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TGIF – Stop the Week, We Want to get Off!

What a disaster!  

Of course, that’s why we have Disaster Hedges, right?  August 11th was the last time we did a "Hedging for Disaster" post which included a LONG trade idea on gold that’s done now (we’re short) after gaining over 300%.  We’re a little mixed in our results on the other hedges but that means we can SWITCH HORSES – from the trades that have already worked to the ones that haven’t yet.  That’s how we cash out our winners on a regular basis – it’s the pony express of investing.   Our other Disaster Hedges from that post were:  

  • DXD Oct $23 calls at $2, selling Oct $27 calls for $1.15 and the Oct $19 puts for .70 for net .10.  That spread is currently -.05 so down 150% so far and a nice horse to switch to, offering a .05 credit on the $4 spread.  
  • FAZ Oct $65 calls at $22, selling Oct $72 calls for $20 and selling JPM 2013 $20 puts for $2.05 was a net .05 credit as a backstop to our long financial plays.  FAZ is now at $71.34 and the October FAZ spread is now $3.70 but the JPM puts are now $3 so net .70 is only up 1,500% so far.  Should the financials stay low, we get the full $7 from the spread and we’re obligated to buy JPM for $20 (now $29.27) in 2013.  
  • SDS Sept $26 calls at $3.20, selling Sept $32 calls for $1.65 and selling VLO Jan $15 puts for $1.20 for net .35.  SDS is only at $25.73 so far (not a disaster yet) and the spread is now net $1.25 and the short VLO puts are .17 so net $1.08 on this one is up 208% and we’re not even at goal – that’s pretty good!  Note the spread is LOWER than when we started so this can also be used as a fresh horse with a different offset, like X Jan $15 puts for $1.20 for a net .05 trade.  
  • TBT was stopped out with a small loss at $24 (fortunately).  My comment at the time, with TBT at $24.88  was:  "Keep in mind though, that the Fed has said rates will stay low through 2013 so it would be wise to uses stops on the puts, at least, if TBT fails to hold $24!"  
  • EDZ is always our favorite disaster hedge as we’ve long suspected emerging markets would implode at some point, whether the Western markets improved or not.  Our EDZ play was selling one set of the ridiculously overpriced January $75 calls for $3 and buying 2 Jan $25/40 bull call spreads for $2.60 each, which was net $2.20 on the spread.  Unfortunately, the Jan $75 calls are still a crazy $4 but, fortunately, the 2 spreads are already $6 each so we’re up to net $8 (up 263%).  There’s a stop on the calls at $5, by the way and, if that is triggered, then we set stops to maintain profits on the spreads, of course.  

I would urge you to read the post as well as our other Disaster Hedging posts we’ve written over the years as there is noting more important than having INSURANCE.  Having portfolio insurance lets us ride out the market waves and stick with our sensibly hedged (hopefully) long positions through the gyrating market cycle.  At the moment we HOPE (not a valid investing strategy) that we are at Capitulation on this chart and we’ve done a bit of bottom-fishing, just in case we’re there.  

Our long ideas in yesterday’s Member Chat were XLF at $11.50, shorting TLT at $123, shorting VXX at $49.50, TNA at $34.50, BRK.B at $65, AA at $10.20, VLO at $19, IMAX at $15.75, BA at $58.32, AGQ at $170, CHK at $27.50, DIS at $30.14 and ABX at $47.50.  Of course we also had plenty of short plays to balance it out (15/15 is our current goal) and, when I say we like, for example, ABX at $47.50, that is to say we liked it enough to sell the 2013 $35 put for $3, which is a net $32 entry, $15.50 below the current price (33%).  THAT’s how we get bullish when we’re not sure if we at Capitulation of Fear – we buy things while giving ourselves a nice buffer (see "How to Buy Stocks for a 15-20% Discount") AND we hedge with short plays that will give us more buying power on the way down.  

We HOPE (not a valid investing strategy) 20% off from here is the worst-case scenario but the markets have gone much lower than that in 2008-9 and, while we don’t feel this situation is the same as it was back then – one thing we learned 3 years ago in September was that you should never underestimate the ability of your fellow investors to FREAK OUT.  Our job is, very simply, to have as much cash as possible when the market bottoms and that’s what hedges are great for.  If we do get assigned ABX at net $32 and we have a hedge against it like EDZ that pays us $20, then we’re getting ABX for net $12 (75% off).  If you don’t want ABX for net $12, then why on earth would you buy it when it’s at $47.50?  

There’s a huge difference between the PRICE of stocks and the VALUE of stocks but there are very few of us Value Investors left in the World.  TradeBots are not value investors – they look at price and that’s all.  If gold, for example, breaks $2,000 – a TradeBot is perfectly happy to buy it because of momentum and if gold breaks below $1,000 – the same TradeBot is happy to short it on momentum.  Gold has no value whatsoever to the machines that are doing 85% of all the trading and neither do stocks – not AAPL or IBM or JPM or VLO or BA or CAT – NOTHING!  

It’s not just the Bots though – most of the traders out there are technical traders as well and that’s a valid strategy because it’s a technically driven market but, at a certain point, stocks get too cheap or too expensive relative to their FUNDAMENTALS – and that includes the whole Global Macro environment (see "The Worst-Case Scenario:  Getting Real With Global GDP") 

 

Note this cartoon from that post is from 2005 and, other than adjusting the debt figure upwards by $8Tn and putting the housing bubble into the past tense, not much has changed – has it?  As we learned from the great Roseanne Roseannadanna back in the 80′s – It’s always something or, as Tommy Lee Jones points out in "Men in Black":

There’s always an Arquillian Battle Cruiser, or a Corillian Death Ray, or an intergalactic plague that is about to wipe out all life on this miserable little planet, and the only way these people can get on with their happy lives is that they Do… Not… Know about it!

We (savvy traders) are the Men in Black – we are keenly aware of all of the threats to Global Economic Stability while the vast majority of the rest of the World gets up and brushes their teeth and eats their Egg McMuffin on the way to work until they get fired.  As more and more people get fired (428,000 last week), more and more people become aware of the HORRORS of the Global economy and OF COURSE THEY PANIC – it’s HORRIFYING!   

Now we (the heroes of this little drama) need to step back and objectively, CALMLY, away from the madness of the crowd and simply factor the panic into our fundamental equation.  On Monday and Tuesday this week I did my best to put Greece in perspective because we EXPECTED this panic drop but that’s only half of the game – now it’s my job to tell you why YOU need to leave the herd and NOT panic.  

In Tuesday’s post I mentioned our Fed hedge was a GLD Nov $180/174 bear put spread at $3.30, selling the $193 calls for $3 for net .30.  That one is already $2.67 (up 790% in 2 days) and we’re done with that, of course.  In Member Chat at 11:50, we added short-term aggressive hedges on SDS, LVS and GLD again – all huge winners, of course and at 12:24 we added a November SQQQ spread to hedge against a longer downturn.  As I discussed in yesterday’s post, we tried to get more bullish but abandoned that when the Fed statement came out and now we are simply doing a little bottom fishing – HOPING (not a valid strategy) that the markets do find some support at our -10% lines – again.   If not – we change horses, layering in our Disaster Hedges and enjoy the ride down!

Have a great weekend, 

- Phil

 


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  1. vic55

    Phil,
    You asked me to remind you after the post

    I have EDZ oct 22/26 bcs, it is a momentum trade, not a hedge. EDZ at $34 now. I think that EDZ may go higher in the very SHORT term. Any suggestion on how to improve position?

  2. jabobeast

    what knocked the futures higher?

  3. stjeanluc

    TGIF Oil Lines
    R3 – 88.87
    R2 – 86.74
    R1 – 83.91
    PP – 81.78
    S1 – 78.95
    S2 – 76.82
    S3 – 73.99
    Yesterday’s high and low – 84.62 / 79.66
    Breakout Lines – 92.64 / 66.67

  4. Pharmboy

    PP for today:

    WSJ says Fed Launches New Stimulus…….huh?  It is called a roll over of debt from short to long!  And investors wonder why banks are getting hammered (and the market for that matter).  Banks lend long, borrow short.  Long end of the curve goes down, short end goes up a smidge and wallah, banks can’t make money, or at least as much money.

  5. kustomz

    Jabo talk ECB could extend longer term refi operations and buy bank debt or cut rates….speculation right now.

  6. stjeanluc

    FAS Money Recap 
     
    Long Strangle –Jan 12 Puts (3.01 average now 4.10) and 15 Calls (2.75 average cost now 1.17). 
     
    Weekly – Full Cover October 13 Puts (1.98 average now 3.65)
    Monthly – Full Cover October 13 Puts (1.98 average now 3.65)     

  7. Pharmboy

    ECB is a bunch of idiots….by raising rates, they cut off their nose despite their face.  Now lowering rates, they are going to be in the same stagflation spiral we are in.  Where’s the money going to go?  China, India and Brazil….

  8. stjeanluc

    That’s going to make one heck of a shopping list eventually:
    http://www.bespokeinvest.com/thinkbig/2011/9/22/worst-performing-stocks-over-the-last-two-days.html 

  9. stjeanluc

    Make that list the entire S&P 500:
    http://www.bespokeinvest.com/thinkbig/2011/9/22/sp-500-breadth.html 

  10. jmm1951

    Could be a good buying day today if beaten down stocks go down another hair or two more, while VIX remains fairly high if orders for stocks are bought with bull put spreads or ITM buy-writes that will give a decent return if the stock is called away or quickly return premium if more downside occurs.

  11. morxlntway

    Pharm – you posted something about how you play PLX a few weeks ago and i guess i neglected to save it. It was trying ot go up yesterday. I have a few shares at 4.62. Any thoughts?
    thanks

  12. stjeanluc

    Another cartoon for the vault:
    http://www.ritholtz.com/blog/wp-content/uploads/2011/09/image003.jpg
     

  13. Pharmboy

    SPY calendar spreads – with the VIX so high, it is going to be fun to watch and play the volatility crush.  Now, next week is EOQ, so the question is, will hedgies and mutual funds stay in the game?  My guess is not, and we are going to have more of a sell off come early next week.  Remember, they want to beat the market (hence they beat the lipper average, even though the lipper average is down 12%, they are only down 10% – good grief).  By EOD, I am going to look at selling the 109/110 Q ends, buying October. on the P side.  On the C side, 114/115s.  I will post which ones in a while.

  14. Pharmboy

    LOL StJ!

  15. pentaxon

    I have updated some of my charts for you:
    The VIY Indicator still doesn’t look too good for the next weeks:
    http://www.pentaxon.com/psw/viyindicator.html

    The SPY in world-currency looks like there is little show-down coming soon (but the situation doesn’t look that desperate):
    http://www.pentaxon.com/psw/spy_vs_worldcurrency.png

    And a little smart assing at last the +1AX/-3ES trade suggested on Sept.13 had the perfect timing:
    http://www.pentaxon.com/psw/daxk_vs_sp500.png
     
    PS. very, very good title of todays article phil….

  16. jcaesar

    pentaxon – What is the VIY?  Can you explain your charts a bit?  Sorry if I missed this before.  TIA!

  17. roberthjrfl

    Phil, how does delta react to large changes in VIX.  For example, if you have an option (SPX Dec 12 1000 put) with a delta of .3 and vix is at 40, does the delta change (if so how) if the vix drops to 20?  Assume to keep things simple that the index price doesn’t change.  I know this is hypothetical.  TIA.

  18. jomptien

    Phil,
    Need help with ECA. I did a BCS at around 30 selling the Jan 30 p’s + c’s (I think), now rolled to 2013 25 p’s + c’s. This is really bleading $. Any suggestions will be appreciated – roll to 2014? Thanks

  19. pentaxon

    jcaesar:
    I have developed some short term trading systems, that worked good until the FED stepped in (a known fact in the CTA industry). To find something new I tried to find predictive indicators on a longer time scale. I used tons of sentiment-indicators, volume, futures and other inputs and checked if they could be used to predict market movements into the future (few weeks). They were all pretty bad and then I “stumbled” over put and call volumes of stock relevant options. Currently I am downloading ALL VIX,SPY & SPX trades of all exchanges on a daily basis. I process only the put and call volumes with a statistical approaches and get an indicator that has an astonishing correlation with future stock market movements on a 6-7 weeks basis. The long time horizon was not intended and was kind of disturbing to me. Phil means it has something to do with the most efficient period to manipulate the markets (or take advantage of the manipulation of the markets) as you do not trade the front month, but the month after. Anyway I know it is just a piece of the whole puzzle, but the correlation is still quite outstanding, so I think it might be worth to look at it from time to time. See how it predicted the sell-off in August 2011– it predicted this already at the end of June! or the turn-around in August 2010.
    I know it sounds quite esoteric, but it’s up to you if you trust it.
     

  20. jcaesar

    Thanks Pentaxon.  Have you tried the same with RVX, IWM and RUT trades?  Would be interesting to see if they were the same or diverged.  Also, what are your data sources for downloading info?

  21. jabobeast

    every attempt at a rally gets sold into.
    nightmare.

  22. edro00

     pentaxon
     
    thanks for the VIY chart.  have you published more detail on how you create it?

  23. Phil

    All right, looking good this morning (or, at least, not worse).  

    Our whole goal is to hold those 10% lines (the ones that haven’t turned yet) while taking back the NYSE and the RUT or the 5% lines would confirm the bottom.  

    We did our bottom fishing yesterday (see list above) and those trades are still very playable as we’re about in the same place but now we’re pretty much watching and waiting until Monday but I do expect SOMETHING to come out of the G7 – but only because I just can’t imagine that our World Leaders can really be so foolish as to let this thing snowball out of control.

    I’m sure many fund managers feel that (and I’m sure the 2nd, 3rd and 4th lemmings feel that way too as they get near the cliff!) and that’s why we have this low-volume, low percentage bounce – it’s not so much bullishness as it is a sense of disbelief on behalf of capital allocators that this is the end of Capitalism as we know it.   

    GS is $94, MS is $13, BAC is $6, C is $24….  

    That is NOT GOOD!  We went long on BCS at $10 (hedged, of course) and they are at $8.70 now.  As I said above, there is no bottom limit to panic and let’s not fool ourselves that there is but I looked over the books (as best I could) and decided $10 was a good PRICE while my VALUE is around $15.  If the PRICE goes to $5, my VALUE will still be $15 (unless there are fundamental changes) and at $2, my VALUE will still be $15.  

    That’s why we scale into these trades though.  In any stock you are thinking of buying, go back to Sept 2008 and find that stock at this price and then MAKE SURE YOU HAVE A PLAN for what you will do when and if it does the same thing it did back then.  With BCS, the went from $10 to $7 to $10 to $2.66 to $7 to $3 to $24 and now $8.70.  Should we wait for $3 again?  That would be great if we were sure we would get it but how do you know?  On the other hand, if I am willing to commit $60,000 to BCS at $3 (20,000 shares) then what is wrong with selling 40 2013 $8 puts for $2.50?  That’s a net $5.50 entry and we put $10,000 in our pocket now (16% of our $60,000 allocation).  

    If BCS falls all the way to $3 then our first 4,000 shares are at net $5.50 and we can buy another 4,000 (ignoring rolling or other hedges) for $3 ($12,000) and we are in 8,000 shares at an average of $4.25 and we’ve only spent $34,000 of our allocation.  If we still wanted to spend the other $26,000, we could buy 8,666 more shares (but we’d hedge and do better) and we’d end up spending $60,000 for net $3.60.  So we risk paying 20% more per share IF THE STOCK GOES BACK TO IT’s 2009 lows but we collect 16% on money we aren’t even committing right up front so if BCS never gets down to $3 – we still make nice money.

    That’s the whole concept behind scaling into stocks using short puts that you REALLY want to own.  Homework assignment is to think about that over the weekend in regards to if you would be doing better or worse if that was the way you entered all of your stock positions.  Yes, if you are a very good stock picker and every trade you enter goes your way, you’ll have a lot of "disappointing" gains but, if you are wrong once in a while, having 20-40% downside protection to your initial entry can really improve your overall performance over time.  

    Oil slammed back to $80.37 – congrats to the Futures players form earlier this morning.  Of course we set our stop at $80 now but $82.50 is very likely into the weekend.  Gold is still laying there at $1,691 even though the Dollar just fell from 79.25 to 78.75 – and that’s what we can thank for this little market pop.  

    Still all rumors and madness driving the markets and I still favor neutrality but if you are neutral and you have 3x plays going both ways, then you can only lose 100% on one side while hopefully you make 300% on the other side!  That’s what we did with the Qs ahead of the Fed on Wednesday and that went VERY well…

    Cash remains king into the weekend and I’d live to say BUYBUYBUY but it’s a crap shoot into the weekend and we have 10% up to run if we’re going to stage a comeback so we won’t miss much by remaining cashy and cautious but it’s fine to deploy a little cash to trade ideas like BCS above – just in case the G7 waves their magic wand and we get a big pop on Monday – although we are just as likely to get no action and a big drop as more fund managers lose faith and take vacations.  

    As long as the RUT is below $650, then a nice hedge is TZA Oct $55/59 bull call spread at $1.20, selling XOM $62.50 puts for $1.15 for net .05 on the $4 spread.  Other offsets are C Nov $18 puts at $1.05, GS Oct $70 puts at .95 or, of course, NONE because this trade makes $2.80 at $59 and if you stop out at .50, it’s a 5:1 reward/risk ratio by itself!  

    At the open: Dow -0.6% to 10669. S&P -0.63% to 1122. Nasdaq -0.78% to 2168.
    Treasurys: 30-year +0.05%. 10-yr -0.05%. 5-yr 0%.
    Commodities: Crude -1.52% to $79.28. Gold -3.18% to $1684.05.
    Currencies: Euro +0.12% vs. dollar. Yen -0.08%. Pound -0.67%.

    10:00 AM On the hour: Dow -0.14%. 10-yr -0.19%. Euro +0.37% vs. dollar. Crude -0.38% to $80.2. Gold -2.89% to $1689.05. 

    Market preview: Stock futures turn south, giving up early gains as global policy makers seem to be leaving investors to twist in the wind. S&P futures -0.6%, 10-year Treasury yields slip below 1.7%, commodities are crushed again - not signs of a healthy market. With global trade slowing and worries about consumer spending, it’s hard to see light at the end of the tunnel. No economic data or earnings of note today.

    European bourses turn south after an early bounce. "All eyes are on G20 and whether they can deliver coordinated action, the market is very choppy and investors are trying to protect themselves from what may come out of the meeting later," a trader says. London-1.2%. Paris -1.7%. Frankfurt -1.7%

    "It is clear now that the Fed cannot bail equity markets out any more," writes Fidelity CIO Dominic Rossi, who expects things to get worse in coming weeks. "At times like these, investors should remember the strong get stronger … Equity will shrink as well-financed companies grow by acquiring others and buy back their own (stock). In time this will stabilize (prices)." 

    The credit spigot is flowing, at least for those companies at the top of the corporate food chain. UTX‘s CFO reports receiving unsolicited commitments for $100B in financing in the weekend following the news his company was interested in Goodrich (GR).

    Moody’s again downgrades the Greek banks, saying it "believes that private creditors may incur substantial economic losses on their Greek government bond holdings beyond the terms of the current debt exchange." National Bank of Greece NBG -5.4% premarket. - I believe the appropriate expression here is "No shit Sherlock"

    A Deutsche Bank analyst says the 21% writedown EU banks took on their Greek loan portfolios following the July 21 bailout agreement is not enough. That piece of paper assumed a bond yield of 9%, but today, there is no Greek debt yielding less than 13.75%.

    A greater threat to Greek stability than rioters and strikers are the reserved members of the growing "We won’t pay" movement. Self-employed and middle-class, these people are beginning to refuse to pay "charatzi" – taxes levied without justification. "Financial resistance has now become the supreme civic duty."

    Providing something resembling a lift to European shares are comments from Germany’s hardline finmin Schauble that the 2nd Greek bailout may have to be revised. Schauble had previously threatened withholding additional funds from Greece if it didn’t meet the July 21 targets. Stoxx 50 about 2% off the lows, -0.9%.

    Sound familiar?  Brazil’s much-trumpeted "new C class" – the nearly 40M people who joined the middle class since 2003 – is in danger of slipping back into poverty. Causes for the reversal include a slowing economy, rising inflation, and the upcoming collision of debt-fueled consumption and higher interest rates.

    "We’re not seeing declines in rail volumes that are synonymous with a recession," says Morgan Keegan analyst Art Hatfield. The rather mystifying growth in railroad shipments – which correlates strongly with manufacturing output – recently hit its highest level since 2008, according to data from the Association of American Railroads. Stocks that could benefit: UNPNSCCSX.

    On the other hand:  For the first time in nearly 3 decades, a shipowner haschosen to mothball a freshly built supertanker as a glut of capacity drives leasing rates to unprofitable levels. "It’s hard to see (this) saving the tanker industry as ships that get laid up will just come back into the market when rates jump," says a shipbroker. 

    Metallurgical coal prices could fall furtherkeeping pressureon coal stocks like Alpha Natural Resources (ANR) and Patriot Coal (PCX), according to analysts at Tudor Pickering Holt. Premarket:ANR -3.3%PCX -3.1%.

    Gold legs down below $1,700/oz. for the first time since early August. A technician might look at a chart and say there is no support for the metal until $1,500. It was from this level on July 1 that gold took off in a straight line to $1,900 over the next 6 weeks. GLD -2.5% premarket.

    Hardest hit in the commodity sector is silver, -10.3%, bringing its 2 day decline to about 20%. The gold/silver ratio has moved from around 40 to more than 50 just this week, with some traders using the gauge’s direction as a proxy for market risk appetite. SLV -9.2% premarket.

    Copper continues its precipitous decline, -5.9% to $3.28/lb. The metal has become financialized – subject to the whims of Chinese financing schemes as much as user demand – making the moniker "Dr. Copper" a charming throwback rather than reality. Instead of a leading indicator, its plunge is coincident confirmation of financial stress. JJC -3.5% premarket.

    Mercedes-Benz’s (DDAIF.PK) China chief Klaus Maier saysthe sales environment there is turning "a bit more challenging." Until this summer the automaker’s sales had shrugged off a sharp slowdown in the rest of China’s car market. Plunging commodities may have their eyes on news like this instead of The Twist and Europe.

    Supposedly worried about over-capacity, China’s NDRC ismaking it more difficult for domestic automakers to form JVs with international firms. The move could also be aimed at protecting the nation’s large state-owned car companies at the expense of smaller, privately owned firms that need the dollars and expertise a JV would bring.

    After a bloody day for FedEx (FDX), Piper Jaffray pops in tomaintain a $116 price target and Overweight rating on shares. Analysts with the firm "tweaked" their estimate for EPS below the company’s own FY12 guidance. Shares -1% premarket. 

    Tiffany (TIFmay be a takeover target after ending its alliance with Swatch, and could hand investors an extra $3.4B in a deal, Bloomberg reports. Fifth Third believes Tiffany could command as much as a 40% premium in an acquisition. Merriman and Caris say Tiffany may lure interest from luxury retailer LVMH (MAGOF.PK). TIF -2.2% premarket. 

    Barclays’ Ben Reitzes, who offered bullish commentary on Apple (AAPL +0.6%10 days ago, is doing it again today, and raising his PT to $555 in the process. An Asia trip and retail checks lead Reitzes to see upside for iPhone, iPad, and Mac forecasts. He also thinks macro issues aren’t "impacting Apple’s ascension as the primary disruptive force in hardware."

    CHINAAAPLCHINAAPLCHINAAAPL!!!  Apple (

  24. Phil

    CHINAAAPLCHINAAPLCHINAAAPL!!!  Apple (AAPLlaunches its largest retail store in Asia in Shanghai, bringing its total to 5 stores on the Chinese mainland. Can Apple’s magic continue to spillover to China’s +1B population? Customers lining the streets ten hours in advance of the new store’s opening suggest – at least anecdotally – the answer could be…yes.


  25. pentaxon

    edro: see my reply to jcaesar above(10:09)
    jcaesar:
    Sure it would be intersting to apply the some algorithm on other underlyings. (also on other assets than stocks) but I didn’t find the time so far.  Currently I am using mainly the OCC to download the trades as I am only looking at the volume. If you have some knowledge on programming you can create batch queries for all the many contracts (type & date) and you get the volumes of each exchange.

  26. jcaesar

    Thanks pentaxon.  Very interesting.

  27. neverworkagain

    Pentaxon:  I’m always intrigued by your VIY chart, and thanks for sharing. I find it a little difficult to imply timing off the chart in some of the timeframes.  Are you saying that the market purge this week was being fortold by the steep drop off in VIY indicators, or more ominously, that there is a much bigger fall to come within the next few weeks? I have historically watched put-call ratios (both index and on equities) as contrarian indicators that work pretty well at market turning points (give or take a few days).

  28. dclark41

    Phil:
    Do you still like FAS here. I have a small trade OCT 12/14 BCS in(2.72/1.59) now (.91/.42). I could not trade yesterday so that kind of sucked. Would you still feel comfortable selling FAS puts here?

  29. jcaesar

    So the G20 is continuing to meet through Monday and will make a statement?   That’s how I read Phil’s comment, but I’m trying to find a news article on the topic and am not seeing one.

  30. jmm1951

    Pentaxon
     
    Pardon my possible dumbness, but what does "VIY firm trades" mean?

  31. pentaxon

    jmm: options clearing classifies traders into customers, firms and market-makers
    regarding the firms-definiton ;-) :
    A customer account is “in respect of a Clearing Member means an account of the Clearing Member on the records of the Corporation which is confined to Exchange transactions cleared and positions carried by the Clearing Member on behalf of its securities customers, other than those transactions of Market-Makers which are cleared through a Market-Maker’s account. The term "customers’ account" does not include a segregated futures account or customers’ lien account.”   And a firm account is “in respect of a Clearing Member means an account established by the Clearing Member which is confined to Exchange transactions cleared and positions carried on behalf of non-customers of the Clearing Member. The term “firm lien account” means a firm account as to which the Corporation shall have a lien on all long positions in the account pursuant to Sections 3(a), (b)(iv), (c)(v), and (k) of Article VI of the By-Laws, and the term “firm non-lien account” means a firm account as to which the Corporation shall have a lien only on unsegregated long positions therein. “

  32. Phil

    DIE TLT, DIE!!!  

    EDZ/Vix – If it were really a momentum trade, you wouldn’t be asking because the momentum slowed and stopped and that’s the end of a momentum trade (see Physics).  I know it’s upsetting not to get $4 when you are $12 in the money but that’s the nature of those spreads – they are time targeted and strike targeted, you can’t have it both ways.  Still, I’m sure you can get $12 for the $22s and buy back to the $26s for $9 and that’s $3 if you are impatient and you can ask $3.50 for the spread and you’ll probably get that, which is pretty good for not having to wait a month.  It’s not too likely EEM comes back 10% and knocks EDZ below your strike but it COULD happen so why give it a chance to?  If you want to get very fancy – you can roll the $9 $26 caller to 2x the Nov $50 callers at $4.50 (even) and you can cash your $12 $22s and buy 2x Jan $30/45 bull call spreads for $3.50 ($7) and that means you put $5 in your pocket on the $4 spread and you don’t owe the callers a penny until you are $15 in the money on your spreads.  If you stop one of the callers out at $6, then you have net $24 of protection ($30 less the $6 you lose on the buyout) on the remaining caller so EDZ would have to go over $74 (up 124%) before you are not up at least $4.  

    Euro trying hard to hold $1.35.  Pound at $1.542, 76.25 Yen to the Dollar and EUR/CHF is $1.222 so the winner is — SWITZERLAND!  

    Gold $1,672, silver $32.66 and copper $3.32.  Oil $79.76 (can be played bullish again over $80 with tight stops), gasoline is $2.545 and Nat gas is holding up way better than copper at $3.72.  

    By the way, I like the TZA today because, as noted in the news – Big Caps can borrow just fine but if money dries up in a liquidity crisis – the small caps will get hit hard.  Also, 650 is an easy stop line to watch – always a good feature in a trade!  

    WSJ/Pharm – They are talking up the "stimulus" from the Fed to make the Fed seem ineffective.  While we may see it differently, the Global headlines are "US Fed acts, has no effect" and much more panic.   Same old crap…  Had the headline read "US Fed does not see the need for additional easing – rolls existing debt to longer maturities" – what would the reaction have been?  

    FAS Money/StJ – My plan is to give it until Monday to see if we’re better or worse.  Then we have to make a decision.  At the moment, I see Nov $12 calls can be sold for $1.55 and that pays for the Jan $15 calls to be rolled to the April $12 calls ($3) so not a terrible trade-off as we get time and position for maybe .20 out of pocket.  The short puts, of course, can be rolled to the Nov $12 puts (now $3.10), also for .20 or less so those are the adjustments we’ll probably make if we have to.  

    Money/Pharm – They money is going to fill the multi-Trillion Dollar hole in the banks’ balance sheets.  AFTER that is done (another year or so) then we will get some MoFo inflation.  

    Worst performers/StJ – ANR, CLF, FCX, X, and  WFR are all ones we have trades for and CAT I’d like to add along with MET, BTU, GNW, CNX and DOW.   

    Good cartoon!  Should be for SWW this weekend:

    Volatility/Pharm – Yeah, the VIX had me worried pre-market.  Calming down nicely now.  That’s why I love those VXX spreads when they get near 50 but it’s the same logic I have with TLT, which you disagree with.  

  33. barfinger

    I have handled my TLT/TBT problem by rolling everything out to various future months TLT 125s. I had to pay for these, and I did so by selling 117 and 118 TLT puts, and turning the short into a strangle. At least now I can hope the premium leaches out. I believe this will stop this trade from draining away my portfolio value, and there is still rolling that can be done.

  34. bobhu

    Phil, you are so right about Chinese words for crisis – "??" and opportunity – "??", there is another good Chinese word you might want to know is "??", means turning point. Also shares the "?".

  35. bobhu

    Sorry for the post, Chinese character can’t display.

  36. Phil

    VIY/Pentax – My problem with that chart is that those lows have been excellent times to accumulate stocks so, to some extent, it’s really a lagging indicator.  What do you make of this huge gap between all and firm trades?  Meanwhile, cool squeezy triangle thingy shaping up on the adjusted SPY chart.   Very good call on SPYDAX.  

    Speaking of the DAX – they tested 5,000 again and are back to flat for the day at 5,152 so we can have fun with EWG again in the $25KP.  The Oct $16/18 bull call spread is $1.30 and we can sell the $17 puts for .90 for net .40 on the $2 spread so let’s try 10 of those.  

  37. ilene

    Phil, this is from Jomptien, posted in the comments of another post where I don’t think you’ll see it:

    Phil,

    Need help with ECA. I did a BCS at around 30 selling the Jan 30 p’s + c’s (I think), now rolled to 2013 25 p’s + c’s. This is really bleading $. Any suggestions will be appreciated – roll to 2014? Thanks 

  38. Pharmboy

    UTHR is bouncing, and they have been holding steady.  I like the Ocotober 40 Ps for 1.60.  Be VERY gentle with these, as they may have to be rolled.  I still think they are a takeover candidate for a mid-tiered pharma.

  39. lapper

    PHIL/anybody
    what are the symbols for DAX, FTSE, CAC and Nikkei futures?  Same as ES/1 for S&p’s.

  40. Savi

    Good Morning
    Phil--what do you think of going long gold at 1685?
    Thanks

  41. Pharmboy

    Inflation/Phil – LOL.  Talk to Japan about that one.  I don’t think they have recovered (yet), and all that ‘supposed’ money to boost the balance sheet, where is it going to go? Levered 10, 20, 50, 100:1 in T-bills, my comrade….1% eventually, after a 1.5% bounce on the 10 yr. That’s the plan, and I stand by my hypothesis.  We are over 50% of the way there from my spring prediction, are we not?

  42. jcaesar

    Pharm – What was your spring prediction?

  43. kurtww

     Phil – EWG spread — I assume you mean the 16/18 spread (16/17 is $.73). Actually 15/17 and 16/18 are both showing at $1.30, but I wonder if I will get filled on the 15/17. 

  44. jmm1951

    Phil/Worst performers
     
    Perusing the list of worsts it seems that coal, copper, steel, oil, and their friend Caterpillar are the worst offenders. The contagion from met coal and steel  is so bad that it has brought down Metlife and Carmax, who will be building less used cars.
     
    Interesting article in MarketWatch this a.m.
     
    "Copper, for example, is used in wire telecommunications, which must be done before a building, like a factory, can be occupied, he said. “Therefore, copper should ‘lead’ manufacturing output by six to 12 months.”
    So as soon as copper starts to come back, it will be time to get back into Carmax and Metlife.

  45. hemas03

    Phil, suppose you meant  EWG $16/18 i.o. $16/17?

  46. Pharmboy

    Spring prediction/jc – Bill Gross is an idiot for shorting the Treasuries (I put a graph up from PC showing that when he did it last time he lost his shirt, er, marbles).  Treasuries would outperform the stock market (10 yr would be below 2%, then when that hit, I said 1.5%), TLT would be a good investment, TBT would suck.

  47. Phil

    Delta/Robert – The VIX is part of the calculation that makes up delta but stocks each have their own implied volatility as well so, like a lot of things, it depends but, in general, if the big VIX goes up, so do your deltas.  

    ECA/Jomp – I only like CHK in that sector and they are volatile enough.  You are not bleeding money you are bleeding UNREALIZED losses and the only way it becomes money is if you terminate the trade and turn them into realized losses.  What you are doing is looking at the PRICE of ECA, at the moment, but that has nothing to do with the PRICE it will be at in Jan 2013 or the VALUE at any time.  If you were scaling in, it’s a non-issue unless you think ECA will drop below $15, and they bottomed out on 2008 at $16.78 so not too likely.  If they do head lower and you can afford more, then I assume you had a net $25 entry and now you’ve rolled to $25 puts and calls with the stock at $20 but you can sell the 2014 $15 puts (now $3.10) for $5 (if ECA goes lower and, if not, then you have no problem anyway) and that will drop your net to $20/22.50 on 2x and if 2x is put to you at $22.50 or lower, you have another 1x coming to you at net $10 for an average of $18.33 and, of course, you can do another 1x at $10 and drop it down to $16.25, which is below the 2008 lows.  If you don’t REALLY want 4x at $16.25, then you do need to set a stop on your 1x position because it was a trade and not an investment and trades we stop out at 20%, right?  

    Another way to protect a spread trade like this (and again you have to be scaling in) is to sell those 2014 $15 puts now for $3 and buy the Jan $25/20 bear put spread for $3.30 for net .30 on the $5 spread that’s $4.80 in the money.  If ECA goes up, then you are happy about your long play and your short puts will likely expire worthless and, if ECA goes down, you get another $4.70 cash towards the cost of a roll and the purchase of more stock at net $10.30.  

    Heading for tests of Dow 10,800, S&P 1,140, Nas 2,500, NYSE 6,800 and RUT 660 hopefully (and hopefully we make it).  Money has been coming out of bonds into the EU close (see TBT/TLT) and they are closing green – up about half a point but it’s possible that it’s the EU traders that have been holding us UP this morning and that we don’t have the support to make those levels so let’s watch carefully.  

  48. hemas03

    or EWG OCT$15/17?

  49. Pharmboy

    Buying MITI here, selling the Nov 5 Calls.  1/4 buy in.  Also, sell the May 12 Ps for the brave…..We are now entering Biotech heaven, as summer has passed, fall has arrived, and data should start pouring in.

  50. kurtww

     No fill yet on EWG Oct 15/17 at $1.30, unfortunately. 

  51. knightpilot

     I used the FAZ $65 $72 BCS to hedge some other positions awhile ago and paid for part of it with the JPM puts. (Thanks Phil!)
    This trade seems on track to be a big help, but the %1500 number in today’s post I don’t understand.  Seems an extra zero perhaps?
    Again thanks for the trade idea.  I can’t have the open naked call to facilitate a roll so, if I believe this is about the bottom, do I want to cash this one out now for the current gain or wait for the premium on the sold call to wear down?  
    In this exact example I am planning on letting it run as there is so much premium left to be collected, but I am trying to learn what factors I should be considering as I make these decisions about when to take profit on these spread type hedges?  Any rules of thumb?
    Probably an after hours question, but thank you in advance for your response. 
     

  52. jcaesar

    Phil / Europe holding us up? – Well for the last ten minutes you would be right!

  53. nicha

    Anybody scaling into AAPL? Oct $400/$430 spread can be had for $12.90

  54. knightpilot

     Sorry figured out the 1500%.  Trade in the money at expiration, JPM put sold paying for most of it, making the total capital outlay relative to the profit 1500%.  
     

  55. stjeanluc

    FAS Money / Phil – Roger that! However, I have one concern (common to these 3x ETF) – I am worried that if we take another hit on XLF they are going to having to reset FAS and the strikes we have will become very illiquid. We increase that risk by pushing another 3 months to March. A good rally could get us out of that jam, but it’s always good to plan for the worse. Thoughts? 

  56. jmm1951

    Phil/NOK
     
    I noticed that NOK $5 2013 calls are more expensive than the puts. What does that signify? Stock currently at $5.20.

  57. angelcur

    ecri weekly leading index which is more timely than leading indicators…fell again… growth rate now at -7.1%..which is nearing danger zone…i hope the g7 FINALLY hears phil and does something..i think we need to assume it will be from lower levels

  58. oakd

     very odd- I was just assigned on 20 of the YRCW 1.0  put options I sold. Not sure what this signifies, but I hope I get assigned a bunch more.

  59. stjeanluc

    Bill Gross / Pharm – I would love to be a fly on the wall in meetings there lately. It looks like they might have missed the biggest treasury rally in a couple of years by taking that bet against treasuries a couple of months back! They’ll need to increase their guest appearance on CNBC to save that one!

  60. jcaesar

    angel - Is the G7/G20 continuing to meet?  If so, are we expecting a statement on Monday?  I saw Phil reference this but I can’t find anything about it on the web.

  61. pentaxon

    Phil,
    Regarding the viy lag: I think that is a big missunderstanding. I shifted the indicator to show probable highs or lows in the future. The indicator is already further ahead. So in your example of yesterday it was not lagging in march 08. It displayed a bottom then but looking at the indicator in mid march 08 it would have displayed a strong rise into the bullish side until end of april already. As it has been predicting lower prices already few weeks ago now.
    Maybe this is confusing and I will shift the timescale back to the date of the prediction. This might me more transparent.

  62. jcaesar

    Krugman & The Social Contract – Good article.
     
    http://www.nytimes.com/2011/09/23/opinion/krugman-the-social-contract.html?_r=1

  63. pentaxon

    I should have replaced the “bullish” and “bearish” labels when shifting the indicator to be a predictive price curve. That makes it missunderstandable.

  64. jcaesar

    lapper / symbols - Are you looking for them on your trading platform?  I don’t think they exist because they or options on them are not traded.  You can see them of course in Yahoo Finance (where I find them). 
     
    I asked this same question a month or so ago and that was the answer from others on the board.

  65. kurtww

    Gold puts working out nicely today! Oct 1675 put up over 500% today. Wipes out my TLT fiasco, at least. How low will we go? My AGQ spread from yesterday not looking so hot. Still, the Oct 165/175 spread pays $10 for $1.75 invested if we get back to where we were yesterday in the next 28 days. Might roll down to 155/175 at this rate! 

  66. cwan120

    Just logged in.
    Question for those who trade SPX/RUT strangles: I thought RUT Weeklys expire Friday PM.  Is that correct?  How come I don’t see the RUT weekly expiry 9/23/2011 being traded on TOS?

  67. angelcur

    so many rumors about some big move by europe over weekend…at technical support….but cds up huge in certain key countries again…i trust NO rally in stocks to be sustainable unless cds starts coming in….credit traders time and time again are MUCH smarter than equity traders.

  68. angelcur

     AND….i think people are being distracted by greece….big picture it makes little difference if they come up with some solution for ONE tiny country…the problem is MUCH bigger than that.

  69. angelcur

     i think we would rally hard on an orderly greece default for a few days or even weeks, but it wouldn’t likely last.

  70. revtodd64

     Jcaesar – Krugman
    I was awake and couldn’t sleep last night so I read Krugman at 3:00 AM.  Then I really couldn’t sleep!  So I watched the Elizabeth Warren statement from yesterday and Roosevelt’s 1941 Four Freedoms State of the Union Address.  Then I could sleep.

  71. exec

    Where the heck is JR when we need him.  If feeling like it wants to go up.

  72. sparky123

    Pharm,
    I don’t think we’re Japan for a number of reasons. There are people in Japan still paying off mortgages that have been underwater for 20 years. The rest of the world and Americans in particular are just not that patient.    

  73. jcaesar

    exec – Yeah, JR’s been MIA for a while now.  Would be interesting to know how he’d have played the markets over the past week or so.

  74. jcaesar

    exec – I don’t know about you, but it’s been difficult for me to day trade successfully (minus a few major wins) over the past week or so.  Lots of head fakes by the market.  I guess it’s a sign of how unsure everyone is about things right now.

  75. asaenz

    @ Phil, any october uso calls worth buying? worth the try dont you think? (greece "fixed" or any good news from the G20 as you mentioned above) Thanks!

  76. jcaesar

    Netflix – This has been a favorite of Motley Fool for years.  Just got an email from them saying how they’re still thinking it’s a big winner (and pushing it) despite the major losses over the past month or so.

  77. ban2

    angel
    assume cds is credit default swaps or the cost of insurance against potential to repay debt  — where are you tracking the cost of these swaps? are they listed together somewhere?
    tia

  78. cwan120

    Oh! Man!
    I just got off from a chat with TOS trade desk.  RUT weeklys settle on Friday AM.  SPX weeklys settle on Friday PM.  I trade SPX weeklys quite often.  But it was my first trade of RUT weeklys expired today AM.  I thought they worked the same way as SPX weeklys.  So, I didn’t close them yesterday!
    Oh! Man!  My stomach starts hurting!  BTW, those were RUT $625 puts.  Today’s low so far was 641-ish.  We’ll see…

  79. angelcur

     hasn’t marc faber been a big china bull?

  80. sparky123

    angel,
    yes he’s probably having a difficult week

  81. exec

    caesar
     
    I’ve been busy all week so haven’t traded much.  JR has been bearish so fortunately it took that in consideration a few minutes ago when I was tempted to load up on TNA.  I looked away….they spiked the dollar…and poof….TNA followed the drop in dollar like a loyal soldier…..I would have found myself immediately down had I bought. 
     
    I think it’s best to sit today out.

  82. jcaesar

    exec – I think you’re right – thanks.

  83. jabobeast

    Senate Has Enough Votes To Defeat Continuing Resolution: Government Shutdown Imminent
    by Zero Hedge – September 23rd, 2011 11:42 am
    Courtesy of ZeroHedge. View original post here.
    Submitted by Tyler Durden.
    As predicted:

    SENATE HAS VOTES TO DEFEAT HOUSE SPENDING PLAN; VOTE CONTINUES – BBG

    Next up: headline risk and a push for Bernanke to print more. Why? Because when all is said and done the market will have plunged (even more) on the realization there is no fiscal stimulus coming in the next two years, despite the Chairman’s clever gambit.

  84. jabobeast

    GLD getting crushed

  85. jabobeast

    AGQ getting crushed

  86. Savi

    FU GLD and AGQ --could not resist

  87. jabobeast

    what just happened??

  88. revtodd64

     
    Bill Gates Spends $56 Million On Amazon In One Night
    See, the Super Rich are creating jobs!

  89. spiro21

    cwan120
    yesterday RUT 625 put : 0.80

  90. shadowfax

    I actually try to fill in when JRW is AWOL. His lines are still golden. My problem is system lock-ups. I found a dropped bit in Windows 7 64 bit that slows non web based on line connections and after a while stops. If you experience this you will not be able to close the program and have to force a shutdown, then all is fine then slows and then stops. If you have this I may have some hints and it may be my stuff that did it. For now I hope it runs until 4:00.

  91. JRW III

    Good morning, nothing new.

     

    IWM    63.04,  63.67,  64.23,  64.74,  65.07,  65.31,  65.56,  65.93,  66.33,  66.56,  67.04,  67.47  and  68.10

    The SPY daily bar opened and closed below its BB bottom; this argues for strong down momentum, therefore the first rebound is likely to fail. For all the past like patterns since 1993, I see no exceptions. Even if a huge rebound does start as early as today (and I do expect one), yesterday’s low will at least be revisited eventually.

    We are between trend support and resistance, now at IWM 63.50ish and 66.33.

    Just play the 3 minute chart, the lines are working quite well, and Good hunting !!

    I’m in TNA, btw, from the 64.23 line as you should know 8-)

  92. exec

    Jobo,
     
    More games with the dollar.
     
    Here’s a good link.  I monitor the 1 and 30 min advanced charts when trading.  Watch the trends in the longer time frames to get a feel for the movement.
     
    It’s amazing how IWM tracks the minute chart tic by tic

  93. jcaesar

    shadow – His lines are very good, but they only help so much when no trend can be sustained for longer than 10 minutes. By the time you get confirmation, the shift in the other direction has nearly started. At least that’s my experience.

  94. JRW III

    MAINSTREAM GIANT GETS PESSIMISTIC

  95. jcaesar

    JR – I’m guessing you got out of TNA.  This is exactly what I’ve experienced.  Oh well.  Some days are better than others!

  96. Phil

    $25KP – Sorry, that was the EWG $16/18 bull call spread, not $16/17.   It’s still $1.30.  

    FAS/DC – Yes, see FAS Money adjustment idea above.  Oct time-frame is tight and you paid a lot without an offset, which is never a good idea for an out of the money spread (you bought $1.11 of premium more than you sold).  You can roll down to the $9 ($2.42) for about $1.48, which drives you to net $2.59 on the $5 spread that’s $1.40 in the money if you want to be brave and you can offset that with the short Jan $9 calls at $2.30 for net .12 so the play becomes you are willing to be long on FAS at $9.12 in Jan.  Will FAS drop $1.30 (12%) by Jan?  Well, if so, then FAZ will go up 36% to $95 (less some decay so figure $90) and the TZA Jan $85/90 bull call spread is .65.  So now your net on the main spread rises to .77 on the $5 spread that’s $1.40 in the money and your worst case is you own FAS at net $9.77 if FAS is below $9 but, if that happens, you will have $5 on your spread and your net entry on FAS drops to $4.77.   So, bottom line is – if you don’t want to own FAS for $4.77 then it’s probably best to take the .50 loss and walk away now, while they are still $10.40!  

    G20/JC – They’ve been meeting and very likely they are bringing back something to their respective governments for action and, if they are going to announce something, it will probably be on Monday to give the futures maximum goosage.  

    Money continues to flow out of bonds – maybe staging for EOD move into stocks but maybe wanting cash ready to play first thing Monday – just in case.   

    TLT/Barf – Good plan but I think we can go lower than $117 so watch that end.  At this point though, I think the Fed has a floor around $115.

    Turning point/Bob – I didn’t know that one.   

    ECA/Ilene – Thanks but see above.  

    Euro Fututres/Lapper – I don’t think TOS has them so I don’t play them.  

    Long gold/Savi – Only if it’s a hedge against your main short play (to allow you to let it ride).  As I said above (and 100 other times) – gold is BS – it has no value other than what people believe it does and that number can go from $200 to $2,000 with rational cases being made for each so, when closer to $2,000 – that’s the top of the range and it’s prudent to short it back towards $1,500 and wait PATIENTLY to see if it finds real support.  

    Japan/Pharm – Yes but they were the ONLY ones doing it for 20 years.  Now everybody’s doing it and I just don’t think it can be sustained but I’ve been wrong since spring so we’ll see.  

    EWG/Kurt – Thanks!  Never hurts to ask for the lower strike – all they can do is say no…

    Copper/JMM – That’s a good plan but MET and the other insurance companies (AFL is my favorite since the other good ones are all Berkshire) are being hammered by the drop in long-term rates – which is where they put all their money.  That all goes back to how long we think these rates can be sustained but the insurance companies can move to the short end of the curve that the Fed is abandoning so I don’t think it’s that big of a deal.   Speaking of copper – this is how long it takes for fundamentals to come through – I called shenanigans on copper way back in April!  

    Gross/Pharm – Yes, and I was just reminded yesterday that his partner El-Erian was the idiot who broke the Harvard Endowment Fund.  

    EWG/Hemas – The lower the better. 

    FAZ/Kniight – You’re welcome.  When in doubt, always take nice gains off the table, you can always go for the next leg with part of your winnings, rather than leaving your entire original bet PLUS the winnings at risk.  See FAZ trade idea above for example.  My preference, on plays like that is to go naked on the caller as a momentum play but you can’t so then you either need to go longer on your call (Oct $65 calls are $13 and can be rolled to Jan $85 calls at $17 and hopefully they don’t lose too much value on a drop or the vertical cover, which may still be considered a naked call for you).  It’s not about how much is left to be collected, it’s about FAZ being at $70 and that’s 10% above $63 which nets you zero and a 10% move in FAZ is a 3.3% move in XLF from $11.65 to $12.03 – if you think that might happen over the next 30 days then you might be wiped out.  If it’s a hedge – then that’s fine because you’re wanting your other positions to come back but if it’s a bet – then you won and you shouldn’t be greedy.  

    AAPL/Nicha – Keep in mind that’s not an investment, it’s an all or nothing bet on earnings.  

    Reset/StJ – They announce them well in advance and we have all learned to liquidate ahead of the event.  

    NOK/JMM – Just sentiment.  At some point, the Greeks are used to set the price but then the contracts go up for auction bidding and anything can happen. 

    ECRI/Angel – Yes, not good at all.  

    YRCW/Oak – They dropped below .06 and some guy may have just wanted his dime to get out.  

    VIY/Pentax –  Now I know, thanks.  

    Krugman/JC – Thanks

    According to new estimates by the nonpartisan Tax Policy Center, one-fourth of those with incomes of more than $1 million a year pay income and payroll tax of 12.6 percent of their income or less, putting their tax burden below that of many in the middle class.

    Republicans claim to be deeply worried by budget deficits. Indeed, Mr. Ryan has called the deficit an “existential threat” to America. Yet they are insisting that the wealthy — who presumably have as much of a stake as everyone else in the nation’s future — should not be called upon to play any role in warding off that existential threat.

    Well, that amounts to a demand that a small number of very lucky people be exempted from the social contract that applies to everyone else. And that, in case you’re wondering, is what real class warfare looks like.

    GLD/Kurt – Congrats on that one.  Good example of being saved by being balanced.  Sometimes they negate each other but the idea is to hopefully get a few more winners than losers over time. 

    RUT/Cwan – I see only Sept 30s on the RUT, no current weekly.  Maybe they expired last night? 

    CDS/Angel – I agree and that’s what the IMF and ECB need to attack.  Greek default would be a rally as it would have no effect but then would make trades complacent about bigger defaults, which would likely come eventually as rates press up.  

    USO/Asaenz – Too iffy with gold crashing.  We only got a little pop from $80 to $80.85 in the Futures and now back below $80 so too boring to play with.   If you want to be aggressive, the USO Nov $28/30 bull call spread at $1.30, selling the $27 puts for $1.10 is a net .20 bet on oil holding $80 for a 900% gain and, otherwise, $27.20 net on USO is below $75 oil for a long bet.  

    NFLX/JC – You don’t need to have a good stock if you grease the right wheels.  

    RUT/Cwan – That sucks.  All you can do is cash ‘em out.  

    Dollar on the move so be careful – just popped back over 79!

  97. shadowfax

    JRW
    I have the 63.50 ish support but 65.94 ish as resistance instead of 66.33. How did you get that #, it is a major line as you posted but my calculation is more off from yours than usual, I always want to learn more. Thanks!

  98. JRW III

    shadow / 66.33 trend line

    Go back to June 2007; you’ll see !!

  99. Phil

    CMG still trending down.  

    $56M/Rev – Even if it were true, that’s not even a week’s interest on his money.  A person, or a corporation for that matter, with $10Bn at just 3% has to spend about $1M per day or they will have more money than they started with tomorrow (and that money will be money that is taken from other investors/borrowers down the line).  Yet there are people who don’t think that’s "too much" money for one person to have…

    Rossi/JRW – It’s got to be tough to be trying to invest in Europe right now.  

    $1,635 on gold!  

  100. JRW III

    On a more tactical note:

  101. exec

    JR
     
    I never would have picked up that trend line.  How strong of support would is that line?

  102. shadowfax

    JRW
    Thanks, I haven’t gone back that far. I find it in June 08, maybe the dates are wrong on this graph but it is there, screaming at me!

  103. oknoman

     Phil/GLD: Great call on the GLD puts from a week or two ago – thanks! Hindsight will always lead me into to trouble, but I’m still delighted to have gotten a double out of them yesterday morning (from the always sell into initial excitement dept.)

  104. l4real

     Good post JRW! Thanks!

  105. jcaesar

    JR – Ok, I didn’t have 64.23 on my chart.  You’ve been in TNA since around 10:20AM?  I would have thought you’d have exited earlier once the trend moved against you.

  106. stjeanluc

    The wheels are really coming off the gold wagon now. We are now below a 61.8% retracement from the highs of 3 weeks ago and with a base in early July. That line is at 1648. Not much support under that as we skyrocketed in 3 months without building support.  The 200 DMA is at 1558. We might soon experience a huge liquidation long squeeze as technical signals and margin calls will soon take effect! 

  107. JRW III

    This is amusing !!

  108. stjeanluc

    Some thoughts on leveraged ETFs:
    http://ftalphaville.ft.com/blog/2011/09/23/681631/leveraged-etfs-not-for-retail-investors/

  109. kustomz

    Merkel on Greece

    Risk of an uncontrollable domino effect
    It’s not an option, damage impossible to predict
    Greece must do what has been asked

    Dudley from Bretton Woods event

    No comment on recent meeting, Operation Twist
    Recover is “unusually anemic” despite efforts
    Regulation, not monetary policy, is best to pop bubbles
    Banks better capitalized than 2008 but need to bolster liquidity
    Unlikely all derivatives will be cleared by 2012

  110. stjeanluc

    This is getting ridiculous now:
    http://www.engadget.com/2011/09/23/samsung-asks-netherlands-courts-to-block-ipad-iphone-sales/
    All this does is keep patent lawyers in business… I understand that people have to protect their IP, but there is no competing on the merit of the product anymore – as soon as you feel some competition, sue the bastards! This has really ramped up over the last 6 months or so which makes it that companies like Google are willing to spend billions just to buy patent portfolios in order to counter-sue Apple or others. Not sure this is good for innovation and/or competition. 

  111. sundevils

    I can’t see any of JRW’s posts. What happened?

  112. Canuck

    VLO buy/write: 
    Oct 19 call, Oct 18 put for 2.16;
    hedge with Oct TZA 50/55 BCS 2.00;  net credit on total trade $0.16.
    Comments?

  113. zeroxzero

    Angel: καλημ?ρα!   Late logon, late night.  I am migratory, live mostly in the Caribbean, keep my old place in Barca, am now at 9k in the Rockies, my U.S. base.  Κι εσ??

  114. kurtww

    GLD – I rolled my Nov 1750 to 1675 for a nice profit earlier, and I just took my Oct 1675 off the table at $4920. IB shows a gain of 1006.82% on the day. I’ll take it! :-) So far I managed to get almost the whole drop from $1900 out in cash, obviously offset by my loss in value of the physical. But I’m happy to be able to hang on to that and not worry about it. I feel bad for a buddy who has a 5k oz silver bar, though. Ouch. 

  115. kurtww

     Sorry, I meant /GC not GLD! I much prefer trading the futures options. 

  116. Savi

    kurtww—how do you trade futures options--recently opened acct at TOS
    Thanks

  117. kustomz

    Reuters VIa forex
    Greek Finance Minister Evangelos Venizelos was quoted by two newspapers as saying an orderly default with a 50 percent haircut for bondholders was one of three possible scenarios.

  118. rainman

    stj / lawsuites — Yet more jobs exported overseas!

  119. asaenz

    airlines looking impressive

  120. kurtww

     Savi – I still use Interactive Brokers to trade futures… usually futures options, though I’m hoping to learn the ropes a bit in Vegas. I was hoping ToS would go back to a consolidated account, but given the problems I may just keep both accounts open instead. I don’t like the IB software at all, especially compared to ToS, but they support the stuff I trade and the execution seems good to me. I’ve had a few bad experiences recently with ToS. 

  121. JRW III

    These are my targets, btw !!

    IWM 65.93,  66.33,  66.56

  122. kurtww

     By the way, conspiracy theory or no, silver and gold like to go down right before options expiration (4 days out now). That has been hugely profitable the last two months, and it worked against me several times in the spring before I figured that out. 

  123. Phil

    Wow, this day is flying by!  

    1:00 PM On the hour: Dow -0.24%. 10-yr -0.34%. Euro +0.07% vs. dollar. Crude -0.88% to $79.81. Gold -5.09% to $1650.85.

    2:00 PM On the hour: Dow +0.53%. 10-yr -0.49%. Euro +0.31% vs. dollar. Crude +0.16% to $80.64. Gold -5.07% to $1651.25.

    Europe closes the books on a dismal week, rallying 4% into the close on likely short-covering ahead of possible government intervention this weekend. The Stoxx 50 gained 1.2% today to finish -6.3% for the week. The euro +0.5% today to $1.3526, -2% for the week.

    German CDS prices today rise above 100 basis points for the first time ever. That’s the same as it cost to insure Italian paper just 6 months ago. Germany may not be likely to default, but it certainly points to "a pervasive and ill-defined fear." 

    J.P. Morgan joins RBS in predicting the ECB will cut rates by 0.5% during its October 6 meeting, to 1%. Economist Greg Fuzesi thinks Europe’s macro issues will spur an aggressive move, as might the fact it could be easier to slash rates while President Jean-Claude Trichet is still around – the October meeting will be Trichet’s last. (previously)

    Credit Suisse pegs the likelihood of a euro break-up at a not negligible 10%, with the odds rising to 20% if France gets downgraded. It calculates the cost to the European banking system, including the ECB as about €1T. While current EU treaties do not allow for secession, the bank believes leaders are at work to make amendments.

    Banco Santander calculates as many as 2M "mortgage prisoners" – reliant on low rates and unable to move – in the U.K. These people were likely to have purchased their 1st home in the middle of the property bubble, now find themselves with little or negative equity, and can only hope mortgage rates never rise.

    Housing Survey: Bye, Bye To The American Dream? (Trulia Insights)

    Funny how no one even cares today:  The Senate tables a just-passed House bill that would have funded the government into the next fiscal year. Senate Democratsopposed House-imposed changes that would give FEMA $3.65B but take $1.5B from an auto-loan program and another $100M from a program to provide loan guarantees to renewable-energy companies.

    You just can’t make everyone happy:  Just because global markets are crashing doesn’t meaninflation is going away. In fact, the dollar’s spike likely will make the situation worse in many countries. Singapore and Hong Kong each reported consumer prices rising 5.7% Y/Y, and inflation remains elevated in Brazil, India and South Korea; now it will get a boost from their plunging currencies.

    What may be driving stocks green thus far is fear … fear of another government weekend rescue that drives shares several percent higher before anyone can put in a buy order. "Come on, dude," writes Josh Brown. "If you stay short here heading into the weekend, you’re a pig. An absolute hog." – Good advice!  

    Ford analyst George Pipas gives a sneak peek at Sept. U.S. auto sales numbers, saying the annualized rate is tracking at its best rate since April. Seemingly casting aside any recession worries, he adds that after Honda (HMC -0.5%) and Toyota (TM +0.9%) recover inventories by the end of Oct. there are "no excuses" for auto sales. Shares of F +2.3% and GM +2.9% are posting steady gains.

    Solar stocks are getting some needed relief today (TAN+3.1%), after nosediving much of this week on bad news from JinkoSolar (JKS -0.5%) and First Solar (FSLR +1.6%), and the ongoing uproar over Solyndra. SOL +7.2%TSL +3.5%LDK +2.6%.GTAT +3.2%CSIQ +3.9%JASO +2.4%.

    Faber still gloomy:  "The stock market is a discounting mechanism," says Marc Faber. He suggests the recent market action may have little to do with what’s in front of our eyes – Europe – and everything to do with what’s coming: "a meaningfull slowdown and disappointing news out of China." Good stuff. (video

    Art Cashin sees the stock market shaping up for a historical trading pattern known as the "Thursday-Monday scenario": a huge Thursday decline is followed by choppy Friday trading, "then you go into the weekend with great hopes and what often happens is they open the trapdoor on Monday [and] you get capitulation selling… but from that comes a massive rally."

    The current market decline looks a lot like the action of 1946 to Tom McClellan, who says both bear moves were not proceeded by a divergence in the advance/decline indicator. If the pattern continues, much of the decline may be over, with shares bouncing around for awhile. The date of the bottom: Oct. 21, 2011!

    Liquidation of the precious metals continues: Gold off more than $100/oz., -6% to $1,635. Silver -16.8%, printing below $30/oz. at one point, now at $30.43. The metal has easily taken out its lows from the April/May panic selloff. Chartists might say, "where’s the support?"

    Suddenly, as usual, the fundamentals start to matter:  Microscopic Fed rates and opaque information out of China have combined to distort the prices of industrial metals, but fundamentals such as years of rising stock/usage ratios are finally catching up. YTD: Copper JJC -28.5%, Lead LD -25%, Aluminum JJU-14.9%, Nickel JJN -23.7%.

    new poll from The Street finds 42% of Netflix (NFLX) subscribers planning to fully cancel their subscriptions following the rise of Qwikster. A number of readers also feel the company is now "out of touch" with its customers, and think the placing of Netflix’s DVD and streaming queues on separate sites will hurt the user experience. (July poll

    Parsing Netflix’s ‘Apology’ (NYT)

    Morgan Stanley’s Ehud Gelblum is staying positive(previously) on Research In Motion (RIMM) following its earnings miss. Gelblum’s survey of 1,852 mobile users found 46% of BlackBerry owners looking to upgrade over the next 6 months, thanks to strong interest in BlackBerry 7 devices. This leads him to think his shipment forecasts could be conservative. (UBS survey)

  124. Phil

    Amazon (AMZN -0.8%) announces an invitation-only special event in NYC on September 28. The obvious answer: a tablet announcement. 

    The NBA indefinitely postpones training camp and 43 preseason games, as the chance for a full-fledged regular season work stoppage (no ticket sales, less merchandising and limited advertising) increases. For firms with some revenue tied to the NBA – including MSGDISCBSCMCSANWSANKE, and BUD - is a stoppage already baked into their stock prices?

    Three lunchtime reads:
    1) Kass: Low rates don’t hold the answer
    2) Squeezing alpha out of bond ETFs
    3) Spain’s banking mess

     

  125. Phil

    Don’t forget our watch levels are Dow 10,800, S&P 1,140, Nas 2,500, NYSE 6,800 and RUT 660.  S&P right on 1,040 but now one is over yet.  

  126. sundevils

    Disregard previous post was "ignoring" him when its actually the opposite.

  127. Savi

    kurtww—thanks

  128. mrmocha

    kurtww - good intel on metals, much appreciated.  Been making good coin selling SLW calls on this tumble, was just wondering when I would start playing the long side, perhaps silver opex is the right timing…

  129. Phil

    GLD/Okno – Congrats.  We finally got it right!

    Targets/JRW – That is not good as it means a lot of big guys are likely to pronounce lowering of their targets and that always scares the markets.  

    Patents/StJ – It’s because rich companies can bully cash-strapped companies for the most part.  Samsung/Apple is just tit for tat at this point.  

    JRW posts/Sun – That makes no sense.  You don’t see 1:32 and 1:35 by him?   Maybe you accidentally ignored him?  Check for ignore boxes below your comment window….

    VLO/Canuck – They hit $13 in 2008 so make sure you have a plan for that.  Seems like a good plan but not a very direct correlation between lower fuel prices and Russell performance.  

    Gold/Kurt – Nice!  You need to teach your friend how to hedge.  He could be backing up the truck on AGQ (now $117!).  

    Airlines/Asaenz – JPM upgraded the sector.  

  130. gmarts

    Phil, would you be backing up the truck on AGQ at 117?

  131. gmarts

    I ask, because I’m considering it, but the technicals have been trashed to oblivion.

  132. williex

    Phil
     
    opinion on SDRL

  133. jomptien

    Phil/ECA,
    I saw your answer below but I was in at 30+ and not 25, and rolled from 30 p+c to 25 p+c. I think you misunderstood – same strategy you outlined below?
    Thanks
    ECA/Jomp – I only like CHK in that sector and they are volatile enough.  You are not bleeding money you are bleeding UNREALIZED losses and the only way it becomes money is if you terminate the trade and turn them into realized losses.  What you are doing is looking at the PRICE of ECA, at the moment, but that has nothing to do with the PRICE it will be at in Jan 2013 or the VALUE at any time.  If you were scaling in, it’s a non-issue unless you think ECA will drop below $15, and they bottomed out on 2008 at $16.78 so not too likely.  If they do head lower and you can afford more, then I assume you had a net $25 entry and now you’ve rolled to $25 puts and calls with the stock at $20 but you can sell the 2014 $15 puts (now $3.10) for $5 (if ECA goes lower and, if not, then you have no problem anyway) and that will drop your net to $20/22.50 on 2x and if 2x is put to you at $22.50 or lower, you have another 1x coming to you at net $10 for an average of $18.33 and, of course, you can do another 1x at $10 and drop it down to $16.25, which is below the 2008 lows.  If you don’t REALLY want 4x at $16.25, then you do need to set a stop on your 1x position because it was a trade and not an investment and trades we stop out at 20%, right?  
    Another way to protect a spread trade like this (and again you have to be scaling in) is to sell those 2014 $15 puts now for $3 and buy the Jan $25/20 bear put spread for $3.30 for net .30 on the $5 spread that’s $4.80 in the money.  If ECA goes up, then you are happy about your long play and your short puts will likely expire worthless and, if ECA goes down, you get another $4.70 cash towards the cost of a roll and the purchase of more stock at net $10.30. 

  134. mrmocha

    Wow, the monster of the day is ZSL.  I had calls on it all summer and I forgot to roll them last Friday, so this is how I feel

  135. jomptien

    Thanks Ilene

  136. kustomz

    Lots of rumors out there and one I think happens..
    From a large Japanese economics desk’s research. “An ECB rate cut may be imminent.”

  137. jabobeast

    stick please!!!!

  138. gmarts

    wouldn’t an ECB rate cut boost the dollar and supress US equity markets?

  139. jcaesar

    gmarts – I think that what just happened, at least for a couple minutes there.

  140. SellPremium

    Phil – In the short-term (next 2-3  weeks), do you see TLT dropping or holding (and possibly going above) $121? 

  141. jcaesar

    Phil – If the ECB cuts rates, we would expect European markets would to rise, and the dollar to fall.  But our markets and theirs are usually roughly correlated.  So even if the dollar rises in that case, perhaps our markets might rise too?

  142. kustomz

    Laying around at these levels = bad action for the bulls. Recent sharp sell offs were bought up quickly.

    jabo thought you were bearish

    gmarts, it would be a positive for the $ but markets have had a healthy pull back, I wouldn’t expect a bigger sell off unless we get a catastrophic event… we are either up 5% on Monday or down another 10%.

  143. Pharmboy

    OK for SPY calendars……Call side is:  Oct 116 (buy)/Sept 116 Q (sell); Put side is: Oct 110 (buy)/Sept 110 Q (sell).  4.00 debit/contract.  5 contracts to start.  If it is new, 1 contract to start.   Here we go……

  144. roberthjrfl

    Has anybody else been watching the VIX rise while the market is flat or slightly positive.  Would this be a indicator of a big drop coming Monday?

  145. yodi

    Phil holding the Nov SPY 123 long pd 7.00 now 11.63 do you see any green lights for Monday I know it is difficult but would you sell or hold?

  146. Pharmboy

    TOS has a Double diagnal calendar spread on the buy function….FWIW.

     

    USO calendars:  I am in the Oct 32 Calss, and 30 puts (buy); Sept Q 32 Call & 30 Puts (sold).  Total for this is 1.49 debit.   Rember, we buy these back on Monday or Tuesday. If one spread is moving against us, buy back the one that is up, wait on the other.

     

    Good weekend to all!

  147. Phil

    AGQ/Gmarts – I don’t know about backing up the truck but I liked them yesterday at $170 so $117 is very interesting to play for a bounce.  $130/145 bull call spread is $4 and yesterday we looked at selling FCX long puts to offset but you can, if you are brave, sell Jan $55 puts for $3.50 for net .50 on the $15 spread but you’ll want to set a stop on those puts – just in case… 

  148. shadowfax

    Seems IWM is going south, maybe 3:30 stick but I will not play that 64.74 is becoming a brick wall.

  149. JRW III

    The last 35 minute push !! (off 64.74)

    Look at TBT !!

  150. angelcur

    also rumor #34 about euro bank recapitalization..i think th eEURO falls further on a rate cut..th eus is the new snb…wait til china’s pervasvie fraud hits the news..they will want to save face til th elast possible second…such a fraud..we are looking better and better..chinese frantically trying to figure out why we aren’t paying higher interest rates to them..uhoh

  151. SellPremium

    Pharm- Does the "Q" in your posts (i.e. Sept Q 32 call) denote weekly options?  If so, does it refer to current weeklies (i.e. the ones expiring today) or the following week’s weeklies?

    Thanks in advance.  Btw, it’s me GSsucks…changed the name to constantly remind myself to sell premium :) .

  152. cwan120

    Hi, Pharmboy,
    Are you going long on TLT at this level?  What do you recommend if one would like to start some new plays on TLT?

  153. zeroxzero

    Phil:  You might want to look at BPOP.  It has dropped hugely, S&P raised its rating a notch, it has [finally] attained profitability, and it is run by a very smart guy I know who’s also a member of the NY Fed. committee.  I’d be interested in your take.

  154. diamond

    pentaxon – I think your chart is better the way it is. It is clearly a predictive indicator that is (as of now) somewhat aligned with Elliott Wave Theory, Cobra and others. Thanks for posting it …. definitely helps!

  155. cjji

     Phil,
    I own QQQ Jan 12 $40 put at $0.98 as l/t hedge from before.  Despite huge market drop it is only at $0.84 now.  Sell or continue to hold over the weekend?

  156. angelcur

    not sure euro rate cut would be a positive at this point!

  157. JRW III

    Phil / G7

    "I do expect SOMETHING to come out of the G7"

    I don’t think Greece will "default" per se. I think more likely scenario is that the EU will prepare banks for possible write-down of Greek debt first. Then the troika will force Greece into a distress debt exchange, which is technically not a default, but for all intents and purposes, will be viewed as a default because buyers of Greek paper will only get cents on the dollar back in the exchange. And of course, WE will fund the difference !!

     

  158. Canuck

    Phil,
    thanks for the tip to not get too cowboy-ish here.  Got my TZA oct 50/55 for a net 0.75 (3.11) ITM)  and an FAZ Oct 65/70 for net 0.70 ($4.05 ITM).
    This can wait till after hours or the weekend, but I have Jan 55/60 FAZ and Jan 40/45 TZA that were hedging stocks that I sold on Tuesday (Entered the trades in late June). 
    I have reviewed your comments over the past couple of days with respect to similar situations others are in , but rather than guess what you would do I thought I’d ask as well.  Thanks in advance.

  159. Pharmboy

    TLT/TBT JRW….U are in cash every day, but that is a low volume run up on TBT.  They have done their damage on SPY and wiping out any Puts, as the P/C ratio is 1.65.  I see a retrace back up to 116, hence our 116 Calendar, but after that…..look out below.  Again, a low volume run, and next week’s end of Q is going to be boom or bust!  I vote for the latter, b’c if a whiff of any thing comes out negative….

  160. Pharmboy

    Cwan – I like Phil’s short actually, but would not initiate any new positions long or short in here unless you follow strict rules (aka, Opts).  There is just too much jumping around and one can get burned very quickly.  I have only been playing the calendars as of late on SPY and USO.  I have been very busy with my day job.

  161. Pharmboy

    Sell (aka GSucks) – Q = quarterly, which is next weeks expiring set.  otherwise, W = weekly.

  162. morxlntway

    etrade doesn’t show a Qtrly. Do other brokers designate it that way?

  163. Pharmboy

    You can see the channel I/we have been playing on the calendars since August.  Be prepared to take ANY profits off right away on these!!!!

  164. Phil

    ECA/Jomp – I figured your net entry was about $25 but, even so, same thing but not as much of a discount.  

    TLT $121!   Go TBT!  

    ZSL/MrM – That sucks!  

    TLT/SellPremium (great name) – Oh we’re totally playing this run over $120 to be short-term (10-year under 2%, 30-year under 3%).  My theory (and it shouldn’t be a theory as it’s more like a fact that is being ignored by these insane markets) is that, at these rates, the real rate of return is below zero and no one in their right mind is going to tie up long-term money at below zero when you can lend to other countries and blue-chip corporations for 4-5% rates at least.   The Aussie 10-year is 4%, for example and dozens of stocks play 4% and more dividends net of a collar.  

    ECB/JC – If they cut rates then the Euro will weaken only slightly and we may test 80 but that should be it.  Cutting rates is not printing money.  We should get a boost from anything that promotes stability in Europe but just lowering rates doesn’t do that.  Anything that does boost the Dollar will knock down our markets and commodities at least at first – what’s important is what happens next.  

    VIX/Robert – Could be just hedging on the way up.  As I keep saying, hedge first, then buy.  Money needs to be played over the weekend but it would be madness not to cover it.  TLT and gold more telling than VIX – money coming out of fear.  

    SPY/Yodi – Those are the puts, I take it?   What, do you want my blessing to risk 166% of your original investment on a coin flip over the weekend?  No thanks!   If you are such a greedy bastard that you can’t stand taking a 66% gain off the table how about cash the $11.63 (which you should have already done as they dropped from $13 earlier) and risk the profit only on 2x the SDS Oct $25/29 bull call spread at $2.05 each so you risk $4.10 you gained to make up to $3.90 more if S&P goes down just a bit (SDS now $25.48) and, if they go down, you should be able to salvage $2.50 and in no case can you lose your original $7.  

    BPOP/ZZ – I like them but not in this wacko environment when all banks may be tossed under a bus.  Risky enough just playing JPM and XLF/FAS.  

    QQQ/Cji – Still too far out of the money.  If it’s a hedge, then hold it if you have the same reason to but the Nas has been very strong so not the best horse to ride – although we have had better success with SQQQ spreads.  Those long puts are for REAL disasters, not so much re-testing our -10% lines. 

  165. angelcur

    JRW a guy that works for me was a compliance chief at a major international bank he said this about the distress swap:.I would consider that a default, but there has been alot of discussion around that restructuring and whether or not it would result in a default event for the CDS’s

  166. palotay

    AAPL/Phil – Im in the ratio back spread play that you put up a few day ago. Long 4 October $410′calls (basis $22), short 3 November $425 calls (basis) $20. I’m not as experienced with these plays, can you explain the plan? They have a big announcent in early October, but does the overall market weakness change our plan? Where should I consider stopping out? Any adjustments that I should consider?

    Thanks Phil.

  167. Pharmboy

    call SPY quarterly ticker: .SPY110930C116

    put SPY Quarterly ticker: .SPY110930P110

  168. sank1

     USO Calendar / Pharm,
    I have a question about the economics of this trade. If I were to put down 10 contracts on each of the four legs of the USO calendar, the outlay is about $1,500 and the commission to open and close the four legs is about $100. If USO were not to move between now and Monday, the profit is about $160 ($60 after commission) and on Tuesday, it is about $230 ($130 after commission).
    Is this really worth it? Thanks for your thoughts.

  169. Pharmboy

    sank, most likely not if your commissions are that high.  Mine are not.  You can wait a day longer though and juice the trade, but most likely not worth it.  Try to get reduced commissions as that is a lot.  Mine are 1/2 that.

  170. JRW III

    angelcur / Greece

    Yes, best of all worlds, Euro stability and a weaked dollar……………..BUY, BUY, BUY !! ………………

    Into the end of the year as I have said, then there are no more buckets for the next bailout and………………

  171. sank1

     Commissions/Pharm,
    Excellent point. If you don’t mind, which broker do you use?
    Phil, Any discounts that you’ve discussed with tos or other brokers for better commissions for PSWers?

  172. JRW III

    And thank you Mr Stick !!

  173. shadowfax

    And that is the 15:52 stick, extremely hard to play. Great weekend all.

  174. zeroxzero

    Thanks for your comment, Phil.  I’m in XLF and JPM, unsurprisingly.

  175. JRW III

    Well, didn’t quite get what I was expecting, but 3 successful TNA trades non the less !!

    Have a great weekend all !!

  176. Pharmboy

    TOS.  But not sure if they will honor honorary rates.  You should be able to get for less than $1/contract depending upon your account size and frequency of trading.

  177. Phil

    Greece/JRW – Yes, we can authorize IMF to do anything without that pesky Congress getting a say in the matter.  Won’t matter much anyway if our own Government is shut down but no one is worried about that this time around.  

    Hedges/Canuck – Wnen in doubt, sell half is Rule #2 (of 2) for a reason.  If you made a little money on the hedges already and you have cushion enough on the long side, then don’t be over-hedged.  We could go up or down a lot on Monday but, despite being left at the alter for the last 5 times, this time I think that G7 is going to show up!  

    AAPL/Palotay – That was an earnings play, do or die bullish.  The idea was to lower the loss on the bullish calls in case earnings were a miss but, quite simply, the risk is still the net $2,800 on the trade with the logic that the 4 $410s should be worth at least $6,000 before the 3 $425s trigger and begin eating away at the gains so it’s risk $2,800 to make up to $6,000 vs just buying 4 $410s for $8,800 but it’s not magic beans that don’t lose money if AAPL doesn’t go over $410 on earnings.  We can look at alternatives to adjust it on Monday if that wasn’t your intention on this trade.  

    TOS/Sank – Our rep is scott at thinkorswim dot com, he’s one of the founders but doesn’t  have much pull after the merger it seems.  We have a guy at IB too but I have no idea who as I don’t use them.  

    You’re welcome ZZ!  

    Have a great weekend everybody – we sure need the rest after this one!  

    - Phil

  178. yodi

    Phil thanks for the no bull advise on SPY but having seen the market at the last week my wife comes in to my office and tells me it stinks I said don’t worry I am sitting on it. On top of it I have 4 dogs and all is shovel ready for OBAMA.
    All have a nice week end and a better start next week

  179. Phil

    At the close: Dow +0.11% to 10746. S&P +0.26% to 1132. Nasdaq +0.78% to 2202.
    Treasurys: 30-year -1.1%. 10-yr -0.59%. 5-yr +0.308%.
    Commodities: Crude -0.37% to $80.21. Gold -5.42% to $1645.05.

    Currencies: Euro +0.31% vs. dollar. Yen +0.52%. Pound -0.87%. 

    Market recap: Stocks moved higher in late trading after a choppy session, possibly the eye of the storm if Art Cashin’s forecastcomes to fruition. Morgan Stanley led banks higher; techs and consumer issues also showed strength. Precious metals ended a week of historic losses: gold -5.6% today, silver -16.5%. Treasurysrebounded from an early swoon. NYSE advancers led decliners three to two. 

    Global stocks are officially in a bear market as the MSCI World Index falls 20% since its May high, and the U.S. increasinglylooks like it’s next. "Sixteen of the Dow 30 get more than 25% of their revenues from Europe," a trader says. "Something has to give because if 2008 taught us anything, it is that developed economies do not de-couple."

    NY Fed’s Bill Dudley believes there’s been good progresstoward making banks better capitalized so they can withstand downturns, unlike in 2008, but more work is needed to help prevent another meltdown. “Many banks remain dependent on short-term funding to finance longer-term assets from counterparties that tend to flee at the first signs of distress," he says.

    Told you so:  The bank loan market is grabbing some attention, as income-thirsty investors seek returns above Treasurys. Portfolio manager George Goudelias claims that "we’re not going to see defaults spike up," pointing out (sarcastically?) corporate America is "behaving better" than governments. New bank loan deals coming down the pipeline should see mid- to upper-single digit returns, he adds.

    Let’s hope:  Though MBS owners could get hit if the White House rolls out a plan to boost low mortgage refi levels that goes beyond Operation Twist, David Wessel thinks it’s still a good idea. Investors would benefit if foreclosure is avoided, consumer confidence could get a lift, and homeowners are collectively more likely to spend additional money than MBS owners.

    Big banks (XLF +0.8%) are some the day’s best performers despite continued uncertainty about the debt situation in Europe. Leading the group is Morgan Stanley (MS +5.6%), after Bernstein’s Brad Hintz says it faces less than $2B of risks linked French banks. Still, Morgan Stanley’s CDS spreads hit 438 points earlier, up from 399 yesterday.

    Pushed into action by rumors about exposure to European banks, Morgan Stanley (MS) CEO Gorman yesterday had his tradersbuy the firm’s debt in the open market. He also placed calls to 2 well-known analysts, explaining that Morgan’s "net exposure" to French banks was "zero." 

    Sources claim Abdurahman Benyezza, an exec at Italian oil giant Eni (E +1.6%), is in line to become Libya’s next oil minister. Eni has major oil interests in Libya, and is seen as one of the largest beneficiaries of the winding down of the country’s civil war. 

    new report from the EIA estimates global energy use will increase 53% from 2008 to 2035, with vast majority of this growth coming from developing nations. Fossil fuels are still expected to make up ~80% of energy use in 2035, though renewable sources will grow to account for ~15% of consumption, from a current 10%. (.pdf)

    The CEO of the world’s largest copper mining company says the freefall in copper prices may be ending. "You get the feeling it’s hitting bottom…the supply and demand equation still remains tight," says Diego Hernandez of Chile’s Codelco. Dr. Copper isn’t cooperating just yet, down 4.5% at last check.

    Dollar stores move up after a Citi analysis says they should benefit from a focus on trade-down customers at the onset of another recession. Dollar stores are seeing wealthier shoppers: People making $70K-plus are the fastest growing customer segment at Dollar General (DG +1.6%), and average household income at Family Dollar (FDO +4.1%) is double from a decade ago.

    See, too cheap!  Aetna (AET +1.9%announces it will repurchase an additional $750M of stock on top of the $310M remaining on its previous share repurchasement program, repping a potential buyback total of about 7.3% of its current market cap.

    Insurance company Harleysville Group (HGIC +26%) skies on a Bloomberg report it is in talks to be acquired by Nationwide Financial.

    Nike (NKE +4.7%) remains up strongly after yesterday’searnings beat. Healthy sales of basketball shoes and lightweight running shoes contributed to impressive top-line growth, as did the solid performance of secondary brands. Sterne Agee sees Nike delivering innovative product launches ahead of the 2012 Olympics. (transcript

    Dish Network (DISH +4.6%unveils its Blockbuster Movie Pass, a bundled combination of streaming video, DVDs by mail and satellite subscription service. Netflix (NFLX +1.7%may be relievedthat the service for now is being bundled specifically for Dish Network satellite customers, rather than as a stand-alone streaming service.

  180. zeroxzero

    White Knights:      It’s the weekend, so I’ll get in an early lick.  If I was given the right, for 60 seconds, to pick the next President of the United States by myself, I’m pretty sure I would stutter and mumble away the time. 
     
    At least, I would if limited to all known candidates.  Maybe Steve Jobs would run; he wouldn’t  have to leave his office to win.  Maybe Winston Churchill   would work out as a write-in candidate, since being brain dead is not a disqualifying factor these days.  Is it possible that if there simply were no president, and Congress became charged by default  for running the country, that congressmen might have to abandon partisan infantilism and behave like responsible adults?  This is not a conservative/liberal issue anymore.   America’s checks and balances system has locked up into stalemate at the worst possible time. 
     
    Newser) – After watching last night’s debate, Bill Kristol says the official response of his conservative Weekly Standard is: "Yikes." What’s more, he thinks lots of right-leaning observers feel the same way, even if they won’t say it. None of the candidates seemed quite up to the task, especially Perry: "It was close to a disqualifying two hours for him." Mitt Romney was OK, but he remains "a technocratic management consultant whose one term as governor produced Romneycare."
    "We do ask (again!), with a month left before filing deadlines: Is that all there is?" writes Kristol. Mitch Daniels, Paul Ryan, or Jeb Bush would be great, but they’re not getting in. "That would seem to leave Chris Christie," he writes. Given the stakes, "don’t we deserve someone with a bigger sense of the task ahead, and a deeper sense of the solutions needed, combined with a proven record of bold governance, than the current field provides?"

  181. elliotteldrich

  182. zeroxzero

    From UBS 23/9/2011: 

    Dear Reader,

     

    ·        Investors appear to have liquidated gold positions in order to satisfy collateral margin requirements for other assets.
    ·        Since all the structural problems in Europe and the US remain in place, the outlook for higher prices stays intact.
    ·        We advise investors to build up long positions in gold from a diversification perspective, targeting USD 2,200/oz over the next 3-12 months. Good technical support levels are notched at USD 1700/oz and USD 1640/oz.
     
     

  183. rdn4evr

    VEGAS -Anyone know what time we get started Sunday?

  184. lvmoda

    Is there someone organizing the poker game for Vegas?   Need to get a firm count of players and time,…I have a friend who should be able to set you guys up with a table in live casino, maybe the Trop.   I’m not a player, so someone playing needs to step up and coordinate and then we can lock in the details.

  185. lvmoda

    rdn4ever,   I think I remember we’re starting around 11am, but of course we need to start locking down these details.  

  186. Pharmboy

    I will organize the poker, if someone else organizes the dinner.  Lv send me the info.  pharmboy123 at gmail.

  187. rdn4evr

     Thanks LV – Rooms are so expensive Saturday night, plus what I would lose playing poker, I’m thinking of coming in from LA early Sunday.  That way I can stay at the Bellagio Sunday, although I’ve heard the Palazzo is nice.  Anyone up for blackjack on Sunday night?

  188. zeroxzero

    Geez, Phil, now look what you’ve started!! 
     
    "#OCCUPYWALLSTREET March
    Saturday, September 24 · 12:00pm - 3:00pm. We are unions, students, teachers, veterans, first responders, families, the unemployed and underemployed. We are all races, sexes and creeds. We are the majority. We are the 99 percent. And we will no longer be silent.

    As members of the 99 percent, we occupy Wall Street as a symbolic gesture of our discontent with the current economic and political climate and as an example of a better world to come. Therefore we invite the public, our fellow 99 percent, to join us in a march on SATURDAY AT NOON, starting from LIBERTY SQUARE (ZUCCOTTI PARK) at LIBERTY & BROADWAY.

    This is a call for individuals, families and community and advocacy groups to march in solidarity.

    Bring friends."
    #LibertyPlaza

    Broadway and Liberty
    New York, NY

  189. snow

    Presidential candidates/Zero – you know, you start an interesting line of thought. There was a repub candidate a few years ago for whom I (despite being a loony flaming radical) had a lot of respect. This was in good part because during his entry into politics he ran for Indianapolis school board, and my dad ran against him. Very respectful, informed debates. This is Dick Lugar by the way. When he became mayor, same deal, and my grandfather worked for him for a while (at age 82 or so) as chief building inspector. But when he was running for the repub nomination, nothing – and this is a decent, intelligent (Rhodes scholar) man. I must admit, the ’96 repub candidates seemed more sober and generally well informed than the current crop, but even so – Lugar would’ve done very well in the office.
     
    I guess the question we come down to is one that’s been floating around for a while – how do you get decent, intelligent, competent people of integrity into our highest offices?

  190. pstas

    http://online.wsj.com/article/SB10001424053111904194604576583382550849232.html?mod=djemEditorialPage_h
    Chicago Economics on Trial
    Nobel-winning economist Robert Lucas on the high cost of the welfare state, why he voted for Barack Obama, and how Milton Friedman changed his life.
    "For the best explanation of what happened in Europe and Japan, he points to research by fellow Nobelist Ed Prescott. In Europe, governments typically commandeer 50% of GDP. The burden to pay for all this largess falls on workers in the form of high marginal tax rates, and in particular on married women who might otherwise think of going to work as second earners in their households. "The welfare state is so expensive, it just breaks the link between work effort and what you get out of it, your living standard," says Mr. Lucas. "And it’s really hurting them."

    But that was then. In the U.S. at least, the liquidity problems that manifested themselves in 2008 have long since been addressed. To repeat the exercise now with temporary tax and spending gimmicks is to produce the opposite of the desired effect in consumers and business owners, who by now are back to taking a longer view. 

  191. exec

    Zero

    I’m a conservative but I have to tell you, I’ve had it with these guys. Both the Repubs and Dems. I’m even more fed up with the system. What the he’ll do these Politicians even do anymore?  From my observation, they lie, bicker, pander, go on recess, vote themselve gold plated perks, exempt themselves from programs that the general population have to adhere to, spend other peoples money, demagogue and screw just about everything they touch up.   Oh…….I forgot to mention their most important function…..campaign.

    Christ…..anymore these clowns start campaigning the minute they get elected.  Not to mention every position or decision they make originates from the prism of politics or is framed around the premise of covering their asses rather than doing what’s right for the country. …and  Phil… don’t give us your gobble-e-gook about how its only the Repubs that are F’d up….the Dems are just as bad if not worst. 

    In any case I find it hard to even listen to these parasites  any longer and unfortunately am rapidly falling in with the ranks of Americans that feel frustrated, helpless, and without hope. 

    They say that nothing connected to politics can be fixed until it is completely and absolutely broken and it looks like we are approaching that level with politics. 

    I’ve been following politics all my life and it’s the same rhetoric election cycle after election cycle…..education…jobs….healthcare…reform this program the started and F’d up…reform that program the started and F’d up….balance the budget…spending cuts….tax cuts for the wealthy…grandma’s going to lose her social security, so and so is F’ing his secretary, his daughters a lesbian, her brothers a drunk…..yada….yada….yada…..when you think about it….it’s become a freaking joke. 

    Behind closed doors, these bastards have to be rolling on the ground laughing at the stupidity of the electorate. 

  192. lflantheman

    AAPL……. finance.yahoo.com/news/Hong-Kongs-1st-Apple-store-apf-1339418591.html

  193. pstas

    Iflan- AAPL- earnings coming up in about 3 wks. I know you will play the stock according to what the charts tell you but what’s is your "best guess" prognosis?

  194. Burrben

    Las Vegas
     
    I booked my room at The Orleans from the 8th – 11th.  Cost around $110/night with taxes.  Just a FYI since I think there are other people staying there.

  195. pstas

    ZXZ- I would respectfully disagree that we are locked at the worst possible time. IMO, quite the opposite. The country faces serious fundamental fiscal and social problems which are going to require more pain and angst. The hated Tea Party actually is serving an extremely usefull function. That is, to steadfastly throw a wrench in the works making a fuss over what is referred often in the media as "heretofore non-controversial" issues. It is the old 2×4 and the mule routine. Not subtle, not pretty but it gets attention which is exactly what is needed. Every spending and tax question should be controversial. For too long, it has not been so. Go along to get along, etc.

    Many state/local goverment bodies along with millions of individuals and families are working to get their houses in order. The Federal Goverment has only begun to think about it. Much work needs be done.

    As to the candidates- I agree- none too impressive. I heard Kristol interviewed on the radio yesterday morning and he was touting Christie. In fact he said he urged him to jump in. He thinks he may still be considering the plunge.
     

  196. lflantheman

     pstas…….AAPL…..my ‘best guess’ , and it’s only that, is that AAPL is over 440 by Oct 21

  197. angelcur

    every year since the crash we go thru this world is coming to an end crap..i ve been a huge euro bear and treasury bull..and i am gettign v bullish on the us…..once the msm decides to stop talking the economy down..(who said never let a good crisis go to waste)..we should rally hard into year end..keep in mind our banks our now levered about 16 to one..european banks are about 47 to one china NO ONE has a clue my guess is they are very illiquid right now..and have fought hard to debase our currency and world standing in order to press higher interest rates onto our cost of debt..that dog is not barking for them and with ;labor cost soaring there..i would say they are fucked..so again as i have been saying we are cleanest diaper in the laundry..30 year could get to about 153..which is frightening..but inflaiton will take a massive powder if that happend as gold and all the bubbles will finally dissipate like farts in a bathtub

  198. sparky123

    angel i don’t understand how you think china has been depressing our dollars. they have to buy tons of them to keep the yuan pegged and then they have to sterilize them which is getting more difficult. wage inflation in china shows up at the local walmart in the form of higher prices.  the last infaltion print was up to 3.8% and that’s probably not counting the fact that what used to be a lb of everything is now 12 ounces on its way to 8. the whole world wants to eat more meat, talk on cell phones, and drive around in their own cars. that genie isn’t going back in the bottle. the us in spite of everything seems to be recovering very slowly. maybe the fact that most people really don’t pay attention to anything past their favorite tv show is actually one of our greatest economic strengths. as far as bonds are concerned i know the bond market is supposed to be so smart, but i just think that fear is blinding bond  investors to inflation that is right under their noses and when the fear subsides those negative real rates of return are going to bite. there are assets that will continue to deflate, and debts that will continue to be either paid or written off for years, but at some point there will even be a bottom in housing in this country.  

  199. rdn4evr

     Burrben et al, VEGAS, 
    Thanks, yes, by the time you add in the taxes and resort fees on Bellagio or Caesar’s it’s one night price isn’t much less than two nights at Vdara, or three at Orleans.  The real bargain is the airfare – $138 rt on SW – that’s pretty much cheaper than driving.
    So count me in for the Saturday night stuff after all

  200. Pharmboy

    Savi – email me at pharmboy123 at gmail.  We need to start putting together the plans.

     

    What I have so far is dinner on Saturday 7ish at ______ for how many?

    Poker after dinner, but I am going to need a headcount as I am trying to arrange with lv’s friend.

    Sunday morning/afternoon is open, regather for dinner and trading at lv’s?

    Monday morning is trading at lv’s until market closes and then disperse? 

     

    If you are planning on attending, please email me as well, i will put together the list of participants and that way we are all connected by email.  We need to start ASAP.  I will make reservations on Monday, so let me know if you are in for dinner. 

  201. barfinger

    Sorry I won’t be able to hit Vegas with you guys, and after a week of the aging-boomer party lifestyle at Lake of the Ozarks, I really need to spend a few days discussing things with folks like you. Can’t make it because of doctor stuff…. (another aging boomer blessing) .Lake of the Ozarks is a fabulous party town IN SEASON (this was not) mostly for folks under 30, like my kids….. What a wonderfully overdeveloped water resource. $1M homes with property taxes under $1k!!!
    In particular, I would love to debate Phil in person, in an environment where the mike is shared, not like here.
    I nominate John Stossel for President…Often shares my point of view. Always sounds reasonable.
    If I were named King for a day,  a flat income tax with absolutely no deductions or exemptions besides yourself and your adult partner. I am completely confident this would solve many problems. This might be blended with a VAT (which I don’t completely understand). After all, I actually heard Tom Friedman say he believes "it is all about incentives". Can this guy really vote for democrats?????
     
    I second the vote for Dick Lugar, one of the most impressive national figures of my lifetime. What ever Lugar and Moynihan agreed to would have been good enough for me.

  202. barfinger

    Any tips on Memphis, New Orleans, Biloxi, Mobile? Driving that way to our FL residence on Sanibel Island. Doing the western route this time.
     
    Oh, and TLT can not fall much below where it is given the Fed bias. The upper end is unlimited. But then, I’m the guy who lost a sleeve of his last shirt playing this crap.

  203. barfinger

    Phil, do you care to share with us the number of premium and basic members? I know there are more than the 100 or so I see posts from.

  204. barfinger

    Sorry, I got carried away and forgot to ask what is up with CHK, down 3% Friday. I have been a long time believer here, and that surprised me.

  205. strether

     Phil
    In case the market turns up, is there an AAPL bull call spread in the OCT 440 range with an OCT  SPY put offset that would be a possible "what if"  things turn upward home run bet?
    Thanks
    Strether

  206. angelcur

    i don’t believe they directly effrot to debase our currency i think they have a strategic (and flawed) vision of how to increase revenue from our treasury and force us into a more malleable relationship through higher interest rates ..if you listen to them proselytize about our fiscal probity it makes me wish i were a cartoonist…i would have a scolding yu look up at a scoreboard that shows the cds for the us and china…i certainly believe s&p was somewhat tendenciously motivated by their pandering realtionship with china in the timing of our downgrade..the constant jawboning of chinese officials about a new reserve currency or more generally their deisre to unlock themselves from the dollar’s clutches is a perfect example of how ham fisted their efforts are..they measure with a micrometer and cut with a meat axe…the municipal off balance sheet debt owed to the central chinese treasury is in the trillions and ..the amplified fist shaking and whinging over us fiscal poilicy is a cloak under which they idiotically believe they insulate themselves from the objective bias of a far more civilized and sophisticated set of players in world markets who know they are buying (MUST BUY) our debt and continue leading the world to falesly believe they have massive reserves..they hide the offset on those reserves as effectively as they manipulate their sham infested propagandized growth engine ..once their labor costs rise another 15 or 20% the usefulness they offer to our corporations looking for cheap goods is severely mitigated…the dilatory effect this will have on goldman citi and the plethora of hagiographers posing as financiers who have attempted themselves to aid and abet china in its false ascension as the central cog in the world’s growth machine ..will be nuclear in its after effects..if the president has anyone around him with a precise vision of how completely vulnerable ( compared to the us) the rest of the world and particularly europe and china ( two of the us’s  prime collaborating protagonists) will become the hone upon which we (finally and completely) sharpen our wits..i could go on about this in far greater detail…i have had a vast bet of europes unravelling of bubbles popping and the us becoming quickly ascendant again..china will NEVER replicate the last 15 years of again unless its as a result of a vibrant chinese consumer……because the chinese people won’t allow it..serfdom disguised as a collective is still a slave colony……once we began tracking AND publicizing the hacklike hacking they have tried with our military… corporations etc., AND when the us government began a far more intense signalling that we knew what was up..i thought wow…they’ve known forever..why now..well i think its the first indication that we don’t believe them worthy of a full and trusting economic arrangement…SHOCK..i did finally sell th ebalance of my bonds wednesday and thrusday and got into a  relatively small short in the 30 year..i suspect the aussie and euro go much lower but i had to cover more than half my position their but remain short euro in gold terms…i think we could break the august lows but i am starting to see th epotential for a massive move higher in stocks into the year end…all of course FWIW

  207. escohen5

    Vegas Details (this is my current understanding, anyway) -- 
    Dinner on Saturday at 7PM — Phil said where, but I forgot!  Anyone have it?
    Poker Tournament after that — count me IN!
    Sunday 11AM Cafe Moda — then futures trading starts at 3PM Pacific
    Monday — back at Cafe Moda for the trading day…6:30AM?

  208. sparky123

    angel i love your posts it’s like when i was 12 and finished a novel in the naugahide recliner in the den and didn’t want to go to bed yet even though it was after midnight. i turned on the tv to the opening scene of dr strangelove and soon enthralled said to myself "yes there is intelligent life out there somewhere."

  209. jabobeast

     Phil--any real help from the G7 today or is just more lip service?

  210. biodieselchris

     TLT, we’ve seen this movie before.

  211. angelcur

    sparky the guy/gal who came up with the name naugahide..that was a smartypants!…

  212. Savi

    Hi Everyone—I am in Bannf Alberta--but will  put a list together tomorrow so that we can all coordinate Vegas

  213. craigzooka

    I created a google site for the psw las Vegas meetup. I will post all the information I can find and give you the address Sunday afternoon. That way we can keep track of everything.

  214. craigzooka

     Here is the address and most updated information.  I will continue to update it with any additional info.

  215. Phil

    Good morning!  

    Busy weekend but I plan to be around in the afternoon. 

    Esco’s schedule for Vegas seems right, my plan was Nobu (Hard Rock) at 7 but depends where and when poker is as we need to be realistic on timing.  As poker takes a while I think we’d best start by 9 wherever that is. 

    Sunday I guess we’ll trade futures until we get bored and then go eat if people are in the mood but don’t forget I have to either be at Cafe Moda at 6 (if LV is even up to open it then) or maybe I’ll start the day in my hotel and we’ll meet there a bit later – we need to work out that detail.   I have a night flight on Monday so Tuesday will be a rough one for me! 

  216. Savi

    Vegas update—I have 18 confirmed attendees
    Phil
    Savi
    lv
    randers1
    danwilliams
    kurtww
    rustle123
    pharm
    pharuk
    esc
    rnelson
    rjarboe
    burrben
    tgolder
    mwilhite
    terrapin
    chrisashfield
    nicha
    let me know if I missed your name
    Thanks

  217. Maya1

    Lflan
    I have a more important question:
    what is your “best guess” in the scenario that Europe tanks over next few weeks, dragging us down another 10%
    what does THAT do to AAPL?
    Have a great weekend.

  218. mb22

     Savi -
    I am going to be at the Monday trading session.  Can you send me an email regarding deposit or anything else I need to do to confirm?  E-mail – jennifersurovy@yahoo.com

  219. zeroxzero

     Angel:  My compliments, very incisive.  I’ve thought about China for quite awhile — who hasn’t — without feeling I’ve sorted it out.  So that was very helpful.
     
    On the longer timeframe, the Western hemisphere, with 950M people comprising 13% of the global population, and at least 25% of the resources on two contiguous, ocean-surrounded, continents with three countries occupying the bulk of it — or two, if you count the U.S. and Canada as one — will see substantial inward capital flows eventually.   The Eastern’s hemisphere’s near-6 billion people always have a couple of wars or insurrections going on, and every few generations they really kick out the jams with casualties in the millions. So betting on the U.S. longer-term is an easy call.
     
    You suggest that China beguiled us into believing that it is a wealthy and powerful country, while it is actually an overleveraged dictatorship with half the per capita income of Mexico.  That China’s vaunted "reserves" were leveraged up and spent many times over on a massive jobs program after export volumes plummeted in 2008.  And that while Chinese Stimulus may have prevented revolution, it has also rocketed Chinese national income well above that of the competition elsewhere in Asia and Eastern Europe.
     
    In sum, you appear to mean that all of the profits accumulated by the Chinese within a generation have been frittered away on a jobs  program to maintain an autocratic regime.  That suggests that the accumulated national income that was transferred on a large scale from developed countries to Emerging Markets over the last 30 years, principally Asia, leaving an overindebted Europe and U.S. to struggle in its wake, became the "equity" in a giant Chinese-elite-get-rich scheme that would leave Countrywide looking like the Swiss national bank by comparison.  It certainly appears so.
     
    But dictatorships can extend and pretend even more effectively than supine democracies, so it’s hard to see who’s going to call a default on Chinese property loans.  And it’s a useful policy tool to be able to lower wages 20% across the board and shoot any given 20,000 people who turn out with Molotov cocktails in the village square.
     
    In sum, while I agree entirely in respect of a Great Unraveling in Europe, as well as the Great Deleveraging of Asia, all of which will eventually inure to the benefit of the United States and its Western nation compatriots [Brazil/Canada], it may be a longwave event with a complicated evolution [governments react] that is more hazardous than profitable to bet on.
     
     Europe not so much; the painless solution to Europe’s fiscal crisis was for the Germans to step in and support a Eurobond.  But as the magnitude of the Peripheral’s aggregate indebtedness is projected forward into what has become a very unhelpful global economy, it becomes more obvious that Germany is shifting the locus of its economic future eastward and will not be writing any blank checks until the Euro falls a lot closer to par with the dollar – and even then, perhaps not.  I’m Euro short / Gold long,  too.

  220. zeroxzero

     Correction:  A Eurobond would have been relatively painless for Peripheral Europe, not painless for Germany!!

  221. jabobeast

     

    Bank Lobby Rejects Reopening of Greek Rescue Deal

     

  222. stjeanluc

    Great post about China Angel! I have also been saying for a long time that the easy part of the road is now behind them! The challenges that they will face in the next 20 years are quite daunting and diverse – ecological with a poisoned environment that is a victim of their growth, economical with mountains of hidden debt (see a post I had from Jim Chanos this week), political (no explanation needed there) and demographic as their population will age rapidly with the increased pressure that it will put on society. In addition, their resource need might have some grave consequences on their relationship with the rest of the world. As Phil likes to say, this is tomorrow’s crisis – today’s is Europe. And that is probably right, but something we need to prepare for as well!   

  223. lflantheman

    Maya1. I don’t believe Europe brings us down 10% during the next 30 days. Even should they, I don’t expect AAPL to follow. But of course we don’t know for sure, so keep your hedges in place, and you should be fine.

  224. barfinger

    I have played my hedges with options rather than the underlying, and after some examination, I believe because of decay issues, you are better off hedging by selling calls against the 3x bull rather than puts against the 3x bear. Even so, I have played EDZ (3x bear emerging markets) for nearly two years, during which time it has dropped by more than 50%, and yet, I have a small gain on it. I believe you can maintain downside hedges by selling calls against the 3x bull even more effectively than that. I will do so on TQQQ if we rally on Monday.

  225. kustomz

    Hugh Hendry of Eclectica Asset Management (http://www.eclectica-am.com/) was interviewed recently (24/9/11). He spoke about the economy, markets and speculation. Thanks to Hugh for continuing to share his thoughts and being ever-so-patient with these interviewers and interviewees!
    http://www.youtube.com/watch?v=fyaSERuv2Z4

  226. celesteschein

    Hi Savi-turns out I can attend Vegas also.  I know you posted before, but to save me time from scrolling for your email, can you send deposit and any other info to celeste.turbeville@gmail.com?  Thank you!

  227. danosu77

     Hello Vegas PSW friends,
    Please let me know if you need help setting up (LVModa) or making plans.  I arrive at 130PM on Saturday and I am happy to provide any help if needed (I practice integrative medicine and acupuncture so let me know if you need that also!).
    I am in for dinner on Saturday and social Poker (if someone teaches me and the cost in contained.)
    Please count me in for all activity on Sunday including social events.
    Monday I will show up as early as Phil lets me.  I have never been to Vegas, but for me this trip is entirely to meet all of my PSW friends and learn all I can from Phil.  
    Kurt and I are staying at the Orleans and sharing car or cabs.  If anyone else is interested, it is relatively inexpensive and they have plenty of rooms.
    Take care,
    Dan
    drdanwilliams@mac.com

  228. strether

     Phil
    What do you think of the Oct AAPL 420/450 bull call spread at $7.20?
    Thanks
    Strether

  229. jmm1951

    barfinger/TQQQ
     
    I see that TQQQ is about $65 now and you can sell the October $60 calls for $10. Is this what you are talking about? Stock goes up and you are called away for a profit--good. Stock goes down, and … ? You keep rolling down with it until it reverses?

  230. Phil

    I hope everyone had a nice weekend.

    Futures are off to a nice start despite dollar at 79.1.  Up over half a point at the moment.  

    Congress apparently is holding off their vacation until they either make an agreement or crash the Government this week.  

    Candidates/ZZ – It would be nice to see better people get in but who wants to subject themselves to all the BS?  Not many people are going to step off the sidelines to have themselves and their families subject to public scrutiny, ridicule, etc. unless they have already chosen that life early on.  For someone like Jobs – there’s no real upside – he’s super-successful, would have to take a massive pay cut and lose control of his company (ignoring recent changes, of course) could only either be embarrassed by a defeat (like Meg Whitman) or end up a disappointment as a leader and I just can’t see a guy like Steve Jobs taking crap from Congress so you’d have to want to go in looking to break the system – not work with it.  

    To that end, crazy as he is on many topics – Trump would have been great.  You need a guy who answers to no one and doesn’t give a crap who he pisses off (Churchill is a good example, so was Roosevelt and Kennedy – all guys who didn’t need politics to make their careers but really thought they could do some good).  So we need a Trump or a Bloomberg or Jobs (but, unfortunately, not possible) or Paul Allen, Mark Cuban…  I do like Obama but his fatal need to please people is a problem on the big stage.  

    Warren is a good person but probably too good for the BS of higher office.  Hillary was great but looks beaten down after 4 years and would only polarize the opposition.  Can we just have Bill back?  This is not, by the way, an opening for Republicans to say the the Dems have no one as the last debate certainly proved no one would be a better choice than what the Reps are fielding. 

    Dollar still climbing – 79.30 and indexes going flat.  Gold $1,851, oil $79.95…

    Gold margin/ZZ – I’m not buying it.  So many people are on the wrong side of this trade with huge money that they will say ANYTHING to try to save it – much like oil in 2008 when, the more it went down – the more the major houses would put out notes on peak oil and other BS.  

    Occupy Wall St/ZZ – That turned ugly this weekend.  Good for our TASR stock!  Better pictures from the protest web site

    Inflation/Sparky, Angel – Yes, let’s get real about inflation.  Wages ARE going up.  Commodity prices may be in a Fed-financed bubble but that’s holding back demand and, when it pops, there is the reality of limited resources once we burn off the speculative excess.   The reason inflation gets away from economies so quickly is because in the Recession lows you’ll get stimulus that seems ineffective (and in this case much of it is just back-filling financial holes from the crash) but, in reality you have many, many people in the supply chain that are unwilling/unable to pass through their increased costs but, that changes VERY quickly once the economy heats up even a little.  

    In the title industry (where I have a new venture starting), for example, home closings are off about 70% from their peaks in 2006 and that’s put half the title agencies out of business with the reamining agencies operating with half the staff they used to have and barely breaking even for the most part.  As with many industries  - they can’t quickly scale back up without an extended training cycle so if demand comes back – supply will be caught extremely short and prices will rise very quickly and skilled workers will be paid a good premium to come back to the industry and that will cause other companies to bid for qualified workers.     

    NO (effectively) homes are being built and far less cars are being sold and very little commercial or infrastructure projects are being initiated so steel, rubber, iron, copper, wood, tools, construction people are being utilized but, with 20% unemployment overall and 50% of that industry laid off – it stands to reason that 30% of those people have moved on to find other jobs at least.  Again, tremendous demand for experienced skilled labor on the rebound.   

    It’s been 30 years (late 70s) since we had a proper recession, which was caused by War, Debt, High Unemployment, Rising Commodity Costs, Divided Government, Slowing Global Economy…  Things were so bad, both the US and Europe turned to Conservatives for answers and we got Reagan, Thatcher etc.   Remember Kent State, Charles Manson, Peruvian Earthquakes, Chinese Spy Satellites, the Cold War, the Pentagon Papers, Idi Amin, Israelis taken hostage at the Olympics, Wallace Shot, DDT, Philippines under marshall law, Nicaraguan Earthquakes, the October War in Israel, Patty Hearst kidnapped, lower speed limits (my pick for biggest catastrophe), Ethiopian Famine, India testing nukes, Tornado Summer, Lebanon Civil War, Saigon Falling, Ford assassination attempt, the Metric System, the Wreck of the Edmund Fitzgerald, Soweto Riots, Karen Ann Quinlan, Ebola, Son of Sam, New York’s blackout, Love Canal, Jonestown, Iran revolution, Three Mile Island, Greensboro Massacre, Nicaraguan Revolution, that Happy Days episode where Fonzie jumped the shark….  

    Imagine if just a few of those things happened these days, with the hyperbolic media coverage we give everything.  Ebola, especially comes to mind when you consider the way we freaked out over SARS and the Bird Flue – imagine graphic images coming at you 24/7 as each new case of Ebola was discovered…

    As I said on Friday – it’s always something and all that crap happened to us in one decade (the decade of our Bicentennial too) and things really didn’t get better until about August  of 1982, with the Dow at 800 after having been at 1,000 in 1966 so 16 years of nothing until then.  Reagan had been elected Nov of 1980 and the hostages were released and oil prices came down but a lot of bad stuff was happening then too (Olympic Boycotts, John Lennon shot, Poland Revolution, Cuban exile, ABSCAM, Saddam vs. Iran, Grain embargo with Russia, Toxic Shock, Pope shot, Libyan War, Aids broke out, Reagan Assassination attempt #1… – all in just 1980 and 1981) but it’s all about attitude.  

    Reagan doubled our debt and had an irrational tax policy that his Vice President called "Voodoo Economics" that could never possibly balance the budget and he doubled the size of government while collecting less taxes and pushed us into the biggest military build-up in history, building nukes no less!  All that and the markets began to rally because he made people feel confident and then the jobs came back but, mostly, it was inflation that made everyone rich – the same inflation that Ford and Carter had tried to tame was FLYING in 1980 and 1981 in the teens before it began to calm down.  

    Of course the markets began to reflect those higher prices in earnings and workers were making more and paying off their debts AND taxes were lowers – substantially for top wage earners and corporations.   That’s what I think is the most likely path to our next recovery – simple global inflation that let’s everyone pay off their debts in inflated currency.  That will spur demand for homes and everything else as people are pressured to turn their money into stuff because money loses value in the bank and stuff – especially stocks – does not..

  231. kustomz

    Geithner Plan for Europe is last chance to avoid global catastrophe
     
    http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8788138/Geithner-Plan-for-Europe-is-last-chance-to-avoid-global-catastrophe.html

  232. snow

    China – good stuff all. The wild card for China, of course, is North Korea. China’s working on reestablishing their historic suzerainity, South Korea is playing with being anti-American (with considerable reason I might add) but realizing this may mean opening the area up more to Chinese influence and do they want that. And both China and South Korea hope like hell that North Korea doesn’t fall suddenly, although given the resemblance to Romania under Ceau?escu, that’s a strong possibility. The first indication we’ll likely see of that will be masses of Chinese troops on the border to keep refugees inside North Korea – since over half the population lives in the northern third or so of the country.

  233. Phil

    Poker/Pharm – Make sure people understand it’s a tournament – the idea is to have a very limited amount of money you can lose and that way it’s really just a fun way to spend an evening – not about wiping each other out.  I hope everyone comes because the idea is to all sit at tables, playing games and chatting.  Since the nature of a tournament is to move chairs around, in a couple of matches we’ll all get a chance to sit with everyone else.  That’s why I like the idea.  

    Sunday I see as straight through from 11-whenever we are bored with futures.  That will likely be 6 and then whoever wants to go to dinner can (I’m not sure all are staying to Monday).  I know Monday at 1pm when the markets close, I’ll need to go check out and then I have a flight that evening.  

    Memphis/Barf – I like the Peabody Hotel there, right in downtown next to many nice places to walk to.  I haven’t been to New Orleans since it was flooded but I’m sure most of the good stuff is back in business.  In New Orleans I like the Old French Quarter hotels but the Ritz Carlton is very nice around the corner.  

    Number of Members/Barf – We try to keep it under 500.  As with most things in a free society, there is a large, silent majority and thank goodness because we have less than 200 active commentors and not even 100 on any given day and that leads to 200-300 comments a day here plus another 100 on Opt’s side and I really don’t want much more than 300 comments a day on average.  That way I can get back to everyone – eventually. 

    CHK/Barf – Court decision calls into question legal rights to Marcellus Shale (not just CHK but all companies out there) as well as the ongoing Fracking debate (much like the Global warming debate it’s pretty much facts vs. denial of facts).  I think, in the end, it’s good for CHK, who have vast conventional gas holdings so if Fracking goes away or Marcellus goes away – yes they take a hit but then nat gas prices head back up on smaller supply.  

    AAPL/Streth – Remind me in the morning to take a look.  

    G7/Jabob – NOTHING!  

    Ultras/Barf – Over time, all ultras decay from churn rates and the fact that 100 – 10% is 90 but 90 + 10% is 99 so up and down moves that even out also damage the ETFs because they have no real value of their own so there is no price to hold.  That’s why I do like to get short on triple ETFs that climb too high but also long on ones that get very low (like $4 or less) as they also tend to hit a lower limit (unless they revalue and then the decay starts again).  

    Hendry/Kustomz – He’s been a Gloomy Gus this decade but, so far – so right….

    AAPL/Streth – These are do or die on earnings so you have to REALLY want to play that game.  A short put on an index is not necessarily a good offset because an AAPL miss can tank the Nas and that can spook the other indexes while an AAPL beat could crush an offsetting short play.  If AAPL were beaten down, then I’d be into playing them long but they are baking in some good numbers above $400 and it’s not better than 50/50 they make $430 on earnings – especially if the market is still dragging.  

  234. Phil

    In a communique from its annual meeting, the IMF agrees "to act decisively to tackle the dangers confronting the global economy." Other than promising a renewed push to implement the crumbling July 21 agreement – a 2nd Greek bailout and expansion of the EFSF – the agency offers no specific policies.

    Today in Washington: IMF’s Borges tries to scare the ECB to scare the markets into submission. While Nowotny moans that "it’s not helpful to have an avalanche of new proposals every week," Smaghi hints that €TARP may be coming down the pipeline.

    The Telegraph reports German and French officials working on a multitrillion-dollar "firebreak." Among the steps is a bank recapitalization going well beyond the laughable €2.5B tagged by the EU stress tests (the IMF puts the figure at €200B, others say €1T). A bump in EFSF firepower to €2T and a "controlled" Greek default giving a 50% haircut to lenders are also in the mix.

    S&P’s David Beers warns enlarging the EU bailout fund (EFSF) could trigger ratings downgrades – for the fund itself, and even Germany and France. "There (are) no cheap, risk-free leveraging options for the EFSF any more," he says. 

    "We are discussing a broken ankle in the presence of organ failure," says Larry Summers, talking about Greece while castigating policymakers for the "grudging incrementalism" of their approach to solving the debt crisis. It’s a good line, but one can only imagine the look on officials’ faces while being lectured by the man whose fingerprints are all over the policies that allowed the great credit bubble. 

    Today’s markets border on the bipolar, says Minyanville’s Jeffrey Kerr, hyper-focused on just the dismal global macro picture. In reality there are reasons for optimism. In addition to record cash levels on corporate balance sheets, the average EBITDA margin for non-financial S&P 500 companies remains near 22%, well above pre-recession margins. It all boils down to your viewing preference, top-down or bottom-up.

    Maybe it’s the bi-polar statements from analysts:  "Absent deficit spending, we’re mired in the worst depression since the Great Depression," observes Rob Arnott, "and the Fed may be making things worse." We have negative real interest rates, and inflation rates in the range of 5%-7%. So, Arnott says, "if inflation kicks up another 1% or 2%… this creates some fairly serious downside risk for equities if the Fed continues on its current path."

    Brett Arends’ 10 money moves to take advantage of the market tumult include this: Ramp up 401(k) and IRA contributions. Stocks have become a buying opportunity, he says, especially when aided by an employer match. And if the economy gets worse, in a worse-case scenario money in a 401(k) and an IRA is sheltered from creditors as well as taxes.

    Fund manager Simon Baker, who made a prescient bearish calls on Chinese equities this year, thinks we’re already in a recession, and that plunging copper prices and FedEx’s (FDXweak guidance act as clear leading indicators. Regarding the latter, Baker asserts, "If people aren’t shipping, then people aren’t buying."

    Dick Bove again assails Congress and the Fed for policies that have "broken" the banks, effectively removing them from the lending process and preventing their ability to convert monetary ease into economic growth. Operation Twist will prove another major impediment, he says, as banks likely won’t make 30-year home loans at 3.75% in an inflationary environment.

    John Taylor – who runs the biggest independent forex-based hedge-fund firm on earth - says Greece will default, the euro will go to hell, and the dollar rally is just getting started. And, in five years, we could see $500 oil. 

    CME Group hikes margins again on gold by 21%, silver by 16% and copper by 18%. (pdf)

    Many U.S. companies are holding most of their cash overseas in order to avoid paying U.S. taxes, a WSJ analysis of their public filings shows. While giving little sense of how that cash would be deployed if repatriated, the findings support the argument that a change in tax policy would result in a flood of cash back into the U.S.

    "Tune out the fear and panic," writes James Altucher, and focus on the tremendous value in big caps like Apple (AAPL), Exxon (XOM), Wal-Mart (WMT), Amazon (AMZN), and Google (GOOG). No matter what happens in Greece (or the U.S. for that matter), these attractively-priced businesses are well-positioned to continue being profit machines well into the future.

     It’s a crash, all right, but in your run for safety, good luck finding a solvent government that will give you anything but a paltry yield. The answer, CSFB’s Andrew Garthwaite says, is in the six safest stocks he knows - big, healthy, high-yielding companies with multinational income: Novartis (NVS), British American Tobacco (BTI), Intel (INTC), Vodafone (VOD), Coca-Cola (KO) and Microsoft (MSFT).

    Notwithstanding Meredith Whitney, muni bonds have been the place to be in 2011, up 9.5%. But they may have no more room to run, as cities and states start to flood the market – and especially if their tax exemption gets capped. 

    UBS CEO Oswald Gruebel has stepped down amid the fallout of the $2.3B rogue trading scandal, the bank says. After leaving Singapore, UBS board members reconvened by conference call Saturday to address its latest crisis. Board member Sergio Ermotti has been appointed CEO on an interim basis.

  235. Phil

     

    On Rhetoric and the Art of Persuasion

    Email this post Print this post
    By Barry Ritholtz – September 25th, 2011, 5:48PM

    Persuasion is clearly a sort of demonstration,
    since we are most fully persuaded when we
    consider a thing to have been demonstrated

    Of the modes of persuasion furnished
    by the spoken word there are three kinds.

    Ethos: Persuasion is achieved by the speaker’s personal character
    when the speech is so spoken as to make us think him credible.

    Pathos: Secondly, persuasion may come through the hearers,
    when the speech stirs their emotions.

    Logos: Thirdly, persuasion is effected through the speech itself
    when we have proved a truth or an apparent truth by means
    of the persuasive arguments suitable to the case in question. (Logic)

    -ARISTOTLE, “Rhetoric“, 350 BCE

    >

    It has been several 1000 years since Aristotle wrote those words about Rhetoric and the Art of Persuasion. The debate about whether Social Security is a Ponzi scheme reminded me that the internet has not advanced the art of persuasion very much, and indeed, may be setting it back.

    Why is this? Regardless of whether you studied Epistemology in college or not, Words have meaning. When we misuse the specific meaning of words to to argue for or against something, we are engaging in the form of rhetoric Aristotle termed “Pathos” — appeals to base emotion.

    For example, demonizing Social Security as a Ponzi scheme is a form of Pathos. It is not an appeal to higher or better nature, nor is it an appeal to logic and reasoning. Rather, it is designed to generate a negative, unthinking emotion.  So too, is calling that form of argument “demonizing,” but at least I am demonizing ideas, and not people, as is so commonly done online.

    If I disagree with someone, that does not make them a criminal or a Nazi or a racist or homosexual or a slave-owner. But those terms are commonly bandied about in internet debate, substituting for what otherwise should be intelligent discourse. It is a rhetorical technique used to demonize opponents. In my opinion, it is intellectually lazy, often reflecting a weak argument.

    Which brings me to our debate:

    What is a Ponzi scheme? It is a fraudulent criminal enterprise designed to scam unsuspecting and naive suckers out of their money.

    Is that what Social Security is? Hardly.

    In my book, that form of rhetoric is weak. It reflects an intellectual laziness and lack of gravity. It appeals to the emotions. Lastly, it betrays the weakness of the argument.

    Once again I find myself shaking my head. America, we can do better . . .

  236. Phil

     

  237. angelcur

    great new phillipics above bravo…now barry left out bathos which is the admixture of air leverage and shit we ve been fed th elast 7 years..truly sad for this great country to have someone so bad handoff to soemone no more good in his own way…please let there be someone out there capable of helping this world made bad by arrogant mediocrites

  238. zeroxzero

     "When we misuse the specific meaning of words to to argue for or against something, we are engaging in the form of rhetoric Aristotle termed “Pathos” — appeals to base emotion."
     
    I always thought that misusing words to argue for, or against, something as an appeal to base emotion was called "Politics."  It is encouraging to know that my blanket condemnation of our political process as "Pathetic" finds support within a 2,500 year old intellectual tradition.

  239. Maya1

    Per JPM,
    AAPL cutting IPad supply chain orders 25%. Why?
    Non issue, or does it reflect a world wide slow down?
    Is the news already baked in? Or are we seeing just the tip of the iceberg?

  240. kustomz

    It has begun!!

  241. diamond

    Phil – RE: "It’s been 30 years …"
     
    Set it to music and you might have a hit! :-)
     
    We Didn’t Start The Fire
     -- Billy Joel

  242. zeroxzero

     Euro falling off a cliff.  Now we’ll see to what extent going long solid U.S. large caps while fulling hedging the dollar exposure can be made to work.

  243. Phil

    Good morning!

    Holy cow, look at the 3am trade today…  The Dow fell from 10,800 at 8pm to 10,544 at 2:40 and is now back to 10,773.  

    Dollar had climbed to 79.65 and now back to 70.04 and that’s the whole story – 1.5% moves up and down on the Dow on 1/2-point moves on the Dollar.

    Oil flopped all the way to 77.11, gold fell to $1,535, silver to $26.15, copper to $3.07, gasoline to $2.47 and nat gas fell to $3.68 before all bouncing back to around Fridays close – which wasn’t so great either.  Nice flush overall if we hold the bounce – Asia went down 2% with Thailand dropping 5% but Europe, other than the FTSE, which is flat but climbing, is up 2.5% this morning even though there is still nothing solved.  

    The only good news I see is Germany’s September IFO Business Index "only" fell to 107.5 from 108.7 vs 106.5 expected – not really the kind of thing you expect 2.5% from….   Still, it’s in-line with my theory that the go forward data is not so bad and all we had (with the bad data) was an echo of the Japan quake rolling through the system – no a long-term contraction.

    It’s all pre-market BS so we’ll see what holds up – markets are still shakey and rumor-driven above all else so the indexes can be played short off the 6pm highs like Nasdaq (/NQ) below the 2,200 line and the S&P (/ES) below 1,140 and Dow (/YM) below our 10,750 line – all with tight stops, of course.  

    It’s the Dollar I don’t trust to get below 79 without a fight and they’re testing it now.  Dollar below 79 is bullish but the easy play at the moment (6am) is to play down with the EU testing 2.5% up and the Dollar testing 79 but just very short-term protection of the Futures advance more so than a bearish bet.  

    Monday’s economic calendar:
    8:30 Chicago Fed National Activity Index
    10:00 New Home Sales
    10:30 Dallas Fed Manufacturing Outlook

    An early rally in the futures gives way to overnight selling just ahead of the Europe open. Culprits include confusion over the takeaways from this weekend’s IMF gathering and a strongly worded warning from Angela Merkel.

    France Has No Plans to Recapitalize Banks, Budget Minister Says. French Budget Minister Valerie Pecresse said that the government has no plans for a recapitalization of French banks and that the lenders are “solid” and don’t need more funds. 

    Portugal Downgrades 2012 Economic Outlook

    Darling: Action on Euro Crisis ‘Imperative’. Alistair Darling has warned that the global economy faces a worse crisis than it did three years ago amid growing fears that Greece will default on its loans. He was speaking after Sky sources revealed that members of the G20 group of nations have had behind-the-scenes meetings in Washington DC to prepare for Greece defaulting on its £350bn debt.

    German Finance Minister Wolfgang Schaeuble said Greece is likely to need ten years to recover from its economic crisis, citing an interview. The Euro group risks a breakup if Greece isn’t rescued and the European Union would lose political trust and power, he also said.

    German Chancellor Angela Merkel said Greece’s exit from the euro zone or a debt cut would cause a domino effect of contagion for other euro-area countries. Any such step would put an enormous amount of pressure on other countries, Merkel said at a regional party meeting where she defended her euro crisis policy against critics from her own bloc.

    Hugh Hendry Just Took Part In The Critical Debate About The Eurzone Crisis. Hedge fund manager Hugh Hendry, whose prediction of the crisis in the Eurozone was spot on, says we’re at a rare moment in economic history. "The problem is greater than the ability of the politicians to respond," he says in a radio debate on BBC’s Bottom Line. "There is no policy prescription that they can offer that will redeem the situation. The redemption will come through the citizens of Greece and elsewhere throwing the politicians out and rejecting the European ideal."

    What You Need To Know About The Rumored Bazooka To Save The Eurozone—And Why It May Have Already Failed.

    S&P Reminds Europe Of Its Toxic Catch 22, Warns EFSF Expansion Will Lead to More Sovereign Downgrades, Rendering EFSF Itself Useless.

    Christine Lagarde: IMF May Need Billions in Extra FundingThe head of the IMF has warned that its $384bn (£248bn) war chest designed as an emergency bail-out fund is inadequate to deliver the scale of the support required by troubled states. 

    Market Mayhem Turns Longstanding Forex Bets Into Losers. It has been one of Wall Street’s few winning bets this year. Ask an investor trading currencies or bonds and you’ll get similar advice: Sell the U.S. dollar and buy currencies of nations in the developing world with stronger economic growth and smaller debts. Now a string of weak economic reports around the globe is raising the specter of another recession and forcing some big investment institutions like pension funds and insurance companies--which typically take slower, longer-term-focused decisions--to suddenly dump risky foreign currencies and return to the safety of the U.S. dollar, traders say.

    Copper has the most significant "fundamental" risk of declining out of the industrial metals because prices are well above the marginal cost of production, Macquarie Group Ltd. said.

    China’s Stock Futures Decline After PBOC Governor Calls Inflation Priority. China’s stock-index futures fell, signaling declines for the benchmark index, after the central bank governor said inflation remains the nation’s “top concern.” China Vanke Co. and Poly Real Estate Group Co. may decline among developers after China Business News said the city of Chongqing will start imposing a property tax on existing villas. 

    Is the Chinese Economy in Trouble Too? As the American economy appears to teeter on the edge of another recession, Europe struggles with a financial crisis and emerging markets like Brazil and India show new weaknesses, China may appear to be in better shape than most countries, economists say. But “better” is relative.

    South Korea’s Sovereign Debt Index Deteriorates Further. The cost of insuring South Korea’s sovereign debt against default surpassed that of France, data showed Sunday, reflecting growing concerns over the local financial market’s volatility.

    After three years of delays and billions of dollars in extra costs, Boeing (BAdelivered yesterday its first 787 Dreamliner to All Nippon Airways. Boeing hopes production will speed up as technology becomes more efficient and lighter.

    Don’t forget our local lunatics are still in the Halls: Congress Forced to Stay as a Shutdown Looms. Congress was scheduled to be off this week, but lawmakers must stay in Washington because they made no progress over the weekend in settling a dispute over spending that threatens a possible government shutdown.

    The lunatic is in the hall. 
    The lunatics are in my hall. 
    The paper holds their folded faces to the floor 
    And every day the paper boy brings more. 

    And if the dam breaks open many years too soon 
    And if there is no room upon the hill 
    And if your head explodes with dark forebodings too 
    I’ll see you on the dark side of the moon

  244. Phil

    AAPL/Maya – Supply issues I think.  There was word of certain suppliers not able to deliver cutting-edge components in time – not really any alternatives for AAPL as they don’t exactly buy off the shelf components…

    True Diamond and Bill Joel was talking about how it wasn’t the 80′s fault as the Word had been a mess since way before that.  "It was always burning since the World’s been turning…" 

  245. exec

    Wow Europe really is a mess.

    We look good by comparison….however I can see the day when more fiscally responsible states rebel against the states that are taking advantage of the union.

  246. iTrade

    http://www.zerohedge.com/news/bbc-speechless-trader-tells-truth-collapse-comingand-goldman-rules-world
     
    <object style="height: 390px; width: 640px"><param name="movie" value="http://www.youtube.com/v/aC19fEqR5bA?version=3"><param name="allowFullScreen" value="true"><param name="allowScriptAccess" value="always"><embed src="http://www.youtube.com/v/aC19fEqR5bA?version=3&quot; type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="640" height="360"></object>
    http://www.youtube.com/watch

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