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Testy Tuesday – 1,920 or Bust!

SPX WEEKLYThat's 2 closes over 1,920.  

It's almost enough to make us regret cashing out our Long-Term Portfolio last week. We didn't expect to call a perfect top, when you have a large portfolio it can take days to unwind your positions and, despite the very low volume – we'd like to thank all the retail bagholders who bought our shares at top dollar in the last few days.  

Thanks Dave and Bill and Jack and Joe and – well, that's about it as volume is so low, there can't be more then 3 or 4 guys trading in this market!  

Last June started off with low volume too – as well as record highs – and then we dropped 5% into July.  We're simply taking our 119% cash and waiting for the dip – is that so bad?  

SPY 5 MINUTEYesterday was only the 3rd lowest volume day of the year and the action was wonderfully fake around a PMI report that was released, revised and then revised again – all in the same morning!  

In the end, they decided on 56.4, which was in-line with consensus but not before giving us a glimpse on how quickly this market can fail on bad news.  

In our Live Member Chat Room, we took full advantage of the over-reaction on the bad news to go against the panicking sheeple and buy TNA (3x bullish ETF on the Russell) in a 9:57 Alert I sent out to our Members.

That trade was so obvious I tweeted it out as well (you can follow me here) saying:

Those calls came in cheaper (because our timing was perfect) at $1.50-$1.40 and they topped out at $1.70 and finished the day at $1.61 but should be cheap again this morning, which is why I'm mentioning them now as they make an excellent upside hedge – in case the market does better than we think.  

Since we sidelined $598,000 last week ($98,000 in profits in less than 6 months), we decided to spend $3,000 on 20 of the above contracts – that way we won't cry if the market flies back up on us.

If the market goes lower, like we think it will, we won't cry either as we will get to take our CASH!!! and go shopping!

Meanwhile, since we have a $3,000 upside bet on the Russell it was an easy call this morning to short the Russell Futures at 1,125 and already (8:10) we have a dip to 1,120 for a quick $500 per contract win this morning.  In addition to topping off our Buy List in today's live Webinar (1pm EST – sign in here), we'll probably have some time for a Futures Trading Workshop.  

A single contract in a single day (out of 45 days remaining on the contract) allows us to make 16% of the contract cost back and the Futures play is, of course, PROTECTED by the long contracts – just in case we were wrong.  

We weren't, fortunately, and we also weren't wrong on our other calls this morning which were (all shorts):

  • Dow (/YM) at 16,700, now 16,675 - up $125 per contract
  • S&P (/ES) at 1,920, now 1,916 - up $200 per contract
  • Nasdaq (/NQ) at 3,725, now 3,715 - up $200 per contract

Futures are a wonderful tool, which is why we have our workshops at least once a month.  We trade futures a lot more often than that (see our recent trade reviews) and it's something every serious trader should consider putting the effort into learning – as it's a skill that can get you out of a lot of market scrapes, when you are lined up on the wrong end of a trade after hours – as well as providing a fun platform to grab a little extra cash before, during or after regular market hours.  

At the moment, the markets are sustaining themselves on Draghi fever, with the ECB making a rate decision on Thursday morning that traders are "sure" will be a move to more easing.  Since it's already baked in, we prefer to short it for the disappointment but, as I said, we cashed out or main portfolio – so we're not taking things too seriously in either direction this week.  

Yesterday we discussed the currently hidden inflation that is building up inside our poorly-measured economy and, ironically, the ECB is moving to BOOST inflation in the Euro-zone, as it's been coming in at an anemic 0.5%.  DEflation is worse then INflation to Banksters and top 0.01%'ers, who own a lot of stuff and want it to maintain it's value since they levered their cash 10:1 to buy it.  

With the Central Banksters looking to sustain inflation at all costs, why are gold ($1,245) and silver ($18.80) so out of favor?  Well, one major reason is Goldman Sachs and their Bankster buddies have been bashing gold for most of the year. You might say "well, that's their opinion" but why then is GS, AT THE SAME TIME, making deals with countries like Ecuador, who are giving GS 466,000 ounces ($580M) in a 3-year commitment?

Drive the price of gold to rock-bottom and then make deals to get control of all the gold before driving the prices back up – now where have I heard that plan before?  

You can conduct your own "Operation Grand Slam" by taking a position in ABX, the World's largest gold miner who have 140M ounces of proven reserves ($174Bn) yet are trading at just $18Bn at $15.90, about 1/10th the value of their gold holdings.  

Of course, it doesn't matter how much gold you have in the ground if you can't extract it profitably but gold is so cheap at the moment that ABX is holding $2.7Bn of it in their inventory – waiting for prices to improve.  

Meanwhile, they are still generating positive cash-flow ($327M last year) while paying another $500M in dividends and servicing their debts.  They've taken $10Bn in write-offs so it will be many years before they owe any taxes, which will be a huge boost to future earnings if there ever are any.  

If you don't want to buy the stock for $15.90 (and we NEVER pay retail at PSW!), then you can sell the 2016 $15 puts for $2.05, which obligates you buy the stock for net $12.95, which is 19% below the current price.  If ABX stays over $15 through Jan 2016, the short puts expire worthless and you simply keep the $2.05 ($205 per 100-unit contract) in exchange for the promise you made – if ABX goes below $15, you may be assigned and own the stock at net $13. 

Since the net margin on the short puts is just $2.28, the trade returns 90% on margin in 18 months – not a bad inflation hedge, is it?  

If you want to get more aggressive, you can add the 2016 $15/22 bull call spread for $2 and you still have a nickel credit but now you have an upside of every penny over $15 up to $22 with a potential return of $7.05 on your 0.05 cash outlay (+14,100%) if ABX gets back to $22 by Jan 2016.  

We'll go over this trade in today's Live Webinar, I think it may be the first play we add back to our Long-Term Portfolio as it's really too good to pass up when net $50 on 10 contracts can make a $7,050 profit in 18 months and our worst case is owning ABX and their $170Bn worth of gold for $18Bn (one net $14.95 share at a time!).  

 


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  1. Good Morning
    Thought  I would put my color box to good use--here is the link to Shadow's fundraiser site in case anyone missed it before http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743


  2. Phil,

    be thankful for the "Apple Bashing Cycles", it creates entry points for the faithful. 


  3. iPhone 6 - Where's that new phone??  From PCAdvisor - Apple hasn't launched a new iPhone outside of the five months between June and October – with a particular fondness for September. We're at the beginning of that five month window, so expect iPhone 6 talk to heat up from now.  Another rumour, this one from unidentified supply-chain sources who spoke with Taiwanese media, is that the iPhone 6 will now launch in August, according to Reuters. That's a month earlier than we expected and a little unusual. The reports also suggest that a larger model with a 5.5- or 5.6in screen will then arrive in September, but again, the idea that Apple will launch two iPhones so close together seems unlikely. 

    A recent iPhone 6 release date rumour to arrive, and one that we think is probably true, is that Apple employees have been told that they are not able to take some specific dates in September as holiday. That's usually a sign that something big is coming on those days, so we're fully expecting it'll be the iPhone 6.

    In fact, German carrier Deutsche Telekom has been telling Apple blog Apfelpage.de that the iPhone 6 will be released on 19 September, after being unveiled by Apple on 9 September, which seems like a safe guess to us.

    Read more: http://www.pcadvisor.co.uk/news/mobile-phone/3436742/iphone-6-release-date-price-specs-features-pictures/#ixzz33Zye30SH


  4. Oil Lines

    R3 – 104.47
    R2 – 103.91
    R1 – 103.22
    PP – 102.65
    S1 – 101.97
    S2 – 101.41
    S3 – 100.72


  5. Good Morning!


  6. Another day, another "scandal" in China's finance:

    http://qz.com/216059/chinas-investigation-into-missing-metal-could-spark-a-much-bigger-crisis/

    Qingdao, China’s third-largest port, has long been a crucial  manufacturing link and one of the key hotspots in the global commodities trade, due to the vast amounts of raw materials like iron ore, copper and aluminum that flow through its warehouses.

    But as of last week, the port’s shipments of crucial metals have been completely frozen, as officials investigate whether or not companies have been fraudulently inflating their stockpiles. Some 20,000 metric tonnes of copper and 80,000 metric tonnes of aluminum are reportedly missing.

    If the investigation finds widespread evidence of wrong-doing, it could create a ripple effect of credit squeezes and defaults. That’s because Chinese companies that struggle to get bank loans are fond of using inventories of metals like copper, which sit in bonded warehouses in port cities like Qingdao, as collateral to secure short-term loans. These loans, in turn, sometimes are used to invest into high-yielding shadow banking products.


  7. Looks like the ISM number had trouble coming out yesterday:

    http://www.bespokeinvest.com/thinkbig/2014/6/2/ism-manufacturing-weaker-stronger-and-inline.html

    While the month to month changes in each of the ISM Manufacturing report's components was mixed, relative to a year ago, the report looks considerably better.  As shown in the table, eight of the ten subsectors shown are higher today than they were a year ago.  The biggest gains in the last year have come from Prices Paid (+10.0), Production (+8.9), and New Orders (+7.2).  All in all, it was a good report, and much better than the initial incorrect read from 10 am.

    Overall, not that bad!


  8. 35 economic charts for the month of May:

    http://qz.com/215467/the-35-economic-charts-from-may-you-really-should-see/

    Too many to post…A mix bag overall, but worries everywhere. We'll still make new highs though…


  9. Good morning!


  10. Not a very strong-looking open but I'm not expecting a big sell-off ahead of ECB on Thursday.  

     Those TNA $76.81 calls (July) are back to $1.40 if you missed them yesterday.  

    Oil tested $102.50 and failed, a tricky short into tomorrow's inventory (/CL).  Brent below $110 ($108.44) indicates WTIC should be lower ($7-10 is usual spread).

    Europe still down about half a point, at lows of day going into the last hour.

    • ICSC Retail Store Sales: +2.9% W/W, vs. -1.2% last week.
    • Redbook Chain Store Sales: +3.5% Y/Y vs. +3.2% last week.
    • +3.1% Y/Y vs. +2.1% last week.
    • "A bout of warmer weather gave a boost to the kick-off of the summer shopping season in the May 31 week", claims the ICSC report.
    • With multi-billion dollar penalties for banks being thrown about like nickels and dimes – the latest being BNP Paribas facing a $10B hit - the ECB is considering adding the impact of fines to its stress tests, reports the WSJ.
    • The ECB is trying to asses whether lenders have set enough aside in reserves for the payouts. If banks were to be found wanting, it could mean the need for additional capital raises. BNP makes a good example: In February, it said it had $1.1B reserved for the U.S. penalty, but two months later warned this may not be nearly enough. Now the figure is up to $10B, and executives at banks all over are watching nervously.
    • ETFs: XLFFASFAZUYGVFHIYFSEFIYGFXOFNCLFINUKCERWWRYFFINZ,KBWCEUFN
    • Macau-related casino stocks are down in early trading after a report on May revenue in the region comes in below expectations.
    • Previous: Single-digit growth stunner for Macau casinos
    • Premarket: Melco Crown (MPEL) -4.2%, MGM Resorts (MGM) -1.6%, Wynn Resorts (WYNN)-2.2%, Las Vegas Sands (LVS) -2.0%.
    • The Project VIP network transformation plan is ahead of schedule, with AT&T's (T) 4G LTE network now covering 290M people and VIP's broadband build expected to have fiber to more than 400K new business customer locations by the end of Q2.
    • The company raises FY14 revenue growth guidance to 5% from 4%, and reaffirms guidance for stable consolidated margins, adjusted EPS at the low-end of the mid-single digit range, capital expenditures in the $21B area, and free cash flow around $11B.
    • Shares +0.7% premarket
    • Source: Press Release

  11. savi thanks for the color highlight.

    I have made the first payment just under $2,750. This fund takes a little over 3% in fees which surprises me as it cost about 2% to run a credit card, the site is very frugal. That is over 10 times my usual amount. Thanks all!


  12. For those that missed it the hacking was headlined last night coming from those friendly Russians. The FBI is investigating and maybe they are who I detected. I don't ever probe into who.


  13. Thanks Savi – Looks like we'll keep having to plug away to get to our goal for Shadow.  

    Entries/Rms – Oh yes, God bless the beautiful sheeple – they make our lives so easy!  

    Those TNA calls opened at $1.30 and already hit $1.70 again (back to $1.55 now) – fun trade to get in and out of if you're quick!  

    Good point Terra.  

    Stockpiles/StJ – They are absolutely faking stockpiles since they are used as collateral for bank loans.  That's not a good thread to tug on in China.

    ISM/StJ – I never like to see inventories piling up and, of course, a 5% bump in prices paid in a month might not be such a good thing either.  Overall, there's been nothing to get excited about on ISM for 3 years now:

    Also not good is Factory Orders, which just came in at 0.7% vs 1.5% last month.

    AAPL making a power move back to $637, that's got the Nasdaq green. 

    WYNN just failed $210.  That's goal on our spread (long way to go though) and we don't want them to fall too fast, of course:

    WYNN Jan $240/210 bear put spread is $17.50 and earnings should be after July expirations so we can buy 5 of the spreads for $8,750 in the STP and sell 4 of the July $210 puts for $6 ($2,400) with a stop on 2 at $8 and 2 at $10.  So net $6,350 is $12.70 per $30 spread.  

    LQMT back to 0.20.  I'll still hold for .18 to DD back to our original entry.  


  14. FBR survey points to soft Priceline hotel numbers • 10:31 AM

    An FBR survey found Booking.com's (PCLN -0.8%) hotel count has fallen since the end of Q1, and that the site's net adds have come solely from vacation rentals.

    The firm adds Priceline could see its per-property productivity get pressured, and that its findings back up the notion its core hotel business is maturing.

    Priceline saw a 32% Y/Y increase in hotel room-night growth in Q1. But that growth rate is lower than the figure posted for any quarter in 2012 or 2013.

    Also: Priceline is guiding for its total Y/Y bookings growth to fall to 22%-32% in Q2 from Q1's 34.2%. However, the company has a history of guiding conservatively.


  15. Apple jul 18 puts?….just  $17.35   ……….comments?


  16. ZQK – i recently bought a new 4/3 wetsuit at the Quiksilver store in Soho to help me cope with the chilly ocean temps here in the NYC area but that did not help their 2Q results.  ouch!


  17. Pharm

    Any trade on this outcome?

    Skin cancer survival rate soars in new drugs trial

     

    http://m.independent.ie/irish-news/health/skin-cancer-survival-rate-soars-in-new-drugs-trial-30323626.html

     

    Thanks


  18. Phil/FTR

    I expect all of my shares to get called tomorrow. Do you think they are too high in the channel to sell puts after  the dividend? Looks like Jan $5.5 puts might go for $0.45.


  19. Phil, two theory questions when you get time on your approach to spreads:

    When buying leap calls why not sell a series of puts with shorter expirations on 2-4 month basis?

    Can you give an example on when you elect to roll a spread up or down using actual figures? Can't get the whole picture yet although you touched on it a little late last week.

    Thanks as always


  20. Final Buy List Update (Part 1, Part 2 and Part 3):

    First, I'll repost IBM from weekend chat:

    • IBM has been holding it's 200 dma at $182.50 and I like them here for a long.  I especially like that you can sell the 2016 $160 puts for $9 to net in at $151, because who doesn't want to own IBM for $151 (the 2011 low)?  So that makes a great bullish offset with a net $16 margin or you can be aggressive and add the 2016 $160/185 bull call spread at $14 for net $5 on the $25 spread that's $24.50 in the money to start.   Definitely one to add to our Buy List should it improve – if I wasn't very bearish at the moment, I'd add it today (probably 5 to own $82,500 of it long-term in one of our $500KPs)

     

    Now for our last few:

    • RIG is still cheap at $41.47, off the lows at $38.  The 2016 $35 puts can be sold for $3.55 for a net $31.45 entry and that's nice by itself and makes a nice offset to a bear trade.  Net margin on the short puts is $3.50 so it's a 100% return on margin – very efficient.  It can be paired with the $40/50 bull call spread at $3.20 for a net .35 credit and your worst case is owning RIG for net $35.35 (15% off) while the upside is up to $10.35 at $40 for a 2,957% return on your cash. 

    • ABX is in the above post – love that one.  
    • HMY is another beaten-down miner (it often is) and it's back to where we liked it last year.  It's a good stock to play if you remember to get out when they go higher and don't let greed overwhelm you and make you forget why you got in (for a quick gain on a bounce).  People don't like our long-term trades because they think they won't make quick money but, as you can see from our reviews, they often make fantastic money in short periods of time AND you have much better downside protection.  Making money with less stress is always a good thing.  The company will make .18 per share this year, not a bad p/e if we knock the price down.
    • At $2.60, you can just buy the stock and sell the 2016 $2 calls for $1 and the $2 puts for .35 for a net $1.25/1.63 entry and that's $1 off (38%) the current price – nothing wrong with that.  In fact, it's the best play but you COULD be super-aggressive and sell the $2 puts for .35 and buy the Jan $2/3 bull call spread for .45 and you're in for net .10 on the $1 spread that's 0.60 in the money (up 500% if it stays here) to start and your worst case is a reasonable net $2.10 entry (25% off).  

    It's hard to be a fundamental investor – you have to look at a chart like this and go against a sea of TA people who think it's a terrible time to invest.  Those same people will be happy to take the stock much lower because they don't see a company at all – just a chart with a trend.  

    • PNW is a nice 4% dividend pays ($2.27) and, if they had 2016 options, I'd like them for the butterfly portfolio because they are so boring.  Interestingly though, you can buy the stock for $55 and sell the Jan $55 calls for $2.75 and the $55 puts for $3.20 for a net $49.05/52.03 entry.  It's nothing too exciting but it's a nice stock to whittle away the basis of for a long-term hold in your portfolio. 

    • ED is another boring utility stock near the bottom of it's range at $55.  This one pays a $2.52 dividend but also don't have 2016 contracts yet.  You can sell their $55 calls for $2 and the $55 puts for $3 for net $50/52.50 with the same boring game plan but it's nice to have a few boring stocks in your portfolio. 

    So there's at least 20 total stocks we can look to buy in our Long-Term Portfolio as we reboot it for the 2nd half of the year.  We'll see which ones get cheaper and buy them or, if they all take off and go higher – there's bound to be a few laggards, so no rush.  

    I'll see if I can consolidate all these picks over the weekend for a post we can put in our Portfolio Section (Members Only, of course).  


  21. sorry –  sell calls not puts


  22. Position sizes/Phil – with JDSU the other day you said: "~~With a trade like this, if you have a $100,000 Portfolio and you are allocating $10,000 margin blocks, you generally would make a $5,000 entry on a trade like this so 6 contracts collects $930 against $780 in net margin and you either end up owning 600 JDSU for net $8.45 ($5,070) or, it's over $10 and you get to keep the $930, which is 1% of your entire portfolio for tying up $780 in margin. "

    perhaps a good subject for a future webinar…  especially commentary on the pointlessness of trading too small..  another argument for keeping number of positions limited so it's not just a whole bunch of trades chasing a couple hundred dollars each (with 2-3% or more in commissions!) over a year or 18 months…


  23. PCLN/Jabob – That's about the first bit of bad news I've seen on them in ages.  

    AAPL/Advill – What puts are you talking about?

    ZQK/Terra – That just shows you how ridiculously off-track some of these stock valuations are.  How can people misvalue a retailer by 100%?  Analysts are asleep at the wheel and the traders are no better.   They lost $200M last year and – SURPRISE! – they are still losing money this year.  Revenues have been flat for 5 years and all they've done now is proven that spending more money doesn't help.  

    How many other stocks are trading at prices that are so far removed from their actual value that they can drop 50% in a single day?  

    FTR/RJ – Well, they are hugging the 50 dma at $5.75 and I HOPE they drop below so we can buy them again.  Meanwhile, since you are fairly sure you won't own shares tomorrow, why not sell the 2015 $5.50 puts for .45?  All they can do is put you back in the stock at $5.05 (13% off) and, if not, you get a 13% dividend for doing nothing for 6 months – that's better than you'd do if you held the stock anyway.  

    Puts/JMD – Because, if the stock goes higher you no longer have the ability to sell the same strike for the same amount.  That would then put you in a trap of always having to sell higher strike puts until, inevitably, they burn you on a pullback when it finally comes.  Our system is not meant to maximize your potential returns but to do our best to insure STEADY returns in the 20% range every year and, over time, we let compounding interest do it's work for us.  Aside from being massively profitable over long stretches of time, it's also very relaxing so we live long enough to enjoy our money. 

    As to rolling, just pay attention to our portfolios and I'm sure it will come up in the near future.  In general, we don't look to roll anything unless the stock has moved close to 20% on us (outside of our expected range) or the premiums on the options we've sold has run out and we're no longer "Being the House" – because we're no longer sellers of premium.  

    Call/JMD – Same thing except you collect less money if there's a big move up.  The point is to sell as much premium on both sides of the trade as you comfortably can and then just sit back and let time do its work for you.  

    Portfolio Management/Scott – Maybe we can do that next week, now that we're done with our buy list.  

    /TF failed 1,020 – now 1,119.  Other indexes oblivious so far.  Same shorting lines as this morning:

    June 3rd, 2014 at 4:21 am | (Unlocked) 

    Dow Futures (/YM) still a good short if they fail 16,700 with /ES below 1,920 to confirm.  /NQ is just below 3,725 and /TF just failed 1,125 so those are our watch lines to short the laggard. 

    Oil failed $102.75, now $102.70.  


    • Dow -0.25%.
    • 10-yr -0.18%.
    • Euro +0.19% vs. dollar.
    • Crude -0.02% to $102.45.
    • Gold +0.01% to $1,244.10.
    • VIX futures average daily volume in May of 143,946 fell 19% from April and 1% from a year ago. CFE average daily volume of 144,266 also fell 19% and 1%.
    • Source: Press Release
    • The sell-side quickly reacts, with UBS maintaining a Buy rating, but trimming the price target by $1 to $57. Credit Suisse reiterates its Underperform rating and $49 price target.
    • CBOE -3.7%
    • Overall exchange average volume of 13M contracts in May grows 6% from April, and falls 12% from May 2013.
    • Average interest rate volume of 7.6M contracts per day is up 27% from April, but fell 3% from a year ago (when rates began blowing up). Eurodollar average futures volume of 2.6M contracts is up 10% from a year ago. Treasury futures average volume of 3.6M contracts slides 13% Y/Y.
    • Average equity index volume of 2.2M contracts falls 22% from a year ago, and ag commodities average volume of 915K contracts declines 5%. Metals average volume of 324K contacts falls 27%, and energy of 1.4M is down 18%.
    • Source: Press Release
    • CME -1.5%

     

    Dow Is Up 68 Points in Six Months. You Call That a Bubble? (The Street)

    How Much is a Tulip Worth?

    Economists: An Astonishing Record — Of Complete Failure (FT)

    Radian higher after May delinquency data

    • Primary new insurance written of $2.97B in May compares to $4.56B one year ago. Mortgage activity picks up from very low levels earlier in the spring (the figure had dropped below $2.5B), but is still not close to last year's levels.
    • Ending primary delinquent inventory of 50,212 loans is down from 50,994 in April and 79,344 a year ago.
    • Source: Press Release
    • RDN +1.5%

    Gold bull only "wounded" says Ned Davis

    • Ignored as gold investors focus on the negative of late, says the team at Ned Davis, are real interest rates … they've stopped going higher. Of any number of indicators, real interest rates historically have had the strongest correlation to gold prices.
    • As for weakening Chinese demand, purchases are still massive and the same trend of slowing occurred in early 2013. Other pluses: Reforms in India which could boost demand there and an ECB about to maybe go negative with rates or launch QE (policy meeting is tomorrow).
    • Bullish, but respectful of the price action, the team isn't recommending getting too long yet. "If you are looking for a short-term entry point, this does not appear to be it. Gold’s price action is poor, and sentiment is not pessimistic enough to take a contrary bet at $1246 per ounce."

    Cliffs price target slashed at Wells Fargo, which foresees dividend cut

    • Wells Fargo's Sam Dubinsky cuts his price target for Cliffs Natural Resources (CLF -1%) to $7-$10 from $12-$14, saying the stock has nowhere to go but down and a dividend cut is the "next shoe to drop."
    • The firm has been overwhelmingly bearish on CLF in the past two months but sees continued downside risk because of potential further deterioration in iron ore prices, a probable dividend cut, and the Street resetting estimates meaningfully lower.
    • Wells estimates CLF is burning ~$80M in cash including capex and ~$220M including dividend payments, and views the dividend as unsustainable unless pricing recovers to $100-$110/metric ton or assets are sold.

    SunEdison strikes Chinese solar pact

    • SunEdison (SUNE -1%) is partnering with Chinese solar wafer vendor Huantai Group to build local solar projects.
    • The companies expect to build up to 1.7GW of Chinese projects over the next 5 years. Also, SunEdison will provide Huantai with polysilicon (from a Korean plant) for use in its wafers, which in turn will support "both companies' subsequent project needs."
    • SunEdison had a 3.6GW solar project pipeline at the end of Q1, and a 1GW backlog. The company is five days removed from filing an S-1 for its TerraForm Power (TERP) solar project spinoff.

    Apple's Spotlight search dumps Google in favor of Bing

    • Along with announcing a major revamp of iOS and Mac OS X's Spotlight search tool – integrated local/Web search, location-specific results, and more content-specific search options are some of the new features, Apple has quietly disclosed it's dropping Google (GOOG -1.5%) as Spotlight's Web search provider in favor of Bing (MSFT -1%).
    • Notably, Google remains the default search provider for Safari, which in turn acts as the default iOS/Mac OS browser. But the Spotlight switch is still a noteworthy loss for Google, given the feature's tight integration with Apple's platforms – an iOS user only has to swipe down from his/her home screen to access Spotlight, and a new search box will provide quick access for Mac OS users.
    • As for Bing, the deal provides a needed mobile win for a search engine estimated by StatCounter to have just a 5.48% global mobile/tablet search share as of May – 1.77% for Bing proper, 3.71% for Yahoo – to Google's 93.5%. Bing replaced Google as Siri's search engine last year.
    • Separately, Apple has added DuckDuckGo as a Safari search option (along with Google, Bing, and Yahoo). DuckDuckGo tries to differentiate itself by emphasizing its privacy and security features – among other things, it doesn't store IP addresses or log user info.

    Why We Still Can’t Afford to Fix America’s Broken Infrastructure (FiveThirtyEight)

    U.S. Faces Worst Outbreak of Measles in 20 years (Seattle Times)


  24. FBR backtracks on Priceline report • 12:46 PM

    After previously stating Booking.com's (PCLN -1.2%) hotel count has fallen since the end of Q1, FBR now says they're up Q/Q.

    The about-face comes shortly after Cowen challenged FBR's numbers, stating both Priceline's hotel and vacation counts are on pace to rise in Q2, and that FBR "might have missed the fact that PCLN changed its definition of vacation rental properties in early May ‘14."

    Cowen thinks Priceline's Q2 Y/Y hotel/vacation property growth should be at 50%, above the firm's prior estimate of 47%.

    Shares continue to trade lower on a down day for many Internet stocks.


  25. Didn't anyone tell FBR that they are NOT allowed to be cautious with PCLN!!!!

     

    http://www.benzinga.com/analyst-ratings/analyst-color/14/06/4605630/cowen-calls-out-fbr-capital


  26. jmd__ 

    Phil already commented on the put selling. besides that selling 2 or 3 month out puts are extreemly high in margin! than you change to calls. that is an other thing all together.

    I sell a leap BCS say 6 of now if the time is right you can sell 1/2 monthly calls against your leap BCS without paying any further margins. Obviously you sometimes win you sometimes have to roll but that is what keeps you out of being bored.


  27. phil,

    couldnt follow up on our discussion on fri….i totally agree with covering the aapl 3 short july 555 calls with some long calls …what i wanted to understand was you rec that i buy jan 16 500 calls which are more expensive than the jan 16 600-700 bcs ….to cover the sht calls…..since im long 3x 450 and 2x 550..(sht 5×700)

    i was only trying to understand the diff since it was more to layout……..so if you get a minute i would appreciate knowing why the bcs (600-700 or another) vs the 500 calls unless that was a typo as i know fri was hectic………..and tks again……..


  28. millkreek AAPL I did not see the Friday conversation but looking at your positions you covering 5x 700 short with 3x 450 and 2x 550 calls Jan15 or Jan16 ??? against you sold the 3x 555 Jul which by now are extreemly heavy ITM Now to cover this you have to roll the 555 caller up say at least 90 pts making it a very costly roll In additional you want to buy more long calls which makes the operation very expensive. By setting up an other 600/700 BCS it reduces the cost of your long cover vs buying just the 500 call. You do not even have to buy 3x the BCS as the combo from the original BCS's 450 and 550 are as well covering the roll of the Jul 555. It is just a matter how much you wish to spend to bring the 555 caller again in some what save waters.


  29. Pharm,

    Good call on BMRN.


  30. FBR/Jabob – I thought that call sounded odd.  

    AAPL/Mill – What?  I thought you had 5 $450/600 spreads?  I really can't keep track but I can't imagine why I would have said $500 anything – what day was that?  As usual, it would be very nice if you could simply state

    • 3 2016 $450 calls bought at $xxx, now $xxx
    • 2 2016 $550 calls sold for $xxx, now $xxx
    • 5 Jan $700 calls sold for $xxx, now $xxx 

    You know, an actual format that allows me to give you an intelligent answer without having to spend 45 minutes deciphering your position…

    Anyway, don't worry about it because the human race is going extinct in 20 years:

    • Meeting the world’s energy supply needs by 2035 will require more than $48T of investment, with more than half needed to compensate for declining output at mature oil and gas fields and the rest on finding new supplies to meet rising demand, the IEA says in a new report.
    • North American shale output is forecast to tail off from the middle of next decade, restoring the importance of supplies from the Middle East and OPEC.
    • Europe could face an energy shortfall if power companies and oil producers fail to invest ~$2.2T through 2035 to replace aging electricity infrastructure and meet regulatory goals to reduce carbon emissions, according to the agency, which advises industrialized nations on energy policy.

    Good luck actually getting people to make that investment in time!  


  31. Phil / HERO - speaking of investment, HERO has spent a lot of capex recently – $745MM in 2013.   EBITDA is trending up and forecast to hit $422MM in 2015.  Operating cash flow is good too but more than offset by the capex, which was financed w new debt.  $1.3bn of debt so leverage is manageable at this point.  stock is building a nice 4 month base here.  what do u think?


  32. What just happened with gold stocks?


  33. phil,…….got it…………let me try again…….

    long 3x aapl  jan 16 450 calls bgt at 140 now 190

    long 2x "       "     "    550 calls "  at    68 now 116

    shrt 5x "   "  "    "       700 calls……….22 now 48

    sht  3x ………………….555 …………….26  now 82…

    …..tks


  34. IAG – unreal. finally decided to roll my june 3.5 short puts out to sept and RIGHT AFTER that.. BOOM stock rockets up from 3.05 to over 3.50..  now at 3.40. wtf?


  35. mill AAPL

    Usually stay out of this but you have a profit. IMHO sell out and wait until after the stock split, never know how that will go and the news is nothing new. Many times a split goes south.


  36. Phil.

     I have 2 short AAPL Jan 2016 $450 puts sold at $40.25, currently $13.88. Should I close them and reopen new puts after the split?


  37. Kevin

    Same as mill only yours is very clearly take the money and run, today the stock is up, even better. IMO stocks fall after a split. AAPL may be different?????


  38. kevin,

    No man ever lost money taking a profit.  Phil also has a general skepticism of the next 7 days so why not? Your short has realized over 65% of its maximum profit with over a year to go.  Book the profit imo.


  39. Scottmi – IAG was recommended by Larry Edelson of Weiss Research.


  40. Heard at Tesla Motors' annual meeting • 3:13 PM

    Tesla Motors (TSLA) CEO Elon Musk says he plans to stay on in his current role for at least another 4 or 5 years.

    The existing Roadster will get an upgrade this year. A next-gen Roadster is further down the road.

    Musk says it's "impossible" to say how the stock market will valuate Tesla – noting the manic-depressive nature of the beast. He still thinks Tesla is a good long-term investment.

    What's after Gen-III? Musk says the company will take additional steps to shift the industry to electric. Trucks and lower-cost vehicles are possibilities.

    Tesla annual meeting webcast


  41. HERO/Terra – They took on a lot of debt to build up and it's still up in the air whether they can handle a larger operation.  They haven't made any money since 2007 but they PLAN to make money next year.  I think I like the plan but I'd go cautious and just sell the 2016 $4 puts for .85 to net in at $3.15 and, if you really want to be adventurous, I'd take the $4/5.50 bull call spread at .60 so you net in for $3.75 worst case and your upside is $1.75, which is almost 40% of the stock's current price without all that messy owning it if all goes well.  

    Gold/Deano – Well I did just say how much I liked gold and gold stocks to a room full of HNW investors.  

    AAPL/Mill – Much better.  So you are long and average of 5 $500 calls and short 5 $700s in 2016 but, unfortunately, you sold 3 $555 calls but not 2016 are they?  That would be strange.   Assuming they are this year, it's not so bad as you just roll the 3 short  whatever they ares for $24,600 to 5 Oct $625s at $39.65 ($19,825) and you can raise the other $5,000 by selling just 2 2016 $500 puts for $26 ($5,200) so it's net $0 for the roll and you have a $125 advantage on the caller before you owe them a penny and you still have 15 months to roll them.   

    Your big mistake on this spread is that you were greedy and didn't sell enough premium at the outset and you ended up paying about $80 for $200 spreads when you could have paid $40 for the $550/700 spreads.  Maybe you took some profits along the way though, other than these.  Anyway, you don't want to be in that position if you aren't willing to add 5 more long spreads if AAPL gets over $650 and holds it – as you need to always have room to roll the short calls.

    And Shadow makes a valid point – not a bad idea to just cash it out and establish a new spread after the split. 

    AAPL/Kevin – Yes, I'd take that and run.

    Electric Trucks/Jabob – No wonder the stock isn't going anywhere.  There aren't many people who are going to hear "electric trucks" without KNOWING he's completely full of crap.  

    And up we go again – this market is simply not allowed to go down. 


  42. Possible you guys are right with AAPL. We seen a healthy drop before without a split. But I think AAPL has still a lot of uptrent to go. Trading a stock now in the 80th will give many buyers the opertunity to buy the stock as they would not do at 635. So again time will tell and let the dust settle first.


  43. I firmly believe AAPL will be around $100 after the split ($700 now).  


  44. Phil AAPL any man's guess


  45. Kevin: Just go "ka-ching"!! and enjoy it.


  46. BOOM!  New Post! 


  47. Phil AAPL

    I actually believe your right and the lower price will bring people in but $80 is still rather high for small investors and I don't believe health kit is going to make a big difference or another IPhone.


  48. Shadow,JPH, Phil Jbur,

      Take the money and run it is.  Thanks all.


  49. BMRN…nice.

    Skin cancer/qc – well, BMS, Roche/CRIS, etc. all are in on it and doing well.  So, no, nothing.  Oh wait, look at my new post….but nothing on skin!!! :)


  50. And we dipped back into the bell.  Another BS day overall but volume was much better than yesterday.  


  51. phil…………tks

    yodi, shadow…tks for your thoughts as well…….


  52. IAG/albo – thanks.. old Larry sure pushed a lot of shares!


  53. where do you guys go to get good data on overall trading volume?

    Thanks


  54. I just go to CNBC and check the volume on the SPY ticker.


  55. Just got back to a computer. Thanks Phil and Yodi for the responses. I was hoping for some specifics. Let's combine it with the current aapl discussion. I have the following aapl options remaining. Have made some adjustments and sold some weekly calls but not recently:

    +4 jan16 450/650 bcs

    -4 jan16  450 put

    +5 jan16  600/750 bcs

    -5 jan16  400 put

    Looking favorably at aapl over the next 1-2 years, what adjustments would you make at this time to maximize  future profits and why? Thankx


  56. Phil / webinar: phil where is the link to all the recoded webinars including today ?

     

    thanks

    david


  57. APPL

    I agree with Phil on APPL going to $100.  I know lots of people who would buy 100 shares at $80 that would not buy 100 at $600 or even $500…like anyone with a $100,000 portfolio. 


  58. Sent from Bloomberg for iPad

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

    Apple a Viagra Boost to Internet of Things: Turner
    June 3 (Bloomberg) — Mary Turner, Chief Executive Officer at Alertme, discusses the importance of Apple’s move into the internet of things and the boost all companies will get Apple’s expansion into software focused on home and health. She speaks on Bloomberg Television’s “The Pulse.”

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


  59. Sent from Bloomberg for iPad

    Watch this video at http://bloom.bg/1iNyOv8

    It’s Not Magic: Parts Assemble Themselves
    June 3: What if if a table or a bridge could build itself? If researchers at the self-assembly lab at MIT have their way, parts will someday put themselves together. Skylar Tibbits shows Bloomberg what a self-assembling future could look like.

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


  60. From Bloomberg, Jun 3, 2014, 7:01:00 PM

    Nespresso capsules. Photographer: Gianluca Colla/Bloomberg

    China’s reduced craving for raw materials is driving mining companies to go to extreme measures to cut costs amid steadily falling prices.

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


  61. From Bloomberg, Jun 3, 2014, 2:00:00 PM

    Rotary kilns are seen at Lynas Corp.’s Advanced Materials Plant in Kuantan, Malaysia. Lynas, which has invested about A$1 billion ($930 million) on a rare earths processing plant in Malaysia, has struggled plagued by weak prices and delays in achieving output targets. Source: Lynas Corp via Bloomberg

    The toxic time bomb set by China’s
    rare earths mining boom is set to boost the prospects for some
    of the $12 billion of projects being developed outside the
    world’s biggest supplier.

    To read the entire article, go to http://bloom.bg/1o5lSpX
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  62. From Bloomberg, Jun 3, 2014, 3:18:29 PM

    Copper futures fell the most in four
    weeks on signals that factory demand will ease in China, the
    world’s largest consumer of industrial metal.

    To read the entire article, go to http://bloom.bg/1l2q1d3
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  63. From Bloomberg, Jun 3, 2014, 12:01:00 AM


    June 2 (Bloomberg) — Dave Hamilton, co-founder of “The Mac Observer,” and Bloomberg’s Cory Johnson discuss the takeaways from Apple’s WWDC. They speak with Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

    Apple Inc. (AAPL)’s pitch to developers at its annual conference yesterday shows how Chief Executive Officer Tim Cook is ramping up efforts to keep programmers from switching loyalties to Google Inc. and others.

    To read the entire article, go to http://bloom.bg/1oqx4fi
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  64. From Bloomberg, Jun 3, 2014, 8:23:10 PM

    Japanese stocks climbed, with the
    Topix (TPX) gauge headed for its longest rally since 2009, as
    Australian and New Zealand bonds followed U.S. Treasuries lower.
    Wheat slipped an 11th day, extending its worst slump in 15
    years, while oil rose on data showing falling U.S. supplies.

    To read the entire article, go to http://bloom.bg/1knN0k8
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  65. From Bloomberg, Jun 3, 2014, 4:43:10 PM

    June 3: Chrysler Group LLC reported May sales that rose 17 percent after its Ram truck and Jeep sport-utility vehicle brands led the Fiat SpA-owned company to a 50th consecutive monthly increase. Sales topped analysts’ estimates.

    General Motors Co. (GM) posted its best month of U.S. auto sales since before the collapse of Lehman Brothers, joining other automakers reporting deliveries in May that exceeded analysts’ estimates on demand for pickups and sport-utility vehicles.

    To read the entire article, go to http://bloom.bg/1l2D5iG
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  66. From Bloomberg, Jun 3, 2014, 5:00:00 PM

    Coffee futures entered a bear market
    after rains eased drought damage for plants in Brazil, the
    world’s top producer and exporter.

    To read the entire article, go to http://bloom.bg/1pDwwq2
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  67. From Bloomberg, Jun 3, 2014, 5:13:52 PM

    Brookstone Inc., the bankrupt luxury-gadget retailer, agreed to sell its assets to a group of Chinese
    buyers for more than $173 million, after they outbid a unit of
    Spencer Spirit Holdings Inc. at an auction, a lawyer said.

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


  68. From Bloomberg, Jun 3, 2014, 3:24:23 PM


    May 20 (Bloomberg) — Federal Reserve Bank of New York President William Dudley talks about the outlook for U.S. economic growth and the impact on monetary policy.
    Dudley, speaking to the New York Association for Business Economics, said the pace of eventual interest rate increases “will probably be relatively slow,” depending on the economy’s progress and how financial markets react. (Source: Bloomberg)

    Federal Reserve Bank of Kansas City
    President Esther George said the Fed should allow its balance
    sheet to shrink before raising the main interest rate, differing
    from an approach backed by New York Fed President William C. Dudley.

    To read the entire article, go to http://bloom.bg/1n9JY1M
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  69. From Bloomberg, Jun 3, 2014, 3:55:06 PM

    As it heads into its second high-profile release of the week, the Institute for Supply Management
    said it will manually vet all data because it hasn’t identified
    why its computer software introduced an error into yesterday’s
    May manufacturing index.

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


  70. From Bloomberg, Jun 3, 2014, 7:01:01 PM


    June 3 (Bloomberg) — Holger Schmieding, chief economist at Berenberg Bank, discusses the likelihood of a cut in interest rates by European Central Bank President Mario Draghi following today’s slower-than-forecast euro-area inflation data. (Source: Bloomberg)

    Mario Draghi is likely to signal that
    any interest-rate cut this week won’t necessarily be the final
    one, according to two euro-area central bank officials.

    To read the entire article, go to http://bloom.bg/1p5kPpG
    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  71. States face unequal burden of carbon reduction targets

    07:02 PM ET · XLE


  72. FuelCell Energy misses by $0.01, misses on revenue

    06:16 PM ET · FCEL

    • FuelCell Energy (FCEL): FQ2 EPS of -$0.04 misses by $0.01.
    • Revenue of $38.3M (-9.8% Y/Y) misses by $6.43M.
    • Press Release


  73. Tesla will wait until year’s end to pick Gigafactory site

    06:01 PM ET · TSLA

    • Tesla (TSLA) won’t pick a site for its first Gigafactory until year’s end, Elon Musk states at his company’s annual meeting. The EV maker previously said it expects to break ground in June.
    • Also: Musk suggests Tesla will simultaneously begin the prep work for a buildout in multiple states. “We’re probably going to do two or maybe three states all the way to creating a foundation and creating the plans and getting approval … I wouldn’t expect that we do a down select for Gigafactory one before the end of the year.”
    • Tesla has said it’s hoping the Gigafactory will be able to supply 500K vehicles/year by 2020.
    • Previous: Heard at Tesla’s annual meeting


  74. New pollution rules should prove profitable for GE’s turbine business

    05:54 PM ET · GE

    • Likely among the clear winners in the EPA’s new carbon framework will be engineering giants General Electric (GE) and Siemens (SIEGY); every utility that moves to overhaul a gas plant with more efficient turbines, or makes the bigger switch to natural gas from coal, could represent a customer for those companies’ high-efficiency turbines.
    • GE only sold a few of its top of the line gas-fueled power turbines in the U.S. last year, continuing a streak going back more than a decade, but new regulations on carbon emissions could eventually mean better results.
    • For Siemens and some of its industrial peers, the government’s push for more efficiency could prove profitable in other ways, if it spurs capital investment in energy monitoring and efficiency systems they also make.


  75. LivePerson buying co-browsing tech developer

    05:46 PM ET · LPSN

    • LivePerson (LPSN) is buying Synchronite, a German startup that has developed co-browsing technology (allows two or more people to jointly navigate Web pages/apps), for an undisclosed sum.
    • LivePerson declares integrating Synchronite’s technology with its cloud customer support/engagement platform will allow clients to “provide real-time collaborative assistance” for completing tasks such as filling out forms, resolving technical issues, and completing purchases.


  76. Google challenges Amazon with overnight delivery for NorCal

    05:32 PM ET · GOOG

    • Google’s (GOOG, GOOGL) Shopping Express service now provides overnight delivery for the whole of Northern California.
    • Orders provided by 7PM are guaranteed to arrive the next day; item prices match in-store prices. Google is providing free 6-month trial memberships until the end of June. Non-members are charged $4.99 for each store involved in an order.
    • Shopping Express already provides same-day delivery to the entire Bay Area (inc. San Francisco), as well as parts of L.A. and NYC. Much like eBay’s same-day effort, the service relies on retail partners to handle fulfillment; the current partner list includes Target, Walgreens, Staples, and Whole Foods.
    • Amazon (AMZN) has been taking a very different approach to same-day, using its own warehouses to offer same-day in 12 cities (more launches are expected).
    • Amazon now only charges a $5.99 flat fee to Prime subs for same-day orders up to 150 lbs, and is testing out its own delivery network in a handful of metro areas. Its AmazonFresh grocery delivery service, which has been viewed as a Trojan horse meant to help the company effectively scale same-day, is currently available in L.A., S.F., and Seattle.


  77. AT&T sells $2B in debt ahead of DirecTV deal

    04:41 PM ET · T

    • AT&T (T) has sold $2B worth of 30-year bonds yielding 4.8%, or just 140 bps more than comparable Treasurys.
    • Analysts think Ma Bell could sell as much as $7.5B in debt to help pay for the DirecTV deal, which has a $14.6B ($28.50/share) cash component.
    • As it is, AT&T had $79.9B in debt at the end of Q1, offset by just $7.2B in cash/investments. 2014 free cash flow is expected to total $11B, and dividend payments are set to be around $9.5B.
    • Previous: AT&T slips following guidance


  78. Baidu announces debt offering

    04:59 PM ET · BIDU

    • Baidu (BIDU) hasn’t yet disclosed the offering’s size. In a prospectus, the Chinese search giant only says the proceeds will be used for “general corporate purposes.”
    • Baidu had $6.38B in cash/short-term investments at the end of Q1, $2.48B in notes payable, and $403M in long-term loans. Like Alibaba and Tencent, the company has been on a torrid investment/M&A pace.


  79. Verizon, Sprint, T-Mobile slide following AT&T’s guidance

    04:07 PM ET · VZ

    • Verizon (VZ -1.5%), Sprint (S -2.2%), and T-Mobile (TMUS -1%) have each closed lower after AT&T guided for no Q2 wireless service revenue growth, and a weak wireless service EBITDA margin.
    • Investors have already been nervous about the impact a T-Mobile-driven price war stands to have on the top and bottom lines of rivals. AT&T mentioned adoption of its Mobile Share Value plans, which saw price cuts after T-Mobile announced a series of aggressive moves, are pressuring its ARPU.
    • Verizon, though offering some modest promotions, has generally stuck to a premium pricing strategy; its disappointing Q1 postpaid subscriber adds – 539K net adds with an estimated 95K decline for phones – fueled questions about whether a strategy change is needed. The fact AT&T expects to add 800K+ postpaid subs in Q2 might heighten those concerns.
    • Sprint has been more aggressive than Verizon, launching its low-cost Framily plans in January and heavily promoting them. But it lost 231K postpaid subs in Q1 as it scrambles to neutralize Verizon/AT&T’s 4G coverage leads.
    • One encouraging AT&T datapoint: The carrier expects ~2/3 of postpaid smartphone subs to be on subsidy-free Mobile Share Value plans by year’s end. Both AT&T and peers have made slashing subsidy spend a priority.


  80. U.S. May auto sales wrapup

    02:53 PM ET · GM

    • Auto sales in the U.S. got a late boost over the Memorial Day weekend to push the new car sales tally for May to close to 1.6M units.
    • The top seven automakers all beat analyst expectations as consumers were more active than anticipated.
    • General Motors (GM) shook off any worries that the incessant recall news would cut into demand to set a seven-year high for the month, while Subaru (FUJHY) and Toyota (TM) carved out some more market share.
    • Daimler (DDAIF) and Volkswagen (VLKAY) lost ground during the month.
    • Kelley Blue Book reports new car prices in the U.S. rose 2.1% Y/Y to an average transaction price of $32,307. Chrysler (FIATY) led the way with a 4.8% jump.


  81. AT&T slips following guidance; no wireless service growth in Q2

    02:48 PM ET · T

    • AT&T’s (T -0.6%) forecast for 2014 EPS growth to be at the low end of a prior mid-single digit growth is overshadowing its revenue guidance hike.
    • Also: AT&T says it expects no wireless service revenue growth in Q2, as a T-Mobile-fueled price war pressures its ARPU. Service revenue grew 2.2% Y/Y in Q1, and 4.8% in Q4.
    • Q2 wireless service EBITDA margin (already under pressure in Q1) to be dinged in Q2 by service revenue weakness and higher equipment sales; the latter stems from strong adoption of AT&T’s Next smartphone upgrade plans. The margin is expected to be above 40% from Q2-Q4; it was at 45.4% in Q1.
    • One bright spot: Q2 wireless postpaid net adds are expected to top 800K, after coming in at 625K in Q1. Postpaid churn is expected to be at 0.95% or lower, down from 1.02% a year ago.
    • Next smartphone sales are expected to rise to 3.2M from Q1′s 2.9M, and make up ~50% of total sales. Roughly half of all postpaid smartphone subs are now on subsidy-free Mobile Share Value plans, and ~2/3 are expected to be on one by year’s end.


  82. Russell still looking sickly bouncing off its 200 DMA with a Death Cross only days away. The other indices might be topping off a bit here. Dow working on that seldom seen pattern of quintuple top!


  83. Will Q2 earnings be better:

    http://alphanow.thomsonreuters.com/2014/06/earnings-roundup-second-quarter-guidance-improved-recent-quarters/

    One reason for the smaller downward revisions for Q2 is the guidance sentiment. Earnings guidance is less negative than it has been for the past several quarters, as seen below in Exhibit 1. So far, there have been 3.9 negative preannouncements for each positive one. The current negative to positive guidance ratio is still more negative than the long-term average of 2.4, but it is an improvement over the extremely negative guidance in recent quarters.

    Earn


  84. Could be a big shakeup in the utilities:

    http://www.businessinsider.com/how-solar-will-destroy-the-power-companies-2014-6

    Barclays recently downgraded the entire U.S. electric utilities sector to "underweight" on the threat posed by widespread adoption of solar-storage. These systems allow homeowners to use rooftop solar panels and a battery to cut all but the figurative emergency backup cord to their local electric grid, putting a severe strain on an industry that has been a defacto monopoly.


  85. It's really surprising that when you cut taxes but don't cut spending, you face deficits. You would think that we would have learned the lessons from 8 years of Bush administration. But tax cuts are still the go to tool to fix everything for the GOP and look at the results now:

    http://www.kansascity.com/news/local/news-columns-blogs/the-buzz/article438956/Kansas-tax-revenues-plunge-again.html

    Kansas revenues plunged again in May, leaving the state more than $300 million below estimates for the current year.

    The state reported Friday afternoon that revenues fell $217 million below estimates in May, the second month in a row they came up short of expectations.

    The latest decline leaves the state about $310 million short for the current fiscal year, which ends June 30.

    The numbers again raise questions about Gov. Sam Brownback’s income tax cuts from 2012 and 2013 and their effect on the state’s financial health.



  86. Good morning! 

    You're welcome Mill – much easier when you lay it out properly! 

    Volume/Pwright – I just go to SPY on Yahoo Finance and look at the volume.  Keep in mind it's delayed and that about 1/3 of the day's volume usually hits in the last 5 mins but, once you get used to watching it, you begin to get a feel for high and low days.  

    AAPL/JMD – Since the 2016 $450s are $192 and about maxed out, it would be nice to cash them.   The short $650s are $66.50 and I'd take the $450s off the table ($76,800) and buy 5 more $600/750 bull call spreads ($53.50 = $25,750) and buy back the 5 $400 puts ($6.85 = $3,425) and the 4 $450 puts ($14 = $5,600) and sell 5 $550 puts for $42.90 ($21,450) and 5 Oct $675 calls for $19.50 ($9,750).  That puts net $73,225 back in your pocket and leaves you with 10 2016 $600/750 bull call spreads and 5 short 2016 $550 puts and 5 short Oct $675 calls and, if AAPL fails to hold $600, you just sell 5 more Oct $600 calls (now $55) and put a tight stop on the $675s or stop out the new calls over $600 – easy to manage when you have half covers and, of course, if AAPL drops $50 – you roll the $600s back down to the $550s for less than $25 ($25K) to widen the spread.  Keep in mind this will all be adjusted soon so you may want to wait until after the split to adjust but the principle would be the same either way – just selling more premium while you wait.  

    Webinar link/Micro – They haven't sent it yet.  Remind me later if we don't have it and I'll call them.  

    Utilities/StJ – Over the long haul, I certainly agree.  Will still take a while.  

    Tax cuts/StJ – You mean the wealth didn't trickle down?  That's just shocking!   The word "trick" is right in the theory….

    I like those charts, they illustrate what I have been trying to tell the top 10-1% for years – that the 1% are coming after their money too.  Soon they top 10-1% will be tapped out and the top 0.01% will turn on the top 1-0.01%.  It's still 31,000 very rich and powerful people in the US who will be looking to take ALL the money from the top 3.1M – that's plenty of power to buy votes, influence elections, lobby the crap out of Congress and get their way until they scoop up the rest of the nation's wealth.  

    But hey – keep voting Republican folks – they'll get you to that promised land! 

    The problem is that the top 10% look down to see how well they are doing and they see many people doing worse and they are doing about the same as their parents so they think it's all great but the top 0.1% are back to Great Gatsby wealth levels – that's money that should have been shared by the top 10% but wasn't.  

    By the time the top 10% and especially the top 1% wake up, they'll be as powerless as the former middle class is today. 


  87. Meanwhile, China dropped 0.6% in both markets today with real estate and casinos taking big hits.  Nikkei tested 15,100 again and failed again, now 15,030 and I like /NKD short below 15,000 with tight stops above.  

    Oil $103.50 (/CL) is always a fun short – still just a scam where they are moving oil out of Cushing (where we measure it) with their new pipelines:

    Oklahoma, the biggest US-storage hub, and the delivery point for NY futures, dipped to 21.7 million barrels for the week ended May 23 – their lowest level since November 2008, and their 16th decline in 17 weeks. Cushing’s weakening inventories are, however, merely a reflection of crude being moved by the southern leg of the Keystone XL pipeline to Gulf Coast refineries since January.

    Yesterday, the American Petroleum Institute (API), the largest oil and gas lobbying group, said in its weekly report that US crude inventories slid by 1.4 million barrels to 382.5 million barrels for the week ended May 30. Analysts’ estimates had pointed to a 300,000 drop, according to Reuters. Stocks at Cushing fell by 300,000, the API revealed.

    Tim Evans at Citi Futures thinks that "Inventories at the Cushing, Oklahoma delivery point for Nymex WTI futures may still be tight and getting tighter, but there is still a relatively vast supply, and that's [reflected] in the futures and options open interest." Although inventories may be constricted at one specific location, the crude market is “also overbought and vulnerable to downward correction," Evans argues.


  88. Oh, still shorting /YM below 16,700 confirmed by /ES below 1,920, /NQ below 3,725 and /TF below 1,120. 


  89. Thanks Phil and JPH re: volume