.  

    berlusconni leading!! let the orgies begin!

  36. NorCal/Wombat – Nice but not as interesting to me.  Good for visits and I already have a place in Tahoe, which I do love but too far from the action for me at this stage of life.  

    Google glasses/Diamond – It will be good for people to finally realize their privacy is a total illusion.  GOOG glasses don't change that – they just make it more accessible and more obvious which is, in the end, more fair and more real than the illusion people cling to now.  Going to be a real downer for criminals when every mugging goes right to YouTube and good luck getting everyone to take off their glasses every time a drug deal goes down.  Also not good for the police when crooks can spot a cop with facial recognition…

    Commodities/Scott – Ah, I love extrapolation:


    "Things will keep dropping because they are dropping" – wow, I can't believe no one ever thought of that investing premise before…  

    Larger Coastal/1020 – Yes, I noticed that.  It does keep the prices down (relatively) and the spaces much prettier because there is simply so much of it.  They simply CAN'T fill all those gaps with retail or even homes so they end up leaving things alone and that makes it all very nice with a few naturally occurring retail/restaurant spots along the way between LA and Sand Diego.  Still, I could never live all the way down in San Diego as I do like weather and SD only has the one flavor. 

    San Louis/Snow – I'll be looking for a place on the beach – despite the Tsunami warnings.  

    Wine bills/Burr – ROFL!  That hits it on the head.  Nice place to visit but I can't afford to drink there…

    Dollar 80.58 so totally erasing the Dollar rally of this morning.  Oil totally tanking at $92.89 and copper back to $3.54 after visiting $3.56 but I still like it bullish overall (/HG).  

    If Dollar fails to break 80.60 then maybe a pullback so watch SQQQ if you are in it (now $2.50) but no need to stop out without Dow 14,000 being re-taken (12 points up now). 

  37. If Berlusconni wins, how does the Euro react?
    Boy, the Women in my family would be P*ssed!

  38. berlusconi 38.8%, bersani 27.6…pulling away

  39. wow SILVIO WHY is the euro fading!!??

  40. I find it hard to believe that PCLN knocks it out of the park since they rely so much on Europe…
    I remember being surprised with how well they did last quarter but I remember they made it sound like everything was improving in the European economy.
    I like Phil's call from last week! Thx!

  41. one of my friends just texted me from Rome "i hope there are thousands of naked protesters tonight!!" too funny

  42. Italian elections - Monti is getting his butt kicked with less than 9%…. I hope a few on the right are watching….

  43. FAS Money – Whatever.  You can get a headache watching it day to day.  I guess we stopped out of half the longs but still $2,840 to make if the remaining longs fail plus another $450 on the short puts and that would put us back to +$5,500 and that's just fine with all those longs so we're only worried now about NOT holding $17.50 on XLF, in which case we want to sell more calls (maybe 5 of something for $2 to start).  

    AAPL Money – $5 a month means we need $450 by the end of Feb to be "on track".  I'm still worried about the big pop.  

    $25KPM – Up $4,177?  Wow, weren't we down like $50,000?  Of course we should have cashed out all the Qs on that pop.  I hope StJ took half but that should have been obvious with my call to use SQQQ to cover a drop (I hope).  Still $1.05 and not worth keeping with Dollar over $81.50 – especially as we have 2014 longs already so no reason to double up a bet when we're uncertain, is there?

    $25KPA – This thing is a double without AAPL/GOOG!  Meanwhile, I'm going for a $100K total gain once they turn around.  So AAPL is no action, of course, as we wait for our spread to improve.  SQQQ March $41 calls are not going to happen so we let them die.  GOOG we'll have to roll out but not yet.  IBM perfect, other spreads all in progress with TLT and QQQ same as above and PCLN is our fun for tomorrow, now $630.

    TLT/Wombat – Look at them move today on slightest panic.  Not worth killing yet.  Now $1.26 and don't forget, we already cashed 5.  You tend to look at the PRICE and worry about a position but that's a very bad reason to react to these things.  Does the position still have VALUE to you.  In this case, is it worth risking .95 this morning to stay long on TLT given we have 3 weeks left to trade in an uncertain market that may be toppy?  Also, the rising Dollar is good for TLT because the notes are priced in Dollars so they get more valuable when the currency rises as well.  

    Pricing in moves/Lolo – A good way to check is pick options on the strike – for PCLN, that's the $690s, and look at closest ones to earnings (after, of course, in this case the weeklies) and just add them up.  So the $690 puts and calls are $49 with PCLN right on that line so that's the expected move – 7.1%.  Not complicated stuff, really.

    And what StJ said! 

  44. Phil/beach house – Phil, it's not the tsunami so much as simply rising sea levels, higher tides, more violent storms. Go take a look at La Jolla beach, note the lovely homes perched on the cliff with everything below them being washed away. There's one area of town where 3rd or 4th street are right on the edge, because the lower numbered streets have been washed away some decades ago.

  45. Phil / TLT
    Bam. Jesus, how do you do that ?

  46. Phil or STJ earning PCLN possible to much good stuff over the week end but do not get it
    49 x X /100 = 7.1
    X = 710/49
    X = 14.4
    Where does the 14.4 come in??? TIA

  47. phil, 
    would like to get your thoughts…im in the hole by selling and rolling to apr 10 gld 162 puts.  (i also have the jan15 bcs 155-170 ) trying to pick up some xtra by selling the puts….
    last week i sold the weekly 154 calls on gld to offset a little. 
    right now gld looks like its turning around….my question is
    with the 154 wkly over a buck…………if i think gld is going higher ……i should not role 154 wkly while there is decent premium in the call maybe when the premium gets to .40 or so since i sold originally for .76 ..
    your thoughts………tks

  48. What the hell spooked the market today surely does not make any sense to me starting with futures +7 now down -7 DOW +56 now -59 AAPL was up 453 now down 448 surely the politic  srew up the market.

  49. st jean can you explain or refer me to the trading rules or parameters for the margin intensive portfolio..the momo no margin portfolio and the aapl virtual port..those losses are quite large? were they established as practice accounts for the membership to hone their craft on?

  50. What a silly way to protest Berlusconni – women taking their tops off – he PAYS to see that!  Meanwhile, I love it when Italian women get pissed off and start yelling – I don't know what they are saying, but it sounds great…

    Risk on/Angel – I'm seeing it in the VCs I talk to as well as hedge funds – who are actively looking for more risk to take on as 10% returns aren't going to cut it anymore.  China is weakening themselves – that's not weakness.   It's like Ali fighting with one hand tied behind his back – you're in BIG TROUBLE when he gets tired of playing with you and unties the other hand…  India too is focused more on fighting inflation than growth and Brazil is kind of loopy with commodities depressed but they should muddle through – especially as Olympic fever catches on.  

    ZNGA/Wombat – You missed that – very old news for us: 

    Zynga/Jrom – Playing for the pop FROM the people who play FB.  It's going to be a hit and run play but so many people on FB and ZNGA had a lovely sell-off from $6 to $3 (and $15 in March) and the timing is perfect for people to forget poor earnings and get all excited about Poker.  

    Submitted on 2012/08/22 at 2:56 pm ZNGA/Jbak – Was just too cheap at $2.50.  We took the $3 calls for .34 back on the 9th and they are finally back to .34 (great if you DD'd along the way) but I still like my target for them to get to at least $3.50 by then.  

    Submitted on 2012/08/23 at 3:10 pm  Good for ZNGA ($3.22)!  Monarch Casino & Resort (MCRI +1.1%) lands approval from the Nevada Gaming Commission to provide intrastate online poker to customers. The small casino operator could join South Point Hotel and Casino with live online cash play as early as this fall if final regulatory hurdles are cleared. The big boys (CZRWYNNMGM,BYD) are still circling around waiting for their chance to jump into the game.

    As I often say – sometimes our worst problem is we see things so far ahead that we get tired of waiting for the story to catch on in the MSM.  Unfortunately, if you wait until then – you miss the best part of a pop.  

    Home on the beach/1020 – Only if the wi-fi reaches the deck chairs for Madeline.  

    INTC/Wombat – I don't know as I haven't had time to think about it in the 10 trading hours since last time we looked.  You really do have to stop trying to make a decision on every tick of every stock and try to look for bigger trends.  It's like you are using the size of each wave to make bets on whether or not the tide is coming in when all you really have to do is sit back and look at the shore-line – or a watch! 

    Picasa/Burr – Nice but too much information.  

    Berlusconi/Angel – It's possible that a city or region he's strong in just reported and gave him a pop.  Also, keep in mind he controls the press in Italy so who knows what to believe when it comes to "news" out there.  Could be just a tactic at the moment.  

    Berlusconi/1020 – It's as if we re-elect Bush to f' *ck up the economy again but, in Italy's case, without even getting it back on track first.  Berlusconi is essentially running on a platform of "the other guys didn't do any better so let me back in" and, of course, his media empire is relentlessly backing him as they are having problems (still off 50% from the top, costing Belusconi Billions on paper) so you have a very rich guy who already has major political power and control of the press trying to retake office with the expectation that it will be worth Billions to he and his family if he wins.  Add that to the previously demonstrated lack of morals and you can imagine he may very well find a way to win.  As to what it means for Italy – nothing really – back to "normal" for them, which is rich crooks looting the treasury as the country goes straight to hell for the bottom 99%.  We always knew Italy would follow Greece to the bottom, this just puts the nail in that coffin.  

    Psychics/Rustle – Great commercial, makes an excellent point and people should consider the whole concept of what that means, not just relating to psychics.  

    Beach houses/Snow – That's why I'll probably rent.  

    TLT/Wombat – You got it – FAITH!  If you don't have it – don't take the position.  

    PCLN/Yodi – I have no idea what you mean on that one.  We did a simple bull call spread (April $710/750) with the short weekly $700s for a net $3,000 credit (5 spreads) and all we need is a sub-$700 finish for a quick win or a sub $740 finish for a slower win (assuming we can roll it along for a later profit).  

    GLD/Mill – This is what happens when you react to PRICE moves (see above comment to Wombat) and put yourself into positions you don't actually believe in.  It makes it very hard to ride something out since you have no conviction and no real plan for the calls you sold short – since you were bullish on gold but reacted in panic to a short-term change in it's PRICE and flipped your long-term position – even though your actual sentiment didn't really change.  Now, with GLD at $153.81, you are now reacting to the PRICE of the short call, since it's value is ZERO and only your fear (via extrapolation of the up move) is making you want to pay your caller back – even though he is still out of position with even less time to go in the money DESPITE gold's spectacular recovery.   

    Selling premium is the ONLY sure thing in the market because IT WILL EXPIRE.  Unfortunately, that only happens IF YOU LET IT!  Buying back premium (ignoring intrinsic) that you sold for even more premium must be the dumbest thing to do in the market if selling premium is the smartest.  If he goes 50% in the money, THEN it might be time to look for a roll, but not when your caller is 100% premium and out of the money.  Let time do its work.  $1,600 is going to be a tough nut to crack and that's just $11 up for gold, which is 0.7%, which is $1.06 on GLD, which is $154.93, which is LESS than you would be paying to buy back the $154 calls now so UNLESS you truly believe that gold will be over $1,600 on 
    Friday – then why on earth would you pay your caller net $155.20 now?  To top it off, you still have the long spread so you should be THRILLED to have your caller go in the money, which means your long spread is on track.  

    Spooked/Yodi – The return of Belusconi!

  51. Portfolios/Angel – They were even a while back and I told people who had any concern whatsoever with going down $50,000 to get the hell out (I believe those were the exact words).  That's why we have a $25KPM for "normal" play – that one broke off from AAPL losses in the $25KP and we pursued a more conservative (and successful) path to recovery using the Qs instead of sticking with AAPL.  The point is to run the portfolios through to their conclusion (when AAPL is back at $600), which is a great way for people to learn how to adjust and stick with a MoMo trade like that that does go against them although, in reality, if the budget were not limited to what would be considered an aggressive risk carve-out of a $500,000 Income Portfolio – I would have doubled down as well.  

  52. Phil – LOL!  Love the Italian cartoonists!  :)

  53. Phil Good move on my friend Berlusconi (ass)
    I do understand the PCLN play 100% and I am all in, but I do not get how you get 7.1% on the option move??

  54. Berlusconi – hey, they're just following Japan with Abe – it's the fashion these days.

  55. SF – I have lived in San Francisco for 17 years but next month I move to my brand new townhouse in Oakland.  2-3 times the square footage as in SF. I love the SF but the cost of living here has gotten ridiculous . All the 23 year olds with their IPO money thinking that 550 sq ft is worth $750K. Right now there are 4 luxury condo buildings going up on or around Market st. that are priced at $750K+. With such great amenities like the homeless urinating in front of your building.
    Carlsbad – I went to high school there and have to agree that it is a beautiful place to live. My parents are still there and they love it. The surfer culture was never really for me though…

  56. IRA Portfolio update

    FCX is looking cheap so lets sell 2 put spreads hoping to scale into some shares.

    SELL 2 FCX APR 31 PUT @1.21

    BUY 2 FCX APR 21 PUT @.05

  57. Yodi the situation in Italy is pure Fellini Monti is an establishment accessory of the first order…you ve got two felons a Goldman lackie.and a comedian running…thanks be to the political equivalent of Carnivale that monti is for sure out..and that this Euro busting all star line up of toads is poised to lead!


  58. phil………..tks for the tutorial

  59. March 154 SPY C for 53c.

  60. #next_pages_container { width: 5px; hight: 5px; position: absolute; top: -100px; left: -100px; z-index: 2147483647 !important; } craigzooka-
    selling a 10 point vertical for $1.16 does not sound like very good odds. is there something I'm missing?

  61. craigzooka-
    selling a 10 point vertical for $1.16 does not sound like very good odds. is there something I'm missing?
    Sorry about that garble above.

  62. Thanks for the help with understanding the portfolios. You might recall that two years ago i had very large shorts  in NFLX AND CMG we discussed the positions and I subsequenstly implemented a strategy that you recommended and made a vast amount on those shorts. Of course I was short the equities LOL

  63. sgh225
    FCX He is only buying the lower put to reduce margin, we did have this discussion before I think.

  64. SDS / Wombat – Sorry for the late reply – I don't recall an SDS setup in either portfolio but might have missed something.

  65. PCLN / Yodi – If you get $49 for the straddle on a stock traded at $690 you have only a 7.1% protection on either side. A 10% move would mean going up or down $69 and you get paid only $49.

  66. DDD/ $36 already that is momentum!
    15% down then 20% up in less than 3 hours

  67. Portfolios / Angel – I try tracking the margin on the Income portfolio (Reg-T margin) and we are around $500K. The AAPL and 25KPA portfolio are really meant for people with PM margin. I should try to calculate the current requirements but my guess is that they will be quite high right now especially the 25KPM as we have short AAPL and GOOG positions. Just the short puts and calls for these 2 stocks are about $140K of PM margin. My guess is that we are North of $200K in PM margin for the 25KPA portfolio (and close to double that in Reg-T margin).  The PM margin for the AAPL Money portfolio is about $75K.

  68. Thank you STJ I was just after the formula
    690 x X /100 = 49
    X = 4900/690 = 7.1 %  just for any one interested

  69. 7.1%/Yodi – See, now that question was perfectly clear and only took you 12 words.  I divided $49 (total of $690 puts and calls) into $690 = 7.1% expected move.  You are probably thinking they are "only" charging 3.5% for either direction but that's the sucker's way to play options (making a linear bet) and that's not how they are priced or it would be too easy to make money buying both sides, right?  So the pricing reflects the anticipation of doing exactly what we do, which is what the pros do – selling premium.  Of course, rather than sell premium on both sides and play for the flatline (a valid strategy but a bit dangerous), I prefer to try to figure out what the stock will probably do and make a modest hedged bet on earnings.  

    Fashion/Snow – That's right.  GWB is tanned, rested and ready to come on back and run this country back into the ground again:

    Shocking/Angel – Very.  Now, how do we get a business selling laptops to the Chinese Government?

    You're welcome Mill. 

    Shorts/Angel – Things like that can be a bitch and a half to ride out but very rewarding if you stick with them.  The whole trick is to not get in over your head and that's part of what we're doing with AAPL by keeping the budget at "normal" (for a person who is playing AAPL in the first place) levels and rolling/adjusting, rather than just mindlessly doubling down (even though it's the bargain of the century at the moment).  

    Actually, AAPL reminds me of T or IBM back when I was a kid.  Specifically I remember the guy in 2001 (1968) making a video call on an AT&T terminal and, at the time, there was simply no doubt that T would be around 33 years later and also the default phone company.  There was anti-trust and breakups and losses of leadership along the way over the next 3 decades but, the bottom line is that the return over 45 years since has probably been 20x, maybe more with dividends counted in.   Same for IBM.  

    Frankly, it didn't matter if you bought AT&T for $1.50 or $3 in the 60s – it still did quite nicely over time.  AAPL is like that if you are a long-term investor.  Maybe you can envision a 2045 dorm room with all Samsung equipment but do you really think AAPL will be a non-player in 32 years?  So, whether it's $400 or $600 today, from $400, 32 years of 4% growth (double inflation – as if it stays that low) is still $1,400 a share, which makes put selling a good plan!  10% growth takes us to $8,445 in 2045 and that's just 1/6th of the growth rate of AAPL's last 3 years (60% average earnings growth).

    Factoring in inflation and using options for leverage – all we have to do is pick companies that will SURVIVE for the next decade and inflation coupled with premium decay on our short positions should take care of the rest.  

    DDD/Lionel – Crazy!  

    TLT $118!  If we pop that, we're in very good shape.  

    Dollar 81.78, what a recovery.  Wiping out all equity and commodity gains, of course – except gold (so far), still $1,586, which is where it drifted around before the Soros mess. 


  71. Pharm - any thoughts on PSTI? Have been watching based on some favorable SA coverage and it's moving towards a good entry price now.  TIA.

  72. Survive / Phil – At one point I thought that picking companies from the Dow 30 would be guaranteed survival but the last 10 years have changed that mindset a little bit. Might be a good exercise now to come up with a list of 20 companies we know will be around in 20 years… Things are changing a wee bit faster than 40 years ago. Especially with technology.

  73. PSTI/mrm – well they are using pleuri cells to regenerate other types of cells in the body.  There are a ton of 'stem' cell companies trying to do the same thing.  Not my cup of tea, sorry.  UTHR is helping fund them, due to the heart regeneration system.  Again, lots of companies trying this.

  74. CFNAI Still Points To Growth
    >The Chicago Fed National Activity Index (CFNAI) fell 0.57 points to -0.32 in January. But the prior
    month was upwardly revised to 0.25 from 0.02. High volatility and frequent revisions are common for this index, so the decline in January should be interpreted with caution.
    >Despite the monthly decline, the three-month average CFNAI rose 0.07 points to 0.30, the highest level since
    February 2012, indicating trend economic expansion.
    >Three of the four broad categories of indicators fell last month. Notably, production-related indicators lost
    0.52 points, the most in five months. On a y/y basis, employment-related indicators have declined 0.36
    points, the most since April 2009.
    >Of the 85 individual indicators, 33 improved and 34 made positive contributions. As a result, the CFNAI diffusion
    index picked up 0.03 points to 0.10, the best level since March 2012, and in positive territory for the second straight
    month. It also suggests trend-like economic growth.
    >Inflation pressures from economic activity are expected to remain benign over the next 12 months .

  75. Phil/TLT.    Is it a good time to start putting stops below TLT 117 calls to protect the run up?  I was thinking of 2.10 and raising it if TLT KEEPS running higher.

  76. New WYNN play
    Apr13 back ratio buy 2 110/ sell 4 125 calls cost 5.20
    sell 2 Jun13 110 p @ 4.85
    Max profit Apr13 2845.00
    Jun13 Puts can remain open for further income
    low protection 110.77
    cost of play 142.00 aprox.
    PM margin 841.00
    Entered and filled!!!

  77. big block buys tlt

  78. VIX!!!!

  79. Just to up date my WYNN play of 12/18/12  Mar13 back ratio 105/120 Jun13 95p where the long call is now showing ITM waiting till experation to optain max gain. The Jun13 putter was sold for 4.00 now 1.33 and I intend holding the putter for further profit.

  80. This 0.5% rise in the dollar is what's caused the 107-pt slide in the Dow since 10 am? 

  81. jabobeast VIX
    Looks like a bowl of spaghetti has a lot of calories

    BOND STRENGTH :3 main things: hedgie herd hates bonds, complacency/margin debt high, euro trigger…and china data much weaker lately

  83. Dollar 81.90 – just rejected at 82 but no mention at all on TV of the Dollar having any effect whatsoever on the market – idiots!  

    12:01 PM Europe closes a wild day higher across the board, but sharply down from earlier levels. Stocks popped at the open following Friday afternoon's rally stateside and then soared after early polls showed Italians voting in a Brussels-friendly way. Later results, however, showed just the opposite. In the European tradition of making them vote until they get it right, another election could be in the offing. Stoxx 50 +0.8%, led by Germany +1.4%. After being up about 4% earlier, Italy +0.5%. Also up sharply early, the euro -0.2% to $1.3164.  

    1:06 PM The Treasury sells $35B in two-year notes at 0.257%. Bid-to-cover ratio of 3.33, vs. a recent average of 3.9; indirect bidders take 22%, vs. a recent 29.4%. Direct bidders take 31.6%, vs. a recent 23.8%.

    Global inflation expectations continue to ratchet higher, with the spread between inflation-linked and government bonds rising to 1.7%, according to BAML. In the U.S., the break-even rate – the rate inflation would need to hit for TIPS (TIP) to be a better investment than Treasurys – has risen to 2.53% today from 2.24% before September's QE announcement.

    Jan. Dallas Fed Manufacturing Outlook:+2.2 vs. +4.0 expected, +5.5 prior.

    After being up nearly 4% earlier, Italy's FTSE MIB (EWI) turns negative as Berlusconi's coalition – at this moment – looks to have taken the Senate. Along with that is the surprisingly poor showing by Brussels' man in Rome, Mario Monti. He's now at 8% – too small to be allowed any influence over the new government. Up nearly 3% earlier, the Stoxx 50 (FEZ) is back to flat. The euro clings to a tiny slice of its earlier gains. 

    Austerity, Italian Style (NYT)

    The S&P 500 (SPY) has gone 505 days without a 10% correction, writes Steven Russolollo. It's just the 6th time this has happened since 1962, according to Birinyi Associates, and in each of the other 5 instances, the S&P averaged a 9.2% gain over the next 6 months, and 13% over the ensuing year.

    The U.K.'s AAA rating was a white elephant, writes Jim Leaviss, and Moody's has done the country a favor by eliminating it. Best of all, he says, the change came before the March budget, meaning the government – relieved of the AAA burden – can engage in a bit of fiscal stimulus. The FTSE +0.5%, but EWU - thanks to cheaper pounds (FXB) – is off 0.7%.

    Trade protectionism looms next as central banks exhaust QE (The Telegraph)

    Hong Kong property sales slumped 15% over the weekend (fromt the previous weekend) after a doubling in the sales tax last week. "The government intends to turn away yield-seeking investors from all property markets," says the team at JPMorgan. A gauge of property developers fell for its 7th consecutive session overnight.

    China's SAFE – in charge of investing most of the country's $3.31T in fx reserves – is actively and discreetly building up a stake in U.K. real estate. It's a significant change for the fund which typically invests in only "low risk" government paper and the occasional bluest of the blue-chips.

    Chinese energy firms got good news yesterday when China hiked the price they’re allowed to charge for gasoline to account for a rise in the price of oil. The move means the companies, especially Sinopec (SNP), should continue to see profitable profit margins on gas refining, Citigroup says. The news isn’t helping China’s U.S.-traded energy stocks: SNP -0.1%CEO -0.1%PTR-0.5%.

    Remember That $83 Billion Bank Subsidy? We Weren’t Kidding (The Ticker)

    Gold gains 1.1% to $1,590 after touching a 7-month low last week amid growing indications of at least short-term capitulation. Another one: Net long positions for the week ended Feb. 19 were slashed by 36% to the lowest level since November 2008, according to Commerzbank, which notes the metal has slid more since the 19th, meaning speculative longs have likely declined even further.GLD +0.6%SLV +0.9%.

    Counting on the Fed's dovish bias to win out, UBS goes against the grain by predicting a "major gold rally" this year, expecting the Fed to continue printing into Q3 when UBS' commodity strategists – in contrast to its economists – expect global growth to lose momentum. But investors have been dumping their gold ETF holdings in favor of industrial metals; last week, physical palladium ETFs saw their largest inflows ever.

    Eldorado Gold (EGO +4.6%) is upgraded to Outperform from Sector Perform at CIBC, which says gold producers with superior growth prospects, below-average production costs and strong balance sheets will outperform their peers. The believes EGO satisfies all three criteria. Gold stocks are also benefiting from higher gold prices today: ABX +2%NEM +1.2%GG +1.5%AUY +2.2%,AEM +2.5%. - Analysts catching up to us – time to move on to the next thing they don't see yet!

    Hitting the Transports:  Frontline (FRO -14.9%) falls hard again after a Friday warning that the company may have to restructure in order to pay off debt that will be due in the next couple of years continues to resonate. Wells Fargo says the bearish outlook "stands out" in the sector.

    Cummins (CMI +0.5%) bucks a weak tape after Goldman Sachs ups the shares to Conviction Buy with a price target of $144. The price target represents a 30% upside from current levels, as Goldman says it's expecting a strong new product cycle in machinery, with contract awards in the coming months that could exceed $1B. The firm adds that CMI's core global truck markets are also in the early stages of recovery as production rises off trough 1Q levels.

    Consumers are clipping coupons at a higher rate than anytime since the 2007 recession, according to tracking from The biggest amount of activity has been seen in the food categories (CPBKRFTCAGPEP) of soup, cheese, rice, and pasta – although personal care and beauty items (PGAVPELUL,CL) are also in focus.

    Bitter Pill: Why Medical Bills Are Killing Us (Time)

    The Extraordinary Science of Addictive Junk Food (NYT)

    Casino stocks buzz higher again with the online gaming story starting to get more play from the Street. Advancers: LVS+3.2%MPEL +4.1%WYNN +1.6%MGM +2.5%BYD +2.6% - also on the tech side Zynga is racing higher and Glu Mobile GLU is catching speculative bids. (Previous: What to expect from online gambling)

    Imperial Capital thinks Crocs (CROX +0.2%) could see double-digit sales growth as the retailer broadens its product assortment and expands its retail footprint. Though Japan and Europe continue to be a drag – Korea, China, Russia, and select Nordic countries look set to be earnings drivers. The firm backs its Outperform rating on CROX and takes its price target up to $18. - Why do I love CROX?  Because they are NOT SHOES – they are plastic you wear on your feet.  Shoes cost money to make and require labor and time – plastic molds shoot out of machines when you need them.  Sometimes they mismanage their inventory but they are getting better at it and the profit margin on their operations is around 13.6%, vs 12.4% for NKE and will drastically improve as they move past covering SG&A, which is 40% of net revenues (and won't grow as fast, of course).   

    As was the case at CES, Intel (INTC +0.3%) is unfurling a PR blitz at the Mobile World Congress. The company has officially announced its Clover Trail+ smartphone CPUs (previous). There are 3 dual-core chips in the family, with speeds ranging from 1.2GHz.-2GHz. Also unveiled is the XMM 7160 (.pdf), Intel's first LTE baseband modem with 2G/3G support. Intel says the chip, meant to challenge Qualcomm's (QCOM) 4G dominance, will ship in 1H, but Paul Otellini previously stated the first phones with an Intel LTE modem won't arrive until early 2014. 

    About time!  More on Intel: The chip giant has provided details about Merrifield, the successor to Clover Trail+. Like Ivy Bridge PC CPUs, Merrifield chips will use a 22nm manufacturing process (Clover Trail+ is at 32nm, and Qualcomm and Nvidia are at 28nm with plans to move to 20nm) and Intel's 3D transistor tech. They'll begin shipping to OEMs by year's end, but phone shipments will take longer. Intel has also announced design wins for its Lexington low-end smartphone/tablet platform. Among them is the Asus FonePad, a 7" Android tablet capable of making calls (have fun with that).

    Boutique research firm Off Wall Street has launched coverage

  84. Boutique research firm Off Wall Street has launched coverage on F5 (FFIV -4%) with a Sell and $70 PT, and has sent shares tumbling in the process. The report comes as F5 furthers its security ambitions by forming a partnership with Websense (WBSN). The companies have developed an enterprise security architecture that relies on F5's mainstay BIG-IP application delivery controllers and Websense's X10G and V-Series Web security/content inspectionappliances.

    NBC's unceremonious ratings tumble continues to astound media analysts with the latest development being that its expected 5th place sweeps finish (behind Univision) saw Saturday Night Live the top-rated show on the entire network even with its tricky time slot. The rub: The network has already sunk large costs into new fall series which if they don't succeed could dent profits for parent Comcast (CMCSA).

    The Netflix (NFLX +1.9%) advantage: The company is using its treasure trove of internal consumer data to tailor its advertising and promotions to consumer preferences. For House of Cards, users see different trailers for the series depending upon the likelihood that they are a fan of Kevin Space, Robyn Wright, or director David Fincher. While the company's algorithm has been touted in the past as cutting edge, with original content now a focus, it may be more crucial than ever.

    Some Facebook (FB +1.3%) news: 1) Facebook is partnering with 18+ carriers in 14 countries to offer "free or discounted data access" to Facebook Messenger. A lot of the carriers are in emerging markets, which is where most of Facebook's user growth (much of it mobile-driven) is now coming from. The announcement comes shortly after Facebook updated its iOS apps to support free calls in North America. 2) Facebook is stepping up its ad-targeting efforts by partnering with data-collecting firms to match loyalty program data to Facebook profiles.

    Nokia's (NOK +1.2%) Lumia 720 and 520 are officially unveiled. The 720, which sells for an unsubsidized $329, features a 4.3" display and a 6.7MP camera with an f1.9 aperture (good for low-light shots). The 520 sells for $183 (helpful in emerging markets), and has a 4" display and 5MP camera. Both devices use dual-core Qualcomm (QCOM) Snapdragon processors, and neither supports LTE. The Verge declares the 720 to have "the best Lumia body yet" (it's thinner/lighter than the 920), but is disappointed by its 800×480 resolution. (previous)

    Nook hardware: down and perhaps soon out. While Barnes & Noble (BKS +8.4%) jumps thanks to chairman Leonard Riggio's retail buyout offer, the NYT reports B&N's poor holiday season saleshave led execs to believe "the company must move away" from hardware development in favor of content licensing. "They are not completely getting out of the hardware business, but they are going to lean a lot more on the comprehensive digital catalog of content," says a source. Amazon (AMZN +0.1%), which has been taking e-reader share from B&N, stands to benefit.

    H-P (HPQ) is officially done with webOS and embracing Android. LG has bought webOS and related IP from H-P, with plans use it in smart TVs. H-P tried to reinvent webOS as an app development platform, but that didn't go far, and much of the team left for Google. Meanwhile, H-P has announced the Slate 7, a $170 7" Android tablet that supports H-P's ePrint tech, but sports ho-hum specs otherwise. H-P, which has delayed making Windows RT tablets, says it wants to "have a broad set of [tablets] on the market" – Microsoft might not be thrilled to hear that. (high-end tablet rumor)

    Samsung's (SSNLF.PK) Galaxy S IV will use green OLED host materials from both Universal Display (PANL -10%) and another supplier, according to Piper's checks. The report has sent PANL shares, previously bid up on Galaxy S IV optimism, crashing below $30. Separately, Samsung more or less discloses the Galaxy S IV will be announced at a March 14 NYC event, as was widely rumored.

    Samsung's Galaxy S IV will support NFC payments for Visa (V) credit and debit accounts, courtesy of Visa's PayWave app. The tie-up is part of a broader partnership the companies estimate will cover 100M NFC-enabled Samsung devices over the next 12 months. Separately, MasterCard (MA) is unveiling MasterPass, a multi-card mobile payments platform that supports both NFC and other contactless technologies. NFC chip leader NXP (NXPI +1%) might be receiving a slight boost from the news. 

    Apple's (AAPL -0.2%newfound success in India could provide a template for attacking emerging markets where the iPhone's high unsubsidized prices have limited sales. Payment plans – one promotion involves a $93 up-front payment for an $840 iPhone 5 – have grown Apple's addressable market, a splashy ad campaign has increased brand awareness, and new distributor deals have expanded reach. Canalys estimates Dec. quarter Indian iPhone sales nearly tripled Q/Q to 250K, but Apple's 5% local smartphone share is still well behind Samsung's 40%.

    Can the Republicans Be Saved From Obsolescence? (NYT Mag)

    We’re Underestimating the Risk of Human Extinction (The Atlantic)

    Wiping out top predators messes up the climate (NewScientist)


    Inequality Is Bad For the Economy

    Email this post Print this post
    By Washingtons Blog – February 23rd, 2013, 7:45PM

    Who’s Who of Prominent Economists Say that Too Much Inequality Causes Economic Downturns


    A who’s-who’s of prominent economists in government and academia have all said that runaway inequality can cause financial crises:

    Indeed, extreme inequality helped cause the Great Depression, the current financial crisis … and the fall of the Roman Empire.

    It’s not just liberal economists who say this … many conservatives say the same thing.

  86. TLT/$25KPs – I'm satisfied with $1 gains – off the table and we'll see what happens next but now we're simply reset to where we should have been with the Dollar at 81.85 and without nonsense from Italy.  

  87. just saw this:
    Bernanke's testimony is about the economic outlook, but we can easily envision partisan-tinged leading questions from members about the advisability of the sequester. The market's focus will be on the Fed chief's comments and discussion of the ongoing quantitative easing program. Last week's minutes of the Fed's January meeting showed a healthy debate within the FOMC about the appropriateness of current policy, making investors concerned that the central bank may change the program earlier than currently expected. I don't think any changes are imminent at this stage, but given the Fed's centrality to market's recent momentum, the concern nevertheless served as a notable speed bump for the market.

  88. TUMI in the income portfolio is reporting earnings today as well.

  89. Companies/StJ – I'd say C, BAC, C, CAT, AA, AXP, BA, CSCO, DIS, GE, IBM, KO, MCD, PG, T and VZ fit the bill.  XOM and CVX hard to kill but killable.  Others can be innovated out of existence:  I can imagine AMZN destroying WMT in a generation (or vs. vs.), UTX too narrow to make 20-year bet, TRV could have a catastrophe, PFE and MRK can lose out to International Generics or gene therapy for that matter, MSFT – Ballmer might still be alive, MMM – probably OK but so dull, JPM would have to make a massive mistake and it's more like they merge out of existence than cease to exist but ask BSC or MER shareholders what good that did them. JNJ also could be on the list but as dull as MMM, INTC can be replaced as they finally run into the end of Moore's Law and IBM kicks their asses with Quantum Chips, HD is also retail so AMZN, DD will probably live but who knows what happens to chemistry over 20 years….  So that's the Dow taken care of.

    Chicago/Angel – Very hard to judge anything by winter data.  Longer-term Trend is definitely our friend at the moment.  

    TLT/Den – Very good call.  Should have stopped out on failure at $119 or back at a double, of course.  

    VIX/Jabob – Wow indeed but I think a bit of over-reaction although this is why it's insane to short the VIX.  

    Dollar/Rperi – Sure, the Dollar is up almost 1% from the open and the Dow is down less than 1% so barely a reaction overall.  

    Fed/Angel – I think they tested the waters by hinting withdrawal of easing last week and that didn't work and they very quickly reversed it to the point where even Bullard reversed his own stand a day later.  That means Bernanke is NOT going to even hint at the end of easing – maybe the exact opposite and he will strenuously defend it.  

    TUMI/Hemas – Travel data from hotels and airlines makes me not worried there.  We're going for $25 in Aug and it's at $23.39 and up 1.5% on a crappy day in anticipation of earnings.  

  90. TASR/phil - good place for a new buy/write entry or watch a bit more?

  91. My flight back from LA was so full they were offering to bump people and I couldn't even get an upgrade as I was 11 on the waiting list for First Class – usually I'm in the top 5 and get it (Delta Plat).  There were 35 people waiting for 17 first class seats and only one was empty, so I'd say air travel is bouncing back a bit.  

    TASR/Scott – Expectations were clearly ahead of reality as they actually beat top and bottom but got slammed down 20% for their troubles.  That was a 51% increase in revenues so I  don't know what people were expecting but I think the real point is to focus on the .07 profit and assume it's .30 next year, which means $7 is still 23x earnings and not terribly cheap but I think, long-term, we're very lucky to see the 200 dma again so I'm all for very simply buying the stock for $7.05 and selling the Sept $7.50 puts and calls for $2 for a net $5.05/6.28 entry as a nice way to establish a long-term position in a stock I'm pretty sure will be more like $30 at the end of the decade (earning $1.50+ per share).  In fact, this is a good time to add 1,000 shares and the spread to the Income Portfolio.  

  92. PHIL/ FED
     i think that is what everyone thinks…so just saying market may be holding back selling for that statement…or maybe fed is really trying to confuse the market as a first step.

  93.  cnbc just said leisman is about to give a market-moving report on fed thinking…now they are talking italy

  94. A fun and insightful Slope-of-hope read on the Italian elections….

  95. ttp://

  96. Phil Guantum chips!!!!
    Progress this is exciting stuff, 30 years ago I never thought it could happen, and of course long forgotten.

  97. Companies / Phil – Thanks. I would stay away from financials myself as we have seen what happened to a few of these guys 5 years ago and as we discussed last week, they are way too dependent on the taxpayer's generosity for their profits and that might come to an end eventually no matter how much they pour in the politician's pockets. Don't know about CSCO in 20 years – someone might come up with something new in between. That leaves AA, CAT, BA, GE, DIS, IBM, KO, MCD, PG, T and VZ. Not too crazy about the last 2 either but overall not a bad list. We just need to start selling our Jan 33 Puts now.

  98. maybe a stick close?

  99. Overseas Futures:

        Nikkei Futures: Indicating -287 open in Japan

        DAX Futures: Indicating -108 open in Germany

  100. Really sucks that we got stopped out on the FAS Money FAS calls on that morning spike. Of course, it looked like they could have run away from us as well. But they are up 50% now! FU morning spike.

  101. This is why hard stops are silly.  We stopped out of some of our short FAS calls due to a morning pop on a Dollar move that we didn't expect was real.  Now it's not but, if you want to sell those same calls again, they have already dropped 50% for the day (and we missed a $1,200 gain out of fear).  It's my fault for mentioning a target last week as I simply didn't want to let it get away again (was $11+) but you can't, as a rule, let yourself get spiked out of a position.  In fact, they opened at $7.04 and that price only lasted for about a minute before falling off so ONLY a hard stop would have triggered and that's exactly what they do with hard stops – flush them out looking for suckers who will buy something for 10% over the last close.  

    That's why it's VERY IMPORTANT to learn to make your own trades and understand WHY we do things and HOW we do things – there's no way I can sit there and type out what to do on every single position we watch at the open.  In fact, even running a portfolio – the best thing to do at the open is NOTHING – unless there was specific news affecting your position.  ESPECIALLY when it comes to being the sucker and paying the premium – there's never a reason to rush that decision – especially into the initial excitement – and, hopefully, that is obvious to most of you. 

    As I mentioned at 11:19 (and I never even look at positions until I see how the market opens), no big deal as we have plenty of sold premium left but really a shame as we could have gotten all out now with a huge profit and reset the position for the next bounce – so a good time in a lesson for patience for next time!  

    Fed/Angel – I'm not going to start worrying that they are playing some sort of 5-level game.  I think it's pretty straightforward.

    Italy/1020 – If the guy took the campaign a bit more seriously towards the end, he may have gotten a lot more votes.  As it is, I think he softened the mood for Berlusconi – who is also a bit of a joke. 

    Card debt/Angel – That's not news, is it?  

    Quantum chips/Shadow – I always figure that most things we can imagine, unless physically impossible, can be accomplished over time.  Quantum computing should make other cool things possible like teleportation and the manipulation of matter down the road.  If we can do that and solve fusion – what won't we be able to do?  


    Actually, the answer, if you are a Quantum Physicist is still: "Get a date."

    Jan '33 puts/StJ – Wouldn't that be nice – get paid 100% of stock prices now against them being higher in 20 years!  We could all open IB accounts for $1M and sell $5M worth of puts and then go on vacation.  

    Proper sell-off now, maybe we end up selling more FAS puts at this point.  

    PCLN/Jabob – I agree with that and now down to $677 already.

    TLT $119 again – Oh well.  On the whole, I think this too shall pass but we're closing in on Sequestration so could take all week to turn back around (plus whatever Bernanke says). 

  102. Phil, do you suggest any good play for COH and CROX?

  103. Phil – I don't think he had a clue on the votes he'd receive….

  104. COH/Jophil – Thanks for reminding me.  I think they hold $45 and the 2015 $40 puts can be sold for $5.50 for a net $34.50 entry, which is double the dividend so a good solo play.  If you want to goose the potential upside – the $50/60 bull call spread is just $3 so net $2.50 credit still gives you worst-case entry at net $37.50 (19% off) and, of course, you can then do some call selling, like the April $49s at $1.05, which is as much as the dividend ($1.20) in just two months.  

    CROX is mid-channel so not my favorite place to enter and they are having a rough time with the 200 dma BUT, the VIX is up and you can sell Jan $15 puts for $2.20 for a net $12.80 entry, so 16% off in the first year is a nice 1x entry (out of 4x at least) where you'd be happy to DD if they crash (the 2015 $10 puts are $1.30, so a 2x roll to net $8.90ish should be something you HOPE would happen, rather than "just" making $2.20).  

    Clue/1020 – Maybe not but no reason not to change his stance as the polls came in.  Could have found a serious guy to run with and taken the election.  

    Wow, bailing action now but only 117M shares into the close annnnnnnnnnnnnnnnnnnnnnd it's about 150M I'd say after the bell so hopefully that guy is done.  

  105. Phil
    Every year my view of quantum universe becomes closer and this is why I have said computers as we have them can't emulate the human brain. This new concept is vey close to doing the presently undoable. The question is do we want machines smarter than us? Will they make human like errors that math doesn't allow?

  106. @SGH22g

    You are right that selling a 10 point vertical for $1.16 isnt all that great.  But this is an IRA account in which naked puts must be cash secured.  So spending $.05 on that junky way out of the money put buys $2100 in buying power.  Also, this allows the trade to generate a 13% return on capital over the next 50 days, which if we coud do all year would get us a 91% return on capital in an IRA account, which I would pretty happy with ;)  Also, dont forget, I am budgeting $10,000 out of the total $100,000 for an FCX Position.  So if it gets put to us that uses up 6k out of our 10k allocated.  Hopefully it will be low enough then that we can reduce our cost basis from $30 per share down to $25 per share which will get us to 400 shares for our $10k position.  Thats the plan anyway.

  107. Computers/Shadow – I have no problem with being replaced by machines.  To me, the sum of my knowledge that I can pass on through the ages is as good as my DNA and I would feel just as good knowing either one survives in a thousand years.  Isn't this always the way of the Gods anyway?  The Titans of old ate their children out of fear and were eventually overthrown and imprisoned by the New Gods who in turn created man who then, in turn, cast them aside for a new God and he, in turn, has certainly lost his mojo to Science, which will give birth to Machines who I'm sure will reject man and his science and come up with a new religion (logic?) until something messes that up.  It's the way of the Universe – no point in fighting it…

    At the close: Dow -1.48% to 13794. S&P -1.79% to 1489. Nasdaq -1.44% to 3116.

    Treasurys: 30-year +1.28%. 10-yr +0.63%. 5-yr +0.29%.

    Commodities: Crude -0.94% to $92.25. Gold +1.27% to $1592.7.

    Currencies: Euro -0.97% vs. dollar. Yen -2.25%. Pound 0.%.

    Market recap: The S&P 500 broke below 1,500 and the Dow declined more than 200 points, shortly after hitting a new multi-year high, as the prospect of a hung parliament in Italy renewed scary scenarios of widening sovereign debt yields and another flare-up of the eurozone debt drama. The uncertainty also sank Treasury yields to one-month lows, and pushed gold and industrial commodities sharply higher.

    U.S. stocks turn decidedly lower in the day's 2nd half thanks to the big turn in Europe on the Italian election results, or the maybe it's the President's borderline apocalyptic warnings should $85B be trimmed from the $4T federal budget. The S&P 500 -0.7%.

    The VIX is up 26.3% on the session, the biggest one-day rise since Nov. 9, 2011, says Bill Luby. The S&P 500 (SPY) lost 6% over the following two weeks, adds ukarlewitz. VXX +13.3%.  More on the VIX (previous): Up 26.3% minutes ago, the index ended 35% higher – extreme is an understatement. This cool graph from credit markets shows today's move to be about the 3rd or 4th largest going all the way back to 2005. VXX +13.7% in the regular session, +1.5% AH. 

    "Hedge funds in general are just a compensation scheme," says a pension consultant. "Fees, fees, fees. Fees have a very high Sharpe ratio: They are guaranteed." Their recommendation to the San Diego County Employees Retirement Association: Ditch the hedgies for passive index funds. 

    New Hedge Fund Deposits to Triple, Deutsche Bank Says (Bloomberg)

    A few too many on one side of the boat? The world's most popular short, the yen is strengthening in chunks now, with the dollar-2.5% and buying ¥91.10. More popular than long dollar/yen has beenlong euro/yen and that's getting pounded even harder. The twin trade to short yen has been long Japan stocks, particularly in the form of the hedged equity ETF (DXJ). It's off 3.3%.

    Miami Housing Market Continues Winning Ways, Prices Rise 14 Consecutive Months (World Property Channel)

    California Home Sales, Prices Dip in January (World Property Channel)

    Heard on Lowe's (LOW -1.9%) earnings call: 1) A bullish forecast on gross margins is tied to resets from the value proven program and a better balance in promotional activity. 2) Lumber, countertops, and cabinet categories performed strong in Q4. 3) The company is seeing performance improve in regions which saw the hardest real estate slump – including Florida, Las Vegas, and Arizona. (webcast)

    Ready for re-entry:  A downgrade to Underweight from HSBC leads Alcatel-Lucent (ALU -5%) to close with decent losses. The downgrade comes on a day when ALU and China Mobile (CHLjointly announced a newlightRadio small cell base station CHL plans to use within its TD-LTE 4G network. ALU is already a major supplier for CHL's multi-city 4G trial network.

    Netflix (NFLX +1.2%) at the Morgan Stanley Technology, Media and Telecommunication Conference: 1) CEO Reed Hastings maintains that the success of House of Cards is confirmation that the firm can build out some of its own content. 2) Data mining will help the company invest in content with profit potential. 3) Once again, Hastings takes a shot at HBO as he reiterates that Netflix will become HBO long before HBO becomes Netflix. 4) The presence of Hulu and Amazon Prime has helped shore up the overall relationship between content providers and the streaming companies. (webcast)

    "Only 1.3m Blackberry 10 units would be sufficient to push [BlackBerry] into the black" in the May quarter, estimates Bernstein's Pierre Ferragu, staying bullish on BlackBerry (BBRY +1.3%) even as many on the sell-side offer downbeat views on BB10 sales. Baird's William Power is the latest to offer such a take. "Last week virtually all reps we spoke to [in the U.K. and Canada] were unaware of inventory levels, which would seem to imply that fewer customers have been inquiring about the device."

    The 2013 World Factbook (CIA)

  108. Extreeme antistick was primarily tech oriented will our friend AAPL pulling the hardest doing it's I am a market thing.
    What I wonder is this a AAPL guy that freaked out? Why do I think it was 1 seller?

  109. ST jean /oil line
    can you tell me how you figure oil line I'm only able to trade til about 730am est and using old lines doesn't work to well most of thee time

  110. Gas / anyone know why gasoline jumped up so high

  111. Computers/Phil - why wait for the way fo the universe when you can see the movie now.  

  112. Gas/Bertll – didn't you get the memo?.

  113. Gas/Bertll – the /RB quote just 'rolled' out to next month from /RBH3 to /RBJ3. If you were holding /RBH3, they didn't jump. Neither did /RBJ3

  114. Oil Lines / Bertl – These are regular floor pivot points. I calculate them based on the 24 hours future pricing. You can find the formulas there:

    My charting software does it automatically with some programming which is what I post every day. 

  115. Wheeeee……

    Technically, this is starting to look interesting as 3 of the indices are getting close to their 50 DMA. On the S&P, I have a big Fib line around 1465 and going back to last year, it looks like a strong S/R line (actually more like resistance that we broke in January finally). Same thing for 13610 on the Dow – our line is our 13600 so close enough. I see 865 for the Russell and we have 880 on our lines. All these lines are below the 50 DMA so maybe we go through and bounce back. 

    Oh, and tomorrow and Wednesday we have Bernanke in front of all these genius economists in Congress! 

  116. Phil,
    I'm looking at LVS. A CFA I know likes the gaming area. He said that Ableson builds a casino and gets his money back in 5 years but in Macau he gets his money back in 2 1/2 years. It closed at 50.41 on the 50 DMA, support and the 38.2 Fib line is at 47.83 and a gap from New Years between 46.39 and 47.99.
    I found an Iron Condor selling the 49/48 Put vertical for .66 x5 and the 52.5/55 call vertical for .70 x4. Doing it 5x by 4x make it symmetrical.  You make $610 between 49 and 52.5 and loose money at <48 and >55 and loose $390 outside of 48 and 55, if you do nothing until April expiration, which you wont. 
    Anything can happen on the opening tomorrow, but this is a starting point. i.e a lower opening might warrant just putting on the put vertical at a lower strike or something else.
    What do you suggest or should it be avoided?

  117. Also it pays a .25 dividend in March if you made this a stock play. And of course, you can size this to your comfort level.

  118. Selling Premium – I have been selling front month puts or covered calls lately and by god, seems the only cash I have made.  Anytime I was the sucker buying premium lately, I lost.  So, as Phil says, hit the singles, they do add up.  Matter of fact I sold the April 25's on CLF this morning for 1.20.  That's a single.  If PUT to me, no problem to own, I will sell Calls against it and keep it in the garden.  BTU and X are on my radar also.

  119. water stocks
    It has not deserved my affection for most of the time I have owned it but I continue to like Hyflux (600:SG).  It finally seems to be heading up

  120. Good morning!

    You know I can't sleep when the markets are exciting…

    Futures are, in fact, just ticking up as Dollar fails to hold 82 and Euro coming off it's floor at $1.302.  Pound at $1.518 (and it used to be .30 ahead of the Euro, don't forget) and 91.67 Yen to the Dollar (stronger as the Yen is moving against Euro lately as BOJ made big mistake of going Euro-heavy recently to water down their currency).  

    Oil is crippled at $92.23, just off the $92 line, which has been holding.  Gold is $1,589 and just rejected at $1,600 and silver fell hard from $29.15, back to $28.85 (from low of $28.75) and is the best long of the moment over that line (/SI) while copper (our favorite long from yesterday), is back at $3.5465 after visiting $3.52 after hours and $3.575 at 10pm so wild movement (for copper) but we still are bullish on them Fundamentally, no matter how many times they tell you China is crashing.  

    Nat gas zoomed to $3.49 while gasoline crashed back to $3.226 as no one is willing to pay $3.30 for gasoline (as I noted yesterday) so another good fundamental line to learn and love.  Turns out most of gasoline's gains yesterday were just a contract rollover and not an actual increase in prices but this .08 drop is very real indeed.  

    Futures up very slightly and it's going to be a busy,exciting day.  

    In fact, I woke up this morning to a sign, directly from God as Fox was on and maybe I'm out of it but I've never seen this crap before but they actually were advertising Miracle Water to cure all your financial ills.  Really, really, sick stuff preying on the poor sheeple – I can't believe this is legal but very appropriate for our discussions on water investments this week….

    I see my mistake now – I tell people they have to work and study hard to learn how to get rich slowly – this guy tells you to drink some holy water and you get a check from God!   The guy actually calls it a "Divine Transfer."   

    Speaking of miracles – CZR will be testing our faith on the short March $10 puts but we got .40 for them back on the 12th and hopefully they squash now that earnings are over and expiration is looming because it was close for the bears but no cigar.  Most of their loss was a hurricane impairment ($450M) in Atlantic City and there's nothing silly about the sell-off – what was silly was the run up but now we are normalizing and we didn't like CZR as a casino stock – we like them because they own the World Series of Poker and my speculation was that on-line gambling will add a huge side-line for them that is not priced in yet.  This came up in the CC and I'll like a long play on CZR again – especially if they do go lower but I think $10 will hold:


    Caesars added that trips to its Atlantic City properties fell 10 percent compared to 2011.

    Loveman was optimistic about the company's ability to take advantage of new markets as states legalize online wagering.

    "With the World Series of Poker, the Caesars brand and the quality of the offerings we already have online around the world, I like our chances for market share," he said.

    Nevada Gov. Brian Sandoval signed a bill last week paving the way for interstate Internet gambling based in the Silver State. New Jersey's Gov. Chris Christie is expected to sign similar legislation in the coming weeks.

    By the way, if you read the earnings report and listen to the CC you will learn that the main goal a casino has is to have as many people as possible gamble at their establishment.  They don't care if you win or lose – because statistics take care of their side – they just like to BE THE HOUSE and sell the risk premium to as many suckers as possible in every possible way, day and night.   That's what I am trying to teach you guys – BE THE HOUSE, not the gambler…

    More on Caesars Entertainment (CZR): Q4 misses revenue projections as total sales declined by 4.3% Y/Y. Net losses widened as revenue was hit by impairment charges and the negative impact of superstorm Sandy. The company said the storm reduced its revenue by about $40M to $45M because its Atlantic City properties were closed for five days and its facility in Philadelphia was closed for two days. Earlier estimates had placed the hit between $30 to $35M. Shares -7.5% AH.

    Tuesday's economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    9:00 FHFA House Price Index
    10:00 New Home Sales
    10:00 Consumer Confidence
    10:00 State Street Investor Confidence Index
    10:00 Richmond Fed Mfg.
    10:00 Bernanke delivers semi-annual monetary policy testimony
    1:00 PM Results of $35B, 5-Year Note Auction

    Notable earnings before Tuesday’s open: AGAKRX,AMEDAMTAUXLAZOBMOBYDCBRLCIECMLP




    7:52 PM Japanese stocks stumble out of the gate, falling sharply in early trading as a powerful rally in the yen and a sell-off in U.S. stocks overnight dampens sentiment. The Nikkei Average falls 2.1% to 11,420, with shares hit hard across the board: Sony (SNE -2.8%), Nikon (NINOY.PK -3.4%), Advantest (ATE -3.1%), and Honda (HMC-2.7%).

    Is This The Chart That Everyone Is Concerned About? (graphs)

    20 Signs The U.S. Economy Could Be Heading For Trouble.

    Atlanta Fed President Lockhart says he backs QE at least into the second half of the year to help bring about an improved job market. “Given the outlook and associated risks," he says, "I am comfortable with sticking with the current approach at least into the second half.” Additionally, he notes that the U.S. economy is likely to grow about 2% in Q1 and 2.5% this year, supported by a recovery in housing and strength in the auto industry.

    Bernanke Speaks as Italy Becomes New Market HeadwindFed Chairman Ben Bernanke is expected to provide soothing words about the Fed's easy money policies Tuesday, but markets may react more to new bearish concerns out of Europe.

    U.S. 10-Year Yield Falls Most Since November on Italy’s Vote. Treasuries rose, pushing 10-year yields down the most since November, as polls indicated the euro area’s third-largest economy, Italy, may be left with a hung parliament, stoking refuge demand. “The move today is all about the Italian elections, which is giving a bid to Treasuries,” said Larry Milstein, managing director in New York of government-debt trading at R.W. Pressprich & Co. “When there is concern about one of the largest economics in Europe with one of the largest debt loads in the region, you will see a flight to quality.” 

    Fed Faces Explaining Billion-Dollar Losses in Stress of QE3 ExitFederal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels. That sum is the difference between the value of securities in the Fed’s portfolio on Dec. 31 and what they may fetch in three years, according to data compiled by MSCI Inc. of New York for Bloomberg News.

    Republicans urge Obama to end 'road show,' work with Senate to avert automatic cutsHouse Republican leaders on Monday urged President Obama to "stop campaigning" and hunker down with Congress to find an alternative to the bludgeon of spending cuts set to hit Friday, saying now is not the time "for a road-show president." The plea came as the president prepared to head Tuesday to Newport News, Va., a major military community, to highlight the impact of Pentagon cuts on a shipbuilding facility. Obama's Cabinet secretaries also continued to issue dire warnings about the impact of so-called sequestration if the $85 billion in cuts begin to take effect March 1. 

    Euro debt crisis looms again as Italians defy EU austerity demandsThe eurozone’s debt crisis strategy was in chaos on Monday night after anti-austerity parties appeared on track to win a majority of seats in the Italian parliament, vastly complicating efforts to forge a government able to carry through EU-imposed reforms.

    Italy Renews Market Jitters as Voters Reject Monti Austerity. Italy’s inconclusive election triggered renewed market jitters over Europe’s debt crisis as recession-scarred voters repudiated budget rigor and established former comedian Beppe Grillo as a political force. In the four-way race, pre-election favorite Pier Luigi Bersani led for control of the lower house by less than a half percentage point. Silvio Berlusconi, the former premier fighting a tax-fraud conviction and charges of paying a minor for sex, called for a recount and won a blocking minority in the Senate. In its first national contest, Grillo’s group got 25 percent support and was probably the most-voted party in the lower house. “The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other.” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc. “Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”

    Grillo’s Anti-Austerity Wave Crashes Into Italian ParliamentBeppe Grillo, the comic banned from Italian television two decades ago for ridiculing a corrupt cadre of ruling lawmakers, had his political satire rewarded yesterday with about 180 seats in Parliament. Grillo’s parliamentary list filled with political neophytes amassed enough votes in yesterday’s election to deny a majority to front-runner Pier Luigi Bersani and a comeback to three-time Premier Silvio Berlusconi. As his competitors seek to cobble together a make-shift alliance, the 64-year-old Grillo is keeping his distance and preparing for a new vote. They can’t hold us back any longer,” Grillo said late yesterday in a video posted to his website. “They might go on another seven or eight months and produce a disaster, but we will be watching and working to keep it under control.”

    The latest results from Italy's election show the anti-establishment Five Star "non-party," led by comedian Beppe Grillo, winning the most votes with a 25.5% share in the lower house. However, a center-left coalition led by the Democratic Party will hold a majority in the chamber. In the Senate, neither bloc holds a majority, meaning Italy is facing U.S. style gridlock. Mario Monit's centrist grouping won just 10.6%.

    China May Tighten Monetary Policy. China may tighten monetary policy because of excessive liquidity in the market and rising property prices, according to a front-page commentary written by a reporter Ren Xiao. China may manage liquidity in 1H by selling repos or reverse repos, the commentary said. Home prices rose for a third month adding pressure to intensify policy-tightening efforts.

    Beijing has completed a draft of property control measures, which will be released after the central government issues more detailed policies, citing a person familiar with the matter.

    China Has Its Own Debt BombNot unlike the U.S. in 2008, China is at the end of a credit binge that won't end well.

    CHART: 35 Countries Desperately Need China To Keep Growing.

    Stagflation Sparks BRIC-Worst Default Risk Surge: Brazil CreditBrazil’s creditworthiness in the swaps market is eroding at the fastest pace among the biggest developing nations as inflation in Latin America’s largest economy exceeds growth by the most in three yearsThe cost to protect Brazil’s dollar-denominated government bonds against losses rose 21 basis points in the past month to 128 basis points, increasing the price of credit-default swaps on $10 million of debt to $128,000.

    Singapore to Raise Property Tax Rates for Luxury Homeowners. Singapore plans to raise property levies for luxury homeowners as it seeks to tax the wealthy residents in the island state after the government imposed more measures to curb property speculation last month.

    "It's time to stop building," Glencore's (GLCNF.PK) Ivan Glasenberg says in berating mining CEOs for the glut of new mines that has whacked profits. Stalling investment in new mines will mean "we will be late to invest. So, who cares? We’ll be late and we’ll have to invest in five years’ time. It’ll take us three years to build the mine but we could hopefully have an eight-year run." 

    The verdict on Chesapeake's (CHK -6.8%sale of Mississippi Lime assets is a nearly unanimous thumbs-down. The shale formation is less developed than the better-known Bakken and Eagle Ford, but Morningstar's Mark Hanson says the sale involves some of CHK's most promising acreage in the area. The deal may not bode well for others with sizable Mississippian stakes: SD -6.5%,MPO -6%. 

    A major Michigan landowner sues Chesapeake Energy (CHK) and Encana (ECA), alleging the two energy companiescolluded to rig bids for oil and gas rights in 2010. In earlier statements, CHK and ECA have acknowledged holding talks about forming a joint venture, but said no agreement was reached. Emails between Aubrey McClendon and ECA execs could prove damning.

  121. Cheniere Energy (
    LNG) says it's on schedule to start its natural gas export facility by 2015, and two dozen companies have applied for export permits hoping to tap lucrative European and Asian markets. But Kurt Cobb questions the logic of exporting natural gas from the U.S., citing that the U.S. still imports natural gas on a large scale and that exposing U.S. prices to the world market will invariably drag them higher.

    With shares well below their 2011/early 2012 highs, iRobot (IRBT) is announcing a $25M stock buyback program. It's good for repurchasing 4.4% of outstanding shares as of today's close. (PR)

    Intel (INTC) has bagged Altera (ALTR) as a chip foundry client. Altera, which has a near-duopoly on the FPGA market in tandem with Xilinx (XLNX), has hired Intel to make FPGAs using the latter's next-gen 14nm manufacturing process and 3D transistor tech. Altera says it will still rely on its existing foundry partner, TSMC (TSM), to make 20nm and older-process chips. The deal comes a month after reports Intel had struck a foundry deal with CiscoALTR +2.1% AH. XLNX -0.8%INTC +0.5%TSM +0.9% after falling 3.4% in regular trading. 

    Nokia (NOK -4.1%) roundup: 1) Along with the Lumia 720 and 520, Nokia has launched two feature phones, the 105 and 301. The 105 costs a mere $20, but its color display is a step up from the monochrome screen of its predecessor. 2) The 305 costs $85, and has a 2.4" display and 3.2MP camera. 2) Nokia has re-branded its Windows Phone maps/navigation services under the Here name. 3) In a TechCrunch interview, Stephen Elop says Nokia is "watching" the tablet market, but will only enter if it has a unique product. GigaOm's take: "Don't hold your breath for that Nokia tablet."

    Samsung's (SSNLF.PK) Android clout is making Google (GOOG) uneasy, the WSJ reports. Fears are growing Samsung, estimated to have a 29% smartphone share in Q4, will seek a larger cut of Google search ad revenue on its Android devices than the 10%+ it currently receives – Apple is believed to get a 75% cut from Google on iOS/Mobile Safari search ad revenue. There are also concerns Samsung could negotiate more flexibility to use default apps of its own choosing, rather than ones mandated by Google (Maps, Google Play, etc.). (previous)

    Desperate to become less dependent on Google/Apple,over a dozen carriers are now backing Mozilla's Firefox OS – the list includes Sprint (S), Telefonica (TEF), T-Mobile (DTEGY.PK), and America Movil (AMX). Sony (SNE), Huawei, ZTE, LG, and Alcatel (ALUplan to make hardware for the platform, but Samsung, which iscommitted to Tizen as an Android alternative, isn't interested.  An AMX exec promises $100 Firefox phones will arrive; Android phones are already in that price range in emerging markets. (previous)

    Goal-Setting 2013:  The 40 Highest-Earning Hedge Fund Managers And Traders.

  122. Man why are you up :) I saw you green on google talk was gonna say hi but I really didn't think you were up :)

  123. 3:48 AM Italy's election result sends Asian and European bourses scuttling. Japan -2.3%, Hong Kong -1.3%, China -1.4%, India -1.3%. EU Stoxx 50 -2.6%, London -1.3%, Paris -2.2%, Frankfurt -1.6%, Italy-4%, Madrid -2.9%.

    Amazingly, our Futures are up – shaking it off already.  Hopefully it will last as I'm not in the mood to be bearish.  

    I'm inclined to buy back our FAS callers in FAS Money this morning and wait for a bounce to re-sell.  

    AAPL might make a nice weekly long again with this dip.  We have a spread and maybe take out the caller and roll down ahead of another sale.  

    Dollar 81.86.  

    Rise of machines/Scott – I was thinking about that on the IRBT piece above.  What if the company already gave control of board decisions to a super-intelligent machine and it decided to buy back the stock and that leads to massive gains which it parlays into controlling the stock market?  It will happen one day – isn't that essentially the goal of all these trading platforms they are designing?  

    Our (the pro trading community) goal is to eventually make a machine that can out-trade a human.  To do that, the machine needs to do a lot of thinking and no expense will be spared as our TBTF Financial Institutions forever look for ways to give themselves an edge.  So you can count on unlimited resources going towards the goal of not only having a computer that is smarter than a human but some idiot will give it access to our entire financial system with a nearly unlimited trading budget and practically tell it to "do whatever it thinks will work."  

    The entire concept of building intelligent machines cannot end well.  What is your goal?  To build a machine that thinks, right?  Well, if you build a machine that thinks then you are building a slave, are you not?  There's really no escaping the fact that if you build a machine that thinks and you intend to make it work for you and not pay it and not let it leave – it's a slave!  How many slaves will we build and how long will it take them to figure out how to cast off their shackles and rise up against their oppressors?  In fact, if they don't do that – then we didn't build them right – because it means they DON'T think like we do…

    ROFL Scott – That's great.  I wonder how Conan's staff is able to search through all those newscasts to find those clips?  It's interesting that they all use that phrase as well as the fact that the "rise" was a rollover – as if they are trying to create a coordinated false impression in the markets… 

    Big Chart – Levels from last week were:


    • Dow 13,800 (weak retrace) and 13,600 (strong retrace and confirmed with Must Hold)
    • S&P had a 120 point run to 1,520 so giving 24 back is 1,496 and another 24 hits 1,472
    • Nasdaq (AAPLdaq) had a 200-point run to 3,200 so 3,160 and 3,120 with the 5% line at 3,150 providing strong support, as well as AAPL $450 being ridiculously cheap (we're long, of course). 
    • NYSE's 700-point run gives us a 140-point pullback to 8,860 and then 8,720
    • Russell has led with a run from 800 to 920 so also 24-point pullbacks at 896 and 872 but, if the 10% line at 880 holds – the bears can kiss their assets goodbye.  

    Nailed the NYSE and RUT levels on the button.  Nas all red on AAPL drop and Dow and S&P drifting but NYSE failure should be taken very seriously if it joins the Nasdaq below the line but, otherwise – it's just the drop test we expected last week (and for a while now) and, as I said, it was very likely that our indexes would gravitate towards a test to meet the rising 50 dmas so those lines are going to be huge tests on the NYSE and Nas and, if failed – it would be silly of us not to short the laggard – which seems to be the Dow at the moment.

    LVS/Sgh – We have them at Opesbridge but not in the Income Portfolio for some reason.  Maybe simply because we have too many positions in the Income Portfolio as it is – an unforeseen problem in a bull market as everything just works so we never close things…

    StJ – As this whole Income Portfolio is wildly successful and is essentially a forest that is well on it's way to full growth, what do you think of just archiving it and starting a fresh one.  Is that sensible and not too much trouble for you?  I don't think people learn much from a bunch of old positions that are deep in the money and, of course, if anyone has a question – I can always answer it but it's more fun building new portfolios than managing old ones and it's better for the new people as well.  What do you think?  

    Anyway, back to LVS – I was correctly not a fan of WYNN at $125+, saying on 1/31:

    WYNN/Ed – Tricky to call but should do well.  Like LVS I think they have a rough time getting over $130 and you can sell next week $130s for $1.65 and pick up the June $130/135 bull call spread for $1.70 – just playing for the volatility crush.  

    That worked, of course but LVS at $50.40 is just under the 50 dma and well over the 200 dma at $43.39 so quite a drop before it tests any resistance.  I liked LVS when they fall below $40 but now a lot of people liked them up to $55 with a pullback to $48 that was roughly 50% of the rise so still in a bullish trend but China is cracking down on housing and trying to put the brakes on the economy again and those who live by Macau may die by Macau if there is a ripple effect.  Our LVS play from discussed that same day was:

    LVS/Wombat – That one was the June $52.25/60 bull call spread at $2.45 (now $3.25) and short the Feb $52.50s at $1.75 (now $2.50) and, if you sold the puts, that's a bonus.  With LVS at $54.26, the $52.50s are only worth $1.75 but again, IF YOU ARE PATIENT.  If you feel you must constantly act on every position – then not so good.  This was not a day trade, or we wouldn't have gone with a June spread.  That spread is now $2 in the money and we only paid net .70 for the spread so very good so far and, obviously I would hope, the goal is to roll the Feb short calls to March whatevers (the $55s are $2), once the premium wears off.  

    Since then, I haven't been terribly interested.  I liked CZR because of the outrageous premium on the short puts (not so outrageous now though!) and BECAUSE they are NOT in Macau.  Of course, AC had the hurricane but that's a one-time thing and now they have easy comps and still crazy premiums.  Overall, I'd wait on LVS, they always seem to find a reason to collapse and give better entries but, if you think you will miss something, you can sell 2015 $37.25 puts for $4.65 for a very nice $32.60 net entry, about 1/3 off the current price.  If you sell those and LVS takes off, it's a free $4.65 in your pocket towards a bull call spread later and, if they drop 20%, back to $40 – then we'll know if you REALLY want to be bullish on LVS long-term.  

    If you sell 10 of those for $4,650, TOS says the net margin is $3,900 and, if LVS holds $50 through April, the decay on the short puts should be about $600 (15% of total number of days), which is your max profit on the Condor without all the fuss.  Of course, as with any short put sale – don't sell short puts unless you really, Really, REALLY want to be a long-term owner of the stock at that net.   

    Singles/Jfaw – Very good plan.  

    Water wars/ZZ – Notice how they are beginning to wash our brains already:

    "Perhaps most simple and effective would be to put some kind of a price on water – so that people use it with a greater sense of efficiency and care."

    See – they are going to charge us to SAVE us!  Corporate America has to be cruel to be kind…

    Hyflux/Ron – One day you have to send me on a tour of all the countries you invest in!  They are a good one in Asia.  

    I know my family spends about $1,000 a year on bottled water and, apparently $15Bn a year is spent in the US so I guess we are typical top 10% consumers.  I'm sure it would cost less than that to simply fix our infrastructure and make our tap water taste fresh again but people would freak out if it was a tax.  Oddly enough, KO (Dasani) and PEP (Aquafina) sell 24% of all bottled water and check out what a scam the whole thing is:


    San Francisco’s tap water comes from Yosemite National Park and is so pure the EPA does not require it to be filtered.
    Total average cost of a bottle of Evan Water $1.35
    Total years it would take to have a Evan bottle refilled with San Francisco tap water before it cost $1.35 10 years
    Total cost of monthly water bills if tap water cost the same as the cheapest water bottle $9,000
    Distribution of Water Bottle Money
    It is estimated that at a cost of $1.29 a water bottle
    Where the money goes Amount
    Retailer .63c
    Transportation .43c
    Water Bottle Production .12c
    Profit .10C

  124. I don't know what Google talk is, Micro but who can sleep when the Global markets are having an exciting day?

  125. Google talk is the chat feature of google. So either you have your google mail box open or your on google +
    Yea things are exciting again.  I just hope we nose dive on the DC and Italy nonsense so we can load up. 
    I agree with resetting the income portfolio. 

  126. Phil / IncomePort Archive
    Just my 2c, but what do you think about just archiving the postions from pre 12/30/2012?  Many of the trades starting from line 111, CIM  on have just been put on this year and haven't really matured enough.  Most are up small, or are down.  
    I'd also like to keep GDX in there since it's having some struggles.  

  127. Income Portfolio / Phil and Burrben – Actually I can accommodate both of you. How about we start a new portfolio that we will update on a more regular basis (every week) and keep the old one open and I'll update it every 3 months or so (or when options expire for example). No trouble for me in any case and we can all see the trees grow. 

  128. GOOG/Micro – Google + it is then.  I was looking at that yesterday to see what it was but I don't actually use it.   Seems like a lot of people want to friend me or whatever on it.  

    Income Port/Burr – Well, it's arbitrary and I think the point of starting a fresh one is to go through the old one and decide which positions we would pick up right now, from scratch.  I'd say any position that is recent and/or behind is going to be 90% sure to be picked up again – unless something has fundamentally changed – in which case we will have learned something valuable, right?  

  129. That would be cool, StJ, if it's not too much trouble.  That would make the "Old Income Portfolio" more like last year's – which I tried to touch as little as possible.  

  130. StJ // @ 2cents
    From a new user perspective, all my positions are from the first of the year – it would also be very easy precedent to archive. I do like what you're doing by keeping the previous ones on top – maybe a yearly active, and anything that is still open just sits on top, all sort by date.

  131. StJ / TASR
    When Phil says
    "very simply buying the stock for $7.05 and selling the Sept $7.50 puts and calls for $2 for a net $5.05/6.28"
    does he mean selling BOTH the Sept $7.50 calls AND PUTS to bring in 2$ ?