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Thank G20 It’s Friday!

"Do as I say, not as I do – or say…"

That’s the word from US Treasury Secretary Tim Geithner as he seems to forget that people follow him around with notepads and microphones as he begins the game of "Survivor – Global Currencies" although Tim seems to be following the very interesting strategy of trying to be voted out first so maybe there’s a method to his madness after all.  

Like any good player, Timmy tries to form alliances and keep the other players off balance.  On Wednesday, he told Brazil’s Finance Minister, Guido Mantega, that the U.S. won’t allow the Dollar to weaken.   After telling Guido he had a hidden immunity idol that would protect the Dollar, Tim walked down the beach looking for others to form an alliance with and the cameras followed Mantega to one of those "private chat" areas, where he explained why he had formed an alliance with Timmy:

He said he doesn’t intend to allow a devaluation of the dollar.  He assured me that the policy is not to weaken the dollar, but on the contrary, to strengthen it.

Brazil’s finance minister said he told Geithner that a firm stance by the U.S. against further weakening in the dollar would “create conditions to open a negotiation” with other countries seeking to reduce volatility in their currencies, and may help reduce pressure on China to strengthen the yuan.  “Otherwise it’s hard, to weaken the dollar and to want a revaluation of the yuan,” Mantega said.  “I then asked him about the Fed’s policy and he said that this policy’s impact is being overestimated,” Mantega said.  

Apparently, Tim was able to swing enough cast members to pull a G7 Meeting this morning, apart from the G20.  Who was conspicuously left out of the G7 (US, Japan, the UK, Germany, France, Italy and Canada)?  Why China, of course.  Poor China was sent off to get some water while Tim and the other ministers talked behind their backs.  The United States and European Union accuse China of keeping its Yuan grossly undervalued to benefit exporters.  Beijing counters that Washington’s loose monetary policy is swamping emerging markets with destabilising capital inflows, as investors chase higher yields than they can secure from the dollar.

In addition to trying to build an alliance before heading off to G20 tribal council, Tim further stirred the pot by sandbagging the G20 meeting with a letter to the Finance Ministers, telling them to (from the pot to the kettle):  "Stop manipulating their currencies to prevent "excessive volatility" and a global currency war."  In a letter to the G20 finance ministers, he also urged them to cap current account surpluses or deficits to rebalance the world economy and said the International Monetary Fund should monitor countries’ progress.

He called on countries to refrain from manipulating currencies to achieve competitive advantage by either weakening their currency or preventing the appreciation of an undervalued currency – a clear dig at China. Other countries, including Brazil, Japan, South Korea, Switzerland and Taiwan have also moved to weaken their currencies so forming a back-door alliance with Japan is critical if the US wants to take down China.

There was a rumor that Chinese Finance Minister, Xie Xuren, was furious when he got back and wanted to know who, when and how – but it turns out those were just the names of three guys who called for him while he was out.  We’ll have to wait until tomorrow to see how this little drama plays out.

Meanwhile, the dollar held the 77 line yesterday in relatively quiet trading but every tiny move in the dollar becomes a violent move in the US markets and it has been a wild week.  We’ve fallen from 88.71 in June to 76.14 this week, which is 14% in 4 months or 3.5% of your dollar-denominated assets being stripped away each month so we really could use at least a small break on the way to losing 20% of our wealth in 6 months.  The 5% rule tells us to ignore the move over 88 and 85% of 88 is 75ish with 10% being 70ish so around 77.5 we would expect to see some critical resistance and we finished yesterday at – 77.42.  One of our Members suggested yesterday doing some 5% charts that adjust for the dollar moves and that’s a great idea so we’ll do that over the weekend

With the G20 gathering in Gyeongju, Global markets were mixed today with everyone in Asia giving up about half a point into the close except Japan, who gained half a point to finish the week down just 1%, as they were encouraged by Geithner’s comments to Mantega.  Europe was down very slightly but have now gone up very slightly (9am) as the dollar has dropped from $1.386 to the Euro at 4am to $1.397 at 9 am (0.7%) led by the Yen bouncing off the critical 81 mark so a little Yentervention by Japan, even as they are meeting with Tim to talk about how wrong that would be.  

[france1022]Things are heating up in France as a coalition of unions called for two more days of Nationwide demonstrations, now heading into the school holidays which is likely to but more youths on the street.  France’s problem is their retirement age is so young that the people the government is screwing over still have the energy to protest.  This is not likely to happen in America, where we work pretty much until we’re dead…. 

On Thursday, Sarkozy’s Government asked senators to speed up their examination of the pension bill, which was approved by the lower house last month. In an attempted filibuster to upset the bill’s passage, opposition parties have submitted hundreds of amendments.  Relying on a little-known procedure, the government asked senators to pass or reject all the remaining amendments in a single vote, instead of voting on each one separately.  "This is a coup," said Martine Aubry, head of the opposition Socialist Party.  The government said opposition senators had had ample time to voice their hostility to the pension bill.

So once again the markets will give us an opening based on a debased dollar that is likely to fade once the reality of volume hits the indexes.  Nothing is certain until after the elections but that’s just a bit more than a week now so we are good and cashy and waiting for a little market certainty at this point.  I’ll give the final word of the week  to Matt Taibbi, who sums it up nicely in his new book, Griftopia:

America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble. Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia’s SAMA Foreign Holdings, and the UAE’s Abu Dhabi Investment Authority.

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class. A Pennsylvanian like Robert Lukens sees his business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market. Lukens has no say in this; he pays what he has to pay. Some of that money of his goes into the pockets of the banks that disenfranchise him politically, and the rest of it goes increasingly into the pockets of Middle Eastern oil companies. And since he’s making less money now, Lukens is paying less in taxes to the state of Pennsylvania, leaving the state in a budget shortfall. Next thing you know, Governor Ed Rendell is traveling to the Middle East, trying to sell the Pennsylvania Turnpike to the same oil states who’ve been pocketing Bob Lukens’s gas dollars. It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.

Have a great weekend, 

- Phil

 


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  1. Phil / NFLX – perhaps a top in the stock price is near.  the bandwidth its streaming service takes up is huge – 1/5 of peaktime internet traffic.  capex needs are prob understated. 
    http://www.zerohedge.com/article/will-todays-embarassing-outage-incident-force-netflix-do-follow-stock-offering


  2. Phil,
     
    I’ve never paid a lot of attention to these Summits.  Is it typical for these games to be played or is this something new that we are bringing to the theater?


  3.  terrapin22 – i think the biggest neg i have seen on NFLX is their alleged overestimation of subscribers.  Future revenue growth may be predicated on these subscribers.  


  4. gel1
    i know you were interested in SLB about 10 days ago with russian deal--did you ever do anything with them? big day today!


  5. phil, i have 5 CMG short 175 Nov calls and 4 long CMG Mar 190 calls  at minus $100.what is the next play here?


  6. Good morning!  

    Nothing to report.  Same old levels being watched but, clearly, it’s all about the Dollar and little to do with the stocks themselves and, with the election coming up – why not cash on a 10% gain since July???    

    • Up 10%Dow 11,220, S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • Up 7.5%: Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5% (must hold): Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 

    Russell is right on the 700 line so let’s watch that as a key indicator.  Dow needs to confirm one day if we’re really breaking up and, once we have that confirmation – THEN we can take new long positions with a very obvious line to watch to let us know when to cover, right?  

    If we don’t sell off by Tuesday from the G20 strengthening the Dollar (doubtful) then it’s up to the election and it’s also likely that "THEY" will try to keep the market up through Nov 2nd.  If for no other reason than to have a strong way to show disapproval if things don’t go according to plan (even if the plan is horrifying!).  

    So, we could break down at any time and we’ll probably break down after the election.   If the Democrats win – Republicans will have a little temper tantrum and, if the Republicans win – aren’t they saying they will usher in a new era of fiscal responsibility and reign in Government spending?  Well, if people actually believe that nonsense, then the dollar gets stronger and we are REALLY IN TROUBLE! 

    Those DXD $22 calls are still my favorites, back at $1.30 again.  $1.10 was the lowest they got yesterday as the Dow never got the strength to drive people off them.  

    BIDU is getting way too excited about their earnings and the Nov $110 calls can be sold for $5 but be careful on those as there is no end to BIDU’s madness so a careful scale  and a wilingess to roll is required.

    QQQQ WEEKLY $52 puts have pretty much no premium and that’s the way to play a retest of 2,475 on the Nas with a .50 entry – big gamble as they expire in 6 hours, of course!

    With my fund hat on, I’m thinking cash, cash is nice, cash is good and if other funds are thinking that way and some of them  decide to cash into the weekend, we can expect some sharp drops at some point today.

    Could be crazy moves based on G20 rumors for most of the day so be extra careful! 


  7.  LEG Jun 11 20 puts for 2.15 anyone? 


  8. NFLX/Terra – I don’t like them long-term at all as they won’t get free bandwidth forever and GOOG, AAPL, AMZN, Hulu and the Cable Companies will rip them to shreds as the market develops.  This is not different than 10 different companies all getting tons of investors because they were going to sell books or pet food or groceries or whatever on the Internet.  Duh – it’s an obvious business that people will want but, in the end, it will go to the low-cost service provider and more than two rarely survive.  If I have to chose between the group I mentioned, NFLX isn’t in the top 5.  

    Wow, MOS finally moved down!

    Summits/Exec – Oh I find them fascinating, the group dynamics, the hidden agendas, the lies, the back-stabbing, the total BS, the photo opps where people who want to kill each other shake hands…. So much fun!  Generally, they are all in general agreement with a goal of protecting their phony baloney jobs (Harrumph!), but economic hardship puts pressure on each one to score a "win" for their country and that makes things messy.  

    CMG/Drum – Well they can be rolled to the 2x the Jan $200s ($8.60) so I’m not too worried and, if you are nervous, you can sell the Jan $180 puts now ($7) as an offset but the market is looking toppy and I’d be more inclined to wait a bit and see if they don’t come back to the $185 line by election time.  The roll will still be there.  If you want to be more aggressive, you can roll them now to 2x the Nov $190 puts, which are very excited at $8 and, of course, that Premium will melt away and THEN you can roll up to Jan $200s or even $210s if all goes well and the Novembers fall back to $5 or less.  If you need to, you can roll the 4 March $190s ($18.50) to 8 March $210s ($9.50) for a little cash to make that 2x roll without a lot more margin.

     LEG/Deano – I hope you mean selling them.  


  9.  Phil
    Any updates to/for the 10k/50k ports?


  10.  Well, I closed my long CMG Mar $210s at an avg price of $10.2, being bought at $6.5.. I will just have to wait a bit to roll the short Nov $180s up and out in time.. this is madness!


  11.  Phil
    Yes, selling – thanks to your training I now have trouble buying even when YOU suggest it!


  12. Hi – Phil — AAPl I have 2 of Jan 300 long call bot before earning for 31.5, I sold Jan 290 short put for 11.9 after earning, have not sold weekly short call yet, would you recommend which strike to sell short call weekly for monthly to cover the jan 300 long call.  thx


  13. At the open: Dow -0.11% to 11134. S&P +0.07% to 1181. Nasdaq +0.03% to 2460.
    Treasurys: 30-year -0.36%. 10-yr -0.21%. 5-yr -0.08%.
    Commodities: Crude +0.79% to $81.20. Gold -0.08% to $1324.50.
    Currencies: Euro +0.09% vs. dollar. Yen +0.02%. Pound -0.06%.

    10:00 AM On the hour: Dow -0.3%. 10-yr -0.1%. Euro flat vs. dollar. Crude +0.36% to $80.85. Gold -0.16% to $1323.50.

    Sept. Regional and State Employment/Unemployment: Rates little changed, with 23 states and DC seeing sequential decreases in unemployment, 11 see increases, 16 unchanged. Non-farm employment down in 34 states, led by Utah (-0.8%), Maine and Massachusetts (-0.7% each) in percentage terms, and California (-63,500) in jobs.

    Sept. Mass Layoffs: 1,486 mass layoff events (at least 50 workers), resulting in 133K job losses – down 60 layoff events from August. Associated initial claims decreased 16,813 to the lowest level since April 2008.

    ECRI numbners at 10:30!

    Doom-and-gloomers, take note: Of the 139 S&P 500 companies reporting results so far, 83% posted earnings that topped forecasts – better than the typical 62%. It’s not just cost-cutting either: Revenue growth is "across the board" and running about 7% ahead of a year ago. Forcasts were made 14% ago on the Dollar – Geeze, does no one get this?

    Even though just one quarter of S&P 500 companies have reported Q3 earnings – with 86% trumping EPS estimates, and 64% producing positive revenue surprises – Credit Suisse warns that the earnings season pop could soon fizzle: "The bulk of the impact of earnings on market performance seems to occur in the first two weeks of earnings season, which ends today," firm notes.

    The top mortgage lenders and servicers are so big and unmanageable, Jonathan Weil writes, that the people in charge of running them have no way to know the extent of the foreclosure problem. "One of the lessons the public should have learned [from the subprime mortgage crisis] is that the leaders of these companies often have no idea what’s going on inside them."

    Major U.S. lenders, including JPMorgan (JPM) and BofA (BAC), are said to be in talks with state attorneys general to resolve the nationwide probe into foreclosure practices. JPMorgan and BofA couldn’t be reached for comment.

    An M&A rebound is underway, but mega-deals have yet to make a comeback. Post-crisis, companies are spending their cash on smaller acquisitions that are complementary instead of shooting for major transformation in a single buy.

    The "ground zero" for global growth may be shifting toward emerging countries, but among BRIC nations, Russia is a laggard. Despite interest in other emerging markets and higher oil prices, investors are staying away, symbolized by the ruble’s decline by some 12% vs. the euro and 6% vs. the dollar since May.

    Ifo’s closely-watched indicator of German (EWG) economic sentiment rises unexpectedly to its highest level in more than three years. "It might not be a miracle," an ING economist says of the German recovery, "but it clearly is an impressive success story."

    Meanwhile, German’s Economy Minister rebuffs U.S. proposals for trade targets, saying the U.S. should rely on "a strengthening of the market economic process" and not dirigisme. This, after Geithner struggled to win backing for a proposal to set firm targets for current-account surpluses and deficits.

    Major companies such as Goldman Sachs (GS), Dow Chemical (DOW) and Prudential (PRU) have been donating big money to the Chamber of Commerce in a bid to halt financial reform and the Democrat agenda. Prudential’s donation, at $2M, may be the largest.

    Americans aren’t saving enough for retirement, and the Employee Benefit Research Institute estimates an average per-person shortfall of $47,732 over the course of retirement.

    Netflix’s (NFLX -3.3%) long outage yesterday may have exposed just how vulnerable it is, Zero Hedge says in floating the idea of a follow-on stock offering. Its streaming service has become the largest source of U.S. internet traffic during peak evening hours, more than double the volume at YouTube (GOOG), yet it is supported by $120M in PP&E vs. Google’s $5B.

    Bucyrus (BUCY): Q3 EPS of $0.94 misses by $0.17. Revenue of $937M (+38.7%) vs. $1.03B. Shares -6% AH. (PR)

    A revealing infographic separates America’s real corporate cash cows (GS, AAPL, GOOG, MSFT, INTC, QCOM) from the charlatans (JPM, BAC, T, CMCSA, VZ, IBM, GE). Bottom line: after factoring in debt, it’s not $3.7T sitting on the sidelines, but rather -$750B.


  14. Hello Phil,
    Do you like UNG Jan5 Cs @ UNG 5.36? other expiry dates? Cheers.


  15. $10-$50K Portfolio/Newbie – No, we went to cash, made a couple of poor short plays and are waiting for something more obvious to shape up.  As I said in the last update – up 160% doesn’t mean it’s time to gamble your winnings just because you didn’t hit an arbitrary 400% goal.  The real secret to making a lot of money trading is – NOT TRADING when you are not sure!  Even when you are sure, you are very lucky to go 2 for 3 so, in a limited portflio where you can’t really scale or DD, being sure is CRITICAL. 

    CMG/Rav – That’s the right way to paly it if you have the margin.  Just take an ITM momentum cover if they pop $197, make a few bucks, get out, wash rinse and repeat – you can’t lose as you are well protected by the callers. 

    Good man Deano!

    AAPL/Gucci – I don’t know where to start on that one as I am so totally against paying that kind of premium for the Jan calls.  You have 3 months and you WILL lose ALL of your money if AAPL doesn’t hold $300 and that means you will lose $7 per month pretty much so, even if you cover with a $8 Nov $310 caller – what’s the point?  You bought more premium than you sold – hard to recover from.  If you must stick with it I’d sell the Dec $310s ($12.80) and roll your $22.60 calls to the Apr $300s ($32.50) for +$10 so $2.50 in your pocket and 3 more months (cutting your time decay in half and giving you another earnings report to sell into) and, of course, the Dec caller can’t go in the money without the Jan putter taking a big hit and that gives you lots of room to roll caller along to Jan, Feb or whatever. 

    UNG/Reza – I like them but far away.  2013 $2.50/5 bull call spread is $1.45 and you can sell $5 puts for $1.10 so net .35 on the $2.50 spread and about $1.80 in margin on the put side so $2.15 cash and margin to make $2.50 if they hold $5 for 27 months, not a bad ROI (116%) hopefully keeps you slightly ahead of inflation!  8-)


  16. Phil
    when you talk about the 3am trade i understand you are talking about USD/JPY.  are you watching this on TOS FOREX or some other place? and you are seeing the $ up then reverse to down right before we open.  correct?  i think this is facinating and i like to watch it for myself, as i am easily captivated entralled  :)
    thank you


  17. Phil Good morning,
    CMG quite a move up for the MX chili boys. I hold the same as Drum above. But again I agree with you what comes up will go down possible after 2nd of Nov. I think in the sentence below you mean roll the calls Nov and not the any puts right?
    If you want to be more aggressive, you can roll them now to 2x the Nov $190 puts, thanks


  18.  This AMZN is absurd, you just have to laugh.  I think I willhave to short some here, POMO or no POMO.  !!


  19.  10k/50k/Phil
    Thanks, I was to late joining PSW so missed all the summer activity and in your last update you mentioned that there were many inquiries so you didn’t do much with it, thought it might be a good question on a slow day.


  20.  Phil/CMG, I’m not very good at doing quick ins and outs from a stock based on a line, specially if the bid-ask spreads are a bit wide.. margin is not a problem, so I’ll right now roll my 3x naked short Nov $180s up to 9x Nov $200s financed with a sale of 2x Jan 11 $165 puts.. this is better as it’s a slower play.. however if they pop $200 I will cover with long-term OTM calls just to reduce the margin again..


  21.  I’m sure this big pop in CMG is just massive short covering.. 


  22. NFLX   I didn’t have the available margin to short the 180 calls, so instead I sold some 180/185 verticals.   I should have realized that I was in the wrong month when I got $1.90 for them, but I didn’t so now I’m short Dec rather than Nov.  I can close it now for a small profit, but I wonder if it’s worth just keeping it open because I certainly think the stock has gone too far too fast and theres a good chance the trade will expire worthless.


  23. Did JR bail on us?


  24.  This is a MASSIVE short covering in CMG, look at the volume!! 


  25. ARNA is starting to move up. I have some Jan calls that I’ve left alone. I wonder….


  26. I think it is time to close long position on SLB ( or at least to sell callers) they got 0.7 EPS but I think at least 10% of that because they cut operational expenses, I doubt they can get the same result next Q


  27.  Exec – cut to JR, hair whipping in the wind, as his Ferrari 250 GT California catches air over a hill in Sonoma… a la Ferris Bueller’s Day Off. Maybe he’s just sleeping in. Certainly not missing much. 


  28. exec
    JRW did say he was busy earlier this week. Hope he can continue with those levels. Maybe it is still dark in California and he has a life after hours.


  29. Part of the reason why JRW is such a great trader is because he knows what days not to trade. ;)


  30. Phil, I have 2 questions.
     
    1.  Is UNG an actual company or are they one of those funds which will have some pretty serious decay whether or not natural gas spikes?
     
    2.  What do you think about the safety of NUE’s dividend?  They are down around there 52 week low and I am looking at getting into a position as soon as we get some sort of spike in the VIX so I can sell some decent premium.


  31. FE – wow, what just happened there? I don’t see any info….


  32. Poor UNG… anyone know any kids that like to play with fire and need a buck?


  33. JR/AWOL
     
    I figured he was busy weighing his Moolah !!!


  34. Phil/UNG
    I really don’t understand all the ETF implementations. I am concerned about using ETFs that have decay.  I learned my lesson a couple years ago with ung. When ng was about $7.00. I bought UNG stock. ng went down and then came back to $7.00, but ung was 10% lower. That is way more than the loss of fees. SO the implementation does not always work. I’ve heard this mentioned as being due to contango. Further out futures at a higher price than current. So they lose every time they roll.
    With a long UNG option such as the 2013, I have know idea how to estimate the decay in that time period to be able to judge if I would be comfortable with a $5 put.
    I currently have this same issue with SDS. I have a Jan. 2011 strike 28 put sold to pay for a bull call spread. I am thinking about rolling it but would have to out to 2012 and have no feeling for the decay. So at the moment I’m in hope mode that this market goes down and I can get some back and take my loss.
    Could you please discuss your thoughts on  this decay issue on some ETFs?
    Thanks


  35. datuu /SLB
    Yes, I have a large position, and I am bullish on the sector ( and the company ), as I see major demand for oil for as far as the eye can see. We are coming out of a world recession, and not the inverse. Clean energy is desired by all, but it is many years away before it has any impact on the demand for fossil fuels. Emerging  markets are on a rip, and demand for oil derivitives just keeps climbing.


  36. Is HRB oversold? 
     
    With inevitable tax changes coming next year, wondering if they are a good buy and LTH, aim for 20 (~100%)


  37. 3am/Z4 – Yep, as some point, usually near the Nikkei open, they try to prop up the dollar or, really, knock down the Yen to cheer up the exporters.  You would think that they would get to the point of diminshing returns after 3 years as certainly traders have to see that it’s a BS move that will reverse but, amazingly, they do it almost every day.  We used to look for a 0.1 drop but, lately, they have been giving regular 0.5 moves – which is huge in currency trading.   At the moment, we peaked out against the Yen at about 6:30 pm yesterday and the dollar FELL about 0.4 through 2:35 am.  By 4 we were up 0.3 and then the normal drop and now though, we are way up, almost 0.5 off the 2:35 low but the weekend is usually the worst time to play as positions get closed into Friday.   Bottom line is – you can make the play with a tight stop if they move up and ride it down if it heads lower (less Yen to the dollar, which is dollar down). 

    CMG/Yodi – Damn, I keep calling short calls puts – thanks, you are right, it’s the Nove $190 calls!  

    11:00 AM On the hour: Dow -0.08%. 10-yr -0.11%. Euro +0.04% vs. dollar. Crude +0.82% to $81.22. Gold -0.16% to $1323.50.

    The Fed buys $2.49B in Treasurys, of $24.81B offered by dealers, in its latest POMO rollover of maturing securities. The purchases were in the 2013-2014 range. Treasurys were mixed: the 30-year yield -0.03 to 3.93%; 10-year +0.01 to 2.55%; 5-year +0.01 to 1.15%.

    Britain’s plan to cut 500,000 government workers – equivalent to 3M layoffs in the U.S. – comes at a time when the private sector is unable to pick up the slack, Paul Krugman laments. British will suffer from the government that took office at "the height of the austerity fad," he says, but the U.K.’s cost of borrowing has dipped to its lowest level in two decades

    ECRI’s Weekly Leading Index slipped slightly, to 122.1 from 122.2, but annualized growth rose to -6.8% – its highest figure since June 11. And it’s the subject of a blog fight, with David Rosenberg taking issue with a Vincent Fernando "Rosenberg was wrong" piece.


  38. After a google search it appears UNG is similiar to USO.  In which case I plan on flipping from long to short over the long term to take advantage of the decay.


  39. Phil / elections
    At this point, I believe the results have been predicted, so the markets have already priced this in. I believe the post election period may turn bearish, as a change in policy, regardless who wins, is far in the future, and has little to do with the economic corrections that are needed in the near term. Hanna and kink made some very good points in yesterday’s late posts.


  40. Wow CMG right around $202! So let me get this straight.  They report 1.52/share earnings which puts their P/E at 133.  Burritos must be the future of American cuisine!  I wish instead of going to culinary school, I had just invested that tuition into spicy burritos.


  41. kinki / burritos — that’s the alternative energy plan!


  42.  re CMG, MADNESS at its best!! :D


  43. As the Grand Master always says, Sell in the excitement, closing my naked short Jan 11 put in SLB up 88%. No sense waiting another 3 months for the last 12%….


  44. AMZN/Cap – I agree.  I like the NEXT WEEKLY $165 puts at $2.37.

    $10K/Newbie – It’s a fine day to ask.  Always coming into the weekend is a good time to check on projects.  This week I’m going to be making a dividend-payer list though.

    Qickies/Rav – That’s why I said on ITM calls, like the $190s, now $13.20, which were $11 at the time.  Not a lot of premium so you capture most of the move and protect yourself.  I like your adjustment but be realistic about what you do at $220!  I agree it’s likely short covering but avg volume is 12M and 1Bn shares out means it would take a VERY long time to cover a lot of shorts.  Throw in an upgrade or two and they could punch another 10% before reality sets in. 

    NFLX/Eph – I don’t think they get to $180 in December either. 

    JR/Exec – I’m sure he’s got no reason to wake up early on a silly Friday.   And what Kinki said! 

    SLB/Tcha – I agree.

    UNG/Craig – No, it’s an ETF. CHK is the company play on Nat gas but their share price does not at all reflect the price of nat gas right now.   On NUE, they just disappointed and may skip a payment if the economy slumps but they are the kind of company that WANTS to pay dividends and those are always good for bargain hunting. 

    UNG/Judy – You are right, there is a danger of fund decay.  Even with nat gas way cheap, there’s no guarantee they’ll come back enough to save the ETF from itself.  Generally, I prefer CHK as a nat gas investment but they have been slow to pull back below $20.  SDS doesn’t decay as badly as a commodity fund because they don’t get burned by monthly rollovers but the volatlity does get you for a nickel here and there almost every day.  In general, it’s the commodity ETFs that kill you – a subject I’ve written on in the past but have no idea where exactly…

    Europe closed pretty flat – slightly down.

    Cotton at post Civil War high!

    SLB/Gel – I like them too but that doesn’t mean they won’t top out briefly.

    HRB/BDC – I think so, they keep getting sold off on the same story over and over again (demise of rapid refund scam).  They will never make $1Bn but they do make $500M on a $6.5Bn market cap and pay a 5.6% dividend so I like them.  You can own the stock at $10.53 and sell the 2013 $10 calls for $3.40 and the $7.50 puts for $2.50 and that’s net $4.63/6.07, which is a 45% discount if put to you, 100% if they flatline AND you get your 5.6% while you wait.

    Elections/Gel – It’s all about the global currency reaction.  Don’t be US-centric in your thinking.  The market has very little do do with value right now and very much to do with the exchange rate and Global Forex is $4Tn a day – you aren’t going to mainpulate your way out of a massive change in sentiment if it comes. 


  45. tchay / SLB
    I like the idea of selling some callers, as I want to keep the stock. Which month would you suggest?


  46. Phil / Elections
    I agree 100 %. The dollar valuations coming out of the FX markets will have a lot to say about our equity markets. I follow very closely two guys that are based in London ( FX gurus ) and they agree with your opinion in this regard.


  47. Health Care & Taxes /    all – My HR people just sent this notice around to all employees – lovely, eh?
    "If you enroll an adult child ages 19 – 25 who is not eligible for tax-free medical coverage, the value of your child’s medical coverage will be imputed taxable income to you for California tax purposes only. This affects you if your adult child will be covered under your medical coverage any time between June 1 and December 31, 2010, and it affects you if you enroll your adult child for medical coverage for 2011."


  48.  Phil/CMG, I think you might have got the wrong number of shares outstanding.. it’s not 1B shares, it’s just 31.1 MILLION, so at 13% short interest, we are talking about 4 million shares short.. so far the volume is 2.2 million, so we are not that far from a complete short covering.. am I missing something?


  49. I’m a Nucor (NUE) employee – just wanna say that I love how the MSM has created a psychology out there where even Phil, who frequently lambasts the analysts, makes the statement "On NUE, they just disappointed…" even though a profit of $0.07/sh was announced when we guided a range of $0.05-$0.10.  But it’s a "disappointment" because our brilliant analyst friends had an average expectation of $0.13/sh.
    And yes – we will pay a dividend every quarter.  It hasn’t decreased in over 2 decades. 


  50. Phil/Gel1
    don’t know if you ever read lacey hunt/ van hosington but they have been incredibly accurate on in their interest rate/bond calls--
    Writes Lacy Hunt and Van Hoisington in their third quarter economic research missive: (from currency currents)

    The problem with the U.S. economy is fourfold: 1) The economy is grossly
    overleveraged, with many asset prices falling; 2) fiscal policy is counter-productive and
    debilitating to economic growth as government expenditure multipliers are near zero; 3)
    proposed tax increases are already curtailing economic activity and tax multipliers
    approach -3%; and 4) increased bureaucracy with many new and yet unwritten
    regulations from the Dodd-Frank bill, along with health care regulations, make business
    planning nearly impossible.
     
    The takeaway from Hunt and Hoisington are these:
     
    1) There is a good chance we will see another recession
    2) If you think we are in a bond bubble you are likely very wrong; long rates go lower from
    here.
    *** they also believe emerging market decoupling is a myth
     


  51. Fitch reports the U.S. default rate for the loans in commercial mortgage-backed securities jumped to 10.6% for the quarter, up from 9.48% last quarter and 6.59% at the end of 2009. While CMBS are starting to move, many property owners – pummeled by prices – have been unwilling or unable to sell in order to repay debt.  Move along folks, nothing to see here

    Gambling company bonds are this month’s best performers in U.S. high-yield debt, returning 3.35% as "Vegas numbers are improving"; Las Vegas strip gambling revenue jumped 21% in August and equity raises are continuing, with MGM selling $511M in stock this month and a $575M Harrah’s IPO on the way.

    CMG/Kinki – For a while it was CAKE, then PNRA, BWLD…  People tend to latch onto hot food franchises and the moves can go surprisingly long but, within a year or two, they all end up looking like restaurant stocks, between 20 and 30 p/es (if they are still growing). 

    LOL Rain!  That was Howard Stern’s idea, wasn’t it?

    PCLN still crazy!   AAPL investors should be downright insulted that PCLN is hitting $360 first….

    Those London guys must be smart, Gel.  8-)

    Taxes/Snow – That’s the joke of "tax cuts" – if they can’t get you the honest way, through proper income tax hikes, they will just nickel and dime you with a hundred small taxes.  Ultimately, budgets must be balanced and that’s why I think this head-in-the-sand keep the tax cuts BS is so destructive.  It doesn’t save anyone money except the top 1% – everyone else ends up paying the same increase (plus whatever the top 5% don’t pay) to make up the shortfall. 

    CMG/Rav – You are right.  I read it off Yahoo but now it does look like 31M – maybe the screen was stuck on something else..  OK so that would only take about 2 days to cover – much better prospects.. 

    NUE/Chuck – Expectations are everything, unfortunately.  I didn’t say I didn’t like them, just that they warned and may skip a payment if push comes to shove but then that’s an opportunity to buy a solid company that does like to pay dividends cheaply.  I am really concerned that Cap Utilization dropped 3% in the Q, though – they are making less steel AND getting $30 less per ton for what they are making – gosh, if the MSM didn’t say different, I’d say the economy is still struggling!  Compared to RS, of course, your earnings and outlook were great.

    Bonds/Gel – It’s possible that the US economy will slip back into a recession and asset prices will fall and banks will begin failing but everybody still will lend the US money at 2% for 10 years while Fed and treasury knock another 10-20% off the dollars value every year.  Sure, that makes sense…


  52.  Gel/ SLB
    well I don’t know, I closed my position, but you can sell Jan calls, I doubt that they can increase revenue till Jan because usually they have yearly contracts which will be renewed and signed new at the beggining of next year


  53. Interesting Trivia!
     
    Don’t look know but…. UUP and FAS are both 22.48 a share.  And as our highly controlled market would have it.. they are moving as perfect mirrors to each other!


  54. No volume is the key today, just 50M on the Dow at 12:30

    12:00 PM On the hour: Dow -0.25%. 10-yr -0.22%. Euro -0.1% vs. dollar. Crude +0.3% to $80.80. Gold -0.11% to $1324.20.

    So if it’s not (ahem) enhanced creditworthiness, then what is driving the unprecedented hunger for sovereign debt? Two possibilities: 1) Bond markets are already pricing in a Japanese-style lost decade of deflation. 2) Regulatory demands for much bigger "liquidity buffers" are forcing banks to max out on government debt.

    DOA (according to Jobs):  Hewlett-Packard (HPQ) unveils its Slate 500 tablet (hands-on), marketed to business as well as consumers and priced (at $799) to compete with the high-end iPad (AAPL) – but basing the device on Windows 7 (MSFT) rather than Android (GOOG) could be a bit of a risk for H-P, in reputation if not financially.

    Three lunchtime reads:
    1) Bond rally: When will the madness stop?
    2) Time for some new stress tests for banks
    3) Can you ethically invest in unethical companies?

    They hit goal on AMZN at $170 and, of course, stopped dead.  Still liking the NEXT week $165 puts, now $1.75.

    UUP/FAS/Matt – Cool! 


  55. Phil:
    Still like the AMZN 165 puts now at $1.76? Crazy market!
    dclark41


  56. Apple News!
    This not a show buster but custom retailers have given a hands down to Apple TV 2 because it can’t be controled by high end home control systems. They are recomending Apple TV 1.


  57. Phil
    i agree with gel1 i would like to keep my SLB stock any suggestions as to which calls to sell?
    thanks


  58. SKX/Phil
    I open a Nov 22p/30c Strangle the other day when SKX was @ $25.46,  bought in the 30c yesterday for a 66% profit and kept the 22p which I sold at .60 and am taking a little heat on it because I believe it will pop on earnings. My cost of owning would be 21.10.  I was wondering if you have any suggestions on maybe hedging, closing or what to do with the 22p? 
    Yesterday, I also open the Apr 20/22.5c/20p you recommended the other day netting a .45 credit.


  59. http://www.nj.com/news/index.ssf/2010/10/audit_of_nj_turnpike_authority.html
    boring day
    whats the old saying – a million here, a million there………..what waste in gov. spending.


  60. APPLE NEWS
    Custom retailer installers are not recomending Apple TV2 because it can’t be controled by home control systems instead use Apple TV1.


  61. PNRA ( Panera Bread ) is really "cookin" today


  62. Swedish Korona is really crankin… Interest rates to most likely rise next week. I sold March puts on the ETF ( FXS )


  63. How funny.  GS tells its clients to front-run the POMO today, which was the right call. However they imply buying the S&P, which is flat today, and instead pump up the QQQQ which is up 1%.   How you like them AAPLs? :D


  64. Phil / London Guys
    Yep they are smart…. probably reading your posts and then reporting back to me, and then I tell you what they said ( hmmm – or is that what you said? )


  65.  Hearing rumor of British nuke sub run aground … 


  66. tchay / SLB
    Thanks, I think I’ll sell some January calls.


  67. For everyone gambling on the VXX:
    http://dailyoptionsreport.com/?p=3647 


  68. Phill,
    On a long term portfolio I am thinking of spliting 100 K into:
    75 K: on AAPL  Jan 2012   230/260 Bull Call and shorting 240 Put as per your advise of few days ago.
    Then,
    25 K: on AAPL  Jan 2012 buy 1 x 250 put, sell 2 x 230 put for a credit of $11,  break even of $200, just in case if AAPL drops
    Does this stradigy make any sence to you? or how would you do it?  Thanks


  69. Here’s the  chart that tells the story.  Our major indexes, then priced in Euros, then in Yen:

    So it looks like we COULD break out and up if the sentiment turns enough in favor of the US markets and we certainly look like a cheap laggard compared to EU or Asian investors local markets and that does mean a 10% upside is possble but, from ourt perspective – only if the Dollar stay here or goes down AND foreign investors start to buy American.  Not at all coincidentally – that’s exactly what Timmy’s asking for in South Korea this morning! 

    Loose end reading: 

    Who’s Who in the Foreclosure Scandal: A Primer on the Players: This Pro Publicapiece is a MUST READ that will get you up to speed quickly

    NY to Hold Lawyers Accountable on Foreclosures: NY State’s highest judge is starting to get angry (Front page NYT) See also Chicago sheriff says no to enforcing foreclosures

    Here is a fascinating graphic from the Washington Post about where in the US, by County, foreclosures have taken place, color coded by percentage.

    >
    click for larger graphic 

    Global Emerging-Market Equity Funds Draw Record Inflows as Dollar Weakens. Global emerging-market equity funds drew record inflows in the third week of October as investors sought growth in developing nations and the dollar weakened, according to EPFR Global.
     
    Fed’s Bond Buying Won’t Help. (video) Whatever the Federal Reserve does to lower interest rates further won’t help the U.S. economy, according to First Pacific Advisors fund manager Tom Atteberry, who says that’ll just weaken the dollar and hurt savers. Deborah Levine reports.
     
    This is great too

     Goldman(GS) Advises Clients to Front Run the Fed Via POMO. After a few months of breaking down what the simplest trade in the world is, that would be frontrunning the Fed for the cheap seats, Zero Hedge is happy to advise our readers that finally Goldman Sachs itself has capitulated and is now indirectly telling its clients to frontrun Ben Bernanke via POMO.

     
     
    Fed’s Hoenig – Must Be Mindful of Creating Bubbles. The U.S. Federal Reserve risks creating new problems if it floods the economy with cash to try to reduce the unemployment rate too quickly, Kansas City Federal Reserve Bank President Thomas Hoenig said on Thursday. Telling a group of business leaders that he is very unhappy with the 9.6 percent jobless rate, he also warned against seeking a quick fix. "If you try and bring it down too rapidly you are in danger of creating the next problem," he said. A new round of quantitative easing, or QE2 as it has come to be known, may not be effective in spurring demand, could spark higher inflation than intended, and could hurt the Fed’s credibility, he said.
     
     
     


  70. gel1
    what strike krona puts did you sell? do yo mind sharing the names of your london currency gurus--i get research from jack crooks whom i think is good-but i have only traded currencies via puts/calls on etfs
    thanks


  71. re:
    HRB/BDC – I think so, they keep getting sold off on the same story over and over again (demise of rapid refund scam).  They will never make $1Bn but they do make $500M on a $6.5Bn market cap and pay a 5.6% dividend so I like them.  You can own the stock at $10.53 and sell the 2013 $10 calls for $3.40 and the $7.50 puts for $2.50 and that’s net $4.63/6.07, which is a 45% discount if put to you, 100% if they flatline AND you get your 5.6% while you wait.
     
    Was just reading about HRB on Morningstar. Those guys run discounted cash flow models to try to determine fair value for stocks. DCF models, like any tool, have their advantages and limitations. I think they’re useful for a business like HRB where you can get some kind of reasonable feel for their future revenue stream and cost structure.
     
    Anyhow, M*’s model says HRB is underpriced  even if you assume total loss of all rapid refund revenue, plus a reasonable assumption of market share loss if competitors will still offer such refunds. Their current FV magic number is $18 a share, and the negative assumptions just outlined didn’t really much of an impact on their FV estimate.
     
    I think HRB at current prices is a classic value play.


  72. Starting now, I will invest in water stocks….
    http://onlinelibrary.wiley.com/doi/10.1002/wcc.81/pdf
    You can question if global warming is human cause (I believe so) or not, this is our future!


  73. stjeanluc
    i am very interested in water stocks--was researching some this am--what do you like--i agree with you completely--maybe we can work to put together a little portfolio?
    thanks


  74.  datuu, I think it would make a nice project. I have no candidate right now, but let’s put a list together and get some input from other members and Phil!



  75. datuu
    Re FXS ( Swedish Kroma ) – I sold the March 150 puts…. I am looking for the etf price to reach 160. Not a huge amount of income, but it is SAFE, I believe.


  76. No volume…..most likely a stick…..of course the Bots are getting clever…..they do like to inflict pain!!!!


  77. thanks gel1


  78. sjeanluc / datuu / water — I’m interested as well in water. The only stock I currently have a position in for water treatment is RINO.


  79. datuu – And for some ETF selections:

    Water: Some of the water systems in the United States are so old, they were built back during the time of the Civil War. With a pipe break a day in Washington at times, isn’t it time to replace some of the water infrastructure to help maintain and protect what resource we still have? And that’s to say nothing of the situation around the world – millions of people need and lack access to clean, potable water.

    PowerShares Water Resources (PHO): Holdings are equally distributed between large-cap value, mid-cap growth and small-cap growth. More than 77% of this fund is allocated to industrials; PIO has a lower allocation to the sector, and a bigger one to utilities.
    PowerShares Global Water (PIO): Has its biggest exposure to the United States, with 33% of the weighting, followed by Japan, France and the United Kingdom.
    Claymore S&P Global Water (CGW): Most of this fund’s 50 securities are based in the United States, but Britain and France also make an appearance. Utilities and industrials are the biggest sectors.
    First Trust ISE Water Index (FIW): Holds 36 stocks from around the world; the heaviest sector weights are in industrials, materials and utilities.


  80. stjeanluc
    great i think it would be a good project--i will look there and will send you over some of the names i have been researching--


  81. AMZN/DClark – That’s why we scale in.  $2.30 + $1.70 = AVG $2 and it’s not like we’re goinig to call perfect entries so flexibility is key.  I hope AMZN stops there but it seems like another one of those days where the very easy to manipulate Nasdaq is being used to try to keep a rally looking good. 

    SLB/Datuu- If you have the stock at $67.28 that’s up 10% for the month so $3.50 is what you want to protect (1/2 the gains) and you get that by selling the Jan $67.50s for $3.75 but keep in mind you limit your gain to 5% plus whatever you roll to.  Alternatively, you can take $67.28 off the table and buy the 2013 $55/80 bull call spread at $11 and sell the $55 puts for $8.50 and that’s net $2.50 on the $25 spread that’s $12.28 in the money and the margin should be about $13 + the $11 cash so $24 left on the table in cash and margin to make another $22.50 profit (93%) if SLB gains 20% over 2 years.  Meanwhile, you have $43.28 to play with and your worst case is you own SLB again for net $57.50

    SKX/Newbie – Nothing.  You did the right thing cashing out the long side.  The puts are Nov and the stoock is at $23.80 with the $22 puts all premium at .90 and they can be rolled to the Dec $20 puts, now .75 or 1/2 the Apr $19 puts, now $1.55 so unless you are dead set against being assigned 1/2x at net $18.50 in April – Don’t Worry, Be Happy.

    CMG $205! 

    Waste/DK – Hey, it’s Jersey!  Fuggedaboutit

    AAPL/RRahbar – It’s not a bad hedge but you are doubly screwed if AAPL crashes below $200.  The downside of the first batch on AAPL is you end up owning it for about $240.  So, if AALP is at $200, you are down 20% and that’s that.  If you add the put play, you mitigate some of the losses but also some of the gains.  Don’t you believe that somewhere between $330 and $240 you would be smart enough to use your $25K cash to buy some puts to cover IF you feel the need? 

    HRB/Chaps – I agree, core business (100+ years old) still works just find. 

    Water stocks/StJean – KO is a water stock (world’s largest seller of it in various forms).   I’m interested in companys that desalinate – that’s going to be the big business.   GE is in the space too.  The little companies are very faddish, like ethanol players - very dangerous.  


  82.  There is Hubris, and then there is Hubris ….
     
    Harry Reid saved the world !
     
    http://www.breitbart.tv/reid-but-for-me-wed-be-in-world-wide-depression/


  83. Something to break up this slow day.
     
    http://www.youtube.com/watch


  84. re  5 cmg short 175c /4 cmg 190c  long
    up a further 10 dollars. does a stand pat stance still prevail per your 10.05 comment
    "CMG/Drum – Well they can be rolled to the 2x the Jan $200s ($8.60) so I’m not too worried and, if you are nervous, you can sell the Jan $180 puts now ($7) as an offset but the market is looking toppy and I’d be more inclined to wait a bit and see if they don’t come back to the $185 line by election time.  The roll will still be there.  If you want to be more aggressive, you can roll them now to 2x the Nov $190 puts, which are very excited at $8 and, of course, that Premium will melt away and THEN you can roll up to Jan $200s or even $210s if all goes well and the Novembers fall back to $5 or less.  If you need to, you can roll the 4 March $190s ($18.50) to 8 March $210s ($9.50) for a little cash to make that 2x roll without a lot more margin."


  85. Phil:
    Yes I agree. I got lucky and bought my original put at 1.76. Just making sure you bought the puts. Thank you.
    dclark41


  86.  re CMG.. I’m in AWE on this stock.. $15.72 million differential between expectations and the actual sales has given CMG $800 MILLION in additional Market Cap, or a factor of 50x the sales differential..  it’s frustrating.


  87. Phil, for desalinization, you are limited to a few players as the entry threshold is quite high. GE is one player, Siemens is also there. Then you have Consolidated Waters (CWCO) but they ran into some legal issues a couple years back and the stock has been treading waters (!) since then! And finally Veolia Environnement (VIE.pa), Suez Environnement (SEV.PA), and Energy Recovery Inc (Nasdaq: ERII). Veolia and Suez trade in Paris as far as I can tell. Don’t know if they have an ADR here. But one of the ETF listed in a previous post might have them as holdings.
    Not sure if it’s the best time to enter though as there was a downgrade of the sector in 9/2010:
    http://www.globalwaterintel.com/gwi-downgrades-desalination-market-expectations-201011/
    In any case, that’s plenty of ideas to get started. 


  88. datuu / Phil
     
    Ok, my London gurus are well known in the currency markets – Dave Floyd is a professor at Oxford University, and is the head guy at Aspen Trading – http://www.aspentrading.com/uploaded_files/7542FXWeek_181010_Aspen.pdf
     
    Phil…. check out the chart…. Aspen is regarded as one of the most accurate.
     
    The other guy is Todd Gordon… used to be with Forex.com, and is joining Asper in a couple of weeks.


  89.  About China’s policies:

    China’s decision to respond to U.S. complaints about its trade practices by embargoing exports of rare earth minerals is, obviously, pretty stupid. Even if it succeeds in garnering some concessions, it’s sent a crude, ear-splitting message to the rest of the world that China can’t be trusted as a trade partner. If they keep it up, they’ll end up going down the same self-destructive path that Russia has gone down with its endless gameplaying over natural gas deliveries to western Europe. Dan Drezner comments:

    China’s foreign economic policies with respect to raw materials suggests that Beijing doesn’t think market forces matter all that much — what matters is physical control over the resources. This is a pretty stupid way of thinking about how raw materials markets function, and it’s going to encourage some obvious policy responses by the rest of the world. Non-Chinese production of rare earths will explode over the next five years as countries throw subsidy after subsidy at spurring production. Given China’s behavior, not even the most ardent free-market advocate will be in a position to argue otherwise.
    More importantly, China’s perception of how economic power is wielded in the global political economy is going to have ripple effects across other capitals. If enough governments start reacting to China’s economic statecraft by taking similar steps to reduce interdependence with that country, then China will have created a self-fulfilling prophecy in which geopolitics trumps economics. Another possibility is that the rest of the would will operate as before in dealing with each other, but treat China differently, developing CoCom-like structures and fostering the creation of explicit economic blocs.

    China has developed its economy pretty shrewdly over the past three decades, but over the past year or two they’ve become suddenly far clumsier and almost comically menacing. It’s not down to any single thing — getting into tiffs with neighboring countries over barren rocks in the China Sea has been going on forever — but it becomes more apparent when you look at everything put together. Chinese leaders seem to be panicking: over demographics in the long run, managing an increasingly fractious middle class in the medium term, and over a global economic meltdown that finally seems to be seriously affecting them too in the short run. This is a potentially toxic combination, especially since, as Dan implies, all the evidence suggests that China has been gearing up for a sustained resource war with the West for a long time. The battle over rare earths is just a minor skirmish in all this, but it’s a telling one precisely because it’s so minor and so transparently dumb. It’s not the kind of thing a smart, confident leadership pulls off.


  90. What happened to EXC??  Dropped 3.5% today.
    This is a long-term hold at PSW, recommended by Phil in May/June, when it was $38-ish.  Time to add more?


  91. stjeanluc/phil & rainman
    PIO has veolia and  suez as 2 of their largest holdings--i have been looking at all you mentioned as well as WTR and CCC


  92. thanks again gel1 for currency advisors info


  93. IWM 70.26 is the 9 day MA…might break it thisat the 7th attempt on a super light volume day (62M DJI @ 2:15!).  If not, POMO is delaying the game?  With GS advertising the scheme, seems a little to obvious, doesn’t it?


  94. Water ETF Top 10 Holdings:
    PHO
    1.American States Water (ticker: AWR) 4.5%
    2.Companhia De Sanea (ticker: SBS) 4.4%
    3.Aqua America (ticker: WTR) 4.3%
    4.Layne Christensen (ticker: LAYN) 4.3%
    5.Franklin Electric (ticker: FELE) 4.3%
    6.Southwest Water (ticker: SWWC) 4.3%
    7.Watts Water Tech (ticker: WTS) 4.3%
    8.California Water (ticker: CWT) 4.3%
    9.Calgon Carbon Corp (ticker: CCC) 4.3%
    10.Consolidated Water Co (ticker: CWCO) 4.3%
    PIO
    ARCADIS ARCAD.AS 4.89
    Danaher Corporation Common Stoc DHR 3.97
    HALMA PLC HLMA.L 4.41
    Hyflux 600.SI 4.05
    Kurita Water Industries Ltd. N/A 3.99
    Stantec Inc Common Stock STN 4.75
    SUEZ ENV. CPY SEV.PA 4.80
    Tetra Tech, Inc. TTEK 4.72
    Valmont Industries, Inc. Common VMI 4.78
    VEOLIA ENVIRONNEMENT VIE 4.60
    CGW
    Aqua America, Inc. Common Stock WTR 3.57
    Danaher Corporation Common Stoc DHR 5.00
    Geberit AG N/A 9.81
    ITT Corporation Common Stock ITT 4.48
    Kurita Water Industries Ltd. N/A 4.75
    Nalco Holding Company Common St NLC 4.72
    PENNON GROUP ORD PNN 4.18
    SEVERN TRENT SVT.L 6.34
    United Utilities Group PLC N/A 7.77
    VEOLIA ENVIRONNEMENT VIE 3.59
    FIW
    American Water Works Company, I AWK 4.23
    Aqua America, Inc. Common Stock WTR 4.28
    Basic Sanitation Company of the State of Sao Paulo ADR N/A 4.36
    California Water Service Group  CWT 4.22
    Energy Recovery, Inc. ERII 5.08
    ITT Corporation Common Stock ITT 3.96
    Lindsay Corporation Common Stoc LNN 3.71
    Nalco Holding Company Common St NLC 3.87
    Pentair, Inc. Common Stock PNR 3.97
    Watts Water Technologies, Inc.  WTS 3.78


  95.   water infrastructure/desalinisation: Veolia Water out of France (VE): They’ve been since the 1850s. roughly 13B euros in revenue, 96K employees, and they do projects all around the world. 4.3% dividend yield. 
     
    Options on the ADR are somewhat limited (only run through April.) But you could sell front-premiums against the stock while collecting the dividend.


  96. Phil- are you expecting any kind of a $ bounce or perhaps some yen weakness following the meetings this weekend?


  97. Crazy spikes on UUP in the last few minutes…something is going to happen soon.  Has anyone noticed the huge movements in TBT today…the new day traders stock of choice?  Some very confused bots out there right now…along with a couple of humans running them…=D


  98. Chaps, rainman – Thanks for the information. 


  99. goldman
    Watching and wondering, in cash.


  100. I’ve been following PSW for a little while and recently signed up for Basic. Thought this contribution from The Onion might be appreciated here…

     
    Microlender Forecloses On Goat
    OCTOBER 18, 2010 | ISSUE 46•42

    ARTICLE TOOLS

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    SAN FRANCISCO—Representatives from One World Finance, a U.S.-based microcredit provider, confirmed Monday that they had initiated foreclosure proceedings on a goat in southern India following a borrower’s repeated failure to make her $2.20 monthly loan payments. "I tried to work with Ms. [Subha] Thangam on this, but once she fell a full $6.10 behind, I had to repossess the goat," said loan officer Michael Conrad, who stated that he was just doing his job and that it was "not [his] fault" if certain subsistence farmers were living beyond their means. "I’d love to recoup the entire $22 loan at auction, but given the glut of foreclosed and abandoned goats in the area, I’d be lucky to get even half that." Conrad also acknowledged that the owner had left the goat in "pretty bad shape" and had even stripped it of its hair for potential resale on the paintbrush market.

    http://www.theonion.com/articles/microlender-forecloses-on-goat,18278/


  101. Phil:
     
    How do options markets function in Europe and Asia?


  102. datuu
    re Hunt projections- I can not agree we will see another recession soon, BUT, he is accurate that long term bond yields will drop. The Fed’s POMO operation is buying these and have an aggressive objective to do much more. This was Milton Friedman’s poposal to inflate the dollar and thus revive the economy…. we shall see if that Mobel Prize was justified, as the theory is being tested.


  103. Phil- are you expecting any kind of a $ bounce or perhaps some yen weakness following the meetings this weekend?


  104. Wow…something is very different today…huge buy volume isn’t moving us up, programs buys getting defeated…someone(s) selling into the strength today, and they have mucho dinero…


  105. Oops, sry 4 double post, on the iPhone in a bldg with little reception and didn’t think the 1st one went through.


  106. stjeanluc--we should also look at the palisades water index


  107. Cao… funny stuff about Reid saving the world… I guess he and many of our elected misrepresentatives will be joining Gore in the Museum of the Accomplished ( he invented the Internet, I believe )


  108. Elections vs. QE2 – I am still not sure if elections will see the massive sell-off.  I just don’t see the reason to sell off just because a particular election result.  On the other hand, QE2 packs massive potential to devalue the US dollar even further, thus a rise in the market after QE2 (which is also announced with the FOMC rate decision on November 3) is more likely.  What do you guys think?


  109.  Phil:  Is there a good reason to not short AMZN, PCLN CMG today?


  110. options/non-US: I don’t know anything about options on non-US exchanges. My vague recollection is that it’s not nearly as big as in the US, but growing.
     
    My IB accounts let me trade stocks pretty much anywhere in the world, but not options on non-US exchanges. I don’t think IB offers it to anyone. And if IB doesn’t, I’m assuming nobody in the US does.
     
    Does anyone know about current/future plans for trading options on foreign exchanges. A lot of big internationals have limited offerings on US exchanges.


  111. This is like paint drying.  Oh well, can’t all be 100 pt days (although I do believe we have had our fair share this year, eh?).  VIX is being teased and lulled back to sleep.


  112.  Just sold 1 PCLN Nov $410 Call for $5.20 !
    Make my day ….


  113. Pharmboy/ViX – Yeah, ViX being lulled back to sleep has me waiting for a magic stick in the last hour, especially considering the 69M DJI volume at 3pm.  There has been a couple of attempts at the dollar…but no luck so far.  With this low of volume, even the bots don’t know the direction yet.  It is beginning to feel like a market that can go both ways…a nice change of pace indeed!


  114.  Phil, Gel/SLB
    I don’t understand why you are so exated about them in long run, I think unless oil go back to $150 they are not going higher, oilfield service market fairly divided and I don’t see that SLB will increase market share. They have PE ratio more than 20 and I think it is little bit too high for today’s economy condition, or may be you see something else which I miss?


  115.  Redlog, other than they are all insanely going up (while real companies like AAPL GS IBM etc go down), no, these will prove to be amazing short entries.


  116.  Cap: PCLN
    Makes me feel better when I see a smart person do what I did.  Last time I saw moves like this we were worried about Y2K.


  117. Datuu – you can track the Palisades water index with PIO. I am busy this weekend but I will do more research on the individual stocks next week.


  118. The action today feels like I am watching a ball bouncing off the floor. Each bounce is smaller than the last and it taking an awful amount of time to come to a stop.


  119.  SNDK/PHIL    
    Phil, what are your thoughts on SNDK with the new flash driven Mac Air laptops?


  120. tchay / SLB
    You very well may be right, but I’m hanging on to my shares, however I sold calls on a ratio of 2.5 :1, all a safe OTM strike.


  121.  SLB
    Just calculated PE it is 26, think way too high, will buy them at 50 again


  122.  After Screwflation Nation, I think maybe we could use a post called Speculation Nation and take on some of these high flyers run by the bots.


  123. Phil/House % net worth (or anyone who would like to reply) - What percent of a persons net worth should their house be (assuming the house is paid off 100%)?  I know it is very subjective and there are studies on this issue and statistics that vary greatly.  I was just curious what you thought as you are not the biggest fan in the world on housing as an "asset"…and I would happen to agree with you analysis (especially on mortgages…you know that "good debt" we all read about…that will probably not be tax deductible in about 2-3yrs).  This is a subject I’ve been thinking about for a long time, all input is greatly appreciated. 


  124. tchay… do you follow BEXP – this one is terrific as it follows the price of oil almost as a shadow.


  125.  redlog; I will take your compliment although I caution anyone from calling me smart & following some of my aggressive trades !
    :wink:


  126. Jordan – it’s a tough one IMO.  When so many people begin thinking sell off, then alot of times it doesn’t happen…market it maddening that way.  However, the elections could generate a selloff for a couple of reasons.
    First, Republicans win.  Great….brief rally, then reality sets in that the political will power does not exist to make the necessary systemic changes to fix our economy.  Also, with Republican win, Obama will shift into WIN in 2012 at any price mode, and EVERYTHING that isn’t already blamed on Republicans will be blamed on Republicans.  He’s not going to pivot to the center like Bill Clinton.  He’s a zealot who’s believes his own headlines.
    Second, Democrats win.  Great…sharp sell off quickly as corporations realize the war on corporate America will continue.  Then even more slide as more enormous graft, I mean stimulus, is poured into the economy driving the dollar lower and fueling the growth of China and other countries who basically steal what stimulus is not directed at specific constituent(read Unions).  Then, more exploding budgets, and multi thousand page pieces of legislative handouts that will only serve to keep businesses stymied for another two years.  Oh yea, and Obama will shift into WIN in 2012 at any price mode, with "See how I"m the greatest since FDR or Lincoln."  And blame Republicans for everything that’s wrong in the world.
    Then, to ice the cake, the Fed will announce some form of monetary stimulus, which will amount to little more than an attempt to drive the dollar even lower.  And countries around the world will hate us more, because China has this funny little thing called a PEG, so the lower we drive the dollar, the lower the Chinese currency gets and suddenly they are the lower cost producer and Japan, Europe, India, Brazil, etc. get hurt, and retaliate by de-valuing their currencies.  Then we have the tied to a falling rock syndrome where nominally we make gains in the market, but in real terms we’re swirling down the drain. 
    The Fed will either introduce too small a package, which will be considered ineffective and we will sell off.  Or too big a package that scares the bejebbers out of everyone who suddenly asks themselves, if life is so great, why is the Fed doing THIS?  And I’m beginning to suspect there’s an outside chance nothing  comes out of the Fed, they hold off and we correct the 10% rally because it’s all been predicated on the Fed acting.
    So, with all those reasons to go down, we’re probably going to rally, just to spite everyone.  Personally, I have more faith in Phil’s Omega 5 chart than the elections or the Fed.
    Face it.  Until America is truly willing to sit down and examine what’s systemically wrong with our way of life and take true steps to towards a better future, we’re just circling the drain.  I know its during school time, but I won’t be around tonight and today’s really quiet.


  127.  can’t argue w/ that take Hoss …


  128.  CMG on its way to $210… 


  129. Interesting observation today. Yesterday, the indexes wanted to run, but the RUT failed 700 early and held everything back.  Today feels like the opposite.  The Dow wants to selloff, but the RUT has risen over 700 and is kinda holding things up there.
    Who the hell knows with the Nasdaq because the mo in there is like 1999 all over again.  Come on free subscribers are counted as real?  Two words for that one…America Online.
    Where’s Time Warner, maybe they could merge with Netflix…..


  130. Reid/Cap – Was there any context to that or just the heavily edited slice? 

    Thanks Exec – I’m flying JBlue in a week! 

    CMG/Drum- Notice that the Jan $200s only went to $16.50 on a $12 move in CMG – that’s the whole point to it, their premium begins to erode while those calls (if you wanted, can now be rolled even to March $210s).  The same goes for the Nove $190 puts, which hit $18 and lost most of their premium already. As I said earlier, CMG could spike up to $220 but, if you are going to bet against them – at some point you need to put your foot down.  People are just getting squeezed today – try not to be one!

    CMG Dec $190 puts at $4.70 were $15 yesterday – I like those!

    50x/Rav – Yes but that’s only 1/2 their p/e so a 50x move actually LOWERS their overall p/e, which is well over 100x – see how reasonable that is!  8-)

    Desalinization/StJean – Yeah, that’s what I thought, thanks.  GE or SI seems the way to go, as usual.  Others are too faddish at the moment. 

    Aspen/Gel – Cool!  Seems like the guys to follow with Gordon coming in too.  Must be quite a lot of money following them. 

    China/StJ – I don’t know, they control 90% of the Rare Earth Elements in the World and they can bring global tech to a grinding halt any time they want to so why waste the clout?  That’s the advantage of Central Planning – the government decided 20 years ago to focus on REEs and now they have the rest of the world by the balls – that’s just good business sense!  Ultimately, they’ll trade them for what they need but not everyone is interested in cash – as you mention, they have deeper concerns and a much longer view than our November to November government planning. 

    EXC/Cwan – That’s a puzzler to me,.  They hit numbers (penny miss) and raised guidance but I guess poor reports from dumber utiltiy companies are simply causing a sector exit.  Pressure on Utes is from increased input costs (not a problem for EXC because they are mainly nuclear) and customers not paying their bills, which also isn’t too bad for EXC in Illinois, which isn’t one of the worst hit areas on the above map.  It is a good entry opportunity for people who want to get in but they may test $40 on a good sell-off. 

    PIO/Datuu – Good one to look into then!

    POMO/Goldman – GS doesn’t want to look wrong on the first day.  They need it to work for a few days so they can max out the suckers and then sell into a suckers rally.  Today doesn’t even count with 73M Dow shares traded at 3:20.

    Water/Rain – Yeah but I want people who MAKE water – not people who treat it or pump it. 

    VE/Chaps – Thanks, that’s the ticket!  4.3% dividend at $28.80, which is still down 2/3 from the top and earnings look like a winner although scary debt load ($30Bn+).  Still selling the Apr $25 calls for $4.80 knocks the entry down to net $24 and if the $25 puts get over $2 (now $1) those would be worth selling too.  

    Dollar/Jrom – I thought we’d get a bounce into the close but nothing.  Now I’m worried we collapse over the weekend.  There was some dollar buying at 3 but it died already and the dollar is selling off again to support the stick.  Copper is over $3.80, oil still below $82.50 and gold bounced off $1,315 this morning and is back to $1,327 – not impressive but beats failing $1,300.  The dollar made it to 81.5 Yen before failing but that’s not very impressive as it was obviously held up by the BOJ off the  81 mark this morning.  If the BOJ has to intevene just to get to 81.50 then the Dollar is really on life support and any negative news out of the G20 can spike us below the 76 line and we’ll all have to line up at Gel’s house to trade our belongings for gold. 

    TBT/Goldman – Looks like dueling bots but mainly a flatline after the monring flop as with the Financials – almost looks like an expiration day, which every Friday is now thanks the Weeklies. 


  131. Pharmboy/Paint Dry - This is more like watching lead paint dry…and the fumes are making us retarded for watching…=)


  132.  Gel/ BEXP
    I don’t follow them, but I think they can be good buy out candidate if price of oil will go higher


  133. phil
    October 22nd, 2010 at 3:30 pm | Permalink  
    "any negative news out of the G20 can spike us below the 76 line and we’ll all have to line up at Gel’s house to trade our belongings for gold."
     
    —————--
    So Gel…how much gold can I get for a GoldenDoodle?  And by the way, I’m bring my own balance scale and weights for verification…and would like to request 1/10 ounce nugets please…LOL!


  134.  DOW making lower lows, NASDAQ making higher lows.
    Stick or sell-off near close?


  135. Out of my QQQQ 51 weekly calls from yesterday, in at .29 (after DD), out at .60, so that worked!  I’m considering taking M-W off from trading and just trading the weekly OpEx from Thursday onward, that might be fun and time-efficient!


  136. gel1
    how are you playing BEXP? its at an all time high--higher than when oil was at $150--have you had it for awhile or aere you buying/adding now?
    thanks


  137. Phil / water — I don’t see the difference between removing salt and treating fresh water. In both situations, the end product is a consumable. Sure, there’s a bigger supply of salt water but then there is the problem of local. Unless you were looking at Rino, which is an evironmental company and doesn’t produce a consumable. It does produce breathables though 8-)


  138. Sold some April naked puts on WDC ( Western Digital ) They have been beat down to 7 X earnings, which is a 53% discount to the S & P average. They control 30% of the hard drive business, and I ( personally ) think they could be a takeover target. If not, then with anticipated growth in this category…. they will, as always do very well. They, by the way, are loaded with CASH.. I sold a bunch of the April 33 naked puts


  139. VE/Chaps – Thanks, that’s the ticket!  4.3% dividend at $28.80, which is still down 2/3 from the top and earnings look like a winner although scary debt load ($30Bn+).  Still selling the Apr $25 calls for $4.80 knocks the entry down to net $24 and if the $25 puts get over $2 (now $1) those would be worth selling too.
     
    One thing to watch out for is the dividend is only paid annually, something fairly common in Europe. Stock went ex-div on May 11th this year. April $25 calls are currently $3.80 ITM with $.87 premium against an annual dividend (in 2010) of $1.23. So if the stock stays up, you might risk losing the dividend if you stay in the April $25s too long.


  140. goldman…. Ha !…. oops… I have hypothicated my gold to Pharm, as collateral for a small  apartment in his Kansas bunker. I have to get a release from Pharm… but not sure he will agree, as he is very "bullish"


  141. just sold to open nov 370 pcln calls at 18.70
    what a ppremium how high is up?


  142.   ROFL gel….

    Bring it on. bunker is getting bigger by the day.  Should have something out on ARIA and something else this weekend.  Happy Friday!


  143. datuu / BEXP
    I own the stock, and when I think oil is toppy I sell the calls, and inversely when oil drops, I sell the puts. This thing is as reliable as a thermometer on Phil’s patio.( All about the price of oil )


  144. Phil
    got trapped on with some cog nov 180 calls today,
    how would you play them from here?
    whats the best roll?
    can that dog keep going up?


  145. Phil
    got trapped on with some cog nov 180 calls today,
    how would you play them from here?
    whats the best roll?
    can that dog keep going up?


  146. chaps VE I hold the Nov 30c short will roll to Apr 30 with a net credit of 1.35 (Apr. 30 c 1.75 )and still hope to get the div.


  147. thanks gel1--have a good weekend


  148. goldman…. have been thinking about those Golden Doodles.. not sure about them as I have oodles of them… but if you have some Goldi-Locks… then maybe we can talk.


  149. gel1/"Goldi-Locks" - Found a "Goldi-Locks" you might be willing to trade for while seeking out costumes for Halloween online.  A rare gem…we should talk:
     
    http://www.costumecauldron.com/shop/images/P/P-T/RU88067.JPG


  150. Goats/Pakdog – Actually they are in great demand by the military these days

    Europe/Chaps – They have slightly different rule re assignments and such but it’s generally the same concept. 

    Nas up 0.7 with AAPL down 0.5 – first time that’s happened in a long time.

    Elections/Jordan – That’s why the Fed is talking up QE2 (well most of them), they are "independent" of the Government so they can provide stability of expectations regardless of the election outcome. 

    Shorting AMZN, PCLN, CMG/Redlog – I can’t think of any reson not to short all three. 

    PCLN/Cap – Good one! 

    SLB/Tcha – Not excited but they are a good, solid company.  I like good, solid companies!   They are good for 25% annual growth or better and not unreasonably priced and, since they service energy, they make an inflation hedge as the more inflation we get, the more their customers can afford to pay.   Also, they are volatile enough to have nice option contracts most of the time – another plus in a long-term hold.  I certainly don’t LOVE them at $67 the way I did when they were in the $30s but it’s still not a bad price for them.

    Good bouncing ball analogy Praiz!

    SNDK/Newbie – If they got the contract then yeah!  I think a lot of the SOX rally today is because of the anticipation of laptops moving to Ram Drives (I don’t know why they didn’t do it ages ago, longer batter life, less heat, more durability).  I’d be liking SNDK a lot if they would retest $32.50 successfully.  We’re spoiled on them as they were buy/writes at $10 and $20 so $40 just feels like a lot, even though it isn’t. 

    House %/Goldman – That’s an interesting viewpoint because, if it’s paid off then it’s technically a lost opportunity cost to put captial to work vs. the risk of gambling that you will have to make mortgage payments again if you blow it.  How many stocks are you willing to "bet the house" on?  For a guy with $1M in assets and $150K in income in cash it would be normal for him to live in a $500K home making $3,000 monthly payments and another $1,500 in taxes and utilities.   Figure the house is about 1/3 of income (ignoring tax BS) and if he didn’t have the payment then he’d have $1.5M in assets and + 3K a month from no morgage and then $40K a year could be added to investments (over and above 15% of income that should be saved anyway).  I think that’s a fair rate then (1/3) from that perspective but I’m not much of a house person so that certainly doesn’t mean a person with $20M should run out and live in a $7M home, it jacks up other expenses for no good reason.  In general – live in the most reasonable home you can be comfortable in – especially while you are building wealth.  Once you are rich enough not to care about the price of your home – THEN it’s time to move up. 

    Great polical analysis Hoss – Clearly it is and will be the Republicans fault, whatever the outcome.  8-)

    Lead paint/Goldman – LOL! 

    Treatment/Rain – I think treatment is fine but global water needs will not be solved with treatment.  Fresh water needs to be created in many parts of the World and that will become big business, especially as global warming keeps evaporating the stuff we used to have in circulation.  Also, every time a home is built, about 250 gallons is pulled out of the water tabel (pipes, heaters etc) and that adds up.  I think each person goes through an average of 80 gallons a day or some crazy numer like that in usage.

    WDC/Gel – Drives are still very useful and they are a good company.

    VE/Chaps – Good point!   Still, I’d rather have the protection until a week before ex-dividend, then roll ‘em out. 

    PCLN/RWV – They gained 6% today on no news with a $17Bn market cap.  That is just CRAZY! 

    CMG?/RWV – As I said before, $220 may get hit on a squeeze but You can roll the Nov $180s ($27) to the Jan $200 calls ($16.50) and the $190 puts ($7.50) to start and see how that goes.  If you can go to 1.5x, then the Jan $210s ($11.30 = $17) and the $185 puts ($6 = $9).  When you get behind on something like that, just try to get even.   With the split, you margin should be no higher and, of course, if they keep going up you have the put money to put towards the next roll and you try again.  Keep in mind that the 2012 $150 puts are $13.50 and the $260 calls are $14 so that’s your long-term "safety range" where you can expect to roll along to.

    Next week is going to be wild with electioneering and such but don’t forget, my goal all month was for us to to get back to cash ahead of the election and I’ll be on vaca the first week of November (but on-line mostly) as I long ago though election week was going to be too crazy to risk a lot on.   When things really start to break down, I’m pretty sure it will be obvious

    Have a great weekend,

    - Phil


  151. From BarrySuccinct summation of week’s events:

    Positives

    1)Solid start for Q3 earnings vs expectations 2)Philly Fed 6 mo outlook rises to highest since Apr 3)Home builder sentiment up to 4 mo high 4)Housing starts rise, good for GDP, permits drop, good as we don’t need new homes 5)German IFO at highest since May ’07 and Euro Zone mfr’g index up even with rise in Euro 6)Solid Q3 Chinese GDP growth, PBOC hikes rates, goldilocks 7)Brazil unemployment rate falls to 6.2%, lowest in a long time vs 9% in Mar ’09 and 13.1% in ’03

    Negatives

    1)Philly mfr’g lackluster 2)Jobless Claims remain too high 3)MBA says purchases fall to 2 mo low and refi’s fall after last week’s 21% jump 4)Housing permits fall to lowest since Apr ’09, slows GDP, Starts rise, we don’t need new homes 5)IP falls for 1st time since June ’09 6)China inflation needs to be tamed 7)II and AAII showing rising bullishness 8)Euro Zone services index falls

     

    Also, don’t worry Conservatives, your "local" Chamber of Commerce is hard at work for you:

    If you want to understand why the Banks and investment houses are so influential in DC, why Financial Regulation was so milquetoast (or why Deregulation occurred in the first place), look no further:

     

    click for ginormous chart

     

    Source:
    Top Corporations Aid U.S. Chamber of Commerce Campaign


  152. 01:00 PM On the hour: Dow -0.23%. 10-yr -0.17%. Euro -0.01% vs. dollar. Crude +0.76% to $81.17. Gold -0.14% to $1323.70.

    02:00 PM On the hour: Dow -0.32%. 10-yr -0.19%. Euro -0.01% vs. dollar. Crude +0.6% to $81.04. Gold -0.02% to $1325.30.

    03:00 PM On the hour: Dow -0.32%. 10-yr -0.16%. Euro +0.03% vs. dollar. Crude +1.46% to $81.74. Gold +0.08% to $1326.60.

    At the close: Dow -0.13% to 11132. S&P +0.23% to 1183. Nasdaq +0.8% to 2479.
    Treasurys: 30-year -0.05%. 10-yr -0.17%. 5-yr -0.08%.
    Commodities: Crude +1.84% to $82.04. Gold +0.18% to $1328.00.
    Currencies: Euro +0.05% vs. dollar. Yen -0.12%. Pound -0.15%.

    Market recap: Stocks closed mixed in a lackluster session, despite a batch of strong earnings reports. The S&P and Nasdaq hit a golden cross, which technical analysts say could foreshadow more gains. Technology rose, while materials, utilities and telecom fell. The dollar recovered as G-20 ministers began meeting. NYSE advancers led decliners nearly two to one.

    TA people still ignoring all exchange effectsIn a "golden cross" formation, the 50-day moving average crosses the 200-day moving average from below. It happened in the S&P today for the first time since June 2009, and the market gained 22% over the following year. Bespoke’s Paul Hickey says it’s an even more reliable indicator when it happens on Nasdaq – as it did yesterday.

    A trip to Asia gives MarketWatch editor-in-chief David Callaway a taste of things to come: global ridicule of the dollar. But don’t expect the trend to reverse. If anything, it’ll become increasingly difficult to wane exporters – like these wheat producers – off habit-forming reliance on a weak greenback.

     Fed policy makers are "making it up as they go along," former Fed vice chairman Alan Blinder says, and the impending program of asset purchases is “a lot like what the Japanese did.” The U.S. bond market is “deeper and more liquid" than Japan’s, which will make it harder for the Fed to lower interest rates through purchases.

    The impact of a margin squeeze coming from currency wars might fall disproportionately on smaller businesses – who are less likely to have an export presence, and who depend on imported supplies (and will likely respond to higher prices, unfortunately, by cutting labor costs).

    Small businesses in Greece are closing one after another as government austerity measures have sliced profit margins and damped consumer demand, according to a NYT story. “Small businesses are Greece’s lifeblood," accounting for 96% of all enterprises and employing some 2M of Greece’s 5M-strong work force.

    Even though the cost of farm commodities has soared, retail food prices have fallen, signaling that manufacturers haven’t passed those costs on to consumers. But better eat your Wheaties soon, since General Mills (GIS) may have shown what lies ahead when it announced an increase in cereal prices to take effect Nov. 15.

    Bob Janjuah comes out of hibernation – now at Nomura after leaving RBS – and while he thinks the market will run with trends on a three-month basis ("pro-risk, pro-policy and pro-policymaker, with a firm belief that the Fed can and will create broad-based inflation and maybe also some growth"), he’s still bearish at six months ("our major concern is that market sentiment will abruptly and completely flip").

    Ahead of Tuesday’s Case-Shiller housing price numbers, Clear Capital’s index (also repeat sales) indicates a "sudden and dramatic" drop in home prices, wiping out the gains just before the homebuyer tax-credit expiration.

    The French Senate passes Sarkozy’s plan to raise the country’s retirement age to 62 from 60. The vote was 177-153. The measure goes to a formal approval process by both houses of parliament next week. The issue has sparked violent protests all week. (photo gallery)

    Buh-buy NFLX, thanks for playing the gameSome analysts think Amazon (AMZN +2.4%) could be getting close to launching a subscription-based streaming video service to compete with Netflix (NFLX -2%), and CFO Tom Szkutak doesn’t quite deny it: “It’s certainly an area [with] room for a lot of innovation. And we’ve got a great team in place that’s working on that.”


  153. goldman / Goldi-Locks
    Hmmm…. nice hair…. but Im not confidant  I am strong enough for THAT one…after a few drinks ( maybe quite a few ), I’ll let you know


  154. Vegas / deano – I’m still in, unless it happens MLK day weekend – have an annual commitment that weekend.


  155. Phil / inflation-adjusted levels – Phil, yesterday you wanted to get a reminder to look into inflation-adjusted levels over the weekend.  I think you have it on your to-do list, but here is the reminder, just in case. 
     
    Your levels worked wonders until this last up-and-up move that may simply be taking into account the devaluation of the US dollar (and your levels expressed in US dollars) in anticipation of QE2.

     


  156.  Anyone know when the results on ARNA are coming out?


  157. Hanna – was about to type the same question…An approval would be a nice way to end the week.


  158. Hanna, anytime….FDA is under no pressure! :)   Oh, and I can tell U, it aint gonna be good.


  159. What the heck happened to /DX and UUP at 5:00?  /DX cratered from 77.6 to 74.6 in one five-minute candle before bouncing back.  Flash crash?  The shape of things to come?


  160. Phil, 
    You wrote yesterday:
    Buy/writes/DClark – Assume a 10-20% sell-off at least.  We enter the buy/writes expecting 20% so that’s not the worry.  What I said was if you are 40% in the money, as we are from many of our early buy/writes that still have until Jan or 2012 to play out – then there’s not much worry as we’re just waiting for expiration and a dip would be nice because we can actually roll.  If you are in a newer buy/write with little profit – you just need to consider whether or not you REALLY, REALLY want to own 2x the stock at the put-to price and, if not – CASH IS ALWAYS NICE!
    Not sure I follow. If we are thinking there will be a drop that will wipe our profits, we will be just where we started (plus the premium decay we make) what good would rolling accomplish if we don’t take the profits off the table? 
    Thanks


  161.  Pharm – I dont expect an approval. I would just like a ‘maybe’ with a recommendation to do some little animal studies. i’m staying positive!


  162.  Phil / Reid – I don’t know (context).
     
    Phil / Chamber of commerce.  Just another interest group / lobbying group.  I could give a rat’s a$$ about them.
    What’s interesting is how they are Obama’s latest bogeyman (after Bush, Rush, Hannity, Boehner, the Tea Party and who knows what else other than himself).
    The Chamber was noticeably in bed w/ Obama and the Dems over Illegal Immigration / Amnesty, which I find rather disturbing.  He loved them then.    Now, they are supposedly the Repubs best friend ?   I don’t think so.  
    Not a conservative group issues group at all.
     
    Face it, Obama is just flailing around, throwing mud, looking for something that will stick to someone other than himself and the Democratic Congress.
     
    It isn’t working.


  163. Per finance.yahoo.com/news/Whos-Buying-and-Selling-This-minyanville-1852174734.html
    Strategists ask the following question, however: just who has been doing the buying?
     
    We know it’s not you and your neighbors. The general investing public has continued to largely side-step stocks in their own background. Burned by two bear markets, and a stock market that has gone nowhere in 10 years, retail investors have been tough to lure back into the US equity market. (Also read Equities Edge Toward a Top.)
     
    Sine the beginning of September, they have dedicated just $1.91 billion to US equity funds, according to EPFR. Year-to-date, they have yanked out $54.1 billion.
     
    The principal buyers, say strategists, have included a couple of well-heeled groups of money-makers. First, there are the hedge funds. In September, hedgies reportedly turned in their best performance in 16 months with a 3.5% gain. However, that still undershot a 9% advance for the overall market.
     
    There are therefore reasons to believe that the so-called "smart money" in fact missed the big September move in the market, which might have been dominated instead by the sovereign wealth funds like the kinds operated by the governments of Singapore and Kuwait. However, hedge fund managers are paid for performance and they cannot allow a headline-making advance to happen without them. So they’re now buying in order to play catch up and meet their performance bogeys, says Jon Markman of Markman Capital Insight.
     
    A second big buyer in the stock market, says Gluskin Sheff’s David Rosenberg, would be the proprietary trading desks at the big commercials banks. These are traders that invest their firms’ capital. As Rosenberg recently noted, using weekly Fed data, bank-wide trading assets have soared $50 billion alone in the past month.


  164. "bank-wide trading assets have soared $50 billion alone in the past month."
    So Lloyd and his other bank buddies meet every month to determine the direction of the stock markets…and the hedge funds are left with the scraps.  Question remains if the MSM can get enough retail bagholders into the equation before the reversal…if not, I’m betting GS and JPM will be first to the exits, with pension, mutual, and retail investors "dead" last…


  165.  Per http://www.minyanville.com/businessmarkets/articles/second-depression-unemployment-job-creation-unemployment/10/20/2010/id/30681?camp=syndication&from=yahoo

    iDepression 2.0: Dissecting Today’s Job Deficit

    Using the method of measuring unemployment used during the Great Depression and reproduced by shadowstats.com, the real unemployment rate is a depression-like 22.5%. The peak unemployment rate during the Great Depression was 25%. There’s no doubt that we’re in the midst of a second Great Depression, but where are the bread lines and the lines of unemployed winding around the corner? No need. This is the electronic Great Depression — iDepression 2.0.

    Your 99 weeks of unemployment and food stamps are direct deposited into your bank account so that you don’t have to leave the comfort of your McMansion that you haven’t made a mortgage payment on in the last 14 months. There were no credit cards in 1933. Without a job or a house, you needed to move to where there might be a job. Hence, the mass migration from the Midwest to California — a la The Grapes of Wrath. Today, a neighbor in a matching McMansion down the street, with the perfectly manicured lawn, could be unemployed for three years and no one would ever know. They could sustain themselves on unemployment payments, food stamps, and credit cards. Welcome to the iDepression 2.0.
     


  166. GEL 1
    I did’t see a date on the aspen article, when was it written? Would you happen to know what time currency trades start on sun night/ mon morning in asia?  thank you


  167. What is going on with the FDA!? Just announce the damn results already!


  168. Ok, now that I had some calm time to analyze my move today with CMG, I made a few mistakes and put myself in an unnecessary position. I would still have an open short position in CMG, but my roll could’ve been much better. I had short naked Nov $180s before earnings, and I covered them by buying Mar $210s. Today I sold the long calls a bit too early. Then I did a roll from 3x Nov $180 to 9x Nov $200s. This oversized my position significantly even though margin was not a problem at all, but I didn’t want to end up with an oversized position.

    I shouldn’t waited until almost the end of the day (1st lesson), then I should’ve used the profits from the long calls and use that money to finance a less aggressive roll. If I would’ve done that, I’d have been able to roll still to Nov $200s but only 4x or even 5x depending on the timing.. This is much better than closing my longs earlier only to see the stock increased $12 more and ending up with a roll to 9x. I looked at the profit from the longs as a separate play instead of focusing on the fact that I started the shorts in CMG to keep a premium from the Nov $180s…

    I hope the stock has a pull-back so I can reduce the size.. Not that margin is a problem but now it’s oversized and I could’ve played it much better..

    Oh well..


  169. Ops, my iPod changed a word, this is what meant:

    ravalos
    October 22nd, 2010 at 9:19 pm | Permalink  
    Ok, now that I had some calm time to analyze my move today with CMG, I made a few mistakes and put myself in an unnecessary position. I would still have an open short position in CMG, but my roll could’ve been much better. I had short naked Nov $180s before earnings, and I covered them by buying Mar $210s. Today I sold the long calls a bit too early. Then I did a roll from 3x Nov $180 to 9x Nov $200s. This oversized my position significantly even though margin was not a problem at all, but I didn’t want to end up with an oversized position.

    I should HAVE waited until almost the end of the day (1st lesson), then I should’ve used the profits from the long calls and use that money to finance a less aggressive roll. If I would’ve done that, I’d have been able to roll still to Nov $200s but only 4x or even 5x depending on the timing.. This is much better than closing my longs earlier only to see the stock increased $12 more and ending up with a roll to 9x. I looked at the profit from the longs as a separate play instead of focusing on the fact that I started the shorts in CMG to keep a premium from the Nov $180s… so the roll was done without using the money from the longs ( I got to keep that money but that wasn’t the initial strategy since I shorted CMG )

    I hope the stock has a pull-back so I can reduce the size.. Not that margin is a problem but now it’s oversized and I could’ve played it much better..

    Oh well..


  170. Goldman,
    Well said. It ties together a few observations I have made lately. I know a few middle income people that are eating BETTER now that they have food stamps. I wondered about an investing premise on this, since the debit accounts, at least here in FL,  are actually managed by JPM and we see food price inflation a la GIS about to raise prices because they can probably get away with it.


  171. Phil,
    I need some behavioral finance therapy and direction here. Remember my GOOG positions that I had rolled down then "lost faith at the point of greatest financial opportunity" and prematurely covered? I missed out on the initial run then rolled up the previous calls to NOV 540s and also missed the pop on earnings. I could have made at least 20K on that trade. I’m pretty rattled and angry about the whole mess. I closed that out today…didn’t see any profit to be had and couldn’t stand to look at it anymore. Anyway, I am still 150K in stock, all covered but rolled up my SPY shorts from last month to 28 Nov 118s and my TZA puts to 18 Nov 21s. I also have 5 DXD Jan short puts and 4 DIA 105 disaster hedges. Basically 1% up in the market equals about 1K down in portfolio value. I have faith in a sell-off eventually and want to stick with the short side but if we moved up 5-10% from here, it would hurt. So, I sold 10 TNA Nov 49 puts as a partial cover to my bearish bets. However, I feel it is not enough as my account still goes negative as the market moves up and I will be extremely upset if we go up 5-10% and I just watch it happen without making SOME profit. So, I am very tempted to add about 20-30 more TNA puts but I don’t want to go neutral and negate the sell-off I’ve been waiting for and make the same mistake, capitulating when I am so close to realizing my trade goal. Yet, there is the very real possiblity that we run up on QE or elections. I know you are in more of a wait and see mode but my portfolio is not balanced that way right now. Please advise.


  172. @Phil
    Just got on line before night night and checked to see if I could get a free copy of, "As I lay Dying", by Faulkner on Amazon, not available on kindle, so I got the paperback,  and then I thought I’d just see where things closed today and now I have to take a sleeping pill to get some rest.
    I read with great interest  your statement the other day that the DX is unlikely to break 76 or there will be great hell to pay, torrential amounts of tears shed, and gnashing of dentures all over the world.  Well. 
    I have had several short DX contracts in the $78ish range during the last month and upon your two statements 1) don’t be greedy, and 2) 76 could be a bottom, I yesterday put a buy GTC order to close my positions at 76 and for some inexplicable reason the DX spiked down after the close and now I can safely say that once again you have confirmed for me that you have been one of the best investment service advisors I have yet to come across.  Almost to the point that I’m beginning to think that maybe I’m completely wrong about my political stance as well. Almost.
    In any event,  I wanted you to know that this has been my third execution based on your comments and recommendations that I have followed and this one has also worked to my advantage.   The priceline earlier in the last week was also a good one but I didn’t have much riding on it. 
    My subscription fee has been more than justified for the next year and there’s some left over to pay  for my stay in Toronto this week, dinner at Joso’s in the Yorkville section of town. If I smoked I’d have a Montecristo to salute you. 
    Be well, stay well.  


  173. Z401
     
    The Aspen article was a few days ago. As far as when the FX markets open - New Zealand is the first to open followed by Australia and the trade times are 7:00 PM -3 AM EST, after Australia.then Asia, the Middle East, Europe and America in that order. Since New Zealand / Australia are a day ahead of us that opening is on Sunday here in the US. For me, since I am on the West Coast, I start trading at 3:00 PM.  From there the opening in Tokyo is one hour later, and then London 6 hours later which is 2:00 AM until 12:00 Noon EST. The New York trade times are 8:00 AM – 4 PM EST.
     
    The major markets are New York, London and Tokyo…. with NY and Tokyo over 55% of the transactions… 24 hours a day. Nearly 2/3 of NY activity occurs in the morning while European markets are still open.


  174. and another thing!  :-)   I’m not good at the trades where you say put on such and such a momo play and kill it if we cross this line. I’m not watching the markets all day, everyday as I have kids to get from school and part-time jobs and such goings-on around town on a regular basis. So, I am much more comfortable just selling premium that can be rolled and doesn’t have to be watched so closely. (Hence, the TNA puts I chose). I know this violates your rule about not selling puts you don’t want to own but with the "rollability"  of those and all the shorts I have going (so no additional margin requirement…actually takes it down I think) and that I am only at .85 leverage, I think it is a reasonably safe strategy. I don’t know where I’ve been going wrong but I need to make some real money here. If I said here is 250K, make 5K per month without taking too much risk, that doesn’t seem unreasonable, so why am I not doing that? I have a lot of good stock positions (XOM, ZMH, VZ, etc.) but don’t now feel comfortable turning them into round-two buy/writes because I am afraid to commit my remaining cash in case good opportunities come up. I almost want to close everything out and start over. It seems like I might be better off not owning anything and using all my margin and buying power just selling premium that is farther OTM but safer.


  175. Forex/aclend: While apparently NOBODY was noticing yesterday afternoon, the USD, EUR and GBP currencies flash-crashed in the AH market:
     
    DXZ Flash Crash Detonates Entire Currency Complex
     
    I was watching it while it happened, and there was absolutely no news about it.  Looking at the charts, it looks like the EUR created the spike, which triggered the crashes in the other currencies.   Someone I was following reported to see unusual activity like someone was pressuring the currency with increasing orders to see how far they could push it.   Possibly to see if they could cause a crash.
     
    Apparently, it is VERY easy to push a currency over the edge of a cliff.


  176. Oh and just to add, it was a spike in the Yen on May 6th that triggered the Flash Crash. Food for thought.


  177. Good Morning.
     
    I’m not sure how much credence you can put in the technicals anymore. It seems the Bots have figured out that a lot of people pay attention to the technicals and thus use that knowledge to torture traders even more severily than normal when a technical level is reached. 
     
    Never the less, I still like to pay attention to technicals and todays post on the "Chart Pattern Trader" has some interesting information that I haven’t seen before,so  I thought I’d post the link.
     
    thechartpatterntrader.com/index.php


  178. Sorry the above message was directed to flipspice.


  179. Kink,
     
    That’s interesting and perhaps is a precurser to what is to come.


  180. Hmm according to the Finviz charts it looks like it was only the USD:
     
    http://finviz.com/futures_charts.ashx?t=DX&p=m5
     
    But in any event, we all know what will happen it that EVER occurred during normal trading hours.


  181. Pharm- is it normal for those idiots at the FDA to wait until 2 AM to release the response letter or was it arena that released it once they recieved it? Either way, pretty annoying.


  182. ARNA is the one, jro, not the FDA.  ARNA most likely received it during the day yesterday.


  183. Good morning!  

     Levels/Jordan – Hopefully I can get to that today.  On the one hand it’s easy, you just add 14% to everything and that means we’re still in the bottom of our range on real movement but that doesn’t tell the big picture or give us an idea of the fair value of the dollar – which is necessary in order to project forward levels.  Then we need to take into account that the bots don’t really care about the international relativity of value – they are just pushing TA on US charts so the whole thing is very mitigated.  On the whole, I would guess that the devaluation of the dollar, assuming we hold 76 – it probably only likely to warp the top of the range – making it easier for us to spike over but it won’t really change the range much.  

    DX/Boobear – Possibly a flush before DX goes higher.  I can’t see the G20 resulting in the dollar going lower.

    Speaking of futures – the RUT (/TF) took an interesting dive last night.  They are the only futures contracts that had any acivity but it was all down

    Wipe out/Amatta – It depends on where your profits are.  If you entered a buy/write down at 10,200 and it was a normal one that makes at least 20% if the stock simply holds its value then you probably have a 10% cushion before your profits are in peril and a 30% cushion before the spread loses money.  So the question is do you like it enough to ride out a dip.  We have many many downside plays to take advantage of a dip and 30% is probable not going to happen overnight and may not happen at all so, as long as you have plenty of cash on the side, you can get more bearish WITHOUT giving up on your longs.  Just make sure the longs you have are ones you won’t be losing faith in if the market does a major dive.  

    Reid/Cap – Good job.  Your smear tactics have gotten so disgusting that now a group has formed in Nevada called "Republicans for Reid."  

    “To lose Sen. Reid would be catastrophic for Southern Nevada,” Rogich said. “We need Harry Reid at the table. He’s our only leverage. If we elect Sharron Angle, it would probably be the most embarrassing moment in Nevada’s history.”

    “I’m a little confused still, to be honest with you. I think it’s absolutely frightening that these are the candidates we get,” said Sam Francovich, owner of the Grill at Quail Corners, a Reno restaurant. “But from everyone who’s running at this point, he’s the best choice we have.”

    Perhaps no one on Reid’s list is more aware of this than state Sen. Bill Raggio, who has endured a cavalcade of calls to remove him as Senate minority leader, a position he was expected to easily retain.  

    “The short answer is, I issued a news release, and that’s all I have to say about it,” Raggio said. “I said what I thought about Reid, and that I was reluctantly willing to vote for him. 

    “I’m sure there will be some criticism,” said state Sen. Dean Rhoads, the most recent addition to Reid’s list of Republican supporters. “But I’m not too concerned about it.”

    “We tell people, look, we don’t happen to agree with 100 percent of the policy matters that come before Harry Reid, but we’re setting aside the ideologies for the betterment of the state,” Rogich said.

    Image

    ROFL Cap – your party is such a friggin’ mess, taken over by candidates rational people are embarrassed to support.

    Who’s buying/Goldman – No shocker there.  It’s what we’ve been seeing all summer.  If they can’t pull the retailers in, this will get ugly fast.  Of course, the most reliable retail suckers are Republicans when they win an election and begin buying with their dreams of low capital gains, corporate bailouts and country-crippling tax cuts so there’s another reason the Banksters are making record contributions to the GOP this season.  

    Depression 2.0/Goldman – That’s a good one!  Interesting way of looking at it.  

    CMG/Rav – Don’t forget Kent (KO) told us that they weren’t hit by commodity inflation in Q3 but the wave was swelling into the end of September.  CMG is all fresh food, it is very doubtful they won’t get hit on margins this Q.  They added 22 stores and had a 2% increase in sales.  They have 1,000 stores and 22 stores is 2% – people simply can’t read quarterly reports is why they are flying.  CMG is up 130% since Jan.  I don’t know about you but that seems like a lot for a company that didn’t get a sudden FDA approval….  Keep in mind that you sold 9x Nov $200s now at $10.70 and it becomes logical to sell 3x the Jan $180 puts ($5) to help finance the rolls if needed.  The relative delta is still 9:1 to the downside buy you’re selling $1.50 per long and you can sell another $1.50 if they go higher and another $1.50 if they go higher (setting stops on the lower sets each time you are forced to sell higher).  That’s how you can avoid having to keep DD’ing on rolls because, for $4.50, you can roll the Nov $200 calls to the March $240s ($6.10) and that’s another 20% CMG has to climb with another $1.3Bn added to the cap.  

    Food stamps/Ac – Just another way the IBanks have found to steal money.   

    GOOG. etc/AC – If you are losing 1% against a 1% up move in the market, then you are 100% bearish.  That’s a lot and it’s a gamble and you are obviously not being a seller of premium so my advice is to rethink what you are doing entirely.  You have $150K tied up in GOOG, which I hope means you have at least $2M in your portfolio but that doesn’t sound right with the other numbers you are putting up.  Anyway, what are you upset about in GOOG, that you didn’t make 10% ($15,000) – well you can make $8,500 in GOOG by agreeing to buy them again for $520 by selling 5 March $520 puts for $12 and buying 5 $480/510 bull call spreads for $26, which is net $13 on the $30 spread that’s over $100 in the money and you make $8,500 if Google simply holds $520 through March.  Because of the $480 callers, your b/e is $506.50.  That’s how you play a stock – don’t try to win big because you can win small like that every 6 months consistently and the worst thing that happens is you get the stock you wanted anyway cheaply.  Meanwhile, net margin on selling 5 March $520 puts is $14K according to TOS plus the $13K for the spread and you used $27,000 of your $150,000 to make $8,500.  That means, if GOOG starts to drop – all you have to do is buy some puts as a momentum play to protect yourself.  

    I know it is very exciting to have big winners but it’s also exciting to consistently make 20% a year.  If you keep swinging for singles, you will accidentally hit a few home runs but, if all you do is swing for home runs, the singles will rarely come and the strikeouts will kill you in the end.  Don’t fool yourself into thinking you are balanced because you have a series of wildly offsetting directional bets – that just means you paid premium in every direction and you have guaranteed you will lose money no matter which way the market goes.

    The reason our buy/writes work so well is that they have built-in discounts and they are all about selling premium.  Even if you are wrong – you still collect the premium.  It’s like buying a condo and renting it – even if the value goes down, at least you had some of your mortgage offset by the renter.  Sure if the building zooms up in value and you have a tenant, you may not be able to sell but that is a fact for all rental properties and how many men, in the entire history of investing, made their fortune by sitting on empty buildings?   It’s ridiculous, it’s stupid, it’s wasteful and inefficient and it’s what you do when you neglect to sell premium every time and, when you buy premium – you are a renter and not an investor at all!  

    DX/Flips – That’s great and I’m very encouraged about the politics.  I will keep working on that as well!  8-)

    Rollability/AC – That’s fine as you can keep rolling things down but it boils down to what you will do when the swan is black?   This is still a violent and dangerous market.  Suddenly everyone seems to forget that we could have another terrorist attack any moment – any time.  I certainly don’t advocate living in fear but that doesn’t mean we should live in denial either.  As I said above, you are correct, better to reboot the portfolio and start with a more conservative premise.  It doesn’t sound like this is gambling money for you so the obvious answer is – don’t gamble with it!  XOM, ZMH and VZ are nice long-term plays but what are you doing with them?  It’s not that easy to make $5,000 a month off $250,000 when the VIX is below 20 as you are looking for more than 20% returns.  Sure you can do it with leveraged plays like GOOG, which makes 32% against cash and margin by March but, if it goes the wrong way on you – it will suck up a lot of your $250K managing it and then you won’t be on target for the in-betweens.  

    VLO is still cheap at $17.65 and you can play them with the March $13/16 bull call spread at $2.60 and sell the $16 puts for .85 and that’s net $1.75 on the $3 spread.  If you play 20, you commit to buying 1,000 shares of VLO at net $17.75 but the $13 calls push your break-even down to $15.38.  Net margin on the $16 puts is just $2 ($4,000) and the spread is another $3,500 so $7,500 to make $2,500 by March if VLO holds $16 – not too different from GOOG and about what you can expect to make using fairly conservative hedges.  Trying to make more means taking on more risk and more risk means more likelihood of failure.  If you can’t afford the failure, then the risk simply isn’t worth it because, certainly this trade isn’t risk free either.  VLO was $13.41 during the crash, albeit briefly.  Owning VLO long-term at today’s price is perfectly great but that’s the fallback to these positions – OWNERSHIP.  If you don’t REALLY want to own the things you are trading, it will be very difficult and very stressful for you to trade them.

    Currencies/Kinki – It is getting very scary seeing what these computers can do to almost any market, seemingly at will.  

    Good chart guy Exec!  

    OK moving on to chat under the Dividends post for the weekend as I still have work to do there. 


  184. Phil .. A big "Huh ?" and "Whatever"
     
    "I could never get the hang of ideology …"


  185. Bumper sticker with Ontario, Canada  plates spotted on Toyota Prius yesterday near the northern border:
    "RE-ELECT NO ONE"!


  186. Copper of 7 cents!? Im so sick of this crap….


  187. of = up…. Not sure what the iphone was thinking!


  188. Phil

    They are back after the dollar again

     Whatever happened at the G20 and the special Geitner-China meeting is not good for the dollar.  Looks like the American people are being sold out again.
     
    4:15 EST
     
    dx/y = (.62)%,  E/$ = +.65%,  E/Y = +.26%,  Y/$ = +1.07%,  Dollar-Swiss(.82)%

    So the dollar and E/$ cancel each other out leaving about +.03%, then ad the E/Y and Dollar Swiss = .26% + .82 = 1.08 ties out to the Y/$
     
    Just looking at those shows almost exact lock step by the developed market currencies, they are walking together, that cannot happen by accident
     
    So what is moving the dollar lower?  Has to be the Chinese Yuan going higher, that is the only currency that could affect everything
     
    there it is Dollar-Yuan (.11)%, that means the Yuan is higher, forcing the dollar lower, and .11% seems small, but is actually huge on a pegged relationship
     
    All of the major currencies moving in lockstep. then China agrees to float their currency higher, when this happens the dollar weakens, all of the indebted countries get a weakening affect overall too, China does not really care because it is pegged to the dollar and weakens also
     
    The other emerging countries are hurt and so are US citizens

    As bribery for all of this Europe gave up some of its IMF seats and voting power to China and India, so that area  is happy, that is the payment .  Plus China signed that ASEAN currency deal Thursday to keep that part of emerging markets happy.  Then congress agrees to make no manipulation decision on the Chinese currency this year.
     
    Biggest losers, the dollar and the purchasing power of the US Citizen

     
    Mike


  189. Another thing I noticed:  starting last week WED, the relationships between the Euro-Yen-Dollar started moving in lock stop, then the Geithner comments
    on Thursday, the developed market currencies had moved in lock stop all morning long then at the European close, 11:3-0-1140EST there was a big change on the Yuan
    on Friday, again at the Europe close, there was a huge change on the Swiss Franc, the $-Franc shot up to +1.20%.  What was weird is there was no corresponding movement anywhere on the E/$, E/Y. Y/$ and the $-Chinese.  They just held the same percent change relationships.
    So it almost like big clean up trades are done to keep things in line at the Europe close.
    We need to watch the Dollar, Swiss, Chinese at the close of europe, if there was going to be accting moves it would happen on a basket currency most likely.