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Faltering Friday – Big Trouble at our Strong Bounce Lines

SPX DAILY9,500.  That's our line on the NYSE

We finished the day at 9,504 but the S&P failed to hold 1,925 and the Russell never made it to 1,040 so we can't call this 3 of 5 over the line which means we don't have a bullish rally yet – just a bounce off the lows which will quickly start looking like a dead cat if the Russell fails to hold it's weak bounce line at 1,000, where we have a long position on /TF Futures.  Likewise, the Nasdaq 100 failed to take back 4,200 – another key failure for the week.  

We never made the bullish marks we were looking for in yesterday's post, so game off for the long play we discussed and game on for some hedges if you don't have any (we favor SDS and SQQQ, as discussed last time we were this high).  All four of our tracking portfolio are in fantastic shape (full review yesterday in Chat) and we discussed locking in the gains by going to CASH!!!, because we're at a very tricky inflection point and it's hard to protect but we decided to press on and we'll see if we can clear those bounce lines next week.

That makes today more of a watch and wait day with Asia finishing the week slightly red for the day and Europe is down about 1% ahead of our open and our futures are down about 0.35% at 8:20.  CPI comes out at 8:30 but nothing exciting expected there.    

There's still a tremendous risk in the Chinese economy and, just this morning, Shaanxi Xinsheng defaulted on 4Bn Renminbi ($666M) and BAC analyst David Cui warns us, saying China must either A) Let the defaults take their course, risking a "chain reaction." or B) Continue printing money to bail out dysfunctional companies, putting downward pressure on the Renminbi. That will make China's foreign non-RMB debt more difficult to pay, creating "financial system risk."

 "In a scenario in which investors are not bailed out and thus become more cautious, e.g, rolling over some of the debt instruments in the shadow banking sector, some borrowers may struggle to obtain credit, for example, developers and coal miners. Whether this scenario would trigger a chain reaction is a key risk we would need to monitor. If shadow banking investors continue to be bailed out, this would imply a further strengthening of the implicit guarantee, and potentially, put pressure on growth, increase the debt burden and hurt RMB stability. We re-iterate our view that financial system risk is arguably the most important risk facing market this year … Until the debt issue is addressed, we believe it is unlikely we will see the bottom of the market."

Also this morning, Up Energy Development Group, a coal miner in China, defaulted on their convertible bond payment for Feb, putting the entire $444.8M (3.5Bn RMB) into a very questionable category.  Over in Hong Kong, the pressure is mounting on property developers to drop prices before they too are defaulting on their construction loans.  It is estimated that, if China continues to bail out these defaults, the Yuan will do a Japan-like drop and lose 30% of its value

So China remains a concern but still one the rest of the World can hopefully shake off.   Falling energy prices mean our energy sector too, may be defaulting on their debts in the near future but yesterday's drop in oil was nothing more than the end of a rumor that drove prices too high coupled with the end of the contract rollover period we told you last week (and the week before that) would drop prices and it's exactly on schedule.  

Since last Monday, another 260,000 FAKE!!! orders have been rolled over, aided by BS rumors of supply cuts that drove prices high enough to let the traders roll out of trouble and fake demand for another month. 

Click for
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Mar'16 30.60 30.73 30.01 30.25 07:32
Feb 19


-0.52 8024 30.77 64341 Call Put
Apr'16 32.70 32.99 32.18 32.45 07:32
Feb 19


-0.48 69773 32.93 483812 Call Put
May'16 34.37 34.62 33.83 34.09 07:32
Feb 19


-0.46 7612 34.55 240063 Call Put
Jun'16 35.57 35.81 35.04 35.29 07:32
Feb 19


-0.47 6983 35.76 184704 Call Put
Jul'16 36.40 36.72 35.97 36.20 07:32
Feb 19


-0.46 2718 36.66 88010 Call Put

Hell, the people who bought at $27.50 were even able to get out with a nice profit (we sure did!) while screwing the American people out of another few Billion Dollars at the pumps this week.  We are now trading the April contract (/CLJ6) and we're long over the $32.50 line though it may spike lower as the last of the March contracts are extinguished.  

Have a great weekend,

- Phil


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  1. Good morning! 

    Here's a brain-twister:

    Charles Koch: "Bernie Sanders is right"

  2. From TOS:

    Thank you for the e-mail and inquiry. I do apologize about that. Please note that we have noticed an issue with custom scripts since the weekends release that is generating the java error you mention. I would suggest that you try the following steps to troubleshoot:

    1. First, save your workspace by going to Setup>Save Workspace As
    2. Then, go to Setup> Reset Workspace to default

    If the you still get the error;

    1. Go to Charts and click Style> reset to factory default
    2. Reset Workspace by going to Setup>Reset Workspace to default

    This will then bring everything back to a complete default and the error should not come up. Please do not load any previous grids/workspaces and do not add the custom script back in for now. We are working on a patch to deliver ASAP to hopefully correct the issue.

    Outside of custom scripts, Person Pivots, Daily High Low, Woodies Pivots, SVE Pivots, Daily SMA, Daily Open will cause the error as well.

  3. JWN & VFC   both down over 7%   Bottom line:  They just didn't sell very many sweaters for Christmas this year. 

  4. Phil – just looking at the STP hedge from last thursday:(

    I know you killed half the sds mar 24/27 call spread; just wondering about the other half and the hedges (- BA and CMG are doing great…)

    Buy 100 SDS March $24 calls at $2.03 ($20,300) 

    Sell 100 SDS March $27 calls at $1.08 ($10,800) 

    Sell 5 CMG March $385 puts for $5.20 ($2,600) 

    Sell 5 BA Jan $90 puts for $8.60 ($4,300) 

  5. Sports Authority   I don't know if any of you have a Sports Authority near you, but yesterday they just announced they are closing all 25 Texas stores.  They didn't say how many employees would lose jobs.

  6. Good Morning!

  7. Koch brothers…rigged five congressional elections via ALEC (2012,2014,2016,2018,2020) but want to pretend they're for "democracy" 

  8. "Japan goes full Goebbels"… Now, that is a scary article by Zero Hedge…. :(

  9. Rexx. Please resend link.
    Page not found. Thanks

  10. Anyone doing any yhoo trades? Just wondering since it is mighty low. Buy out maybe?

  11. Bought some UGAZ at 1.08.

  12. Ditto on the UGAZ 1.09

  13. sorry – here's cleaner link: 

  14. yhoo has a billion users-must have value.

  15. FU oil!!!!

  16. TOS/Edro – LOL, well that explains my problem.  

    JWN/Stock – I don't like them as much as M, who are also pretty cheap at $39.30 with a p/e down around $10 ($3.50/share earnings expected this year).  Great long-term play and the 2018 $25 puts can be sold for $2.25 to offset the cost of the $30 ($11.50)/$40 ($6.20) bull call spread at $5.30 for net $3.05 on the $10 spread that's $9 in the money to start.

    SDS/Rexx – Well, looking at today's action, I'd rather keep the SDS spread on for the weekend.  As to short CMG and BA puts – there's no point at which I'll be looking to change those, they are simply there to pay for the spreads when they expire.  .  

    Sports Authority/Stock – DKS has been kicking their asses with super-stores but all of them got killed by the mild winter (no ski stuff or coats).  Sports Authority is private and they did an LBO to buy them in 2006, so very bad timing, probably going BK in the near future.  

    Big Chart – Stopping dead at those W middles is NOT GOOD.  Of course, it's not that unusual to consolidate here for a session or two so it's all about next week's action now.  Remember, Strong Bounce lines we goal for the week and that mission was accomplished – though it would be nicer if we held them. 

    Times/Rexx – Redacted already, don't mess with ALEC!  cheeky  Gerrymandering is another critical issue that SCOTUS will have to take on.

    YHOO/Pirate – I think the sum of the parts is greater than the whole so can be bet by selling 2018 $25 puts for $3.50 and buying the $25 ($9)/35 ($4.20) bull call spread for $4.80 is net $1.30 on the $10 spread that's halfway to paying you an $8.70 profit (669%) in two years and maybe sooner if they get bought.

    Yikes, /NGK6 back to $1.965.  I have 6 now at average $2.  Probably similar rollover issue to oil, so I'm not worried.

  17. /TF back over 1,000 – game on!  

    Meanwhile, DAX in major failure mode after failing to retake 9,500.  

    Nikkei hopefully finding a floor at 15,800 again.

  18. Right off 1,900 on /ES – yikes!  

    Remember, the more it tests, the more likely it is to fail! 

  19. Speaking of fail – oil (/CLH6) down to $29.35 and /CLK6 is $31.65 – still a very wide spread to have to roll into.  I would imagine such a high rolling cost will be extra-damaging to UCO/USO and whatever other ultras there are out there.  

  20. Mellow play for SPY to move up a bit more and retest 1950 SPX or better……Mar 200 Cs for 66c. 

  21. Phil – What's your current Oil position?  Did you stop out?  

  22. Phil--when is the last day to roll over the oil contracts???

  23. Oil/Burr – I'm on /NG so not playing /CL and /TF stopped out.  Can't play everything and we weren't getting a good signal when /CL failed $30.  $31.50 on /CLK6 getting interesting though. 

    Rollover/Jabob – I think Monday but that stuff is really confusing so never sure.  

  24. phil, morning, 

    need your thoughts re my overall gold position because of a lot of puts when the metal was much higher.  things have become somewhat convoluted and i want to simplify……

    my present positions are as follows 

    abx…400 shs and sht 13x jan7… 13 strike

    1000 shs of gdx

    7000 shs of phys the sprott etf backed by gold… (sold gld to transfer after a comex chart you showed)

    the prices are from much higher rolls etc …i would like your thoughts as to the most efficient way of consolidating with a spread / sell puts to play for a large upside move over a 2017/18 timeframe…my thinking being that the world of neg rates will have a positive effect on gold ………..tks

  25. UGAZ – went with UNG next week 7 calls at 10 cents instead.

    One of the fun things about energy way down here, off 70% over 18 months, is the chance of a spike up on any given week is hugely in our favor now. That dooesn;t eman we will get it or there's any chance any one of us can "time the bottom," but the probability is massively on our side. Energy is still generally trending down and I've had a couple of UNG and USO short term spikes that I've caught for a tidy gain. This helps with the losses in the Co's* on the way down. Hopefully bottom is in and we can start to ride a recovery a bit.

  26. Just another political note-heard on Npr yesterday that the Rhinelander schools had to float another bond issue to the taxpayers to  keep their schools running normally which was necessary as they were going to fire 40 teachers, scrap the whole athletic and music programs and basically strip the schools. The reason? Four years ago the state covered 55% of the funding needs and now only fund14%. They will have to come back again within 3 years to keep things going. They are a northern Wisc district as ours is also, and we just had another referendum which is costing the taxpayers and it has only been 2 years since the last one. How many students do we have? 105 from elementary through high school. Ours is like a private school; all students get computers etc, etc. Yet these tax payers, many very destitute, keep electing the likes of Walker, Duffy and Ron Johnson. Of course the burden falls on those with more property, bigger homes since those who live in very modest means, mobiles and the like haven't had a tax increase in 8 years! This whole area is turning into  seasonal occupancy, but the politics in this state is just plain awful. Very seriously thinking of getting out, but there are 5 properties for sale within one mile of the farm and going to a warmer climate has the same political aspect of this state, that is hopeless.

  27. The Co's I've mentioned include anything in the XOP index and also CHK ECA PBR CLF, etc etc, many of which are looking like good long-term entries at this point.

  28. NLY around $10 today. They have had trouble around that level the last 2 years. The call premium is not that great, but might be worth covering around here.

  29. /NGK6 – Phil, can you explain what you mean by "similar rolling issue to oil?" If you mean that front contract holders are rolling to /NGJ6 or /NGK6, I would expect the price to not be falling quickly because of the extra buyers. So I'm confused.

  30. I don't know about you guys but I WANT a phone that the FBI can't hack!  It will really suck if AAPL (and everyone else) has to cooperate and leave a security hole in the phone.   It will eventually be exploited and cause untold chaos later.  

    ABX/Mill – You know it's difficult enough for me to decipher your stuff but when you don't even put your entry prices – how on earth can I know what you're dealing with?  GDX I never likes and what, 7,000 ounces of physical gold or PHYS?  PHYS has no options, it is what it is.  Your biggest problem is you ar  long on gold 3 different ways so it's a complete mess – why not just pick ABX (my favorite) or GLD – I never did like GDX and PHYS has no options, so I'd never touch it.

    Either way, I have no idea when you entered but at least with ABX we know you have 400 shares (now $12.68) and you sold 13 Jan 2017? $13 puts or calls against them and that's on the money so I guess I'll have to throw up the white flag on that one as I think I'm totally lost at this point.  At $6, I would have said put it all into ABX but that was 100% ago – now a bit chasey though I still like them better than any other gold play.  

    Chances/BDC – Good attitude/strategy.  We can do so well on the bounces we'd almost rather it not recover and we can play it over and over again from the floor.  

    Hopeless/Pirate – 5 years of Walker is enough to make anyone lose all hope!  105 students in a town of how many?  Let's say you sent them all to Harvard and Paid $60,000 tuition and $20,000 living expenses for $80,000 x 105 = $8.4M.  Divide that by 2,000 homes and it's $4,000 per student for the best possible private education and housing and food.  Your school budget is $25M!   I mean, WTF???  

    I think the waste in Education is probably as bad or worse than it is in health care.  My kids know a good teacher from a bad one and they like going to classes where the teacher is good and they feel like they are wasting their time in other classes.  We have turned teaching into a low-level job (until they put in enough years to level up) and it doesn't attract good people anymore. Plus it's stigmatized as well.  As noted in the Harvard example (where class size averages 20), it's not about not paying the teachers or having crappy facilities – it's about treating education like it's a priority and an investment in our country's future.  

    Just $79Bn Federal Dollars out of a $4.1Tn budget (2%) goes towards education in our society.  That is F'd UP!  There are 50M students in the US and we spend about $1,500 per student vs. $4,000 it would cost to give every child in this country an Ivy League education.  This is why Bernie is dead right about college – it should be a RIGHT, not a privilege and the money INVESTED in giving our kids good educations will come back to us in just 4 years as we have a well-educated work-force.

    We spend 10x more on the army (2M people in armed forces AND reserves total) and the same guys who tell you it's NECESSARY to spend $317,000 PER SOLDIER try to tell you with a straight face that they can't afford a penny more than $1,500 per child for education.  Again, people ask me how I can vote for Democrats and I say how can I not?  

    Entries/BDC – I want to see SOMEONE start spending money on infrastructure before I go back to that well.  

    /NKY/StJ – Good point.  

    /NGK6/Cordoor – No I mean /NG's front month contract is also expiring and the warm weather means they have to do a lot of rolling this month, which means panic selling that depresses the strip.  

    Oil turning up nicely off $31.50.  

    King Dollar down to 96.72. 

    1,008.50 on /TF.  Stop should be 1,007.50. 

  31. UNG at 6.66


  32. Budget / Phil – That chart really says it all. 80% of the budget is something that cannot and will not be touched (SS, Medicare, Defense, Debt and Vets). They talk about privatizing SS, but it would only apply to future generations because old people vote so that's a 10 year window at least. Meaning it will never pass. That leaves only 20% where they can actually try to do something. I guess 3% for agriculture is also not negotiable also it includes food stamps so I guess that portion of it can be cut! But what else is left? Energy is $52B and that includes deals for big oil I am sure. So we cut the $31B for science and the $80B for education? Just a joke…

    Of course, they have a solution in Idaho:

    Last year, the state Republican party's central committee officially endorsed using the Bible in the state's public schools. Although the Bible has valid educational uses in a number of classes, the resolution included a huge laundry list of possible topics where it could apply, and those included a number of sciences, specifically astronomy, biology, and geology.

    That takes care of education and science!

  33. micro-cap aluminum company CENX is doing well today. A green shoot for materials. Can't be all bad out there…

  34. NG – In at 1.95 but even that looks like it may be too early. How low can it go? Front month expires in 7 days.

  35. ABX/Phil

    I had 500ABX costing $15 net after Call premium collected.

    Took a chance in February when ABX popped from $6 up to $8 and I sold the Feb $8 Call for $0.50c.

    What can I do to re position as I am going to get called away for a loss.



  36. NG could go to 1.50 but then it's just a bigger opportunity. I'm prepared to be wrong a couple of weeks in a row. The win is a 5 to 10-bagger so OK to be wrong 4-8 times or less and still get a win out of it.

  37. StJ – religion in schools, religion in hospitals, it's all good brother – as long as you're a dude!

  38. Crazy/Burr – Crazy like a fox!   That story is the lead on every platform at the moment.  I wish I'd thought of it…

    Bible/StJ – Well, it used to be the only thing we learned.  Still is in the middle east and look how great things are over there.  blush

    CENX/BDC – Good but I still prefer AA long-term. 

    /NG/Traded – Warm weather and spring is in the air and no LNG exports.  I'm saving plenty of firepower for lower prices.  It turns colder starting next week with maybe snow so that's going to be the pop we're hoping for (and maybe a good LNG announcement).

    And what BDC said!  

    ABX/DM – I'd do what you should have done 100% ago, which is DD.  Had you doubled down at $6, your average would have been $10.50 and you'd be out of 1/2 with a profit already.  You have 500 shares and the short $8 calls are $4.70 and you can sell the stock for $12.65 ($6,325) and buy 10 2018 $10 calls ($4.30 = $4,300) and that's $2,325 back in pocket and then you can roll your 5 short calls ($2,350) to 10 short 2018 $15 calls at $3.25 ($3,250) to put another $900 back in your pocket.  

    Now you spent $7,500 less $3,225 back on this roll is $4,275 and you make $725 at $15 in 2018 with no margin required (and a not terrible 16.7%).  Since you are tying up 1/2 the cash, you might want to consider selling the 2018 $10 puts for $2.35 ($2,350) if you feel like only making $725 at $15 would be too dull for you.

  39. Phil,

    I have a PG Butterfly similar to yours – but with the Feb (today) short puts and calls – where yours is March expiration.  

    -10 FEB16 77.5CALL   $2.00  now $4.25
    -10 FEB16 77.5PUT     $2.05  now $0.02

    I wonder if you could please suggest a roll for the Call – and if you have the time explain your thinking behind the selection.    Thanks!

  40. ABX/Thanks Phil

  41. PG/Gbase – Seems a bit toppy to me so I'd just roll along to April $77.50 calls ($5.10) and the $80 puts ($1.45) so you get another $1.30 for the time and you are giving up $2.50 for sure but now you have collected $4.05 + $1.45 = $5.50 so your make money (up to $3) between $72 and $83.  I'd also consider cashing the long calls up here if they did well and buying something cheaper.  

    You're welcome DM.  

  42. For electricity production so much NG is now coming online to replace coal I think it accounts for more NG use than heating homes. I don't have the figures though, it is just a suspicion. This provides for a baseline price support in any event, whatever that turns out to be! (1.50-2.00 likely). Then hot weather is good for NG prices via air conditioning use.

  43. My theory is coming up short. Here's a long term elec power gen graph (from NG).

  44. phil, per your reply

    the 400 abx shares were put at 15 which was a roll from 25 or so……..

    the jan 13strike …13x puts were recently rolled  from 15s. for 5.35..

    the 1000 shs of gdx were put at 44 

    the 7000 shs not ounces of phys was @9.50 (from gld put back in the 140 's)……..

    and as you said it is all over the place and im looking to consolidate……..with a view toward gold bottoming and heading back up w/ the nirp and global anxiety…………..tks

  45. PG/Phil – perfect, thanks!

  46. biodieselchris: this is just for a residential home, but…   in the summer, my central air conditioner uses electricity, not gas.  There's nothing being burned.  My electric bill goes sky-high.   My gas bill is higher in the winter because of my furnace.

  47. Phil/Markets

    GLD down, TLT down, markets down…..hummm

    May be buy express is getting ready…


  48. Actually, BDC, /NG caught up to coal a while ago but now both are suffering from increased efficiency eating into demand:

    ABX/Mill – That's a bit better.  Still don't know what you paid or what your net is but at least a few clues to go on since it seems impossible for you to simply say "I sold 13 ABX Jan $13 puts for $5.35" or whatever.  It's not like you use less words, you simply refuse to use the simple format everyone else uses and it causes confusion and degrades the quality and timeliness of the responses but if you can't be bothered after all these times I beg you to fix it – I guess this is the way you like to talk about your trades. 

    See how easy it was to help Gbase?  That could be you….

    Anyway, So you have 400 shares of ABX and 34 short Jan $13 puts that I can't believe you sold for $5.35 but, if you did, then that's great and why would you change it?  GDX was $12 and you didn't double down then, where you would have had 2,000 shares at net $28 so not sure what you want to do with them at $44.  Stops are a thing you should look into as GDX was last at $44 in early 2013 so it's been 3 years of inaction and NOW you want to fix it?  7,000 shares of PHYS at $9.50 are up 0.65 – YAY! 

    • ABX is at $12.63 so the short Jan $13s are good (now $3) so you stand to make $3,900 if all goes well there.  
    • If you own 400 shares of ABX at $15 and they are down $2.40, that's kind of a non-issue.
    • PHYS is up 0.65 and that's +$4,550.
    • 1,000 shares of GDX is killing you, down $25,500 at $18.50.

    I'd certainly move of GDX to ABX as GDX includes all the struggling miners and, as I said yesterday:  ABX is AWESOME!  You can cash $18,500 of GDX and $71,050 of PHYS and that's $89,550 and you're down about $20K after all that and then you have the ABX short puts and long shares.  I'd ditch the long shares ($5,060) and now there's $94,610 and using that, you can:

    • Sell 27 Jan $13 puts for $3 ($8,100) 
    • Buy 50 2018 $10 calls for $5.10 ($25,500)
    • Sell 50 2018 $17 calls for $2.65 ($13,250) 

    So now you are using net $4,150 + what TOS says is $10K in margin and you make up to $35,000 at $17 and you keep $85,000 in your pocket and worst case is you own 4,000 shares of ABX at $14ish.  

    You're welcome, Gbase. 

  49. /NGK6 – I believe in this one, but it's certainly starting to stress me out. It's stressing me out because I originally only wanted 1 contract. But now I'm in for 3 at an average of 2.044.

    I would be *willing* to buy more (say, 3 more to double down), though not excited about it, if we had an idea of when the bottom were reached. But this would only increase my level of stress even more.

    My question is more of a general one on how to handle situations like these. I can't imagine /NGK6 is below 2.044 by May, but of course, this can't really be known or guaranteed. By doubling down to 6, I'd reduce my cost basis to 1.993 (and get out of 5 contracts when it gets back to this level so I'm back to 1 contract), but dramatically increase my stress level.

    But considering all of this, would it make more sense to just hold tight and leave 2.044 as my cost basis and wait this out? I really like to reduce cost basis and believe this is the best way to win, but man, 6 contracts is far more than I wanted to hold at once.

    Note that I don't need this money for anything, but as it goes down, it reaches into my account and grabs the daily losses, which reduces my cash balance, which pisses me off.

    I'm only two months back into the trading/investing game since setting it aside over eight years ago to start a software company. So I'm pretty fresh back in and I'll admit I probably am jumping off a 50 foot cliff for my first dive, but it is what it is.

  50. Whatever your shopping preferences, it seems these days that there’s a subscription box to cater to them. Birchbox, which peddles a monthly box of curated beauty samples, was an early player in a trendy format that has grown to include everything from healthy snacks to pet treats to proudly nerdy …

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    “If the economy …

  59. The American work ethic can basically be boiled down to one well-worn phrase: “Work hard, play hard.” But new research from a pair of Stanford economists suggests we are failing, miserably, at the latter half of that maxim.

    Take a look at the chart below. It’s a plot of hours worked per capita …

  60. Here’s a look at the vital signs of Europe’s banks

    European banks are once again facing fears of a meltdown. While current risks require careful scrutiny, a thorough checkup suggests that relatively healthy lenders can be found in the market today.

    It’s been a rough start to the year for European banks. The STOXX Europe 600 Banks Index has tumbled …

  61. Oregon lawmakers have approved landmark legislation that propels the state’s minimum wage for all workers to the highest rank in the U.S., and does so through an unparalleled tiered system based on geography.

    The state House of Representatives on Thursday passed Senate Bill 1532, which now heads to …

  62. They’ll welcome you with open arms.

    Canada’s Cape Breton Island is opening its doors to all American-defectors if the presidential election lands Donald Trump in the nation’s highest seat. You can trade in your daily slog and sub-par health care for free-roaming moose and idyllic lighthouse …

  63. A new group could spend $10 million a year on the campaign.

    Billionaires Charles and David Koch, prominent donors to conservative causes, are now looking to put their money behind an advocacy group that would promote petroleum-based transportation fuel and fight government subsidies for electric …

  64. BEIJING—China’s leaders moved to dispel perceptions of disarray in the management of the world’s second-largest economy, firing a top regulator and setting out specifics on how they intend to restructure the economy without having growth fall off a cliff.

    The departure of Xiao Gang as head of the …

  65. The OECD has called for its rich-country members to ease up on austerity and collectively agree to spend more on infrastructure projects to boost flagging growth.

    The Paris-based Organisation for Economic Cooperation and Development expressed concern about the state of the global economy as it cut …

  66. Investors edgy as profit expected to fall 30%

    Being a top internet retailer has gotten to be pricey for Nordstrom jwn .

    The upscale department store on Thursday gave a disappointing forecast for the first half of the new fiscal year, including the expectation that profit per share will fall 30%, and …

  67. Nice blow-off bottom in oil ($29) and hopefully /NG as well ($1.94 on /NGK6).  

    Buy Express/Pat – Would be a nice way to close the week but I'm happy here with the mild pullback we've had off that crazy 1,000-point run in the Dow. 

    Bottom/Cordoor – You have to be aware of your loss limits for sure but you can also buy 1 with a VERY TIGHT stop at $1.95 and then sell it at $1.96 and that still lowers the basis of the other 3 by 0.0033, which is not inconsequential.  It's not all or nothing with add-on entries.  For instance, I added 2 at $1.96 last and at $1.98 I'd be perfectly happy to take the 0.02 x 2 profit off the table as it lowers the basis of my other 4 by 0.005.  

    As a rule of thumb, I don't like to add a new contract unless it's going to move the needle on my other contracts so, for example, I had 2 at $2.04 and then at $2.00 I bought 1 more to average $2.02 on 3 and then at $1.98 I bought one more and and 2 more at $1.96 so now I have 6 a bit below $2, which I think is very realistic for a bounce (but maybe not until the contracts roll next week).  

    With an average of $2, I'm not inclined to add more unless we are maybe 0.12 below $2 so $1.88 as that would drop each of the other contracts down by 0.02 to $1.98 and if I added another at $1.85, I'd have 10 at about $1.96, which I'd be really happy with as it's about where we are now.  

    And then, of course, there's perspective – always try to look at the bigger picture before you panic:

    Looks a lot better than this, right:

  68. Do not click on link for Koch/ALEC link above. Totally crashed my computer. Been fighting with it for an hour. Anyways, 15K people in Bayfield county, but large land area, 2042 Sq miles with 28% water. Two other schools in area, however about an hour away. Budget is about 3.45 million for this school, but it is truly insanity. It's the same song,"I don't have to pay more, so I don't care." And you can elect to go to any school in the county and many home school here as they have "fundamental or religious values." Amazing. Every year we have less graduating, but they do get a great education with only 10 in a class!

  69. Phil – Thank you for the explanation. This makes sense.

  70. Alec/Pirate – I took them down.  Let me know if I missed any.  

  71. Speaking of the Koch – they are just destroyers now:

    The expected result of the new group will be ads and research that promote "pro-petroleum transportation messages" and attack subsidies for plug-in vehicles, HuffPo says. An affiliated group, the Institute for Energy Research, has already gotten its feet wet attacking Tesla and its Powerwall. The new anti-EV messages could start appearing this spring.

    Have to stand with Musk here:

    Tesla Motors CEO Elon Musk (after just writing, "Sigh"), Tweeted that if the new group wants to attack EV subsidies, it is, "Worth noting that all gasoline cars are heavily subsidized via oil company tax credits & unpaid public health costs." According to a report from the International Monetary Fund last year, fossil fuel companies are subsidized to the tune of $10 million every minute.

    Get rid of all the big oil subsidies and we can talk EV!

  72. /NGK6 – Haha, sorry for asking more about this. If I'm willing to get 3 more contracts, then why not just sell a single 1.85 put contract now for 1K, then another at 1.75 (if /NGK6 continues to go down), and a third at 1.65, on the way down? That would collect 3K (assuming it actually keeps going down) and I wanted them anyway. If I don't end up getting them, then I've reduced my basis by 0.1 without having to get into additional contracts.

  73. /NGK6 – Well, it would be nice to be able to edit a post, but I can't. Anyhow, I realize that there's a problem selling the puts because the buyer chooses to put to me and that wouldn't happen until expiration. And I don't actually want the underlying. So I think this answers my own question about that. (unless I'm missing something).

  74. /NG/Cordoor – You could do that.  I don't play options on futures as it's too messy with everything else I'm doing and, of course, I'm very good at laddering in and out so I prefer to concentrate on that.  You could, of course, apply the same logic as we do to anything we REALLY want to buy but, of course, it can force your hand in an unforeseen situation – as you note in your next comment.  

  75. Nas and RUT are green, will the Dow and S&P follow?  Dollar trying to help at 96.66 (mark of the Blankfein!) 

  76. Cordoor/futures

    I've found that slowing down my entries, that is, waiting longer to double down has helped me quite a bit. In addition to always keeping perspective with the bigger picture and defining what max loss you are willing to have in total and per contract. I find that keeping my per contract loss in mind relieves stress, since it much easier to see where you are with respect to where the instrument is trading. 

    You need to develop your own style to control the stress, but my best advice to you would be slow down a bit. It will help you trade these things more effectively and with less stress. 

  77. jeffdoc – Thank you, this is good advice. Right before reading your comment, I decided to do nothing today and wait until Monday to look at this again. There are several things I am willing to do at this point. I just don't need to do them today and really need to just step away for a bit per your suggestion.

  78. Winston – BID – their stock combined with Moeller-Maersk (shipping) can be a market indicator.  I mentioned it yesterday in a missive.

  79. pity the fool the buys premium

    VIX       May strangle  28/19  bought one each for $3.3

  80. Good advice Jeff.

    S&P just one point off green.  

    Not much of a rally with a few minutes left.  Can't see them getting the Dow green at this point.

    That means we'll have to wait until Tuesday to see what's real next week.

    I'll be speaking at the NY Trader's Expo on Monday so half a day here and then off to the city.  It starts Sunday night so I'll check it out and report.  

    Have a great weekend, everyone,

    - Phil

  81. SA – I love how they finally get around to posting Phil's daily report by the end of market close (just received the email at 3:53 PM). Very timely of them…

  82. tom_nj my point was NG is a higher percentage of electrical power generation ergo when residential homes are running AC in hotter summers, it burns more CH4.

  83. Uh oh, The Donald says to boycott AAPL. Strong buy strong buy!!! lol

    But seriously how many more groups can the GOP thank they can alienate and still win a general election? This idiocy will send right-leaning libertarians over to the donkey side of the aisle in droves. The Nov election is going be a landslide.

  84. right leaning libertarian, that's me… GO BERNIE!!!

    Trump is not the repub party. He may be hijacking the working class base and every loud mouthed redneck out there… still need to narrow the field, Jeb! needs to realize nobody wants another Bush and get out. The brain surgeon needs to go back to brain surgery. I hope Kasich steps up, of those left on that side I may be able to stomach him but… I do believe it's Bernie time!

  85. When I begin to believe that the Chinese Communist Party has a far more rational system for picking its leaders than the U.S. Presidential Candidate Clown Car being driven across the television screens of America, it is clear that the U.S. has transitioned from a constitutional democracy to a Talk Show Plebescite devoid of any objective criteria that qualify a candidate to run for the office.

    I have lived more than half of my life outside of the U.S., in multiple countries throughout Europe, South America, and the Caribbean – and still do.  I and have seen and known the mechanism of wealthy upper classes who pick and control a "popular candidate" to "lead the people" in their "democracy,"  -- as my father was in fact tasked by a branch of the U.S. govt. to bring American influence to bear on these selections [you don't think Chavez really runs Venezuela single-handedly, do you?].

     I lacked the imagination to believe that the U.S. could possibly become one of them.  I was wrong, because I believed that better education and a free press would always prevent such a transparently farcical system. But in fact it appears that once the concentration of wealth in a country reaches grossly disproportionate levels, such wealth inevitably converts itself into a concentration of power that no formal system of elections or government can dissipate. The only recourse is some type of revolution, and those are always uncertain and even bloody affairs. 

    Can this be true?  Well, the Clinton and the Bush families have already shown this tendency in action, and we now have the vulgar Billionaire Trump, whom has made his living sucking the life blood of poorer people in his casinos [do casinos ever lose money] presenting himself as a champion of those very same people.  It is a well-trodden path taken, among many others, by Bashar al-Assad, Ferdinand Marcos, Kim Il-Sung, Generallissimo Francisco Franco, Muammar al-Ghaddafi, Hideki Tojo, Mobutu Sese Seko, Agusto Pinochet, Jean-Claude Duvalier, Ceausescu, Suharto, Kim Jung-Un, Jaruzelski, Somoza, Meriam, Hafez al-Assad ad nauseam. 

     Of course, most of those were fairly brutish; U.S. leaders would be more subtle.  The U.S. requires what Neil Young calls, in  "Rocking in the Free World,"  "a kinder, gentler machine gun hand."

    I hope politics after hours has not cause offense to the Members.

  86. Hillary Clinton just can’t win: Democrats need to accept that only Bernie Sanders can defeat the GOP

    Bernie Sanders will become our next president and it should come as no surprise to people actually paying attention

  87. Zero, no offense, it's pretty obvious (and embarassing). Yes, you can loose money running a casino. Trump has proven that. He has plenty of experience with bankruptcy. Maybe subconsciously that's what his followers want. Of course, it's not his fault we are in the current siuation…

  88. Wisc/Pirate  I know another who left long time ago, and shares these things on occasion..

  89. 0X0 – Spot on commentary… a kinder gentler machine gun hand… "The only recourse is some type of revolution, and those are always uncertain and even bloody affairs. Can this be true?"   History repeats itself, those who fail to learn from the past are doomed to repeat its mistakes. But it's always different this time, right? No meaningful effort to change the status quo was ever brought about without one of these, war, revolution, protest, sacrifice and this, violence and bloodshed occurring. This is the way of the world and the nature of the beast man.  Out.


  90. SA/Cordoor – I give up on those guys.  They have gone down Motley Fool's path of quantity over quality and they lack the ability to distinguish between them.  They are based in Israel so 80% of the staff is gone on Fridays (our time) and nothing gets published and then they are backlogged until mid-Sunday.  Of course a sensible person would say, "why not hire editors in other countries so the users (and authors) have a better experience?" but that would be rational thought and there's no room for that in companies that are run exclusively based on the balance sheet.  Then their readership slips and they are baffled so the solution, of course, is to cut staff.  

    Did you know Reuters has outsourced their entire news desk to India?  Every Reuters story is now written by people who, just a few months ago, were calling to sell you time-shares or giving you tech support on your blender…  Here's where it all began – a 10-year cycle between running a test and full replacement:

    Outsourcing has become all the rage in recent years, and India has become a favorite destination for Western companies that want to send jobs to cheaper markets. Companies as different as Delta Air Lines and Dell Computer have hired workers or subcontractors to perform customer service, data entry or other computer-related jobs once done in the United States.

    Now, Reuters is going a step further. It told its editorial employees in an electronic posting late last week that it planned to hire six journalists in Bangalore, India, to do basic financial reporting on 3,000 small to medium-size American companies.

    ''It's a place where you can get people who understand English, understand financial statements, understand journalism and who are educated to a very high standard and eager to do this kind of work,'' David Schlesinger, global managing editor of Reuters, said in a telephone interview. They are also relatively inexpensive, he added.

    Donald/BDC – I don't understand how, in the name of "national security" the GOP wants to create a security hole in all of our communication equipment?  I suppose they already decided that CEO's, Congresspeople and the rest of their cabal will have special access to fully encrypted phones while it's open season on everyone else.  

    Image result for privacy quotes

    Image result for privacy quotes founding fathers

    Bernie time/Mkucs – You betcha!  

    Well said ZZ. It is amazing to see what's happening in our own country after thinking for years how easily manipulated other populations are.  Interesting too that you essentially have a list of people we put in power as examples…

    No surprise/Pstas – Certainly not to me:

    Cool! Bernie Sanders (I-Vermont) is pressing Bernanke on the Wealth Gap!

    Submitted on 2009/11/06 at 1:41 pm

    Vermont Sen. Bernie Sanders introduces legislation that would give Treasury Sec. Timothy Geithner 90 days to compile a list of banks, funds and insurers deemed too big to fail, and thenbreak them up within a year.

    Submitted on 2010/05/11 at 12:40 pm

    Finally bi-partisanship!  The Senate comes together to vote 96-0 for Bernie Sanders’ unprecedented one-time audit of Fed programs. The amendment also calls for releasing the names of institutions that got loans at the peak of the crisis.

    Submitted on 2010/12/10 at 3:21 pm

    Bernie Sanders with a 5-hour speech against the Obama Tax Cuts – way to go Bernie!  

    Politicians I trust/Cap:  Al Franken, Ed Markey, Bernie Sanders, Barbara Boxer, John Kerry, Carl Levin, Tom Harkin, Chris Dodd, Dick Durban, Chuck Shumer, Mark Udall, Olympia Snow…  I’m sure you’ll do you best now to tear them down.  

    Submitted on 2011/04/29 at 10:25 am

    The Daily Show – Exclusive – Bernie Sanders Extended Interview Pt. 1

    Submitted on 2011/07/21 at 4:59 pm

    Let the re-education begin:  Getting underway on Capital Hill is a briefing of House Republican freshman by S&P on the consequences of default should the debt limit not be raised. Many of these members are part of the so-called "default caucus" – those unwilling to raise the debt ceiling under any circumstances.

    A GAO audit leaves the door open for Fed-bashers by finding the central bank awarded many of its largest contracts on a noncompetitive basis, and should improve conflict-of-interest policies. Senator Bernie Sanders jumps right in saying, "this is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else."

    Bernie Sanders on CNBC sounding like Phil – hes my favorite senator anyway.

    Bernie Sanders doing his best not to kill Maria, who is amazingly annoying in the interview.  She is NOT getting the sound bytes she wants out of him! 

    I love Bernie Sanders – he sounds like the Aardvark from that old cartoon.  

    Submitted on 2014/12/05 at 12:24 pm

    Charts/ZZ – Who will fund him?  That's the joke that's been played in American politics.  Without several million dollars you don't stand a chance of being more than a local politician and the Corporate news won't cover you and the Chamber of Commerce won't endorse you and the regular people have been brainwashed into believing that nothing they do matters (see the turnout of the last election).  It's not a democracy, that's what people don't understand – this country hasn't had a real Democracy since Kennedy was shot.  

    Liz Warren is holding those signs up and shouting from the rooftops yet, if I didn't quote her here, when have you seen a single clip of her on the news?  Bernie Sanders too – a couple of people have slipped through the cracks but Bernie has been ranting about this stuff for 6 years now to no avail and, again, to no press coverage.  

    The Internet gives people the illusion of a free press but what it really does is simply reinforce whatever views you already have for the most part.  As you click on your "favorites", you are presented with more and more things that agree with your favorites until your entire World is stuffed with things that agree with you – so nice and comfortable, right?  

    I love Bernie Sanders!  He's just being himself in interviews – the honesty seems to be confusing the journalists…  

    Submitted on 2015/05/06 at 4:54 am

    WASHINGTON (Reuters) – Bernie Sanders, a self-described socialist U.S. senator who has launched a bid for the 2016 Democratic presidential nomination, s…

    I'm like a political talent scout!  cool

    Clinton/Pstas – Wow, Jonah Goldberg dug up a negative quote about the Clintons?  Alert the media!  What's next, will Larry Kudlow say Bernie's plan to fund college is too expensive?  Will Rush say Obamacare is a bad idea?  I'm sorry, I'm trying to come up with the names of other Conservative "thinkers" but I'm drawing a total blank…  I guess it's more than just an oxymoron!

    Revolution/Naybob – That's my macro prediction from 2010.

  91. For those who don't think Bernie is viable – the MSM ignores him but the people find him anyway:

    In an interview with New York Times reporter Ana Marie Cox he was asked why his competitor in the Democratic race, Hillary Clinton, gets more attention for her hair than his own, which is known for often being dishevelled.

    Sanders answered:

    OK, Ana, I don't mean to be rude here. I am running for president of the United States on serious issues, OK? Do you have serious questions?

    Marie Cox then clarified the context of her question by citing the greater coverage of female candidates' physical appearances – at which point Sanders cut her off.

    When the media worries about what Hillary's hair looks like or what my hair looks like, that's a real problem.

    We have millions of people who are struggling to keep their heads above water, who want to know what candidates can do to improve their lives, and the media will very often spend more time worrying about hair than the fact that we’re the only major country on earth that doesn't guarantee health care to all people.

    How can you not love this guy?

  92. You think that in many ways this would be perceived as a positive for the economy;


    And at the same time, everybody was blaming high oil prices when they were over $100 and that impacted the market. Now oil prices are at $30 and it's also impacting the market negatively. I believe that the biggest factor is not oil prices, it's the dollar. Actually, low oil prices are probably also affected by that higher dollar but it means mostly that the companies that could benefit from low oil prices are negatively affected by the high dollar. Just my uneducated $0.02.

  93. phil…tks for your thoughts /suggestion on the gold/abx/ gdx 

  94. StJL – cheap oil, high dollar – You are correct both cheap oil and high dollar have their unhealthy downside. Aside from that,  it is what is happening in the "dollar", as in unregulated credit based Eurodollar market that is wreaking systemic havoc.  See here for the convergence that is going to knock some debt/equity holders silly this year.    Also, Super bowl post mortem autopsy is up. Out.

  95. /CL- Phil with 27142 open interest left and one more day of trading, is tthere still pressure on these or is this a manageable number for the last day? Just curious what your take is as always. Also, with such a large gap still between March and April, does this pressure the April contract down on Monday? Is there any way to play this on expiration day, or is it a no play as usual? 

  96. With economies from Brazil to China to South Africa struggling, the US consumer has been touted as the main driver of global growth.

    Unfortunately, American shoppers just can’t cut it anymore.

    “The US consumer alone does not have the ability to right the ship,” Chief Market Strategist Joe Quinlan at …

  97. By Luc Cohen

    HOUSTON (Reuters) – This week, Saudi Oil Minister Ali Al-Naimi will for the first time face the victims of his decision to keep oil pumps flowing despite a global glut: U.S. shale oil producers struggling to survive the worst price crash in years.

    While soaring U.S. shale output brought …

  98. Currency and the Collapse of the Roman Empire

    The Money Project is an ongoing collaboration between Visual Capitalist and Texas Precious Metals that seeks to use intuitive visualizations to explore the origins, nature, and use of money.

    At its peak, the Roman Empire held up to 130 million people over a span of 1.5 million square miles.

    Rome had …

  99. 5 Big Dividends In Danger

    Oil prices picked up this week on the promise that Saudi Arabia and Russia would coordinate a cut in production. But surprise, surprise – there’s already speculation that they’re both going to cheat.

    That’s going to keep oil prices low – and it’s going to threaten the dividends of many producers, …

  100. HONG KONG—China doesn’t need Wall Street after all.

    China Citic Bank Corp. and China International Capital Corp. are snagging key mergers-and-acquisitions assignments from Chinese companies, which are snapping up Western assets at the fastest clip ever. The banks are supplanting the Wall Street …

  101. The broad NYSE Composite stock market index is testing the level we deemed “must hold” – that broke in January.

    Back on January 8, we posted a chart …

  102. The latest data from Strategy Analytics reveals that the Apple Watch remained the most popular smartwatch through the fourth quarter of 2015, capturing 63 percent global market share based on an estimated 5.1 million sales in the three-month period.

    Samsung trailed in second place with 16 percent …

  103. McDonald’s all-day breakfast is already crushing its competitors.

    Sales at US locations open for at least one year rose for the first time in two years in the fourth quarter, thanks to the company’s new offering.

    And as competitors announce results, they’re admitting that McDonald’s is starting to …

  104. Phil/outsourcing-this, and H1Bs, have really decimated jobs and wages in the US.  And nobody really cares about quality anymore.  If we want wages to migrate to the lowest global level, then prices have to as well or the consumer will continue to be absent (there's your deflationary force).  My grandparents were immigrants so I'm not xenophobic, but we really need to take care of the people here before we try to save the world. 

  105. ~~Phil/vaccines-throwing this out here for consideration even though I know you feel strongly about the subject.  Thanks to microbial DNA testing, we have good evidence  that a healthy microbiome is essential to vaccine efficacy.

    This is not surprising given the wealth of evidence that certain microflora can influence immune response.  We also know that the diversity and health of the microbiomes of the population have declined over time as has the general health of the population (I won’t inundate you with links to these latter points since the research is widely available and largely undisputed).  Clearly, this is likely  to increase the number of vaccination fails. 

    A few tweaks around the vaccination programs can probably improve the program as well as the overall health of the general population.  The link below provides a partial list of various companies in clinical trials for implantable microflora.  This probably isn’t being done for the same reasons that not much is being done about the declining state of health of the general population.

  106. Phil--what is your prediction this week for oil? Do we go above and hold $30?

    Could we trust the Russians and OPECkers?

  107. quiet today

    Syria ceasefire may be imminent; Kerry says he and Russia’s Lavrov have reached a preliminary deal on terms for a ceasefire – Reuters 

    ·         Oil production freeze – the Russian oil minister said details on the recent crude production “freeze” deal will be agreed to by Mar 1.  "Those countries which have openly supported this approach are producing around 75 percent out of global (oil) export volumes. My point is that, in practice, this is enough to agree” – CNBC  

    ·         Nigeria backs the OPEC/Russia production “freeze” deal while giving Iran and Iraq flexibility to recapture lost market share; thinks oil market will begin tightening by June.  “Countries like Iran and Iraq have been out of the market for a while and if they are to come back you shouldn’t freeze them out where they are, you should freeze them at a higher level…by June we will come very close to tightening the market” – Bloomberg

  108. Seer – microflora – it is the smallest of things.

  109. LL – Not Good on a lot of fronts 

    Lumber Liquidators' Flooring Has Increased Cancer Risk, CDC Says

    Health agency reverses its own finding from earlier this month

    Original report used incorrect ceiling height to weigh danger

  110. LL – However CDC is not changing recommendations:


    After correcting the measurement in the model, CDC/ATSDR is revising the possible health effects. The final results are not yet available, but are estimated to be closer to these:

    Exposure to the range of modeled levels of formaldehyde in indoor air could cause increased symptoms and other respiratory issues for people with asthma and COPD;

    Exposure to the lowest modeled levels of formaldehyde could result in eye, nose, and throat irritation for anyone; and

    The estimated risk of cancer is 6-30 cases per 100,000 people. Because of the very conservative (health protective) nature of the models used in this analysis, ‎the calculated risk is likely lower than our modeled estimate.

    Our recommendations will likely remain the same –we strongly stress taking steps to reduce exposures, which should alleviate respiratory and eye, nose and throat irritation.  These steps should also reduce the cancer risk.

  111. At her most recent news conference, in December, Federal Reserve Board Chair Janet Yellen had this (abbreviated) exchange with ABC News reporter Rebecca Jarvis.

    Jarvis: Historically, most economic expansions fade after this long. How confident are you that our economy won’t slip back into recession

  112. The FBI has shed more light on its involvement in what is shaping up to be the most controversial piece of evidence in the investigation of San Bernardino terror suspect Syed Rizwan Farook: his iCloud account password.

    Hours after Farook’s iPhone was recovered by law enforcement, the password to his …

  113. HARRY DENT: The recession isn’t coming — it already started

    So the S&P 500 is out of correction for now and the coast is clear. NOT! This is exactly what we’ve been predicting would happen – after reaching new lows, stocks would have to bounce before they inevitably resume their longer-term trend, which is down.

    But stocks haven’t been the only victims of …

  114. Authorities said they are investigating whether Uber driver Jason Brian Dalton may have given a harrowing ride to a passenger shortly before embarking on a shooting spree in Kalamazoo, Mich., that killed six — and that he may have continued picking up fares in the middle of his rampage.

    Ultimately, …

  115. Republicans arose on Sunday reeling from Donald J. Trump’s sweeping victory in South Carolina, with some refusing to accept that he could be the eventual nominee and others acknowledging that his insurgent candidacy might soon be unstoppable.

    With their sights set on upcoming caucuses in Nevada on …

  116. (CNN) — “Did you hear that whistling sound too?”

    “Sounds like — you know, outer-space type music.”

    “I wonder what it is.”

    This conversation, between Apollo 10 astronauts Eugene Cernan and John Young, as their craft flew around the far side of the moon, remained under wraps for over four decades.

    While …

  117. Warren Buffett defines an economic moat as something that gives a business a unique, enduring advantage over competitors that protects its profits and market share. It can be in the form of pricing power, toll booth-like qualities, or qualitative brand name value. The wider the moat, the better, …

  118. Walt Disney reported resultsfor its fiscal 2016first quarter last week. The diversified entertainment giant posted strong year-over-year results with revenue increasing 14% and adjusted earnings per share jumping 28%. The results were driven by the phenomenally successfulStar Wars: The Force …

  119. China’s Last Chance: The G-20 In Shanghai

    G-20 finance ministers and central bank governors meet in Shanghai on the 26th and 27th of this month in what might be the last chance to save the renminbi.

    The original concept of choosing China to host a series of G-20 meetings this year was to showcase the country’s progress and to allow it, in …

  120. Most shares in Asia traded up on Monday, with Chinese markets gaining in the wake of news that authorities are replacing China’s beleaguered top securities chief.

    The Shanghai Composite Index SHCOMP, +2.05% was up 1.5% at 2902.59, after Chinese official media said over the weekend that Liu Shiyu, a …

  121. The U.S. Economy Is in Good Shape

    The American economy is in good shape, better than critics think and financial investors fear. Incomes are rising, unemployment is falling, and industrial production is up sharply. The recent steep declines in the prices of stocks and junk bonds are not the precursor of an economic downturn. …

  122. Two camps traditionally exist when it comes to stock valuation: intrinsic vs. relative. Intrinsic valuation involves cash flow projections, estimated growth rates, and present value discounting. Relative valuation takes a different approach, determining the price of an asset by comparing it to the …

  123. LL  60 minutes had a blurb at the end of the show that the numbers recently released were wrong (math errors) and 3 times worse than stated.

  124. Asia up this morning DAX 9473 at present up so we might see a positive day when you guys wake up.

  125. With great jealousy I see the futures /ES from a plus of 10 point to plus 19 point climbing but just have not got the balls to jump on the train. Just leave it to Phil.

  126. DAX 9531

  127. Good morning! 

    Futures are flying and all seems well this morning and that's despite being kept down a bit by a rising Dollar (97.30).  Oil is back near $33 as OPEC seems to have a production freeze agreement.

    OPEC's Path From Oil Freeze to Output Cuts Is Far From ClearSaudi Arabia said its accord with Russia to cap oil production was “the beginning of a process,” but the path from a freeze to the output cuts needed to eliminate a global surplus is far from clear. When Saudi Oil Minister Ali al-Naimi suggested that the agreement in Doha was a prelude to “other steps,” he fanned hopes that the kingdom’s resistance to production cuts was finally weakening. Oil’s recovery from a 12-year low last month was fueled by speculation that major producers were finally building a coalition that could work to end the glut. The problem with using a production freeze as the bedrock for deeper cooperation is that none of the parties involved have to make any effort to comply. “The four producers involved are already producing close to their peak,” said Miswin Mahesh, an analyst at Barclays Plc in London. “The freeze is the oil-market equivalent of calling for a cease-fire when they’re running out of ammo.”

    Also, Europe seems to be avoiding the UK leaving and China has put in a regulator whose job it is to boost the markets - so it's happy, happy, joy, joy this morning all around:

    Asian Stocks Rally With Crude as Pound Sinks on `Brexit' TussleAsian equities rallied as the yen’s retreat sparked a revival in Japanese shares and China replacing the head of its securities regulator underpinned gains in the nation’s stocks. The pound slid amid a split in the U.K.’s ruling political party over whether Britain should leave the European Union. Japan’s Topix index reversed early declines as the yen snapped a two-day climb, while the weekend ouster of China’s chief market regulator sparked equity advances in Shanghai and Hong Kong. The U.K. currency weakened the most in a month against the dollar after London Mayor Boris Johnson, a popular and well-known political figure, said he’ll campaign for Britain’s exit from the EU in a June referendum, putting him at odds with Prime Minister David Cameron. Crude oil rebounded, while gold extended losses. The MSCI Asia Pacific Index added 0.3 percent as of 11:42 a.m. Tokyo time, rising for the fourth time in six days as the Topix advanced 0.2 percent. The Japanese index slid 1.5 percent on Friday, reducing its steepest weekly gain since 2009 to 8 percent.

    Cameron Unleashes 'Project Fear' – UK Military Leaders Warn Against Brexit Threat To National Security

    The gloves are finally off for epic Brexit fightThe risk of staying in seems to be that of being repeatedly over-ruled and disadvantaged by the eurozone majority.

    Liu Picked to Cure China's Stock Hurt After $5 Trillion RoutThe new head of China’s securities regulator has been tasked with restoring confidence after policy missteps by his predecessor rattled investors and helped deepen a $5 trillion rout. Liu Shiyu is assuming oversight of the world’s second-largest stock market in the wake of last summer’s slump that saw Xiao Gang criticized for mismanagement. As well as needing to rebuild morale among the nation’s 99 million investors, Liu will preside over an overhaul of initial public offerings, the planned expansion of a trading link with Hong Kong and a campaign to get the nation’s shares included in MSCI Inc.’s global indexes. "China faces a confidence crisis after the recent stock market turmoil, stoked to a large extent by policy flip flops," said Vasu Menon, Singapore-based vice-president for wealth management research at Oversea-Chinese Banking Corp. “International investors will wait to see if he can deliver fresh policies to stabilize the stock market with a steady hand without backtracking on market liberalization."

    China's Debt Seen Rising Through 2019, Peaking at 283% of GDPChina’s ratio of debt to its economic size is seen climbing for at least another four years, underscoring the risks facing policy makers as they strive to prevent a deeper slowdown without triggering a credit blowout. Seven out of 12 economists see the debt-to-gross-domestic-product ratio increasing through at least 2019, with four expecting a peak in 2020 or later,according to a Bloomberg News survey. Debt will peak at 283 percent of GDP, according to the median estimate of eight economists. Policy makers grappling with the fallout from a credit binge after the global financial crisis are also being confronted by anemic demand for exports and an aging workforce, pushing economic growth to the slowest pace in a quarter of a century. With robust consumption and services struggling to pick up the slack from slowing investment and manufacturing, China’s communist leaders are striving to put a floor under growth to ensure average expansion stays around 6.5 percent through 2020. "We doubt the debt ratio will peak before 2020," said Julian Evans-Pritchard, a China economist at Capital Economics Ltd. in Singapore. "Our model puts the peak in the debt ratio in 2024, but the ratio could rise further beyond that if Chinese policymakers fail to implement the necessary structural reforms required to improve credit allocation."

    Chinese Military Spending, Ambitions Fuel Asian Arms Race, Studies SayRegional defense spending rises even as nations’ economies are tested. The rapid rise in Chinese military spending and a greater assertiveness in its territorial claims is fueling an arms race in the Asia-Pacific region even though many of the countries involved have been hit by an economic slowdown, new research reports suggest.

    And, of course, we're ignoring this – because it doesn't fit the bullish narrative of the morning:

    South Korea's shrinking Feb exports a worrying sign of global slowdown. South Korean exports shrank by one-sixth for the first 20 days of this month from a year earlier despite longer working days, data showed on Sunday, adding to concerns that the global economy was losing momentum. South Korean exports during the Feb. 1-20 period totaled $22.16 billion, down 17.3 percent from the comparable period of 2015, while imports fell 17.4 percent to $20.19 billion, according to the data from the Korea Customs Service.

    Germany's Looming Demographic Cliff

    It's leap year so the month doesn't end until next Monday, so plenty of time to dress those Windows – especially for Q1 so it's going to be a very interesting 30 days.  

    Even iron ore is back over $50 today, though people are skeptical about that one.  FCX is my bargain pick for the Traders Expo this afternoon:

    Iron's Rally Toward $50 Will Reverse, Australia's Top Mill SaysIron ore’s surprise rebound toward $50 a metric ton may run out of steam as a further increase in global supplies and the closure of some steel producers in China will boost a global glut, according to the head of Australia’s largest steelmaker. Prices are more likely to drop than rise, said Paul O’Malley, chief executive officer of BlueScope Steel Ltd. Almost all of China’s mills are losing money, which means that further production cuts are possible, he said on Monday. The commodity bottomed at the lowest level in over six years in December as surging low-cost output from miners including Vale SA in Brazil, and Rio Tinto Group and BHP Billiton Ltd. in Australia coincided with shrinking steel consumption in China. Since then, prices have rebounded, capping the biggest gain since April last week, on a seasonal upswing in consumption after a break in the largest user and signs that the pace of miners’ supply growth may be easing off. Still, the uptick probably won’t endure, according to O’Malley.


    Copper Skeptics Boost Bearish Wagers, Defying Rally for PricesWhile copper prices have rallied in four of the past five weeks on the prospect of improved industrial demand in China, hedge funds are skeptical that recovery will last. The funds and other large speculators have bet on declines for the metal since October. Last week, the net-short position in copper holdings grew for the first time since mid-January, even as the metal advanced. Investors increased their net-short holdings in copper to 7,672 U.S. futures and options in the week ended Feb. 16, according to Commodity Futures Trading Commission data released three days later. That compares with 7,134 a week earlier. Long wagers slumped 9.1 percent to 33,217 contracts, the biggest drop since Nov. 3. While prices traded in New York rose 2.4 percent to $2.0805 a pound last week on the Comex, the metal is still down about 20 percent over the past 12 months. Global inventories monitored by exchanges in New York, London and Shanghai jumped 4.6 percent last week to 547,004 metric tons. The gains were driven by increases at Chinese warehouses. The stockpiles tracked by the Shanghai Futures Exchange grew by 15 percent, the biggest gain in a year, signaling that the Asian country is well supplied.

    Don't forget, it's Monday so we can't take things too seriously but, fortunately, we decided to stay bullish into the weekend (though our hedges are toast) and we'll just have to see what sticks as we're back over our strong bounce lines.  

    Of course, that TNA play from Thursday is now kicking ass:

    We still need to see 1,040 on the Russell to confirm a rally and the Russell is our lagging index with the Dow at 16,500, S&P 1,930 and Nasdaq 4,215 and if they hold, then we can play the Russell Futures (/TF) bullish over 1,010 or, for the Futures-challenged, we can get a nice effect from the Russell Ultra-Long ETF (TNA) at $43.64 with the following options play:

    Buy 10 TNA March $41 calls for $3 ($3,000)

    Sell 10 TNA March $44 calls for $1 ($1,000)

    Sell 1 BA 2018 $80 put for $7 ($700)

    That obligates you to buy 100 shares of Boeing (BA) for $80 (now $116) in 2018 if it's below that price and, meanwhile, you have $3,000 worth of TNA spreads for net $1,300 with a potential $1,700 upside (130%) if TNA is above $44 in 30 days.  That's a nice way to take advantage of a further rally and, of course, you can use any stock you REALLY want to own for a discount instead of BA – we just happen to really like that one!  

    The Russell is still lagging at 1,021 so, if it's a real rally, /TF Futures should catch up a bit and TNA has a long way to go with it.  

  128. Gold/Mill – Well out of favor again as the market soars and the Dollar comes back but I still like it long-term though well up from our $1,050 bottom call at $1,207 isn't going to have me calling it a bargain.  GDX you know I don't like.  ABX I do but again, that was 100% ago, now it's chasing. 

    Oil/Criags – 27,000 contracts they can easily do in a day, over 30K is a problem (and that caused last week's selling pressure) but don't forget they'll take 7-17,000 deliveries so as little as 10,000 to roll today is why I called a long on /CLK6 at $31.50 Friday morning and, at 2pm, I said $29 was a blow-off bottom and it was.  Now, $2 later, I'm way less enthusiastic about calling it, having taken the money and ran on all open contracts (except /NGK6, now $1.91).  

    Take care of people/Seer – How about taking care of them by educating them and creating a BETTER workforce.  Engineers are in demand all over the world in great, high-paying jobs that aren't being replaced by machines but we treat science like it's voodoo in this country because we have an entire political party that wants us to revert to knuckle-dragging.  Building a wall around a country has been tried before – by China – and that country remained behind while the rest of the world advanced around them.  That's the model you want to emulate?  Japan is another society that keeps out immigrants and protects jobs and industry from foreigners – how's that been working out for the last 30 years?  

    I like that stuff on microbiome studies – that's a promising field.  

    Oil/Jabob – Well I said we'd hold $30 in a national interview last week and, as noted above, we made bets on it so I've got no reason to change my mind now – especially with a bit of progress being made by OPEC.

    Syria/Jabob – Good luck.  Rash of suicide bombings this weekend.  

    Multiple Suicide Attacks Rock Shiite Strongholds In Syria; Dozens Killed, Hundreds Wounded

    IRS/Scott – Who knows what the truth is in that case?  So complex.   Those guys can be bullies though. 

    LL/Batman – Geez, another down round for LL but another buying opportunity back under $12, I think.

    Crazy Train/Yodi – Yeah a bit chasey by 3am and it's Monday, so we'll just see what sticks.