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Toppy Tuesday – Can We Break On Through to the Other Side?

Day to day
Hour to hour
The gate is straight
Deep and wide
Break on through to the other side – Doors (of Perception)

Up and up the market goes, where she stops, no one knows.

We already had to roll up our DIA hedges in our new Income Portfolio yesterday as they had dipped (the June $135 puts) from $1.90 to $1.40, costing us $2,500 of our virtual profits already or, as a bearish optimist would say, setting us up to make a nice amount on the way back down as we plow another .55 into a roll to the $138 puts (as we couldn't fill our initial target of the $139s).  

No matter how bullish we are (and all of our Income Portfolio positions are bullish so far), it's always prudent to have some hedges.  When you are at a possible top in a range – it is more important than usual and we're sitting on the top of a 20% move from S&P 1,300 (last Q2) to the 1,560 that we're moving in to test in Q2 of 2013.  

We're down to our last two red boxes on our Big Chart and if it wasn't expiration week, we would have already redrawn the lines to reflect our new trading range but we're still expecting a 2.5% to 5% pullback before breaking on through to what would be our 20% lines.  

On the Russell (the leading indicator at the moment) that would be 1,000, along with NYSE 10,000, Nasdaq 3,600, S&P 1,700 and Dow 17,000.  If the math seems confusing versus our current figures, it's because the Bigger Big Chart set those targets for a 5-year recovery back in March of 2009 (see our July 2010 update: "Charts from the Future" for a good explanation of how we use our 5% Rule) and we work our numbers backward from there, with the occasional adjustments for Dollar activity

Using those lines, all our numbers change and our goals will become our "10% Up" lines – the top of our new expected range – and then we're forced to redraw all our lower numbers accordingly and our Must Hold lines become -10% from the top at Dow 15,300, S&P 1,530 (already over), Nas 3,240 (just over), NYSE 9,000 (over) and Russell 900 (over).  As noted last Thursday, 15,200 is where we calculate the fair value of the Dow into earnings so that shouldn't be holding us back either – even with the aggressive adjustment.  

It almost makes us feel silly taking short positions at all but we have to have hedges, as you never know when the market will go into panic mode again.  Also, we have "smart" hedges like GDX and TLT that can go up for reasons other than just market panic – so we have a couple of ways to win – even if the market never does slow down.  

We did find an interesting short on JNJ, with the May $77.50 puts at $1.02 as they are facing serious lawsuits and are currently priced to a p/e of 20 – more than twice what AAPL is "worth" according to market participants at the moment, so it's a good way to pick the Dow component most likely to fail (after XOM, which we shorted last week).  Speaking of oil, OPEC just put out a report saying World oil demand will rise 800Mbd this year and oil is flying to $92.75 already on the NYMEX and will make a great short as traders have just 7 trading days left to dump 165Mb worth of contracts that they have pretended to want for April delivery.  


Click for
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Apr'13 91.94 92.64 91.60 92.64 08:34
Mar 12



0.58 37598 92.06 165993 Call Put
May'13 92.46 93.09 92.05 93.08 08:34
Mar 12



0.56 13110 92.52 257824 Call Put
Jun'13 92.75 93.42 92.43 93.40 08:34
Mar 12



0.53 6642 92.87 173896 Call Put
Jul'13 92.79 93.62 92.65 93.62 08:34
Mar 12



0.54 2198 93.08 126406 Call Put
Aug'13 93.20 93.62 92.74 93.62 08:34
Mar 12



0.51 1255 93.11 68270 Call Put

As we predicted last month, they now have a log-jam with 257,000 fake orders already in May and 173,000 (1,000 barrels per contract) worth of fake demand for June and 126,000 contracts already written for July.  As last month closed with just 11Mb of oil actually delivered to Cushing, a facility that only holds 48Mb of oil and is currently full – it is nothing but a blatant sham that these "orders" are even allowed to be placed but, if the NYMEX crooks want to pretend to want to take delivery of 165Mb of oil in April for $93 per barrel – we will be happy to promise to sell it to them, which obliges them to accept delivery FOB at Cushing, after which storage, transportation and eventual disposition of the oil will be entirely their problem!  

In other alleged criminal activity:  Goldman Sachs joins OPEC in goosing oil by raising their 3-month outlook for raw materials to "overweight," saying "The recent sell-off in commodities on worries about Chinese growth is overdone in our view and we upgrade to overweight on a 3-month horizon."  Limited supplies of oil will support front-month prices near current levels, while longer-dated Brent pries will be “well-anchored” at about $90 a barrel, Goldman said.

Limited supplies?  ROFL!!!  As I said, let's sell those crooks the 165M barrels they are pretending to want and then we'll see how "limited" the supply is as we add to Cushing's weekly build in April to the tune of 40M barrels a week!  Not only that but take a look at the EIA's projections for the next 3 years – Net imports are dropping, due to lower US demand and greater US supply, from the current 7.72Mbd all the way down to 5.44Mbd projected in Q4 of 2014.  

That's 2.28Mbd LESS oil imported to the US.  At $90 a barrel (good luck holding that price!), that's a $75Bn net change in our balance of trade per year and $75Bn less dollars we send overseas and $75Bn less Dollars being essentially burned to fuel our vehicles.  

Not only that, but the EIA assumes fairly steady demand – as if small cars and electric vehicles won't continue to gain market share over the next 3 years – so these are conservative figures.  No wonder Goldman is trying to con people into taking all those bad oil trades off their hands.  Even mighty JPM has already seen a 16% decline in commodity revenues this year and, according to Reuters:

Wall Street's continued ownership of physical commodity assets, including power plants, oil storage tanks and metals warehouses, is also still under question after the conversion of Goldman and Morgan Stanley to Bank Holding Companies during the financial crisis.

So of course we're jumping all over the chance to short oil Futures (/CL) at the $93 line and, hopefully, they'll go a little higher than that and we can add short positions using SCO or USO in Member Chat as things can turn very ugly next week as the thieves try to wriggle out of the contracts they signed today in order to create a false impression of demand so they could screw the American public out of another few Billion this month.  If everyone reading this post simply agrees to sell them 10 barrels for $93+ and then doesn't let them cancel the contract – we can flood the US with oil and crash the market – giving us a whole summer of low gas prices – wouldn't that be fun?  

We've done this before – in June of 2011, with oil at $103, I called for similar action in an article titled "Let's Break the Speculators", saying: "If some idiot is stupid enough to pretend to want to buy oil at $103 for July delivery – we are happy to sell it to them."  At that time (June 1st), there were a whopping 376,000 open contracts on the NYMEX and we caught a dip there all the way down to $90 – good for a $13 gain or a loss of $4.8Bn for the NYMEX crooks in less than a month.  What other newsletter gives you tips that can lead to $4.8Bn gains?

Keep in mind though, that you can lose $4.8Bn as fast as you make it.  Futures are very dangerous, which is why we use that $93 line as a very hard on/off switch for the trade (unless we get to $93.50 first, then we'll use that).  It's a lot easier for smaller players to limit their exposure with something like USO April $33.50 puts, which should be about .75 at the open with USO right at $33.50 now.  With SCO, we can just play for $95 not to happen and pick up the April $36/39 bull call spread at $1.80 as SCO is at $39.56 now so the trade is on the money to start and can lose 50% before you get in real trouble.  

These are just some of the fun ways we can benefit from the criminal manipulation of the market by others.  

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  1. Oil Lines

    R3 – 94.09
    R2 – 93.18
    R1 – 92.70
    PP – 91.79
    S1 – 91.31
    S2 – 90.40
    S3 – 89.92

    Yesterday's high and low – 92.28 / 90.89

  2. Good Morning!

  3. Income Portfolio / Phil – The roll from the DIA Jun 135 to the Jun 139 never got close to $0.50. The $0.77 you saw was the closest it got. Roll or not?

  4. Bad news for AA in the medium term:


    In much the same way that the US and Russia lavished cash on their space programs in the 1960s, China since the late 1980s has worked tirelessly to perfect its aluminum production skills. And China’s economic planners like new aluminum smelters because they are mostly coal fired (pdf, p.175) and thus are useful consumers of the black stuff. The Beijing government has pushed for massive development of new coal mines in Xinjiang in Northwest China for example, and the aluminum plants will be natural customers for the mines.

    China now has the world’s best aluminum production technology, according to Michael Komesaroff, principal of Australian commodities consultancy Urandaline Investments. But its over production hurts global miners. Rio Tinto has written down the value of Alcan, an aluminum company it bought in 2007, by an estimated $28 billion.

    “Aluminum prices won’t do well for the next ten years,” says Komesaroff.

    So China’s aluminum  industry is a great window on how its economic planners think. New smelters create jobs for construction workers, smelter staff and miners, and aluminum gives China’s politicians some world class technology to feel proud of in a nation that is best known for making low value consumer goods. Supply and demand is neither here nor there.

  5. Hopefully XLF calms down soon!

  6. Good morning!  

    Very exciting action in oil but remember to be patient as the highs for the week usually come right before tomorrow's inventory report (10:30).   

    Still, for the $25KPs, let's scale into 10 of the USO April $33.50 puts for .80 and we'll see if $93.50 holds.  

  7. DIA/Income Portfolio, StJ – Note in the above post I'm capitulating to roll to the $138 puts for .55 as no one seems to have gotten the fill but we still want the roll and buying $3 for .55 is still a good deal.  

  8. Some help from GOOG and AAPL today!

  9. Phil – I know you're not a big fan of nat gas long term since we have so much of it, but Cheniere (LNG) is on a long term upswing, and they are said to be on track to become the largest buyers of nat gas in the US…might be work a look for some kind of medium term bullish play…what do you think?

  10. USO really wants to hit the 50d MA, which is also a gap fill (according the tea leaves)……Oh, and good morning from the bullet selling left coast.

  11. That fill would be ~34 on USO….FWIW.

  12. iEverywhere/Diamond – Not surprising.  I have kept saying that AAPL's competitors (other than IBM) just don't get it and AAPL's next phone is no phone at all – it's just Siri everywhere:

    Business Insider says that, in addition to Ferrari, other car-makers working to integrate Siri Hands Free into their electronics are BMW, Daimler owned, Mercedes-Benz, Land Rover, Jaguar, Audi, Toyota (NYSE: TM), Chrysler, Honda (NYSE: HMC), Hyundai and GM (NYSE: GM).

    AA/StJ – That's why we liked the short call sale.  So far, they are less affected than we though they'd be as we sold the April $8s in the Income Portfolio.  

    Euro popped right back up off $1.30, now $1.306 but Pound rejected at $1.49 – very pathetic.  96 Yen to the Dollar, which is back at 82.74 and 82.75 is still our functioning bull/bear line.  

    Copper encouraging at $3.56 despite horror stories out of China.  By the way – I saw something about MASSIVE increases in existing home sales in Hong Kong ahead of the new regs – like 200% up from last year, but couldn't find it again.  Anyway, if true – adds credence to my theory that China is working very hard to stuff back some huge demand and all this anti-commodity data will flip very quickly once they get tired of manipulating their market (and it does get expensive over time).  

    Meanwhile, gold hit $1,597.60 before pulling back ($1,593) and ABX and GDX are up 2% already.  HMY also flying and I don't know why we didn't add them last week, when they were below $6 but let's get 2,000 of those at $6.58 for the Income Portfolio and sell 20 of the Jan $5 calls for $1.80 and 10 of the $8 puts for $1.90 for a net $3.93/5.29 (on 3,000) entry.  Let's see if Yodi can work that one out for himself!  

    Oil holding $93 so far ($93.30).  Definitely a good Futures short off $93.50 but this is one of those things where you have to take the quick nickel loss and prepare for a  cross on the next .50 line.  

  13. MOMO virtual portfolio:   BTO 1 GOOG  April monthly 830 call for 25.00.

  14. Looking at an AAPL chart, we really need to punch through that 435 or so line that was support back in January and has been resistance this month! The next convergence line is around 460 and then 480 but one line at a time.

  15. Phil – Regarding TA Voodoo, check out the chart on GLUU.  It moved up yesterday before any news was announced.  It's up another 20% today.  The news was already reflected in the charts.  Sure looks like it was leaked.

  16. Phil / GLD – i had the June '13 145/170 bull call spread from Sept and Oct .  I recently got out of trading restriction at work.  bought back the caller and made nice gain on that.  should i roll the call (cost $28, now $10) now or wait or enter new spread?  Thx.  I also have the GDX  Jan '14 35 puts which are looking good so far with GDX's recent bounce off 35.57.    

  17. HE no insults this morning I am still TWO hours behind!!!! These Mexicans have not changed time yet!!!!!!!!!!!!!!!

  18. $25KP – Woo hoo, up a quick $18,000 today.  Imagine if we actually had two good days in a row?  

    LNG/Jercon – I don't like the premise of us being able to squeeze our gas to a liquid and pack it into super-cooled ships and then send them overseas to other countries that are also starting to frak their own gas now.  I think the demand story for nat gas – if it happens at all – would be the US truck fleet as well as more power plants switching from coal to gas but both of those are not likely to happen if stupid LNG players make the long-term forecast for low nat gas prices iffy.  Like the ethanol craze of 2006-8, you can get some nice pops on LNG but that's all it is – a speculative trading vehicle that loses as much money as investors give it each year (and last year, this $5Bn company sold $2.5Bn worth of stock after burning through the $500M they sold in 2011 on losses).  They are too scary to short, like PEIX was at one time (and Bill Gates even bought into that one!) but take a look at PEIX's long-term chart and you'll see what I mean about these fad technologies.  It's great if you catch the ride at the right time – but don't fool yourself into thinking it's an investment. 

    Bullet-selling/Pharm – Reminds me of a line from Johnny Dangerously where he goes next door and says "Mrs. Capone, can I borrow a cup of bullets?"  Couldn't find that clip but here's a good one to represent the California lifestyle under the 2nd ammendment.  

    AMZN flying.  It's better to sell AAPL products for 5% profits than make them for 35% profits I guess…

    GLUU/Albo – It is mind-blowing how often that happens and no one is ever prosecuted.  I once made so much money on GOOG calls into earnings that the SEC questioned me as to what I knew but that was a long time ago and I don't see even the attempt to disguise inside trading anymore – people just make massive bets on inside information with impunity these days.  Unlike LNG though, I think GLU is worth a toss at $2.88 as they are valued at just $200M and, if they do get a toe-hold in on-line gaming, they could double up quickly.  You can sell the Sept $2.50 puts for .50 and net the same $2 the guy with "insider knowledge" got yesterday so, rather than worry about it – you can join in!  

    GLD/Terra – June is plenty of time but I don't see a catalyst to knock the Dollar down and that makes it tough for gold to  pop $1,600, which is $155 on GLD so why not just sell the June $155 for $3.85 and roll your $145s ($10.80) to Jan $145s at $13.80 so you get another 6 months to grow (and, with inflation, it's all about the time) and you have a $10 spread and, of course, the June $155 caller can be rolled to the Jan $167s ($3.80) at the moment and probable much higher if gold doesn't pop too fast.  

    Insults/Yodi – I wasn't insulting.  It's just that you usually have math questions and that one is tricky as it's uneven.  

    Paul Ryan decides it's time to bum everyone out. 

  19. ryan – I thought we had this discussion last fall and the voters didn't buy it….

  20. albo / GLUU – I started buying this last week.   I rode it last year from 3 to 5 and got out.  It sounds like one of the insiders got out as well near $6 but now back in at $3 to the tune of $10 million (9% stake) per seeking alpha article.   This guys company GGV capital has decent record of selling its portfolio companies.  F9E bought about 1% stake and has been funded in the past by Francisco Partners, a buyout firm.  With the latest online gaming development in NJ, perhaps an acquisition of GLUU is back on the front burner in the offices of Zynga or FB.  Gluu has $22MM of cash and its mkt cap is $188MM.  Zynga's mkt cap is $2.5 billion.  Mobile betting is estimated to be a $100 billion industry by 2017. 

  21. Ha for once I was in line with your thought process—went short GLUU sept 2.50 puts on 2/5 at .85 --

  22. Followed Phil's advice and sold some Sept 2.5 puts at .50 to replace some of the stock I sold this morning at $3.

  23. Insults Phil no problem I will get you next time!
    YUM play of yesterday. We did not expect the stock will be 72 this morning. We still sit very well in the saddle. But as usual, for those not having entered the play, we need to wait till the excitement has cooled down. Now only 69. But we know this, as it is the usual trent without making big MATH. calculations!!!! (8

  24. LNG – dunno about trucks, Phil, but it seems every bus I see in the LA area has a CNG sticker.

  25. Phil
    Are you letting those AAPL $450 March (in 25K Aggressive) naked calls die on the vine?

  26. Got a fill on the LONG USO put but the SCO bull is above my 1.90 offer as /CL is already down from 1.25 up to .99

  27. Phil/INTC – We're still holding the Mar $21 calls (same as older Income Portfolio). Are we rolling these out the April's? or is there another plan for these. Thx.

  28. Speaking of speculative – Pharm, do you remember BSDM?  Big distribution agreement for MicroThermX announced on their CC last week and now they're testing the 50 dma but, at $43M for the whole company – seems like it could be a huge winner selling these razor-blade systems that deliver $2,000 doses. What say you?  

    Ryan/1020 – But they'll keep trying to sell it.  

    GLUU/Terr – Nice summary!  

    GLUU/Savi – Very nice.  

    GLUU/Albo – Very good tip for selling without the regrets.  

    Buses/Snow – That's a little artificial as it's under Government control so environmental concerns can outweigh the bottom line.  When we start seeing companies like FDX switching their fleet – then we know the Pickens Plan is gathering some real steam (or gas, so to speak). 

    AAPL/$25KP, DC – Damn, were those this week?  I though we had another week.  Costs $2 to roll to next week at the moment and they were $4.80 at the open so a lot better chance of getting our money back on those so we may as well do the roll to next week $450 calls for +$2.  

  29. INTC/Opes – INTC at $21.65 and the week isn't over so I'd wait and see how things shake out.  Concept is to roll, of course and the April $21s are $.95 so nothing wrong with getting paid .30 for another month of .60 downside protection at the same strike, right?  

  30. AAPL giveth, AAPL taketh away the day after! No break so far!

  31. terrapin22 – Thanks and well done.  Optrader has played this one like a Stradivarius.

  32. I like the HMY trade, but have 2 sold 2015 ABX $30 puts (net $4.20).   Would initiating the HMY position give me an overabundance of exposure to gold sector? I'd be happy to own ABX at $25.80 for 200 shares and would also invest in a smaller position in HMY than your proposed trade. Thanks.

  33. FU AAPL!!!!!

  34. TLT/StJ – What ever happened to doubling down on those at $2.30?  

    HMY/Rperi – Depends on overall portfolio but they are two very good stocks to hold long-term.  Since you collected the money on ABX puts, you could, instead just pick up a couple of HMY Jan $5/8 bull call spread at $1.40 and let's say you did that for $280 vs $420 collected means you're still net $140 credit on 200 ABX at $30 for net $29.30, worst case but, best case, HMY hits $8 and you make an extra $320 on the set.  

    AAPL/Jabob – Has it ever occurred to you that AAPL may respond better to positive reinforcement?  


    Why Time Frames Matter to You

    Email this post Print this post
    By Barry Ritholtz – March 12th, 2013, 7:22AM

    Do you suffer from Time Frame Confusion?

    That question came up recently after a media appearance where the host asked about a specific stock (which we did not own). The way this investor asked the question was “You mentioned this stock could do THIS — how does that square with your long term view of THAT?”

    The short answer is that most of our client’s investment profiles ar eloking out years or even decades, but the anchor asked what was essentially a trading question.

    Consider for a moment what your time frame is and you will figure out what your answer should be. Indeed, much investor confusion (and many investor errors) involve making the mistake of investing for one time frame and behaving in another.

    Perhaps a few examples might help to illustrate this.

    The classic rule “Never turn as trade into an investment or an investment into a trade” illustrates shifting of time frames for the wrong reasons. If your time frame is that of a trader — you are seeking to take advantage of volatility of daily price fluctuations — then you stick to your expected holding period. Extending this into a longer frame because the trade goes against you is an error. Especially if you have not done the requisite research and planning for a long term hold.

    Investors make a similar mistake. They own something with an expected multi-year holding period, only to bounce on some very short term news — a critical review of a product, a negative research report, a 5% price drop. I doubt any of these investors has in their plan “I will sell XYA if an analyst downgrades the stock.

    Good investors must learn to contextualize (i.e., mostly ignore) the Daily Background Noise. That is my phrase for the never ending proliferation of economic releases, media broadcasts, technical updates that are more or less meaningless time fillers. Television and radio have 24 hours per day to fill — do you believe that all of that content is meaningful? Newspapers and magazines have a specific number of pages that requires ink be spilled on them — are they all worth your time to read? The modern internet has an infinite number of pages to fill (guess how many are truly valuable).

    Consider these various time frames, and what they mean to your investing or trading approach:

    Minute-to-minute: Constant flow of prices, rumors, and chatter about stocks

    Hourly: Similar to minute flow, only with opening and closing behavior (“strong open in XYZ” or “I hate the way the ABC closed”)

    Daily: Very noisy. Filled with random gains and losses, driven mostly by the overall market (my guess 35%) or the equity’s sector (~30%).

    Weekly:  Begins to smooth out the noise factor. Informative charts, overall trend beginning to develop. Still contains lots of noisy economic chatter.

    Monthly: Provides a window into secular cycles. Most traders ignore the monthly charts — too slow they say — but these can give you some insight into real (versus false) reversals.

    Quarterly: Valuation data comes into focus via earnings. Longer term view allows potential mean reversion to be taken advantage of  (via re-balancing).

    Annual: For retirement planning, and life events. Yearly data puts the rest of the noise into perspective. Most of the daily or even weekly up and down movements get smoothed out. Ultimately, where long term investors should be focused.

    Decades: The market historian’s friend.


  36. VXX—woulda coulda shoulda.grr
    AAPL…watching it this morning…for me, it will be a good sign today if it holds today's FIB kill zone 428.10-426.70.  On the upside I would like to see it break the rest of the gap fill (441) as it started to fill yesterday, then break the daily 20ema 443-ish. Its currently bouncing around 61.8%…another good sign? Depending on price action I may add to my $360 put today…Go ahead Phil, I am holding my bucket for you to throw up in!
    BTW-my school called out a level on the SPY today of 155.50/155.34 (60 m level)…-sitting in the level now…if it breaks a good sign for further downside for the little bears. If it holds…I may reduce some of my own shorts take my money and run

  37. NO! I agree with the cartoon!!!

  38. Click for complete graphic (great!)

  39. Wheee on oil already – $92.70!  Stop at $92.75 (never be greedy, you can always get back in) but $92.50 is the primary target.  

  40. GOOG – they forgot google translate app.  I like that one a lot.  using it to help me learn portuguese. 

  41. Once you make a quick .25 like that in the futures, you have something very valuable – the ability to make 5 .05 entry mistakes going forward.  That means, we only have to be 20% right to make money on our next 5 entries – why throw that away?  

    Watch that Dollar (82.85) – couldn't possibly be giving us clearer bull/bear signals today.  

    VXX/Dawn – VIX is up $1 from the close.  Good to get a mark on the floor anyway.  

    AAPL/Dawn – $430 looking good at the moment – very encouraging with whole market selling hard.  As to the $360 put – I hope you mean short put!  

    Cartoon/Jabob – As, of course, do I. 

    CNBC trying to save their pals by pushing the OPEC report.  

    GOOG/Terra – Yes, they are also an incredible company.  Thankfully though, also coming down nicely for us (-$10 today) as they were behaving a little too incredibly.  

    Oil sticking at $92.75ish so a brave play is to re-short and put a stop at 92.81 on /CL.  

  42. Phew on XLF – that one is a gut-wrencher for FAS players!  

  43. Phil—Barry is my 2nd favorite… Thanks for always posting his great articles!

  44. Yupper short aapl $360 put add to my position.  I am gonna wait for a deeper retrace as one of my problems is patience is not one of my virtues!

  45. Poor RCL, dragged down on virus news.  Sucks for me as I'm hitting Disney Cruise at the end of the month.  Hopefully, someone with a better cabin than mine gets spooked and we can get an upgrade!  

    Barry/Jabob – Only guy I read religiously.  

    AAPL/Dawn – Yes, we could have a general pullback that finally gets AAPL to $400 but we won't know until Thurs as this is just the usual drama we get around TBill auctions (to drive the suckers back into bonds for under 2%).  

    33M on the Dow coming into noon – not exactly a stampede out of the market.  

    Oil back to $93 now – good for round 2 but probably will pop over the line first.  Of course, if they fail the line – then also a good short but worth waiting and catching them below $92.75 at worst if they don't at least touch $93.  

  46. 128545 600 Rand Paul cartoons

    HLF swinging wildly again – something's up.  

  47. On AAPL pullback I meant just for today see if it holds the level I mentioned.  Whenever I get in on a shallow retrace (which so far has been around the 61.8 FIB for this weeks swing high/low I usually feels some heat until it retraces to the next level.  Trying hard this year to sit on my hands a little longer.  Yup, miss some trades but…
    That sucker SPY held the level within $.02 freakin cents! …means nothing (except for us scalpers) if it can't make new highs

  48. Phil – made my day with the rand paul disappearing act…..  :)

  49. wow wild swings on /RB

  50. ROTFLMAO…..(Rand Paul)

  51. TLT / Phil – Corrected. That was not tagged as 25KP so I missed that one.

  52. Oh man, was that it?   Come on bears – can't we sell off for more than an hour? 

    FCX up despite sell-off, BBY, BA, AMZN, DIA, HPQ (all our favorites!), IBM, JNJ, MO, MRK up big, NFLX refuses to lose $180, OIH, T, UNG, USO, VLO, VZ, WFR up 2%, WMT and XOM all up for the day.  RRD up nicely,  CELG going crazy lately, now up 50% for the year. 

    CAT in danger of failing $90, that was expected in our Dow review but 200 dma is very supportive at $87.79 so hopefully they test that and we can grab a short put as we really don't think China bad news lasts and US is picking up and rubber and steel are cheap and that's what CAT makes stuff out of (with cheap labor, no less).  

    JAZZ popping on BCS conference presentation.  GILD and CELG also moving up.  

    STX is stock that will not die.  

    WPRT giving back gains.  

    RB/Savi – Crazier than oil. I'd like to see them test $3 after inventories.  More ethanol in mix means less gasoline consumption, in theory.  

    There goes $93 again!  

    TLT/$25KP, StJ – Sorry, I see that now, was discussing in context but didn't mark it. 

  53. IBM/Phil:
    Regarding our IBM trade (below), how about rolling the deep ITM Mar 200's to the July 205's for about even?
    5 IBM July $190/200 bull call spreads for $5.25 ($2,625) and sell 3 March $200 calls for $2.60 ($780) and 3 July $180 puts for $4.70 ($1,410) for net $435 for the $2,500 worth of long spreads if all goes well

  54. That MRK move is ridiculous….IMHO.  It says nothing except the trial could continue, which is not news, as the same thing was said last year.  The question remains, is the premium pill better than the generic at CV risk or not?  Although, they can still sell the pill, for now.

  55. For yield, I would rather own GSK…..Pipeline is better.

  56. Einhorn owned about 26 million shares of Xerox at year end.  It pays 2.7% dividend. 

  57. TLT – For those who did manage to DD in the $25KP, the average entry drops to $2.65 and we do want to be 1/2 back out even there.  

    IBM/Jbur – I think I did them already and we decided to roll the callers to 2x May whatevers and add 5 July $210/220 bull call spreads and IBM is still at $209.95 so that plan seems better than giving them another 2 months to gain on us.  Still, we have 3 more days to observe before having to decide.  

    Premium pill/Pharm – I know I'm co-paying $100 a month for a "premium pill" because the generic one makes me itch like crazy so sometimes worth it, I guess…

    GSK/Pharm – Excellent choice with the $2.76 dividend.  Nice growth outlook too.  At $44.68, the 2015 $43 calls can be sold for $3.35 and the $40 puts for $3.70 so the net is $37.63/38.82 (15% discount on 2x) and that makes the $2.76 dividend 7.3% while you wait to see if you get called away for another 14.3% gain for 29% over 2 years on the trade.  

    Got another quarter off oil but $92.75 held and now a bit dangerous into NYMEX close at 2:35 and, of course, inventories tomorrow.  No change in overall premise, of course, just dangerous on the Futures.  

    I follow Bespoke on Seeking Alpha.  they give some good info (in my opinion)

  59. Anyone still on the TUMI play ? Lookin for news //

  60. Phil,
    EXPE Mar $65 call @-4.00 in the 25KP Aggressive Portfolio. Do you recommend letting these expire? Thank You.

  61. Thanks Pharm // Phil
    Like the GSK trade very much / scaling in, not a cheap stock by any means but reasonable P/E.

  62. STX/Phil – the whole storage sector bumped up (unreasonalby!) this morning, WDC on an investment, OCZ, etc. Quite surprising.

  63. Pharm- pgnx, are you buying, selling, or holding here? 

  64. Bespoke/Dawn – Always good charts:

    TUMI/Wombat – Earnings are next Weds.

    EXPE/Hex – Wednesday is usually decision day for that stuff but, in general, if you are close like that is, there's no sense in doing the roll early as the net of the call you want to roll to should stay pretty much on par with the current call BUT the current caller MIGHT expire worthless if you give him a chance.  

    GSK/Wombat – I like to work into blue-chips for long-term holds.  We discussed the strategy of whittling down the basis on dividend-payers in Vegas last Nov – it's a really important thing to internalize for long-term trading.  

    STX/Scott – Both STX and WDC are both waking up and investing in flash storage.  Kind of a rough transition from drives to chips though and I'm not too keen on betting on either, though we did love STX in 2011, when they were stupid low under $10 but, at $35 – no thanks.  

  65. Could CNBC stop promoting that "exclusive" interview of Paul Ryan with Kudlow tonight. The guy was just on TV the entire weekend and tonight show will not be an interview – it will be a lovefest that will bring absolutely nothing to the table.

  66. PGNX -  well, you could sell a few, or a covered call on it….I still like them long term.  We went to 1/2 a month or so ago on the first spike, which made our basis lower, so selling a CC makes sense.  Aug $4s for 40c or better.  We can sell puts to get back the other 1/2 later.

  67. Phil,
    During this lull, do you have any thoughts on JOE or any other land/lot rich RE cos that might benefit from an upturn in hsg demand, similar to HOV (in the crapper today).
    Thanks in advance

  68. Some pretty good charts to illustrate market rules:

    This guys seems to think that we are further along in the market than we think though:

  69. Phil:  Any thoughts on Diamond since the earnings report and subsequent downgrade?  Would you start selling puts here, or not yet, or not at all?  Thanks.

  70. Stjeanluc-love the last quote in the article you attached!
    “I am a long term, fundamental value, investor.  So these rules don’t really apply to me.”

  71. 11:40 AM The quick selloff in Europe on rumors Commerzbank needs a substantial capital raise has pulled U.S. stocks down a bit further. S&P 500 -0.4%, Nasdaq 100 -0.7%, led by Apple -1.6% and Google-1.2%.

    Commerzbank (CRZBY.PK) is not commenting on market rumors it is preparing a capital raise of €700M-€800M. The chatter has sent the bank's shares 4% lower in Frankfurt and the DAX from a small gain to a 0.3% an hour before the close of trading. EWG -0.4%.

    Midday top 10 gainers: BOSC +23%EMITF +19%OCZ+18%CLIR +17%XNY +16%

    CIS +14%GLUU +13%TLF +12%.ENPH +12%CAB +12%.

    Midday top 10 losers: RVP -15%FREE -14%EMAN -13%LAKE-13%CBMX -13%

    SHOS -12%CALI -11%AVG -11%SLCA-10%HIMX -10%.

    1:04 PM The Treasury sells $32B in three-year notes at 0.411%. Bid-to-cover ratio of 3.51, vs. the previous 3.59; indirect bidders take 20.6%, vs. the previous 18%. Direct bidders take 23.4%, vs. the previous 26.9%.

    "QE has successfully turned the bond vigilantes into bond zombies," writes Mike Riddell. With central banks having an unlimited bid in fixed income,  the discipline enforcers turn instead to currency markets and index-linkers (TIP), and the world's worst-performing currencies this year are the yen (FXY) and the pound (FXB) as the stimulus efforts of the BOJ and BOE trump that of the Fed.

    kind word for the drubbed pound is said by the WSJ's Nick Hastings, who points out the BOE may be chatting about QE, but may well decide not to offer a new round. There'a also the budget next week, and – with elections set for 2015 – Treasury Chancellor Osborne may back off austerity pledges and serve up growth proposals. FXB-0.4%.

    One gauge of U.K. inflation expectations rises to its highest level since September 2008, with the break-even rate – the difference between nominal government paper and index-linkers – rising to 3.35%. The pound (FXB) continues to slide, -0.4% to $1.4859. Any easing Mark Carney is planning on when takes over the BOE in July may have already been done for him.

    Is March 2013 90s month on the Street? Joining the Dow 36K guys in reemerging is Jeremy Siegel, calling for Dow 16K-17Kthis year and 18K in 2014. It's the old "cash on the sidelines" argument – it never goes out of style. "Take a mental note - at a point where investors can't possibly imagine how stock prices could decline," wrote John Hussman last week.

    "It's fun to be able, for once, to place yourself on the cheerleaders' side of the U.S. markets," writes Richard Russell, advising his readers to buy the DJIA ETF (DIA). "It makes sense to be on the side of the (Fed)." Russell last week: I've never seen anything like this.

    The trailing P/E ratio on the S&P 500 (SPY) has creeped up to 15.25 from just above 13 late last spring, writes Bespoke. There's nothing unusual about rising valuations during rallies, they say, but keep it on your radar. Contributing most of late to rising multiples have been Staples (XLP) and Discretionary (XLY), but dividend favorites Telecoms (XTL) and Utilities (XLU) continue to trade at nosebleed (for them) valuations.

    Hedge funds took their equity exposure up to to 35-40% in early March, according to BAML, the highest exposure in 8 months, but well below historic levels. In currencies, speculators nearly tripled shorts in the euro (FXE), but the level remains well less than the "crowded short zone" evident through much of 2012.

    Regions Financial (RF), SunTrust (STI), and Zions Bancorp (ZION) are likely to see the biggest dividend boosts among the regional players, says Credit Suisse. Buybacks would be best at the "cheap" banks as they would get the biggest boost to book value – Regions (again), KeyCorp (KEY), and Comerica (CMA) this year, and Fifth Third (FITB) and Huntington (HBAN) in 2014.

    Strategas analyst Daniel Clifton sees a better than 50% chance the Keystone pipeline (TRP) will be approved by late summer, and he thinks seven stocks will benefit directly or indirectly: CNQ,COPDEXOMLYBPWR and VLO - companies which already are doing well, and adding incremental revenue from Keystone should only help to improve their top and bottom lines.

    A Halliburton (HAL) executive testified yesterday he was aware of some irregularities in HAL's testing of its cement that was used to seal BP's Macondo well, the Times-Picayune reported. A lawyer for plaintiffs in the case said HAL had discarded several "off the record" tests of the cement, the newspaper added.

    An upgrade to Hold from DNB Markets helps First Solar (FSLR +1.5%) trek higher. "We had been negative on First Solar, believing consensus had looked too high. This has now come down to fall closer in line with our forecasts." The firm is maintaining a PT of $27. 

    With bankruptcy rumors flying around, Suntech (STP) isshutting down a Goodyear, AZ solar module manufacturing facility that has 43 employees. Meanwhile, Reuters reports the Wuxi municipal government "may prefer a bailout rather than risk wider repercussions for the sector and local banks," but doesn't want an "aggressive" one. CLSA: "Two months from now, bond holders will likely have to compromise and take some sort of haircut, and then Suntech will get help from local government."

    The fertilizer trade is turning to potash/phosphate producers rather than nitrogen producers, BMO Capital believes, which is bullishfor Potash (POT +0.9%) and Mosaic (MOS +0.8%) but less so for CF Industries (CF -0.8%) and Agrium (AGU -2.1%). The firm also likes MOS' share buyback potential, upgrading the stock to Outperform, while it lowers AGU to Market Perform.

  72. Cliffs Natural Resources (
    CLF) says it will idle its Wabush Pointe Noire plant in Quebec by the end of Q2 to reduce costs as iron ore prices remain weak. VLF says the idling will push down cash costs to $95-$100/ton in its eastern Canada iron ore business from its prior $100-$105 forecast, while it backs its full-year sales and production volume forecast of 9M-10M tons from the business.

    CIT Group says it has heard from a number of commercial airline companies seeking an alternative to the Boeing 787 with a quick fix for the troubled jet looking unlikely. Norwegian Air Shuttle and United Continental (UAL -0.4%) are two Boeing customers that are known to be adjusting their fleets, but other unnamed carriers also appear to be scrambling. It's a problem for the sector (FAA) with alternatives to the 787 providing less seats and higher fuel costs in general.

    Whirlpool (WHRbacks its FY13 guidance as part of its presentation at the Bank of America Merrill Lynch 2013 Consumer & Retail Conference. (webcast).

    Nike (NKE -1.7%) comes out of the gate a bit weak withchatter on the street that OTR Global is downgrading its view on sales in the U.S. and China. The read-through from yesterday's earnings report from Dick's Sporting Goods was a mixed bag for Nike with certain key categories strong but the overall pace of sporting goods demand worrisome.

    Heard during Wal-Mart's (WMT +1.1%) talk at the BofA Consumer & Retail conference: 1) The much-discussed slowdown in the U.S. during Q1 isn't "disastrous" considering the short-term headwinds in place. 2) Returns to shareholders are called a "top priority" and the FY13 annual dividend rate is pegged at $1.88/share. 3) Execs predict international growth will be strong – led by Brazil, China, and Chile – with both new and older stores contributing. 4) New innovations in mobile coming in next few months. 5) Reading between the lines, there seems to be a suggestion the company could make a key acquisition this year. (webcast)

    Heard during Wal-Mart's (WMT +1.1%) talk at the BofA Consumer & Retail conference: On the current status of the U.S. consumer, CFO Charles Holley says delayed tax refunds are a bigger factor than higher payroll taxes. He notes trends for its own refund check cashing numbers and its understanding from tax preparers is that many returns will be processed at the last minute this year. Food inflation shouldn't be a major factor this quarter, according to Holley. (previous) (webcast) 

    Costco's (COST +2.1%6% gain in February same-store sales is the nugget that jumps off the page after Wal-Mart and Target saw the month challenging. The retailer continues to show its unique positioning as membership fees add stickiness to customer traffic and its reputation for pricing integrity keeps sales percolating. Though Amazon Prime is a threat with its membership-based online model striking a similar chord, food items help keep Costco's average ticket price higher as shoppers load up.

    Is something brewing at J.C. Penney? Chatter has picked up that a CEO resignation could be upcoming for the retailer. Also in the mix, tomorrow the company's CFO is scheduled to give a talk at the Bank of America Merrill Lynch 2013 Consumer and Retail Conference. Traders are betting something is in the wind, JCP +3.1%lickety-split.

    Brinker International (EAT -0.7%) will present later today at the Bank of America Consumer & Retail Conference, but slides released early by the company tip off which direction the talk will go. For FY13, the company plans to grow its Maggiano's chain at a 5%-10% clip and Chili's at a more moderate 1%-2% rate. The long-term plan is to see 3% to 5% growth, a mark which would please investors with restaurant revenue sluggish. On capital allocation, expect Brinker to repurchase $1B in shares over the next five years. (webcastslides)

    Heard during Dunkin' Brands' (DNKN -1.5%) presentation at the BofA Consumer & Retail Conference: 1) The NYC ban on soda would have had no impact on the company overall. 2) The company sees FY13 EPS $1.48-$1.51 vs. consensus $1.53 on revenue growth of 6% to 8%. 3) In the U.S., expect net unit development of 330 to 360 units and 450 to 500 remodels. 4) Look for a different restaurant mix, with 70% of  new restaurants including a drive thru and ~2K outlets of the 24-hour variety. 5) On tech, a mobile app launched late last year improved speed of service and conversions on location-based offers. In 2013 a loyalty program will be introduced to the franchisee model. (webcast) 

    Diamond Foods (DMND) saw some strength with its Kettle and Pop Secret brands during its FQ2 but saw its nuts business fall a disappointing 30% Y/Y. Though accounting adjustments are in the rear-view mirror, the company says walnut supply problems are now an issue. DMND -6.5% premarket.

    The New York State Psychiatric Association and mental-health patients have sued UnitedHealth Group (UNH +0.3%) for allegedly violating New York parity laws that prevent insurers from placing more restrictive limits on mental healthcare than for other conditions. UnitedHealth is also accused of breaching federal law by not paying for mental health treatment until final internal appeals were sorted out.

    UnitedHealth (UNH +1.3%) makes some cautious commentstoday at Barclay's Healthcare Conference regarding its participation in upcoming health-insurance exchanges. The new state-based marketplaces are supposed to open later this year under the health-overhaul law, which could translate into millions of new members worth billions in revenue for health insurers. But companies have generally been hesitant about their planned participation, opting to wait and see how well markets function first. "Our position on exchanges is that our entry will be measured," says UNH CFO David Wichmann.

    Shares of Herbalife (HLF -0.1%) spike on reports that the company is not subject to an FTC investigation.

    RadioShack (RSHslumps 4.2% in premarket trading after taking on a downgrade from Goldman Sachs. That the business model is called "challenged" by Goldman is no shocker, but the line in its report citing "minimal equity value" for the retailer cuts a little deeper.

    downgrade to Neutral from Citi sends Red Hat (RHT-4.7%) lower: the firm cites slowing growth and a lack of catalysts. Red Hat is expected by the Street to post 16% growth in FY14 (ends Feb. '14) on top of 17% growth in FY13. FQ4 results arrive on March 27. - The problem with Linux (and anything that is open and free) is there's no one there to market it, so it dies on the vine as competitive crap is polished and sold to the masses for a healthy profit.  

    Seagate (STX +3.8%) has now shipped 2B hard drivessince its founding, the company boasts. Both Seagate and Western Digital (WDC +2.6%) are rallying – investors might deem the timing of the announcement a positive for March quarter shipments. Separately, WDC announces a "strategic investment" in Skyera, a maker of high-performance flash storage systems featuring a proprietary flash controller and OS. In January, Seagate invested $40M in server flash module maker Virident.

    Cisco (CSCO -1.2%) follows tech lower after receiving a downgrade to Hold from Standpoint Research. The downgrade comes as Cisco updates its integrated services router (ISR) line to support application monitoring services. The update is another sign of Cisco's software/services push, and (as CRN observes) helps address the spread of apps arriving on corporate networks thanks to the BYOD trend and the adoption of cloud services. Cisco's ISR line also features WAN optimization support, making it a rival to Riverbed's (RVBDSteelhead appliances.

    In spite of Carl Icahn's maneuvering, Dell's (DELL -0.5%) LBO consortium doesn't plan to raise its bid, a source close to the group (and thus possibly hoping to sway investor sentiment) tells theNY Post. Analyst Bill Kerher: "Silver Lake spent a lot of time examining Dell. It’s going to be difficult for them to raise their offer." With Dell still trading 5% above its  $13.65 LBO offer, others clearly feel differently. (more)

    10M More Ipad sales forecast – must be bad for AAPL somehow:  IDC dials up its 2013 tablet forecast by another 11%, this time to 190.9M units. The popularity of smaller tablets is a big reason why – the firm estimates half of Q1 shipments will involve sub-8" devices. Android (GOOG) is now expected to be the most popular OS – IDC forecasts a 48.8% share, up from a prior estimate of 41.5%. The iPad (AAPL) is seen having 46% of the market, and Windows 8/RT (MSFT) just 4.7%. 2017 shipments (not an easy thing to predict) are seen totaling 350M. IDC expects PC shipments to fall 1.3% in 2013 to 345.8M units. (Q4 figures)

    A selloff in Shanghai and poor guidance from Perfect World (PWRD -7.9%) lead some Chinese Internet stocks to underperform.YY -7.1%BIDU -2%SINA -2.5%GAME -2.6%Citi has downgradedPerfect World to Neutral on sales and margin concerns. On theearnings call, management mentioned sales of PWRD's popularTorchlight 2 game are expected to see a Q1 drop. One title the company has high hopes for (Neverwinter) will launch in Q2, while two others (Saint Seiya and Swordsman Online) are expected around mid-year.

    Susquehanna upgrades VeriFone (PAY +7.5%) to Positive following news long-time CEO Douglas Berenson is out. The firm thinks VeriFone might now be an M&A target, and also foresees an upgrade cycle for EMV payment systems. Wedbush also likes the move, but is more cautious. "We believe the new CEO and new CFOMarc Rothman will need to repair the damage their predecessors have left behind, which could lead to further negative developments … over the next few months/quarters."

  73. The FCC has approved
     the MetroPCS/T-Mobile USA merger. The announcement isn't surprising, given the agency wants to see AT&T and Verizon face tougher competition. The biggest challenge for MetroPCS (PCS -0.9%), which has ticked higher on the news, remains overcoming opposition from dissident shareholders led by Paulson & Co. (official ruling)

    Google (GOOG -1.1%) roundup: 1) Oppenheimer throws some cold water on the Google bandwagon, slashing 2013 estimates on concerns Google's search toolbar policy changes will lead to traffic loss. 2) Google has reportedly signed up Target (TGT) and Babies 'R' Us as test partners for its same-day delivery service. 3) Motorola's X Phone will reportedly feature a feature a 4.7" 1080p display, an Nvidia (NVDA) Tegra 4i processor, and a 16MP camera – 4i-based devices aren't expected until Q1 '14. 4) The first apps for Google Glass: Gmail, Path, Evernote, and the New York Times.

    eBay (EBAY -0.9%) turns lower after the latest batch ofdata from ChannelAdvisor show the company saw its same store sales growth rate fall to its lowest level since April 2011 in February at 8.2%. The reaction could be a tad overdone with the extra leap day last year providing a -3.6% headwind on the comparable for this year. eBay SSS breakdown: eBay auctions -20.3% Y/Y; eBay fixed-price +15.6%; eBay Motors +6.8%.

    While eBay slumps in the wake of ChannelAdvisor's Feb. data, Amazon (AMZN +1.5%) is doing the opposite. Same-store sales for ChannelAdvisor clients using Amazon rose 30.8% Y/Y in February, or 34.8% when normalized for the 2012 leap year. That compares with 34.3% growth in January, and indicates Amazon's 3rd-party sales (39% of Q4 paid units) remain healthy.  Google (GOOG-1.1%) saw mixed results: Google Shopping's same-store growth fell to a normalized 4.5% from January's 7.9%, but search e-commerce growth rose to a normalized 4.9% from a prior -1%. 

    More on Amazon: 1) Morningstar and CIRP estimate Amazon's Prime subs have surpassed 10M. They also estimate Prime members spend an average of $1,200/year on Amazon (twice as much as others), and that Amazon made $78 per Prime sub last year after various expenses. Bloomberg previously reported Amazon had only 3M-5M Prime subs as of Oct. '11. 2) Amazon Web Services is making a stronger push for enterprise accounts by adding virtual private clouds as a default option. Microsoft, VMware, and OpenStack supporters are pitching private and/or hybrid clouds as an alternative to AWS.

    The Nokia (NOK -0.7%) Lumia 928 (codenamed Laser) willhit Verizon in April, sources tell The Verge. The 928 is said to feature an aluminum body (previous) rather than the polycarbonate body used by the 920, something that will help make the device thinner/lighter. It will also reportedly have a Xenon/LED flash and OLED display – the 920 uses an IPS LCD display and LED flash. (41MP sensor phone rumors: III)

    Three lunchtime reads:
    1) Can the Fed burst the next bubble before it’s too late?
    2) Feared copper 'flood' more likely a trickle
    3) Even Berlusconi can’t slow bulls boosting euro view

  74. Looks like bears have the wheel right now as the SPY level I mentioned just broke…now for those intraday chart watchers like myself ;-) ES --breaking yesterday's low of 1540.49 another level needs to break then futures could see 1528-1525 last area of resistance (school level too)…cross fingers as I am a temporary bear at this altitude
    Phil—what needs to happen for you to turn bearish?

  75. Phil // NOK   AAPL
    Reading the weekend newsletter, the back half you were dedicating to the emerging market mobile expansion with NOK cited as the dominant player. I know this is FB's new mission as well. ANy more thoughts on this ?
    Also, when you posted this – got me thinking /
    The problem with Linux (and anything that is open and free) is there's no one there to market it, so it dies on the vine as competitive crap is polished and sold to the masses for a healthy profit.  
    I don't know what took me so long but I just jailbroke my iPhone5 – pretty remarkable. I have functionality on here that just beats the crap out of anything Samsung can deliver. I know it's a geek nitch, but its free and unleashed a tsunami of 'apps' and other logical fixes that AAPL just cant seem to push through.

  76. btw / speaking of wireless induction coils 
    my brother was just granted his first patent a few weeks ago on 'induction spanning' – meaning you can configure these charging coils to charge anything, regardless of the frequency and type.
    Throw everything into a suitcase, or briefcase thats coiled, and everythings charged on the go.
    go bro.

  77.  Methane!!   Not meaning to be Cassandra-like with everyone so bullishly chipper today, but I believe a major step has been taken today in bringing on the end of life on earth as we know it.  At least, if that involves breathing and average ambient temperatures under 50 C.  The U.S. alone is estimated to have over 2,000 Trillion cubic feet of the stuff.  And, trust me, they have no clue as to how to extract the stuff without having much of it escape into the atmosphere — "techniques like " putting a big tarp over the area" [no kidding] are being floated.

  78. :41 PM Priceline's (PCLN -1.1%) online ad spend has more than tripled over the last 3 years to $1.27B (25% of revenue), as the company fights harder than ever with Expedia (EXPE -0.3%) to grab hotel bookings. RBC's Mark Mahaney (he of Facebook fame) thinks $1.14B of that total went to Google (GOOG), single-handedly accounting for 2.6% of the search giant's ad sales. Priceline's online ad spend rose 41% Y/Y in Q4, but there was a payoff. Expedia, which doesn't break out online ad spend, has seen its total ad budget rise 40% in the last 3 years to $870M (22% of revenue).

  79. Methane…..

  80. 0X0 – some day, some way, it will happen!

  81. SGEN….unleash the beast!

  82. There's $92.50 on oil! 

    Wow, CNBC interviewed some girl who said Euro was important to prevent them from going to war with each other and no one laughed at her!  I guess we'd better sit down with Canada and Mexico to work out a common currency pronto before we begin charging each other's boarders.  Oh wait, Mexico already does that to us – maybe she's right…

    Ryan/StJ – Good show for anyone who needs to lose some weight (throwing up).  

    JOE/8800 – Those are hard because you have to really dig into them to determine the value of their assets vs debts.  Cramer used to sucker people into JOE at insane prices and we used to short them in the $70s but then they got so cheap in the crash (around $15) that there were worth a chance but, as far as I know, it's the same Florida swampland they've always had to the point where they tried to make a deal with Southwest to set up some sort of hub in NorthWest Florida so people would have a reason to go there (and maybe buy some land).  So I'm not thrilled with Joe but, if you remind me on the weekend, we can look at a few others. 

    Eurphoria/Pharm – So the premise would be that we were "optimistic" during the massive drop in 2011 and "relieved" in the crash of 2010?  Sorry, no sale.  People are just getting optimistic now – excitement would be S&P with a current p/e of 20, not 15 trailing and name some stocks that are grossly overbought?  There were thousands back in 2007 and commodities were incredulous and Financials were worth triple what they are now – and that's 15% of the S&P right there.  The /e at the time was based on fake balance sheets – something we've somewhat purged and, of course, no Fed pumping in cash.  Yes, Europe and Asia were collapsing then too – so what?  Euphoria is GOOG $1,000+, not $850.  Look at X – $20 – is that anyone's idea of Euphoria?   Hell, it's not even optimism…

    DMND/John – Let the downgrade police have at them and then maybe we get a nice entry.  They should hold $15 and then we can expect them to slog back to $17.50.  They made .43 a share for the Q but most of it was a one-time item so .06 is more realistic but expectations are .22 this year and .75 next so, even if we give them a 20x value – $15 is the right price and they have to do what they say they can do (cut costs and boost sales) to make $17.50 – I don't think there's any rush. 

    HRB/Pharm – Gosh, who would have thought a $500 tax service wouldn't do top-quality work?  That's another ridiculous thing about our tax system, forcing people who only make $20K to hire a $500 service to do their taxes (unless they want no deductions, which costs them $500 anyway).   As TurboTax is proving – the whole thing can be done much more efficiently on-line but even that shouldn't be necessary as the IRS should be doing what TurboTax does.

    Bears at the wheel/Dawn – Well, if so, they are terrible drivers.  Up, down, up, down – they're all over the place.   For me to turn bearish we need 3 more red boxes on the big chart (5 total).   That's the simple answer but I'm already bearish from last week as I said you have to play the odds and the odds favor a pullback to 14,050 at this point (2.5%) or about 1,510 on the S&P.  As we correctly played very bullish on the way up, it's just sensible to lock in our gains as best we can and sacrifice a 2.5% move up and THEN we can add more bullish positions – although, since we are NOT EUPHORIC – there are till plenty of nice little bargains we're finding.  

    Aside from the usual scaring the sheeple into bonds this week, we have the oil breakdown we're betting on and that will pull the Dow and the S&P lower and then people will panic into the Dollar and that will put more pressure on the other indexes and commodities and that will drive the Dow and S&P lower so I don't care about all that – what I really care about is what levels end up holding and, if we ONLY dip 2.5% of less – then we are going to be MORE bullish next week than we were last week.  

    NOK/Wombat – That's funny as my note on the Newsletter was "Please make it more clear that the NOK comments are by the author of that article and not from me!"  I knew that would happen…  I don't really agree with the author as 6Bn people already have cell phones so it's not about giving them cheaper phones unless they are cheaper smart phones.   Why would you think an African pig farmer doesn't want the same IPhone you do?  The problem is he can't afford it – or the data plan, most likely but NOK isn't solving that problem with a $50 phone.  As to jailbreaking your IPhone – Jackie is saving up $20 to do that to hers.  I have no idea why but she has my old 4 and wants to get Siri and some other stuff that you can apparently do with a $20 program or chip or whatever it is.  I warned her that if she frys the IPhone – I'm not running out and buying her another one.  

    Congrats on patent Wombat, it's a good idea.  I still want wireless chargers – there should be a pad on my desk and in my car that charges my phone and laptop and bluetooth thingy.  It's got to be possible – tell your brother to invent that.  

    Methane/ZZ – I'd be more worried about a spark in a massive underwater field blowing a moon-sized chunk of the Earth into space.  It's OK, Branson, Musk and I are getting off this miserable planet ASAP!  

    PCLN/Jabob – If Expedia is spending $870M a year on advertising, their agency sucks because I can't recall a single ad. 

  83. Methane / Zero and Phil – I actually understand that rising temperatures will lead to the Siberian permafrost defrosting which will free up unknown quantities of methane which in turn will aggravate the global warming problem. On the other hand maybe we'll find a way to actually use that methane eventually!

    This has the potential to release vast quantities of methane trapped by ice below the surface – billions of tonnes of methane. World-wide, peat bogs store at least two trillion tons of CO2. This is equivalent to a century of emissions from fossil fuels.

  84. Euphoria & Powers Phil…sure….if StJ was I and I was StJ….or maybe we are one in the same!! And I am sure you have no idea about what I am talking about, but since I did not post about Euphoria (cough StJ), I assume those premium drugs are working their magic! 

  85. QQQ roll to next week 70s for 7-8c.  Currrently 3c for our March  16 $70s.

  86. Oh, and adding another 1.5X to those calls.  So if you have 10, make it 15.

  87. Article / Dawn – The article also outlines a simple way to time the market that has worked pretty well over the year – look at a 52 week period on a weekly chart. Or a 12 month period on a monthly chart:

    I had written a post with some backtesting earlier :

    In the end, too many people are focused on 5 minutes charts or even daily charts and getting whipsawed in and out when simpler system will usually keep you in these normal corrections and get you out when it get really bad! Looking at the chart above, you would have been bullish since January 2012 and using the corrections in 2012 to DD in your positions. You don't catch tops and bottoms but no one does except after the facts in newsletter ads!

  88. Phil/ryan   It works for supermodels….maybe I should tune in…. ;)    

  89. Sorry Pharm, I knew it was StJ and I even know why I wrote Pharm – because I wanted to know if you had an opinion on BSDM (above comment)?

    Methane/StJ – Bad video but exactly my point.  

    Philip J. Fry: [Sees the ruins of the Statue of Liberty] No! They did it! They blew it up! 

    [Camera pans to ape version of Statue of Liberty

    Philip J. Fry: And then the apes blew up their society! How could this have happened? 

    [camera pans to other Statues of Liberty

    Philip J. Fry: And then the birds took over and ruined their society! And then the cows, and then… I don't know, is that a slug, maybe? Noooo! 

    Bottoms/StJ – I can't find that video anymore but I just so happened to be doing a 3-hour show live on March 9th, 2009 and I was pounding my fist while the market was collapsing screaming BUYBUYBUY!!!  It still links to the clip but it's password protected and I have no idea how to get it.  But, other than that – no one hits the exact tops and bottoms….

    Ryan/1020 – I challenge you to watch the whole thing.  I know I can't do it without breaking my TV when I throw something at the screen.  I think the only worse thing I can imagine would be if Kudlow were interviewing Bush and congratulating him on his 8 fabulous years in office…

  90. Phil/ryan – Meditation can help with that shoe, err…crox throwing habit….. :)

  91. thank you stjeanluc…I do use the 12 monthly as a 'bull-bear' line but again, I am trading so I am not staying in for the big downdrafts.  As an example, on AAPL I will put 2 or 3 contracts on and once it hits a swing level on a daily or weekly chart I will take one or 2 off, let the remainder run.  If it dips back down again to a good level, I will layer back in.
    ok, enough on the intraday levels ;-(

  92. CLF: should we look at some puts??? (CLF) says it will idle its Wabush Pointe Noire plant in Quebec by the end of Q2 to reduce costs as iron ore prices remain wea

  93. Yes, BSDM….we were in them and out of them with a hefty little profit.  With CLSN having a similar product, I am a bit gun shy of going "all in".  They will need to raise capital soon, so starting with an initial 1/5 entry, they are worthy of a small allocation.  I really like CERS better, for reasons that have to do with 'cleaning' plasma for infusions.


    For a home run, May 2.5 calls for 10c.  Then stock wise, Aug 2.5 covered calls on the stock.  I would sell 1/2 Aug 2.5 Ps as well.  So 200 shares, STO 2 calls and sell 1 P.

  94. Phil – Was the 3/9/09 show the one where the girlfriend came on and got a LOT of positive reviews?  She had more curves than the charts that day!

  95. Uh-oh – looks like we may actually close red (not the Dow, though).  Does anyone know the protocols for handling this?  It's been so long I seem to have forgotten…

    SOX are up half a point, that's interesting.  

    Dollar 82.83, oil right on $92.50 line, gold $1,593, silver $29.19, copper $3.551, nat gas $3.63 and gasoline $3.15 so pretty much all up from last week, when the markets were lower.  Nope, still bullish…

  96. iphone jailbreak/ wombat: how'd you do it?

  97. Maria B. – "Dow could make a record for the eighth straight day"
    Bill G. – "Maria did say it would happen like that"
    Why the hell am I here from 3 to 4 EST.?!  I could just listen to Maria and make a sh*tload of money!!!  ;)

  98. Good way to play, Dawn. 

    CLF/Newt – I think this is a good floor for them but may take a while to recover.  

    Thanks Pharm.

    Girlfriend/Grant – Yes, that was her.  Daleela, I think her name was.  I'm not sure if Tim's still with her, he's been on vaca for a year.  

    Maria/1020 – She's amazing, isn't she? 

    Dow volume just 64M with 10 mins to go, not much of a reversal day even if they get to 90M.  

  99. Phil- it seems every year after tax season HRB falls…. With tax season less than a month away and HRB almost up %100 the past year might a bear put spread make sense as both a seasonal play and downside protection? 

  100. HRB/Jrom – Also every year they run up into April 15th as more and more people think "they must be doing great" – After that is a good time to short them.  

  101. Phil: Get yourself a nice cold beer…

  102. Guy on CNBC has same complaint as me – we can't even get a good sell-off.  So annoying! 

    Sorry Newt but I'll be billing you for my time on that one.  

    ROFL – Dow up 0.01% at close.  Take that bears!  LOL, that wasn't fake at all, was it?

  103. Maria is way too excited about a +2 point finish !

  104. Phil your /CL play spot on congrat. I am still mathematically walking softlyTested the waters today by buying the USO 33.5 put.
    I did sell the same again at  /CL 92.50 as I was not sure if you would hold this over night, nothing mentioned. So I sold with a nice LA dinner in my pocket. Thanks

  105. Those 30 measly dow stocks may be up…by a hair, BUT it was not confirmed by IWM, SPY or QQQ…all down.  VXX up too for whatever that is worth these days…6.23%

  106. Dinner/Yodi – Very wise – that's all we ever need is enough to feed ourselves another day.  Tomorrow we probably get another pop into inventories and, unless there's a big surprise, we can do it all again.  

    Confirmed/Dawn – Yes but Globally, people still watch that Dow so it's the cheapest and easiest way to paint a pretty picture. 

  107. agree…measly .02% fooey

  108. thank you jean luc for taking the time before.  great article. I do subscribe to active trader, too.  good mag!
    good night all!

  109. Kudlow / Phil – I wonder when his "Obama Boom" book will hit the press! After all, the guy got all excited by an 8 year flat market so a 130% rally should get some props no?

  110. Bottom / Phil – Oh well, almost no one!

    In any case, even if you had jumped in the market 3 months later, you would have done well!

  111. Interestingly enough, GOOG was down today but so was AAPL again… At least 1/2 of our 25KPA nemesis is helping!

  112. Phil // Newt // PSW
    Get Your Hands Off me you Stupid Ape !!!! // Jail break

    Backup your devices.

    Have iTunes update all your iDevices to iOS 6.1

    Download and run a program "TinyUmbrella" plug each device into your USB port on the mac. Select each device one at a time under "connected devices" bar on the left and then click the "Save SHSH" button. Select the next device, repeat, until you have archived all the SHSH iOS blobs. SHSH blobs are Apple's iOS code signatures that are specific to each devices's serial number and iOS release.

    Then for the devices running any 6.0-6.1 version iOS which you want to liberate, download and run this:

    Once the jailbreak is complete, check out  which Cydia apps are the kewlest.

    There is no downside to jailbreaking, only upside… I promise — just go and do it and thank me later.
    NOK // Yep. thats why I had that dissonant shock to the back of my head – See, if you hang around long enough, you start to think like Phil. Oh my. ; >

  113. … black smoke still over the Vatican. I love over-indulgent ceremony.

  114. Friction, cassocks,…..

  115. Consolidation?

  116. Not surprisingly, a higher market doesn't help as much the economy:


    The latest research – by the economists Karl E. Case, John M. Quigley and Robert J. Shiller – shows a $1 decline in housing wealth reduces consumption by 10 cents per year, whereas a $1 increase in housing wealth raises spending just 3.2 cents. This suggests that homeowners will spend $500 billion less this year than they would if home prices were at their 2006 level.

    By contrast, changes in stock-market wealth have a much smaller effect on spending. Consumption rises or falls about 2.5 cents for each $1 change in stock market wealth. Therefore, the $4 trillion increase in financial wealth from 2011 to 2012 will add only about $100 billion to spending this year.

    I guess it would have made more sense to support the housing market, but how much fun would that be to help the bottom 99%?

  117. All,
              I made some suggested edits re: grammar/syntax/spelling to the book chapters currently posted (  I emailed the word document w/changes to Phil but never heard back. Is there a better way to make these suggestions? I tried the wiki but that looks more like it is for ideas on sections versus actually editing. 
              Also, I thought I remembered someone saying they had a couple pages of their favorite "Phil-isms" (?) If you wouldn't mind sharing I would love to read them all in one spot. Thanks! 

  118. This is not supportive for oil and gas prices moving forward:

  119. Laptop / Phil – Tall order, dual monitors off a laptop.  Check out this device.
    High end laptops here.
    My laptop for traveling is a 14" ASUS, I7 Processor, 8GB Ram.  Works well at 700.00.

  120. FAZ / Phil – Thanks for the FAZ trade.  Up 0.10 from this morning.  I will execute in the morning.

  121. Phil: Awwwwww. Come on.

  122. Wombat: Thanks. can you or do you need to get updates etc once its Alive?

  123. Stj:  I must ask: is there something about a 3.52% average 30 year U.S. mortgage rate that sounds unhelpful to you?  Short of buying them for their 2006 price and letting the former owners live in them for free, I'm wondering what you think should be done?  Just saying.

  124. Multiple monitors on a laptop - I use these Kensington adapters to do it, works great.

  125. Good morning! 

    Going for day 9 of gains on the Dow but, of course, yesterday was nonsense.  

    Not looking good in the Futures with the Dow back at 89.90 and our indexes down slightly.  

    Oil just hit $93 (/CL) so we get to short it again!!

  126. China was a real downer this morning as another big city added housing curbs.  

    Euro tested $1.30 or, as we now call it, the early morning line.  Pound is still lame but $1.494 is slightly less so.  Yen stuck under the 96 line for day two.

    Gold $1,589, silver fell back to $29, copper $3.546, nat gas $3.62, gasoline $3.1765 and oil just bounced off $92.75 and may be giving us quarters all morning as it bounces back off $93 (tough line to cross on pre-market volume).  

    It's important to mark commodities because we can then go back to a day like the last time the Dow went down (3/1) and we see oil at $90.97 (we went long), gold $1,566, silver $28 (we went long), copper $3.48 (long), nat gas at $3.50 and gasoline at $3.08 (and we went long).  

    So, now that we have some reference prices – we can see that commodities are up about 2.5%ish and the Dow is up 400 points, which is also – TaDa! – 2.5%, which indicates to us that there's not really and reason for us to go lower and we also can start watching our commodity lines for signs of weakness but, so far, no one is leading the way down at all – especially considering we''re fighting a 1% stronger Dollar.  

    Yes, I'm sorry it's not TA – so much easier to draw a squiggly line and pretend it reveals the secrets of the universe but, if you learn to identify the FUNDAMENTALS that make the squiggly lines move – the picture is a lot clearer!  

  127. Thanks Mr. M!  I just bought this laptop on AMZN – sounded good to me and it helps our HPQ position.  Also, it has Windows 7, not the dreaded 8, so I figure I'd better get it while it lasts.  I also bought two of those connector things and this nice-looking USB portable monitor so AMZN owes you a commission!  As long as I can mimic my 3 main screens, I can function pretty well anywhere and, when I travel with the kids, I commandeer their laptops for screens 4 and 5 anyway. 

    Oil back at $93 again but very tight stops now as the Dollar is falling (82.90) so not as good an environment as last time but, I have to pay for this laptop now so /SI over the $29.05 line (where it is now) is the play of the moment until the Dollar bounces.

  128. Thanks Wombat – Jackie is very excited to try it but currently has no phone until her room is cleaned!  

    Big Chart – A bit early to call it consolidation but it would be healthy if we did so into the EOQ – especially if we hold all those lines that we're resting on.  It would give the 50 dmas a chance to catch up and curve those 200 dma's to a more positive position as well.  

    Meanwhile, futures off a bit now, about 0.15%.  Oil back at $92.83 (so stop at $92.85 – that's what tight means!) and silver $29.06 (stop even) and Dollar 82.83.  I think we should consider $29 on Silver and $3.50 on copper to be very critical must holds for the commodities in order for the indexes to stay bullish but, as we've been discussing – oil is likely to fail $92.50 and it's almost a certainty that will drag the markets down with it. 

  129. PHil – up 2.5%  "indicates to us that there's not really any reason to go lower…"  sorry, but I'm missing something…doesn't the 2.5% indicate a "weak bounce" (acc to PSW market dynamics) and therefore could be a potential inflection point?  Why does the 2.5% indicate no reason for the market to go down?   TIA for clarification! 
    Btw, an SA contributor on commodity markets wrote yesterday that he uses LNG (the stock, Cheniere) as an indicator for what's going on with the entire gas/oil sector – when it's rising at it has been, he says that it indicates the entire sector is rising and when falling…I much prefer your analysis of how many barrels at Cushing and how many to be sold, but still found his "indicator" to be interesting…

  130. Economy/StJ – Very good point.  As I often say, thank God for the Times – even though Conservatives are discouraged from reading it ("liberal rag") and Murdoch is trying to destroy it, it's nice that there's still a paper that isn't just a tool of the top 1% for the moment.  

    As to supporting housing.  That's what I pitched to Geithner when the crisis began – handed them a power-point and everything but was told it was "politically unfeasible" as the GOP would never vote to bail out homeowners.  For new members – I originally posted "How to Solve the Housing Crisis Tomorrow" on April 16th, 2008 – BEFORE the crisis was broadly acknowledged (so I guess I called the top too!) and that wasn't even the first time as I had written something I had Members circulate to Congress on Jan 21st.  These are actually great reads on this 4th anniversary of the great crash of '09 – especially in light of StJ's saying no one saw this coming!  

    Democracy does work, by the way as we managed to annoy enough people in Congress that Timmy G summoned myself, Yves Smith and John Lounsbury to Washington to give him our opinions.  Ahead of that meeting, I put up a little love-letter to Timmy, to make sure it was on the record that we told him so!  Geithner was actually great but, tragically, also impotent as his hands were tied by the GOP and, even more tragically, 5 years after I came up with a very simple solution to the housing crisis – we still have a housing crisis.  

    Book project/Bdonn – Sorry but Tina was away last week and I didn't get around to much.  Hopefully I'll be caught up by the weekend.  Best place to make notes or comments on book is in comment section of book.  My goal is to do a rewrite on Saturday and then we can go over and hopefully finish that chapter and move on to the next.  I decided we need an "About the Authors" page to take out the Phil and Gareth stuff from chapter 1 as it's off topic as it sits.  

    Great demand chart, StJ.  Note how they refuse to project further drops, which makes no sense as CAFE standards alone raise the fleet to 35mpg (from current 22) by 2020 and 54.5 (no, I am not kidding) by 2025.  So tell me, how does that chart stay flat if the same cars that were getting 22mpg in 2012 are getting 54.5 in 2025.  Also, what about other possible improvements in the use of solar or Bill Gate's fusion project or something?  That's why I love the long-term short on XOM – they are a lot deader than AAPL in the long run.  

    Thanks Jfaw – I took the easy way out with AMZN and 2-day shipping of a 2-year warranty HPQ with 16 Gig of ram.  I'm pretty sure it's everything I want other than light weight (if I customized it I would have told them no drives needed) but my primary need is for something to be a full set-up when I'm on vaca so it really doesn't have to be that portable.  

    What can be done/ZZ – How about letting people qualify for that 3.5%?  My mom has good credit and it took her 4 months to refinance because my Dad died and she wasn't showing significant income so she had to go to another bank through HAMP and they took forever (as the banks kept delaying hoping to catch her on an up rate cycle that never came and I had to threaten legal action to get them to finally move) and then, when they finally closed, they sold the loan right back to my Mom's original bank!  What idiocy!!!  

    Think about what's happening, they are telling people who have $400,000 6% loans that they don't qualify for $400,000 3.5% loans – even if they are making their current payments.  If the Government simply fixed that – this economy would take off like a rocket.  The banks are able to quickly refinance at low rates but not their customers.  Also, of course, there are all sorts of nonsense charges involved when refinancing.  You need title insurance again, which is ridiculous and they usually do appraisals, also ridiculous and then they charge you application/origination fees, etc.  All BS charged to the consumer and enough money that it prevents the most needy from going through the process that they desperately need to save them money.

    One stroke of a pen and the Government can force banks who want to borrow for 0.25% to ADJUST EXISTING LOANS to 3.5%, with no fees and no searches – there is no reason other than corporate greed for banks not to pass along those savings to consumers – savings that those same consumers are going into National Debt for to provide subsidized rates to those very same bankers.  


    2.5%/Jercon – Not talking about a bounce, we're up 2.5% from the last time the Dow had a red day.  2.5% moves are significant in all sorts of things, as are 5%, 1.25% and 0.625% with big indexes.  In this context, I'm saying that EVERYTHING went up 2.5%, not just the indexes, which indicates an overall repricing of assets, not so much a runaway market.  Still, yes, with a 2.5% move up, a 0.5% retrace is expected (retraces become more and more likely as you hit 1.25%, 2.5%, 5%, 10%, 20% and, over 20%, Fibonacci takes over but 38.5% and 50% are Fib lines anyway).  

    As to LNG – many things go through periods of strong correlation.  We used to have a Valero Rule because VLO used to tell us everything we needed to know about the energy sector and it worked for years until it stopped.  So nothing against using LNG or any indicator that's working but always be aware that the do, at some point, stop working.