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Monday Market Movement – Living on the Edge

Wheeeee, what fun!  

Just a few more steps and we’re there.  I’m not quite sure where "there" is but we’ve been told it’s a happy, happy place full of well-capitalized banks, low interest rates and low inflation as far as the eye can see and all we have to do, according to our friends at the EU, is take a simple leap of faith with them.  

Sound good to you?  I’m not going to re-hash the situation, that was done brilliantly in Stock World Weekly this weekend (and boy does it look good on the IPad!).  What we need to do to get is through THIS week is to get our fingers on the pulse of the rumor mill, which is still grinding out market-moving stories at a mile a minute, the last one being that Sarkozy’s classic tirade toward the UK yesterday ("We’re sick of you criticising us and telling us what to do … you didn’t want to join (the euro) and now you want to interfere in our meetings") was merely a ploy to line up votes for UK PM David Cameron to JOIN the EU (because there is nothing the English like doing better than pissing off the French).  

Meanwhile, Bank of France Governor Christian Noyer says French lenders would need less than a €10B capital raise to bring their ratios up to the 9% level agreed to by EU FMs over the weekend. He claims this can be done privately without state assistance.  Whuck???  That is not at all what we’ve been hearing from the media nor is that in any way indicated by the 30-year bond spread, where France is paying 124 bps more than Germany to borrow money.  

Who’s to say what’s true anymore – these are just some of the statements jamming the market up and down this morning.  At 2:30 am, the Dollar was way down at 76.25, below Friday’s lows on Euro-enthusiasm.  Then, the Euro-zone October PMI report came out and they really sucked, falling to 47.2 from an already contracting 49.1 in September.   "The deterioration signalled a second successive monthly contraction of the private sector economy and the fastest rate of decline since July 2009," says Markit.  

SELLSELLSELL you say?  NONONO I say because what happened in July of 2009?  STIMULUS!!!  We LOVE stimulus, don’t we?  At the time (7/22/09), I predicted we we would be completing a decade-long consolidation range that would top out around 11,700 on the Dow.  

Here we are, two year’s later and still consolidating around 11,700.  It’s been over 11 years since we first tested this level back in January of 2000 and that first test did not end well.  Our second attempt took us over the line in September of 2007 but that was based on Government stimulus and we all know how that ended.  We took another little run over the line early this year with mixed results so far but at least we’re finally getting some proper consolidation – hopefully before our next attempt to break out, back to that 14,000 mark, which is the top half of our broader range (100% up from the 7,000 base).  Even if you didn’t buy my premise then, you would have done well to buy BA, which was our featured pick that day with a net $36.60 entry on a short put play (the Jan $40 calls finished at $17 for a net 14.90 gain, up 709%).  

Just a side note, as I was looking back on July of 2009, I happened to browse past a very informative article called "China GDP – Are You Kidding Me?" which outlines a lot of our points that are only now being realized about the China Growth Bubble – makes for interesting retrospective reading in light of new facts.  

Speaking of great trade ideas, I’m in the process of updating our September’s Dozen Buy List and there are still a few actionable trade ideas left (ie. trades we were wrong about so far!) so it’s a good idea to check there today and tomorrow as it also includes our first pick for our White Christmas Portfolio, which is going to be the GNW Jan $5/7.50 bull call spread at $1.10, offset with the sale of the Dec $6 puts at $.85 for net .25 on the $2.50 spread.  We’re doing 10 in this fairly aggressive virtual portfolio who’s aim is to turn a $15,000 Christmas budget into a $25,000 Christmas budget in time for the Holidays.  Of course this is meant to be a risk allocation of a larger, more conservative portfolio, like our low-touch Income Portfolio, which is running over 6 months ahead of schedule already.  

Notice on our Big Chart, that we are just on the cusp of a major breakout, back over our Must Hold levels (which have not held in quite a while) and gearing us up for a nice Santa Clause rally as the G7 Ho-ho-heaps on the stimulus, beginning (so I’m told) with the EU deal on the EFSF signed, sealed and delivered on Wednesday (but sung by Little Stevie Wonder over 40 years ago).  

Until then, rumors still rule the intra-day and the trading is sure to be choppy.  We cashed out our $25,000 Portfolio after 9 months, hitting our $100,000 with a virtual $30,000 to spare as it just wasn’t worth risking into what’s sure to be a crazy week.  Our Income Portfolio is hedged to about neutral as well and, in fact, is a bit more bearish now that the short DIA puts we had sold expired worthless (100% gains!).  So, while I am excited to be back at these levels – we are also recognizing that these are the levels we have FAILED at – over and over again.  If it’s a real rally, we’re not going to miss much by waiting to get a proper confirmation by seeing ALL 5 of our major indexes conquer their Must Hold levels but, for today, we’ll just be happy to see the S&P hold 1,235!  

That’s not asking too much, is it?

It’s all about Europe, of course, but then the spotlight will come back to the US and our own budget battles.  Treasury has a boatload of T-Bills to peddle this week, beginning with 4-week, 3-month and 6-month notes this morning around 11 with 2, 5 and 7-year notes on Tuesday, Wednesday and Thursday.  Housing dominates our data flow this week and we’ll also get the Chicago, Richmond and Kansas City Manufacturing Reports along with Consumer Confidence (Tuesday), Durable Goods (Wednesday) and GDP + Consumer Comfort (Thursday) but none of that matters as they are all buried under the barrage of over 1,000 earnings reports.  It’s going to be a fun week – especially when you are in cash and don’t really care which way things go!  

If you do care at all about Europe, I’d take a look at the NYTime’s "Overview of the Euro Crisis" with an image below from Barry Ritholtz that you can click on for a quick view.  

Don’t forget – France says it’s all under control and, according to the Times, they are the only ones who seem to be really out of control so it’s going to be interesting to say the least.  Be careful out there…

 


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  1. stjeanluc

    Oil Lines

    R3 – 89.87
    R2 – 89.05
    R1 – 88.63
    PP – 87.81
    S1 – 87.39
    S2 – 86.57
    S3 – 86.15

    Yesterday’s high and low – 88.24 / 87

    Breakout lines – 90.24 / 83.75 

  2. stjeanluc

    Going in different directions:

    http://ftalphaville.ft.com/blog/2011/10/24/709526/a-tale-of-two-pmis/

    Austerity doesn’t seem to be working in Europe 

  3. exec

    Does anyone know why the SMA’s change depending on the duration. 
     
    For example:  On the SPY daily chart, the 20 SMA is approximately  $117.88.  On a weekly chart the 20 SMA is 123.00 and on a monthly 121.00.

  4. stjeanluc

    There seems to be a lot of people short the euros:

    http://ftalphaville.ft.com/blog/2011/10/24/709756/lets-face-the-euro-shorts-and-dance/

  5. stjeanluc

    SMA / Exec – Different data sets will produce different results. On a daily chart, the 20 SMA is using the last 20 days, on a monthly chart, the last 20 months.

  6. Phil

    Good morning!  

    Had a super-busy family weekend so catching up a bit.  Have to be on TV (BNN) this afternoon so I’ll only be here until about 12:30.  They love me there because I was on the day after Fukushima and told them to BUYBUYBUY and then I was on on Aug 2nd and told them to SELLSELLSELL and, in fact, predicted it would be a 20% drop overall – so the pressure is on for me to say something clever but I want to talk about Occupy Wall Street – please let me know if you have any interesting tidbits on that or anything else you think would be fun for TV.

    Dollar at 76.65, which is about where we traded Friday so still below 76.50 is bullish and over 76.75 is going to be bearish for the day.  Gold zoomed back up to $1,662 and oil is at $88 with silver $31.66 and copper $3.33.  Nat gas is $3.66 and gasoline is $2.70, which is down 20% from $3.40 in May and gas at the pump was $4 in May, which means it should be $3.20 now – so anything you are paying over $3.20 is you being ripped off!  

    That’s another good topic for TV…

  7. exec

    So Phil……today are you going to tell them to BUYBUYBUY or SELLSELLSELL???

  8. NF**X

    TV – Where do I find BNN? I’d imagine NFLX will carry re-runs eventually part of basic streaming package. Given your disdain for the longer acronym, I’m going with “*” as an homage to the old Trudeau Doonesbury way of empty-talk for GHW Bush – so just a simple asterisk. Prob need to talk a little * today given it’s earnings day and all…

  9. NF**X

    White X-Mas – Thanks, PD. I just did up the GNW – and I actually get it. Learning is cool. Learning + Profit = Way Cool.

  10. NF**X

    * – * is paying really fat premiums today. I’m not going to bore you with my various positions (yet) – but at minimum I’m thinking even the Oct w 90 P can yield 2-3% before the report – in and out today. Otherwise, I’m mainly holding repair stuff from my old lonely single disastrous long play from many moons ago – the March 155 C’s. Any bump tomorrow and I’m done with those for good.

  11. Pharmboy

    PP for today:

  12. 1020

    Good Morning!
     
    Gas at Costco this weekend – 3.75/gal.  (San Diego)  :(

  13. jcaesar

    1020 / gas – You might want to think about a hybrid or diesel. 

  14. jerconn

    Iflan and Phil – There was an SA article from a few months ago that AAPL tops out cyclically in Jan/Feb each year, and drops after that for a few months.  Using that as a basis, I am thinking of a Jan. 2012 400/450 bull call spread for around $1600, selling Jan. $350 puts around $1000.  Total cost in the area of $600 – what do you think?  Was also thinking of using Feb 2012 options but it looks like they just came out today and are not yet priced – any feedback on this?

  15. angelcur

     gold vending machine just hit the Chinese market last week.

     

  16. ganyant

    Jerc
    So what will happen IF, just IF AAPL drops to say $350 by that time? The put you sold will loss big or just $600 in total?

  17. stjeanluc

    AA Money Recap

    Long strangle:

    Jan 13 12.5 calls – $1.27 now $1.32

    Jan 13  7.5 puts – $1.04 now $0.96

    Short weeklies:

    Weekly 10 calls – $0.41 now $0.49
    Weekly 10 puts – $0.23 now $0.14

     

  18. jerconn

    ganyant – Of course IF AAPL drops to $350 you have to be ready to buy AAPL at $350, that comes with the territory, and as Phil would say, "you have to really really want it at $350"  or don’t sell the puts.  However, I think there is more likelihood AAPL will be near $450 in Jan, hence the bull call spread.  It’s all about risk/reward and here I think to risk $600 for possible profits of $5000 ain’t bad…but there are some better heads than mine out there and I want to know what they think… 

  19. roberthjrfl

    Phil, i would talk about the gas prices and how Americans are being just ripped off.  It is a topic that needs to be discussed over and over again.

  20. grenowoods

     NF**X – BNN is a Canadian cable channel. Phil always posts a link to the interview afterwards.

  21. NF**X

    BNN/grenowoods – Thanks.

  22. 1020

    jcaesar – I might whine about gas prices, but I enjoy a fun drive.
     
    Diesels are getting better, hybrids…no thanks  :)

  23. NF**X

    * – Sorry.  Meant 2-3% yield for the week on short 90 Ps today.

  24. Phil

    Hello again!  

    OK, looking good so far with the Dollar testing, but not breaking 76.80 so that 76.75 line is acting as nice resistance and now we’ll see if we can get below 76.50 to get this party started (although up half a point already means we’re in party on mode anyway).  

    I was out and about this weekend and I got a good consumer vibe as I bopped around NYC and NJ.  Here’s the thing I think people fail to take into account – you have 10% (using government low-ball figure) of the people unemployed but that’s "only" up 5% from the normal 5% (less than 6% is abnormal and not too healthy).  Unemployment is highest among the lowest-paid workers so figure the total economic impact is maybe 3.5% to spending but then a portion of that money is made up by record Corporate Profits and, of course, some of it comes back through Unemployment so let’s say 2% impact to Consumer Spending and that’s only 70% of GDP so 1.4% TOPS!  

    So what sent us down so far?  The FEAR of the other 95% of the people that they might lose their jobs too.  That leads the other 66.5% of our GDP (95% x 70% of GDP) to pull back maybe 5-10% on spending because they lack CONFIDENCE in their future situation and their homes are losing value so they don’t feel rich at all.  Simply restoring that confidence, even a little bit – allows people to unleash a lot of pent-up spending (think of all the Washing Machines that didn’t get bought, all the cars that are on their last legs, all the vacations that haven’t been taken…) simply based on the fact that their jobs were "saved" (not created) through policies to date.  

    This is an underlying premise to be bullish into Q4 – because the consumer has been asleep at the wheel for the past two holidays and if they wake up and decide to CHARGE IT this Christmas – we could start seeing some spectacular retail numbers to match a lot of other pretty good numbers we’ve already been getting.   

    THAT is my bullish message of the week.  

    Meanwhile, we’ll watch our Must Hold Levels and make sure they stick while we wait for the RUT and NYSE to catch up with the NYSE needing 400 more points and the RUT needing a 5% move (which is why we liked TNA on Friday) just to catch up to the 3 major indexes.  NYSE is always a laggard but the RUT was our leader and small-cap earnings tend to come later in the earnings cycle so a late snap up will not surprise me at all if the numbers are good.  

    Our other bullish plays from Friday Morning’s Alert were a DIA spread, FAS (loving it today) and YRCW, which is still at .55 but that one was the most speculative but I do like them as a generally bullish play on Q4.  

    Best short hedge is still the SQQQ as a big-name tech miss could still tank that index.  The Dec $21/29 bull call spread is $1.05 and you can almost fully offset that with the sale of WFR 2013 $5 puts at $1 or VNO Jan $60 puts at $1.20 or C Jan $24 puts at $1.15 although the potential 8:1 pay-off means you don’t need much of an offset to get very good protection.   

    Volume is very light this morning so we don’t put too much stock in the movement.  We’re too early in the cycle to be excited about shorting oil and gold needs to be watched at that $1,650 mark as we’d prefer people not buy gold and put their money into equities.  

    Also, watching AAPL at $400 is a good idea as they need to move past that to allow the Nasdaq to head back to that 2,733 mark and prove that this is more than a slight overshoot of the Must Hold levels.  

    CAT had really good numbers and that’s encouraging too.   We had some merger announcements which should provide a bit of a boost so there is every reason for us to head higher today but we must have Dollar cooperation as the correlation has just been too strong to imagine it will suddenly break this week – especially prior to a proper announcement from the ECB. 

    At the open: Dow +0.19% to 11832. S&P +0.11% to 1240. Nasdaq +0.28% to 2644.
    Treasurys: 30-year -0.03%. 10-yr -0.01%. 5-yr -0.02%.
    Commodities: Crude +0.8% to $88.09. Gold +1.25% to $1656.55.
    Currencies: Euro -0.46% vs. dollar. Yen -0.22%. Pound -0.31%.

    10:00 AM On the hour: Dow +0.3%. 10-yr -0.04%. Euro -0.41% vs. dollar. Crude +1.33% to $88.56. Gold +1.05% to $1653.25.

    Notable earnings after Monday’s close: ALBAMGNCIM,FTNTHLXHMAHXLMASNFLXPCLSTMTXNVECOZION

    Sep Chicago Fed National Activity Index: increases to -0.22 from -0.59 in Aug.

     NY Fed President Bill Dudley says recent Fed moves should help the economy, but the central bank can’t by itself lift the U.S. out of its current doldrums. Fed policy is not "all-powerful," he says, and needs complementary fiscal and housing policies. Dudley didn’t offer any insight into where he thinks monetary policy should be heading. 

    The full German parliament (as opposed to just the budget committee) is expected to vote Wednesday on leveraging the EU rescue fund. Other than rumors floated at 3 PM ET once or twice a week, there is not yet a definitive plan for expanding the EFSF, so it’s unclear exactly what lawmakers will be casting ballots for.

    Greek banks are plunging as the 21% haircut on its country’s paper looks to be out of the question – with EU officials talking 50-60% (and the market pricing in even higher). National Bank of Greece (NBG-13.2% premarket. Athens -5.1%. Greek 1 year paper yields 187%.

    Italian PM Berlusconi calls an emergency cabinet meetingto discuss new fiscal reform proposals following his weekend humiliation in Brussels at the hands of Merkozy. Saying Italy had been put into receivership by the duo, an economist blames ECB purchases of Italian debt for allowing the government to procrastinate for so long.

    Satyajit Das does a wonderful job going through the detailsof the EFSF leverage proposal, making it clear it’s little more than the CDO and CDO2 hocus-pocus that got the West into this mess in the 1st place. "The circular nature of the scheme is surreal."

    "We are selling everything we can produce," says Rio Tinto (RIO) CEO Tom Albanese, addressing concerns about Chinese growth. Product may be moving, but at lower and lower prices. With the price of ore on the decline (down 10 days in a row and 21% since Sept.1), expect the Chinese to renege on longer-term contracts. (pdf)

    HSBC China manufacturing PMI rises to a preliminary five-month high of 51.1 in October from 49.9 in September, signalling a return to expansion. The manufacturing output sub-index climbs to 51.7 from 50.3. "All these data confirm our view that there is no risk of a hard landing in China," says HSBC. (PR

    Japan posts a ¥300.4B ($3.9B) trade surplus in Sep. as exports rise 2.4% Y/Y to ¥5.98T, with both indicators topping forecasts and recovering all their losses since the March earthquake. Exports rise despite the yen’s strength, the EU debt crisis and slowing overseas growth, although they’re still a threat. (PR

    U.S. solar adoption is going mainstream, with tax breaks and financing expected to drive a doubling of installations this year, following a doubling last year. Nonetheless, it remains to be seen when demand will reach the point where it wipes out the industry’s current supply glut, and the unrelenting price declines it’s produced.

    FedEx (FDX +1.1%) is expecting e-commerce to provide lots of Christmas joy and drive record holiday shipments. The company predicts that it will deliver over 260M packages from Thanksgiving to Christmas – up 12% from 2010 – and that Dec. 12 will be the busiest day in its history with more than 17M parcels moved.

    Wal-Mart (WMT) announces a new strategy that will"guarantee" the lowest price on most products no matter when customers buy during the holiday season. Shoppers who buy an item at a Wal-Mart store between Nov. 1 and Dec. 25, but then find the identical product elsewhere for less, can get a gift card in the amount of the difference.

    More on Caterpillar (CATQ3: profit +44% to $1.141B and sales hits a record. Caterpillar predicts FY EPS and rev at the top end of ranges of $6.25-6.75 and $54-56B respectively. "Although there is a good deal of economic and political uncertainty…we are not seeing it much," says CEO Doug Oberhelman. Shares +4.8%. (PR)

  25. jcaesar

    Krugman doesn’t think Europe will be able to fix itself.  Time will certainly tell.

    http://www.nytimes.com/2011/10/24/opinion/the-hole-in-europes-bucket.html?_r=1

  26. dmoroz

    Good morning. 
    Phil, Is the GNW play still ok with the DEC 6 put selling for .71 and the Jan 5/7.5 spread @ around 1.19? 

  27. NF**X

    * – I’m logging my * trades here only so that PD (and others) can dish out my lumps when it all goes wrong at 4:05pm.  In any case, I’m net .50 credit on Oct w 80/90 BPS – that’s the 3% yield.  This would not technically qualify as a boring short putz. 

  28. stjeanluc

    I guess CAT is helping push AA up 2% today…

  29. NF**X

    FAS/PD – Loving Friday play today also.  Thanks.  My trigger finger has been itchy already.  Haven’t scratched – but we’re pretty green.

  30. NF**X

    FAS – What did I/we risk there?  Net $.59?  Haven’t we already yielded almost 40% ROR this morn?

  31. celesteschein

    Phil-don’t you think the markets will be encouraged to move a bit down because of the T bill sales?

  32. Phil

    SMA changes/Exec – It’s just a reflection of the AVERAGE of all the points before it so if you are looking at 20 on a daily chart, it’s the last 20 days and if you are looking at 20 on the monthly chart, it’s the last 20 months.  Actually, that result is surprisingly flat.  

    And what StJ said! 

    Euro shorts/StJ – BIG SQEEZE if EFSF passes.  People mistakingly think it will devalue the Euro but the Euro is already devalued way past the point that would be justified by a mere printing of 3 Trillion more.  

    Buy or sell/Exec – At the moment, I’d say buy, we’re looking pretty good but it’s HOLDHOLDHOLD for us until we get good confirmation that these levels are here to stay.  

    */NF – Hopefully we’ll have something of substance to discuss.  They ask me to come on almost every week but it’s too much hassle.  The only reason I go is because they are very nice (can’t help it, they’re Canadian) and I figure one day I will have something I do want to say so I should keep the relationship going.  On the whole, I hate the hassle of going on TV – just not worth the effort.  BNN is here and I think I’m on a bit after 2pm

    AAPL/Jerconn – That’s a nice play on them but what do you think about selling 5 Dec $400 puts for $16.30 ($8,150) and buying 3 April $360 puts for $20.20 ($6,060) for a net $2,090 credit on the spread?  That takes your premise into account and all you have to do is wipe out the short puts to make $2,090 and anything left on the long end (which is firewalled behind 2 earnings periods) is excess profits.  If AAPL fails, for example, $390, you can add a long put and if they fail $380, you can add another to flatten the Delta but, clearly, you would already be rolling to a lower strike in your worst case drop so a lot of ways to win on this trade, whichever way it goes.  

    Good primer Rpme.  

    Oil $89.37.  Dollar testing 76.50. 

    GNW/Dmoroz – Wow, I have to be careful what I write on the main page!  We were going for net .25 and you’ve got net .50 that’s a big difference.  I’d take the bull call spread for $1.19 and wait for a pullback to sell the short puts or sell the Jan $6 puts (.83).  

    CAT/StJ – Yes, most likely.  Healthy demand for CAT is good for many sectors.  

    TBills/Celeste – If they go poorly but the short-term auctions are very small and very liquid.  Maybe if the 5-year (Wednesday) or the 7-year (Thursday) or next week’s 10 and 30-years go badly, it would be an issue but 2 years and under is hardly worthy of mention unless they go spectacularly wrong.  

  33. lflantheman

    jerconn/AAPL   I actually hold a trade very close to that.   I’ve bought the Jan 400/450 spread and sold the Jan 370 puts.   I got this trade "free" a few weeks back. It remains free as long as AAPL holds 370 thru Jan.    I would do the trade today as a Jan 390/440 bcs selling the Jan 390 puts.  Again, this trade is "free", with a very good upside and profitable if AAPL stays above 390 through Jan.      And would you buy AAPL at 390?  
    On another note,  rumors that AAPL may have a an iTV in the works.  http://www.forbes.com/sites/ericsavitz/2011/10/24/apple-street-now-convinced-theyll-soon-make-tvs/?partner=yahootix

  34. Pharmboy

    PLX…go go go

  35. 1020

    Phil, do you have an opinion on NOK?  Thanks

  36. pstas

    Pharm- PLX- finally some positive movement.
    Do you have a value target in mind on PLX?

  37. terrapin22

    Phil / GLW – do you like a play on this one?

  38. Pharmboy

    pstas – I am holding through their PDUFA in Feb.  $10 is my target b’f that.  Then $20-30 longer term.

  39. stjeanluc

    AA Money – So much for picking a less volatile instrument as AA is now up 3% for the day…. 

  40. rustle123

    FAS has been a great place to be.  If we have a clear breakout, it can easily move to 20 very quickly.  Patiently awaiting shorting oil again.  Believe they can run oil up to mid to high 90′s.

  41. 1020

     Michael Moore on CNBC…  They did not even cut to commercial….

  42. Phil

    Wow!  Dollar failed 75.50 and we really took off!

    Craig – Why not tie triggers to the Dollar rather than look at one chart?  That should be an easy enough program to write….

    NOK/1020 – My opinion on NOK is based on my bad experience with MOT – there is no recovery once these guys begin falling out of favor.  I don’t think NOK is going to self-destruct the way MOT did but, after that epic disaster (and RIMM is no picnic so far, either), I’m not too keen on risking cash on NOK.  Don’t forget, those $49 IPhones are just around the corner.  

    GLW/Terra – I always like those guys.   2.2% dividend (.30) is worth capturing so buying the stock for $14.15 and selling the 2014 $12 puts and calls for $6.75 is net $7.40/9.70 which is 40% off the current price even if put to you with a 62% profit if called away at $12 in 27 months and the net $7.40 entry makes that .30 dividend 4%!

    AA/StJ – That’s fine, we can always roll.  It’s the 10% moves we like to avoid (a daily problem in FAS).  

    Speaking of FAS – $14.50.  Just last week we were worried whether or not they could hit $13….

    Markets rocking now with EU closing up 1.3%ish.  

  43. David Ristau

    I like the looks of WYN going into earnings and went long on it this morning.

  44. 1020

    Phil/NOK   A $49 IPhone.  I remember Razors for $0.00….
     
    I think I’ll pass on NOK….. :)     Thanks

  45. rustle123

    Fast Money traders are still very bearish.  They’re off by 400 points so far.

  46. NF**X

    AMZN/Short P – Sorry if this is a dupe.  AMZN Oct w 210 still paying $1.16 today.  I sold it at $1.91 a couple hours ago and will taril it now – but still easy (boring) money.

  47. JRW III

    Good morning,

     

    exec / F

    I’ve got resistance at 12.65,  12.94, 13.31  and 14.14

    IWM resistance is right here (73.15)

  48. NF**X

    AAPL 395/405 BCS – props to PD.  This started as a 400/405 for last week.  When it looked sunk, I thought about just paying to take the short off the table and look for a run this week.  PD reco’d rolling the long down to 395 and holding the 405 short.  Thanks, PD.  My rookie move might have been fine – ur pro move was killa.

  49. Phil

    WYN/David – Not a bad company.  I think the downscale side of the operations is still a drag but luxury is hopping.  We went with MAR and HOT earlier in the year on the premise luxury and business travel would make a nice comeback.  

    NOK/1020 – Good idea.  They went in a strange direction, going after the 3Bn cheap phone market rather than the 1Bn expensive phone market and, just like any company who’s business plan is to sell something to everyone in China – in reality these things tend not to pan out.  

    Big move in the indexes but be real in your expectations – 2.5% is HUGE move for a day and never likely to be hit without a pullback.  Also, we know RUT 735 is going to give us trouble anyway as that’s their -5% line so watch that closely.  Remember, a 0.5% pullback (20% of 2.5%) does not break the bullish trend and is, in fact, healthy.  

    12:00 PM On the hour: Dow +0.79%. 10-yr -0.12%. Euro +0.25%vs. dollar. Crude +3.53% to $90.48. Gold +1.12% to $1654.35.

    European shares end at the day’s highs as EU debt issues have lost their ability to shock, leaving investors free to buy beaten down stocks. Stoxx 50 +1.4%, Germany +1.4%, France +1.6%, Italy+0.8%, Spain +1.4%, U.K. +1.1%. Euro +0.2% at $1.3926.

    Rumor du jour:   European shares (and all risk assets correlated to them) fly higher on an AP report of a German official saying the expanded EU rescue fund will top €1.4T. Stoxx 50 +1.3%, with all of that gain coming in the past few minutes.

    Ed Yardeni’s reasons for being mildly bullish center on the calendar as much as anything: "We are in October," scene of some scary market swoons through history, "headed into November," usually a good month for stocks. But reason no. 5 – "the Europeans are in a panic to avert a panic" – seems a bit shaky, although that sentiment is largely propelling stocks higher. 

    Greek citizens may catch a break as the government agency that sends out tax bills is on the verge of running out of inkafter the department’s supplier cut off deliveries due to not being paid. Taxpayers are being asked to print out bills on their own via the online system.

    This is why I like the VNO short puts:  Moody’s reports commercial real estate prices rose in August for the 4th consecutive month. The 2.4% advance brings the Y/Y gain to 7.2% and the rise from the April post-crisis bottom to 15%. The agency isn’t terribly optimistic going forward, noting commercial mortgage originations and demand for vacant space remain slow.

    "The most interesting thing you may not know about the housing market," according to Citi: "Inventory of existing homes for sale has been declining on a Y/Y basis for the past eight months and now stands at a multi-year low," suggesting that a floor in the marketmay have been found. Savvy investors may have picked up on it already, as the homebuilder ETF, XHB, has jumped 31% in a few weeks.

    Jobs?!?  The big boost in holiday shipments that FedEx (FDX+1.7%) expects to see this year will give a boost to seasonal hiring. The company says 20K workers (+18% Y/Y) will be brought in to help with the large holiday volumes – expected to be driven by a surge in online retail orders.

    Paul Volcker tells NYT‘s Gretchen Morgenson that Fannie and Freddie must go: “This is an opportunity to get rid of institutions that shouldn’t exist." Also on his wish list: make bank capital requirements tough and enforceable; derivatives must be standardized and transparent; ensure that auditors are independent by rotating them; shrink systemically dangerous institutions.

    Solar stocks are rallying (KWT +5.6%) thanks to positive comments from Yingli (YGE +3.4%) about German and Italian demand, as well as a general embrace of the risk trade. Some of the biggest winners: FSLR +8.3%STP +8.7%CSIQ +8.2%LDK+7.3%SPWRA +7.2%. - And WFR is still $6.19!!! 

    Barron’s following PSW yet again:  In addition to today’s rally in copper, Freeport-McMoRan Copper & Gold (FCX +7%) gets an added boost from being touted inBarron’s over the weekend. The article notes the stock is trading for far less than the value of its mining assets, and the company could be a major beneficiary of a rebound in metal prices, or possibly even a takeover offer.

    Comex Dec. copper +5.6%, perhaps headed for its largesttwo-day rally since March 2009, on optimism over a European debt deal and the first expansion in China PMI since June. The China dataraises hopes that "Asian demand might compensate for reduced demand from slowing economic activity in the U.S. and euro zone," Standard Bank writes. FCX +6.9%.

    Texas Instruments (TXN +3.5%) gains ahead of today’s Q3 report, as Wedbush lifts its PT to $36. The firm thinks TI’s Q3, which was guided lower in September, will be in-line with estimates, but expects Q4 guidance to be above. UBS is more pessimistic, expecting soft Q4 guidance as the chip industry finishes its inventory correction.

    Research In Motion (RIMM +4.5%) is joining today’s rally in spite of a downgrade to reduce from GMP Securities, which is also lowering its PT to $18. GMP was underwhelmed by co-CEO Mike Laziridis’ remarks at last week’s developer conference, and doubts "RIM can restore the confidence of customers and investors."

    DisplaySearch predicts tablet sales will grow to nearly 330M in 2017, with most units featuring ARM (ARMH) processors rather than Intel (INTC) x86 chips. iPad (AAPL) shipments are expected to quadruple to nearly 200M. Of course, ABI predicted in Feb. ’10 that tablet shipments would reach 57M in 2015 – DisplaySearch and others expect that figure to be passed this year.

    October is shaping up as an historic month - with a week to go, it’s the best month for the DJIA in10 years and in the top 20 for the last 5 decades (maybe top 10 by day’s end).

  50. Phil

    OK, I have to run. 

    IWM Weekly $74/73 bear put spread at .44 makes a very nice hedge for a move back down – out with a tiny loss if we’re over 735 on the RUT but nice 100% upside protection if we pull back (Dollar bouncing off 76.25 is what to watch for direction).  

    AMZN/NF – Don’t forget earnings.  May not be so boring.   Congrats on AAPL – much easier to do the right thing with adjustments when you stick to stocks you truly believe in.  

  51. NF**X

    AMZN – Agreed.  I had earnings in mind – hence the pretty low floor.  But the "easy" money means/meant taking a 30%+ gain the day before earnings and running.  Should get there pretty "easy" – lol.

  52. sank1

     Pharm / SPY Calendars,
    Based on your 1:35 pm post on Friday, http://www.philstockworld.com/2011/10/21/friday-market-follies-following-murdochs-money/#comment-1416091, and how SPY has moved up today, would you consider buying back the SPY 121 Puts which are nicely profitable, (which would make the Nov 121 Put a directional bet) or would you only close out both legs of the calendar for the Puts?
    Thanks,

  53. etradingsignals

    JRW: Are u  short now?

  54. stjeanluc

    Apparently, buy in November and sell in May:

    http://www.ritholtz.com/blog/2011/10/a-tale-of-2-seasonal-investors/ 

  55. dflam

    Hi Phil: In Sept., Bought INTC at $19.96 and sold jan. $20 C at $1.25 for net $18.71 expecting 8.5 % return/24 % annual plus dividend. With INTC  now at $24.68 should I roll to 2013 $22.50 C at $3.80 or just let this "safe" position run it’s course

  56. stjeanluc

    Best performing stocks since the start of the rallye:

    http://www.bespokeinvest.com/thinkbig/2011/10/24/best-performing-stocks-since-october-3rd.html 

  57. Pharmboy

    sank, when you are up on the P side, buy them back.  Calls are ok for now, but I am hoping that they turn tomorrow.

  58. JRW III

    etradingsignals / Short
     

    No, I closed my TNA out and am now in cash !!

    They may well push it higher (73.45-50 ish) but unless I see a squeeze trend, I’ll be waiting to short !!

  59. JRW III

    Phantom bar on IWM to 71.17 !!

  60. Pharmboy

    Not in TOS JR.  Those PBs have been real misleaders lately FWIW.

  61. jcaesar

    Pharm – What’s a PB?

  62. Pharmboy

    phantom bar.

  63. jcaesar

    Oh, phantom bar.  Duh!!!

  64. jcaesar

    Pharm / PB – Yeah it takes me a while.  ;-)

  65. rustle123

    Goodbye TNA, thanks for the nice ride.

  66. terrapin22

    Pharm – would you bail on DEPO or wait for rebound?  take profit on OPK or hold?  Hold onto CLDX, CERS, CRIS, CGEN and OPXA?   Thanks. 

  67. escohen5

     How is the /ZB down 12/32 and TLT up .27?

  68. Pharmboy

    If you are up, I would reduce.  DEPO, I am waiting for next year to see how sales go.  I have been adding to them.  All others I am about break even on or slightly up (except DCTH). OPXA – we were out ages ago, so i would get out.  CRIS, I am holding and have been adding.

  69. Pharmboy

    Now this is getting ridiculous. 

  70. jcaesar

    JRW – Boy are we getting to that 1275-1280 target fast.  That was #12 on your chart if I remember correctly.  In fact this is like two or three months too soon!

  71. NF**X

    * – Well, if my boy Reed Hastings can’t show minimal sub loss today, good-bye $100 level sooner than I expected.  Total crap shoot this afternoon.  I want out of the weak longs very soon (so cheap now – and hedged 1:2 now, I can’t bail just yet) – hoping just a sliver of hope gives us a phony bump into tomorrow and then – see ya! 

  72. lflantheman

    AAPL                :)    :)    :)    :)    :)  

  73. JRW III

    jcaesar / Too soon
     

    +/-  8 weeks too soon for #13 at 1282   (1270 – 1325), but if Europe doesn’t go well……………….

    and even if it does, we may get a "sell-the-news" correction !!     I’ll just be riding the wave, in either direction  8-)

  74. yshenhar

     AA money – at what point (price) do we buy back the short puts? 
    (I did not take the FAS wild ride so new to this type of trade…)

  75. stjeanluc

    AA Money / Yshenhar – At this point it looks like they short puts will expire worthless on Friday. 

  76. Canuck

    Phil is on BNN right after the commercial!!

  77. grenowoods

     Phil coming up on BNN for Canadian members.

  78. stjeanluc

    Oracle making another move against SalesForce:

    http://dealbook.nytimes.com/2011/10/24/oracle-to-buy-rightnow-for-1-5-billion/ 

  79. mrmocha

    Pharm, ARIA "been berry berry good to me" lately, you still playing?

  80. grenowoods

     Sorry Canuck, didn’t see your post.

  81. sank1

     SPY Calendar / Pharm,
    Just so I have understood you properly, when you say "sank, when you are up on the P side, buy them back", this means I only buy back the October 121 SPY Puts (where I went short, and these are now profitable), while leaving the long November 121 SPY Puts (which are under the water now) as-is, with the expectation that SPY will turn down over the next few days, correct?
    So we are breaking up the SPY Put Calendar into a straight long November Put, right?
    Should we do the converse with the SPY Call Calendar, where the long November 126 Calls are profitable, but the short October 125 Calls are under the water? As a whole, the situation is okay, of course.
    Thanks.

  82. mrmocha

    NF**X, I’m with you on NFLX, I have DEC puts covered with weeklies hoping to get a bounce tomorrow and then close the covers for the next ski-slope…

  83. jabobeast

    could someone post Phil’s interview, please?

  84. JRW III

    Looks like "they" are going for a push into the close !!

  85. Pharmboy

    sank – when I play calendars, I buy both lots at once, and sell them paired as well.  Rolling (aka the AA or FAS play) is too much work.  Thus, if the short side and long side put 20-40c in your pocket, I buy BOTH back (in other words, the Puts were bought for 1.40, and you can buy them back for 1.60, then buy both long and short).  I do not hold naked longs without a hedge unless I am DAMN sure things are going in my direction.

  86. Pharmboy

    ARIA – unfortunately not.  Was called away.  IMGN and UTHR are my two favorites right now.

  87. Pharmboy

    And I am glad that it is ‘berry good’ some things have been a little sour!

  88. sank1

     Pharm,
    Thanks for the clarification.

  89. Pharmboy

    BPAX is moving and grooving.  Gotta love a little libido product, no?

  90. grenowoods

     Phil’s interview on BNN:  http://watch.bnn.ca/#clip555203

  91. jabobeast

    stick or broken stick today????

  92. Pharmboy

    No really, this is getting ridiculous….

  93. rustle123

    I guess broken stick but might be biased because I got rid of some longs and wrote put on the stock I sold much lower than where they are.

  94. angelcur

     it is about asia today…europe credit angst keeps worsening…but that one datapoint out of china, which im sure isn’t manipulated, sent asia soaring…and then CAT comments here solidified perception that global economy fine….even as pmi accross europe were awful.

  95. jabobeast

    thx grenowoods!

  96. angelcur

    and no volume so magical sloppy buyerS can have a field day

  97. Pharmboy

    VIX is holding support FWIW.  TLT has been positive (barely) and falling all day.

  98. Canuck

    Phil,
    TZA weekly 32/34 net 0.60 or 32/33 net 0.35 as a hedge?

  99. Pharmboy

    CAT – they have a ton of competition coming with Chinese makers….Just needs to gain some traction, and margins will get squeezed.

  100. danosu77

    Good interview Phil!

  101. asaenz

    @ JR, got rid of my longs today with some nice gains, i think we are way overdue for a healthy pullback, where do you see a nice support in IWM? Looking to go long once again, just not sure where…Thanks!

  102. rustle123

    CNBC has someone on that is trying to put the spin that oil is going much higher and has seen its lows.  So hearing that, I bought a 1/5 position of SCO.

  103. JRW III

    asaenz / Target
     

    I hold no longs; I expect we go North after a small pull-back. The pull-back could go to 70.50 ish, I dought we’ll see 69 again before 2012, but if Europe messes up………………………………….!!

  104. jomptien

    Great job Phill @BNN – best one yet

  105. jabobeast

    the stick!!!
    Oy Vey!

  106. exec

    JR/Ford
     
    Thanks for the lines.

  107. Burrben

     Phil, you won’t graduate to CNBC if you call all those people who buy options…"suckers who buy premium"
     
    (even though it’s true) 

  108. oscarz

    Hi everyone.
    First comment: Just watched the interview, truthfulness and intelligence, a great combination indeed.

  109. rustle123

    Phil/Unemployed
     
    Have to disagree with your statement about the unemployment rate at 10:11am.  It’s more than 5% above normal because the unemployment rate does not count people no longer getting unemployment benefits, many self employed who no longer have businesses and doesn’t take into count the mass amount of people working part time jobs.  this is definitely more than 5% above normal.

  110. jmm1951

    See Phil Talk
    http://watch.bnn.ca/#clip555203 (corrected)

  111. rustle123

    seeya NFLX

  112. jcaesar

    Anyone have problems viewing Phil’s clip?  For whatever reason it doesn’t play.  No error message, but just a black screen.

  113. angelcur

    its crazy….im underperforming on this rally….but that is fine…just look at the mass of hedgies getting killed this year….they are the idiots buying at the peaks and selling at the lows….like we have talked about before…the hedgie heard is the new dumb money. nflx getting hit on earnings after-hours..-19…  lowest volume spy since july 26th today..so the MSB has been unzipped and running into unhedged pleasures around the block!.

  114. rustle123

    no problem but clip by jmm1951 is wrong.  Should be:
     
    http://watch.bnn.ca/#clip555203

  115. Phil

    Hey, I’m back!  

    Looks like we helld up pretty well for the day, still consolidating along the top, which is good while we wait for the RUT and NYSE to come back.  

  116. angelcur

    unless management is short its own sotck..i cannot imgaine a worst case of complete shit strategic decisions for these guys at NFLX…how can you continue to reach a series of ever worsening strategic moves and still be stading around with your D in your hand..good lord..i hope none of you have been long this hog

  117. Phil

    Just watching myself – Nice that she says I’m her favorite.  

    I love the juxtaposition of what I’m saying with the video of the Occupy crowd.  Too bad they slammed the door on the interview before I could call for public beheadings…   

    Actually, I was going to talk about how it’s Corporations who are the real criminals – I had stats ready and everything but I guess that’s not a media-friendly topic!  

  118. deano

     Looks like 5/5 at the -5% level!

  119. dmoroz

      Great interview. Love the OWS support and explicit comment on the rigged markets. Its sick that so many people acknowledge that fact and nothing will happen unless there is a civil war. I mean, people spent decades building this system there is no way they will let it go without a fight.

  120. NF**X

    * – Fearing the worst, I packed on puts (80s and 100s) – but then thinking (dreaming): “Man. I hope I didn’t just curb a little phony upside ride thru tomorrow.” Hahahahaha! Thank god. Cashing my Ps and – finally – goodbye NF**X. Call me when they find Hastings in a concrete bunker, pull him out, rip-off his goofy sweater and accidentally shoot him in the cross fire.

  121. Phil

    Catching up from 1pm

    November/StJ – That’s just playing the Santa Rally essentially.  

    INTC/Dflam – I’d say no hurry while we are still uncertain but they are obviously high in the range.  If anything, I’d look out to 2014, where you can sell the $25 call for $3.30 (-$1.45) and the $15 puts for $1.40.  As long as that combo doesn’t get away from being an even trade, you’re in good shape.  

    Best Performers/StJ:  

    Speaking of energy stocks – WOW!  Oil $91.74 is a bit much.  Will make a nice short Wednesday.  

    Good ridiculous call at 1:54 Pharm!  

    NFLX/NF – "See ya" is right!  Oofa they got slammed! 

    Sell the news/JRW – Could be at this point.  I wish we hadn’t run up so hard.  Makes it so much more dangerous. 

  122. stjeanluc

    Barry must have been watching BNN this afternoon.

    http://www.ritholtz.com/blog/2011/10/forget-the-top-1-look-at-the-top-0-1/ 

  123. exec

    Phil,
     
    I checked out your interview and realized that the skill in which you communicate with your hands can only mean one thing…….you have Italian gene’s in ya……eh Gumbadi!!!!……..Madone…..we’re Paesano’s!!!

  124. stjeanluc

    Sell the news / Phil – I was just saying that this afternoon and Pharm will probably concur. We are up almost 17% since the lows of 10/4. And without a meaningful break save for the 10/17 debacle. It’s just as bad as going down 17% in August. They are truly turning these markets into casinos where it’s becoming impossible to make an informed investment when they will kill you 20% one way and take you back up 20% they other way within 2 months. The small guys lost his 17% on the way down and never recovered the 17% on the way up because he cash out in September. I know you can’t catch tops and bottoms, but you can’t even get in in between now! No wonder they occupy Wall Street!

  125. stjeanluc

    The trend is not good for the bottom 90%

    http://visualecon.wpengine.netdna-cdn.com/wp-content/uploads/shareofgdp.gif

    What is striking is the trend when presidents are from different parties. I’ll let Phil analyse the data!  

  126. oknoman

     Phil/BNN: Phil you rock my world – that was priceless soundbite, talking about the 150 million beheading the 400. Absolutely priceless. I guess Maria won’t be calling anytime soon.

  127. stjeanluc

    This is not your average recession:

    http://ftalphaville.ft.com/blog/2011/10/24/710106/stagnation-beckons-for-the-uk/

    And in UK, austerity has not worked well… And based on the charts, government spending cuts have not been fully felt yet. 

  128. jmm1951

    Bottom 90%.
     
    Of course things are not good for the bottom 90%. They don’t have equity in their homes because so many mortgages are underwater and they don’t have equity in their cars due to depreciation. If they don’t have a pension fund or 401K, then they don’t have equity in anything other than their children and pets, and from a statistical point of view the average net worth of the bottom 50% is probably approximately 0. On the other hand, there are also huge numbers of Americans who have their homes paid for, have inherited wealth from an earlier generation, and who own profitable businesses or have lucrative jobs. It is all a question of proportions.
     
    I don’t want to sound like a fascist, but I lived in Bermuda for more than a decade before I came to US. In Bermuda the whites mostly ran businesses like department stores or hotels, or were doctors and lawyers, the blacks were civil servants and teachers or cops and prison officers, and  the Portuguese were farmers, mechanics and fishermen.
     
    When I first came to the US 20 years ago, I could not understand why there were so many USians who were not immigrants working in entry level or lower level jobs, because in Bermuda you hardly ever saw that. Maybe it is the US education system that holds people back, I don’t know, or maybe it is the power of the corporations.
     
    I have also noticed among many people I know who have originated in the West Indian islands (Jamaica, Barbados, St. Kitts) and have been upwardly mobile and have left home to work in the UK, then moved on to Canada, and then finally moved to the US in middle age to be closer to home and aging parents. The children they have left in the UK are often university educated and successful, likewise the children who have grown up and stayed in Canada, but the youngest kids of the family who made it to the US have often ended up being downwardly mobile and/or getting involved in crime. Go figure!

  129. elliotteldrich

  130. Phil

    AA Money/Yshen – I would say if we can get out (buy back puts) for .05 by Wednesday it’s worth it for the flexibility.

    TZA/Canuc – It’s a very reasonable hedge but I still prefer bullish offsets because we’re leaning bullish and only worried about some EU disappointment on Weds. 

    Just heard from BNN – they loved the interview.  I don’t know, I guess I’m never satisfied with my own appearances…  

    CAT/Pharm – I’m dubious on the Chinese makers.  These are very high-performance machines that have to survive rough conditions under constant use – there’s a reason people still buy Craftsman, etc., even though the tech is 1/1,000th what it takes to build an Excavator or an All-terrain Loader or a Material Handler.   China currently whacks CAT with a 30% tariff coming in or they’d be outselling the locals there too.  In that business, it’s about the total cost of ownership, not the up-front cost of the machine and cheaper is not better.  Parts and support are also major factors.  One of the big "upcomming competitors" for CAT that gets mentioned is LiuGong and they have just two lines:  Forklifts and Rollers – very basic stuff.  What’s really funny about them is the picture of the staff, which is a dozen white people and two Chinese guys – it will be a while before they "take over" the industry, I think….

    Thanks Dan. 

    Oil/Rustle – I heard a guy (maybe that guy as I was in the car listening) who said that because they popped over $90 they are now in the $90-95 range.   After one day???  That’s some pretty lame analysis! 

    Thanks Jomp.  

    CNBC/Burr – I’m already banned from there so no problem. 

    Unemployed/Rustle – True, U16 Unemployment rates are TERRIBLE and we’re not even talking about the underemployed which, to me, is an even bigger issue.  Still, even if it were 10% more – it’s still nothing compared to the people who are working and can spend.  

    Thanks Dmoroz.  I have been saying for years we’re heading down that path and what amazes me is the way the top 1% would rather dig their heels in and sharpen the distinctions than make a few concessions and ease the pressure.  

    Top 0.1%/StJ – Cool, Barry always comes through with the good graphics for us:  

    Genetics/Exec – Yes, a lot of Sephardic Jews ended up in Italy after the Inquisition, my Dad’s side of the family is from there.

    Informed investments/StJ – Unfortunately, you have to either be a very long-term investor who ignores the weekly and monthly BS or a short-term range trader.  You can’t have "loyalty" to a direction because we go from being too low to too high and back again but it’s OK if the game is rigged, as long as we figure out how it’s rigged and play along. 

    That is one sad little graphic, StJ:  

    Thanks Okno – Did I say beheading on TV?  I tried not to but it was on the tip of my tongue…  8)  

     Austerity/StJ – As if there is a place where it’s working out?  

    Go figure/JMM – Because the US has worse income mobility than those other countries.  Working hard and getting ahead died about 10 years ago and doesn’t look like it’s coming back anytime soon.  The system in the US is set up now to protect family wealth and make sure kids from rich families (who can afford private schools and colleges and access to capital and preferred jobs when they graduate) have MASSIVE advantages over kids from poor and middle-class families.  Since corporations devour the small and leave large and lean – there are LESS good jobs every year as innovative businesses are no longer encouraged either – so there’s really nowhere left to grow new jobs, simply recycling old ones.   Very sad – it’s not Capitalism at all anymore – just an elitist mockery of it.  

  131. dmoroz

     Phil. THis morning you replied to me with, "GNW/Dmoroz – Wow, I have to be careful what I write on the main page!  ".
    Does this mean you will not be posting the virtual portfolio plays in the morning posts? If so, where would one look for them?

  132. knightpilot

    I certainly enjoyed the interview.  Crazy that someone would go on T.V. and actually say something so valuable.  Not used to getting real information from interviews!  Sort of like mining gold, and selling it at a massive discount.  People are too lazy to make the drive to the mine, so you bring it straight to their door, where most just stare like a deer in headlights and go back to watching CNBC!

  133. Burrben

    dmoroz / GNW
    Phil was looking for a net 0.25 entry into the trade.  The premium paid for the bull call spread minus the premium collected for the short puts sold should equal somewhere close to 0.25.
     
    When you posted your numbers, you were asking if it was okay to enter the trade for a net 0.50 total cost, or a 100% greater entry price than what was recommended.
     
    Therefore Phil is basically telling you to not take what he’s writing as a bible, make sure you understand the trade and entry prices and to not pay 100% more than recommended.  In his post he thinks you should wait to enter the short puts and collect more premium, or go out to Jan12 (which I’m going to do, I like to keep my months lined up).  
     
    I got into the bull call spread today for $1.11, and I have a alert setup to make a trade when the puts get to .85

  134. dmoroz

     Ahh, thanks for clarifying that, Burrben. I am not following the post blindly, hence my question since i observed that the prices have changed. But, I do have a hard time understanding what numbers will actually work and what the cut off prices should be. I have learned a lot from this forum already but, obviously, I still have a lot more to go. 
    Thanks for your help.

  135. stjeanluc

    Share of GDP / Phil – It’s amazing that for 50 years or so, the share of the bottom 99% stays around 55% or so and then Reagan and 2 Bush later and it’s 47%. If it was not for 8 years of Clinton, it might be under 40% now! But i guess it’s part of the plan eventually.

  136. jcaesar

    Phil – What in the world possessed you to recommend that NFLX trade?!?!

    Just kidding. ;-)

    They really must hope AMZN buys them up now.  In all honesty, what do you think they’re worth?  Are they going to be a $10 stock before we know it?

  137. stjeanluc

    Really funny – Republican dictionary:

    http://www.huffingtonpost.com/jonathan-bines/republican-dictionary_b_1028841.html

    At least to some of us.

    Money quotes

    Constitution (U.S.): The hallowed founding document of the United States, the text of which must be interpreted strictly and amended immediately.

    Corporations: Large people who are overtaxed.

    Deficits: 1) Fiscal shortfalls incurred by Democrats that threaten to bankrupt the country. 2) Fiscal shortfalls incurred by Republicans that don’t matter.

    Ronald Reagan: A fictional character based loosely on President Ronald Reagan.

    Poverty: The condition of having inadequate financial or material resources due to not trying hard enough.

    Wealthy (the): People who earned every penny.

    Welfare: A government program to distribute Cadillacs to unwed mothers.

    Yes: (no translation)

  138. Burrben

    Phil / Searching the site
    I tried the google based search you suggested last week, and it doesn’t work for me.  It can’t search the members only area or the comments that are posted.
    I tried to search for my name using:
    burrben site:philstockworld.com
     
    Only found two results

  139. biodieselchris

    NFLX had a P/E of 30 today before getting slammed. I won’t even discuss the horrible miserable pig that is CMG (other than Phil said "350" in Las Vegas, so watch that line very carefully!!!).
     
    However, PCLN has a P/E of 37 and there 5-year and 2 year charts are looking very interesting. I know gambling is bad, but the front month 485 puts hit 1.35 today and is gambling so bad with just 1 of those thrown in for good measure? <365 is possible here….
     
    Nothing goes up forever.

  140. biodieselchris

    KBH showing strong signs of life.
     
    Good entry here at 7.78, and the Jan12 – 7.50 puts you can sell at 0.93, so as long as you don’t mind doubling down at 6.57 this is a good entry (on this one, don’t sell the calls, protect your upside).

  141. biodieselchris

     oh boy.
     
    congrats on PLX! I sold this one a while back to make some other plays. I like the chart though and might get back in on this one….

  142. lol730

    oil is very jumpy tonight.
    Dollar inches down – oil flyes
    dollar jumps – oil barely moves down

  143. jerconn

    Phil, watched the interview and didn’t hear you say "beheaded" but if I’m not mistaken that was your last sentence and they cut it off pretty close.  Enjoyed the interview, but by their nature such interviews don’t allow you to go into depth in anything, and before you answer they’re already asking you something else.  Would be nice to get in one or two sentences going a little deeper into something.  Btw, interesting on the Sfardic Jewish/Italian connection, but "Davis" is neither one, how did that come about? 

  144. Phil

    Good morning!  

    Euro seems happy today, up at $1.395 and the Euro Bears are going to be s**tting in the wood, their pants and everywhere else if we break $1.40 so we have the very strong possibility of a Euro short squeeze, which will knock the Dollar down and likely zoom the markets too.  

    Oil isn’t waiting, it’s already at $94 and gold isn’t moving because the fear is draining out as fast as the Dollar is dropping but it should get a pop too.  Silver is $32, copper $3.46 (and based in simplistic punditry – if copper is going up the economy must be suddenly good), nat gas is $3.60 and gasoline $2.65 (going lower while oil goes higher to emphasize what BS the oil move is).  

    Our futures are up half a point and we can layer some more speculative upsides on top of Monday’s picks not – I’ll have those at the open but YRCW is already .08 so YOU ARE WELCOME for me banging the table on them!   As I said, I never pick penny stocks but 5.5 cents (and lower the last time I mentioned) was just friggin’ ridiculous with the markets heading higher.  

    Again, that’s FUNDAMENTALS, FDX just announced a brighter outlook, we had discussed that YRCW was certainly busy and the only question was whether they could make enough money to cover their liabilities but those are the same liabilities that had been drastically reduced in their dilutive distribution that took them down to .05 in the first place.  .05-.10 was our expected range when we first began accumulating a year ago and, if you do you homework and REALLY believe your fundamentals, you don’t stop buying just because a stock gets to the bottom of your range – even if that bottom is .05!  

  145. jromeha

    Phil-where do you like shorting oil here? 20$ in 20 days kinda ridiculous…

  146. Phil

    GNW/Dmor – I don’t usually put trades up in the post, they are usually in comments during the day.  If my trade is on XOM or IBM or some other large cap, it’s fine but when I call attention to a smaller company like GNW, I tend to push the stock around and I don’t want to do that before Members have a chance to accumulate.  Just like the other portfolios we track, when a trade idea is for the White Christmas Portfolio, I will write WCP as the header for the comment and the comment will be in one of those indented white boxes so hard to miss but this is a day-trading portfolio – you don’t make 66% in 2 months by taking long-term plays in a choppy market, unfortunately. 

    Thanks Knight.  

    Thanks Burr – That’s right the key is getting the net entry and, as I mentioned yesterday, selling the Jan puts instead make it work.  As long as you believe in your price and don’t need the margin for anything else, the month is not a lot to give up.  

    GDP/StJ – I was joking on BNN but that is one of the problems with the way OWS presents themselves – even the top 1% should be outraged at the gains made by the top 0.1% and especially the top 0.01% – that’s where ALL the money went in our economy since Reagan – we’ve established a noble class, right here in America and, like all noble classes, they are writing laws and putting their family and friends into positions of power to make sure things stay the way they are (favoring them).  

    I guess having family in England always made me more class conscious.  My Uncle was Lord Mishcon and was Lady Di’s personal attorney and I used to go to Ascot for the races where we’d sit with the Lords and Ladys and social structure in the UK is rigidly enforced and even my Grandparents, who were 1st cousins to the Miscons and very well off themselves, knew their "place" and there were never any illusions that we were "one of them".   

    So it was never a shock to me in the US, even when I became fairly wealthy, that within the top 1% there are class distinctions as sharp as any set up by British Nobility.  As a consultant, I often consorted with top-level CEOs and Government officials but those people live in a very different World from you and I and, over the years, I became disgusted as the lines were drawn deeper and then, as Republicans claimed class victory after class victory, I was horrified as this country changed from the land of opportunity that allowed my generation (maybe the last) to work hard and get ahead, into a harshly structured Kleptocracy, where rule after rule was changed to benefit those on top and punish those down below.  

    The last straw for me was the war on health care in Clinton’s first term.  That’s when I saw how ugly the class warfare had become because America was no longer about reaching out and giving all people an equal chance for a leg up but about creating an aristocracy that has everything while condemning those who were unlucky enough to be born on the wrong side of the tracks to a life of wage slavery through debt.  

    It costs about $6,000 a year to raise a child, even in poverty.  What chance do the people who make $40,000 a year with 2 children have of saving for their retirement and their children’s college while paying another $1,000 a month for health care?  So these children, through no fault of their own – if they want good jobs MUST go to college and that’s now $100,000 for 4 years or maybe $60,000 in a state school.  So kids get out of college (no grad school) $60,000 in debt (or their parents are $60,000 in debt which means the kids will have to take care of them later) and then they are supposed to get their own $40,000 job, pay $300 a month for health care and pay $500 a month for their loan and then a car plus insurance and gas to get to work is another $500 a month etc – how do they save for a house?  How do they save for retirement?  

    They don’t.  Each "step" in their lives is just more and more debt piled on and, over the past 20 years – they don’t even get raises, do they?  When we (assuming you are 40+) took out home loans and even car loans, we had EXPECTATIONS that we would get a raise EVERY YEAR and that it would make our payments more manageable.  We also had EXPECTATIONS that our homes were a place to save our money and that they would also be worth more when we sold them.  Try re-running your own life without those benefits….

    That’s what I mean by wage slavery – the bottom 200M people in this country have almost no hope at all of escaping that cycle and the the next 100M aren’t having a party either.  Only the top 30M even have a chance of achieving the American dream and, as I was saying, the difference between the top 30M and the top 3M is even greater than the top 30M to the bottom 300M and the top 3,000 may as well live on a different planet and the top 300 own this planet – we just live on it with them.  

    Oops, time to work now!  

    Search/Burr – I let Matt know re. moving banner.  

    Davis/Jerconn – When the Nazis took over a city, the first thing they would do is go through the phone books looking for Jewish names to load onto the trains.  All of Europe had fallen except the UK (and they were being bombed daily) and Bernstein was a very Jewish name so the family changed it to Davis.  

  147. Phil

    Oil/Jrom – We’ll have to wait out the EU deal and see how far the Dollar falls first.  

  148. morxlntway

    Pharm – AMAG upgraded to buy by someone with a goal of $18. What do you think? I got out of the spread but still have the $16 short puts.

  149. jerconn

    Phil, interesting on the family name…but Bernstein is also neither Sfardi nor Italian.  However, Mishcon de Reya certainly fits the bill (btw, I know a couple of lawyers working for the firm, they were also involved with Pr Di’s divorce…)…
    Back to business…I’ve been pondering your suggested AAPL trade ever since you posted it yesterday (sell five Dec $400 puts, buy 3 April puts).  It seems to that since it plays the downside that AAPL may go thru after earnings (as we saw just now occurred), it actually complements very nicely the upside play that I mentioned (the $400/450 Jan BCS, offset with $350 Jan puts).   Do you think it worthwhile to do both plays (actually, I’m not sure that I have the margin to sell 5 $400 calls, but assuming that I do…)?  

  150. jmm1951

    Phil/Uncle Victor
     
    Yes, but Mishcon was a left wing lawyer/politician who was not a hereditary peer, but was awarded the title for services to the Labour Party by Labour Party Prime Minister Jim Callaghan. He served as a major in the British army in World War II. He served as a Labour member of the Greater London council. He assisted Princess Diana in her divorce, thus striking a blow against the royal family.
     
    Your description of Ascot races is appropriate, as that is one of the very last ceremonial occasions, a piece of theater that celebrates the old order. I think it has always been out of date. Certainly George Bernard Shaw thought so, using that scene at Ascot races in My Fair Lady where the flower girl, daughter of a refuse collector,  who has been taught to speak and act like a member of the aristocracy suddenly loses her cool as a horse race comes to a tight finish, and shouts: "C’mon Dover, move your bloomin’ arse!", thus betraying her proletarian origins. (I hope you managed to avoid that faux-pas!).
     
    Guardian obituary:
     
    Lord Mishcon:Veteran London solicitor who believed the law should give justice to everyman
     
     
    http://www.guardian.co.uk/news/2006/jan/30/guardianobituaries.mainsection

  151. dmoroz

     burr?phil in order to make the site searchable you would need to let the bots crawl restricted areas. your programmers should be able to identify googand le bots via http headers

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