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Negative 4th Qtr GDP……. Who Cares!

If you've learned anything since the Financial Crisis and the March 2009 666 lows, its that bad economic data means very little to the over all market. Just minutes ago U.S. GDP for the 4th Quarter was announced as contracting by .1%, well below expectations of 1%, the worst reading since 2009. This is bad news right? Stock futures initially pulled back from their highs but are now inching higher. Since the market crumbled to its lows in 2009, we've had the heads bears lose tails bulls win stock market (credit Jimmybob with that line). Bad data is shrugged off and good data is cheered because we have a global easing scheme that is focused on inflating asset prices. The old adage "don't fight the FED" is more relevant today than ever before. I wouldn't advise fighting the "ECB, BOJ, BOE" either. Just look at Japan. Three months after they began openly talking up a massive weakening of their currency the Nikkei 225 has gained 23%. That is some train to be standing in front of.

How about the ECB? In the middle of July ECB President Mario Draghi stated, among other things that the "ECB Ready To Do Whatever It Takes To Preserve Euro" and "Has Power To Defeat Market Speculation". The EUR/USD has risen from $1.20 to almost $1.36, a 1575+ pip move as the ECB seemingly has beaten up all speculating for a Euro zone collapse. When a central bank is hell bent on doing something be sure to hop along for the ride.

Negative GDP? Anemic growth? Growing National Debt? A government that needs to print money to pay its bills? It all means nothing right now.

While markets around the world continue their ascent higher and globally, central banks are busy artificially propping asset prices, now is not the time to be fighting the trend. But be sure of one thing, when the music finally does stop all the jaw boning and fake money will have little affect on the markets and economic data will again be meaningless as we get a global asset sell-off.

U.S. stock futures tallied mild losses Wednesday after the Commerce Department reported the U.S. economy unexpectedly shrank in the fourth quarter.
"While most believed that the economy slowed considerably in the closing months of last year, few anticipated that the economy actually contracted," said Jim Baird , chief investment strategist for Plante Moran Financial Advisors .
"With consumer spending set to take a hit in the months ahead as households adjust to higher taxes and lower discretionary income, the near-term outlook becomes even more difficult," Baird added in comments made after the government data, which found gross domestic product fell at a 0.1% annual rate, the worst performance since the second quarter of 2009, when the U.S. economy remained in a recession.

$HLF Herba…slow Death

$HLF has been one of the most talked about stock recently. I think it will suffer a slow death over the coming months. With so much attention on this stock, and volatility, there is no reason to be holding a position in it. I currently hold no position in $HLF but will buy out of the money puts to Capitalize on the stocks decline and slow death.

$ZAGG Another Strong January Coming?

I have started to accumulate some $7 and $8 calls for $ZAGG as I see the stock running up to $10 into its late February earnings report. If you look at last January the stock has a powerful rally into the end of the month as it rallied from current prices to $10.00 a share.


If we get this type of rally the calls will return a very nice profit. However if the stock falls I will look at the $6.50 long term support level as the line in the sand as far as opening any more positions.


What does ZAGG do? ZAGG Inc is a leading mobile device accessories and technology company with products that protect, personalize and enhance a consumer's mobile experience. ZAGG differentiates itself as the preferred brand by offering creative product solutions through targeted global distribution channels, with the broadest product offering in its sector. With a brand portfolio that includes ZAGG® and iFrogz™, the company manufactures and markets a complete line of products to improve the functionality of portable gadgets, including keyboards, cases, audio and protective films, through direct, retail, specialty and international channels.

Why do I like this stock? First lets start with the bad. ZAGG's CEO stepped down last August after selling company stock to cover margin calls. A possible class action lawsuit has clouded the future of the company and this could cap gains until this is resolved. Class action suits can be costly and time consuming.

Now on to the good. The company is growing at a very healthy clip with revenue up 30% last quarter. The earnings report coming next month is usually the company's strongest quarter (it includes the holiday shopping season) and last year the stock rallied over 20% prior to its release.

The company announced a $10 million share buy back last month, which amounts to almost 5% of the current outstanding shares. They also favorably refinanced their debt reducing their interest expense by $2,000,000 annually. The stock rallied over 12% on the heels of this news in December, and while the stock has since fallen back to the mid $7.00's , this is good news for ZAGG shareholders.

ZAGG's January in the money options trade with very little extrinsic value and that is good for an option trader. For instance the $7 strike that I currently own trades within $.05 of the price of ZAGG. I think we could see a nice gain on the calls in January and February as the stock ZIG ZAGGS its way to higher prices.