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Thursday Fake-Out – Weak Dollar Props up Weak Markets

SPY 5 MINUTE

They just don't appreciate that you get tired
They're so hard to satisfy, You can tranquilize your mind
So go running for the shelter of a mother's little helper
And four help you through the night, help to minimize your plight
Doctor please, some more of these
Outside the door, she took four more
What a drag it is getting old – Rolling Stones 

The rally is looking a little tired.  

Despite repeated doses of Central Bankster stimulus, we just can't seem to get a proper breakout over our key levels.  As you can see from Dave Fry's charts, yesterday's volume was so low we may as well have been closed yet despite all the "good" news (see this mornings News Flast for details and Futures trading notes) the S&P only made a half-assed attempt at 1,850 and barely held 1,840 in the end.  

INDU WEEKLYFar more significantly, the Dow fell through the bottom of its ever-rising channel and today is make or break technical action at 16,350 (below which we are short on /YM) despite the Nasdaq plowing along to new highs.  The NYSE fell just shy of our 10,400 line (see yesterday's post) and the Russell tested 1,080 but we just jumped in on the short side at 1,175 – but with very tight stops over that line.  

Oil jammed up to $97 (we're short /CL at that mark) on news that the Keystone Pipeline will drain 700,000 barrels a day (3.5M per week) out of Cushing, OK, which will allow us to export 3Mbd of petroleum products out of the country – which would make the US the World's 3rd largest exporter and the ONLY country in the world that imports oil and exports refined product in order to artificially increase prices paid by our own citizens.  

Prices that are, in fact, SO HIGH, that Valero Energy (VLO), our biggest refiner, says it expects to make $1.70 per share in Q4, that's 82% HIGHER than expectations thanks to the combination of a lower cost of oil and a higher margin for gasoline thanks to the US consumers cutting back on consumption while the export of gasoline (and VLO has a plant right at the end of the Keystone Pipeline AND gets a massive taxpayer subsidy for investing in it) makes US prices HIGHER than they were last year, when we were consuming 10% more gas.  

You can send this post to you Congressmen and tell them to WAKE UP and do something about it but, unfortunately, if he's a GOP Congressman, there's a 63% chance he's a member of ALEC, the American Legislative Exchange Council, who are the very same group that has been lobbying to push Keystone and just about every other piece of evil legislation that is destroying our country.  

 

I'm not going to try to convince you how bad these guys are – just make sure you understand WHO ALEC is before you head back to vote in November!  As noted by The Nation:  

ALEC and the Kochs often pursue parallel tracks. Just as ALEC “educates” legislators, Koch funding has helped “tutor” hundreds of judges with all-expenses-paid junkets at fancy resorts, where they learn about the “free market” impact of their rulings. But ALEC also operates like an arm of the Koch agenda, circulating bills that make their vision of the world concrete. For a mere $25,000 a year, Koch Industries sits as an “equal” board member with state legislators, influencing bills that serve as a wish list for its financial or ideological interests.  More here

8:30 Update: OK, liberal rant over – back to the Economy!  Only 326,000 people lost their jobs last week, about in-line with expectations.  Despite throwing 1.2M people off the unemployment lines, continuing jobless claims nosed up to 3.06M – not a good number.   MCD's earnings are a good example of what's wrong with the company missing revenues (very slightly) but beating on earnings, thanks to more automation and lower labor costs.  December comp-store sales were off 3.8% in the US.  Had McDonald's not bought back 2.5% of their own stock this year – earnings per share would have been a disaster.  

China shadow bankingSpeaking of disasters, investors in China are NOT happy as the $500,000 minimum trust instruments they bought through ICBC that was guaranteed to be "100% Safe" turns out to be worthless.   The product, which comes due on 1/31, raised funds for a coal mining company that collapsed after its owner was arrested.  

A total of $496M of these $500,000 minimum blocks (992) were sold but what's at stake here isn't just this half a Billion Dollars but the entire $6Tn Chinese Trust system, which relies on the TRUST of investors that their money is safe and secure.   Should this deal fail, the whole system may begin to unwind!  

Meanwhile, 4 Chinese purchasing managers' indexes – two compiled by the government and two by HSBC Holdings PLC - all dropped last month, the first time that has happened since April.  The HSBC services PMI, released Monday, fell to 50.9 for December, compared with 52.5 the month before and, this morning, the official Chinese PMI showed CONTRACTION, to 49.6 vs 50.6 expected and the Hang Seng tumbled 1.5% this morning.

This can be a major problem for trust funds that promise investors 9.5% to 11.5% annual returns.  A very difficult trick to pull off when you loan the money in a contracting economy! 

That's why I put out an Alert this morning to short oil, short the Dow, short the Russell and yesterday we shorted oil and this morning we can't wait to short NFLX near $400!  Already our Russell Futures (/TF) are up $300 per contract as the index fails 1,172 at almost 9 and next we expect oil to start dropping (/CL) – see Tuesday's fabulous live Futures Trading Webcast for much more information on how we trade the Futures.  

Meanwhile, I'm very glad we're "Cashy and Cautious"!  

 


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  1. Dollar being smashed now, down to 80.86 – down over 0.55% since midnight and more than 1% since yesterday's open.  Not helping the Futures too much yet but oil is $97.10. 

    Good morning, by the way!  


  2. Good morning.
    Phil, the dollar dropping may give us a delayed market response and better short entries later.


  3. Good morning

    NFLX already drifting down before you can buy an option


  4. With that view of the world, no wonder they don't want to help:

    http://talkingpointsmemo.com/livewire/republican-voters-pew-income-inequality-poor-rich

    Fifty-seven percent of GOP voters said that a person is rich because "he or she worked harder than others," while just 32 percent attribute it to advantages they enjoyed. The results are almost completely flipped among Democrats.

    Overall, 51 percent of Americans said that people are wealthy due to advantages in life, while 38 percent said it had more to do with hard work.

    Pew also found that 51 percent of Republicans believe that people are poor due to a lack of hard work, compared with just 32 percent who attribute it to circumstances beyond their control.


  5. Oil Lines

    R3 – 98.76
    R2 – 97.82
    R1 – 97.15
    PP – 96.21
    S1 – 95.54
    S2 – 94.60
    S3 – 93.93

    Yesterday's high and low – 96.89 / 95.28


  6. NFLX / Yodi – Not much of a down move so far – still look to open over $390. Last quarter, they opened over $390 but quickly fell to $315 or so. They actually opened at $387 and closed at $323 but moved down some more AH. 

    Maybe worth a shot to pick up way OTM puts hoping for a repeat! Although riskier than last time I think.


  7. STJ,

    I agree it is a MOMO stk. could go anywhere but I think by 390 the heat is gone for any crazy buyer. We will see.


  8. 143406 600 LOCAL Arizona education cartoons

    143384 600 Benghazi Report cartoons

    143333 600 Secure Americans cartoons


  9. Good Morning!


  10. 143283 600 Freedom Water cartoons

    143274 600 Affordable Generics cartoons

    143272 600 Moochers cartoons


  11. Dollar 80.68 was just hit but quick bounce to 80.77, which is down 0.666% – thanks Lloyd! 

    Better short entries/Razi – Yes, everything is bouncing again.  Oil had fallen back to $96.80 at 9 but now back to $97.25 and, same as all morning, we can expect a nice .10 to .20 pullback so still good shorts on /CL, but only if you are quick and not greedy!

    Dow down 100 for the open, also 0.66% – would be way worse if Dollar wasn't so weak.  Gold skyrocketed to $1,255, didn't fail $1,245 since our re-entry there (/YG) at $320 per $10 move per contract!  Now $1,255 is the stop line and re-enter on break back over but that's up $25 (2%) off the bottom ($1,230) so I expect a bit more of a pullback here.  


  12. Meanwhile – NFLX!  Looks like $389 and hopefully they squeeze up a bit.  The aggressive way to play yesterday's combo trade is to sell the long calls into the excitement and let the rest calm down or, even more aggressively, sell the pre-roll March $400s and put a stop on the short Feb $170s.  We'll check on that at the open. 


  13. Some thoughts on bitcoin and other digital currencies:

    http://www.nakedcapitalism.com/2014/01/bitcoin-plays-hands-central-bankers-will-facilitate-use-negative-interest-rates.html

    Bitcoin enthusiasts like to present it as a “power to the people” form of money, stressing its apparent lack of ownership (the “Napster for finance“). They stress the lack of need for a “trusted party” like a bank or broker to verify that a payment has been made. And many clearly relish the idea of launching a currency outside the control of central banks (plus this beats Cryptonomicon in geekery).

    If you believe the hype, you’ve been had. As Izabella Kaminska of the Financial Times tells us, you all are really just doing free/underpaid R&D for central banks, since you are debugging and building legitimacy for one of their fond projects, making currencies digital and getting rid of cash altogether. [...]

    …the greater the negative interest rate, the greater the incentive to hold alternative coins. The greater the incentive to hold alternative coins ,the greater the incentive to produce them. The greater the incentive to produce them, the greater the chances of oversupply and collapse. The more sizeable the collapse, the more desirable the managed official e-money system ultimately becomes in comparison.

    Either way, the key point with official e-money is that the hoarding incentives which would be generated by a negative interest rate policy can in this way be directed to private asset markets (which are not state guaranteed, and thus not safe for investors) rather than to state-guaranteed banknotes, which are guaranteed and preferable to anything negative yielding or risky (in a way that undermines the stimulative effects of negative interest rate policy).

    So all these tales by Silicon Valley promoters (and remember, Marc Andressen mentioned all the money chasing Bitcoin-related ventures) of how liberating and democratic Bitcoin will be are almost certain to prove to be precisely the reverse. Hang onto your real world wallet.


  14. And some thoughts on China:

    http://www.nakedcapitalism.com/2014/01/china-credit-worries-rise-large-shadow-banking-default-looms.html

    Japan had a grinding-down of market prices over a period of years, even as the government tried restoking the economy. And when it thought it had gotten a real recovery and withdrew support, it did get a series of financial collapses. Now the credit overhang in China isn’t believed to be as bad as Japan’s, so it has more room to navigate an exit. But the flip side is that Japan’s credit hangover took place when global growth was strong and the West tolerated Japan continuing to run large trade deficits.

    To put this more simply, everyone, even the Chinese officials, seem to recognize that the old Herbert Stein saying, ‘If something cannot go on forever, it will stop,” is close to becoming operative for them, and they are trying to be pro-active. But no country has ever navigated from being export and investment dependent to being consumption-driven without undergoing significant upheaval. Given the lack of models for what the Chinese are trying to accomplish, I’m not sure that optimism, even of the muted sort, is well placed.


  15. Inequality/StJ – I don't understand how only 20% of Republicans believe hard work and determination do not guarantee success.  Maybe that's the secret – 80%(ish) of Republicans are ACTUALLY lazy, or at least believe they are – therefore they are not insulted by statements that it's their own fault if they are poor or don't have enough money to retire.  There are certainly a lot of people who are guilty about things in life and want to be punished – maybe the GOP has a sort of S&M relationship with the lower-class members of their party!  wink

    NFLX Feb $375 puts at $10 with NFLX at $387.42 – I like those right off the bat.  


  16. Wow, a repeat of last quarter for NFLX – opened at $387 again! Let's see if they match the $60 plunge again!


  17. NFLX earnings play was 5 short Feb $360 calls (not $370) at $10.10,  buying 4 2015 $370/400 bull call spreads at $10 and now the 2015 $370s are $67 so those are the ones I'd cash out and see how the rest goes. 


  18. As I said before NFLX is dropping faster then you can write


  19. Of course, if they repeat last quarter's swan dive, these $0.50 Jan4 350 puts will be worth $30 tomorrow… I guess a little lottery ticket.


  20. Meanwhile, the short 2015 $400s are $53 so net $24 on that spread and the short Feb $360s are $29 so a loss of 5x $18 ($9,000) on the short calls and a gain of 4x$14 ($5,600) on the long means the whole trade is a net $3,400 loss – not devastating but annoying.  So, best to just cash it and do a new trade unless you want to go with my above suggestion to add more risk.  

    The 2015 $420/380 bear put spread is $23.50 and you can sell the $500 calls for $23 for net .50 on the $40 short spread.  That would take less margin and give you a massive upside ($3,950 per contract) if NFLX fails to hold $380 for the year – that's what I would switch to rather than mess around rolling.  


  21. However my Plays on NFLX are still up 3.2K for the day


  22. Gold miners having a good day so far…


  23. /NKD in free-fall – just failed 15,600, which was old resistance.  That's down from 16,000 at the open last night. 

    Re-wheeee! on the RUT, 1,170!  

    XLF falling hard and fast.  VIX 14, TLT over $106 – suddenly people are panicking.  Gold $1,257, silver $20.20.  Nat gas, meanwhile, had hit $4.947 but now back to $4.82 but, swinging like that – it's unplayable.  Gasoline $2.666.  

    Good note on currency, StJ. 

    LOL Yodi!  

    NFLX tomorrow $375 puts are $2.60 and you can buy 10 of those ($2,600) with a stop at $1,600 ($1.60) and you can take 1/2 off the table at $5.20 and get a free ride for the rest of the day if all goes well.  Let's do 2 in the $25KP.


  24. Interesting NFLX back to 389 they call this the second jump of a dead cat There are still fools around


  25. What's today's plan for oil inventories?


  26. Great article by Charles Smith:

    China and India are both powder kegs awaiting a spark for the same reason: systemic corruption.


    The conventional view of China and India sports not one but two pair of rose-colored glasses:Chindia (even the portmanteau word is chirpy) is the world's engine of growth, and this rapid economic growth is chipping away at structural political and social problems.

    Nice, especially from a distance. But on the ground, China and India (not Chindia--there is no such entity) are both powder kegs awaiting a spark for the same reason: systemic corruption in every nook and cranny of both nations. The conventional rose-colored view is that corruption will inevitably decline with modernization and economic growth.

    This is simply wrong on multiple levels: as the opportunities for crony/neofeudal skimming increase, so does corruption. As the scale of the economy increases, so does the scale of corruption.

    China's "princelings" (offspring and family of the inner political circle and top apparatchiks of the Communist Party) are billionaires, not mere millionaires. A recent expose of offshore accounts held by various Chinese billionaires estimated the wealth skimmed and transferred our of China at between $1 trillion and $4 trillion: China's Epic Offshore Wealth Revealed: How Chinese Oligarchs Quietly Parked Up To $4 Trillion In The Caribbean.

    Even the top number is a gross underestimate, as $4 trillion only accounts for the skim of the top layer; beneath that 1/10th of 1% is the rest of the top 1%, tens of thousands of lower-level political functionaries who skimmed billions of dollars forcing peasants off their land and selling development rights to crony developers--to name but one common skim of many.

    A more realistic estimate might be $6 trillion--half of China's gross domestic product (GDP). Consider the ramifications of the many models of systemic corruption at the top:How a PLA General Built a Web of Corruption to Amass a Fortune.

    Much more…


  27. If you can get it the NFLX 400 butterfly is mighty tasty, eh MrM?  45c or better.


  28. NFLX I feel it is to early to make any moves on that stock today


  29. Phil the put you suggested is now only 1.42


  30. It looks like institutions shook down the weaklings in NFLX at the open and got themselves a better entry for a push upward! If you can enter at $380 and take some profits at $395 it sounds like a good deal… Did Icahn tweet about NFLX?


  31. Corruption / Phil – How about Russia? Look what happened with the Winter Olympics… $50B when Vancouver did it for $7B. I wonder where the difference ended up.


  32. $25KP - NFLX puts dropped very fast but we don't count spikes – especially one-minute ones.  Currently $1.88 and NFLX at $391.65 so not looking good but let's give it some time rather than jumping right out.  


  33. Did you guys forget the reason it dropped after lasty earnings?

    Icahn announced he reduced his position.


  34. By the way, has anyone been reading the PSW Magazine?  We're up to 2,081 subscribers!  It's mostly stuff I've already linked in chat for you guys – usually things that are more general interest and "evergreen" (not something that won't be valid a month later) but I also put off-topic items there when they don't fit our usual discussions.  

    Oil still going the other way from the market.  Must be expecting a draw at 11 and Dollar at 80.70 is sure helping a lot.  

    • SEC administrative law judge Cameron Elliot has barred the Chinese units of the Big-4 accounting firms – KPMG, Deloitte, PwC, and Ernst & Young – from auditing U.S.-listed companies for six months.
    • Elliot declares the accounting firms "willfully" chose to withhold audit work papers from U.S. regulators for Chinese companies being investigated for accounted fraud. The firms have been worried about violating Chinese privacy laws by turning over the papers, and have argued the dispute needs to be resolved politically.
    • Though the firms plan to appeal and say they can continue serving Chinese clients for now, shares of Chinese Web and solar names aren't handling the news well. Soft Chinese PMI data could be worsening matters.
    • Chinese Web decliners: BIDU -2.5%. SOHU -3.2%. DANG -8.9%. SFUN -8.5%. 
    • PWRD-.5%. QUNR -7.1%. LITB -6.5%. YY -6.1%. WUBA -6%. 
    • BITA -5.4%. EJ -5.9%. SINA-4.6%. LITB -6.5%. CTRP -5.4%.
    • Chinese solar decliners: TSL -8.7%. JASO -6.9%. SOL -6.3%. JKS -5.6%. 
    • CSIQ -5.4%. DQ-4.6%. YGE -5.6%. CSUN -6.2%. HSOL -7.8%.
    • Qihoo (QIHU -4.6%) has joined the selloff in spite of a BrightWire report stating Alibaba (ABABA) has reached a deal to acquire a stake in the company. Marbridge Consulting reported two weeks ago Qihoo and Alibaba were in talks about a possible investment.

    XLF $21.66!  /NKD 15,535!  

    OK, NOW if NFLX is over $390 again, we'll want to stop out in $25KP.  $375 puts are $1.85 and now that it's calmed down, if our premise is sound, we should start seeing some resistance to the upside. 


  35. NFLX is still overvalued drek IMO but I wouldn't expect anything like last time.

    Hope I am wrong


  36. And now we're stopped out in the $25KP, right at $1.70.  Loss of $200, trade idea didn't work.  Could have made $1,000 so worth a toss.  


  37. stjean/difference   Putin's Pockets!  :)


  38. No, really 1020? Such an honest leader!


  39. stjean – Putin is more than likely the world's richest……


  40. PLX,   nice August $5 put sale….2000 contracts


  41. Down and down we go!  

    At some point, people start running back the Dollar and that can be BIG TROUBLE!  

    Gold already $1,263 – Boo-yah!  

    If only oil would crash, this would be a perfect day….  Testing $97.25 at the moment from above (/CL). 

    Russia/StJ – I don't think you need an article to tell you they are corrupt.  I wonder if the IOC will ever take that into account – that the Olympics can be used by a corrupt government as an excuse to steal Billions from the taxpayers.  You would think they wouldn't want to be used that way…

    Could Putin give Bill Gates a run for his money as the world’s richest man? Picture: AP. Putin – Possibly the richest man on Earth:

    In the interview, Belkovsky claimed Putin controlled 37 per cent of oil company Surgutneftegaz and 4.5 per cent of natural gas monopoly Gazprom, giving him a fortune of about US$40 billion — the market price of these stakes at the time, Bloomberg reports.

    Putin goes diving. Picture: AP.

    Belkovsky has since said Putin’s stake could now be worth between $60-70 billion, putting him in contention with Bill Gates, the wealthiest man in the world with a $72 billion fortune.

    Dollar 80.68, oil $97.33.  Leading indicators were very weak:

    • Dec Leading Indicators: Leading Index +0.1% to 99.4 vs. +0.1% expected, +1.0% prior (revised).
    • Coincident Index +0.2% vs. +0.4% prior.
    • Lagging Index +0.3%

    December Existing Home Sales: 4.87M vs. consensus 4.90M, 4.82M previous (revised).

    NFLX next weekly $370 puts are $2.50 now so I like those but, of course, it's a gamble.  


  42. ABX – Next weeks $20 Calls are 21c.  It needs to break the glass ceiling….


  43. Natural gas only -107 bcf the first strike on oil.


  44. Looks like we're testing last week's drop so same bounce levels will tell us if we are getting a real breakdown – watch the NYSE closely, they are right on the line.  Also, S&P, of course – now 1,821.  As we fall, those -1.25% levels should be support if we're still strong.  If not, then we're back in the zone, looking to test the -2.5% lines.  

    • Dow 16,300 and 16,100
    • S&P 1,825 and 1,800
    • Nas 4,125 and 4,075
    • NYSE 10,275 and 10,150
    • Russell 1,155 and 1,140

    Of course, the trick is, when 3 cross over, we look to play the laggard bullish until one of the 3 fail.  The same goes for crossing under, of course.  


  45. IOC / Phil – I wonder why they even allow countries that are not democracies to hold the games. Kind of goes against the Olympic principles… Of course, the problem is that the people who decide where the games will be held also collect bribes!


  46. Phil,  RIG is starting to look interesting again.  What's your take?


  47. FU NFLX!!!!


  48. Here we have an other long term play UPS

    they have their earnings 1/30 down 1.11 today and pay for some one wish to buy the stock 2.5% yield

    Buy Jan16 87.5/100 BCS 6.60 and sell the Jan16 87.5 putter for 6.50 Set your play up so you can sell 1/2 monthly callers like Feb 100c for .76 cents however I would wait until 1/30 to sell any callers


  49. IOC/StJ – On the other hand, they did hold an Olympics in Nazi Germany, so it's not like they ever had principles in the first place….  That was the summer of 1936, not like they didn't know what was happening, the first concentration camp opened in Oranienburg, just outside of Berlin, in March of 1933, Hitler was "elected" Fuhrer in 1934, Jews were stripped of their rights in Sept 1935 and in March of 1936, German troops occupied the Rhineland and Mussolini took over Ethiopia…   

    RIG/Jr – I like them long-term but I am still waiting for oil to drop to $85 so they can have a nice pullback.  

    2nd time's a charm on NFLX (so far).   Too bad the timing wasn't right for $25KP.  

    LOL – Oil with a small but gasoline with a big build – factor in distillates and we're flat but disappointing for the bulls:

    Still a good short below $97 (/CL)


  50. Oil was a wash but nobody is buying gas.

    RUT finally like maybe a breakdown.


  51. Phil / TSLA – time to buy some puts again on this one?  you had great timing the last time around.  almost a double top here.  


  52. EBAY giving back almost all the AH gains that were boosted by another Icahn tweet. Maybe people are starting to see through that… Although there are still enough suckers for him to skin out there.


  53. CL- if theres a build in inventory it goes up , if theres a draw it goes up..  this shit has crushed me week after week . I get stopped out 15 times for every small ride down I can grab. Lost more than I can evr hopeto recover anyway, time to give it up and trade something I understand.


  54. New trade: 5 NFLX Jan 15 BPS, $420/$380 filled at $22.35. NFLX price at time of trade $390.44.


  55. SNDK holding around $70 which seems to be turning from resistance to support. I like these guys long term and was waiting for the earnings to look at a trade.

    FFIV retracing some of the gains. $103 is a Fib line in my chart. Getting expensive though.


  56. hummer

    Watch for a small run up and go for SCO or USO February 22, You can easy get some back and not bite your tong.


  57. I'll post tonight's earning numbers after lunch. Some interesting ones tonight and big movers as well.


  58. Several of us have discussed the difficulty of trading VIX options.  They don't track the index very closely, and they move in fits and starts.  A good example :  I bought the April 14 calls at $2.60 when the VIX was at 12.  It is now up over 2 points and the option is up .10.  That's the reason I always go out at least two months.  Would expect that if we have another weak day tomorrow that the calls should move up, and perhaps pretty sharply.  We'll see.  As Phil and STJ have said, there are easier things to trade.


  59. CL- I could make a fortune by just doing the EXACT OPPOSITE of what makes sense-- Im wrong on every single trade. Keep pressing at the next level , just has increased my losses .  Get stopped out so much theres nothing there when it does break downward. 


  60. Waiting for the Carl Icahn HLF tweet in 3,2,1…


  61. hummer

    I made a mistake 2 days ago by a stupid chart that said reports on the 22. I did DD on USO puts and the advantage is you can wait a day or a week, Prices usually drop on Monday.


  62. TSLA/Terra – Very scary into earnings but of course I'm still very short on them anywhere near $190.  Like NFLX, I like the 2015 $210/180 bear put spread at $20, selling the $220 calls for $18.60 for net $3.40 on the $30 spread that's 100% in the money at the moment.  This trade is great for people who get the concept of covering with a 30-45 day $10 call whenever TSLA goes over a $10 line as a momentum trade (and then using the profits to roll the short call higher).  

    EBAY/StJ – As long as they hold $50, I'm happy.  

    Oil/Hummer – It has been a rough week but you have to get out as soon as you cross over those .50 lines in the wrong direction.  A big run up can really chew you up if you stick in it.  Also, single contracts with quick ins and outs make much more money than multiple contracts anyway.  3 day run from $94 to $97.50 has been a killer though!  

    Notice nothing unusual really.  Short at $94 stops out, $94.50 never crosses back below, $95 works the first time for a .50 gain, loss on the second try, then a loss at $95.50  but $96 never gives us an entry and $96.50 turns out to be one loss and then a loss at $97 but then a win at $97.50 for $500.  So it's all about limiting the losses – even in a horrific run like this going against you.  

    Also, don't forget, the start of a new contract cycle is the worst time to be bearish.  

    NFLX/IHS – Now we just have to hope they get real.  

    VIX/Albo – Has been amazingly frustrating to trade.  

    LOL Rdn.  

    USO/Shadow, Hummer – Good point, if you want to make a conviction play on oil, use USO/SCO, not the futures – you can't afford to have convictions there.  


  63. Ive just been doing the short at .99 and .49 , stopping out at .09 or .59 and getting long at .12 .62 with stops etc ,  turned that one bad 50k loss day into a 150k loss since thxgiving-  literally 15 stop outs for every 25 move that im on the right side of—- thers .50 backwardation between March and april right now… at march exp , april will be about .25 high than march — that's .75 per contract — thinking about shorting march into april and just waiting for the backwardation to reverse — safe and no stress--I have a day job , cl is ruining my life


  64. EBAY / Phil – $50 has been close to the bottom of that channel that they have been stuck in all last year. Talk about a stock going nowhere for 12 months while the NASDAQ is up close to 30%. Of course, good for selling premium against!


  65. HLF / Rdn – I really hope Icahn gets taken to the cleaner on that one. But he'll bail before anything bad happens to him, tweet 2 weeks later and let the small guy pick up the tab I am sure.


  66. NFLX – was able to sell short the 2015 400 C for $60 this morning. Phil's maxim "always sell into the initial excitement" takes on a whole new meaning when you do it reverse!


  67. Virtual Short Strangle Portfolio,

    The RUT Jan5 weeklies are going to expire tomorrow morning, so good timing to sell new spreads:

    - Sell 10 SPX Feb 1650 puts for $2.125 and Sell 10 SPX Feb 1900 calls for $0.975 credit


  68. Sell 20 RUT Feb2 Weeklys 1070 puts for $1.725 credit, Buy 20 RUT Feb2 1040 puts for $0.9 debit


  69. getting close to 97.50 cl


  70. Pharm

    Any interest in these two ?

    VIVUS Inc. (VVUS)

    Insmed Incorporated (INSM)

    Thanks


  71. Good article on CLF. Seems headed to $20 or below. The 2016 13/20 bcs, selling 18 puts. can be had for a much lower price. Patience. Patience. Patience.

    http://seekingalpha.com/article/1959471-cliffs-natural-resources-how-far-will-it-fall?source=yahoo


  72. hummer125 – I feel your pain.  Sorry that's happened.


  73. ARIA up on acquisition rumors, if your stock is covered you might want to buy something above the short calls to give you back some upside.  For example my stock is covered w/ MAR 7 C so I bot some FEB 10 C @ .20 as insurance.


  74. CL- I ve been going long at .12 and .62 's  they get stopped out too— just on the wrong side of every trade somehow— lose the .10 stop on every single one in either direction lol  --  maybe im  not taking small enough profits,  but when I go long at say 97.12 , I wait for a pop into the 97.40s before selling then shorting at 97.49… its just so choppy all that happens is stop out losses trade after trade , day after day— here it is reaching another new high today— im long at  97.62 — where do I close this trade ??  97.82? or 97.98 and get short?


  75. Phil,

    What are your thoughts on the MSFT trade in the LTP now that the stock is trading around $35.70. Do you still recommend the same entry points?


  76. FU TSLA!!!!!


  77. MJNA going up ( in smoke?)


  78. VIVUS Inc. (VVUS) – no thank you.

    Insmed Incorporated (INSM) – interesting….but options suck.  Repackaging an antibiotic for IT dose (think inhaler).  Data for Phase 2 are due out in the coming quarter or two, the other just started Phase 3.  I would wait for a bit more of a pullback and then sell a few puts.

    ARIA.  Sell some puts as well.  I have that covered call from buying the stock.  now it is time to do some BCSs.  So, buying the May 7/12 BCS, selling the 5 puts for 70c net debit on the $5 spread.


  79. Oil/Hummer – Definitely don't trade it then!  The idea is to catch little $100-500 moves and take $100-$200 losses and, every once in a great while, we get lucky and catch a big move but .10 stops are WAY too much.  If you enter at .99 and it goes to .01 – that's it!  Generally, you don't even want to enter at .99 unless it is coming DOWN from above anyway (if you are short).  From the amount you are trading, I assume winning small amounts doesn't satisfy you but that's all the Futures is about, especially in oil, where they try to flush you out as soon as you enter a trade.  Meanwhile, Buffett's Rule #1 is best followed – "Don't lose money!"  

    EBAY/StJ – Yes, that's why the only trade I liked was the put sale.  

    NFLX/MrM – That's not reverse, that's the idea.  You sold premium into the excitement and now it died down to $55 already for a quick 10%.   Good job!  

    Strangles/Peter – Off to a very good start.  

    CLF/DC – Part of CLF's capex in China is building a railroad so they can sell what they mine.  They've got exclusive mineral rights to the region (paid for) and they are mining (paid for) and stockpiling material while they build a railroad to ship the stuff out for sale.  Once they get that cranked up (late this year) it should drop another $2Bn a year to sales (+40%) with better than usual 25% profit margins (double current earnings).  That's why it's a LONG-term play!  

     Oil/Hummer – Well, that's a strange entry, better to be long at $96.51 with a stop at $96.49.  Essentially, if it fails to hold, get out.  Also, it's not a mechanical thing to short or long EVERY time you get a cross – there needs to be a catalyst you can count on.  Right now, the Dollar keeps going down so we don't have a good short signal but we will when it begins going back up and God help your longs when it does.  Oil topped out at $97.79 and the stop at that point (for a long) is $97.74 – if $97.75 doesn't hold – get out!  If I wanted to play long, I'd look for a bounce off $97.50 to go long with a stop at $97.48 but I'm short, so I want to enter at $97.48 and stop at $97.52, so I risk $40 but there's no limit to what I can make if I get it right.  In fact, I'd rather see $98 tested now so I can short there! 

    MSFT/Sibe – Break-even on that spread is about $32.50 so not at all worried with 2016 spread.  Of course they are going to sell off with the market so I still like them but I'd wait and see how low we can go. 

    MJNA/Randers – That was a very easy pick!  

    LQMT still .30 – I don't pick many penny stocks, but when I do…


  80. Peter D

    Unsure of which Feb SPX options you are selling – the mthly, Feb 22?

    Sell 10 SPX Feb 1650 puts for $2.125 and Sell 10 SPX Feb 1900 calls for $0.975 credit

     

    Thanks


  81. Speaking of our Portfolios, STP up 1.4% and LTP only down to up 0.8% so still well-balanced.  


  82. Thanks, Phil.

    Ooppsie, Jan5 is not expiring until next week.  No worries, we have plenty of margin for the new spreads.  We were waiting for a day like today to add to our position and finally the opportunity came.

     

    8800,

    Yes, when we say Feb it's the monthly.  It tried to label the Weeklys clearly and the monthly is just the name of the month with no number.  You can check the pricing too to make sure that it's the correct option chain.


  83. CL-  PHIL__  So heres the big question— if im only looking for a .10 or .20 cent move and I close out , how do I ever catch the .50 or $1?   Is it just guess work on when to close a WINNING position?   And its not about being satisfied with $100 profit, Id take that every day instead of the $3k to 9K per day I get crushed


  84. Income Portfolio down 0.3% but no worries there as it's very new and very long-term (good time to catch up if you need some trade ideas!):

    Butterfly Portfolio as dull as it's supposed to be:

    And our $25KP – and I did include the loss on the NFLX earlier:


  85. hummer CL

    Watch bid/ask numbers, they will show a pattern change when the big players on the floor change mood. If they reverse with price get out, if no change, hang on. It is definitely a feel thing that takes time and until you get the feel trade 1 contract. BTW I think oil has topped out and Phil would say short on the next .50 cross.


  86.  Since oil has spiked recently, I thought I'd post this, received today from GK Research"

     

    "Rising US crude output has, until very recently, been of precious little benefit to US consumers and even many US refiners. Pipeline bottlenecks in the heartland meant that large amounts of crude simply piled up in tanks near Cushing, Oklahoma—the price point for the West Texas Intermediate (WTI) crude benchmark—rather than reaching refiners on the coast. Coastal refiners with access to this “stranded” oil reaped windfall profits, but many others without good transport links continued buying seaborne crude at a big premium to WTI. This, in turn, meant gasoline prices for most drivers throughout the US continued to track more expensive global benchmarks like Brent. It also meant key OPEC producers such as Saudi Arabia faced relatively little pressure to cut prices in response to the US supply increase.

     

    That is, until late last year, when US coastal crude prices, and nationwide gasoline prices, took a big step down to align them with WTI, not Brent. Dramatically expanded US pipeline capacity, paired with continued robust output growth, is the explanation. This trend is set to accelerate this year as capacity on Enbridge’s Seaway pipeline doubles to 850,000 bpd and TransCanada’s Keystone South starts pumping 700,000 bpd south from Cushing to the coast."  Disclosure:  I shorted oil today.


  87. In that Income Portfolio, we've only used $23,000 of buying power – so remind me to make some trades there!  

    Oil/Hummer – If you are behind, you try to get even and the idea is to set stops, not just get out.  If you just lost $100 on your last entry, then you should be thrilled to make $100 on your next one and get net even.  If you are ahead $100, then you can play the next one with looser stops – looking to catch a bigger move but, if you are not NOT trading 90% of the time you look – then you are doing it wrong anyway.  We started this morning noting it would be dangerous to short with the weak dollar – the dollar has been weak all day so very, VERY tight stops on shorts.  

    EVENTUALLY, we'll catch a good dip, like the .50 dip we just got from the first drop from $97.50 back to $97 (/CL) - there was no stop, we went below $97 briefly and stopped out at $97 (or $97.02).   Now we are crossing $97.50 again from above so we want to short but FIRST we look at the Dollar (80.685) and make sure it isn't going down.  So if the Dollar isn't getting over $80.7, we're not liking the short oil play and, even if we trigger in at $97.49, we're going to keep super-tight stops as long as the Dollar remains weak.  


  88. Pharm

    Any interest in these two?

    Clovis Oncology, Inc. CLVS  is this the replacement stock for cldx

    ImmunoCellular Therapeutics, Ltd. IMUC after big drop

     Thanks


  89. Added back some DRWI on this pullback.


  90. If you are playing oil short (Shadow!), notice that, between 11 and 11:30 we held the line at $97.33 so that's the line we want to see broken to get comfortable but it's also the line we expect to see a bounce so, from $97.50 to $97.30, we play a very, very tight stop.  It does look promising as the Dollar is testing 80.70 but it has to get over it first.  

    Pipelines/ZZ – Despite the spin, this rise in oil is about their ability to send refined products OUT of the country.  Rising crude output has been of little benefit because we cut back our imports and tripled our exports – very simple.  

    Nothing complicated about this – they just keep trying to spin it to make it seem so…


  91. Phil, regarding the CLF as discussion a few days ago, I had a question / wanted to better understand the short puts.  If when CLF was around 25, I sold 10 of the 20 puts for $4.10, I received $4100 in premium.  Then, if CLF goes below 20 (say to 17 or 18) and I get assigned, I will need to spend $20000 ($10K in ordinary margin) and will own 1000 shares.  Then with the stock at 18, I sell 10 front-month 20 calls for $1.00 (I receive $1000 in premium).  If CLF pops back to 22 and I'm called away, (I get my $20000 back), I have actually earned $5100 in premium and am now out of the stock (irrespective of any BCS that there may be), even though the stock is selling at $3 less than what it was when I first sold the puts when it was 25.  Am I calculating this in the right way?

    Thanks; if that's the case, makes me worry less about getting assigned, but not sure if I'm figuring it correctly..


  92. Bieber busted!!!   (CNN) -- Justin Bieber was charged with drunken driving, resisting arrest and driving without a valid license after police saw the pop star street racing early Thursday morning, Miami Beach police said.

    Watch this video

    Yet Dimon, Blankfein et al get to just walk around… 


  93. Put on an SCO Mar 32-Mar 35 spread for $1.


  94. Earnings tonight:

    ISRG
    Consensus – $3.79
    Whisper – $3.89
    Average move / Predicted by options: 10.4% / 6.2%

    JNPR
    Consensus – $0.37
    Whisper – $0.39
    Average move / Predicted by options: 7.7% / 5.7%

    MSFT
    Consensus – $0.67
    Whisper – $0.70
    Average move / Predicted by options: 4.6% / 4.4%

    SBUX
    Consensus – $0.69
    Whisper – $0.68
    Average move / Predicted by options: 4.3% / 5%

    Once again, options don't seem to reward the risk except for SBUX but I have to believe that there is more risk in SBUX today.


  95. CLF/Pwright – Amazingly, yes, that is correct.  This is why we want to teach you to BE THE HOUSE in 2014!  In simpler terms, you collect $4.10 for the $20 puts and you net in for $15.90.  When the stock is assigned, you are still in for net $15.90 and, if you get called away at $20, you make $4,100 plus whatever you sell calls for.  This is why it's such a powerful system.  Unfortunately, it's also very dull as you have to pay your temporal dues to collect your money.

    SCO/Albo – Very tempting to press yesterday's bets.  

    Speaking of oil – once again we exported 2.138Mbd vs 944K last year.  We also imported just 7.4Mbd, 300Kbd less than last year.  Overall, we're shorting ourselves 11.2M barrels a week vs last year and we STILL don't have a draw in oil!    We have cut our consumption of oil by more than Spain or England or Taiwan or Australia's ENTIRE consumption of oil in just one year!  

    Here's Bertha from the NYMEX on CNBC – now they like gold and silver!  No comment on oil at all – interesting. 


  96. Phil/LQMT

     

    Did you liq the whole position? I am long 10k from well essentially zero since my original entry was .08 and sold half at .20


  97. LQMT/Sage – Not in any of our official portfolios anymore but, as I noted yesterday, I'd take 1/3 and run at .30 and set a stop at 1/2 at .25.  With a zero cost basis (good man!), cashing 3,000 at .30 is $1,000 back so 100% profit locked in and the rest is pure fun.  


  98. if I could get NFLX Feb 380's under 5 that might be a go. They've gone too far too fast.

    HLF could be interesting. If this is just another BS move like when that loud-mouth investor's comments turned out to be a non-event then whatever, but if something really is rotten in Denmark with this company they have a long way to fall.


  99. Wow, this year sure doesn't seem any different than last year as NFLX and TSLA go up up up.  Job security for Jabo's rants 8) 


  100. ARIA – played that one for three years on the $35 buyout premise, tragic that now we get excited thinking they might get acquired for only $10…


  101. stepping on bucky…trying to stop the bleeding


  102. Dollar 80.57 – wow!   We'd be down 2.5% if not for the fact that the Dollars we buy the stocks for are losing value faster than the stocks themselves…


  103. Phil – …. and the bitcoins people buy with dollars. Compared to the dollar, this thing is rock solid!


  104. Damn, market is still dropping like a rock. A move like that makes sheeples rush into safe haven n bonds….


  105. Bitcoins/BDC – Soon to be safer than stocks too! 

    TLT 107!   VIX 14.65.  Dollar 80.55, new low for the day.   

    RUT almost 1,160 – congrats to the shorters on that one!  Dow good too at 16,094 so stop at 16,100 now.  


  106. This is perhaps grasping at straws, but a few days ago I had a conversation regarding the possibility that the U.S. and Iran would continue rapidly on a path to rapprochement, the idea being that [with fracked oil popping up everywhere] that the U.S. and the apparently moderating Iranian government are rapidly moving towards "the enemy of your enemy is your friend" mode in Central Asia, the enemy being  Sunni crazies supported by many of the 75-90% of the world's Muslim population  [depending on who you ask].  My friend suggested that Israel might actually support such a move, perhaps somewhat covertly.  Well, today I saw a note that Rouhani's and Netanyahu's jets were parked next to each other in Davos, and there was an "accidental" exchange of friendly greetings.  Just saying.


  107. Correction: I meant that 75-90% of the world's Muslim population are Sunnis;  I did not mean they all support the radicals.


  108. LULU/Phil:  The Income Portfolio LULU play was supposed to be buying the 45/60 spread for $4.20 and selling puts for $4.00 for net $0.20.  But I noticed the price of the spread is hovering around $5.00 and the play in the chart above is at a price of $5.20.

    Is the play still good at a net of around $1.00?


  109. Sorry I mean selling 1/2 the puts for 8.00 in the LULU play above.


  110. Earnings notes:  

    • ISRG – So hard to like a stock at $450 that we started buying at $80!  We recently used ISRG to hedge a 500% SSO bullish play that worked out great (should be stopped out now, of course):
    • Submitted on 2014/01/10 at 4:01 pm
    • ISRG/MrM – That's why I always pick them when they are down.  I wonder if Seeking Alpha will call as much attention to this article as they do to the ones that people get right?
    • Our other new trade idea from the weekend post (so far, still not finished, but still playable) was 10 SSO March $92/97 bull call spreads at $3.20 ($3,200) offset by the sale of 5 ISRG April $300 puts, now $5, for a $2,500 credit for a net of $700 and an upside potential of $3,300 (471% on cash).  
    • We had also sold ISRG $300 puts for $23 back on 9/10, when they were selling off and I decided to make a stand.  Now, they are $450 and I still like them but would rather see them pull back for a new entry.  
    • JNPR – Unfortunately, they already popped.  Pre Oct earnings, I wanted to buy them on a dip, but we forgot.  Now we hope they miss and we know we love them at $17.50.  
    • MSFT – As noted above, we still like our LTP set-up and, if they miss, then we'll likely improve it.
    • SBUX – Those finally paid off and we hit our $72 goal on the shorts but they STILL haven't taken a proper hit for the KFT settlement.  If they do get down to the $60s – I will go bullish but no interest here other than to see what happens.  Our old STP play was 20 Jan $85 puts at $6.10, they finished Friday at $74.90 so $10.10 for an $8K gain on those – finally!  

    Oil just tested $97.33 and looks to be failing (finally!).   Stop should be $97.36 for those of you playing the home game….

    Iran/ZZ – The US is making friends, Israel may be a tougher sell but it's actually a good thing to have your old business partner suspicious of your new business partner sometimes…


  111. Phil everything changed directions a t 2 PM the next 30 minutes may give us direction or a head fake.


  112. IMUC – no interest.

    CLVS – yes, I like them and will do some more research in to them.


  113. Pharm ?Halo any interest?


  114. HALO – sure, they are good as well.


  115. ARIA play went through at 80c.  Not 70.


  116. Speaking of stopping out – of course the RUT stopped out at 1,163 from this morning's /TF short ($1,000 per contract)

    Gold made $30 at $32 per dollar per contract off the morning long – very nice.  

    LULU/Kinki – It was a 1/2 sale of the $8 puts and that netted to $4 off each long spread.  Bottom line is you get about the same entry now with that combo (10 2016 $45/60 bull call spread at $4.65 ($4,650), selling 5 2016 $45 puts for $8.35 ($4,175) for net $475 or .475 per long.  Shouldn't be $1 – try to be more conservative with your offers.  I still like it – it's got 2 years to come back and our net entry is $45.47 with LULU at $46.80 AND we have room to DD or roll to lower strikes as it's only 500 shares ($22,737). 

    2pm/Shadow – They have to at least try to save things.  China only has 5 more sessions before their holiday, they can start spinning out of control pretty fast.  

    Anyway, we tested 16,100 in the Futures, which is our 2.5% drop line so of course a bounce there.   Nas hit 4,200 at the same time – also good support (3,580 on /NQ) so now we need to see if the NYSE can re-take 10,275 (-1.25%), now 10,241.  If not, and  even if just a bounce to -1%, then likely downside follow-through tomorrow.  

    Lots of earnings, of course – anything could happen.  


  117. USO 38% fib line 34.77, IWM 115.8, QQQ 87.74. only the QQQ held strong. At this point I feel follow through but the lines are close, may take a stab in the last 1/2 hour or not, but holding USO short.


  118. Nov. FHFA Housing Price Index +0.1% vs. consensus +0.4%, +0.5% prior(Revised).

    US Jan. PMI Manufacturing Flash 53.7 vs consensus of 55.0, 54.4 in Jan.

    • The average rate for a 30-year fixed-rate mortgage fell for a second straight week to 4.39%, from 4.49% in the prior week, according to Freddie Mac's latest weekly survey.
    • The 15-year fixed averaged 3.44% in the latest week, down one tick from 3.45% in the prior week.
    • A year ago, the respective average rates for the 30- and 15-year fixed mortgages were 3.42% and 2.71%.
    • "People shouldn't want us to be everything to everyone," says Citigroup (C) CEO Michael Corbat, holding court at Davos. "We've gone through a pretty significant transformation. We've got the right business mix."
    • Investors "saw the benefits" of exiting five consumer businesses and restructuring other units last year, says Corbat, and, for now, the bank will continue down this path. Assets at Citi Holdings – Citi's bad bank if you will – fell to $117B in Q4 vs. $156B a year earlier.
    • "The world’s becoming a better place and again it is up to us to make sure we’re doing the right things … We’ve got the resources: we’ve built capital, we have liquidity.”
    • One sector nearly fully in the green on a big down day for the broad averages is the mortgage REITs (REM +0.6%) as investors – worried about further declines in book value – take comfort from a big 10 basis point dip in the 10-year Treasury yield to 2.76% (off from 3% at the start of the year).
    • Leading are CYS Investments (CYS +3.1%), Annaly (NLY +1.7%), American Capital (AGNC+1.4%), (MTGE +1.5%), Invesco (IVR +1.8%), Anworth (ANH +1.3%), and AG Mortgage Investment (MITT +0.7%). The sector elephants – Annaly and American Capital Agency – are head 6% and 8% YTD, respectively.
    • With the big drop in yields at the long end, how long will it be before investors stop fretting about declines in book value and shift to concern over narrowing spreads!
    • Related ETFs: MORTMORL
    • Money continues to flow into the world's most hated asset class, with the 10-year Treasury yield off a big nine basis points today to 2.77%. It started the year at 3%. Year-to-date TLThas already outperformed the S&P 500 by about 620 basis points.
    • Another asset garnering its fair share of hate entering the year, gold continues a nice 2014 run. Up 2% today to $1,264 per ounce, the metal's up more than 5% YTD.
    • South African gold miners are higher – AngloGold Ashanti (AU) +6.3%, Harmony Gold (HMY)+3.2%, Gold Fields (GFI) +2.4%, and Sibanye Gold (SBGL) +2.1% - as they enjoy a reprieve from the start of strikes at the country's platinum mines.
    • There were talks of labor strikes in the gold mines too, but the gold miners managed to avert that by challenging the AMCU labor union in court; any potential strike against gold producers is delayed until Jan. 30, and analysts say the union is looking to see how the platinum strikes go before moving forward.
    • Lifting the U.S. ban on crude exports would give refiners more flexibility to run a variety of grades and help narrow the U.S. trade deficit, a Phillips 66 (PSX -0.2%) official said yesterday as did former Sec. of State James Baker.
    • The comments come as production of U.S. crude has surged to a 25-year high and refiners say their capacity to process more light, sweet crude from onshore fields will eventually hit a wall.
    • Scrapping the ban would affect refiners differently: PSX has 21% of its refinery capacity outside the U.S. and has put a plant in Ireland up for sale, while Valero (VLO -0.5%) has nearly all its working capacity in North America.
    • Noble Corp. (NE -9.7%) leads a drop in deepwater drilling contractors after saying it is seeing fewer contract opportunities than a year ago and the industry may be experiencing a “pause in the cycle” after years of growth fueled by oil and natural gas discoveries.
    • The pace of customer spending growth is expected to be lower this year compared with last year, NE says in its earnings call, and that's with 38 ultra-deepwater rigs around the world looking for work vs. 22 a year ago.
    • The market for shallow-water rigs also looks wobbly, as Hercules Offshore (HERO -16.3%) said yesterday in a fleet status report that it suspended plans to reactivate a shallow-water rig in the Gulf of Mexico.
    • Also: DO -5.3%, ESV -4.8%, RDC -3.8%, ATW -3.9%, RIG -3.5%, SDRL -2.8%, HP -1.1%,VTG -4.3%, PKD -1.9%
    • Hercules Offshore (HERO -14.1%) plunges after Global Hunter downgrades shares to Neutral from Buy and lowers its target price to $6 from $12 after HERO released its monthly fleet status report.
    • The firm says it failed to see any of the three key items it was looking for in the report: meaningful contracts for the Discovery rigs; a tick higher in Gulf of Mexico dayrates; and Pemex recontracting several of the legacy jackups set to roll in 2014, indicating to the market that its newbuild awards are not solely replacement rigs but rather incremental.
    • Cliffs Natural Resources (CLF -3.2%) is looking into whether its Bloom Lake project makes sense in the current environment, and Morgan Stanley believes a decision could come when CLF reports its Q4 earnings on Feb. 13.
    • The firm surveyed investors to get a sense of the consensus opinion around Bloom Lake and found it perhaps overly bullish; most investors expect CLF to find a new partner for the remaining ~$1.25B needed to complete Phase II, but the firm thinks it could be difficult to find a new partner on reasonable terms.
    • The firm also forecasts higher shipping costs, so it lowers its price target on CLF to $12 from $14 while maintaining its Underweight rating.
    • The latest report indicating a cooling Chinese economy is weighing on CLF and other global base-metal miners: RIO -0.8%, BHP -1.2%, VALE -2.3%.
    • Shipping rates fell again overnight, and the Baltic Dry Index is now -44% YTD.
    • Overnight, capesize shipping rates declined 19.6% (or -$1,4620 to $11,128/day), panamax rates slipped 4% (or -$219) to $11,710/day, while supramax rates fell 1.8% (or -$94) to $11,721/day.
    • YTD, capesize rates -71.5%, panamax rates -20%, supramax rates -23%.
    • On watch: DRYSGNKPRGNDSXFREEULTREGLENMNMMSBLK
    • KEXSB,SINOBALTESEADCIXTEUDACSHIPSSWGSL.
    • Canada's Transportation Safety Board would like to see regulators in the U.S. and Canadaadopt stricter standards to ensure safety on both new and older railroad cars. A particular from the board is on tankers carrying oil and other dangerous products.
    • The early round of earnings report from railroad companies have been strong (Norfolk SouthernUnion Pacific).
    • Railroad stocks: UNPNSCCSXCNIARIIGBXCPKSUCNI.
    • Canaccord raises its price target for Boeing (BA -1.4%) to $160 from $150 and reiterates its Buy rating ahead of Q4 results set for Jan. 29.
    • The firm expects a strong finish to 2013, but focus will be on initial 2014 guidance, seeing better than expected execution as the primary catalyst, specifically as the benefits of cost reductions start to flow into the commercial margins.
    • Canaccord raises its 2014 and 2015 annual EPS estimates to $7.72 and $8.47, respectively.
    • Boeing has been swept away in today's broad market selloff; shares had hit an all-time high of $144.57, capping a 6% YTD gain vs. the Dow's 15 loss.
    • Kelley Blue Book forecasts new auto sales will rise 1.6% Y/Y to 1.06M units in January.
    • Nissan (NSANY) is expected to have the strongest pace of sales growth at 7.5%, while Ford (F) and Toyota (TM) are forecast to see a drop from last year's sales level with their biggest model introductions for 2014 set to come down the road. Honda (HMC) and Hyundai (HYMLF) are also
    • Between them, General Motors (GM) and Ford (F) should account for a third of all sales in the U.S. in January.
    • What to watch: As profitability takes center stage in the industry, the levels of incentives used by automakers will be closely watched. KBB thinks GM will reduce incentives on the all-new Chevrolet Silverado and GMC Sierra.
    • Macau-related stocks are lower again after taking a little dip yesterday.
    • note yesterday from JPMorgan cut into the frivolity over the sector, warning on valuation and slowing growth trends.
    • Decliners: Las Vegas Sands (LVS) -3.1%, Melco Crown (MPEL) -2.7%, MGM Resorts (MGM) -1.8%, Wynn Resorts (WYNN) -1.6%, Galaxy Entertainment (GXYEY) -2.3%.
    • SodaStream (SODA -2.9%) and Green Mountain Coffee Roasters (GMCR -1.4%) trade lower in front of Starbucks earnings report which is slated to be released after the market closes today.
    • The companies have traded skittishly in the past pre-SBUX earnings on the fear of a major product announcement from the Seattle juggernaut.
    • Some traders are calling the dips an opportunity to grab shares at a discount.
    • The debate on Starbucks (SBUX -1.2%) continues to build with the company's store traffic in the U.S. to be a focal point with its Q4 report tonight.
    • The massive $1.3B in gift card sales the company churned up during the holiday period is expected to have supported revenue totals, but weak mall sales amid tough winter weather along with a sluggish report from McDonald's earlier today suggests store traffic could disappoint.
    • The company's guidance for "mid single-digit" same-store sales growth in the Americas leaves a lot of wriggle room. A mark over 6% would probably be enough to satisfy investors.
    • Vitamin Shoppe (VSI -4.6%) shares are hurting amid a weak market and a downgrade from William Blair to Perform from Outperform.
    • The firm cited limited upside to consensus estimates due to sputtering consumer spending and increased competition.
    • Shares of a number of retailers selling to apparel to teenagers trade weaker than market indexes after peer American Eagle Outfitters replaces its CEO unexpectedly.
    • The gloom in the sector has only intensified over the last week with more warning signs that mall traffic could stay depressed.
    • Decliners: Aeropostale (ARO) -4.6%, Pacific Sunwear (PSUN) -1.4%, Buckle (BKE) -1.6%, Zumiez (ZUMZ) -2.2%, Express (EXPR) -1.6%, Abercrombie & Fitch (ANF) -1.4%.
    • Wal-Mart's (WMT -0.5%) head of e-commerce says the company will be able to match Amazon's online delivery capabilities within two years.
    • It's an ambitious undertaking with Wal-Mart trailing Amazon on the number of products it offers and delivery speed to consumers.
    • The edge that Wal-Mart might possess is with its pick-up-in-stores program. During the holiday season, more than a million TVs were ordered online and then nabbed by consumers at Wal-Mart outlets. Presumably, some of them did some additional shopping as well.
    • What to watch: New distribution centers will need to be built by Wal-Mart to meet its goal.
    • Target (TGT -0.6%) CFO John Mulligan will face questioning from a Senate committee on February 4 on the data breach at the company.
    • The committee will also hear from the Secret Service and the FTC.
    • Though Mulligan will likely be grilled over what the retailer knew and when, the larger story could be the gaining momentum for a data security bill that would advance the use of smartcards in the U.S. to replace magnetic strips.
    • Related: The NRF calls for use of smartcard technology

     

    • Sears Holdings (SHLD -0.6%) is one step ahead of many other retailers, claims Eddie Lampert in a corporate blog post hammered out earlier this week.
    • The exec says the company has cut its retail footprint in a concerted effort to pivot to cutting-edge initiatives such as Shop Your Way program and online ordering.
    • He also makes the analogy that Sears is on the same general path as other retailers like Home Depot and Macy's with capex decisions, though critics will be quick to point out that SHLD's share price has been on quite a different track than the other two.
    • Adidas (ADDYY) is the company that might have the biggest headache from the news that Justin Bieber was arrested earlier today for drag racing in Miami under suspicion of being intoxicated.
    • The company has a highly-touted Neo for Adidas line endorsed by the singer.
    • Though most retail analysts see the arrest as a negative for Adidas and its investment, a few aren't so sure sales won't actually get a boost from the development.
    • Logitech (LOGI +21%) is at levels last seen in early 2011 after blowing away FQ3 estimates and upping its FY14 (ends March '14) guidance. The peripherals maker now expects FY14 revenue of $2.1B (above a $2.06B consensus) and op. income of $100M-$125M, up from prior guidance of $2B and $100M-$125M.
    • Logitech's numbers highlight its success at lowering its dependence on slumping PC and home electronics peripherals markets. While the company's pointing device (mice), PC keyboard/desktop, video (webcams/videoconferencing), PC audio, and Harmony remote segments respectively saw sales declines of 8%, 2%, 9%, 12%, and 13%, sales to the audio wearables/wireless and tablet & other segments rose 79% and 95%. PC gaming was also an area of strength, rising 25%.
    • Strong demand for Logitech's Ultrathin iPad keyboard covers continues to boost its tablet accessories sales, and surging shipments of UE Boom wireless speakers are lifting audio sales.
    • Also helping Logitech's bottom line: Thanks to job cuts, opex fell 11% Y/Y to $160M, even as revenue rose 2%.
    • SA contributor Ashraf Eassa highlighted Logitech's turnaround efforts and tablet/PC gaming opportunities in an August column.
    • FQ3 slidesprepared remarks
    • Cypress (CY +4.2%) has guided on its Q4 CC for Q1 revenue of $161M-$168M and EPS of $0.05-$0.07, which compares a consensus of $164.7M and $0.07. With expectationsdepressed on account of the chipmaker's 2013 challenges, investors are pleased with the numbers.
    • Cypress, which beat Q4 estimates with the help of relatively healthy memory sales (+3% Y/Y vs. a 6% revenue drop for the company overall), ended 2013 with a book-to-bill of 1.08, its highest reported level since Q1 2012.
    • The reaction to Nokia's (NOK -9.4%) Q4 report is very different from the one that followed its Q3 report, as investors worry about a 22% Y/Y drop in NSN sales (follows a 26% drop in Q3) and a 320 bps Y/Y drop in the division's op. margin to 11.2%. Excluding divestments/contract exits, sales fell 15%.
    • NSN's mobile infrastructure sales were relatively healthy, dropping 12% Y/Y to €1.56B after falling 26% in Q3. But its services sales fell 22% to €1.54B, nearly on par with Q3's 23% drop.
    • NSN's sales fell 21% in Europe, 13% in the Middle East & Africa, 23% in Asia-Pac, 38% in North America, and 35% in Latin America. They managed to rise 2% in Greater China (lifted by 4G buildouts).
    • Also: The Here division (mapping/location services) saw a 9% Y/Y sales drop to €254M, and the Advanced Technologies unit (patent licensing/R&D) saw its sales fall 20% to €121M. However, Nokia predicts the business, which could have more negotiating leverage following the Microsoft deal, will produce €600M/year in sales.
    • Mobile infrastructure rivals Alcatel-Lucent (ALU -2.4%) and Ericsson (ERIC -1.9%) are following Nokia lower on a down day for equities. Ericsson reports on Jan. 30, and Alcatel on Feb. 6.
    • Nokia's Q4 resultsdetails/guidance
    • In a statement provided to The Verge, the DoD says "absolutely no new orders have been placed for new [BlackBerry] devices" as part of its implementation of a new apps/services management program.
    • BlackBerry (BBRY -5.7%) shares rallied on Tuesday in response to a DoD statement that mentioned its program currently supports 80K BlackBerry phones (and just 1.8K Android/iOS devices), but never confirmed any new phone purchases.
    • It's worth noting that even if the DoD had purchased 80K new BlackBerry phones, the sale would be equal to less than 2% of the company's estimated November quarter sell-through of 4.3M (down from an August quarter level of 5.9M).
    • Carl Icahn's spinoff proposal is overshadowing weak fundamentals, says Needham's Kerry Rice, reiterating a Hold on the stock. "We believe a spinoff of the PayPal business is unlikely." The team lowers its FY2014 EPS esimate to $2.97 from $3.05 and sets 2015 at $3.45.
    • Susquehanna's Brian Nowak also believes a spinoff is unlikely and removes his Buy rating on the stock. "We believe it more likely that eBay stays one company and steps up its investment spending, which limits its potential for higher earnings power."
    • "While shareholder activism could keep a floor on the share price near-term, we see few compelling reasons to buy the stock at current valuation levels," says Topeka's Victor Anthony, also removing his Buy rating. His team cuts is FY2014 EPS estimate to $3 from $3.15. "Challenges growing the core above e-commerce, challenges monetizing off-line initiatives, and stepped-up investments at Payments, are likely to limit management's ability to post beat and raise results over the next year."
    • Stifel Nicolaus also downgrades to Hold.
    • Previous coverage of earnings/Icahn
    • EBAY now up just 1.7% after being up nearly 10% last night.
    • From eBay founder and chairman Pierre Omidyar: "I and the rest of (the) board are fully aligned that eBay and PayPal are best together."
    • The Fox (FOXA) network had a week to remember with ratings that nearly topped the combined effort of ABC, CBS, and NBC.
    • The NFC Championship football game delivered a massive 47 share in the adults 18-49 category – while the return of The Following and American Idol kept the momentum going.
    • Weekly viewer tally: Fox 17.24M; CBS 8.36M; ABC 5.15M; NBC 4.59M; Univision 2.74M.
    • What to watch: Though the smashing performance only covers one week, Fox has the Super Bowl broadcast this year to give it another crack at promoting its slate of shows. Analysts say early response has been positive.
    • Backing up several reports in recent months, the WSJ reports Apple (AAPL -0.8%) plans to launch two larger iPhones in 2H14: One with a 4.5"+ display, and one with a 5"+ display.
    • The paper adds both devices will use metal casings and won't feature curved displays, and that Apple is "expected to scrap the plastic exterior used in the iPhone 5C."
    • The WSJ previously reported Apple is evaluating iPhones with 4.8"-6" displays, andBloomberg has reported Apple plans to launch 4.7" and 5.5" iPhones with "glass that curves downward at the edges."
    • More recently, Cowen's Timothy Arcuri has said supply chain checks point to the launch of a 4.8" iPhone supporting the high-speed 802.11ac Wi-Fi standard (already supported by various Apple and Samsung devices). Like others, Arcuri also expects a ~13" iPad to launch this year.
    • Calls for Apple to offer larger iPhones have been widespread amid soaring demand for large-screen Android devices, particularly in China and other parts of Asia-Pac. The launches could allow Apple to win back some European and Asian smartphone share lost in recent quarters to Samsung (SSNLFSSNGY) and others.

  119. See how that $97.33 line continues to hang tough on /CL?  


  120. Phil, your thoughts…..

    CNBC reports Carl I spent another 500mill today on AAPL….Whats he know before all of us….Earnings on Monday going to be a blowout? 


  121. LULU/Phil:  OK Thanks I see what the problem is, my broker sucks.  ;)


  122. AAPL/Jasu – We've been buying ahead of earnings too – we just don't have $500M.  What does he have to know, it was my pick of the year for 2014 – he must be a reader!  

    LOL Kinki – common problem.  


  123. FU PSX and FU XOM

    Allowing exports of crude will screw refiners TOO! Of course there are always buyapoliticians for chump change.


  124. Phil – do we still like LQMT at .30-.32?, showing overbought but that could just be the "Phil influence".  LOL

    Thx as always.


  125. Phil – Don't pat yourself on the back yet on AAPL.  It's still down on the year. :-)


  126. albo AAPL had a bad Christmas in all but money centers just like the rest. It is down for a reason and tweets don't do much when facts are obvious.


  127. LQMT/Steve – I think they go to $1 at some point but I've said that since .08 when we started.   Along the way they will be super-volatile and it's usually rumors that the new IPhone will be made out of liquid metal (AAPL has exclusive rights but the manufacturing process is so flawed that AAPL took it over).  AAPL has so far experimented and included a little liquid metal tool with IPhones but the casing would be a big step.  So I doubt they announce it this earnings and that means LQMT probably pulls back to .20 or maybe less.  That's when I want to get back in but, just in case it doesn't, I never want to be out of this stock because, one day, their ship will come in. 

    AAPL/Albo – We don't care if its down when we sell the $450 puts to pay for a $500/650 spread. 


  128. I saw the indicator of IWM follow through, don't need to sell 1/2 mil shares to clear stops.


  129. got it, thx, helpful as always.


  130. You're welcome Steve. 

    See how, now that oil failed $97.33, it tried to get back over, failed and now is heading lower ($97.22 now).  So we set the stop down to $97.26 now, as it's above the .25 line and, of course, if we stop out there, we can always get back in at $97.24.

    I hope this is more helpful than confusing!  


  131. And Dollar may have finally found a bottom at 80.50 – maybe. 


  132. I'm kidding, Phil.  BTW, I'm in that spread with you.  AAPL is the only expensive stock I'm willing to sell OTM puts on.


  133. Pharm – Have to check in on your EW thoughts, seems to have turned up a teeny bit off a few measures.


  134. the Feb HLF 45/75 strangle is currently going for a credit of $3.00 (wide bid/asks).  Surely a 1 lot can't hurt too much…


  135. EW – when that 5d MA turns, we are in a gain.  I still have a few 75 calls but the rest you should have been out of.


  136. Pharm

    Was GILD your stock for 2014  ?

    What do you think is top for 2014  $100 ?

    Thanks


  137. Yes and yes…although 100 was not my number, I think it was higher, but my brain is on other data right now…..I think it was 95 or so.


  138. LOL…higher… lower… you get it? 


  139. phil, in our last conv you suggested me rolling the 8x jan 130s to feb 150's…done

    i am long 7 jan15 140s's and short 20x jan 15 180's……. im only sht 5 jan 15 130 put as i bgt back the 115';s and was going to sell more put when it came back in……..

    now that tsla is 180 my question is would it be the right thing to sell the 140's and take maybe some of the money and put on a jan 15..185- 220 bcs (or something) maybe 10x as there is only 14 of prem in the 140. and the 180's have gone from 26 in prem to 34……

    i ask cuz i have seen you rec similar approaches in the past………..rather then just wait till earnings..tks


  140. Nas making a strong move into the close, just popped 3,600 on /NQ (4,214).  Dow doesn't seem to care much.  AAPL a big help, back at $555 and TSLA just popped $180.

    S&P over 1,820 on /ES, also helpful if it holds but far cry from 1,845 this morning!

    RUT trying to get back over 1,170, NYSE 10,266 – that's why our line was 75 and not 50!  

    AAPL/Albo – If I have to get forced to own a stock – that's the one.  

    HLF/Rdn – Yikes – I'm not sure anything is safe with those guys.  

    Here comes the bell and only weak bounce outside the Nas – earnings will tell the tale.  


  141. Little war brewing between AMZN and GOOG:

    http://www.businessinsider.com/google-pla-shopping-ads-data-2014-1

    PLAs push Amazon's organic, non-paid search results farther down the page every time they appear. In search advertising, everyone knows that the top of the page is key. The bottom of the page is shopping Siberia — and that's where Amazon's pages are now frequently ranked on Google. Frequently, when you do a search that generates PLAs, the shopping ads will display ads for all Amazon's competitors on that product line. But not Amazon.


  142. Microsoft earnings of 78 cents per share on revenue of $24.52 billion

    http://www.cnbc.com/id/101356147

    MSFT + $1.5 (4.31%)


  143. Big beat by ISRG but the stock is not moving much right now….We'll want to see guidance!


  144. Thanks Rookie – that revenue is a big beat! They were expecting 21.46B!

    All these guys are going to get away from us!


  145. Conflicting numbers from JNPR. Not much going on right now!


  146. Beat from SBUX as well but guiding a bit lower for Q2. Hedging a bit higher but not by much right now!


  147. TSLA/Mill – Why are we back to me having to decrypt your position?  It would be so much easier for me to help you if you could simply write your position down clearly.  From what you are saying, I'm going to guess:

    • Short 8 Feb $150s at an undetermined price
    • Long 7 2015 $140s at an undetermined price
    • Short 20 2015 $180s at an undetermined price
    • Short 5 2015 $130s at an undetermined price

    That is a TREMENDOUSLY short position with essentially no hedge at all to the upside.  Actually, now I had to look and, what I said to you on the 16th was:

    For one thing, you are super-bearish, the hedges are a joke as you are short 48 calls and long 7 calls and 10 puts.  Why even pretend you are hedging? 

    At the time there were 10 short 2015 puts (or so I thought) and I said you should sell 10 2015 $130 puts before they go below $15, which they are ($14.35).  You NEED that put money to help fund rolls on the longs (or the purchase of the bull call spreads to cover.  You can't just keep ignoring the upside risk and then asking what to do every time it moves another $20 against you!

    Assuming you have PM, the 2016 $180/250 bull call spread is $20.  You can buy 10 of those and they knock back (because they have a $50 profit potential), $50 of your margin on 10 of the short calls.   They also give you $50,000 of upside protection.  You can pay for them in part by selling those 2015 $140 puts we discussed and then you lower the margin by another $15 on 10 long contracts and THEN you can sell the 7 $140s for $65 ($45,500) but you'd better be ready to spend another $20K on the bull call spreads if TSLA pops $190 as well. 

    That would leave you with 20 of the 2016 $180/250 bull call spreads covering 20 short 2015 $180s AND the 8 Feb $150s so at least you have 20 of 28 covered.  Meanwhile, your mission was accomplished as the Feb $150s are now $33 and TSLA is at $81.50 so they've burned all the premium and you already knew you had to roll them to March so the march $170 calls are $21.80 and you can do a 1.5x roll (12) about even and then your short callers are 1/2 premium again.  

    GOOG/StJ – They are a very dangerous monopoly.  Someone needs to break them up.  

    MSFT – Not bad earnings.  Still need a CEO though.

    ISRG/StJ – That's the problem, they already moved 20% into these earnings – they'd better be good. 


  148. AAPL
    is anyone else seeing a huge AAPL spike into after hours ?


  149. Nothing wombat! All quiet on the AAPL front.


  150. These guys are really busy – I might never get a new entry:

    http://www.engadget.com/2014/01/23/qualcomm-acquires-palm-other-patent-portfolios-from-hp/

    Chipmaker Qualcomm just announced that it's acquired 1,400 granted and pending US patents and another 1,000 foreign patents from HP. Those include "fundamental mobile operating system techniques" and come from a collection of patent portfolios that include those of once-great smartphone manufacturer Palm. The sale comes just months after the announcement that HP sold Palm's operating system, WebOS to LG, and more than a year after HP put the failed TouchPad tablet to rest. HP's relationship with Palm and the technology that it brought to the table has been a sordid one. Former Palm CEO Jon Rubenstein even went as far as to call the sale to HP a waste during an interview last summer, months after he joined Qualcomm's board of directors. The company also acquired patent portfolios from HP's iPAQ PDA business and Bitfone, a mobile enterprise software company that it acquired in 2006.


  151. Should we have a trade on HPQ  ?

    Thanks


  152. StJ
    So strange, at 1:35 I show a flash crash all the way down to 138. Rebooted TOS, tried different views …
    Omen ?


  153. NFLX
    ""Taking into account the updated cash flow figures, I estimate that Netflix can earn $186.8 million in free cash flow to equity in 2014 or about $3.05 per share. The resulting forward P/FCFE multiple stands at 109 which is about as ludicrous as the forward P/E multiple of 84""


  154. NFLX – GO SHORT!


  155. free bitcoins. not a lot (I've calculated a $0.024 E.V. per "roll"). But hey, it's a good price!


  156. oh, play here. not the link above. Commissions! hahaha


  157. Dow bounced off the 50 DMA.


  158. For those of you with tough short positions on one of our favorite momos, I've been using a strategy on TSLA which is a slight modification to Phil's advice to momentum trade calls to hedge to the upside.  I have found this to be very difficult to do with a full time (non-trading) job, as it is difficult for me to sit and watch the lines closely all day.  Instead I have been buying a size-able bull call spread with an expiration a couple months out.  This has several advantages for my trading style.  First of all, it doesn't move as fast as straight calls , so if I'm in a meeting, I won't lose a ton of money if TSLA crashes.  But the delta is higher than my longer dated upside hedges which are part of the play.  Second of all, I don't have to use tight stops, because I can slowly scale out of the long call portion of the spread, on the way down.  If you stay short the short call portion of the spread (and make sure you have the required margin and risk tolerance!!), you can take bigger losses on the long call side, and still end up even or in the black on the hedge if your favorite momo finally gets realistic. (ya right)

     

    I did a position like this to cover TSLA the day after they announced that they had beat estimates for delivered cars.  I purchased the March 165/195 call spread for 9.70, in a quantity equal to my short call position.  I sold a quarter of the position earlier this week up 35%, and another quarter position up 50%.  Now my net on the remaining spreads is much lower so I can afford to keep my stops loose, but I still have considerable upside if TSLA keeps going up.  To be clear, these covers are meant to be short term, and are in addition to longer term upside hedges like my 2015 call spreads, and my short puts.


  159. patolay, thanks for taking the time to write about your experiences; working with these momo plays is extraordinarily taxing both on margin and patience, I could write an entire book on how I worked my way out of the NFLX short position we took on this site at 175.  It took me an entire year to get even but boy did I learn a lot, I probably should have blogged about it along the way to help others out…


  160. Sure thing mrm.  I've been through a few cycles of getting behind, and slowly recovering, and have also learned a bunch. I also took that same short position at 175 2-3 years ago on NFLX, and it felt like it took forever to get back in the black, but boy when it finally fell, it made my year.  


  161. palotay – funny thing about NFLX is that I finally worked myself out of the hole in December and now I'm back underwater; I was playing NFLX for a 10% move either way but 16% was hard to prep for.


  162. Phil, thanks for the excellent seminar that showed us the Futures & Contract tricks in active trader. Really good. I need to practice, practice and practice more in the right ways. Gotta push myself to get up at 6am EST in next week!  Thanks! :)


  163. Good morning!

    There was a half-hearted attempt to move back up until about 10pm but that's over now and we're back to yesterday's lows.  We're still going to be watching our -2.5% lines to see if they hold but, if any of them break – I'd be very concerned about the whole set failing.  So far though, there's nothing unexpected about this pullback, these are the numbers we predicted at the beginning of the month, per our 5% Rule:

    • Dow 16,300 and 16,100
    • S&P 1,825 and 1,800
    • Nas 4,125 and 4,075
    • NYSE 10,275 and 10,150
    • Russell 1,155 and 1,140

    As you can see, 16,150 is the 50 dma on the Dow and all we did yesterday is bounce off the Dow's major support while the NYSE bounced off our 2.5% line at 10,250.  When a major index bounces, they all tend to bounce, regardless of where their own supports are but, as you can see, there's no technical support below that line for the Dow (the 200 dma is 5% lower at 15,400) other than our 5% lines, while the NYSE has it's own 50 dma at 10,100 after it fails at 10,250.

    Those are our LONG-TERM supports (the ones on the chart), the -1.25% and 2.5% lines we worked out at the beginning of the month were the short-term retraces we EXPECTED after that silly pop in December.  So this is a good and healthy correction so far – let's see how the rest of the World is handling their medicine.  

    The Dollar has found a floor at 80.50 and is back at 80.60 at the moment.  Oil is not going to like that and of course we still like the short at $97.50 on /CL.  Gold is $1,260 and I'm not a fan of shorting it but that's the pattern so if the Dollar is over 80.60 and /YG is under $1,260 – why not?  We'll see if 3,600 holds on /NQ – if not, things can get ugly but, if so – we can play the Dow long over 16,100 (/YM), now 16,090.  A stronger Dollar is also a good reason to play /NKD over 15,300.

    So we have things we can do in either direction – it should be a very interesting morning.


  164. HPQ/QC – I lost interest after they were up 150% over our entry, now 200%.  I still like them long-term, but nothing compelling about them at $30.  It's earnings season, better time for picking up stocks that have silly drops when they come.  

    Bitcoins/BDC – Seriously, you would actually give a random web site your information?  

    Wheee – there goes all already, failed $97.25 and already $97.12.

    Great cover adjustment, Palotay!  I'd appreciate it if you remind me to discuss for our next Webcast (Tues, 1pm).  

    You're welcome Invest.  I could sure use some more company in the mornings!  



  165. Kiev:

    24 January 2014

    Kitschko the boxer getting political in Kiev:

    24 January 2014

    That is one big statue!  (Christ the Redeemer in Rio):

    22 January 2014

    Vlad died 90 years ago today:

    21 January 2014

    Volcano in Indonesia:

    14 January 2014

    Big rubber duck makes it to Sydney (doing a World tour):

    10 January 2014

    I love this guy, look how happy people are around him!  

    7 January 2014


  166. Watch out for oil – $97.10 now, should be a good place to take some profits. 


  167. I'm here.  Back from the dead.


  168. From Bloomberg, Jan 24, 2014, 5:14:21 AM

    More Davos Coverage >>

    To read the entire article, go to http://bloom.bg/19RgG4X
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  169. From Bloomberg, Jan 24, 2014, 4:35:13 AM

    More Davos Coverage >>

    To read the entire article, go to http://bloom.bg/19Ra9qF
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  170. From Bloomberg, Jan 24, 2014, 2:44:34 AM

    The worst selloff in emerging-market currencies in five years is beginning to reveal the extent of the fallout from the Federal Reserve’s tapering of monetary stimulus, compounded by growing political and financial instability.

    To read the entire article, go to http://bloom.bg/19RHamB
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  171. From Bloomberg, Jan 24, 2014, 4:23:02 AM

    More Davos Coverage >>

    To read the entire article, go to http://bloom.bg/19QHCl3
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  172. From Bloomberg, Jan 24, 2014, 3:39:57 AM

    Anti-government unrest spread from
    Ukraine’s capital as the government recalled lawmakers from a
    winter break for an emergency session after weeks of protests
    claimed their first lives.

    To read the entire article, go to http://bloom.bg/19QvUqG
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  173. From Bloomberg, Jan 23, 2014, 7:00:01 PM

    Sochi may attract the fewest American visitors to a Winter Olympics in 20 years amid terrorism concerns, a lack of luxury hotel rooms and difficulties procuring visas, according to U.S. tour operators.

    To read the entire article, go to http://bloom.bg/19Rixqd
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  174. From Bloomberg, Jan 23, 2014, 5:46:07 PM

    Tesla Motors Inc. (TSLA)’s Elon Musk said
    sales of electric Model S cars in China should match U.S. levels
    as early as next year, with demand from the world’s largest auto
    market eventually requiring a local plant.

    To read the entire article, go to http://bloom.bg/19QWcck
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  175. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/1dz8qBy

    Jack Lew: U.S. Economy Has `Tail Winds’ This Year
    Jan. 23 (Bloomberg) — U.S. Treasury Sec. Jacob J. Lew discusses the U.S. economy, interest rates, and the debt ceiling with Bloomberg’s Tom Keene at the World Economic Forum in Davos, Switzerland. (Source: Bloomberg)

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  176. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/KKGKCL

    The NSA’s Worst Nightmare: What Is Tor?
    Jan. 23 (Bloomberg) — What is Tor and why is it a threat to the NSA? Bloomberg Businessweek’s Sam Grobart explains how Tor works and reveals the surprising source behind Tor’s funding. (Source: Bloomberg)

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  177. From Bloomberg, Jan 24, 2014, 2:35:18 AM

    China’s banking regulator ordered
    its regional offices to increase scrutiny of credit risks in the
    coal-mining industry, said two people with knowledge of the
    matter, signaling government concern about possible defaults.

    To read the entire article, go to http://bloom.bg/19RxIQi
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  178. From Bloomberg, Jan 23, 2014, 10:00:01 PM

    Argentina’s peso is poised to extend
    losses after the government devalued the currency 12.7 percent
    in a bid to arrest a decline in foreign reserves.

    To read the entire article, go to http://bloom.bg/1dzKmhL
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  179. From Bloomberg, Jan 24, 2014, 5:09:04 AM

    Natural gas rose for a fourth day in
    New York and headed for the biggest weekly gain since September
    2012 as meteorologists predicted U.S. temperatures will remain
    below normal through the end of this month.

    To read the entire article, go to http://bloom.bg/19RmyuK
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  180. From Bloomberg, Jan 24, 2014, 12:09:42 AM

    The story of how a 3 billion-yuan
    ($496 million) Chinese trust investment wound up on the brink of
    default shows what billionaire investor George Soros has called
    the “eerie resemblances” between the 2008 global financial
    crisis and the nation’s debt market.

    To read the entire article, go to http://bloom.bg/19R8LV7
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  181. From Bloomberg, Jan 24, 2014, 1:34:53 AM

    The Australian dollar dropped below
    87 U.S. cents for the first time since July 2010 after China’s
    bank regulator ordered regional offices to increase scrutiny of
    credit risks in the coal-mining industry, according to people
    with knowledge of the matter.

    To read the entire article, go to http://bloom.bg/19RjwXA
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  182. From Bloomberg, Jan 23, 2014, 10:44:45 PM

    Industrial & Commercial Bank of
    China Ltd.
    Chairman Jiang Jianqing said the lender won’t
    compensate investors for losses tied to a troubled trust product
    distributed by the bank, CNBC reported on its website.

    To read the entire article, go to http://bloom.bg/19RnYpf
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  183. From Bloomberg, Jan 24, 2014, 12:00:01 AM

    For Jeffrey Gundlach, the U.S.
    housing recovery isn’t so rosy.

    To read the entire article, go to http://bloom.bg/19RyPQ1
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  184. From Bloomberg, Jan 24, 2014, 5:08:35 AM

    U.K. Chancellor of the Exchequer
    George Osborne and former U.S. Treasury Secretary Lawrence Summers sparred over how much governments can spur investment,
    reviving the debate over the virtues of austerity.

    To read the entire article, go to http://bloom.bg/1hqoDgI
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  185. From Bloomberg, Jan 23, 2014, 12:21:00 PM

    China’s national interests will
    converge with the rest of the world as its economy grows, and
    policy makers there shouldn’t be “browbeaten” for managing
    their currency in the meantime, Goldman Sachs Group Inc. Chief
    Executive Officer Lloyd C. Blankfein said.

    To read the entire article, go to http://bloom.bg/1dyFae3
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  186. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/19QDSQy

    Lagarde Sees Complacency Risk as Growth Unbalanced
    Jan. 23 (Bloomberg) — International Monetary Fund Managing Director Christine Lagarde talks about the outlook for the global economy.
    She speaks with Bloomberg Television’s Francine Lacqua at the World Economic Forum’s annual meeting in Davos, Switzerland. (Source: Bloomberg)

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  187. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/19P2SI0

    HSBC Cut China Stocks to `Underweight,’ Evans Says
    Jan. 23 (Bloomberg) — Garry Evans, head of global equity strategy at HSBC Holdings Plc in Hong Kong, talks about China’s economy and stock market.
    A Chinese manufacturing index showed a slowdown in January as output and orders cooled, with the gauge slipping to a level that signals a contraction. Evans speaks with Rishaad Salamat and Angie Lau on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  188. From Bloomberg, Jan 23, 2014, 6:57:52 PM

    For Dominga Kanaza, it wasn’t just the soaring inflation or the weeklong blackouts or even the looting that frayed her nerves.

    To read the entire article, go to http://bloom.bg/19OLoeT
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  189. From Bloomberg, Jan 24, 2014, 3:16:36 AM

    China’s Shanghai Composite Index
    will probably bottom out within days and begin to rebound, said
    Tom DeMark, the developer of market-timing indicators who
    predicted the measure’s rally from a four-year low in June.

    To read the entire article, go to http://bloom.bg/1dzlrea
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  190. From Bloomberg, Jan 23, 2014, 7:00:02 PM

    When yields on long-term government
    securities
    are below nominal growth rates for a prolonged
    period, trouble may be brewing.

    To read the entire article, go to http://bloom.bg/19RgQZZ
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  191. From Bloomberg, Jan 24, 2014, 12:00:01 AM

    The American consumer’s readiness to
    kick the economy into high gear comes down to a question of
    who’s right: Yale’s Stephen Roach or Harvard’s Martin Feldstein.

    To read the entire article, go to http://bloom.bg/19RyVHd
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  192. From Bloomberg, Jan 23, 2014, 1:16:09 PM

    In a Friday morning news media kick-off to the upcoming Winter Olympics, Russian President Vladimir Putin sat in front of a semi-circle of invited reporters in Sochi, Russia. Playing the role of tough, bothersome Anglo-American journalists were ABC’s George Stephanopolous and the BBC’s Andrew Marr, who peppered the Russian leader with questions about corruption and Russia’s notorious laws restricting so-called gay “propaganda.”

    To read the entire article, go to http://bloom.bg/1dyKYnK
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8



  193. From Bloomberg, Jan 22, 2014, 11:32:10 AM

    A spat in New York state over $613 million in settlement money from JPMorgan Chase & Co. raises a question much larger than local politics: Should law enforcement officials be allowed to do what they want with the money they extract from suspects and defendants?

    To read the entire article, go to http://bloom.bg/19NT0hC
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  194. From Bloomberg, Jan 22, 2014, 6:50:15 PM

    As with so many seemingly
    intractable fights, the warring camps that have paralyzed
    Thailand both say they want the same thing: a cleaner, more
    legitimate democratic process. It’s time for them to prove it.

    To read the entire article, go to http://bloom.bg/19OIfvw
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  195. From Bloomberg, Jan 22, 2014, 5:29:08 PM

    Most of the work produced by
    Washington’s bipartisan-industrial complex ends up in the
    National Library of Forgotten and Ignored Bipartisan Reports,
    where it rests undisturbed for posterity. The 96-page report
    released today by President Barack Obama’s bipartisan commission
    on election reform deserves a better fate.

    To read the entire article, go to http://bloom.bg/LHG0iu
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  196. Welcome back, Burr!


  197. Big wheeee on oil below $97 – just bounced off $96.50 for a stop out – re-entry below or at $96.75 (with tight stops now as we had a nice move).  


  198. Dollar diving again – game off for shorting oil until it settles down (80.29).  Gold up, obviously.  Futures being saved by emergency measures yet again. 


  199. Samsung Electronics Q4 profit sags as smartphone growth concern deepens.  Apple down $4.70 pre-market.

    http://www.cnbc.com/id/101360490


  200. Oil back over $97 and the Dollar pushing back to 80.35, over that line and we can short oil but, of course, we want to short it below the $97 line anyway.  

    On to the new post.  


  201. Phil:

    Have been out of pocket all day at a board meeting…Thanks for responding to my inquiry on AAPL.

    On 12/23/13 I did a AAPL BCS 500/650 when AAPL was at $575, now $500. So you shouldn't be surprised that the 500 call cost me 99.15. If you remember, this BCS was your recommendation.

    That said, I will hang in there and bank that investors come to their senses and AAPL goes back up to $600 or more by year end. 

    What is your opinion of rolling  650 short call to 2016 and harvesting some profit. I'm reluctant to take the loss on the long call 500 position.

    Also you wantted me to remind you to think of a FB trade.

    Thanks,