Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Thursday Thrust – 14,400 Would be Impressive for the Dow

What have you done for us lately?

That's the question investors have for the Dow as we continue onward and upward to record highs.  Our own Big Chart has a target of 14,400 for the senior index and making and holding that line will finally get us to roll our targets higher – per our 5% Rule, which has been right on the money since 2009 so no sense in ignoring it now, is there?

I mentioned in yesterday's post that the Dow today is not the same Dow as we had in 2007 so, in general, comparisons are silly but we have to play the hand we're dealt and keep in mind that any index that is based on 30 stocks that are now selected by a Rupert Murdoch company is certainly nothing any serious investor should be basing decisions on.  

What we can take very seriously is S&P 1,440 – long gone already along with our targets on all our other indices save the Nasdaq, which has been dragged down by AAPL's 40% drop, costing that index 8% or about a 250-point handicap and it's STILL just under that 10% line.  

In fact, the NYSE is about to test a critical 2.5% line at 9,000 and 1,550 is the 12.5% line on the S&P and the Russell is closing in on 17.5% over it's own Must Hold line (940) so a lot of thing lining up for the big cross that will officially put us up and over the top and will raise our Must Hold lines up to those 5% lines as the market confirms it's next leg higher.  

So it's the Dow that is WAY behind and needs to catch up and, to see if it has the gas to get going – let's look at the individual components and see if they are likely to let us move higher or if they themselves are toppy after a 10% run for the year.

Tom Luongo put up this useful chart showing who has contributed the most and the least to the Dow's rally this year.  Not surprisingly, in the price-weighted index, it's IBM getting the lion's share as that stock has gone from $190 to $208 – up $18 and adding about 140 points to the index (8 points per Dollar is about right).  Here's a fun fact, had AAPL been put in the Dow when KFT went out last fall, the Dow would have lost 2,400 points due to it's inclusion.  The economy would be the same, the rest of the market would be the same but the Dow would be at 12,000 now, rather than challenging 14,400 – due solely to the arbitrary inclusion of one stock over another.  See how silly the Dow is? 

Still, think about the psychological effect it has on us as 12,000 would certainly not have put the other indexes on such a tear, would it?  If you think about it, you realize what a house of cards the whole market is when you see that the inclusion or exclusion of a single stock in a single index could completely turn the tide on investor sentiment and the EXACT SAME companies that you are now willing to pay +20% for could just as easily have followed AAPL lower and been -20%.  No change in their business, no change in the economy – just the simply substitution of one stock in one index and everyone's view of the markets would be drastically changed….

At the moment, the Dow is acting like an anchor and the other indices are going to have a very hard time moving more than 7.5% away from the Dow so it's a good idea to look at the components to see if we have any room to run. CVX and XOM, for example, are major components in the price-weighted index, accounting for $208 out of $1,861 (11%) and we think oil is staying low, so no help will be likely from those two and possibly a negative 10% for -$20. 

AXP, BAC, GE, JPM and TRV represent the Financials at $231 for 12.5% and those should have room to grow under QE3 so let's say a conservative 15% for $35 more in that group. AA, BA, CAT, DD, and UTX actually make stuff for $317 (17%) and, if the global economy ever gets going, these guys should be our stars but Europe and China as stuck in the mud so let's say 10% can be expected for $32 at best.   

Despite missing AAPL, tech is well represented with CSCO, HPQ, IBM, INTC, MSFT, T and VZ (better than separate Telco category) at $384 (20.6%) and they have been mixed this year and the laggards should have room to run if Q2 earnings aren't terrible – call it 10% for $38 there. That leaves consumerish stocks like DIS, HD, JNJ, KO, MCD, MMM, PG and WMT at $595 (32%) who have already had massive runs and have very little room to improve ($0) and, finally, health care stocks: JNJ, MRK, PFE & UNH with $203 (11%) who have, as a group, gone nowhere so we should expect inflation alone to buy us 10% this year for $20.   

So, we're just finding $105 of likely improvements in the near future and that's just 5.6% up from here – not exactly rally fuel is it? No wonder the Dow is having so much trouble getting over the 5% line – it's already exhausted and 10% is very likely to be its limit! But, on the other hand, we don't have any particular reason to short it at the moment so we'll just have to watch earnings very, very closely in the month ahead as there will have to be substantial reasons to get us past 15,200, which is EXACTLY where that +$105 would take us.  Isn't it funny that a fundamental analysis of the Dow should line up with our 5% Rule target 4 years later?  I'll take that over TA voodoo any day!  

Meanwhile, we know investors are sheep and the Dow Theorists will still be plowing some money in between here and 14,400 and, if that pops on this run – all the way to 15,200 so it makes sense to look at our Dow laggards and figure out who will get some lovin' over the next few months.  CSCO, MSFT, INTC, BAC, CAT, AA and UNH are our underperformers and we love CSCO and already grabbed them for our new Income Portfolio at $20.80 last week (now $21.72).  AA is also in there as our 6th trade in our rebooted Conservative Portfolio, and those we grabbed at $8.50 but still just laying around at $8.57.  

BAC was our "One Trade" for 2013 but that was at a ridiculous $5.75 (even more ridiculous than this year's One Trade with AAPL at $425) and now BAC is $11.92 and I already predicted that $15 would be about their top so hard to get excited about here BUT, through the magic of stock options, you can sell the 2015 $10 puts for $1.22 and buy the 2015 $10/15 bull call spread for $2.05 for a net 0.83 entry on the $5 spread and your worst case is being assigned the stock at net $11.83, so you have a built-in $1.09 discount – about 10% at worst.  Best case is you make $4.17 off your .83 cash commitment and that's a nice 500% return on cash so I do like it, but too risky for the Income Portfolio – just a fun way to be bullish on the Financials in general. 

MSFT is still run by Steve Ballmer so I wouldn't put a dime into them and, if you read this article by MG Siegler, I won't have to explain that statement any further.  CAT I would love to see lower so we could get a good buy-in as China and Europe are not likely to get worse while US housing is very likely to pick up and make them much better.  Tempting though it may be to get in now – we're going to patiently wait for a "crisis" to scoop them up.  UNH is tricky to call with the new Health Care laws but what a great company and they are low in their channel so nothing wrong with selling the 2015 $45 puts for $4.20 as the worst-case is you get assigned at net $40.80, which is 24% below the current price and, if you don't get your cheap entry, then you keep the $4.20 anyway and ThinkOrSwim tells me it's just $4.50 in net margin so there are certainly worst things to do with $4.50 than either make 93% in two years OR get to buy UNH for 24% off, right?

That leaves us with INTC and just yesterday I said to Members I don't like buying them between the 50 ($21) and 200 ($22.70) dmas as I'd rather wait for clarity and that's how we feel about the Dow on the whole as we've had a 10% run from 13,000 to 14,300 this year and that means – according to the same 5% Rule that predicted the move in the first place – that we can expect a 260-point pullback to 14,040 at some point.  To that end, we have taken some DIA June $135 puts ($1.90) in our Income Portfolio, to protect us from a sudden drop or to allow us to pick up a little cash on the EXPECTED pullback.  We can offset the cost of those ($9,500) with the sale of 10 of the UNH puts ($4,200), which should be more than adequate to pay for us to roll to January if the Dow sails through earnings and on to 15,000 – which is the next spot we'd expect a nice pullback.  

Waiting and seeing is our primary battle plan at the moment.  As long as the Dollar behaves itself – no reason this ride should end – for now.

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Phil – APA and EGO – your thoughts?  beaten down and at bottom of range.  Both have had fairly steady revs and ebitda. 


  2. R3 – 92.61
    R2 – 91.85
    R1 – 91.07
    PP – 90.31
    S1 – 89.53
    S2 – 88.77
    S3 – 87.99

    Yesterday's high and low – 91.09 / 89.55


  3. Good Morning!


  4. APA & EGO/ Terra: any way you can post your chart so I can see how to look at the ranges and channels?


  5. SD cut to sell at BMO.
    rj – I sold the Sept calls to give me a little more downside protection. 



  6. Wow – that was the least dynamic open i've had in AGES..


  7. Reading every day about Carl Icahn trying to get himself into one company or another makes me wonder what drives these people. At his age and with his money I would try to build a legacy of charitable work like Gates or anything constructive for investors like Buffett. But him, no! He plays with his own money and has to look for a fight – Ackman, Michael Dell… Do you really need to prove that you are still the alpha male? 


  8. Oh look, AAPL opening down for a change!


  9. DD on INO….now.


  10. It really feels like the next time we see FAS down will be when they do the split!


  11. And maybe AAPL should do a reverse-split so that we can see $700 again!




  12. Icahn, like many old alpha males, starts his day off right with a plate of oysters, a side of lemon rind and a FU to the doorman on his way out…..


  13. Phil—great article again!!!
     
    ANd..
     
    FU AAPL!!!!


  14. stjean
    Were the March TZA closed yesterday?
    Phil: "On TZA, we didn't get the sell-off we were worried about today so we'll be taking that loss and moving on unless something strange happens. "


  15. INO/Pharm – tell me more…


  16. jabob
    You keep doing that and they are going to change their stock symbol to FUAAPL! :)


  17. This is now the AAPL-GOOG Money portfolio!


  18. TZA / Scott – Maybe… Same price as yesterday so no loss there!


  19. BA has caught a bid.


  20. Pharm / INO,
    I was reading some on line info on INO and saw they were pricing an offering at $0.55 / Share for $15M.  Do you have a write up / analysis on them?
    Thanks


  21. dclark—it might be the only thing they could do to catch a bid…
     
    I remember when they would go up every day and Iflan could do no wrong with his bull calls…
     
    Now the mkt goes up daily and AAPL is up maybe once a week???


  22. Good morning!  

    Dollar 82.02 says it all this morning – we'd be down a bit if not for that.  

    The cat's out of the bag on WFR so we're probably done buying those guys cheaply now:  

    MEMC Electronic Materials (WFR+6.5% premarket after Goldman Sachs upgrades shares to Buy from Hold with a $6.50 price target (from $4), favoring WFR's "unique sum-of-the-parts story" which implies a near-free call option on solar given a steady-growth, cash-flow positive semiconductor segment the firm estimates to be worth $5/share on its own.

    And, of course, AAPL is selling off because it's AAPL and they have adjusted their net shipment projections down in total (but way up for IPad Mini).  This hopefully, will be the "buy on the news" event after months of selling on the rumor:

    Apple (AAPL) has adjusted expected iPad (down) and iPad Mini (up) shipments in 2013 to 33M and 55M respectively, reports Digitimes. Originally the company had predicted 60M for the iPad and 40M for the Mini. It may be bad news for panel suppliers to the iPad, but good news to those for the iPad Mini. 

    88M down from $100M is 12% but, of course, the Mini is cheaper so call it 24% in revenues but IPad is only 11.9% of total company value (combo of revs and profit and projections) so IT DOES NOT MATTER.  For reference, Macs are 11% and IPhones are 50.3% and ITunes is 4% and the IPod is now considered irrelevant at 0.8% with Apple TV bringing up the rear at 0.3% – so no success there is anticipated at all, nor is there an IWatch category or IGlasses – if AAPL decides that GOOG shouldn't have an exclusive on the category.  

    Oil is up to $91.25 on Dollar weakness but gold already failed to hold $1,580, despite the Euro jumping to $1.31 (just under it now).  Silver failed $29 but copper jumped over $3.50 again ($3.52) and Nat gas just failed $3.50 and gasoline is laying at $3.10 and always makes a nice long off a line like that into the weekend (/RB). 

    At the open: Dow +0.1% to 14311. S&P +0.15% to 1544. Nasdaq +0.07% to 3225.

    Treasurys: 30-year -0.32%. 10-yr -0.18%. 5-yr -0.09%.

    Commodities: Crude +0.65% to $91.02. Gold +0.36% to $1580.5.

    Currencies: Euro +0.86% vs. dollar. Yen +0.44%. Pound -0.24%.

    10:00 AM On the hour: Dow +0.33%. 10-yr -0.17%. Euro +1.03% vs. dollar. Crude +0.98% to $91.32. Gold +0.08% to $1576.2. 

    Q4 Productivity and Costs: -1.9% vs. -1.6 expected, -2.0% prior. Unit labor costs +4.6% vs. +4.4% expected, +4.5% prior. - That's what we want, wage inflation puts money in consumers pockets and lagging productivity means they have sqeezed existing workers to the max and now it's time to hire.  

    Initial Jobless Claims: -7K to 340K vs. 355K consensus, 347K prior (revised). Continuing claims +3K to 3.09M.

    The Bloomberg Consumer Comfort Index is barely budged at -32.4 this week, remaining right around a 5-year high. The index has held onto a -30 handle for 24 consecutive weeks, the longest string since before the financial crisis. Those with incomes less than $15K sport the biggest gains – at -41.6, the subindex is up 31 points this year. 

    ECB President Mario Draghi's press conference is set to begin. The bank earlier left policy unchanged. Watch live here. The debt crisis solved, or at least put on ice, these events don't pack quite the punch they used to. European stocks and the euro are moderately higher at the moment. 

    Draghi: Risks remain to the downside, he says, announcing cuts to the ECB's EU GDP growth (or contraction) forecasts for 2013 and 2014. The euro (FXE) shoots higher, now +0.7% at $1.3058. Go figure.

    German factory orders unexpectedly fall 1.9% in January. Economists had forecast a gain of 0.6%. Factory orders for the EU as a whole slumped 4.1%. "The drop in orders … signals that the manufacturing industry hasn't overcome its weak phase yet." The plunging yen and soaring euro (at least from Nov-Jan) certainly didn't help.

     

    Lookin' good for rent-free living:  Certain non-judicial foreclosure states have begun to take on "judicial-like" characteristics, says LPS (presentation), noting a recent more-than-doubling in the "time to clear" in Nevada and Massachusetts. On watch is California, which recently passed legislation modeled after Nevada's. Might it become like judicial NY and NJ where backlogs could take decades to clear if nothing changes? (PR)

    Florida property rebound: Mattamy Homes commences with a project to build a 1.1K-home master-planned community outside of Orlando. The company will spend $15M on 250 acres in Kissimmee and expects city approvals in Q2. Sales are expected to begin in 2014 Q2.

    One factor behind the soaring prices of the private mortgage insurers (MTGRDNGNW) is the pullback of their main competitor, the government. The FHA – under pressure to cut its $16.3B budget shortfall – has raised premiums, with the result being the private group increased market share to 35% in 2012 in Q4 from 26% in Q1.

    Exxon's (XOM) Rex Tillerson predicts global energy demand will grow 35% by 2040, a view broadly shared by BP's Bob Dudley. But producing oil from unconventional sources can cost as much as $50-$75 a barrel, and even higher deep offshore. That's the challenge ahead; even Tillerson says he never expected to spend an expected $38B/year through 2017 to get just a 2%-3% uptick in annual production.

    Chesapeake Energy (CHK), seeking to sell as much as $7B in assets this year to plug a cash shortfall, plans to divest most of its stake in Clean Energy Fuels (CLNE). CHK's interest in the builder of filling stations that dispense gas-derived transport fuels will drop to 1.1% after the stock sale from the current level of 7.7%. CLNE -4.1% premarket.

    SandRidge Energy (SD) is downgraded to Sell at BMO with 12-month price target of $4. Yesterday, Goldman maintained its Sell rating even as former Goldmanite Lee Cooperman added to his stake, with analyst Brian Singer saying he doesn't see a path to free cash flow. Shares -2.6% premarket.

    Canaccord cuts its price target for SandRidge Energy (SD -2%) to a measly $1, citing SD's 2013 capital plan and associated capital productivity which embeds $500M-$600M in JV carries vs. prior expectations of $300M-$400M. Meanwhile, responding to a letter from TPG-Axon, CEO Tom Ward tells employees SD's outlook has never been better. (earlier)

    Baker Hughes (BHI) says its worldwide rig count in February of 3,679 slipped 5.7% from 3,900 a year ago but rose 4% from January's 3,539. Rig count in the U.S. was 1,762, up from 1,757 in January but down from 1,990 a year ago. The average rig count in Canada was 642, up from 503 M/M and down from 706 Y/Y. 

    Even as his hand has gone ice-cold picking stocks, John Paulson's stake in gold (GLD) has served as a positive counterweight for his funds. That's no more as gold's slide (along with the miners - GDX) spurred an 18% decline in his Gold Fund in February, and is now down 26% YTD, reports Bloomberg. "We believe in the long-term outlook for these positions as QE programs continue around the world," he writes to clients.

    More on James River's (JRCCQ4 results: Revenues fell 35.1% Y/Y to $232M vs. analyst consensus $244.8M. Suspends production at five underground mines and reduces output at three surface mines in Central Appalachia, cutting 400 jobs and production capacity by 3M tons. Does not issue production or cost guidance. Shares -11.7% premarket.

    The broad shipping sector could see another round of volatility after DryShips (DRYS) misses on both its top and bottom lines with its Q4 report and issues a troubling outlook for the market. "We continue to be bearish about the short-term performance of the shipping markets." DRYS-5.5% premarekt. On watch: PRGNESEAFREEEGLESBLKNM,CPLP], DSXGNKEXM

    Kroger (KR +3.2%) trades higher after its Q4 report delivers some surprise to the upside. Revenue at comparable stores rose a respectable 3% and operating expenses dropped 70 bps compared to last year. The company says it expects FY13 EPS of $2.71 to $2.79.

    More on Costco's (COST) sales report: Comparable-store sales rose 6% Y/Y in February after adjusting for gas inflation and foreign exchange with international growth outpacing U.S. Sales for FQ2 totaled $24.34B (+5%) while H1 sales came in at $47.55B (+6%). (PR)

    M&A fever continues:  Sycamore Partners plans to acquire Hot Topic (HOTT) for $14 a share. The $600M deal will be voted on at a special shareholder meeting.  Retail radar: The sweet 30% premium offered up by Sycamore Partners for Hot Topic could set up a number of peers to trade at a higher earnings multiple with a buyout boost in play. On watch: PSUNBKE,RUEWTSLBEBEBODY.   

    Retail riddle: Ross Stores (ROST) joins Wal-Mart (WMT) and Target (TGT) in directly tying a February sales shortfall to the late distribution of income tax refunds by the government. The oddity is that none of the retailers seem to be backloading the lost February sales into guidance for March through May. What gives?

    Green Mountain Coffee Roasters (GMCRreaches a deal with Unilever to offer Lipton hot and ice teas through its Keurig brewing system. GMCR +2.1% premarket. (Previous: Showtime for GMCR)

    A couple of Wellesley professors say their research shows the closing of major online piracy websites added 6% to 10% to online revenue for movie studios – a mark that is higher than what analysts factored in for the effect. Though it's major studios such as Sony (SNE), Disney (DIS), Viacom (VIAB), and Lions Gate (LGF) which have done most of the heavy lifting in the anti-piracy fight – the trend toward legitimate movie viewing isn't half-bad for Coinstar (CSTR) or Netflix (NFLX) either.

    Was SA contributor Mark Gomes right after all? On Monday,Gomes speculated Himax (HIMX) shares could triple assuming it is chosen as Google Glass's (GOOG) primary provider of microdisplays. Shares soared and then retreated after after Karl Guttag, upon whose research Gomes's claims were partially based, disputed Gomes's conclusions in a comment. Now this morning, HIMX shares are +28%premarket on reports Himax "will be the sole supplier of LCoS solutions for Google Glass."

    Intel (INTC) has held talks with Apple (AAPL) about manufacturing its (ARM-based) A-series mobile processors, a "source close to one of the companies" tells Reuters. The rumor comes shortly after Intel landedAltera as a client, and a report it had landed Cisco. Intel's manufacturing process edge – while TSMC/Samsung are at 28nm, Intel is at 22nm – could appeal to Apple. Reports have been around for a while that Apple isthinking of using its A-series chips in Macs, instead of Intel CPUs.

    Three breakfast reads

    1) 


  23. jabob
    It's very frustrating. I too remember iflan. Is he still here? He was fun to watch, but like any casino, if you stay around long enough the house will eventually win.
    I'd be doing great if not for AAPL. FU AAPL! :)


  24. We found some buyers at $419 on AAPL on Monday – hopefully that happens again.


  25. Phil – do you see a trade on TLT with the pullback and auctions next week? Thanks


  26. Phil on your UNH put play, I looked at the following play
    Jan15 vertical buy  4x 45/55c @ 5.63
    sell Jan15 45p @ 4.04 5x
    and having no cash out lay sell Apr 55c x2 @ 1.00
    PM margin743.00
    Profit potential on the Jan15 play 3720.00 aprox


  27. PS 5x Jan15p alone cost PM margin 1625.00 !!!!


  28. dclark/AAPL – Way back in Oct, Lflan said get out of AAPL and not to expect to get back in til after April – he tried one bull call play in the meantime and it didn't work, but he's probably the only trader who's made the right call on AAPL (aside from Phil who plays them under all circumstances), assuming the AAPL trend changes after April earnings, not at all guaranteed…


  29. Phil
    WFR – with the GS buy upgrade and PT of $6.5 the Jan14  $4/ $5 bull CS can be had for $.66 and selling the Jan14 $4.50 p for $.75 gives a net +$.09.
    worst is owning WFR for $3.75 in Jan14 — a 30% discount
    Sounds like a low risk play for 109% if WFR just holds $5. by Jan14
    what do you think?


  30. INO – briefly, they are a vaccine maker for different disease bases, but I am betting on the management and science to make this company work.  First, they are based right next to Merck, West Point, PA.  Second, their leadership is Merck….and for those that are in the Pharmaceutical industry, MRK vaccines division was/is one of the best in the business.  Well, many have moved over to this company and redeveloped its branding.  It is cheap and a Long Term play.  If it gets to ~1, then we can sell 1/2 and let the rest ride.  

    I was aware of the offering, and the stock price is currently under the offering.  I want in at better, as our previous entry was 67c or so.


  31. APA/Terra – They have really levered up to build capacity and they still haven't let people know what $2Bn in assets they plan to sell to cover their cash flow this year (see annual report).  So it's not a good idea to look backwards as you need to bet on this management team going forward to make wise use of the cash and, essentially, not to screw up.  I think they are a bit ahead of the curve as I don't see oil prices rising that quickly and, as Tillerson said above, it's simply costing a lot more to extract the same amount of oil and I don't like massive borrowing into a margin sqeeze in energy – no matter who's in charge.  So, the gist of it is that it's not a place I'd invest – but that's true of so much of the energy sector.  

    EGO/Terra – ABX, HMY, NAK.  Surely I've mentioned this before, right?  While I'd love to go into a blow by blow dissertation of why those 3 are superior every single time someone mentions another miner – on a Thursday morning you just need to trust me and those who did last week and anyone who owns them today is in a very good mood – especially compared to EGO, up just 0.4% and struggling already. 

    Chart/Newt – Really, you are going to look at a CHART to determine which is better?  Oh dear….

    Icahn/StJ – Sure, that's what drives him.  He's 77 so what other fun is he going to have and I think his fight with Ackman really energized him as I think he'd forgotten how much fun it was to beat up on people.  

    INO/Pharm – Nice call!  Good note to all – Pharm follows a stock and KNOWS it's value so, when they announce a "dilutive" offering and the stock drops 30% – he KNOWS it's oversold and is ready to act.  That's great fundamental trading. 

    FAS Money/StJ – Does seem like it's never going to stop, doesn't it?  Of course, think of it this way – if we were to buy 20 more 2015 $16s and roll the FAS $155s into 60 short XLF June $18 calls (.68) then we'd have 60 longs, the 20 short 2015 $19s and 60 short XLF June $18s that are $2 above our XLF calls with 18 months left to roll, would you still be worried?  The difference between FAS and XLF is we can sell 10x more premium with the same amount of short calls but, in the long-run, gains are gains and we can always manage our rolls.  

    Other Portfolios are no touch for now.  

    LOL 1020.  

    Thanks Jabob. 

    BA – Wow!  

    MTN Wow! too. 

    TLT/Crussell – I always like them at $116 so let's go for 5 April $114 calls at $3 in both $25KPs and, if they go lower, then we can sell puts to offset but hopefully we catch a ride back to $118 before having to roll and pock up $1.20 (based on .60 delta).  


  32. UNH/Yodi – I like that idea for an income trade.  

    By the way, we were supposed to sell 10 of those UNH 2015 $45 puts for $4.20 for the Income Portfolio, in case that wasn't clear in the above post!  


  33. Chart / Phil: No. Just trying to get off the tit.


  34. AAPL/Jerconn – Yes, I agreed with Lflan and told people who didn't like volatility to get the f*ck out on the Jan spike but I didn't want to risk missing a rally (so far, no danger of that!) and I was pretty confident in $400 holding and us scaling into a big long by this point – just ahead of April earnings.  All is going according to plan except for the stress it seems to cause people who watch the daily moves off 2-year plays too closely.  Mainly, it was NFLX's 70% gap up on earnings that turned me off to covering AAPL as it would really suck to miss a move like that just because you had no real faith in your stock.  

    WFR/Ban – A very good way to "chase" it.  

    Dollar back to 81.20 taking the steam out of the markets this morning.  


  35. LOL Newt!  


  36. aapl / Phil:  You know, just because it's a $400 dolar stock, it doesn't mean I can't track it on my 3 minute chart!
    Go aapl, almost GREEN!


  37. Today's a distribution day, so we should see if tomorrow's NFP data are good, we should blow to the upside and then…???  Problem is, more jobs = less money.  And layoffs are picking up….Not sure what is better….


  38. OPXA…remember them?   We invested in the stock, saw a spike, got out.  Well, they showed up in a blog I read, and I took a look at it….Spike on Feb 5 to ~5…now 1.72.  Biotech investing 101, don't buy the spike.  Buy the dip.  Not buying OPXA, but I am again on the hunt for players whose stocks due such a thing.  (cough cough, SGEN).  Steady, steady….hold it… hold it….

    CLDX…lets sell some Apr $9 Ps….1/2 position.


  39. Phil – I'm in your RRD play.  Bought the stock and sold the Jan 10 puts.  S & P thinks the dividend is well covered.  Looking to sell some OTM calls now that the price is up some.  Selling Jan 10 puts still looks attractive to me.


  40. Phil/jerconn…..Still here and still own no AAPL.      


  41. No wonder they can't get anything done in Congress:

    http://maddowblog.msnbc.com/_news/2013/03/07/17224185-charm-offensive-wins-positive-preliminary-reviews

    Follow up to that dinner last night between Obama and some GOP senators

    [O]ne senator told us that he learned, for the first time, the actual cuts that the president has put on the table. Leadership hadn't shared that list with them before.

    So basically, the GOP leadership meets with Obama and when they come back from the meeting, they report nothing (or worse lies) to the rest of the body. Besides enraging the base and hurting the economy, I am not sure what they are trying to achieve. And that same senator can't make the effort himself to see what's on the table like for example by reading newspaper outside of his little Fox News bubble? Just unreal!


  42. Did anyone do the PGH trade from a few days back?


  43. FU IFLAN!!!!


  44. ;-)


  45. Lflan – what's your AAPL prognosis?  Still looking for an April turnaround?


  46. Pharm,
    is there a particular reason to be concerned if IBIO were to be delisted from the exchange.  Thanks for your insight.


  47. Distribution/Pharm – if this is distribution I can't wait to see the rally!  

    RRD/Albo – Yep, lovely company.  Will probably stop being cheap soon – certainly by earnings.  

    No AAPL/Lflan – Glad to see there's still sideline money waiting to come in. 

    10:30 AM EIA Natural Gas Inventory:  -146bcf. Futures +1.97% to $3.53.

    Jobless Claims in U.S. Unexpectedly Fall to a Six-Week Low (Bloomberg)

    New robots in the workplace: Job creators or job terminators? (The Washington Post)

    11:05 AM Shares of Gap (GPS +4.1%) have been halted with news pending.

    Gap (GPS +4.1%) says total sales during February rose 11% to $966M. The retailer's global comparable-store sales were up 3% Y/Y in February with a 6% gain at Old Navy helping to offset a sluggish month for Banana Republic. Following a familiar retail theme, Gap says sales came in stronger at the end of the month as winter storms abated. (sales call transcript)

    More on Gap (GPS): A vendor for the company released atranscript covering its pre-recorded sales call early leading to a quick 4% runup in shares before trading was halted. The company just released itsfull sales report. Shares have now resumed trading up 3.1%.

    The NAAIM Survey of Manager Sentiment rises to 90.15 for the week ended yesterday. A level over 80 is generally considered overly bullish – 88.1 at the end of the year was called "shockingly bullish" by one sentiment watcher. It subsequently rose to 104.25 by the end of January before February's choppiness brought the number down.

    Is that a buy from the Coppock indicator? (FT Alphaville)

    Citizens in Europe are rejecting austerity policies as deeply misguided (theguardian)

    We’ve reduced the deficit and hurt the short-term economy (Wonkblog)

    The big U.S. banks are considering defying the Fed and announcing capital return plans shortly after stress tests are released this afternoon, reports Bloomberg. The Fed wants the lenders to wait another week, but bank lawyers worry the plans will leak out. It's under discussion, JPM CFO Lake told an investor conference (transcript) Tuesday. XLF+0.6%.

    With Legal Reserves Low, Bank of America Faces a Big Lawsuit (DealBook)

    Fallout from ‘Untouchables’ Documentary: Another Wall Street Whistleblower Gets Reamed (Taibblog)

    Sumitomo raises its forecast for a global aluminum surplus to the highest level in two years, saying demand from China won’t be enough to absorb new capacity. Supply is projected to outpace demand by 866K metric tons this year from 760K tons in 2012; China alone will have a surplus of ~510K tons after years of smelting capacity expansion.

    Freeport McMoRan (FCX +0.5%) says it is more than willing to supply any new copper smelters in Indonesia with raw copper concentrates but remains reluctant to build smelting operations itself. The Indonesian government is renegotiating royalty contracts with foreign investors including FCX as it tries to push firms to add more value within the country. 

    Boeing (BA +3.4%) rallies ahead of the release of NTSB's report, earlier hitting its highest level since June 2008, and accounting for roughly one-third of the DJIA's current gain today. Separately, the companyissued an update on its Orders & Deliveries page today with 27 new orders: ALC 10 777s, GECAS four 737s, Qantas five 737s, and United Airlines eight 737s. In the Changes category, 737 net orders were reduced by two.

    China-based fund manager Scilla Huang-Sun thinks luxury brands in China can hold their own as the number of millionaires in the region continues to rise despite whether or not the nation's overall growth rate is in the single digits. Though the ride is sure to be bumpy, high-end sellers with a strong brand should prosper. Her favorite sector pick is Prada. Others to watch in China: Swatch (SWGAY.PK), Estee Lauder (EL+0.1%), Richemont (CFRUY.PK), Michaek Kors (KORS -2.3%), Coach (COH -0.8%), Ralph Lauren (RL +0.6%), Burberry (BURBY.PK).

    Carl Icahn promises "years of litigation" for Dell (DELL -0.1%) if it doesn't combine a vote on its LBO with one for an annual meeting in which Icahn will propose a friendly slate of directors, in a letter to the board. Icahn also suggests Dell would only have to raise $4.26/share ($5.25B) in new debt to finance his $9/share dividend. Larry Dignan argues "rivals will have a field day" with a debt-laden Dell should Icahn's proposal win out. But this assumes the proposal isn't just a negotiating tactic. Jefferies: "We think that Icahn would likely be satisfied with a raised bid to $15." (more)

    Office 365 subscribers may gain access to apps not available to conventional Office buyers, hints division chief Kurt DelBene. The comments are the latest sign of Microsoft's (MSFTambitious push to get Office customers to migrate to subscriptions with the release of Office 2013. DelBene also promises more touch-friendly features and UI options for Office apps. Meanwhile, Digitimes reports OEMs are preparing to slashtouchscreen notebook prices by 10% or more in response to Microsoft'sWindows 8 discount - good news for INTC, but maybe not for HPQ. (also)

    It's rally time for telecom equipment and optical component makers, as the Street sees positive implications in Ciena's FQ1 beat and respectable FQ2 guidance for service provider capex. JDSU +6.2%JNPR+4%FNSR +4.5%INFN +5.1%ADTN +2.5%RVBD +1.7%FFIV+2.3%CALX +2.1%.

    OCLR +5.7%OPLK +2.7%EXFO +4.5%. - Don't forget our old friends ALU and CSCO

    Nokia's (NOK +1.7%20-F is out, and investors are reacting positively. A possible reason: the company reiterated its growth and margin guidance for Devices & Services. Nokia also says its balance of payments with Microsoft (previous) will be favorable to the company this year, though it expects the balance to be favorable to Microsoft by ~$650M over the remainder of their deal. Stephen Elop earned €4.3M in 2012, down from €7.9M in 2011.

    Shhhhh – don't confuse us with facts:  ComScore:  iPhone Taking Share From Android in U.S. Smartphone Market (comScore)

    How to predict the progress of technology (MIT news)


  48. UNH: No success yet selling the Jan15 45 puts for what was discussed. The mid is at $4.00. Patience… and maybe it just won't be today!


  49. jerconn/AAPL.  Yes, it will turn around sometime.  I don't know when.    If you MADE me trade it today (you can't) I might sell some under-400 far out puts.  


  50. JCI/phil – looking into selling auto electronics biz. something to keep on radar in case something is put forward. i don't think we've analyzed/played a spin-off here before?


  51. LFlan – Glad you are back. Where were you for so long ? We miss your insights on the 25K MoMo portfolio. 


  52. JCI/Scott – Didn't play it because it's too much of a pain in the ass.  I even got out of MCD when they spun out CMG – I just hate doing the math – though that one I think I should have stuck with….

    Kind of interesting how much people are taking this rally for granted.  Up and up and up and all the MSM can do is talk about the pending disaster du jour.  

    Meanwhile, XOM down while the market is up – BRILLIANT! 


  53. IBIO – none that I know.  Pink sheets are less restrictive and cheaper to report…so could be a good thing.  On the other hand, not a company I am real excited about.


  54. Phil / Thanks. 
    By the way, we were supposed to sell 10 of those UNH 2015 $45 puts for $4.20 for the Income Portfolio, in case that wasn't clear in the above post!

    I believe this was to cover the cost of the DIA puts
    NAV —- woah !!!!!!
    jr_mints / Thanks man ! I'm printing TShirts ( delta, gamma, theta, rho )
    Burr// Yes, I got the PGH fill – already up 3% – whats up ? Look at the trade grid for the UNH, you're right in there, I think it's just patience.


  55. Phil,
    re the TLT trade above (114 Apr calls @ $3), any reason not to do a bcs, say 114/118? From a novice's perspective, that would give one the option to ditch the long call should TLT break below 115.50 and recoup losses by squeezing the sht caller. Right/wrong?
    Thanks


  56. Seems like sellers keep coming out at 430… Need them to be taken out!
     
    Come on AAPL!!!
     
    Do we need him???
    http://www.youtube.com/watch?v=EmfE4KAZicY


  57. I've been around, just kicking myself for not making more $$ in this run up, so I'm psyching myself out.  I need to chill this weekend and get back in strong.  


  58. Phil / AAPL
    I made the jump and rolled the One Trade. I think I'll sleep better and we'll make it up in spades.
    Q on hedges / since the transitioning of the portfolios ( i came in at the worst time ; > ) we had some previous hedges on
    SDS, SQQQ, TZA and now the DIA puts.
    I see on the new Income port it is just the DIA. 
    I would like to keep the SQQQ ( because I'm AAPL heavy ) but your thoughts on the old TZA Jul13 10/14 spread ?


  59. Burr….QQQ March 70 Cs are 7c.  Could make a bundle in any push up.  Risky, yes.  But all on black, Vegas style.


  60. Burr // ditto. Staring at the ground waiting for my trees to grow. ahhahaahaa.


  61. Saw this on the trails right behind the Capital this early a.m..  Rand Paul is the one in the bushes….Marco Rubio is wrapped in the flag.


  62. Pharm // QQQ
    .06 / I'm in.


  63. Mattress play – Should we be partially covering today?


  64. My premise is that QQQ has to catch up to the rest of the indices which are about 10% over the dotted green lines….thus, the 7c should double on a spike, then sell 1/2 and let the rest go.  If AAPL goes to 450is, that should just about give us the double.  As the market bounces around, it will hold.  Don't wait for me to get out though.


  65. Burr- this market is only 'easy' to make money in if you are a bot.


  66. Pharm,
    Thanks!


  67. Scott/ robots. Most of the stocks I've watched this past few days move neatly between the fibonacci levels. Pretty amazing! All those people coordinating their selling and buying actions (add your sacarsm here).


  68. UNH/Wombat – Yes, we like it and we can use that $4,200 to roll out the DIA puts when the time comes.  

    TLT/8800 – Ah, you are jumping the gun.  Note we bought 5 when we usually buy 10 so my plan is already to roll out and DD but only if the price gets lower.  $116 has been our entry but we did get a dip to $115 in Jan so we're happy to press our bets there but, meanwhile, if we cap right off the bat then we limit our ability to take profits if we do get a quick pop – especially as we won't want to leave ourselves naked short on TLT – too dangerous.  

    Kicking/Burr – If this rally is real, you're not missing much.  

    Hedges/Wombat – I always like TZA and the solution to keeping it is simply to roll the $10s before they get cheaper than the spread was.  So, if you bought the $10/14 spread for $1, the $10s are now $1.10 so that means, if you roll them, you haven't actually lost anything, have you?  It costs .35 to roll the July $10s to the Oct $10s and that means you are spending .10 per month to have the same protection as you wanted before.  Of course there's no hurry and maybe you will want to end up spending .35 more to roll to the Oct $9s and then you are buying 3 months + $1 in strike for .70 – still a great deal, right.  And, of course, once the short July $14s wear out, you even get some of the money back selling the Oct whatevers.  Always keep in mind, these are just insurance payments you EXPECT TO LOSE but, as long as you have good long positions that you know ill generate at least that much money if the RUT stays flat or goes up – then there's nothing to worry about.  

    Premise/Pharm – If AAPL ever pops it will be easy. 


  69. Burr/Womb,
    I must have missed the PGH (an old favorite) trade. Could you tell me what it was?


  70. Scottmi  -  I guess man.  I remember watching this video / reading this article right before the holiday's with "big plans".  
    So far, I didn't follow through, and if I just would have listened it would be a much different year.
    http://www.t3live.com/articles/market-analysis/3733-scott-redlers-predictions-for-2013-.html


  71. From Pretzel…this is what I am following as well, hence the low price, OTM options for minimal loss, and explosive upside action.


  72. PAA/Phil – big run up, don't want to chase, but do you like fundamentals for PAA?


  73. Pharm / AFFY - not sure why I have a watch on this one, but if it's because of you please note the action today.


  74. There are 2 ways to look at this chart:

    1. We are reaching the point where average bull market top.

    2. We are only about 20% away from the best bull market ever.


  75. kevin // PGH

    I have PGH +2500 @4.70
    -25 OCT13 4 Calls @.75
    -25 OCT13 5 Puts @ .80
    it's already up 5% so you may have to adjust, or wait it out


  76. Stjeanluc – thanks for another interesting chart.. How did you get:
    " 2. We are only about 20% away from the best bull market ever."
    Thanks


  77. PAA/Scott – I like pipeline companies, they are very boring toll collectors.  As with the whole sector though, PAA sure isn't cheap now and, in fact, they will make less money this year and next than they did last year but they are priced 20% higher than last year and 100% higher than 2011, when they were growing into this "value".  So, it's simply not something I'd be interested in as it's a fad investment at the moment – mostly fueled by this recent dividend frenzy.  

    I must do a terrible job of teaching people how to sell options if they would pass up a simple ETF like OIH, which diversifies your risk and allows you, at $42.46, to sell the 2015 $39 puts and calls for $13 for a net $29.46/34.23 entry, which makes 32% if called away at 10% lower than the stock is now with a break-even 20% lower, in favor of a bloated dividend stock that pays just 5%.  Well, at least I know well enough to put 10 of the OIH spreads into the Income Portfolio so we can look forward to a very dull $9,540 profit – not to mention short calls we end up selling if the mood ever takes us.  

    Bull markets/StJ – In how many of those bull markets was the Fed pouring in $85Bn a month?  In how many of those bull markets were Corporations sitting on $2Tn in cash (from Fed pouring to date)?  As I said the other day – you ain't seen nothin' yet.  

    CVX making new highs while XOM goes the other way.  


  78. Phil / TZA
    Thanks ! That was a great explanation. Apparently, the way you play it you don't even have to lose money on the hedging. I'm ripping this for the book, it's a great example.
    It  helps me sleep, so I'm keeping both the DIA and TZA


  79. Outlier…..Where have I been?   Well, let's just say that I've been dealing with  some important  things that have little or nothing to do with trading, so my attention to the latter has waned of late.   But I'm ready to get re-focused and make some money.   Nice to hear from you.  Whenever I read your username I think of that wonderful book by Malcolm Gladwell.  


  80. Lflan ,
    It's that very book which prompted me to chose this username (and start counting those 10,000 hours of learning  with respect to options trading with you guys).  


  81. Phil / OIH
    Whats the thought behind the bull here – I'm looking at a 3yr and there's this very bizarre volume drop abruptly in 2012, like it got its knees taken out. Is this the LNG / fracking kicking in ?
    Amateur Q – when you use the phrasing 

    2015 $39 puts and calls for $13 for a net $29.46/34.23 entry 

    you're referring to a straight straddle, without buying any stock right ? that's where you get the $13 net cost for the position
    but what is the $29.46/34.23 entry ?
    TOS is showing a breakeven at $26.00/52.00


  82. 20% / Crussell – I meant we are only 20% in the best market. That is if we get to 500%!


  83. Bull Market / Phil – I'll settle for second best right now at 267%…. Obviously it would be nice to have AAPL along the way!


  84. stj/ I take the biggest bul market ended ended with the carsh of 2000?


  85. Womb
    PGH You really make me laugh some times you traded that stock 3 days ago and if it goes up a bit you thinking of rolling already. Did you look as well at the Oct put it is actually down the same as the caller is up. Looks like you jumping in a box.
    I have been trading that stock since 10/27/09. It actually dropped 4$ on me since but made up on the option selling so should I get excited on a three day move?


  86. UNH play
    Comments
    Phil submitted a put play just to creat cash to cover I think the DIA play. The 4.20 was established this morning but regret on an up day it is more difficult to fill a put. Further more the naked put cost much more in margin than the long term play with short term callers!!!
    Again I filled my long term play at 10.30AM this morning and only received for the putter 4.00 still 4$ now. but overall I am up 2$ should I start to roll ???? (8


  87. Phil et al / TZA – If you are using any of these for hedging, remember that they all split on April 1 and I've found that rolling ETF options post-split is a bit of a hassle, so you may want to close your protection on the morning of the 1st and reset the hedges the next day:
    TYD / YANG / EDZ / EDC / ERY / FAZ / FAS / SPXL / LBJ / MIDZ / DRN / RETL / TZA / TNA / TECS / NUGT


  88. Wombat,
     
    $29.46/ 34.23 is:
     
    Buying the stock for $42.46 – $13 premium= $29.46. If  OIH is put to u at $39, the average of $29.46 + $39 Putter is $34.23. 


  89. Yodi / PGH
    What r u talking about ? I'm not rolling anything – I was just helping Kevin and Burr out with the position – I just filled it a few days ago.
    ???


  90. AFFY – well, someone decided that the risks now make it time to dive back in……injectables/infusion drugs are not without risks of anaphylaxis, but taking a small stake for a gap fill or best 6 aint that bad of a risk reward.  My play would be the Jan14 $5/10 BCS, selling the 3 Ps for a net 40c credit.  I do not think it is withdrawn, but could put a damper on it for a while.


  91. Womb OK Ok I take the rolling back!


  92. mrmocha // thanks
    Turning1 // thank you sir. i'm chewing on it ; >


  93. Burr ECA is on the move again sold the Apr13 20 c for .30 Overall 675.00 up today in my play!


  94. Wombat , I get that chewing feeling here all the time ; )


  95. Thanks Phil—/RB that was a nice little run into the NYMEX close


  96. SCO?


  97. You're welcome Wombat.  Keep in mind you do "lose" eventually but, if your core strategy sells premium below the range you're covering then, over that eventually you should do very well on the long side to more than make up for the insurance costs.  

    OIH/Wombat – It's cyclical as companies over and under-invest in oil services.  OIH is SLB, HAL, NOV, RIG, BHI, CAM, WFT, FTI, SDRL, NE – a lot of companies we like but don't often play, except RIG, which is always fun when they are cheap.  As a group, their fortunes generally come and go with oil and last time we bought them was down at $35 but, with the 200 dma rising at $40, I'm satisfied with this entry and their volatility makes them good to sell short calls against (when they are up in their channel, which is currently $37.50 to $45).  And no to the last part – that's a standard buy/write, where we buy the stock and sell the straddle.  

    And what Turning said. 

    Crash of 2000/Arivera – And this one will too, most likely but if you told me in 1996, with the S&P at 700, up from 500 the year before and up from 400 the year before that and 350 the year before that – that the rally would crash at 1,400 all the way back to 750 – would I sit out the 700-point gain for the next 3 years because I fear the crash that I know for a fact is coming or, as I said yesterday – should we get our heads on straight and learn to make hay while the sun shines?  

    TZA Et al/Mr M – Very good point, they ALL should be closed prior to the split date (April 1st).  Better to get out to cash and get back in to new shares than let Direxion adjust you!  

    /RB/Savi – Super nice at $3.12 – all we ever want on those gas futures – congrats.  

    Oil, meanwhile, rejected at $91.50 and a tough short into the weekend and not worth it as they are so low already but, based on yesterday's inventory, I'll be surprised to see them higher.  Next week it gets more fun with less than 10 days to roll out of current contracts – the pressure builds daily so expect a frenzy to push oil as high as they can Wednesday (maybe $93) and THEN we want to strike on the short side.   

    SCO/ZZ – See above.  


  98. Crash/ Phil"  I'm with you.  Just thought it interesting that the boom/bust cycle is truly our mode of operation these past decades.
    http://blogs.marketwatch.com/thetell/2013/03/07/sp-500-chart-appears-to-repeat-history/


  99. Ifantheman,
    I've got the MoMo Virtual Portfolio trade of EBAY Mar 16 $55 calls @ $2.25 and at $2.80. What would you advise now on this trade? Thanks.


  100. thanks Phil ///


  101. ONXX strong.


  102. ZLCS up 9%….Whoa Nelly!


  103. mrm….Eye of the Tiger…AFFY is going parabolic.  I just hope it is not a trajectory that does not quite make orbit and….


  104. ZLCS:  Thanks a milliion, Pharm!!  I rode that puppy up to the high today after thowing down yesterday, now out with a sweet gain, bought some PLX, which was looking lonely!!


  105. hextra/EBAY…..Those aren't worth much at the moment.  Not worth cashing in unless you hold a lot of them.  I'd just put an order on to sell 1/2  at 1.00 and the rest at 2.00 and hope for a miracle within 8 days. 


  106. NYSE quietly holding 9,000.  

    1:10 PM Midday top 10 gainers: IMMR +39%AFFY +36%HOTT+29%CTC +26%NAV +26%GMXR +20%

    REE +18%HIMX+18%CIEN +17%MITK +17%.

    Midday top 10 losers: SCTY -14%AV -12%BAA -12%HTHT-12%YY -11%BORN -10%MCOX -9%

    MTG -9%BLDP -9%.JRCC -9%.

    January Consumer Credit rises $16.2B vs. an expected $14.5B and $14.59B previously.  More on Consumer Credit: Again revolving debt (credit cards) is flat to down, January's total coming in at $850.9B vs. $850.8B in December. Nonrevolving debt – student loans, auto loans – rose to $1.944T from $1.928T. The annualized increase in total consumer credit was 7%. 

    They're back. Jim Glassman and Kevin Hassett – who brilliantly penned Dow 36,000 at the peak of late 90s bubble – say that goal is again within reach. All we need is for the Dow to rise another 117% in the next 4 years like it has in the last 4 years, and then tack on another 5K points. There. Simple. Sheesh.

    This is housing nirvana, I'm the most bullish I've ever been, Ivy Zelman tells CNBC. Bearish at the top, and bullish a year ago near the bottom, Zelman says we're in the very early innings of a house price rally that could go on for another 4-6 yearsXHB -0.4%. 

    Shorts in the junk bond ETFs - HYG has 8% of float shorted, JNK 9% – have hit the highest levels in their 5-year history, suggesting institutional investors are joining retail in positioning for a selloff. Big players often have trouble unloading paper in size and turn to the ETFs as a short to hedge their positions.

    The AAII Investor Sentiment Survey shows bulls – who went scattering last week - creeping back in, their number rising 2.7 points to 31.1%. Those bearish also rose, 1.9 points to 38.5%. The bears are well above their long-term average of 30.5%, while the bulls are far below their average of 39%.

    "The current bull market might be one of the strongest of our careers, says Richard Bernstein, believing the next 4 years may rival the 4 beginning in 1982. Concerns of the current cycle are not unique, he says, saying now as then investors are concerned with the Fed, Iran, slow-growth, and the last decade's poor returns. "Many investors still do not even believe that a bull market is underway."

    "Buy Italy," says SocGen's Al Edwards as the electionsmean the country will "remove the horse-hair shirt forced on (it) by the (EU) and these dreary architects of depression can be told to take a very large running leap." Edwards says the country's deficit management has actually been solid in recent years. 'The heavy lifting has been done." EWI +1.1%.

    Already a nice addition to our Income Portfolio:  Along with a big move higher in Petrobas the past couple days have been sizable gains for Itau Unibanco (ITUB) and Vale. These stocks more or less dominate the Bovespa and the EWZ, and both are surging alongside. EWZ up another 2.2% today, -14% Y/Y.

    Two of Brazil's states plan to file lawsuits with the country's Supreme Court to fight changes to oil royalties payments that could cost the states billions of dollars in revenue. The moves follow a vote by both houses of Brazil's Congress to overturn a presidential veto of key portions of a controversial oil royalties bill.

    Petrobras (PBR +5.1%) extends yesterday's big gains as Credit Suisse upgrades shares to Outperform from Neutral with a $25 price target, believing the move to raise diesel prices may be the beginning of a change in attitude and the company may have hit an "inflection point."

    Royal Dutch Shell (RDS.A +0.5%) says it may be within two years of a major advance in shale gas production in China, bringing the country closer to being the first outside of North America to cash in on technology that has transformed U.S. energy. Unlocking the gas would cut down on China's need to import gas and would provide a windfall for Western energy giants that provide fracking technology.

    Cliffs Natural Resources (CLF +2.3%) says the challenges of developing North America’s first major chromite mine are finally on the verge of being overcome. A feasibility study which would help attract a partner to share capital costs and risk will be completed later this year, and progress is being made in First Nations talks. Still a holdup: a definitive agreement with Ontario's government.

    And just wait until they are self-driving!  Subaru (SBUOF.PKrecalls 47K vehicles due to a problem with remote starters which could lead to engines to start on their own accord. The recall covers a number of different models with the remote starter system.

    While shares of Tesla Motors (TSLA +1.4%) continue to flirt with making all-time highs, Stone Fox Capital suggests to investors some profit-taking might be in order given consensus EPS estimates are trickling lower. Though the automaker's forward progress has been impressive, its road to profitability still looks bumpy.

    888 Holdings of Gibraltar and Treasure Island are the latest gaming firms to take steps toward setting up an online poker platform in Nevada. The firms say they will join with WMS Industries (WMS+0.3%) and Caesars Entertainment (CZR +2.4%) to set up a World Series of Poker website for Caesars. In order to gain approval from the state's gaming board, the group needs to convince the regulators that it can detect out-of-state users or collusion between players.

    Mexicans must be richer than I thought at $1 per wing:  Buffalo Wild Wings (BWLD +1.2%) says its will expand into Mexico with three restaurants scheduled to open this year. The company will work with local franchise groups in the nation.

    Macy's (M +0.5%established the blueprint for how to create a retail ominchannel by investing in today's technology as far back as 2009, according to Retail Info Systems. By fulfilling online orders at stores and encouraging associates to sell both in-store items and online products, the company is on course to boost sales as witnessed by last month's stellar 48% gain in Internet sales and +3% rise in comparable-store sales. - They miss the point that the service itself is excellent at Macy's – makes people want to shop there

    Costco (COST -0.4%) deserves credit for a clever strategy which has helped it ride out some of the turbulence seen by other large-sized retailers in the sector, according to Business Insider. The Costco advantage: 1) The firm sells fewer items within each category. 2) Costco can control costs easier with customers buying in bulk. 3) A subtle mix of higher-end brand names such as Coach or Dom Perignon is a margin driver. 4) Paying an up-front membership motivates customers to return instead of seeking bargains elsewhere. 5) By skipping out on advertising, Costco can invest in other areas.

    Colgate-Palmolive (CL +0.4%) trades higher after boosting its dividend and setting a 2-for-1 stock split. The moves add to the bull case for the stock led out by its standing as a member of the S&P 500 Dividend Aristocrats and the strong market position of the company's well-known brands.

    I said "don't forget about ALU" this morning!  Alcatel-Lucent (ALU +4.9%) and Ericsson (ERIC +3.4%) have joined the rally seen in telecom equipment and optical component makers following Ciena's market-pleasing results andguidance. This morning, Ericsson, which has an early lead in 4G deployments, announced a 4G infrastructure deal with MetroPCS – merger partner T-Mobile USA (DTEGY.PK) reportedly plans to flip the switch on its LTE network later this month. 

    Hard drive kingpins Seagate (STX -2.8%) and Western Digital (WDC -3.9%) are having a rough day. Pac Crest reportedly cut estimates on the companies, along with Intel and AMD, citing weak notebook sales. Hard drive controller supplier Marvell (MRVL -1.2%) is also off.

    "Silicon Valley is a pig pile ..  Everyone is putting out the same services, the devices have become more commoditized and the platforms are the same," declares AOL CEO Tim Armstrong, pitching his company as a content "arms dealer" to the Valley. Armstrong plans to achieve this in part by aggressively investing in AOL's video network (#2 in the U.S.) – he sees HuffPost Live acting as a next-gen cable channel. Nonetheless, AOL's display ad sales for its own sites were flat Y/Y in Q4, with domestic sales falling 3%.

    Facebook (FB +3.3%) catches a bid ahead of its 1PM ET news feed announcement, which will reportedly feature the launch ofcontent-specific feeds. Gene Munster went on CNBC (video) this morning to declare Facebook a better growth play than Google. "Over the next 5-10 years, Google is a much more reliable play. If you're looking for more aggressive money, I'd own Facebook … they should trade at a higher multiple than Google." Facebook currently trades at 44x 2013E EPS after backing out net cash, whereas Google trades at 15x. 

    Mark Zuckerberg shows off a sleeker, "mobile-inspired" news feed design at Facebook's (FB +1.6%) press event. The revamp tries to make photos (50% of content), videos, and articles stand out, and also delivers recommended content based on user interests. As expected, content-specific feeds are being rolled out. Feeds for photos, events, music, updates from "friends," and posts from "followed" businesses/publications are among them – there could be some ad targeting possibilities here. Facebook has given back some of today's gains. (live blog) 

    Google (GOOG +0.5%) has passed Apple (AAPL +0.3%) as the biggest holding among the top 50 actively-managed U.S. mutual funds, according to a Citi report. Google is also now the top holding among hedge funds - a slew of major hedge funds eithe


  107. LOL – Marc Faber has resorted to pointing to the calendar (4 years since crash) as his main reason to be bearish.   Such a joke!  



  108. Google (GOOG +0.5%) has passed Apple (AAPL +0.3%) as the biggest holding among the top 50 actively-managed U.S. mutual funds, according to a Citi report. Google is also now the top holding among hedge funds - a slew of major hedge funds either pared back or fully unwound their Apple positions in Q4. After backing out net cash/investments, Google now trades at 15.5x 2013E EPS, and Apple at just 6.3x FY13E EPS.
     

    As part of a major 4G LTE phone/infrastructure deal, Samsung (SSNLF.PK) has promised  leading Indian carrier Reliancelow-end 4G smartphones that cost just ~$100 unsubsidized, theTimes of India reports. The tie-up, which might also feature a JV, could be a positive for 4G baseband chip leader Qualcomm (QCOM), provided Samsung relies on Qualcomm's 4G chips and not its own - Samsung currently uses both. Again, this is what people don't get about AAPL's strategy – it's very easy to sell $100 phones to 6Bn people and make $60Bn.  AAPL wants to sell $500 phones to 1Bn people and make $140Bn instead.  They've been doing that with Macs since 1984 and they've never backed down off 35% gross margin goals – why would they change now to maintain a market share that they held by accident for a brief period of time?  It's never been about the market share for AAPL – it's about selling as many units as they can for 35% profits.  

    Music studios continue to balk at Apple's (AAPL +0.8%) royalty terms for its planned Web radio service, industry sources tell the NY Post. Whereas Pandora (P +2.8%) pays $0.12 per 100 streamed songs and iHeartRadio $0.22, Apple is said to have made an initial offer of $0.06. Is Apple playing hardball out of a belief theInternet Radio Fairness Act (something apparently on the minds of studios) gives it some leverage? The report could be helping Pandora rally ahead of today's FQ4 report. (previousUpdate: The NYTreports stalled licensing talks have led Apple's service to be delayed at least until summer.



  109. Boom and Bust/Arivera – It's been going on for 5,000 years, not just a few decades – see Joseph, for example.  

    You're welcome Wombat.  


  110. SPY continues to bounce b'w two pivots….154.53 and 154.89


  111. Wow, Phil…u really shut 'em up after that Techno Dreamcoat video….


  112. BRB.B short calls
    Just a FYI (meaning don't hang me).  The BRK.B short Apr13 100Calls are now 4.30 with BRK.B at 103.32, meaning they have 0.84 of time value left.  Let's keep an eye out if BRK.B starts to run.
     
    Let's do 10 of those (2015 $85/100 bull call spread at $10, selling $85 puts for $4.20 and selling April $100 calls for $2.50) in the Income Portfolio as this spread does exactly what our goal is for that portfolio 


  113. Dreamcoat/Pharm – I find it to be a very good point for contemplation myself.  I'm forcing my kids to watch "The Bible" on the History Channel this month on a similar premise – these are the stories that our ancestors thought you MUST KNOW to function in society.  Forget the rituals and the superstition but they are stories that teach us what they considered important lessons from a time when society was stripped down to the basics.  


  114. BRK.B/Burr – Yes, it would suck if they ran away but we're at what we think should be upside resistance so I'm not inclined to be quick to capitulate – even on GOOG short calls as we're bound to find something to correct over at some point – maybe.  


  115. Volume is still lame – not even 100M but up is up so let's enjoy it. 


  116. Pharm  -  Took the QQQ Mar22 70's for a ride at 0.14 instead.  Had a bit higher delta.  Figured F* it…..  


  117. 128309 600 Hugo Chavez cartoons


  118. 128276 600 Market on steroids cartoons


  119. Joseph technicolor/  What the heck is that? :-)     The amazing part of Bible/Torah stories is that mankind has not changed much in the last 2000 years.  Same mistakes, same problems, same arrogance.
    Boom-Bust  / At least this time I'm awake at the wheel.   In 2000 my "advisors" where dead at theirs…



  120. My Apple weekly play worked out well. I sold 4 this week's $430 puts and bought next weeks $420 puts to cover for about $2.00 credit late last week. Closed it today for +$950. 


  121. PHIL/AAPL  yeah.. but if aapl was wasn't in it  (spu)for the last 4 years where would it be?

      aapl +412% since 3/6/09
    its trading better last few days…
    .you see goog most owned by hedgies now..that worries me


  122. Civilization:  There is a fascinating book entitled "1491" [The New World before Columbus] that advanced a number of theses that are quite divergent from the conventional views of New World civilizations at that time.  It encompasses both South and North America, I'm not sure which is more surprising, but it's a quick, vibrant read.


  123. THC
     
    Interesting trade; THC: CC
    Bought stock 41.46 trying to get filled on the Aug 39 calls for 5.00 which gives me a 6.2% return w/ 12.1% downside protection b/e is 36.45 which is below the 50dema which this stock hasn't touched in weeks.  Capturing 2.55 in time value per share


  124. Zero read this:

     

    That is a fascinating read.


  125. GOOG / Angel – I was thinking the same thing. Seeing all these hedge funds jump on GOOG now reminds me of AAPL one year ago. As we have seen, crowded trades rarely end well. Next year, people will bail on GOOG and jump back on AAPL (or whatever is the flavor of the month). We just never learn!


  126. Virtual Short Strangle Portfolios/general thoughts -
    For the past three years at this time (March/April), things looked very rosy, then poof, the downward corrections came.  It's important for the short sellers (especially short put sellers) to recognize this timing and not over commit on the position sizing.  With low VIX and a bit of greed, it's too easy to commit to a large short put position, then get slammed when a correction arrives.
     
    When hearing the chatter about missing out on rallies and trying to catch up by selling puts, we need to exercise caution.  If VIX goes from 14 to 30, a short put can go up 8 to 20 times in value, depending on the strikes and time to expiration.  If the premium sold from the short puts were more than 5%, a 10 fold increase is 50%, i.e. we are likely to run out of margin, and are forced to close out the shorts at a large loss.  Always keep an eye on position sizing at this time of the year.
     
    On a tangent topic, do we see a Positive RSI divergence on AAPL daily and weekly chart?  I'm not a TA expert so just checking to see if others are seeing it too.   Not that AAPL would go up because of it, but be cautious if you are shorting AAPL.


  127. Zero/Civilization,
    Thanks for the '1491' suggestion. I can recommend the following book:
    Genes, Peoples, and Languages
    Luigi Luca Cavalli-Sforza
    Since I belong to the plebs, I don't think I can show the cover like Pharm did, LOL! 


  128. Zero/Civilization,
    Oh, and a +1 on Pharmboy's suggestion!


  129. stjeanluc/AAPL & GOOG,
    Yeah, I see the "manipulation" going on when I started trading more options for those two symbols.  It's incredible that GOOG with forward PE of 15.7, P/S at 5.4, gets pushed higher and higher, while AAPL get sold.  However, a more detailed look at AAPL put pricing (don't ask me the details, just a rough comparison) shows that not many people believe that AAPL would go a lot lower, while GOOG call value goes through the roof.  Yes, I have the same feeling that it may not end well for GOOG.  Then they'll start manipulating other $500+ stocks such as MA, ISRG, PCLN, etc.  FAS was on track to get there (great short if it does), but too bad for the split coming up soon.


  130. Peter D – Funny [strange, not ha-ha] you should mention volatility.  I was just reading a fund manager  letter [E. Carmignac] regarding his long Italian sovereign position, hammered by the Euro selloff [while doing well on Mexican/Polish bonds].  He is generally quite equities-heavy,  and has shifted position in the direction of USD exposure solely for reasons of political stability.  I can't see what would change that trend in the short term, given French/Italian difficulties [I think Spain/Port/Greece are already largely discounted].  But it's a wild world out there, and your warnings on "put greed" are well taken, given that the seeming U.S. recovery is making it the flavor of the month..


  131. Reading further, Carmignac's co-manager, R. Oaha, writes that she is piling into U.S. Treasuries as well, so I suppose one should be wary of trying to frontrun a spike upwards in U.S. rates, if other economic regions are bailing out on their local debt and seeking dollar exposure in T-Bonds.  Inflows of foreign cash may defer interest rate increases in the U.S. longer than I might have thought, but perhaps at the expense of a preternaturally strong dollar going forward.  All very interesting.


  132. And while I'm on the topic of Europe, there was an item on the importance of accuracy in flling out tax returns.  A man in Eversham [UK] had his tax return sent back by Her Majesty's Revenue & Customs service for a defective answer to one of it's questions.  In response to the query "Do you have anyone dependent on you?"  the man answered:  "2.1 Million illegal immigrants, 1.1 Million crackheads, 4.4 Million unemployable Jeremy Kyle scroungers, 900,000 criminals in over 85 prisons, plus 650 idiots in Parliament and the whole of the European Commision."  The HMRC wrote that the answer was unacceptable; to which Mr. Taxpayer responded, "Whom did I leave out?"
     
    Somewhat illiberal for PSW, I know, but funny nonetheless!



  133. Bonds / Zero – Piling on into US bonds now would seem dangerous to me but at the same time messages from the Fed seem to indicate that they are in for the long run as far as easing is concerned. I know we all keep on talking about the dangers of inflation but deflation risks are also present (see Japan) and much more pernicious in the long run. 

    What puzzles me more is why given these low interest rates, we don't invest more in our own infrastructure (see China) with a view on improving potential growth later that would easily absorb the additional debt burden. These investments usually pay for themselves in the long run while tax cuts never do!


  134. Zero – thats hilarious.  i feel the same way here in NYC paying a 50% tax rate. 


  135. Peter D/ AAPL  PD
    Yup, there is a sequential positive divergence x 2  (more  valid than a single PD) on the daily chart and a single PD on the weekly. Its been my observation that these signals are more noticeable- and valid – after the fact than in real time  b/c they can be easily eliminated by a lower low which, in a downtrend, is just part of a continuation of the trend and would invalidate the positive divergence.. Nice to look at in the rear view mirror but not sure how tradeable they are in practice. Checked Bulkowski's work and not much hard empirical data.  FWIW


  136. AGNC Div
    Fyi, 4:34 PM  American Capital Agency Corp. (AGNC) declares $1.25/share quarterly dividend, in line with previous. Forward yield 15.52%. For shareholders of record Mar. 20. Payable Apr. 26. Ex-div date Mar. 18. (PRRead comments


  137. AAPL / Peter and 8800 – It's really hard to find positive reinforcements in charts now… Looking back to last October, we seem to have gone through the 9 circles of hell with this stock! Every time it looks we find a bottom, they take it lower. We go down to 630, then rally 20 points in one day. Drop to 509 which looks like it will hold and rally 80 points, drop back again to 509 and rally 40 points. Then drop to 440 and that holds for a week with another 40 point rally. And now it looks like 420 is the next line in the sand. So, do we rally to 460 before dropping to 380… At this point, no one knows. It's irrational but then again so is this market most of the time which is how we make money selling options which are only valuable because of the irrationality of the market.


  138. wappler…. :) there you go!


  139. rj – ur in Kansas, no?  KC?


  140. PeterD/divergences,
    After dinner musings:
    There is also an active negative divergence x 2 in spy suggesting (to the extent one assigns credence to divergences) a sell-off.
    Also, checked the last 9 yrs and we had the most sell-offs in Feb (3), with 2 each in Mar,Apr & May. Interestingly, the later the sell-offs occurred, the steeper they were (very roughly: 7% in Feb, 8% Mar, 9% Apr and 15% in May). Major caveat – very small sample. There were also sell-offs in later months; no clear seasonal pattern that would make one get a tingling feeling about now, but….


  141. Holder/Deano – Holder is going to go down in history as one of the most corrupt, incompetent, damaging, and ultimately forgettable AGs we've ever been so cursed to pay a salary, benefits and pension to. If, that is, the republic survives his and this administration's abuses. One can only hope his burdern upon the public is short.


  142. More regarding Android security issues …
     
    F-Secure: Mobile Threat Report Q4 2012


  143. Apple Maps directions beat Google Maps, Waze in pundit's head-to-head test
     
    The fact that Apple outperformed Google and Waze in providing directions with traffic a real-world scenario made Dvorak admit he now has to "wonder what the fuss was about" regarding dissatisfaction with Apple Maps.


  144. Analysts still seem to be fairly bullish on AAPL in general.  They still haven't gotten attacked by the downgrade police yet, so maybe there is still some downside left for some sell-side retail bailing.  A spike under $400 would get lots of people peeing their pants I bet! 


  145. kinkistyle – Or backing up the truck! ;-)


  146. Venezuela – Escobar writes a good article all the way through..and the "here" link is worth the visit.  
    http://www.atimes.com/atimes/World/WOR-02-060313.html


  147. Good morning!  

    Futures off to the races again:

    Dollar 82.23, Euro $1.31, Pound $1.5032, 95.52 Yen to the buck.

    Oil $91.48, gold $1,576, silver $28.74, copper $3.503 (down from $3.53 yesterday), Nat gas $3.585 and gasoline almost made $3.15 but back at $3.13, which probably holds into the weekend. 

    4:18 AM The global bull run continues as an upwards revision of Japan's Q4 GDP data helps boost the Nikkei 2.6% to 12,283.62, its highest close since September 2008. Along with better-than-expected Chinese exports and anticipation of a U.S. jobs report later, the news lifts shares across Europe and Asia – although not in China – with the FTSE 100 touching five-year peaks. Hong Kong +1.4%, China -0.2%, India +1.2%. EU Stoxx +0.8%, London +0.5%, Paris +0.8%, Frankfurt+0.5%, Italy +1%, Spain +1.2%.

    6:00 AM Overseas: Japan +2.64%. Hong Kong +1.41%. China-0.24%. India +1.39%. London +0.35%. Paris +0.72%. Frankfurt+0.53%.

    If you make the same forecast repeatedly for 15 years, you will eventually be right: Dow 36,000 Is Attainable Again (Bloomberg

    "Take a mental note – at a point where investors can't possibly imagine how stock prices could decline. This is what euphoria looks like," tweets John Hussman as the Dow 36,000 authors reemerge, Richard Bernstein says 2013 looks like 1982, and Richard Russell can't believe the bullish patterns he's seeing.

    Dow Theorists get chatty as both the DJIA (DIA) and DJ Transports (IYT) set all-time highs yesterday. "I've never seen anything like the action since the 2009 bottom," says Richard Russell. Ryan Detrick says when both averages make new highs near the same time, stocks tend to see strong returns over the following year.

    "The current bull market might be one of the strongest of our careers, says Richard Bernstein, believing the next 4 years may rival the 4 beginning in 1982. Concerns of the current cycle are not unique, he says, saying now as then investors are concerned with the Fed, Iran, slow-growth, and the last decade's poor returns. "Many investors still do not even believe that a bull market is underway." 

    Things are gonna work out fine if you only will shower the people you love with loveFirms Send Record Cash Back to Investors. U.S. companies are showering investors with a record windfall in the form of dividends and share buybacks, helping to propel the stock market's rally. Companies in the S&P 500 index are expected to pay at least $300 billion in dividends in 2013, according to S&P Dow Jones Indices, which would top last year's $282 billion

    When the Corporate Elite Supported Raising Taxes (Echoes)

    The Fed is considering abandoning its plan to eventually sell the trillions of dollars of bonds it's bought and just let them mature instead. The move would prevent the disruption of markets that might come with big sales, and it would prevent any losses if and when interest rates rise, not to mention any subsequent criticism from Capitol Hill. There might be some economic benefits too.

    Fed's Fisher: tapering Fed's bond buys could help housingSlowing the Federal Reserve's current pace of monthly asset purchases could paradoxically help the U.S. housing market, a top Fed official said on Thursday.

    Has the U.S. really been deleveraging? Absolutely yes in the private sector, particularly among financial institutions. But in the public sector, a substantial buildup in debt has occurred in recent years. Taken altogether, total U.S. debt today is higher as a percentage of GDP than ever before.

    Household net worth increased 9% Y/Y in Q4 to $66.1T, according to the Fed's Flow of Funds report. It's still below the Q3 2007 peak of $67.4T, but up $14.7T from 2009's trough. The value of household real estate is estimated at $17.6T, up $447B, but $5T below the peak. Mortgage debt declined by $6B in Q4 and is now off $1.2T from the peak. 

    Nouriel Roubini warns that Italy's political paralysis poses a "tsunami" risk, saying that he expects new elections within six months. "In this time the economy will get worse given the political uncertainty, (with) less investment, less job hiring and less consumption," Dr. Doom predicts. He also forecasts a possible clash with Germany and the ECB that could lead to Italy threatening to withdraw from the euro.

    Italian Banks’ Bad Loans Seen Rising as Gridlock Hampers GrowthUniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP), Italy’s biggest banks, may struggle to boost profit as political gridlock threatens to increase borrowing costs, worsen an economic contraction and drive up bad loans

    Japan revised GDP numbers for October-December to show annualized growth of 0.2%, after the preliminary reading indicated a 0.4% contraction. Meanwhile, the island nation's trade deficit widened in January to ¥1.479T ($15.6B) from December's ¥567.6B, as exports rose 6.7% Y/Y, while imports rose 6.6%. The yen rose to ¥94.90 immediately following the numbers.

    Japanese stocks move higher yet again today as the yen eased back down to 2009 levels and pushed the Nikkei Average up 1.1% to 12,100. Exporters lead the gains: Olympus Corp. JP:7733+1.00% (OCPNY.PK +3.4%), Toshiba (TOSYY.PK +2.3%), Nintendo (NTDOY.PK +4.7%, Advantest (ATE +3.3%), and Mazda (MZDAY.PK+4.4%).

    Japanese financial regulators say they plan to make permanent in November a ban on "naked" short selling that was implemented after the global financial crisis in 2008. The ban will only be triggered when the price of securities falls more than 10% from the closing price of the previous trading session. Conversely, regulators also announce plans to relax the uptick rule – which allows short sales only at a price above the last sale price – and obligations for information disclosure on short sales.

    Roach Says BOJ, Fed Currency Weakening Won’t End in ‘Pretty Way’. (video) “Whether it’s the Bank of Japan (8301), the Federal Reserve or even the ECB, the idea that they can engineer economic recovery by quantitative easing that may lead to weaker currencies ultimately is not a story that will end in a pretty way. Currency devaluation as a recipe for economic growth always comes at a cost of taking market share from someone else.” “China is understandably concerned about that, as has been Brazil, as has been most major developing economies that rely on exports as a source of economic growth.” “The developed economies say, well we’re not trying to depreciate our currencies, but they know this is going to happen.” “This is one of the unintended and potentially dangerous consequences of the financial engineering of quantitative easing.

    China's trade surplus falls to $15.25B in February from $29.15B in January but beats expectations for a deficit of $7.75B. Exports +21.8% vs 25% and 10.1%. Imports -15.2% vs 28.8% and -8.8%. Data is distorted by the Chinese New Year, so analysts look at January and February combined, when exports rose 23.6% vs consensus of +17.6% and imports were +5% vs +10%.

    China central-bank chief warns on money supply. The high ratio of money supply to gross domestic product in China means risks are excessively concentrated in the banking sector, according to a top official. This demonstrates the need for financial reform, People's Bank of China Gov. Zhou Xiaochuan was quoted as saying in the China Business News on Friday.

    China's Middle Class in No Mood to Spend. (video)

    Chinese Parliament Holds 83 Billionaires. The legislature of the world's last major communist country is almost certainly the wealthiest in the world, according to a popular rich list that names 83 dollar billionaires among the delegates to China's parliament this year.

    Austrian Banks Rated Negative by Moody’s on Bad-Debt Charges.

    Everybody's a winner, and everybody's a star:  Fed Stress Tests: Ally Financial is the only bank not meeting the Fed standards.  All of the other 18 holding companies showed a Tier 1 Common Ratio higher than 5% under the central bank's severe loss scenario. 

    More on the Fed Stress Tests: The exams measured to make sure banks' Tier 1 Common Ratio remained above 5% in the Fed's "severely adverse" economic scenario - GDP falling 5%, the UE rate rising to 12%, a 50% fall in stocks, and recessions overseas, among a number of other variables. This table shows the results, withGS and MS just passing, and BACCWFC, and JPM getting by with a little more room.

    More on the Fed Stress Tests (regional bank focus): BBT,FITBKEYPNCRF, and USB came through with higher ratios than the big banks. STI is the laggard among the regionals, but still showed a 7.3% common ratio, well above the 5% cutoff. KeyCorp is the only stock showing noticeable movement AH, +0.8%. 

    More on Fed Stress Tests (the rest of the lenders): AXP passed easily with a 11.1% common equity ratio. COF was a little closer to the 5% cutoff at 7.4%. The custodial banks - STT and BK - showed the best results of the entire group, with common ratios of 12.8% and 13.2% respectively. State Street +0.8% AH. (Previous: The methodology)

    After-hours movers following the Fed Stress Tests: Citigroup (C +2.5%) is the biggest gainer after looking like it's the most overcapitalized of the large banks with a 8.3% common ratio. BAC+0.8%. GS -0.7%MS -1% after both just squeaked over the 5% bar. There's not a lot of movement in the rest of the banks.

    Barclays (BCS) CEO Antony Jenkins reportedly wants the bank to cut almost 30% of its employees over the next ten years as he prioritizes lowering expenses. The only question, Jenkins told a recent shareholders' meeting, is "how can you eventually turn this bank into one that can operate with 100,000 staff instead of 140,000?" The comments follow Barclays' recent announcement of major job and costs cuts as part of a strategic review. 

    TransCanada (TRP) fails to qualify as a common carrier under state law, Texas landowners say in court arguments that plans for the Keystone pipeline don’t give it the right to condemn their property. Lawsuits by four landowners constitute the last hurdle blocking the pipeline's southern leg from Cushing, Okla., to the Gulf coast.

    Cheniere Energy (LNG) will start to recruit commodity traders as the company is expected to become the largest single buyer of U.S. natural gas by 2016, CEO Charif Souki says. LNG plans to start exporting an average of 500M cu. ft./day of natural gas by late 2015 when its Sabine Pass, La., terminal is scheduled to come online, with another 1.5B cu. ft./day added through the following 18 months.



  148. Maersk Sees Tanker Slump Persisting Amid Biggest Glut Since 1996
    The biggest glut since 1996 in the supply of the largest oil tankers means owners will have to wait three more years for rates to recover, according to A.P. Moeller-Maersk A/S. The global fleet of very large crude carriers expanded 28 percent over the last four years, Hanne Sorensen, chief executive officer of Maersk Tankers, said in response to e- mailed questions yesterday. The fleet is currently oversupplied by about 70 ships and as many as 50 more VLCCs will be delivered this year, Sorensen said. 

    China Copper Imports Slump to 20-Month Low. Copper imports by China tumbled to the lowest level in 20 months as a week-long holiday slowed customs procedures amid high local inventories. 

    Rebar Trades Near Lowest Level in Two Months as Output Increases. Steel reinforcement-bar futures in Shanghai traded near the lowest level in more than two months as steel mills increased output and spot market price dropped. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 1.1 percent to 3,890 yuan ($625) a metric ton, before trading at 3,927 yuan at 11 a.m. local time. The most-active contract on March 4 closed at 3,905 yuan, the lowest level since Dec. 27. China’s daily crude steel output in late-February was estimated to have risen by 1.4 percent from the middle of the month to 2.03 million tons, according to industry consultancy Custeel.com. The average spot price for rebar fell for the fourth session yesterday to 3,764 yuan a ton, according to data from Beijing Antaike Information Development Co.

    Molybdenum to Drop as China Curbs Weaken Steel: Chart of the Day. Molybdenum, the steel-hardening ingredient that's plunged by two-thirds since September 2008 even as most non-ferrous metals gained, is poised to fall further after China cracked down on some property sales. "China's restrictions on speculative investment has had an immediate impact to reduce transactions in steel and therefore molybdenum," said Wang Min, an analyst at Beijing Antaike Information Development Co.

    As expected, The National Transportation Safety Board's "interim factual report" on the Boeing (BA) 787's battery problemsdidn't provide the reason why two malfunctioned, although it did say that Boeing considered that the possibility of the components burning to be extremely remote. The NTSB plans to hold two public hearings on the battery, which will probably delay the resumption of Dreamliner flights even further.

    Tesla Motors (TSLAplans to repay $465M in Energy Department loans five years early in 2017, the company said yesterday in its annual report. Under new terms of the debt, warrants that Tesla issued to the government will vest in 2018 if the loans are not paid off, enabling Energy to purchase over 3M company shares at a discount. 

    More M&A:  After a sales process that has dragged on for months, KKR (KKR) has reportedly agreed to acquire Gardner Denver (GDI) for $76 a share, or 2.9% above the latter's closing price of $73.85 yesterday. The deal values the industrial-pumps manufacturer at $3.74B; it would be KKR's third purchase of a company in the industrial sector in the past few years.

    More on H&R Block (HRB): FQ3 misses on all counts as total sales declined by 29% Y/Y. Net losses also widened as a delay to the start of the U.S. tax season negatively impacted its top line. Even so, the company only deferred $15M of revenue into FQ4, which doesn't even come close to mitigating its $91.6M shortfall for the current quarter. Gross margin also narrowed to 20% from 31.4%, due to the revenue decrease. Despite the miss, optimism over a potential pickup in U.S. tax volume has the stock +3.3% AH.

    Carl Icahn discloses the purchase of about another 2M shares of Herbalife (HLF), upping his stake to 15.5% from 13.6%. Shares +1.6% AH.

    CDW has reportedly hired banks in preparation for an IPOthat could raise $750M later this year. The floatation would come six years after the electronics retailer was taken private for $7.3B by private-equity firms Madison Dearborn and Providence. CDW is one of the largest computer resellers in the U.S., generating net sales of $10.1B in 2012.

    Texas Instruments (TXN) favorably narrows its Q1 guidance. The chipmaker now expects revenue of $2.8B-$2.91B and EPS of $0.28-$0.32 vs. a prior forecast of $2.69B-$2.91B and $0.24-$0.32; the consensus stands at $2.8B and $0.31. The news seems priced in following a big rallyTXN -0.3% AH. CC underway (webcast). (PR)

    Carl Icahn has discussed floating a $15/share tender offer for a large chunk of Dell's (DELL -0.7%) stock in talks with special committee advisers, the NYT reports. Sources also claim Icahn, who appears to have abandoned the tender offer idea for now as hepushes for a $9/share dividend, continues to hold talks with said advisers. Shares +0.6% AH to $14.30. (more)

    Motorola Mobility has started laying off 1,200 workers in the U.S., China and India, or over 10% of its staff, as the Google (GOOG) unit continues its efforts to return to profitability. "Our costs are too high, we're operating in markets where we're not competitive and we're losing money," Motorola said in a company email. The cuts add to 4,000 redundancies that the firm announced last summer. 

    Yahoo (YHOO) is working on two "significant" acquisitions to go with 6 small "acqui-hires," says HR/M&A chief Jackie Reses. Thus far, all of Yahoo's acquisitions (IIIIII) in the Marissa Mayer era have been of the latter variety, though Reuters reported last October the company has at least mulled some bigger purchases. Kara Swisher observes Yahoo's improved reputation in the tech world could help it out. One startup exec: "They are no longer complete losers, although Facebook and Google and Apple and Amazon are still cooler."

    How Disney Bought Lucasfilm—and Its Plans for ‘Star Wars’ (Businessweek)

    More on Pandora: FQ4 mobile revenue was $80.3M (64% of total), +9% Q/Q and +111% Y/Y – the latter exceeded mobile listener hour growth of 70% (improved monetization). Total listener hours +15% Q/Q and +53% Y/Y (was +67% Y/Y in FQ3). Ad revenue +51% Y/Y and 87% of total, subscription/other revenue +74%. Content costs +57% Y/Y, slightly above rev. growth and equal to 61% of sales. But gap between content cost and rev. growth fell from FQ3. Sales/marketing spend +63% and equal to 27% of sales. P +18.9%AH. CC at 5PM ET (webcast). (PR)

    "We've turned the corner on mobile monetization," boasted CEO Joe Kennedy on Pandora's (P) FQ4 call, even as he remained vague about the reasons for his planned departure. In spite of the boast, Pandora's mobile ad revenue per thousand hours (RPM) fell 8% Q/Q to $23.51, and was 56% below a PC ad RPM of $53.53, which itself was down 8% Q/Q. Pandora attributes the latter drop to a greater sales focus on mobile. Pandora's share of U.S. radio listeninghit 8.48% in February, up from 8.03% in January and 5.74% a year ago. P +21.3% AH. (live blog) (previous)

    Ad execs see a lot of potential in Facebook's (FB +3.9%)news feed revamp, and so do others. In addition to targeting content-specific feeds, advertisers will be able to use bigger, more prominently-displayed photos and (eventually) videos, something that could yield higher ad rates. The revamp also stands a chance of boosting engagement, which has been slumping in the U.S. and some other markets thanks to user fatigue and the mobile shift.

    Apple (AAPL) will have to reveal more of its inner workingsafter California judge Paul Grewal told the company to show how it is complying with a previous court order to hand over evidence to plaintiffs in a privacy lawsuit over the collection of customer-location data from iPhones. Grewal also told Apple to provide unredacted documents related to its app-review process under an "attorneys-eyes-only" designation, if warranted.

    Why 401k Investors Chase Performance – and How to Prevent It (Fiduciary News)

    401Ks are a disaster (USA Today)

    What to do now if you’re mostly in cash (MarketWatch)

    Wrong question. (The Reformed Broker)



  149. Amazing/Arivera – I agree, we're just monkeys with hats now – doesn't change our basic nature.  I'm loving the Dow 36,000 guys coming back – certainly nothing has changed since 1999!  

    Production/Scott – Such old-school thinking!  8)  Actually, the great leap for US Corporations has been discovering ways for you to give them money when they give you nothing:  You pay for a TV, Phone, etc so they can sell you stuff on it and most of the stuff people buy on the web is nothing but bits and bytes anyway.  The sell you health care for operations they hope you never have as well as all sorts of other insurance products that simply didn't exist 100 years ago and, amazingly, the same 300M people we had a decade ago are consuming the same amount of stuff (or less) that we did a decade ago but they are charging us 30% more than a decade ago despite the fact that wages are down over that period.  Production – Ha!  Get with the new program and stop expecting to have something to show for your money!

    AAPL/Palotay – Nicely done.  

    GOOG/Angel – That's why I'm sticking with the short calls – I don't see over $800 lasting without dipping back for a test – at least.  

    1491/ZZ – Sounds good, thanks.  I read the other, kind of a rehash but good for those who don't usually read history (or think about the implications).  

    AAPL/Peter – I think shorting it would be madness – hopefully its' finally ready to pop.

    Cover/Wappler – Yeah, how did you do that?  

    Funny/ZZ – Yes, and I hope that, on their return, the "crackheads and scroungers" listed him as a dependent as he depends on them to not kill the elitist bastards on a daily basis…  Don't worry though – I'm sure he'll vote to keep cutting the health care to the bottom 10% of the population and then he'll be very surprised when he dies of TB or whatever other plague he breeds in the "lower classes."  It's only happened 100 times before – I'm sure this time is different…

    Speaking of TB - I got out of LA just in time

    Big Chart now breaking the bonds of gravity and about to boldly go where no Big Chart has gone before….

    Infratructure/StJ – It is amazing, isn't it.  The most obvious thing to do and we don't do it.  We waste 50% of the energy that goes through the grid and 50% of the water in the aqueducts but, if it wasn't wasted, then someone would be selling less water and less energy so there are lobbyists who are paid a lot of money to crush any attempt to fix the problem.  That's Capitalism at work!  

    50%/Terra – Not to get into a whole thing but I'm sure you agree that some of your 50% goes towards protecting your lifestyle with police, anti-terror, etc.  So, ask someone in the bottom 50% of NYC, who live in a 500-foot space (if they are lucky) with one couch and a TV and a pile of bills on the kitchen table how much they feel they need to pay to protect their stuff and their lifestyle.  Not much, right?  You can always move to Texas and pay less taxes and get your own gun (many of the finer establishments ask you to check your guns at the door) but, if you want to live in NYC, you have to pay extra to protect your stuff.  Also, as I noted above, protecting your stuff includes the miracle of keeping a city of 8M people living withing 5 miles of each other from breathing out contagious diseases until 90% of them are dead.  So a little education and a little health care keep the bodies from piling up in the streets is in your self-interest.  And, does it ever occur to you that the guy who's making your coffee for minimum wage in the morning couldn't even be there without some of those "liberal" subsidies that the bottom 50% enjoy (like the subway that takes them from their cheap apartment to the store next to your much nicer home)?  It's generally expensive to live in a city – you import everything and export nothing (except trash) – who supports that negative balance of trade that keeps food on your table and clean water coming out of your taps (imported from reservoirs that are 50-100 miles away?  Food for thought over the weekend.  

    Freezing/Diamond – LOL, it's amazing the ingenuity of these hackers.   I had always thought that was a very important edge AAPL had with their dreaded "closed" operating system but they've taken a few hits as well.  As we move commerce authorizations to phones, this will become a much bigger deal.  

    AAPL maps/Diamond – They are great now.  Were buggy before but that's normal for something with a few billion data points and no way to test/debug it until you let a few million people use it.  

    Amazon, Samsung tablets inch up, but Apple's iPad still ahead by a mile

    Good Obit Scott. 


  150. Cover/Phil,
    For some reason I thought that the lower ranks couldn't post charts…


  151. Me too, that's why I'm surprised that image came up.  

    In theory, only admins can post pictures because it would be chaos if everyone did, that's all.  

    So, not a big deal but I didn't think it was possible for a non-admin to post an image.