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Which Way Wednesday – Beige Books and Strong Bounces

SPY 5 MINUTEWow, what a fun day yesterday was!  

As you can see from Dave Fry's SPY chart, we went up in the Futures 30 S&P points and then we fell from the open 30 S&P points and then we recovered into the close 30 S&P points.  This is what we call a "Bugs Bunny Market," where Bugs throws a switch and people stamped in and out of the theater (5:00 on this video) -  and it's not usually a good thing.  

In fact, that's the action we saw back on 2/28, when I was warning people to get to cash and, in fact, I tweeted out a similar comment (with the same video link) and our trade idea for playing the next 45 days was:

TZA/Craig – Well, the April $14/17 is still doable at $1.30 and you can sell the $15 puts for .88 for net .42 now

RUT WEEKLYEven with the Russell's bounce off our 1,100 goal yesterday, TZA is still at $17.65 and the April spread, which expires tomorrow, is net $1.90 – up a very nice 350% in 45 days (you can follow me on Twitter here, but I rarely tweet our Member Trade Ideas – for those, you have to sign up HERE).  

We actually flipped long on the Russell during our Live Trading Webcast at 1pm yesterday, catching it pretty much on the button and I showed people, LIVE, how to make hundreds of dollars in just 15 minutes trading the Futures (replay available here). 

In yesterday's post, I reminded you we were shorting oil at $104 and we caught a $500 per contract move back to $103.50 but then (also live in the Webcast), we decided to wait for $105ish to re-short today (/CL Futures).  This morning, I posted early (6:22) to our Members that we had our shorting opportunity at $104.95 and already (8:06) we're back to $104.65 and that's good for $300 per contract after a hard morning's work – plenty of money for breakfast!  

We're still expecting a much bigger drop, probably not until after the weekend though, as Ukraine tensions are keeping oil high.  Rather than play the volatile Futures over the weekend, we have SCO and USO plays set up for our Members to take advantage of the potential correction.  Today though, we can still have fun with the Futures (stop at $104.75 at the moment) into inventories at 10:30.  

We're past the weak bounce lines on our indexes and now we're looking for the strong bounce lines to be taken and held at Dow 16,240, S&P 1,850, Nasdaq 4,150, NYSE 10,430 and Russell 1,145 (noted in yesteray's post) but none of it matters until the Fed's Beige Book this afternoon at 2pm and then that doesn't matter either as we have a holiday weekend and there's no sense in betting on that – better to have a nice Easter and see what happens next week – that's why we picked the April time-frame on our TZA hedges (which can still make another 250% if TZA stays over $17 through tomorrow!).  

So let's all relax and have a happy Easter with our sidelined CASH!!! and let's reflect, in this holy season, on the new study done by Princeton and Northwestern Universities, which has concluded that "The US government does not represent the interests of the majority of the country's citizens, but is instead ruled by those of the rich and powerful."  I know – duh, but it's interesting to see it in an official study, isn't it?  

No wonder the Kochs are working so hard to defund education – if it's going to uncover this sort of thing:

After sifting through nearly 1,800 US policies enacted in that period and comparing them to the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile) and large special interests groups, researchers concluded that the United States is dominated by its economic elite.

Researchers concluded that US government policies rarely align with the the preferences of the majority of Americans, but do favour special interests and lobbying organizations: "When a majority of citizens disagrees with economic elites and/or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the US political system, even when fairly large majorities of Americans favour policy change, they generally do not get it."

Ask yourself this weekend, WWJD?

 


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  1. Oil Lines

    R3 – 105.41
    R2 – 104.73
    R1 – 104.27
    PP – 103.59
    S1 – 103.13
    S2 – 102.45
    S3 – 102


  2. Individual and Corporate Income Taxes and Percent of Total Revenue


  3. What's ahead for the euro:

    http://alphanow.thomsonreuters.com/2014/04/storm-clouds-forming-euro-zone/#.U058o_ldV8E

    The chart below is a long term view of the euro, showing that after strengthening from its initial launch in 1999 it has indeed been weakening the last five years from its strongest point reached back in 2008.


  4. Martin Wolf on Piketty's book:

    http://www.ft.com/intl/cms/s/2/0c6e9302-c3e2-11e3-a8e0-00144feabdc0.html#axzz2z3Msm0oP

    Yet the book also has clear weaknesses. The most important is that it does not deal with why soaring inequality – while more than adequately demonstrated – matters. Essentially, Piketty simply assumes that it does.

    One argument for inequality is that it is a spur to (or product of) innovation. The contrary evidence is clear: contemporary inequality and, above all, inherited wealth are unnecessary for this purpose. Another argument is that the product of just processes must be just. Yet even if the processes driving inequality were themselves just (which is doubtful), this is not the only principle of distributive justice. Another – to me more plausible – argument against Piketty’s is that inequality is less important in an economy that is now 20 times as productive as those of two centuries ago: even the poor enjoy goods and services unavailable to the richest a few decades ago.

    For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality. We should take notice.


  5. No wonder recovery has been weak – the housing bust killed consumer spending:

    http://houseofdebt.org/2014/04/14/the-consumer-as-a-shadow-of-its-former-self.html

    houseofdebt_20140414_1

    Two things jump out. First, spending declined during the Great Recession by much more in states where house prices fell the most. This is something we have documented in our own research. But perhaps more importantly, the recovery in spending has been very weak in these areas. In 2013, spending in states where house prices fell the most finally increased above its 2006 level. It has taken 7 years for spending to recover in these states! This is related to an earlier post we did using furniture spending to see the legacy of the housing bust.

    The chart above shows clearly that any explanation of the severe recession and weak recovery must have housing as a central feature. Even though house prices have risen more in areas that had the worst crashes, the rise in house prices has had a mitigated effect on spending for reasons we outlined in our very first post.


  6. StJean – You're like our own ZeroHedge.  After reading you're posts, they could depress Pharrell Williams


  7. Phil,

    What do you think of a bear call spread on BAC, say May $14/$16 based on just reported earnings?


  8. Good morning!  

    That chart doesn't tell the whole story, StJ – those individual taxes are unfairly burdened on the bottom 90% as well, who pay 50% more of their income to taxes than the top 1% – and that doesn't even account for the massively disproportionate effect property, sales and local taxes have on them:

    Euro/StJ – Also, don't forget Draghi flat out said they will take drastic action to keep a lid on the Euro here.  Probably makes FXE a good short ($136.50) – certainly they don't want to see $140 and you can sell Jan $140 calls for $1.65 to help fund a $140/134 bear put spread at $3.10 for net $1.45 on the $4 spread.  

    Even the poor/StJ – I hate that argument.  I guess, a few decades ago, they could have said that even the poor have access to electricity that only the rich had decades ago and, when electricity rolled out, they could have said at least the poor now enjoy running water.  It's a ridiculous argument to excuse gross inequality by comparing what comforts the poor do have to abject poverty, as opposed to comparing your 17" wide airplane seat (if you can even afford that) to a private jet, which is what's actually happening.  

    Meanwhile, oil (/CL) tagged $104.50 and now that's bouncy.  

    BAC/Sibe – I'm not bearish on them, or even the financials in general.  BA's numbers were skewed by massive litigation costs last Q – otherwise, they did pretty well.  

    • Adjusted EPS of $0.35 compares to estimates of $0.27, with the $6B settlement weighing on the headline EPS loss of $0.05.
    • Net interest income of $10.3B fell 5% Y/Y, with NIM of 2.36% up six basis points. Noninterest income of $12.5B is flat from last year, with lower mortgage banking income and trading profits offset by increases in investment and brokerage income, equity investment income and gains on the sale of debt securities.
    • Provision for credit losses of $1B is down 41%. Net charge-offs of $1.4B down 45%, with net charge-off ratio of 0.62% comparing to 1.14% a year ago. Reserve release of $379M vs. $804M a year ago.
    • Noninterest expense of $22.2B is up from $19.5B a year ago, with higher mortgage litigation costs ($6B vs. $2.2B) partly offset by cuts in Legacy Assets and Servicing (LAS). Excluding litigation, expenses fell $1.2B Y/Y.
    • Other highlights: Mobile banking customers up 19% to 15M – more than 10% of deposits now done through mobile; first mortgage originations fell 65% Y/Y, with production revenue of $273M comparing to $815M a year ago; Wealth Management net income of $729M vs. $721M a year ago.
    • Basel III Common equity ratio of 11.8% up from 11.7% at 2013's end. Tangible book value per share of $13.81 up $0.02 from year's end and from $13.36 one year ago.
    • CC live on Seeking Alpha at 8:30
    • Press releaseQ1 results
    • BAC flat premarket in active action

  9. Poor / Phil – Remember when Bill O'Reilly made a big deal when he mentioned that 97% of people had microwave ovens! How could life be that bad when you can afford a microwave.

    These guys live in a clueless bubble and would not survive a week on minimum wage in the 'hood.


  10. Zero Hedge / Burrben – I guess the liberal Zero Hedge… and with facts!


  11. Good Morning!


  12. Right on cue, real estate numbers not pretty this morning. Besides mortgage apps I guess… 

    No surprise with the China GDP number last night – how can they surprise when the number is pre-planned months in advance! My guess for next Q of China GDP is 7.4% +/- 0.1%.


  13. https://twitter.com/search?q=%23deeperlearning

    Phil/Learning  The kook brothers are too late. This thread is a view into education's future…..


  14. Dollar jumping on better than expected Industrial Production Numbers (need more Dollars to run the machines):

    • Mar. Industrial Production: +0.7% vs. +0.4% consensus, +1.2% prior (revised).
    • Capacity utilization 79.2% vs. 78.7% consensus; 78.8% prior (unrevised).
    • March housing starts of 946K were 5.9% higher than a year ago and compare to 920K in February (revised from 907K). Single-family starts of 635K were up 6% from February.
    • The market seems focused on permits, which fell to 990K from February's 1.014M. On a Y/Y basis, though, permits gained 11.2%.
    • The 10-year Treasury yield dips two basis points to 2.64%.
    • Homebuilder ETFs ITB and XHB show no trades premarket.
    • Full report
    • MBA Mortgage Applications:
    • Composite Index: +4.3% vs. -1.6% last week.
    • Purchase Index: +1.0% vs. +3.0% last week.
    • Refinance Index: +7.0% vs. -5.0% last week.

     

    • Stock futures hold solid gains after data showing housing starts rose less than expected; S&P, Dow and Nasdaq all +0.5%.
    • Better than expected economic growth data out of China helped soothe concerns of a more rapid slowdown, helping boost Asian markets; major European bourses are higher.
    • Yahoo +8% and Intel +1.2% premarket after their Q1 reports beat estimates; Bank of America -1.5% after posting a Q1 loss thanks to $6B in litigation expenses.
    • Treasurys trade at morning highs, with the 10-year benchmark up 2 bps at 2.646%.
    • Still ahead: EIA petroleum inventories, Yellen speaks, Fed Beige Book.

     

     
     
    • Japanese industrial output fell 2.3% on month in February, as expected, after rising 3.8% in January.
    • On year, production +7% vs +10.3%.
    • The Nikkei is +3% and the USD-JPY is +0.3% at 102.26. (PR)
    • strong month for retail sales in China could bode well for U.S. companies relying on a vibrant consumer in the region. March's pace of 12.2% growth beat estimates.
    • During Q1, China's retail sales increased 12% Y/Y to 6.21T yuan ($1.01T).
    • A cross-section of some firms looking at China for growth includes Yum Brands (YUM), Whirlpool (WHR), Avon Products (AVP), Ford (F), Ralph Lauren (RL), and Procter & Gamble (PG).
    • The Pentagon would have to cut $40B of its planned spending on operations and maintenance from 2016-2019 if Congress doesn't stop automatic budget cuts that are due to take effect in 2016.
    • In a report yesterday, the DOD also said the R&D budget would fall $18B to $337B.
    • Companies that would be affected include Lockheed Martin (LMT) and its F-35 program, Boeing (BA), Northrop Grumman (NOC), United Technologies (UTX), GD (GD) and Huntington Ingalls Industries (HII).
    • Ukraine retook an airfield in the eastern Donetsk region yesterday after fighting with pro-Russian militias.
    • Ukrainian forces have also apparently surrounded the town of Slaviansk, which had been seized by the militias. In total, the separatists have taken over government and police buildings in up to 10 towns and cities in eastern Ukraine.
    • Ukraine's action has prompted Vladimir Putin to describe the country as being on the "brink of civil war;" it has also come ahead of talks tomorrow between senior diplomats from Russia, the EU, the U.S. and Ukraine.
    • Russia's Micex is -0.1%, while the USD-RUB is -0.4% at 36.095.
    • More on Ukraine
    • Settling with Financial Guaranty Insurance Company (FGIC) over nine Countrywide-sponsored MBS deals, Bank of America (BAC) has already paid about $900M and will disburse about another $50M.
    • Press release
    • Earlier: Litigation charges take a big chunk out of Q1 results.

     

    • "People effectively carry a branch in their pocket," says Bank of America (BAC) CEO Brian Moynihan on the earnings call (live now on Seeking Alpha), noting mobile banking customers grew 19% Y/Y to 15M and 10% of deposits now take place on mobile devices. Consumer banking costs fell 4% from last year, he notes. CFO Bruce Thompson: “We continue to reduce production staffing levels in the quarter consistent with the volumes.”
    • Inquiring minds want to know more about the $2.4B boost to litigation reserves, and management is fairly tight-lipped, saying they're about addressing previously disclosed mortgage-related issues. Ambac (AMBC) shareholders looking for movement in their case against BofA may be disappointed as Thompson says the reserve increase isn't about a pending settlement with the monolines.
    • Presentation slides
    • Earlier BofA earnings coverage
    • Just ahead of the open, shares -1.6%.

     

    • Net income of $1.1B of $1.82 per share compares to $995M or $1.74 per share one year ago.
    • Net interest income of $2.2B fell 8% Y/Y with NIM of 3.26% falling 55 bps thanks to lower interest-earnings asset yields and the decline in purchase accounting accretion. Noninterest income of $1.6B gained 1% Y/Y, with residential mortgage income of $161M falling 31%, but asset management income of $364M up 18%.
    • Noninterest expense of $2.2B fell 4% Y/Y thanks to personnel cuts.
    • Tier 1 capital ratio of 9.7% compares to 9.4% at the end of 2013 and 8% one year ago. Tangible book value per share of $56.33 is up from $54.57 at the end of 2013 and $50.30 one year ago.
    • Press releaseQ1 results
    • CC at 10 ET
    • PNC +2% premarket
    • Credit Suisse (CS) Q1 net profit dropped 34% to 859M Swiss francs ($976M) and missed consensus of 1.09B francs.
    • Net revenues declined 8% to 6.47B francs.
    • Total assets -7% to 878B francs.
    • Investment bank pretax profit -36% to 827M francs, undershooting forecasts of 1.02B. Revenue from debt trading -25% to 1.49B francs, hurt by a lower contribution from rates and emerging markets businesses. Equities revenue -7.4% to 1.2B francs.
    • Earnings at Credit Suisse's private banking and wealth management unit, increased 15% to 1.01B, topping estimates of 941M francs.
    • Basel III common equity ratio 10%.  (PR)
    • General Motors (GM) plans to ask a federal bankruptcy judge to protect it from legal liability for actions it took before its bankruptcy in 2009.
    • The automaker tipped off the strategy in a motion filed in a federal court in Texas. GM has been the target of 30 lawsuits related to the ignition switch recall issue.
    • The decision to play the bankruptcy card could bring sharp criticism to GM unless compensation packages to victims are viewed as adequate.
    • survey by Janney Capital Market of McDonald's (MCD) franchisees indicates they project positive same-store sales growth for both March and April.
    • The poll of owner-operated outlets came in with an estimate for a 0.9% same-store sales growth lift in March and 1.2% for April.
    • SodaStream (SODA) races higher in early trading after an Israeli publication indicates the company is talking to a large soft drink company about buying a stake of over 10%.
    • The deal price for the stake is reported to be at $52.
    • Hedgeye thinks Starbucks can be crossed off the list of potential buyers. That would leave PepsiCo and Dr. Pepper Snapple near the top of the list.
    • SODA +10.1% premarket to $40.98
    • Alibaba Group (ABABAcould file the prospectus for its U.S. IPO on Monday, Reuters reports, adding that the listing could be worth over $16B.
    • The report comes after major shareholder Yahoo (YHOO) disclosed that Alibaba's Q4 net income surged 110% to $1.35B as revenue jumped 66% to $3.06B.
    • Alibaba's results helped Yahoo's shares climb 6.8% in AH trading. In Tokyo, shares in SoftBank (SFTBF), which owns 37% in Alibaba, jumped 8.5%.

     

    • KING Digital is partnering with Chinese gaming/messaging giant Tencent (TCEHY) to bringCandy Crush Saga to the Middle Kingdom. The game will be distributed via both Tencent's QQ (PC messaging, 808M MAUs) and WeChat/Weixin (mobile messaging, 355M MAUs) platforms.
    • Candy Crush was responsible for 93M of King's 128M average Q4 DAUs. But bookings and unique payers started to slip in Q4 after seeing meteoric growth over much of 2013.
    • King is counting on newer titles such as Pet Rescue Saga and Farm Heroes Saga - they're promoted via Candy Crush and have moved up Facebook charts, but are nowhere are large right now – to help pick up the slack.

     

    • Researchers in Boston find that casual pot use (one – seven joints a week) changes the size, shape and density of the nucleus accumbens and the nucleus amygdala, regions of the brain that regulate emotion and motivation.
    • More study is needed to determine the specific effects of the changes which appear different than the effects of consuming alcohol.
    • The National Institute on Drug Abuse and the White House Office of National Drug Control Policy partially funded the work.
    • Healthcare ETFs: IYHXLVVHTCUREFXHRXLIRYIXJFHLCPSCHRYHPTH,RXD

  15. /CL touching that 104.50 line and bouncing away like a scared puppy.  Come on oil, I have a bullet lined up for you at 104.48….


  16. O'Reilly/StJ – He's the official anti-poor spokesman apparently:

    “These race hustlers make a big living, and they get voted into office, by portraying their constituents as victims,” O’Reilly continued. “And it’s all your fault, and it’s my fault, it’s the rich people’s fault, and it’s the Republicans’ fault — it’s everybody’s fault except what’s going on.”

    As Ryan stared blankly ahead, with a half-smile, waiting for O’Reilly to finish ranting, the host went on.

    “And what’s going on, as you know, is the dissolution of the family, and you don’t have proper supervision of children, and they grow up with no skills, and they can’t read and speak, and they have tattoos on their neck, and they can’t compete in the marketplace, and that’s what’s going on!”

    LOL (if it wasn't so sad) on "proper supervision of children" when after-school programs are cut, day-care isn't covered and WAY too expensive for two parents working 40 hours a week at minimum wage, which brings them to about $25,000 for the family – so $2,000 a month for rent, heat, electricity, food, clothing, medical expenses, etc. with two people working their asses off and it costs $241,000 to raise one child to 18, so that's 1/2 of their salaries gone, not counting college or retirement savings and Bill O'Reilly tells you the problem is they're not supervising their children properly?!?  F that son of a bitch!  

     


  17. Apps/StJ – Those are all over the place.  Pre-holiday applications being rushed, rising rates cause people to jump in.  Applications aren't sales anyway, they're a very poor indicator at the best of times.  

    China/StJ – Same as any company really – the local governments are given a goal and the officials either hit that goal or they will be back on the farm next week.  What a surprise, they hit the goal any way they can.  It's a complete focus on short-term results (on paper) with no regard for long-term costs.  That's why they have ghost cities and ghost airports and 3,000 mile trains from nowhere to nowhere.   Here's the Chinese miracle in one chart:

    Oh wait, here's another good chart:

    That's why I don't flip bullish just because we're bouncing.  These are our MACRO CONCERNS and the indexes bouncing a little bit didn't change the FUNDAMENTALS that drove them lower.  If earnings show that this stuff isn't affecting our companies – THEN I'll be inclined to ignore this disaster-in-progress but, for now, I still like CASH!!!

    Co-Teaching/1020 – Cool, I certainly hope things change because the path we're on now is a road to ruin. 

    Oil/Burr – Be very careful into inventory, this close to rollover, they are going to go all out to try to spike people off the short side.  


  18. Phil, What do you think about buying Nov calls on SH (22 strike @ ~$3 ?


  19. Nice wedge breakout on IWM.


  20. China / Phil – That debt curve is so scary and that probably doesn't even cover all the bad loans being switched around between banks! 

    And to listen to all these guys ranting about China buying our debt. These guys don't understand that China doesn't buy our debt because they want to, it's because they have to if they want to keep a tight leach around the yuan and keep on growing. In the meantime, they are drowning in their own bad debt. 


  21. Indices holding high but swinging… whippy.  Not trusting anything now… not even my bread and butter weekly trades… SPY credit spreads


  22. Breakout/DrC – Keep in mind the markets have Yellen fever today.   We'll see what sticks after her speech.

    SH/Zten – I don't see the advantage to trading SH vs just buying SPY puts.  Also, we're not long-term bearish, we're just looking for a correction.  I don't think we're done yet but I think I'd be more inclined to short the Dow than the S&P and you can leverage that with DXD, and our last play on that was Monday:

    Dow is down the least so I still like DXD ($28.43) and the May $27/30 bull call spread is still $1.10 so let's buy 30 of those in the STP for $3,300 and we'll offset them with 5 RIG 2016 $35 puts at $4.90 ($2,450) for net $850 on the $9,000 spread. 

    That spread is now .80 and the RIG puts are $4.50 so a better deal than we took on Monday.  That's my favorite way to play for more weakness at the moment. 

    Big build in Oil +10Mb, gasoline flat, didn't see distillates.  Dropped very fast to $104.25 but we should see $103.50 on that news.  


  23. crude up 10M barrels


  24. Really enjoyed the Daily Show clips!!  Thanks Phil and Keep 'em coming.  The take on the market past few days Re: Warner Bros. cartoon short… priceless!!


  25. China/StJ – It will be one of those things that are "so obvious" in retrospect.  

    Whippy/Louis – I'm already in holiday mode.  Not very motivated to play this mess. 

    Ah, here's the oil numbers:

    • Crude +10M barrels vs.consensus of +1.5M and +4.0M last week.
    • Gasoline -0.2M barrels vs. consensus of -1.4M and -5.2M last week.
    • Distillates -1.3M barrels and +0.2M last week.
    • Futures +0.64% at $104.43.

    Thanks Louis, just a small glimpse of what goes on in my head…  


  26. Don't forget.  Jellin with Yellen at 12:45 pm.


  27. Funny the EIA is on twitter.  @eiagov


  28. It's too bad oil inventories were so bad as the snow in NY/NJ makes me think Nat Gas (/NG) would make a nice long at $4.54 into tomorrow's report.  Storage is super-low and I think we can run to $4.60 but too risky now if oil is already collapsing:

    Embedded image permalink


  29. This is informative:


  30. Phil / GILD

    Since it's a little slow here.  I have a long term GILD spread that's in the red.  I love GILD and want to be long them.  I did the short Jan16 62.5P long Jan16 62.5/72.5 bull call for a net avg of -0.16.  

    Here is a picture with Avg price, bid and ask.  The first line is the "combo" of all 3 options.  The next 3 lines break the "combo" down.

    http://quick-markup.com/p/534e9bd7c15ec

     

    I'm thinking of rolling down the short call since it's up 45% to something closer to the ATM.  I don't mind owning GILD for 62.5 at all, but I'd also love to get it even cheaper.


  31. That I'm down 50% on my oil shorts (SCO Long, USO Put) after two weeks of huge inventory builds is really leaving me ticked off.


  32. Wal-Mart / Phil – Good strategy from them though – lower cost for their employees who then get food stamps. Since they don't make that much money, they have to shop at Wal-Mart for what they need. Katching! Rinse and repeat. 

    I don't know how these people sleep at night… 


  33. Here's my man Bernie laying it out on Income Inequality:

    “Will you sweep away the righteous with the wicked?  What if there are ten righteous people in the city? Will you really sweep it away and not spare the place for the sake of the ten righteous people in it?


  34. GILD/Burr – They're at $69 so your spread is on track, who cares what the PRICE of the contracts is with 638 days to go?  I would buy back the $72.50s for $10.80 and roll the $62.50s ($15.50) down to the $55s ($20) for $4.50 and then – IFF GILD doesn't hold $67.50, I'd sell the $65s for no less than $13 (now $14 with a delta of .64, so a $1.50 move is $1) and then you'd be in the $55/65 bull call spread for net $2.50 more.  If GILD does head higher, then you just have to cover back when you feel like it.

    Oil/JPH – Not behaving at the moment though failing $104 now, as expected.  You have to learn to be patient and flexible trading oil.  Often frustrating, sometimes rewarding…

    Stop on oil (/CL) is now $104.

    Sleep/StJ – On mountains of cash.  


  35. /cl under 104.  I rode it from 104.25 to 104.  

    Now short 103.90…


  36. Wheeeee! on oil – $103.65, the whole morning pump has been completely reversed now.  Should bounce here (stop at $103.75), reload at $104 or break back below (like Burr is doing).


  37. Europe gunning it into the close.  Dax up 1.3%, CAC 1.2%, Italy 3%, Spain 1.3%, London is the lagger at 0.6% but a very strong day in Europe.


  38. /cl stop hit at 103.50.   Now below at 103.44.  Keep pushing?  It breaks through the .50 levels by a gap, so hard to get in at 103.48


  39. /CL
    So, I woke up and saw the oil tweet, and all excited checked our positions and they've barely moved ?

    USO May 38 PUTS ( $1.11 )
    SCO May 26/29 BLCS ( $1.20 )

    WTF ?


  40. DOE 4BB for renewable / grid 


  41. Wombat – Keep in mind that a lower VIX will also mess up your long options…. That's really the problem with being long options – you have decay working against you and you have to take into account the VIX because lower volatility adds to the decay when the VIX goes lower!


  42. Stopped out of my /CL short at $103.50 but nice ride down.  Taking a stab long at $103.25


  43. Oil/Phil – on macro view, if/when keystone is given the green light, will oil prices drop not at all? a little? a lot?  


  44. Wow… we do live in interesting times and there might be hope for global warming if we can slow it down just a bit:

    http://mashable.com/2014/04/16/solar-power-photoswitching-molecules/

    Scientists at MIT and Harvard University have devised a way to store solar energy in molecules that can then be tapped to heat homes, water or used for cooking.

    The best part: The molecules can store the heat forever and be endlessly re-used while emitting absolutely no greenhouse gases. Scientists remain a way's off in building this perpetual heat machine but they have succeeded in the laboratory at demonstrating the viability of the phenomenon called photoswitching.


  45. Wombat – USO doesn't change as fast as /CL.  /CL is down -0.40% today while USO is only down -0.16%.  That's why I tend to play the /CL options when Phil suggest playing a longer term USO play.

    SCO is on my "don't" list to go long.  Too much damn decay.  


  46. Wombat – USO doesn't change as fast as /CL.  /CL is down -0.40% today while USO is only down -0.16%.  That's why I tend to play the /CL options when Phil suggest playing a longer term USO play.

    SCO is on my "don't" list to go long.  Too much damn decay.  


  47. StJ / CL
    Understood. 
    Thanks Burr.
    I'm closing both.
    I'm up 14K on my /CL spreads – these just don't seem worth it with VIX so low 


  48. On the other hand, we have no shot to slow global warming with these clowns:

    The Tennessee Senate passed a bill last week that, if approved, would broadly ban mass transit projects in the region, an anti-transit effort that’s gotten some help in the state from Charles and David Koch.


  49. Wombat, what is the spread you have on now?  I never have done these, and I want to put it in my paper account for a little bit to play with.


  50. Let's see if the Bots kick back at 1130.


  51. Oil finally stopped at $103.25 – that was certainly worth waiting for!  Congrats to all who played along. 

    Oil/Burr – As noted above, I set the stop a bit more generously, at $103.75 because you KNOW $103.50 is going to be a little bit bouncy.  Once below $103.50, that's the stop (but only if it's really looking like it's turning, not just any blip) and then the same each .25 down.   There's also nothing wrong with just getting out at $103.50 and re-entering at $103.45 with a .10 stop.  Makes just as much as stopping out at $103.60 if you didn't take the $103.50 and run and, if you re-enter at $103.45, all you miss is a nickel move vs hanging in and risking your gains.  

    USO/Wombat – Yeah, we should have rolled them.  I was greedy and hoping we'd get a head-fake higher after inventories so we could DD or roll.  Now we just have to wait for a normal sell-off. 

    DOE/Wombat – I wonder if we'll end up paying for TSLA's Gigafactory?  

    Keystone/Scott – No, that will be terrible for us, it allows them to send oil OUT of the country and will make our energy more expensive at home.  

    What we're watching unfold in Washington, D.C., is more than just a high-stakes political power play — it's a scam undertaken by Big Oil's congressional puppets on the orders of oil companies that have billions of dollars at stake.

    The politicians pushing the pipeline are (how can I put this politely?) lying to the American people and pandering for dirty oil money. What do we really stand to gain if this thing is rammed down our throats? Higher gas prices, more air pollution, the threat of poisoned water, and enough carbon pollution to make stopping climate disruption next to impossible — but few of the jobs and none of the huge profits that Big Oil would reap.

    Now that Europe closed, there's nothing left to buy buy US equities.  

    Photoswitching/StJ – Cool.  It's a race now as we have to discover and commercialize a solution before we do irreversible damage.  


  52. I think a small personal whee on PCLN is demanded. The day to day gyrations of this stock is a wonder to behold. A move up to $1300 whereupon it should stay until opex in Jan 2015 would do very nicely. Too early to start reviewing car showrooms, but…….


  53. Phil / GILD – Would you do anything with the put?    I'd also like to add more spreads if GILD doesn't hold.  Right now, if GILD holds 72.5 in Jan16 I'd make only $1000 per spread, or $10K, that's with risking owning 62,500 of GILD.  


  54. I guess this is the Yellen uplift —  we will support the economy, bah, bah, bah.


  55. We are back to last Friday's close.


  56. PCLN/Winston – Wow, up $60 since yesterday?  What a crazy MoFo MoMo.  

    All the MoMos staging a bit of  a comeback for Janet.  

    Federal Reserve Chair Janet Yellen said the central bank has a “continuing commitment” to support the recovery even as policy makers now see the economy reaching full employment by late 2016.

    In a speech that outlined the disciplined policy framework she uses, Yellen told investors to pay attention to shortfalls in both inflation and the jobless rate for signals on the Federal Open Market Committee’s decisions on the policy rate.

    “The larger the shortfall of employment or inflation from their respective objectives, and the slower the projected progress toward those objectives, the longer the current target range for the federal funds rate is likely to be maintained,” Yellen said in a speech in New York.

    “This approach underscores the continuing commitment of the FOMC to maintain the appropriate degree of accommodation to support the recovery,” she said.

    At 6.7 percent for March, she said the unemployment rate was more than a percentage point higher than policy makers’ estimate for full employment of 5.2 to 5.6 percent.

    “This shortfall remains significant, and in our baseline outlook, it will take more than two years to close,” she said to the Economic Club of New York.

    I don't think she's saying anything new or exciting here.  Getting like Draghi – all talk, no new stimulus.  

    /ES testing 1,850 is worth a short, /YM 16,300, /NQ 3,510 and /TF 1,125 are confirming lines.   Tight stops, of course. 

    GILD/Burr – No, it's well above your net so why worry?  If you didn't REALLY want to own $62,500 worth of GILD, then you shouldn't have sold them in the first place and you really do need to stop out – just as you would if you did own the actual stock. 


  57. Phil – Should we wait untill tomorrow to roll the butterflies? I was thinking on rolling the BTU Apr $16 call to either the May $16 (for a credit) or to the May $17 (for a debit). BTU goes up or down? DIS is a little more complicated (both put and call are ITM) but I am only paper trading it.


  58. I guess the bot's really didn't like 1130!


  59. Butterflies/Akad – LOL, now you want to wait?  I guess it doesn't hurt to make sure we get all our premium.  On BTU, I'd go lower as it's been weak, these are long-term plays, we generally want to be defensive unless we're SURE things are turning up.  Though I have read some good news re. coal demand….  

    Per the above levels, Dow is now the laggard, at 16,310, so a fresh horse should you need it for shorting.  Yellen is done now – we'll see if it can be spun bullish by the Punditocracy.  


  60. /cl creeping back to 103.51, but it looks like a upward trend line right now.  


  61. Not as much time as I would like to be on the board but in addition to the TZA play expiring this week, the TNA play also yielded some nice fruit, thanks Phil!!!

    Another portfolio update with possible entry comments coming soon? 

    Cheers and Happy Easter to all once we get there!


  62. Henry Schwartz analysis on LNG.

    http://www.thestreet.com/options-profits/article/hot-topics/henry-schwartz-analysis-lng-cooking-gas

    I like this guy alot because I worked with him in the HF space and he runs Option Alert, the first big block alert tool that all the big banks use.  

    Phil – Your take on LNG?  I think you like BTU better, but I don't remember why.


  63. $25,000 Portfolio ($25KP):  

    • USO – We're waiting for the big one.  
    • XRT – This is a bonus round on XRT, we're waiting on some retail earnings.  
    • GMCR ($97) – Pretty much on track.  

    Butterfly Portfolio:  

    • BTU – Looks like we'll be rolling the April $16 calls (.80) to the May $16 calls ($1.16) to pocket another .36 ($360) as we already have aggressively bullish short Jan $18 puts.  Hopefully, tomorrow, we can do that roll for more like .40-.45. 
    • CZR – May, so we don't care.
    • DIS – Exactly in the middle of our zone!  We sold $4,270 worth of puts and calls and now they are $2,250 – so we made $2,020 in one month – very nice.  That's the way these trades work when they are going correctly – whenever we are lucky enough to hit our targets, they are like cash machines.   Over time, with a dozen of these trades working, we will get lucky more and more often.  The Apr short $77.50 calls ($1.30) can be rolled to the May $80 calls ($1.60) for .30 (+300 in our pocket) as we're bullish on DIS into earnings.  The short April $80 puts ($1.55) can be rolled to the May $77.50 puts ($1.70) – just in case we're wrong and, anyway, we still get another $150 for our trouble on that one.  

    Income Portfolio:

    • CHL – Only China stock I like
    • DIS – Love 'em
    • FCX – Love 'em
    • HOV – Tempting to sell more but let's just say fine.  
    • TASR – Love 'em
    • AAPL – That's an earnings play we just added, we will sell puts if AAPL goes lower.  If it doesn't, then we'll make lots of money – nothing wrong with that. 
    • ABX – Love 'em, good for a new entry. 
    • RIG – Love 'em

    Not a bad set.  If we can make this much for the next 3 quarters, we may even beat the S&P (assuming it does what it did last year).  We'll be adding plenty of new positions over earnings season when things get too high or too low.  


  64. There goes 16,300 on the Dow (/YM), /ES at 1,847, /NQ 3,497 and /TF 1,122 just ahead of the BBook. 

    TNA/Steve – That's a great example for all and a good point on Fundamental vs. TA trading.  We had a target on TZA at $17 and, when it overshot the mark, we locked in the profits with a TNA play from the other side.  Since it's now hitting our target – we end up making money on both.  We don't change our VALUE targets just because the PRICE changes – that's how we can make money on both ends.  

    LNG/Burr – Still speculative.   I think LNG sounds good but the reality will be that there's a supply glut that goes global and, with nowhere to hide the excess, the whole thing will fall apart.  Probably not before it goes way up on speculation, though.  BTU is just a long-term recovery play.  It will be another decade before we can wean off coal significantly, the low demand is not environmental or supply-driven, it's simply a weak economy not generating demand.   I don't think it will last too long – not with all this free money being tossed around.  

    Beige Book is out!   Blaming the weather for everything bad, of course.  I'll go over it next. 


  65. Is there a problem with the site today?  I am not auto updating and the new feeds seem slow to post.  May just be my ADD.  Could be my Comcast.  Anyone else noticing anything?


  66. Earnings tonight:

    AXP
    Consensus – $1.30
    Whisper – $1.33
    Average move – 3.0%
    Priced into options – 2.95%

    GOOGL
    Consensus – $5.36
    Whisper – N/A
    Average move – 6.4%
    Priced into options – 5.4%

    IBM
    Consensus – $2.54
    Whisper – $2.61
    Average move – 4.6%
    Priced into options – 3.73%

    SNDK
    Consensus – $1.25
    Whisper – $1.22
    Average move – 11.6%
    Priced into options – 5.4%

    STLD
    Consensus – $0.16
    Whisper – $0.17
    Average move – 3.5%
    Priced into options – 2.66%

    The GOOGL numbers are not that reliable as everybody is trying to figure out the share distribution. Some services don't even has estimates so be careful playing that one.

    Clearly, options are no paying for potential moves right now. Tough to make plays. Even SNDK which usually moves a lot is not taking any volatility into account. 


  67. Summary of Commentary on Current Economic Conditions by Federal Reserve District

    Prepared at the Federal Reserve Bank of Atlanta and based on information collected before February 24, 2014. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

     

    Reports from most of the twelve Federal Reserve Districts indicated that economic conditions continued to expand from January to early February. Eight Districts reported improved levels of activity, but in most cases the increases were characterized as modest to moderate. New York and Philadelphia experienced a slight decline in activity, which was mostly attributed to the unusually severe weather experienced in those regions. Growth slowed in Chicago, and Kansas City reported that conditions remained stable during the reporting period. The outlook among most Districts remained optimistic.

    ?Here's my issue with "most" – there are 12 districts, 8 "moderately" good and 4 in decline.  Weather excuses or not – is that the kind of report you expect to be paying all-time market highs for?  Where would the S&P be if all 12 districts had strong growth?  2,000?  3,000?  Don't all-time market highs assume STRONG growth – especially when the S&P is already up 35% from last year.  On weak growth?  On 8 of 12 districts weak growth with 4 contracting (for whatever reason)?  REALLY?
     

    Retail sales growth weakened since the previous report for most Districts, as severe winter weather limited activity. However, Richmond, St. Louis, and Minneapolis reported modest sales growth since the beginning of the year. Weather was also cited as a contributing factor to softer auto sales in many Districts, with the exception of Cleveland, which saw strong gains. Tourism increased in a number of Districts but declined in Philadelphia and was reported to have been mixed in New York and Minneapolis.

    The demand for nonfinancial services was mixed compared with the last report; however, both Boston and San Francisco reported strong demand for technology related services. Manufacturing sales and production in several Districts were negatively impacted by severe winter weather; however, modest improvements were noted in Boston, Atlanta, Minneapolis, and Dallas.

    Residential real estate markets continued to improve in several areas, albeit modestly. Boston and New York gave mixed reports on sales, and Philadelphia, Cleveland, Minneapolis, and Kansas City noted a decrease in sales. Many Districts cited low inventories of housing and continued home price appreciation. Commercial real estate leasing expanded, according to most reports, while reports on construction activity were mixed. Demand for commercial real estate loans was solid in Boston, improved slightly in Dallas, and continued to grow steadily in Chicago and Kansas City.

    There we go again.  Always remember there are 12 districts, so improved slightly in one and solid growth in 3 leaves 8 districts not so hot.  When you see me use green or red, it's not just a good or bad note, but it has to apply to a significant portion of the Districts (and yes, we have to weight for population as well as specialties).  

    Of the Districts that reported on agriculture, conditions softened in Kansas City and Dallas as dry soil adversely affected wheat crops. Districts reported that energy production and demand continued to increase as a result of increased demand due to the unusually cold winter.

    Employment levels improved gradually for most Districts, and shortages of specialized skilled labor continued to be reported. Price pressures remained subdued, with the exception of upward cost pressures for some energy and construction products. Wage pressures remained stable for most Districts.

    Consumer Spending and Tourism
    Most Districts reported sales growth had softened from January to early February. New York reported noticeable weakness; however, Richmond, St. Louis, and Minneapolis reported modest growth since the beginning of the year. The extreme winter weather conditions reportedly contributed to the decline in sales in some markets; however, Richmond, Chicago, and Minneapolis reported that weather-related goods contributed to positive sales growth. Reports from furniture retailers in Boston and Minneapolis indicated strong sales. Contacts in Cleveland, Richmond, Kansas City, Dallas, and San Francisco expected retail spending to improve going forward. Vehicle sales varied across Districts. Severe weather conditions resulted in softer vehicle sales as reported by New York, Philadelphia, Richmond, Chicago, Kansas City, and Dallas. Cleveland noted a modest increase in auto sales compared with a year ago. New York cited upcoming auto shows as an expected boost for future sales, while Chicago anticipates that sales incentives will increase near-term sales.

    Short story:  Things really suck now but we HOPE they will get better.  Keep in mind this is an informal, anecdotal survey of friends of the Fed in each district.  It has the same optimistic forward bias as the PMI reports tend to have and then you have to take into account the spin of the particular Fed Governor who is reporting on his district and what they are hoping to "prove" to make their own economic case… 

    Travel and tourism was generally strong across most reporting Districts except for Philadelphia who recorded a slight decrease. San Francisco stated that the level of travel and tourism increased in their region. Recent winter weather conditions benefited many ski resorts in Kansas City, Richmond, and Minneapolis. Atlanta and Boston also indicated that hotels fared well from the weather, but that restaurants, museums, and other attractions were negatively impacted. New York reported mixed activity from January to early February. Hotel occupancy rates in Manhattan and New Jersey increased, buoyed by the Super Bowl, while hotel business was down in western New York State due to the harsh winter storms. Airline contacts from Dallas indicated solid to slightly stronger demand, with some temporary disruptions due to severe winter weather across the nation. The majority of Districts reported a solid start in the first quarter for hotel bookings, occupancy, and revenue with an optimistic outlook for the remainder of the year.

    Nonfinancial Services
    Reports from Districts mentioning nonfinancial business services indicated that activity has been mixed since the previous report. Both New York and Philadelphia reported that severe winter weather reduced demand for services in their region. Activity in Minnesota and San Francisco's professional business service firms improved since their last report. Boston said that demand for software and information technology was stronger than expected, and demand for cloud computing remained strong according to San Francisco's report. Richmond service providers noted flat revenue in recent weeks, while sales were characterized as stable among Kansas City service providers. The outlook among contacts was mixed, as well. Planned activity in St. Louis was described as negative, while contacts in Minneapolis and Dallas noted optimism. Contacts in Kansas City anticipate activity will pick up, while software and IT professionals in San Francisco are cautiously optimistic and anticipate revenue growth will be positive this quarter.

    Transportation activity since the previous report was mixed. Severe weather reportedly disrupted supply chains and delayed shipments in several Districts. In Dallas, railroad cargo volumes fell slightly below year earlier levels, with winter weather conditions across the country largely to blame. Port activity in Atlanta and Richmond reflected increases in auto shipments, while Dallas reported declines in container volumes. Atlanta and Dallas indicated air cargo was down, compared with year earlier levels. Kansas City cited increasing optimism about future transportation activity, while Cleveland noted expectations that demand in 2014 will be the same or only moderately higher than a year ago.

    BUYBUYBUY!!! Yeah, right….

    Manufacturing
    Manufacturing activity expanded at a moderate pace from January through early February in most Districts. Several Districts reported that severe winter weather had a negative effect on sales and production during this period, including Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, and Dallas. The weather was cited to have caused utility outages, disrupted supply chains and production schedules, and resulted in a slowing of sales to affected customers. Philadelphia and Richmond reported that shipments and orders declined during the first half of February. Steel producers in Cleveland indicated that they have excess capacity, and San Francisco reported low capacity utilization rates at steel mills. Boston and San Francisco indicated that semiconductor sales had been particularly strong. High-tech contacts in Dallas reported a slight improvement in orders, as demand for memory chips remained strong and demand for logic devices remained weak but stable. San Francisco also cited growth in the commercial aerospace industry due to a backlog in orders for commercial aircraft, while defense-related manufacturers reported sluggish overall conditions and expected sales to trend downward. Auto production was strong in Chicago despite weather-related slowdowns in sales, and Cleveland reported auto production to be higher than a year ago. Most Districts were optimistic about the future and expect manufacturing activity to rise in the coming months.

    Let's consider the effect of the weather.  People don't shop, so stores have less money and more inventory.  My brother sells less Toyotas – same problem.  Homes don't get built, money doesn't get transferred to builder, workers don't get paid.   Airlines grounded – lots of people don't get paid.  People miss work, companies miss sales, no one works overtime except the snow-plow guys…  This is not the kind of lost business that bounces back right away.  It's the kind of lost business that drains cash and reduces spending going forward until people catch up.  RICH people think that weather merely "puts off" purchases because missing a few days of work doesn't affect the top 10%, but the bottom 90% are drastically impacted by things like this.    

    Real Estate and Construction
    Reports on residential housing markets were somewhat mixed. Many Districts continued to report improving conditions but noted that growth had slowed. Most of the Districts indicating otherwise attributed the slowing pace of improvement to unusually severe winter weather conditions. Home sales increased in Richmond, Atlanta, Chicago, St. Louis, and Dallas, while sales were down in Philadelphia, Cleveland, Minneapolis, and Kansas City. Boston and New York reported that the trend in sales for their Districts was mixed. New home construction increased in Richmond, Atlanta, Chicago, St. Louis, and Minneapolis, and remained flat in Kansas City, and was down slightly from the previous period in Philadelphia. Most Districts reported low levels of home inventories and indicated that home prices continued to appreciate. The outlook for sales and residential construction was positive in Boston, Philadelphia, Cleveland, Atlanta, and San Francisco.

    Strong multifamily construction was cited in New York, Cleveland, Richmond, Atlanta, and Dallas, while Boston indicated that its pipeline of multifamily construction was declining. Dallas experienced rent growth above its historical average, while New York reported mixed trends in rent growth. Cleveland noted that it expects healthy growth in rents this year.

    Many Districts, including New York, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco, indicated that commercial real estate activity had increased and that conditions continued to improve since the previous report. Philadelphia noted that there was very little activity to report in construction or leasing due to severe winter weather. The outlook for nonresidential construction was fairly optimistic in Boston, Philadelphia, Cleveland, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco.

    Well, you can see why the homebuilders and REITs are down.

    Banking and Financial Services
    District reports of loan demand and volume were mixed. Demand for residential mortgages decreased in New York, Richmond, St. Louis, and Kansas City, and softened in Philadelphia and Dallas. Cleveland and Atlanta noted increased demand for new purchase mortgages, while mortgage refinancing declined in New York, Richmond, Atlanta, and Kansas City. Demand for consumer loans grew slightly in Philadelphia, Cleveland, Chicago, and Dallas, and held steady in Kansas City. Decreased demand for consumer loans was noted by Richmond and St. Louis, and among small to medium-sized banks in New York. Boston reported commercial real estate loans were highly competitive and demand was solid. Richmond businesses looked for shorter-term commercial real estate loans in order to benefit from lower interest rates those loans offered. Chicago and Kansas City reported steady growth in commercial real estate loans, and demand for such loans improved marginally in Dallas. Small to medium-sized banks in New York reported no change in commercial real estate loan demand.

    New York noted modest declines in delinquency rates. Cleveland reported delinquencies were stable or trended lower, and St. Louis indicated delinquencies for most types of loans decreased. Loan quality in Kansas City improved compared with a year ago and continued to strengthen in Dallas. Bankers in Cleveland and Atlanta voiced concerns about recently enacted regulations and the potential negative impact on lending.

    Agriculture and Natural Resources
    Agricultural conditions softened since the previous report. Severe winter weather affected several Districts with some crop damage being reported by Richmond and Atlanta, while Chicago noted disruptions in the flow of agricultural products. Both Kansas City and Dallas cited dry conditions adversely affecting wheat crops, while San Francisco reported concerns about water shortages and water costs. Several Districts noted falling feed prices had a positive effect for cattle and hog producers. Kansas City indicated farmland price appreciation moderated from the rapid pace seen in the past few years. Crop prices received in January by farmers fell from a year earlier for corn, wheat, soybeans, hogs, and chickens; prices increased for cotton, rice, oranges, cattle, milk, eggs, and turkeys.

    District reports showed continued strength in energy production and demand for oil and gas; much of the increased demand was driven by unusually cold winter weather. Cleveland, Richmond, and St. Louis reported coal production was down, with steam coal plant closures in Richmond. Cleveland, Atlanta, and Dallas described growth in drilling (both inland and offshore) and refining activity. In contrast, Minneapolis indicated that oil and gas exploration decreased slightly from recent months, primarily due to the extremely cold weather. Inventory drawdowns and supply shortages of natural gas and propane were reported in Atlanta, Chicago, and Dallas due to increased withdrawals that were exacerbated by the severe weather. Nearly all Districts attributed energy price surges to increased demand during the unusually cold weather; yet, Boston reported that natural gas prices were also driven up by pressure on pipeline capacity in New England. Some firms in the Richmond and Chicago Districts indicated that they elected to delay production and/or reduce usage rather than pay high prices. Dallas indicated that increases in the price of West Texas Intermediate (WTI) crude oil were being bolstered by debottlenecking at Cushing, Oklahoma.

    Funny how you get the real story here – the benefit of the pipelines is to RAISE the price of WTI.  But we already knew that.  

    Employment, Wages, and Prices
    Since the previous report, the pace of hiring had reportedly softened in Boston, Richmond, and Chicago, with those Districts attributing at least part of the recent slowdown to unusually bad winter weather. Despite a pickup in hiring in some sectors across New York, Cleveland, Atlanta, and St. Louis, notably in manufacturing, overall employment growth for these Districts remained sluggish. In Philadelphia, as outlooks for long-term overall economic growth improved, firms reportedly continued to expand their headcounts cautiously. In contrast, labor markets in the Minneapolis District tightened slightly. The rate at which temporary employees were converted to permanent hires remained strong across Boston, while contacts in Richmond reported this conversion was happening at a slightly faster pace than previously noted. Many Districts continued to note shortages for particular types of specialized, technical skilled labor, such as healthcare professionals and information technology workers. Atlanta and Dallas also noted shortages for freight truck drivers.

    Inflation pressures remained largely unchanged across most Districts. Price pressures were described as minimal or roughly steady in Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco. There were some mentions of rising raw materials prices passing through to final goods. Boston indicated that higher material costs and rising costs of overseas labor could have an upward influence on apparel prices. Chicago, Minneapolis, and Dallas noted that unseasonably cold weather had pushed up costs for some energy products. Construction materials prices remained a source of upward cost pressure, according to contacts in Atlanta and Kansas City. Retail contacts in New York and Philadelphia reported deep product discounting; however, reports from Dallas indicated that retail prices were stable.

    Most Districts noted that wage pressures were largely steady since the last report; however, a few Districts cited upward wage pressures in some highly skilled jobs in industries such as information technology, transportation, and construction. Reports from Cleveland, Kansas City, and San Francisco indicated that businesses were anticipating wage growth to increase from the recent mild pace as the year progresses. Contacts in Chicago indicated that higher healthcare premiums increased non-wage labor costs, while a growing number of employers in Cleveland reported passing through rising healthcare costs to their employees.

    All in all, it's not a report that makes me want to pay all-time highs for stocks, is it?  The gist of it is, things would have been better if the weather didn't suck and they expect them to be better next Q.  The really good news is, they will have easy comps to beat.  I guess the weather will also be used to excuse all earnings as well.  


  68. Good article on how media uses visualization to spread lie:

    http://gizmodo.com/how-to-lie-with-data-visualization-1563576606

    For example, different scales:

    How to Lie With Data Visualization

    Or

    How to Lie With Data Visualization

    Lots of example from Fox!


  69. Site/Mjj – Seems fine to me, when I post something, it pops right up.   Have you tried re-loading the page?  Also, it's just generally slow as it's spring break.  I was on a cruise this week last year and I should have gone away this week as it has been very slow.  I am going to AC tomorrow for the weekend at least. 

    Earnings/StJ – I'd rather wait and see on this group.  Nobody seems too mispriced though maybe a bullish poke at SNDK for fun – the May $80s are $1.55 with SNDK at $76.19.  The Delta is .33 and the 50 dma is %76, so hopefully some support.  Dangerous but fun.

    Good article, StJ. 


  70. Thank you Phil..  I'll try a reboot after markets close.  You're right…it is a slow day.  Now why would anyone schedule spring break on options expiration week?  


  71. stjeanluc 
     

    Good article on how media uses visualization to spread lie:

    Thanks worth the read  


  72. Phil- you mentioned that you had $17 as a target on TZA. Did you post this when you suggested the trade or is there a formula for that in the strategy? I have had some trouble figuring out what my targets are and when to exit certain short term trades, so if you did post it, can you tell me when so I can go back and see what I missed, or revisit the formula that tells us that $17 is the target? thanks.


  73. Phil

     

    Liquidmetal Technologies Inc. (LQMT)

     

    At  .18 cents


  74. Caught up on "The Profit" today while working on the PC.  Season 2 must be called the "crazy owner" season.

    Amazing Grapes and Mr. Green Tea look like the only winners to me.


  75. Phil- speaking of targets;On April 8th you made a call on SDS buying a 27/29 May BCS and selling puts. Did you guide out of that position or is it still a hold? I did a paper trade and it is now down a bit, so should I have sold it previously when the market was down last week, or is this still held in case the market has further to fall? If I had actually done this trade, what would my target be for exiting? This is a lesson I still need. Thanks. 


  76. Phil ,

    Any trade on LQMT…..What price would you enter this position…thanks


  77. Back at RUT 1130 and a great shorting line with tight stops.


  78. Admin. has told me I can't access the long-term or short-term portfolios (as I did when I was on Darwin investing)  


  79. WFM has been going down for awhile.  Anyone think it is getting to an interesting spot yet?  PE of 30.  Analysts are expecting 18% growth next year.  


  80. I decided to nibble on a 1x position on WFM.  Sold the 2016 Puts, and bought the $40/55 call spread.  For about $1.60 net.  


  81. I am in the NFLX spread. Is it time to roll the Jan '16 short 550 call? Approx. 70% of premium gone.


  82. Visualization / QC – Thanks. That chart was one of the best of the bunch:

    How to Lie With Data Visualization

    Up is down and down is up…. 


  83. /NKD alerted at 14500.  Short?

    ugghh.. nvr mind, 14455 now. wtf.


  84. 25pt drop on the NASDAQ emini at close. Wow!


  85. Google earnings miss Street, shares drop 6%


  86. TZA/Craigs – Yes, that was the target ($17) from way back when we took those original TZA spreads.  It was roughly 1,120 on the RUT, about what we expected to pull back to.  

    LQMT/QC – That's where we like 'em. 

    Profit/Burr – I like Shark Tank better.

    SDS/Craigs – If it wasn't for a portfolio, I don't follow-up with adjustments but SDS was over $30 last week and now $28.50 – at some point you have to stop out of those things.  That goes for any trade – it's not a profit if you let it evaporate on you – every gain you make needs to be protected.  It's like those hedges we had that were up 300-500% – you put a stop at a 20% pullback of your gains, just like we do with any kind of momentum trade.  If it's a hedge, and not a bet, then you may have enough offsetting longs to justify it but we cashed out our TZAs in the STP last week – 100% of them.   That would have been a pretty good time to take the money and run on any of those kind of plays. 

    LQMT/Jasu – I like them at .20 or less but they can go way down too so be careful.

    Portfolios/Zten – I just haven't printed those two yet this week.  Just like the ones above, I'll do the other two tomorrow.  

    WFM/Palotay – P/E of 30 is a bit rich for a grocery store – even one that is growing (assuming expectations are right).  I think they may hit $40 but then I like them long-term. 

    NFLX/Zten – What spread is that?  

    /NKD/Burr – No reason to go short with that big move today – just have to see what sticks into the weekend.  

    Nas/Yo – GOOG I guess. 

    That was the bell already, wow, what a fast day!  


  87. IBM down almost 2% AH


  88. NFLX-- Jan '16 —- long 500 Put, short 400 Put, short 550 Call.  It was recommended as a play, not part of a portfolio


  89. Phil – Totally different shows.  Shark Tank is also pretty rigged.  The sharks aren't commited to doing the deal until after the show and after they see all financials and if they change their mind on a whim, they are out.  

    Most of the biz's up there now use ST as a marketing tool, rather than a investment tool.

    The profit, while still made for entertainment and drama, does teach sound business practices if you read between the lines.  People, Process, Product.  Margin.  Free Cash.  Debt.  Inventory as cash.  Time value.  Net Profit vs Net Rev.  Gross Profit vs Net Profit (which many fail to see)  To value employees more than owners.  Etc.


  90. Bot some SNDK May 80 calls at the close … will make tomorrow
    a little more interesting, one way or the other.


  91. IBM down 4.15%, tomorrow will be an interesting day for the techs


  92. Phil,

    Would you consider selling puts in GLD or GDX in anticipation of a drop in equities and possible flight (hedge) to security of gold? Looking at selling  contracts that, if  assigned, would put me in at or near lows (20 for GDX; and way down at115 for GLD) both of which are tracing out H & S bottoms. Thinking that GLD might benefit from fear more than GDX.

    Thoughts? Thanks in advance


  93. Burrben / As the Market Turns (or Capitalist Drama Series) - 

    Shark Tank, for me at least, has always been more fun because of the caustic whim of any of the sharks. Malefactors have always been more interesting than benefactors for some reason, and a greedy a-hole can sell a show to an audience sooooo much easier than some virtuous soul. That's where I come to this unique duality in my soul. On the one hand, it's frankly captivating to see the sharks, sitting like they're holding court as if they were economic nobles with their (scripted) holier-than-thou attitudes and looking at ideas for their own (scripted) amusement. On the other hand, it kills me to think about that show is that its almost conditioning its audience to think that if they have an idea that's relatively useful then the only way to make it work is sell it to a rich person whol'll demand 50%+ control over the idea  because they're the only ones with the amount of capital necessary to move that idea to deploy it to market with any hope of profitability. Beyond that, it's a very period piece in that its constantly showcasing how some people are ready to give away all their control over their originality for a few bucks – and giving up on thousands to hundreds of thousands to millions - because desperate times have them discounting future earnings in favor of getting cash now.


  94. Nice pop in SNDK on good earnings:

    • SanDisk Corporation (SNDK): Q1 EPS of $1.44 beats by $0.19.
    • Revenue of $1.51B (+12.7% Y/Y) beats by $20M.
    • Press Release

    Others not so hot:

    • American Express Company (AXP): Q1 EPS of $1.33 beats by $0.03.
    • Revenue of $8.19B (+3.9% Y/Y) misses by $170M.
    • Press Release

     

    • Capital One Financial Corporation (COF): Q1 EPS of $1.96 beats by $0.26.
    • Revenue of $5.4B (-2.7% Y/Y) misses by $50M.
    • Press Release
    • International Business Machines Corporation (IBM): Q1 EPS of $2.54 misses by $0.01.
    • Revenue of $22.48B (-4.0% Y/Y) misses by $450M.
    • Shares -2.3%.
    • Press Release
    • Google (GOOG): Q1 EPS of $6.27 misses by $0.15.
    • Revenue of $15.42B (+19.1% Y/Y) misses by $90M.
    • Shares -1.2%.
    • Press Release

    Told you so on GOOG:

    Submitted on 2014/03/25 at 9:58 am

    GOOG/CDT – It seems to me like GOOG is about to go heavy into an R&D + Infrastructure phase and they want to have iron-clad control as they move away from profits for a while.  I'm not saying they should be shorted, because who knows what the reaction to the split will be but, if they get cheaper, then it's going to be a very interesting long-term hold.  

    Submitted on 2014/03/26 at 7:55 am

    GOOG/8800 – Just a combination of lots of stuff I've been hearing plus the moves they've been making with the stock.  My guess is they are doing a big infrastructure roll-out (likely fiber but maybe self-driving cars) that's going to crimp profits for quite some time.  Very wisely, they don't want some jackass like Icahn to swoop in and stir things up so they are making moves to make sure they can have a bad quarter or two if they feel like it without having to look over their shoulders.  Here's Larry Page giving a good overview of his vision.

    GOOG/ZZ – I like them long-term the same way I like IBM long-term or AAPL long-term – I don't know HOW exactly they will make money in 10 years but I'm very confident that they will. 

    Submitted on 2014/03/27 at 9:56 am

    GOOG/StJ – I love them long-term but, short-term, they are simply not going to make as much money while they build this stuff and most investors don't want to hear about "building for the future", so they'll bail. 

    Submitted on 2014/04/03 at 10:44 am

    GOOG/StJ – What a mess, I have no desire to deal with them.   As to why they split – it's all about control and my theory is they are about to make some unprofitable long-term investments and they don't want to risk an Icahn-type attack.   Sadly, that's what it takes to plan for the Future in a US Corporation.  

    NFLX/Zten – Ah, I love those kind of trades.  

    Submitted on 2014/02/19 at 11:48 am

    NFLX/Jabob – You have to look at why it went up.  House of Cards was a big hit, with 16% of NFLX subscribers watching it the first week.   This is really not a big deal, it just means that 16% of their subscribers are fans – the first season, not that many people rushed for it but now it built an audience – just like any hit TV show.   Meanwhile, not a word about Lilyhammer, Hemlock Grove, Bad Samanthas, the Ropes….  NFLX is a TV station – nothing more.  The fact that they have A hit is novel, but it's not the game-changer they are pricing for.  Even if they were a successful TV station – they are still overpriced by 10x for that market.  

    The only way to short NFLX is long-term and with conviction.   I would short NFLX 2016 $500/400 bear put spread at $60 and sell the $550 calls for $60 for net $0 on the $100 spread – if I were crazy enough to short Momos.   That pays $10,000 per contract against no cash (TOS says $44 in margin) and you don't lose money until NFLX is over $550 and, keep in mind, at $500, you can capitulate and BUY NFLX to cover the short call and you can stop back out below $500 if it fails again. 

    That's a very aggressive spread – and very profitable, so far.  The problem with vertical spreads is you don't make much of your money until you get close to expiration.  At the time of the trade, I didn't expect NFLX to fall so fast (or we could have just gotten a straight put) and now the short $550 puts are $20 and the $500/400 spread is net $77 for net $55 out of a possible $100.  Since you can only make $45 more if you wait 2 more years – I'd take the money and run or, at least, put a stop on the trade at $50 because you have to consider that you're tying up a lot of margin AND the profit, just to make $45 on $55 over 2 years now. 

    Shark Tanks/Burr – I know, I just like hearing people pitch stuff.  I intend to use it to market some of our start-ups in the PSW Project, in fact.  

    By the way, no one reminded me of yesterday's YHOO earnings spread, which is a shame because of course you sell your long call (May $33s at $2.40) into the excitement (opened at $4.50, now $3.75) and then you wait and sell the short calls (April $34s at $1.20) when things calm down (opened at $3.69, now $2.35).  Doing this trade properly, would have netted back $2.15 off the net $1.20 spread, now it's net $1.40, still profitable as the logic of the spread was sound – even though YHOO popped more than we thought.  

    GLD/8800 – I like both long from here in any case.  Either the market sells off and people panic into gold or it doesn't and we have inflation down the road and gold goes up.  As I think you know, I like ABX much better than GLD or GDX.  

    Sharks/Yo – Shhhhh, you're giving away the strategy for PSW Investments!  We fully intend to work with small companies who are willing to give up ownership for capital – that's the whole point…  wink


  95. GOOG / Phil – The estimates were all over the place for this quarter. Zack had them at $5.36 which is what I posted so $6.27 looks good to me! Looks like they trade around 20x earnings now (or so) and they have grown revenues by 19% YoY so not an outrageous multiple as long as they can keep margins where they are and keep growing as well. Not cheap, but not in the AMZN/NFLX/TSLA range. And they do actually make money!

    Spending money on funky stuff when you have a boatload is what everybody should do. Even with a 10% success rate, the payoff could be impressive. I guess it's what VC do usually. Google just does it internally. I wish a lot of other businesses would do that as well. 


  96. Louis – SNDK

    Good bet.  I would think about selling at the open.  I've found that when I thought a direction play on earnings was going to make me bank, it only made my change due to the vol drop.  If you do a Market on Open order, many times you'll sell at the high.  It's still a gamble though.  


  97. Phil / Big Secret - 

    Hah!


  98. Speaking of Google:

    http://blog.appannie.com/app-annie-index-market-q1-2014/

    image01 - Store Download Revenue Charts

    Google Play led the iOS App Store in downloads by approximately 45% in Q1 2014, up from 35% in the previous quarter. Meanwhile, the iOS App Store maintained its comfortable advantage in revenue, leading Google Play by 85%. However, Google Play continued to narrow this revenue gap. The gains for Google Play come as Android devices extended their lead in worldwide device installed base.

    I guess they still need to monetize that installed based. Of course, they make money on searches even on iPhones anyway.


  99. /CL 104.13.  It's been a steady rise since 103.20.  Feels like a pivot level is going to be hit and we drop off again.


  100. /CL / Burrben – Looks like TOS has switched to the June contract for their front month. Trading at 103.27 now.


  101. Amazingly enough, the Dow is only about 1-2% from its highs. Could be forming a head and shoulder though. Nasdaq and Russell seem to be in a bearish price channel. Nasdaq would need to break over 4200 to escape it seems. And both now have their 50 DMA as overhead resistance.


  102. Thanks for the updates on multiple fronts Phil – appreciated for us when the "man" gets in the way of the really interesting trading learning…….but we have to fund our habits, eh?


  103. Tomorrow NAS will challenge 4000 (on a mission to retest 3,950) and RUT will take another run to 1100.


  104. The Korean ferryboat disaster will go down as the most unnecessary, incompetent slaughter of innocents in maritime history.  The boat turned on it's side, but sank very slowly.  It had a full complement of life rafts — not a single one of which was deployed by an untrained crew which, I believe, had never had a lifeboat drill.  Instead, students were told to jump into 54 degree F water in the early hours of Wednesday.  Average survival time in that water temperature would unlikely exceed four hours.  The news reports 290 "still missing."  They are dead by now, except for any of them that may have been trapped inside the boat without water immersion  — very unlikely, now that the boat has settled. The captain and at least a dozen crew members escaped unharmed.  Most of the hull was above water for many hours.  By way of comparison, the Costa Concordia disaster took 32 lives — another cowardly captain.  If the ferryboat were Japanese, the captain would likely commit sepukku.  Disgraceful.


  105. StJean – Maybe, I don't use TOS.  I am still trading the May on IB.  They do have a liquidation policy, and it's quite unclear.  Regardless I'm keeping a May contract in my paper account until expiry so I can see what they do.

    I'm also trying a few "automated" ideas.  For example setting a conditional parameter to trigger a sell order and then also transmit a hidden trailing stop order as well.  So I did this when /CL was around 104.05

    If /cl  double last<=103.97, sell /cl@103.99, trigger order 1.1 buy /cl with trailing .20 stop with .01 offset to ask.

    which triggered.  Then I set another one to trigger at 103.47.

    This is just for kicks using my paper account.


  106. [image]Good morning!

    Oil just failed $103 – let's see how this goes.  NYMEX closed tomorrow so after 2:35, they have just two days left next week to roll the rest of their barrels, still 118M at yesterday's close and figure they will end up with 18,000 contracts (1,000 barrels per) so they have 100M barrels to roll in 3 days – very doable and, as you can see, they've already dropped 600M into the next 3 months and hope springs eternal for "Summer Driving Season".  In short – we should probably take advantage of any good drop and cash out of our oil shorts – as it just didn't break out way this month.  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    May'14 103.84 104.28 103.63 103.78 05:04
    Apr 17


    -

    0.02 12939 103.76 118667 Call Put
    Jun'14 103.05 103.44 102.84 102.99 05:04
    Apr 17


    -

    -0.04 8495 103.03 341653 Call Put
    Jul'14 102.20 102.55 101.97 102.13 05:04
    Apr 17


    -

    -0.07 2592 102.20 168463 Call Put
    Aug'14 101.26 101.55 101.07 101.16 05:04
    Apr 17


    -

    -0.09 785 101.25 89583 Call Put
    Sep'14 100.25 100.37 99.99 99.99 05:04
    Apr 17


    -

    -0.23 401 100.22 98032 Call Put

    Asia was pretty flat, except India, which popped 1.3%

    Europe has been trading down into lunch, off by 0.25-0.5%.

    It's one of those days when the Dollar is diving to mask market weakness and already it's down to 79.65.  That's not nice for /NKD, which has already slipped from 14,500 to 14,420 and the Nikkei will be making a very unhealthy-looking chart if it fails 14,000 again.

    Gold is failing hard at $1,300 – just can't get back over it.  Silver is $19.51 but holding $19.50, where I like a long play (/SI) and copper held $3.02 so far.  Nat gas is $4.55 and gasoline is a no-brainer (/RB) at $3.03 with tight stops below but it's a holiday weekend – hard to imagine them not jamming it up over $3.05 for your driving pleasure. 

    Lots and lots of earnings today (which will be the big story for the rest of the month) and Philly Fed at 10. 

    SNDK is over $80, that will be great for those May $80s!  

    • SanDisk (SNDKguides on its CC for Q2 revenue of $1.55B-$1.625B and 2014 revenue of $6.4B-$6.8B, in-line with consensus forecasts of $1.58B and $6.66B.
    • But following a strong Q1, the NAND flash giant's 2014 gross margin forecast has been hiked to 47%-49% from a prior 45%-48%.
    • Rival Micron (MU) is getting a lift from the forecast, much as SanDisk gained last month following Micron's numbers.
    • SanDisk's Q1 resultsdetails

    GOOG bounced back a bit after giving good CC:

    • Going forward, Google (GOOG) will break out its paid click and cost per click data in more detail, CFO Patrick Pichette states on the CC. Numbers for Google's reporting segments (sites, ad network, etc.) will be given in addition to a company-wide figure. (CC live blog)
    • The remarks come after Google reported disappointing Q1 paid click growth (-1% Q/Q and +26% Y/Y). The numbers might fuel questions about the impact mobile apps (they account for 86% of U.S. smartphone activity, per Flurry) are having on search activity. When indirectly asked about the issue, sales chief Nikesh Arora only said Google is trying to succeed in both realms.
    • Pichette states EPS was hurt by one-time legal and M&A expenses, and that Google's expenses would've been in-line with its targets otherwise.
    • Separately, re/code reports Marissa Mayer is intent on convincing Apple to abandon Google as its default iOS search provider in favor of Yahoo (YHOO). Google's dominant mindshare, together with Apple's Maps experience, might make Cupertino think twice.
    • GOOG now -2.8% AH. Q1 resultsdetails.

    Our Futures are down about 0.25% and that's not bad since IBM is hitting the Dow for 64 points all by itself.  Actually, that doesn't make sense so let's short /YM at 16,295 with a stop at 16,300 (-$25) as I think IBM must not be calculated in properly yet.  

    /ES is at 1,849, /NQ 3,498 and /TF at 1,121 so lots of strong lines to watch in the Futures – should be a fun way to close the week.

    Letterman getting political in his final year:


  107. Goldman with good numbers, lifting the markets.  Oil still below $103, silver doing great at $19.70 – don't be greedy!  /RB just touched $3.03, still good for an entry.  


  108. Phil, Are you suggesting closing the May $18 puts on USO win or loose today?


  109. Phil – does that go for SCO as well?


  110. DXD / Phil – Bot the May Bull Call spread on DXD yesterday at .80 per your posting.  Was thinking about letting it go today at a small loss and Maybe reapplying the position later at lower strikes since the DOW is STILL on a tear and shows no signs of slowing thanks to Fed doves and bottomless punch bowl.  What do you think?    


  111. SNDK / Burrben – Just read your post re SNDK.  Much appreciated.  Thanks for the input!