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Trying the Tops on Tuesday – As Usual

Seriously, this is 4 Tuesday's in row – is anyone seeing a pattern?

Of course this Tuesday we are 100 Dow points lower than we were last Tuesday and the BS pre-market pump job at 6am has already faded (7:30) although we're still working short bets on the Russell futures (/TF) and the Euro (EUR/USD) from 813 and $1.256 as I put up a note in early morning Member Chat as we spiked on – get this – the news that Draghi cancelled his appearance at Jackson Hole this weekend.

Why would it be good that Draghi is NOT going to the last Central Bankster conference of the year but the buzz is that he MUST be so close to a masterful solution to all of Europe's problems that he can't be bothered to gather with his brother bankers on the eve of his triumph.  The announcement was timed to coincide (10 minutes before) bond auctions by Spain ($2Bn 3-month notes at 0.95%) and Italy ($3.75Bn of 2-year notes at 3.06%) and the Euro jumped 0.7% into the auction – lowering the effective rates and both auctions were a "success".

That pulled the EU markets off the floor (still down half a point at 8am) and got the US futures out of the red zone as we finally pushed the Dollar under that pesky 81.50 line, goosing the indexes and commodities.  Unfortunately, it's just a sugar rush and we've already run out of steam but I'm sure someone will start another rumor around 9:15 to get us back to green into the open.  

As I said last Tuesday, with the Dollar at 81.50 we're looking for adjusted levels of:  Dow 13,464, S&P 1,428, Nasdaq 3,060, NYSE 8,160 and Russell 816 and we held the Nasdaq yesterday but that was all so no reason to capitulate on our bearish stance just yet.  Last Tuesday we also discussed 3 more trades (there we 3 the Tuesday before) to make 300% if the market did break higher and our first batch had several 100% winners so let's see how our 3 new trades did in a downtrend:  

  • 2 FAS Oct $107/117 bull call spreads at $2.05, selling 1 BBY 2014 $15 puts for $3.75 for net .35 is now net $1.52 – up 334%
  • AGQ Oct $38/45 bull call spread at $3.10, selling BTU 2014 $20 puts for $3.60 for net .50 credit, now $1.18 – up 236%
  • 3 DIA Oct $135 calls at $4.05, selling 1 HPQ 2014 $20 put for $3.80 for net .25, now -$2.56 – down 924%

HPQ had a rough week, dropping 20% and that killed that trade, which was the most leveraged of the 3 but not a bad consolation on the first two considering the market moved against us.  Of course, setting a stop somewhere before you have a 100% loss can save you a fortune in these situations as well!  We never did made our levels and, as we discussed yesterday, our bearish positions had a fabulous week so the hedges certainly did their job.  

Obviously, we take the money and run on the first two hedges and there's no need for 3 new hedges when the DIA spread can now be played with 2 DIA Oct $135 calls at $1.23 selling the HPQ $15 puts for $2.30 for net .16 and, if you don't mind owning HPQ for net $15.16 (12% off the current $17.21 price), then there's not much to worry about on this trade but, as I said last week – we are NOT bullish and these are just small hedges against our generally bearish bets.  

Realistically, if we played all 3 spreads with even distributions, we laid out .10 in cash and the two winners made $2.70 while the loser dropped $2.56 so, even without stopping out the loser, we're no worse for the wear on the drop.   A great example of why all your eggs should never go in one basket.  

Speaking of broken egg baskets – check out this Bespoke chart of the Shanghai Composite – what a mess!  Our stock indexes are currently back where China was in late 2007-early 2008 and a lot of the reason we're back there is the way we're so enthusiastic about potential expansion into China and the growing Chinese demand for our goods and services and swelling Chinese Middle Class and the endless Chinese demand for commodities and…. hey, what's that smell?  Smells like BS to me…

You can read 100 articles and the Punditocracy on the MSM can hit those talking points until they are blue in the face but this chart is A FACT!  The Shanghai is down 66.6% from the top and anyone on TV using CHINA as a reason to be bullish should be given a few hundred volts through is chair!  What if the US market looked like this and people tried to tell you how great things were?  Would you say "well, that certainly not what I see here but, if you say so – it must be true"?  Just because the MSM assumes you're an idiot, doesn't mean you have to invest like one.

Despite the "great" bond auction this morning, the rats are leaving the sinking ship of state in Spain at an ever-accelerating pace.  The chart on the left shows the outflows from Spanish banks, where deposits fell 4.7% in July alone.  A few more months like this and there won't be any banking system left to save!  

Spain's once-wealthy Catalonia region has officially requested an emergency liquidity injection of $6.5B this morning from Madrid's sadly insufficient bailout fund.  Don't worry Spain, Germany says CHINA will buy up all your debts (not a joke, sadly).  Spain officially admitted they are in a recession today as Q2 GDP fell 1.3% after falling 0.6% year/year in Q1 and is projected to fall further in Q3.   

At this point, even the Swiss are running out of money, and patience, as the SNBs policy of supporting the Euro at all costs.  The SNB is currently holding 230 Billion Euros, which is 1/2 of their entire GDP, adding 34Bn in July alone.  If not for Swiss support, the Euro would surely be at $1.20 or less – even against the weak Dollar.  "The minimum price is not for eternity," said SNB's Jordan, "this is an extreme measure for an extreme situation."  Any sudden removal of this support can have a sudden and devastating effect on the Euro.  

Just ahead of the open we're getting our predicted pre-market re-pump and that's fine with us because – we don't care IF the game is rigged as long as we can figure out HOW the game is rigged and place our bets accordingly.  The Russell bottomed out at 808 – up $500 per Futures contract and the Euro hit $1.24, which doesn't seem like a big move (.016) but it's $10 per .001 so up $160 per contract on that one and that is how we pay for our Egg McMuffins.   

Now we get to sit back and watch the fun!  


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  1. stjeanluc

    Oil Lines

    R3 – 100.25
    R2 – 98.87
    R1 – 97.17
    PP – 95.79
    S1 – 94.09
    S2 – 92.71
    S3 – 91.01

  2. angelcur

    JET// I feel exposed! i am so impressed that someone so new to our august gathering has brought my knuckle dragging tendencies to the board's attention..i had hoped to continue my passage quietly hauling my calloused knuckles along without note…SIGH
     
     
    NOW BACK TO THE PLANET EARTH
     
     
    I HOPE THAT MANY OF YOU HAVE HAD A CHANCE TO PURCHASE NTE. I BROUGHT IT TO THE BOARD WHEN IT WAS TRADING IN THE MID FOURS AND PRIOR TO THE GROWING AWARENESS THAT IT IS AN APPLE SUB CONTRACTOR..ITS SEPTEMBER Q SHOULD BE A MASSIVE ONE AND THE NEXT 12-18 MONTHS SHOULD BE EXTREMELY REWARDING..I VE DONE EXTENSIVE RESERACH ON THIS NAME AND HAD OUR CFO VISIT THE COS PLANTS IN CHINA AND HAVE TAKEN NUMEROUS MEETINGS WITH THE CEO..I BELIEVE THAT TOSHIBA OR SHARP HAVE AN AGREEMENT IN PLACE TO BUY THE COMPANY ONCE CERTAIN PRODUCTION GOALS ARE REALIZED.. MY YEAR END TARGET IS 12-15..MY LONGER RANGE PRICE GOAL IS 22-30

  3. Pharmboy

  4. pstas

    NTE- Angel- I,for one followed your trade on this one albeit a small position. I liked the story on MIL better so I took a larger position. That one seems to be working also. Got any more you can share?
    If your projections are to play out then March-13 buy / write looks attractive ($7.50 p/c) pays 17% plus the div.
    Phil, any thoughts?

  5. stjeanluc

    NTE / pstas – Why not sell the Mar 13 7.5 puts to pay for a Mar 13 10/12.5 BCS. Right now it's around a  $0.25 credit and return on margin is close to 200% if they are over 12.5 in March. On the down side you are covered all the way to $7.2.

  6. stjeanluc

    You could also sell the Mar 10 puts for less downside protection but a larger credit!

  7. Pharmboy

    Privatization of food and water….here we go!

  8. rustle123

    RUT has been holding very strong last few weeks, would love to see it break below 800 or even get close to it.  Just seems more likely that it's getting ready to pop.

  9. stjeanluc

  10. stjeanluc

  11. stjeanluc

  12. aaronc

    TOS/ Anyone else having issues with their account? Won't give me access to my account and tech support asked me to email them my client .log files? They said many customers are having the same issue. 

  13. rustle123

    Art Cashin had a very good take on Mario (the Dragon) Draghi not going to the conference.  He said he didn't think he would be able to upstage Bernanke and at the same time couldn't be bland, either would hurt the Euro so the best result is cause speculation and just not come using the excuse he has a heavy workload.  And so far it's working for today.

  14. bdybdy2

    TOS/aaronc  – I was able to log in this morning at approx 9am, running [build 1824.6], no issues so far.

  15. villashaka

    Flip- Why do you see WOR popping ? Also were you talking about Jan13 or LEAPS in 14. Thanks, just looking into ur suggestion.

  16. Phil

    Good morning!  

    Gosh I wish something different would happen!  As predicted, 9:15 and the Dollar was jammed down to 81.30, popping the Futures – but rather ineffectively.  Things will get ugly fast if we have selling pressure like we had yesterday at the open because yesterday we opened high so the day didn't look so bad, even though the Dow fell about 100 points from 8:20 to the close.   

    They are already spinning the Draghi news to seem positive with CNBC having the nerve (Art Cashin too, who I thought had more integrity) to say that Draghi didn't want to upstage Bernanke at Jackson Hole.  Can you believe the level of BS that is flying???  The statement from his office is:  

    "He has decided not to go to Jackson Hole due to the heavy workload foreseen in the next few days," writes an ECB spokesperson of Draghi's cancellation of his Jackson Hole appearance. In fact, no one from the bank's executive board will attend (Jens Weidmann, who will be there, is on the governing council, but not the executive board). The next ECB policy meeting is September 6.

    So just the normal silliness, it seems and, as is often the case on Tuesdays, we'll just have to watch and see what shakes out in the morning.  We're nowhere near breakout levels so probably not an issue today but the Nas has to hold 3,060 and the S&P absolutely needs to hold 1,400 and the RUT 800 and the NYSE 8,000 and the Dow 13,200 – oops….

    At the open: Dow -0.15% to 13106. S&P -0.14% to 1408. Nasdaq -0.08% to 3071.

    Treasurys: 30-year +0.19%. 10-yr +0.1%. 5-yr +0.03%.

    Commodities: Crude +0.63% to $96.07. Gold -0.43% to $1666.05.

    Currencies: Euro +0.53% vs. dollar. Yen -0.25%. Pound -0.07%.

    Market preview: Futures are flat-to-lower as the summer continues to meander on, devoid of much of the drama of this time last year. Markets are killing time until Ben Bernanke speaks at Jackson Hole, hoping that he'll print more money, but they've been disappointed before. S&P Benchmark -0.1%. Later: Consumer Confidence, State Street Investor Confidence Index, Richmond Fed Mfg. 

    Outgoing BOE dove (and an American) Adam Posen calls for his bank, the Fed, and the ECB to all get going with additional stimulus packages in September. Reason one: It's needed. Reason two: Markets expect it and markets must not be disappointed. One of his regrets is not pushing for QE sooner.

    ICSC Retail Store Sales: +0.5% W/W, vs. -1.5% last week.+3.4% Y/Y, vs. +3.1% last week. The increase in sales is attributed to cooler weather and the start of school.

    Redbook Chain Store Sales: +1.5% Y/Y vs. +1.9% last week- That's odd, usually chains do better than small stores.  

    After sizing up the roundup of Q2 reports from high-end retailers in China, analyst Rahul Sharma sees a trend emerge. "Solid demand from cosmetics to watches, but costs, competition are making their margins shrink." Under pressure: RLCOHEL,LVMUY.PKGUCG.PK.

    June S&P Case-Shiller Home Price Index: +0.9% M/Mvs. +0.4% expected, +0.9% prior. +0.5% Y/Y vs. 0.0% expected,-0.7% prior.

    More on Case-Shiller: June marks the first time since summer 2010 when all 3 indexes – the national , the 10-city, the 20-city – were higher for the month. The national composite is up 6.9% Q/Q and 1.2% Y/Y. A longer-term chart shows maybe the beginning of a recovery, but mostly house prices bouncing around near 2003 levels.

    Australia's property market grapples with gravity as new homes fell to the 2nd lowest amount on record in July. The HIA's (Oz's version of the NRA) top economist says low confidence, tight credit and high taxes are to blame for "recessionary conditions" in housing, but it's still a great time to buy! The aussie fell to a one-month low, but has since rebounded to unchanged.

    The ECB wakes out of its slumber to urge Basel to water down tough new bank capital rules coming down the pike. Massive bank capital shortfalls under the new standard might likely be standing alongside any other issue as a threat to economic growth (not to mention bank share prices) going forward.

    I forgot to mention this – the reason China was up 1% today was rumors that companies will begin buying back shares at the 2009 lows – evidenced by the fact that one company did:  A sign of strength or desperation? Baoshan Iron & Steel soars 10% in Shanghai after announcing it will buy back up to $787Mof its beaten-down shares. The refiners – namely Sinopec (SNP) and PetroChina (PTR) – join the rally as speculation falls on these giants as the next to commence repurchases. Shanghai +0.9%.

    Struggling with finances amidst a credit crunch, the Chinese city of Wenzhou (the epicenter of the country's shadow banking boom), puts up 52 plots of land for sale. Revenue growth for the city's coffers slowed to 4.4% in H1 – nice, but the equivalent of a crash for a burg used to 20-30% growth.

    CHINA!!!  Ford (Fplans to bring the Lincoln brand to China, according to CEO Alan Mulally. The move will be an attempt to counter the domination of Volkswagen, BMW, and Daimler in the nation and tap into a luxury market that's expected to be the world's largest by 2020.

    Firefighters have extinguished two of three storage-tank firesat Venezuela's largest oil refinery, the country's state-run oil company says. The Amuay refinery has a capacity to process 640K bbl/day of crude but had been working well below that rate for some time. WTI crude +1% to $96.48.

    Siemens (SI), GE and start-up backed by Bill Gates are among those developing different methods for storing surplus energy. It's not just about batteries, with one technique using excess electricity to pump compressed air into caves and then releasing that air to generate power when needed. The storage is needed to cope with the vagaries of solar and wind energy

    Da da da da, da da dun, da da da da – Monsanto (MON -0.4%signs a deal with Alnylam Pharmaceuticals (ALNY +3.6%) to use the biopharma's gene-silencing technology to improve its biopesticides. MON gains exclusive rights to use ALNY's platform technology and intellectual property; ALNY will receive $29M in upfront payments plus milestone payments and research funding.

    The next 10M job cuts approaching rapidly: Having created a supercomputer that beats "Jeopardy!" champions, IBM is now developing "Watson" for commercial applications, which the company believes could generate billions. Watson is already crunching data for Citigroup and WellPoint; ultimately, a Watson app for a smartphone would be able to answer consumer questions, such as about their health. 

    Is Disney (DIS) firing on all cylinders? CEO Robert Iger certainly makes a compelling case in an interview with the WSJ where he explains how the roaring successes of The Avengers and ESPN aren't just seasonal blips or coincidental timing, but the result of savvy investments. The exec says that still on tap to drive Disney's revenue even higher are new cruise ships, Avenger-related sequels, refreshed theme parks, and a $4.4B complex in Shanghai.

    Costco, Costco, Costco (COST). That's the messagegetting pounded out by Mitt Romney and his wife in recent interviews that attempt to shine a light into the candidate's personal life. The bit of unexpected press for the company includes the tidbit that dress shirts worthy of the aspiring leader of the free world can be found in the back aisles of the retailer's stores. No mention of WMT.

    What?  AMZN has competition?  Why didn't anyone tell us there were other people in the space with 1,000 times the experience and infrastructure already in place?  How will AMZN grow 100% a year if the competitors whose space they are entering don't fold over like cheap suits?  UPS invests in same-day delivery firm Shutl as it looks to keep up with Amazon, eBay and a number of startups looking to solve the logistics riddle of how to deliver packages to retailers faster. Shutl plans to jump across the Atlantic to the U.S., with its eyes on a market that could be as large as $26B by 2016

    Though Apple (AAPL) is suing many Android OEMs (including Google-owned Motorola), it has refrained from directly suing Google (GOOG) over the OS. And Google, while assisting in its partners' defenses, issued a cautious response to the Samsung verdict. What gives? It might be that the companies remain joined at the hip, in spite of all the enmity. Google needs its iOS search deal with Apple to maintain a dominant share of mobile search. And Apple doesn't want to lose Google's search payments, or its extensive iOS app support.

  17. Phil

    LOL – I was just looking to see what to short after getting a bite and the rally is already over – that can't be good.  The Euro is still in play at $1.255 but the RUT didn't even get back to 813 before dying. 

  18. Pharmboy

  19. villashaka

    Phil- Too Late to play TZA today?

  20. Phil

    Consumer confidence (or lack thereof) down from 65.4 to 60.6 – we're dropping as fast as Spanish bank deposits!  

  21. aaronc

    bdybdy2/TOS – Thanks, I called again and they said many clients are having the same issue, they "hope" to have it resolved within a few minutes. I was on hold about 10 minutes before I could speak with someone so it does seem widespread. I would be pissed if I wasn't so comfortable with my positions- stacked short with a few upside hedges.

  22. mjjwo9b

    sjl / FAS:  Per your accounting of FAS, should not the short $11 strikes be reported as a closed position?  This, I think would adjust the Current Postions P&L to -$15.  I certainly cannot maintain a short and a long position of the same option concurrently in my accounts.  Still, your format does clearly show the BCS situation, but not my account reality.

  23. stjeanluc

    FAS / mjj – I corrected the portfolio. Thanks!

  24. stjeanluc

  25. Gingbaum

    Phil,
    Is the VIX or VXX more representative of volatility?  I did a bull call spread on the VXX and it won't move – while the VIX has gone up about 3 dollars?
     
    Thanks

  26. 1020

    Phil/Cashin  Don't be so harsh on 'ol Art – He's had some moments of delusion in the past…..
    http://www.youtube.com/watch?v=epZw8cjPlV8

  27. stjeanluc

    VXX / Ginbaum – VXX suffers from decay so it's not an accurate representation of the VIX. If you look at the performance of the VIX and VXX since the beginning of the year you will see that the VIX is down 27% while VXX is down over 65%. You can play VXX for short term spikes in the VIX, but longer term you can get burned.

  28. rustle123

    Cashin/Phil
     
    I read Cashin differently, thought he was pointing out that it was a strategic move to cancel and the workload excuse was bs, it was just to keep the illusion that something would be happening.

  29. shadowfax

    IWM has a major trouble spot 81.40 to 81.50
    In the past year 20 over in Feb and March 5 in April 2 in JUL 3 in August. More recent stay over my 81.30 line all day only 1. This is the RUT with breakdown support about 80.40. It appears we are where we are because of the dollar as Phil said and I fail to understand why the exit if forex markets believe in QE. Would this not indicate that QE is baked in and disappointment will cause an ugly responce? On the 20 day chart 38.2 fib is 80.26 and the show stop for the last week is 81.43. Range bound 73 to 83 since December 20 2011, above times over 82. FWIW how I see it.

  30. Phil

    NTE/Pstas – I stay far away from Chinese small-caps.  They may be good or they may all be in jail next week and I don't have time to check.  So I like MIL better already as they are Canadians – so only a little weird and untrustable but again, it's a small cap with most of their company "news" coming off the PR Newswire so nothing I would put money into either.  

    Good water report Pharm, thanks.    

    Wow, consumer confidence was so bad, it's good (Fed back on table, though how giving another Trillion to banks will make consumers more confident – I have no idea)!  

    Aug Consumer Confidence: 60.6 vs. 65.8 expected, 65.4 (revised from 65.9) prior. Expectations 70.5 vs. 78.4 prior. Present Situation 45.8 vs. 45.9 prior - Look how completely and utterly wrong analyst expectations were – these are the analysts the Fed relies on for forecasting.  

    Good timing for Obama to have a hurricane and show how not Bush he is.  

    Richmond Fed came out too:  

    Richmond Fed (-9 vs -17 in July): New orders gains 5 points to -20. Capacity utilization gains 7 points to -9. Employment weakens, down 6 points to -5, average workweek down 4 points to -11, the wage index down 6 points to 3. (full report)

    TOS/Arron – I'm in and now there's no way I'll log out to check!  

    Cashin/Rustle – Oh please, what nonsense.  It worked for exactly the 15 mins it was worth.  Turns out the horrible CC number and continued weak Richmond Fed is a better market booster with Bernanke on deck on Friday (10 am):

    Federal Reserve Chairman Ben Bernanke (FOMC Voting Member) To speak on "Monetary Policy Since the Crisis" at the Federal Reserve Bank of Kansas City Economic Symposium

    TZA/Vill – That one could have been played on the morning pump and now we'll have to wait but hopefully we get another shot on this little rally.  Yesterday was an easy call as we looked out of gas, now it's up and down 5 points on the RUT 3 times in less than an hour so a rougher bull to ride.  

    Comfort/Aaron – Another side benefit to the wonders of hedging.  

    VIX or VXX/Ging – VXX is just an ETF that tracks the actual VIX, which is a true measure of volatility.  I like VXX because it's more liquid but it does tend to decay. 

    Cashin/1020 – I agreed with him on the street violence.  

  31. stjeanluc

    Looks like some drought areas will be helped by Isaac:

    isaac

    But in some cases it might be too much of a good thing with flooding and destruction. It seems that we can't win!

  32. rperi

    TOS/I can log in fine to one account but my second account shows a zero balance and no positions. 

  33. Phil

    TZA weekly $15 calls at $1.45 with TZA at $16.45 are just too much fun.  10 in the $25KPs with stops at $1.20 – nice with no premium as there's nothing to decay.  

  34. Phil

    That stop should be about RUT 815.20.  

  35. aaronc

    rperi/TOS – Same here. Two accounts one is just fine the other not so much.

  36. Phil

    FAS Money – Let's sell 2 FAS $97 calls for $1.60 ($320).  

  37. 1020

    Phil/Cashin  Oh, I'm sure that day will come, but Art's reasons and timing (Jan.'10) were unfortunate…..

  38. Phil

    On the TZA calls – $1.75 was top of the channel today so we take that (20%) and run on half and then push stops to $1.60 on the last 5.  

    $25KPs – Holding up well near the top.  Notice how annoying it is waiting for JRCC callers to give up that last .25.  Nothing to do otherwise. 

    WFR at $2.87!  

    VIX down to 16.10 because up and down 5 points on the S&P 3 times in one hour isn't volatile, I guess…

    Drought/StJ – Hopefully not too little, too late. 

  39. Phil

    EUR/USD back to $1.256 – should be another good short.  RUT (/TF) tapped our 814 shorting goal to.    S&P (/ES) is a nice short below the 1,410 line (now 1,410.25).  

  40. angelcur

    NTE anyone who would like my analysis of second q earnings please ask and send your e mail address to rhetra@aol.com..I ve had a 20 year relationship with the CEO of this company and all that i can tell you is i have 20% of my liquid net worth invested here and all most all of that has been made invested with mr koo..just my take..Phil is correct about Chinese companies and many of you know who along with Phile sounded the alarm on china two years ago..i am still short..but all chinese companies are not alike this is one of those deals that seldom comes along..i am sharing it because i am not an options jockey and have little else to contribute

  41. stjeanluc

    NTE / Angel – These guy have really gone parabolic the last week or so….

  42. jromeha

    Angel – you give good color commentary!
    1020- THe "predictioneer" is just an author who wrote an interesting book (The Predictioneer's Game) using game theory to predict future outcomes/behaviors by world powers.

  43. stjeanluc

    Well worth reading….

    http://www.theamericanconservative.com/articles/revolt-of-the-rich/

    In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues. By 2007, the last “normal” economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950. By 2007 they had fallen to 14.4 percent. So who has skin in the game? [...]

     

     

    I saw for myself how GOP proponents of globalized vulture capitalism, such as Grover Norquist, Dick Armey, Phil Gramm, and Lawrence Kudlow, extolled the offshoring and financialization process as an unalloyed benefit. They were quick to denounce as socialism any attempt to mitigate its impact on society. Yet their ideology is nothing more than an upside-down utopianism, an absolutist twin of Marxism. If millions of people’s interests get damaged in the process of implementing their ideology, it is a necessary outcome of scientific laws of economics that must never be tampered with, just as Lenin believed that his version of materialist laws were final and inexorable.

    If a morally acceptable American conservatism is ever to extricate itself from a pseudo-scientific inverted Marxist economic theory, it must grasp that order, tradition, and stability are not coterminous with an uncritical worship of the Almighty Dollar, nor with obeisance to the demands of the wealthy. Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia? [...]

    What if Christopher Lasch came closer to the truth in The Revolt of the Elites, wherein he wrote, “In our time, the chief threat seems to come from those at the top of the social hierarchy, not the masses”? Lasch held that the elites—by which he meant not just the super-wealthy but also their managerial coat holders and professional apologists—were undermining the country’s promise as a constitutional republic with their prehensile greed, their asocial cultural values, and their absence of civic responsibility.

    Good stuff all around.

  44. Phil

    Yen, which is tied to the Dollar this week, testing 78.50 and I'd say that's the end of this Dollar dump at 81.30 with the Euro at $1.2566 and the Pound at $1.5826.  Euro went up so fast that EUR/CHF is $1.2007 – this would be a smart time for the Swiss to dump a few Euros too.  

    NTE/Angel – Feel free to post a write-up here, I'm sure many would like to read.  I love that you know them so well.  I don't want to scare people out of NTE – if you trust them, that's good enough for me because I know you are serious about this stuff and, as you say, they are not all alike – the problem is simply separating the weak from the strong and I'm just being honest with people and saying I simply don't have the time to do that kind of digging myself.  

    Oh no – WHEEEEEE again!  With a move like this, we're not automatically taking the $1.75 on half of TZA in the $25KPs until we see that floor hold

  45. jromeha

    Funny you mention Phil Gramm. I DESPISE that guy's politics but I didnt know he is a Colonel in the Reserve (so I guess I cannot criticize him now). He came to Kabul a while back as a Senator and got DV treatment everywhere – then he put on his Colonel uniform to serve his week or two and probably served under the very Generals who were kissing his ass earlier in the day.

  46. rainman

    Pharm — Thanks for the water privatization link.

  47. revtodd64

    Stjeanluc – Christopher Lasch
    Thanks for the quote and link.  I have always found Lasch intriguing since reading "The Culture of Narcissim" in the 1980s and "The True and Only Heaven" in the 1990s.  I have not read "The Revolt of the Elites" but that would be consistent with where he was going in his earlier works.   More to go on my reading list.  From a theological perspective, it seems that conservatives have all become apocalyptic, even the secular conservatives.  There is a sense that there is no hope at achieving a better world, that it is all going up in smoke soon, so let's all get ours in the mean time and let God sort it all out later.  EJ Dionne has also made the connection that conservatives have lost a robust sense of community, and narrowed down to their own families and friends.  So our public space is all occupied by making money, with little value on something more than GDP or quarterly profits.  This was not what conservatism was about historically.  
     
    I would also add in the title of the book written by the author, a long term Republican staffer, that  you quoted,  The Party Is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted

  48. pstas

    NTE is fine. Being a Chinese firm adds an element of risk but what investment does not have some wild card?
    I will just wait for a pull back . It has had a good run.

  49. stjeanluc

    Lasch / Rev – Sullivan makes the case that Obama is truer to the historical conservatism than the current GOP. There might be some truth to it….

  50. Phil

    Prehensile greed/StJ – I love it!  

    10:00 AM On the hour: Dow -0.28%. 10-yr +0.11%. Euro +0.44%vs. dollar. Crude +0.06% to $95.53. Gold -0.33% to $1667.85.

    11:00 AM On the hour: Dow flat. 10-yr +0.13%. Euro +0.54% vs. dollar. Crude +0.83% to $96.26. Gold -0.09% to $1671.75.

    Are Retail Investors ‘Fleeing’ Stocks? (WSJ)

    A reading list to reflect loss of faith in capitalism (FT.com)

    August State Street Investor Confidence Index: 90.9,down from a reading of 94.0 in July - Investors aren't confident, consumers aren't confident, stocks at all-time highs – must be time to BUYBUYBUY!  

    More on Consumer Confidence: At 60.6, the index hits its lowest level since November, led by a sharp drop in optimism about the short-term outlook.  Those expecting business conditions to improve fell to 16.5% from 19%. Those expecting worsening increased to 17.7% from 15.1%. The report hits stocks a bit (Why? Shouldn't this make Fed action more likely?), the S&P 500 -0.2%.

    The ProShares leveraged VIX ETF (UVXY) sets a 1-for-10 reverse stock split for September 6. It's the 2nd reverse split this year for the fund, which aims to double the return of the VIX – allowing it to slide towards zero with better than twice the speed (think compounding effects) of the VXX.

    The tables turn as property prices rebound nationwide - including depressed cities like Detroit and Cleveland – but wealthy Connecticut declines, led by steep falls in its tonier NYC suburbs. The state's GO bond rating was cut earlier this year by Moody's, which cited its over-reliance on financial industry bonuses, and the return on Connecticut debt trails all other states in 2012.

    How Young Homeowners Lost Out by Buying (The Atlantic)

    Getting to Know Underwater Homeowners (Zillow Real Estate Research)

    You Are Probably Worse Off Than You Were Four Years Ago (The New Republic)

    China’s unprecedented liquidity injection (FT Alphaville) 

    China Said to Order Action by Banks as Developer Loans Sour (Bloomberg)

    And this is a good thing?  "I have 10 engineers, but without [Amazon Web Services] I guarantee I’d need 60," says the co-founder of app developer Cue, just one of many startups to view Amazon's (AMZN) cloud infrastructure platform as a game-changer. AWS chief Andrew Jassy confidently expects the platform, currently estimated to produce ~$1B in annual sales, to eventually be more than 10x as big as its is today. AWS' capex needs have been rapidly growing with its sales. (OpenStack) - See this is the problem – the 1/10th job creator makes 9/10 more money and becomes super-rich while the 9/10 unemployed engineers go from middle class to unemployed.  By refusing to have realistic redistribution of wealth – it's concentrated in the hands of the very few, mostly out of circulation and then this guy goes out and gives money to Romney to cut his tax bill and the 9/10 are simply cut loose.  This is what's wrong with America in a nutshell.  

    Corn prices have shot up 60% since June, and soy prices have risen by more than one-third, but it's not a big problem for U.S. consumers, as the USDA estimates U.S. food prices will rise just 3%-4% in 2013. But in many poorer countries, 2B people still live on $2 a day or less: "For these people, a huge rise in grain prices is more than noticeable – it can literally break their budget."

    Well, they got permission to drill in ANWR but now the problem is – it's HARD:  In taking on the Arctic, is Shell (RDS.ARDS.Bbiting off more than it can chew? As Shell seeks permission from U.S. authorities to extend its north Alaska summer drilling campaign, the fact that such an industry giant is finding it so tough is making the rest of the sector sit up and take notice. “There are a lot of eyes on Shell,” says a top exec at a major oil and gas firm.

    I guess he didn't get his envelope:  Illinois Governor Pat Quinn vetoes a gambling bill that would have set the stage for five new casinos in the state, including one in Chicago. It's believed that Quinn will ultimately support expanding gambling in the state, but with two of his predecessors spending time in prison – he's a tad skittish on such things. Singing the Chicago blues: BYDCZR, [ASCA.

    Short sellers continue to bet on biotech firms compared to the July 31 settlement date. Arena Pharmaceuticals (ARNA -0.3%), Gilead Sciences (GILD +1.4%), Pharmacyclics (PCYC -2.2%), Vertex Pharmaceuticals (VRTX -0.6%) and VIVUS (VVUS -0.4%) all saw short interest rise more than 9% between July 31 and August 15. Two exceptions to the rule worth noting however, are Alexion Pharmaceuticals (ALXN +0.1%) and Biogen Idec (BIIB -0.4%), both of which saw short interest decline by 10% and 8.4%, respectively.

    Five myths about Paul Ryan’s budget (Washington Post)

    The Real Romney (NYT)

  51. stjeanluc

    The irony is just so sweet…

    http://ftalphaville.ft.com/blog/2012/08/28/1135281/dead-parrot-sketch/

    “I’m really sick of this government giving away our taxes to those corrupt Greeks,” said the owner of a pet shop in Amsterdam who asked not to be identified by name because he does not declare all his income to the authorities.

  52. stjeanluc

    Add one continent to the list of problems:

    http://ftalphaville.ft.com/blog/2012/08/28/1134681/is-australia-in-the-same-boat-as-europe/

    The crisis-stricken economies along the eurozone periphery share one key characteristic: their external debt is too high and their net international investment position (NIIP) – measuring the difference in stock value between assets held abroad and asset held domestically by foreigners – is deeply negative. Yet, a closer look and you will find Australia and its neighbour New Zealand in the same company, with negative NIIP well above countries such as Turkey and Brazil.

  53. revtodd64

    Phil – Just in case you thought there are not women at the GOP Convention:
    http://www.theonion.com/articles/gop-convention-to-feature-strong-lineup-of-conserv,29339/

  54. Pharmboy

    FWIW….not that we are uninformed….Paul McCulley, the former legendary economist and fund manager at PIMCO, who was once being touted to join the Fed as a policymaker, told me last year at the Altegris-Mauldin conference, the YoY trend in the three-month moving average of core capex orders had for a long time been his preferred indicator of how the broader economy was going to fare a few quarters into the future. Well, if you are bullish on U.S. growth prospects over the near-term, I suggest you look at the chart below.

    Notice how the YoY trend just sliced below the zero-line in July (to -1.7% from +1.1% in June).Only once in the past did this NOT tip the overall economy into recession and that was back in September 1998 when the Asian crisis was at its peak, LTCM had to be wound up and Russia defaulted … not exactly a pretty sign even if the recession was delayed for another two years.

    In terms of sectors, it was order declines in machinery, electrical equipment and communications equipment that far outpaced gains in metals, autos, aircraft, and computers.”

  55. Pharmboy

    Unclaimed Corpse Indicator (and 37 Others):

    The Concept: Because of high funeral costs, family members never claim the bodies of the deceased so the state will pay for costs. 

    The Proof: In 2009, at the height of the financial crisis when non-farm payrolls were falling by more than half a million a month, Detroit logged a massive increase in the number of unclaimed bodies at its morgue. State payouts for burials nearly doubled over a two month period compared to just a year earlier. 

  56. shadowfax

    IWM is looking really bad 80.40 line would not be good and that FIB is 80.26. Phil your hold call is solid in my book.

  57. Phil

    Tampa strippers encourage GOPers to party like a liberal

     

    But if past conventions are any indicator, Republicans are likely to outspend Democrats heavily at topless bars and strip clubs, says Angelina Spencer. She heads the Association of Club Executives, an organization for the nation’s 4,000 “gentleman’s club” owners. The group talked to members in the host cities of past conventions.

    “When we compared spending,” Spencer notes, “the average showed Republicans spending $150 per person at an adult club, versus Democrats, who averaged $50 a person.”

    Asked about the notion of Republicans patronizing strip clubs, convention spokesman James Davis told CNN, “We’re focused on having a great convention and nominating Mitt Romney.”

    Some clubs hired more dancers or installed extra ATM machines. Some spent money on renovations or put the Republican logo on their signs.

    While Tea Party favorite and former Alaska governor Sarah Palin won’t be there to address the convention, her porn star impersonator was in Tampa to undress for anyone not adhering to their family values.

    Australia/StJ – Without Asia growth they are screwed.  

    Things That Shouldn't Be Said In Modern Society To Be Said At Least 1,400 Times At RNC

     

    “It’s almost as if these people are unaware that the Enlightenment, the scientific revolution, various civil rights movements, and the entirety of social progress over the previous several centuries even occurred,” Wright added.

    Scholars also affirmed that sentiments relating to economic opportunity, natural resources, and human culture that should never exit a person’s mouth would in fact be chanted in unison throughout the convention, easily bringing the total count of grossly inappropriate utterances into the hundreds of thousands.

    According to the vast majority of experts contacted, such bizarrely out-of-date concepts, if ever fully acted upon, would nullify scores of generations of human advancement.

    “If this gathering were held in the 1700s or 1800s, a certain fraction of the comments they will make on issues like religion and commerce might be considered somewhat appropriate by people of the time,” anthropologist Gregory Switzer said. “But much of what is said at the RNC about fairness and the treatment of fellow human beings in need, for example, is far more consistent with the very beginnings of rudimentary social empathy in our species dating back to the earliest emergence of human civilization some 10,000 years ago, when our barely developed ancient ancestors would literally smash each other’s skulls in with large rocks without a care or second thought.”

    In stark contrast, scholars noted, several hundred things that desperately needed to be said in modern society would be uttered throughout next week’s Democratic National Convention by gutless speakers who would not possess anything remotely close to the strength or resolve needed to act on them

    ROFL – I love that article!  

    Lance Armstrong Lets Down Single Person Who Still Believed Him

    RNC Builds Levee Out Of Poor People To Protect Convention Site

    Capex/Pharm – More scary stuff….  Corpse indicator funny.  Huge drop-off in trash too – all bad signs.  

  58. stjeanluc

    Mining stocks are starting to feel the pain:

    http://www.ft.com/intl/cms/s/0/e20eb9f4-ef6a-11e1-9580-00144feabdc0.html#axzz24rAorAEq

     

    Ms Bartels argues that management teams’ ability to control costs will become more important given the subdued price outlook. “Mining groups may not be able to control their revenues but they can control their costs,” she says.

    The danger is that miners – as they did in the prolonged downturn of the 1990s – cut too drastically leaving themselves short of manpower and growth opportunities come the recovery.

    “Cost control is not about slash and burn,” says Ms Bartels, “but being smarter about what they chose to do and how they do it, whether they are riding commodity highs or lows.”

  59. dclark41

    Phil
    Are you thinking that no stimulus will come (in September)? Or, that it may or may not come, but even if it does it has lost it's effectiveness (sans a very short term pop upon announcement)? I have become a moderately short (SQQ,VXX, USO) against some very long term positions.  I have been effectively neutered to a little baby on the sidelines sucking his thumb watching the big boys play!

  60. aussie260

    stjeanluc/australia. aussie banks made 35b npat this past year, very profitable. australia has floating fx rate so banks not reliant on offshore for liquidity. however, they are reliant for term preference. internal economy is still relatively ok but external position is not. currency is way overvalued

  61. Pharmboy

    This market will continue to until it

  62. shadowfax

    Phil
    Do you have a link to the actual words repeated?

  63. Pharmboy

    dclark – I noted that they were sucking premium out of both sides a few weeks back, but the net shorts were falling as they were selling Aug/Sept puts OTM.  The bots are using the PP to perfection, on the daily plays, and the trend lines are acting as support/resistance.  It is a waiting game.  I still think they head fake this thing.  TLT remains elevated.

     

    Speaking of TLT…the Calendar play is holding well, up about $40/contract.  If it continues up, we are going to need to set a stop on it at $30/contract.  I don't want it to get away if there is a sell off, as it will skyrocket and the short sale calls will burn us.  Patiently waiting, but I have a finger on the trigger.

  64. denlundy

    TZA weekly $15 calls back at $1.45 with TZA at $16.45   This should still be a play as we yo yo back and forth until uncle Ben speaketh?

  65. dclark41

    denlundy
    You really have to get in and get out or join me on the sidelines!

  66. dclark41

    Pharm
    It seems like the low volume environment gives them a better opportunity to manipulate the market, news, and the players. And everyone is playing along nice, for now. The question is when does someone throw in the towel and call bad BAD? My problem is I haven't been told the script!
    Your responses always appreciated.

  67. stjeanluc

    Australia / Aussie – I guess they will soon join the race to currency debasing!

  68. stjeanluc

    Why bother with facts when the fiction sells so much better:

    http://www.washingtonpost.com/blogs/plum-line/post/fact-checking-for-thee-but-not-for-me/2012/08/28/cccd6036-f11d-11e1-892d-bc92fee603a7_blog.html?wprss=rss_plum-line

     

    The Washington Post’s “Fact Checker” awarded Romney’s ad “four Pinocchios,” a measure Romney pollster Neil Newhouse dismissed.

    “Fact checkers come to this with their own sets of thoughts and beliefs, and we’re not going to let our campaign be dictated by fact checkers,” he said.

    It's going to a fun 3 months!

  69. iTrade

    SQQQ sept $38 are $1.55
    - planning on DD if they catch $1.45

  70. shadowfax

    Demand down Oil contracts need to be flipped to April 7 months out. Looking better for the heating season.
    http://futures.tradingcharts.com/marketquotes/index.php3?market=DX

  71. Phil

    Stimulus/DC – Our rule of thumb is $10Bn of G20 stimulus buys one S&P point for 6 months.  We're up 140 points from when Draghi fever began and less than $500Bn committed (mainly by China) plus the drip of Twist, which is good for about $400Bn but, since it's monthly, it's more like $80Bn tops so 58 S&P points justified from 1,280 is 1,338 and we're at 1,410 so about $700Bn to maintain this plus 2 months of decay on the original $500Bn (the Fed's drip doesn't decay until they stop the program) brings us back to $800Bn needed just to maintain where we are.  That's a lot of money and it's very unlikely the ECB will come up with that much on its own and I don't think the US is good for anything at the moment so – EVEN if we do get some sort of QE/Stimulus – it's going to have to be a lot to justify the run-up.  

    Link to words/Shadow – You mean the RNC?  That's a joke article from the Onion, click the title.

    TZA/Den – It's more like a futures play – nothing you want to leave alone to go to the bathroom – let alone overnight!  I'm getting bored with it now as it didn't do what we wanted it to and the Dollar is just playing dead at 81.33.  I'm more inclined to pull the plug even than ride anything out but there's still a better than 50% chance of another down leg to 808 on the RUT.  

    "We're not going to let our campaign be dictated by fact checkers" – ROFL.  Really GOP people – how can you seriously have any respect for this party?  20 Historical Facts That Republicans Distort Or Just Get Plain Wrong ..

  72. Pharmboy

    LLY @ 52 wk highs….

  73. Phil

    11:00 AM On the hour: Dow flat. 10-yr +0.13%. Euro +0.54% vs. dollar. Crude +0.83% to $96.26. Gold -0.09% to $1671.75.

    11:39 AM European shares close with solid losses, helped only for a moment by news Mario Draghi is skipping Jackson Hole due to a heavy workload (a bond-buy program?) back home. Bailout requests lose their ability to shock as Catalonia's request for a rescue from Madrid (itself needing assistance) doesn't move the needle. Stoxx 50-0.9%, led by Spain and France each 1% lower

    12:00 PM On the hour: Dow +0.05%. 10-yr +0.15%. Euro +0.53%vs. dollar. Crude +0.6% to $96.04. Gold -0.09% to $1671.75.

    1:00 PM On the hour: Dow +0.07%. 10-yr +0.14%. Euro +0.57% vs. dollar. Crude +0.75% to $96.19. Gold -0.21% to $1669.75.

    Tropical Storm Isaac is upgraded to Category 1 hurricaneby the NHS, with sustained winds of 75 mph and moving northwest at 10 mph. Natural gas (UNG) and gasoline (UGA) futures remain flat to moderately lower. WTI crude (USO+0.5%.

    "Nothing has been decided … nothing is predestined" says Dallas Fed chief Fisher, speaking in a phone interview about another round of stimulus. Not owning a vote on the FOMC, Fisher would like someone to show him the link between further Fed easing and putting people back to work.

    Low volatility may be here to stay, argues BNP's Gerry Fowler, the result of an "extreme" risk-on, risk-off environment where investors sit on their hands until some central banker or government official utters something. The resulting high volatility on just a few days makes all other trading sessions snoozers. It's enough to drive even Louis Bacon to the golf course.

    Operating profits for non-financial Canadian corporations put in their worst H1 performance since the bursting of the dot-com bubble, falling 5% in Q2 on top of a 5.1% drop in Q1. The report comes not long after BOC Governor Carney's demand for companies to put their cash to work or give it back to shareholders.

    The top 10 global investment banks saw a 7.5% hit to revenue in H1 vs. the same period a year ago, according to Coalition. The declines were across nearly all lines, but 2 areas – prime brokerage for equities and emerging markets fixed income – saw gains.

    Fitch downgrades 7 mid-size Italian banks, noting their reliance on ECB funding as wholesale markets continue to tighten. The agency isn't worried about central bank funding going away though, as the ECB continually seeks to widen the range of eligible assets available as collateral for loans.

    Truck volumes look "weaker than normal" in August, Citi's trucking analyst says: "It appears that August loads were barely positive Y/Y and roughly flat sequentially (typically August volumes improve from July). Multiple carriers cited uncertainty over the election and overall economic softness as the drivers of August weakness and expected September softness."

    The back-to-school shopping season has seen a flood of shoppers hit outlet stores looking for bargains, according to Tangers Factory Outlet Centers (SKT +0.4%) CEO Steven Tanger. The company has a good handle on retail traffic with its 39 outlet shopping centers spread out across North America. The nugget also jibes with the recent round of earnings CCs from retailers with execs highlighting the performance at outlet stores a bit more than normal.

    Sears Holdings (SHLD +0.5%) continues to build new brands amid the highly-dissected slicing and dicing at the company, showing that it has a bit more on its mind than just managing its real estate assets. A new "guy's guy" line called Outdoor Life Line will launch this weekend at 800 stores and hit Sears' website next month. The Kardashian Kollection is also makes changes, branching out into more plus-sizes to follow an industry-wide trend to make plus-sized shoppers a higher priority.

    Gartner's Q2 Indian PC market share data drives home the price Dell (DELL) is paying in emerging markets for refusing to sacrifice margins to maintain share. Dell's share of the Indian PC market, which skews towards the low-end and has remained a bastion of growth, fell 380 bps Y/Y to 12.9%. Lenovo (LNVGY.PK), which has been competing aggressively on price, saw its share rise 620 bps to 16.6%, while H-P's (HPQ) share rose 190 bps to 13.1%. Dell's sales to BRIC markets fell 15% Y/Y in the July quarter.

    Motorola Mobility (GOOG) has agreed to license some of its standards-essential patents to Apple (AAPL) in Germany. The deal doesn't cover Motorola's non-standards-essential software patents, one of which led to a German iCloud ban, and 7 of which were recently asserted in an ITC complaint. The deal could be a way for Motorola, which is in a better patent position than Android rivals, to appease regulators worried about its use of standards-essential IP in patent suits. (earlier)

    Three lunchtime reads:

    1) Five stocks that could jump 20%

    2) A new take on the 4% rule

    3) Finance is in need of a technological revolution 

  74. aaronc

    VXX –  Reverse stock split just announced.

  75. stjeanluc

    Historical facts / Phil – Wow, reads like the historical editing of Joe Kernen's book…

  76. hemas03

    Phil, do you still fancy those PCLN 540 Sep Puts at $3?  They didn't fill for me a coupe of days ago, so there is a new opportunity right now.

  77. scottmi

    VXX/aaronc – as i read the news item, it looks like only UVXY is reverse splitting. i have not seen any statement that VXX is, but i would not be suprised if it follows sometime soon.

  78. stjeanluc

    VXX / AAron – I would not be surprised. The last time they split in Nov 2010 they were trading around 11 as well.

  79. rustle123

    Alert TMZ and CNBC, found video of Mario Draghi and what he's doing:
     
    https://www.youtube.com/watch?v=BeAOZrpSykE

  80. Pharmboy

    From Pillows at Slope….IF these (Gas futures) break that glass ceiling…things are not going to be good for the little guy…..nope, no good at all. 

  81. aaronc

    VXX/STJ SCOTTMI – You guys are right it's the UVXY. It would be nice though.

  82. Phil

    SQQQ/ITrade – Keeps falling just short.  Good indication our channel is right though.  

    Draghi – If they had a plan (and don't forget it was two months ago that he said he had one) then it would have been announced.  I think he's buying time because the ECB meeting is the 6th but I still don't see how they can do anything without the German vote on the 12th and if Bernanke punts (which I'd say is 75%) – I don't see people being that patient.  Draghi's a GS guy and he know better so there is no way he blew off Jackson Hole if he had something to announce.  There is a teeny, tiny chance that they are legitimately all just getting back from vacation and the only way to coordinate with a Fed announcement is to meet all week and iron out details but – not after 2 months of BS. 

    Joe Kernan/StJ – I can't believe someone in the nanny state hasn't taken that poor girl away from him to a safer place!  

    PCLN/Hemas – I don't know, Shatner's back…  Just kidding – of course I still like them.  

    VXX/Arron – Not VXX, the ultra that tracks it. 

    And what Scott said! 

  83. stjeanluc

    VXX / Aaron – You mean it would be nice so you could short it again?  :-)

  84. stjeanluc

    Kernen / Phil – Of course there is always a chance that Blake Kernen turns out like that young kid who spoke at the RNC convention 8 years ago but is a staunch Democrat now….

  85. shadowfax

    Reversed splits!
    The idea is to attract those who have rejected it. The outcome is usually bad.

  86. mjjwo9b

    Kernen – With youth there is always hope; not so much with the old cur dog.

  87. shadowfax

    Pharm
    Excellent! That chart was about what I detailed about IWM this AM. Doesn't matter what index all the same, kind of tells a story or warning.

  88. dclark41

    Phil:
    You holding TZA overnight?

  89. dclark41

    Phil:
    Just saw your earlier answer to my question. Forget I asked.

  90. Pharmboy

    Pennant forming on 3 min SPY with Higher Lows.  IF they follow TA…should break up, not down.  Char it SPY 5 min (Cobra), but same info.

  91. aaronc

    VXX/ STJ – That would be a nice long term trade, but I'm on the other side presently. Short some Jan 13 10 Puts. Sitting on a nice profit but haven't gotten nearly the pop I would have expected by now. Holding till Jackson Hole then I'll reevaluate. 

  92. shadowfax

    Pharm
    Another excellent chart shown the trend/trap/POINT!, I see. I gave up on posting my charts all I seen to know how to is links to others and I don't search for them, I creat them.

  93. Pharmboy

    Shadow – all my (borrowed) charts are excellent…heck, all my posts are excellent…. ;)

    1020 – no comments from the peanut gallery!

  94. Phil

    Kernan – Very clever by the way, making his 10 year-old daughter the co-author.  It makes the book virtually attack-proof as no on wants to rip to shreds the misguided musings of a child.  Also probably had some nice tax advantages….

    1:00 PM On the hour: Dow +0.07%. 10-yr +0.14%. Euro +0.57% vs. dollar. Crude +0.75% to $96.19. Gold -0.21% to $1669.75.

    2:00 PM On the hour: Dow -0.11%. 10-yr +0.21%. Euro +0.56% vs. dollar. Crude +0.72% to $96.16. Gold -0.4% to $1666.55

    Fed a Profit Center for Taxpayers?  Congratulations to CNBC for one of the silliest economic assertions in history

    Federal Judge dismisses prominent evangelical college’s lawsuit against Obamacare 

    Seems real:  An ECB Member Gave A Speech In German That Laid Out Exactly The Plan To Save Europe 

    Anti-EU, Anti-Brussels Sentiment Rises in Netherlands; Don't Expect Much (Except Bickering) From a "Merkollande"… 

    How To Make $500,000 With Credit Suisse Betting For A Big Jackson Hole Disappointment 

    CIO of Buffett's Gen Re says France Debt ‘Significantly Overvalued’

    Barclays Has 3 Reasons Why China Isn't Ready To Stimulate Its Slowing Economy

    SocGen: A Bunch Of Industries Are Collapsing In China's Bad Debt Nightmare 

    So is the Venezuelan oil fire out or not? Venezuela’s energy minister insists the inferno that has halted operations at its largest refinery is “totally extinguished," but recent a live broadcast by Venezuelan TV – which was swiftly cut off – showed flames and black smoke in at least one of the fuel storage tanks. Valero (VLO +1%) is the leading gainer among refiners; also XOM +0.3%CVX +0.5%.

    Vehicle Miles Driven Just Hit A New Post-Crisis Low

    Tesla Motors (TSLA +3.4%) bounces back after shares were rattled yesterday on early word that GM was partially pulling the plug on its Chevrolet Volt production. Sentiment today could be influenced by a finalization by the Obama administration on new rulesthat will require cars and trucks to average 54.5 mpg starting in 2025. If the highly-debated reg sticks it's not a bad thing for Tesla as its Model S already sports a hard to match mix of power and fuel efficiency. The stats: An equivalent mpg rating of 89 and 0-to-60 mph acceleration of 4.4 seconds

    Yelp (YELP -4.6%) is selling off ahead of tomorrow's lockup expiration; shares have now mostly given back Friday's gains, and are down 29% from their Aug. 10 close. 52.7M shares will becomeeligible for sale tomorrow – by comparison, only 7.15M shares were sold in Yelp's IPO. VC investors hold large stakes in the company, as do chairman Max Levchin and CEO Jeremy Stoppelman.

    Analysts question the idea Nokia (NOK -5.8%) will be a major beneficiary of the Apple-Samsung verdict. While expecting Windows Phone to get a lift from the ruling, Berenberg argues Nokia'supcoming Lumia phones still have "no chance" of competing against Apple and Samsung, and that the market is pricing in margin, ASP, and and market share improvements that might not arrive. MKM recommends buying October 3.5/2.5 or 3/2.5 put spreads.

    The next iPhone (AAPLwon't feature an NFC chip, thinks AnandTech, after doing a technical analysis of the front assembly pictures that fueled speculation in this direction. The could be contributing to today's selloff in NXP (NXPI -2.9%), the early leader in the NFC chip market. Broadcom (BRCM) has also developed NFC chips, and plans to integrate the technology with its Wi-Fi/Bluetooth combo chips. (NFC challenges)

    Nanny state much?  GOP platform calls for prosecutors to "vigorously" prosecute porn - This is what I love about Conservative – keep the government out of my face unless you are doing something I don't like and then I want them to hunt you down like a dog. 

    Romney's Plan To Increase Defense Spending Is Ludicrous

    Here are updated charts of the odds for the President, House and Senate

    Bank of New York Mellon - Derivative Exposure

  95. dclark41

    3:00 pm and only 51 mil. shares traded on the DOW.

  96. Pharmboy

    OK, here we go….

  97. Phil

    50M at 3pm – same program as yesterday.  

    Dollar making very small move up to 81.37, weakness strongly encouraging bulls to hang on.  

    TZA/$25KP, DC – No, we need to kill that by the end of the day, no matter what.  

    CZR getting killed.  Have to look them over at this price ($7.23).  

  98. shadowfax

    Republicans Dodge Tax Details While Offering Rate Cuts http://finance.yahoo.com/news/republicans-dodge-tax-details-while
    Proposing cutbacks in tax breaks for charitable contributions, mortgage interest and employer-provided health insurance could mobilize well-organized opponents, said Phil English, a former Republican congressman from Pennsylvania.
    'Difficult to Explain'
    "Anybody is taking their life into their hands by offering very much specific detail," said English, now a lobbyist at Arent Fox LLP in Washington. "Fundamental tax reform is for Republicans what fundamental health-care reform has been for Democrats," central to the party's agenda though the details are "very difficult to explain in the context of a campaign that involves 30-second TV spots."
     
    Romney's plan would cut individual rates by 20 percent and eliminate the estate tax and alternative minimum tax, which is a parallel calculation designed to keep high-income people from legally avoiding all taxes. He would leave the top rates on capital gains and dividend income at 15 percent and cut them to zero for households making less than $200,000 a year.
    Overseas Profits
    For corporations, Romney would cut the rate to 25 percent from 35 percent, keep a research tax credit and impose lighter taxes on the profits U.S. companies earn overseas.
     
    Romney says he would broaden the tax base by reducing deductions and other tax breaks to ensure his plan generates as much revenue as the current system, and avoids shifting the tax burden from high earners to the rest of the population.
     
    The Romney campaign has resisted explaining how it would do that, even after an Aug. 1 study by the nonpartisan Tax Policy Center showed that achieving all of his goals would be almost impossible, given that the rate cuts for top earners would cost the U.S. government $360 billion in revenue in 2015.
     
    Romney has offered only hints. In remarks overheard at an April 15 fundraiser, he said he was considering eliminating mortgage interest deductions for second homes and the deduction for state and local taxes.
     
    Those changes alone wouldn't come up with enough money to offset the rate cuts. Ending the state and local tax deduction could generate $862.2 billion over the next decade, the Congressional Budget Office estimated last year. Phasing out the mortgage interest deduction over that period would yield $214.6 billion. The estimates would be lower if tax rates also were cut.
    Mortgage Deduction -131720119.html

  99. Pharmboy

    GOP prosecute porn…while the Tampa industry is getting ready to 'entertain'.  ROTFLMAO.

  100. rustle123

    Thought this was interesting:
     
    SPY – SPDR S&P 500 ETF – A massive bearish spread initiated in the final hours of the trading session on Monday afternoon suggests one big options market participant is prepared for a roughly 8% pullback in the S&P 500 Index during the next few months. Shares in the SPY, an exchange-traded fund that tracks the performance of the S&P 500 Index, slipped to an intraday low of $140.97 earlier today after consumer confidence fell the most in 10 months, but have since recovered to stand 0.10% lower on the session at $141.40 as of 11:30 a.m. ET. The large, approximately, 100,000-lot Nov. $130/$140 put spread purchased Monday for around $2.47 per contract makes money if the price of the underlying slips 2.7% to breach the average breakeven point on the downside at $137.53.  Maximum potential profits of $7.53 per contract are available on the position in the event SPY shares drop 8% to settle at or below $130.00 at November expiration. The strategy could be looking ahead to the meeting of central bankers in Jackson Hole, Wyoming; betting the markets may be disappointed in what Bernanke and others have to say as the U.S. settles in for the long weekend. Additionally, with the S&P 500 Index having traded up to its highest in four years on an intraday basis last week, the spread may simply be locking in recent gains to protect against any bumps in the road, central bank-related or otherwise, that could trip up the market in the next few months.

  101. shadowfax

    Thanks Rustle
    I hope that guy is right.

  102. zeroxzero

    The ECB plan / Asmussen: "…the ECB will buy under the new program, only bonds with short maturities….[a]nd though Asmussen makes a point to say that depressing short interest rates is not the same as financing governments, it's also true that short-term borrowing does the 'heavy lifting' for European sovereign borrowing needs, so this is a de facto form of central bank debt monetization."  
     
    So Europe is going to transition from kicking to rolling over the can down the road.  How fast will they roll the can? "Asmussen lays out the real long game, which involves financial, fiscal, economic, and political union. The EMU is not complete yet, and has serious flaws, but there is a path involving work on all these areas. A key point that Asmussen makes, which is very in keeping with the German stance, is that he's more concern with the quality of reforms than the speed."
     
    Unfortunately, the market is likely to concern itself with the speed of the reforms rather than their perceived long-term quality, especially with China belly-flopping to the east [not much help with Peripheral Note-buying from that quarter], making 2012 the Year of the Dollar.  That should make Bill Gross happy.

  103. Phil

    NTE still flying but that could be just us buying – only 2.5M shares all day.

    Details/Shadow – Good article but a brief summary and a link would be preferred next time.  

    SPY/Rustle – That's a good bet.  

    Dollar down another 0.4% today so not very impressed with the gains.  

    Income Portfolio:  50 TZA Jan $15/22 bull call spreads for $1.50 ($7,500) pays $35,000 in a catastrophe.  No need for an offset – that's what the portfolio mostly is!  

  104. shadowfax

    Can't develop a candle body over 80.43 even on the 1 minute chart, tried and crashed again.

  105. shadowfax

    Phil
    Sorry afraid noone would click the link. Will do!

  106. Pharmboy

    CRM is close to even from the DD….you better darn well get 1/2 out even, or just get the funk out!

  107. cdel360

    StJ – Do the "virtual" portfolios get updated with actual fill prices or just the bid (or ask, depending) when Phil decides on a trade? Did you actually get filled on that TZA spread at $1.5?  I got a quote 6 minutes after the post for $1.7…same thing happened with $3 PCLN 540 Sept puts earlier in the week. 

  108. Pharmboy

    cdel – same here.  1.7 was the bid/ask.  The 16/22 was 1.50, so could be those.  Always ask b'f entering IF you have questions.

  109. Phil

    Now the VIX is up at 16.46, what silliness.  Does indicate put buying picking up into the close.  

    TZA/Cdel – If you are a little more patient than 10 minutes to fill a 5-month spread, you might get a better price!  

    Speaking of TZA – very annoying.  Clearly they are trying to keep everyone green today.  Dollar never got back over 81.40 and now 81.35 so no pressure there.  I guess we'll give it another 15 mins (3:53) providing we don't get stopped out the other way, which doesn't seem likely.  

  110. markilus

    Phil, still not 100% sure how to play this Bull call spread (TZA) and therefore won't take this trade, however can I confirm that (if I were to do it) I would:
     
    Buy to Open 50 TZA CALLS @xxx
    and
    Sell to Close 50 TZA CALLS @ xxx

    And the difference between what I paid out in a) and got paid in b) is the £1.50 premium cost?
    Thanks
     
    Mark

  111. RichL

    Phil/Oil-What do you expect crude will do heading into the inv. report tomorrow in light of the hurricane and speculation that high gas prices will drive a release from the strategic petroleum reserves ?

  112. Jbur

    WFR tacking on another 3% today! Yeah!

  113. mjjwo9b

    Markilus:
     Buy to Open 50 TZA $15 CALLS @xxx
    and
    Sell to Open 50 TZA $22 CALLS @ xxx

  114. cdel360

    Phil/TZA – I was looking at the trade and simply wondering 1. If it was the correct spread 2.  If you (or anyone else) got an ACTUAL fill at the stated price and 3.  if the virtual portfolios are updated when you propose a trade or when the trade actually gets filled.  It took me 3 days to get the proper PCLN fill…patience is not an issue

  115. markilus

    Cool – glad you clarified part b)
     
    Thanks
     
    Mark

  116. jacalynm

    Phil Scottrade is showing a $3 diff between bid and ask on TZA Jan 13 or Jan 14 strategy.  Guess I just don't know enough to pull the trigger on this one yet. 

  117. Pharmboy

    SDS 15 Sept Calls 58c.  I still have those darn 16 calls as well at 22c (net ave 39c).  These are my 'bet' on a sell off b'w now and then….

  118. angelcur

    VOLUME//COUSIN PHIL! YOU TALKED NTE DOWN WHILE YOU WERE BUYING..SMART! 
    ST JEAN ONCE THEIR TOP LINE TRIPLES AND THEY ATTAIN MARGIN GOALS AND INVESTORS REALIZE THE CUSTOMER IS AAPL..THEN THIS PRICING WILL SEEM LIKE A STEAL..THE IMPORTANT THING TO KEEP IN MIND KOO IS 70 SHARP OR TOSHIBA WILL TAKE HIM OUT..SO A BACKSTOP AND AN AMAZING VALUE GROWTH STORY TRIPLE DOUBLE
    I SENT YOU THE PAGE AND A HALF SUMMARY PHILLIP

  119. dclark41

    Pharm:

    Sept. $14 calls? $15's at .22?

  120. Phil

    Up to 60M at 3:50 and Dollar back to 81.38 with Yen back over 78.50 but Euro still way up at $1.256 and Pound at $1.582.  

    TZA/Markilus – All correct except is should be in Dollars.  8)

    Oil/Rich – Should head up into report, hopefully $97.50 so we can short it again but depends on the hurricane too.  It's going right up the shipping channels so 3-4 days of deliveries halted.  Won't reflect in this report, which is through Sunday, but we're going to have a major draw next week.  

    WFR/Jbur – The new super-stock!  

    Patience/Cdel – That's good.  I see the $15s at $3.15/3.25 and the $22s at $1.53/1.57 so a bit wide.  I'd offer $3.15 for the $15s and offer to sell $22s for $1.60 and, whichever fills first dictates my next action.  

    TZA/$25KPs – Patience pays off but we have to take $1.55 and get all out out.  

  121. Pharmboy

    dc – I have both … naked as a jaybird.  That is a better strategy for less risk.

  122. Pharmboy

    dc…yes 14 & 15 calls, sorry.

  123. Pharmboy

    big volume in SDS at the end.

  124. scottmi

    Markilus – there are some great primers for options. One i found partulcarly helpful early on (approachable, understandable) with terminology etc was "Options Made Easy" by Guy Cohen.

  125. shadowfax

    IWM held the 80.30 line @ close, over in last minute now under.

  126. stjeanluc

    Portfolio / Cdel – It really depends. In the case of the TZA BCS I will actually check the prices that the options traded at 5 minutes after Phil's post to be fair (and since Phil doesn't split the prices!). And sometimes I use Phil's prices for expediency. For the exits I usually try using the last trade price after Phil's post. When I update the portfolios I use the Mark price since I can't be bothered with spreads… These are "learning"portfolios in any case so exact prices should not matter that much!

  127. markilus

    Hi Shadowfax,
    I'm showing $81.30 ish not $80.30 – is this a typo as it threw me earlier?!
     
    Take care
     
    Mark

  128. Phil

    TZA/Jacalyn – It's this Jan – if it were 2014, I'd say 2014.  No biggie, the net spread doesn't change much day to day and we have all month to fill it. 

    Summary/Angel – Did not work at all.  

    Volume worse than yesterday, just 81M on the Dow at close but was very clearly all downhill on the last 20M at the end.  Still the kind of pattern that suggests fake trading during the day to pump up the markets and back to cash at the end of the day to fool 'em all again tomorrow.  

    Considering the Dollar dropped 0.4% today – super-pathetic for the indexes.  

    TZA lucky to get out even – other indexes all fell but RUT held ground, unfortunately.  

    Tomorrow morning is GDP at 8:30 but it's 2nd revision of Q2 estimate and not likely to deviate much from 1.6%.  We have Pending Home Sales, at 10, oil inventories at 10:30, 5-year notes auctioned at 1pm and the Beige Book at 2pm so busy, busy….

    Prices – In general, I use the last price of each option leg – as long as they were recent and still in the bid-ask range.  As noted above, you have to be a patient buyer – especially since right after I mention something demand spikes and influences the prices.  

  129. markilus

    $/£? Is there a difference?!! Thanks for pointing out Phil

  130. markilus

    Phil, I'm so glad you clarified the time frame for Option buying as I was confused (couldn't get near the spread).
    To confirm:
    a) In week calls (like the TZA earlier) its a get in as soon as you can type of recommendation (it climbed pretty fast)
    b) Longer term spreads and calls may involve purchasing both legs at different points to generate the final score but certainly not a hurry
    Thanks
     
    Mark

  131. markilus

    Incidentally, decided to short Gold last night (DUST) and Silver this evening (ZSL) close of play on the basis that Bernanke punts the ball down the field and does nothing. Didn't do options as the spread was too wide. What do you think  as a pure 'no QE coming' play? I suspect you/we are being played with on TZA and FAS/FAZ. . .
     
    They're onto you Phil :-)

  132. shadowfax

    markilus
    Sorry I make errors, only 80s was the breakdown around 80.40. I stopped day trading because the pain causes my mind to deviate, I am holding TZA still and the stock is no where near as dangerous as those options. I am sure that is why Phil said get out out before the close. My reactions are just not sharp. If I am right whenever it is I can turn on pain control with a refil.
    Good news for those that worry about addiction, no withdrawal 6 days, only happens if you use it to get high!

  133. shadowfax

    markilus
    Without getting totally exact $$$ divided by about .63-5 = Pounds. I do buy parts in your country as long as small, even light and large shipping gets out of control. UK and Germany should look into that. Israel is dirt cheap and I get UK and German parts there more often, doesn't make sense to be that way. Cheers to the anglos!

  134. Phil

    Time-frame/Markilus – Yes, for a day-trade/short-term play, you want to get it right away but 5% one way or the other is about the most I'll pay over.  Call it a nickel for things under $1 and a dime for things that are $1.50 and so on but you just can't go chasing things that are 10% more than you wanted to pay – it's like giving yourself a 10% handicap to start.  Obviously, if you do pay an extra nickel, you're just going to make a nickel less on the exit – under NO circumstances to you try to make up your bad entry by waiting too long to get out!  

    Not only do longer-term spreads not matter (you can always adjust the strike) if they don't fill but you can often do better if the market moves so much you miss an opening.  Look at the 3 examples above – 2 returned 200-300% and one was a total failure so, easy enough – "chase" the failure.  Even if you took a hit on it, that's the one you want to DD and roll, right. 

    By the way, a point I forgot to make this morning was how totally superior it is to use the ultras for spread hedges.  It's because, when the stock goes down, your calls tend to gain premium while the out of the money calls lose it quickly.  Also, you can see the great value to offsetting short puts in the opposite direction – even if you lose, you may still win.  

    No QE/Markilus – I like GLL.  The Jan $15/18 bull call spread is $1.20 and you can sell ABX Jan $32 puts for $1.10 for net .10 on the $3 spread.  Logic is that, if gold does not go down, then ABX puts that are 15% out of the money should expire worthless and, if gold drop on no QE, you make a quick $2.90 on the GLL spread and worst case is you own ABX for net $29.10. (using the $2.90).  

  135. stjeanluc

    NTE / Angel – Sounds great but I am guessing there might be some profit taking along the way – up 20% last week, up another 25% this week so far is bound to attract some attention.

  136. markilus

    Hi Shadowfax,

    I trade $ a lot and the difference is a nuisance but i rarely get confused except when typing! I only trade US stocks, ETF's and indicies as they are more liquid and diverse than ours. Having said that, I've lost a lot of money in so many ways playing the game it's quite scary. However I have learnt a few lessons:
    a) The field is completely rigged against you, the Option spreads are manipulated to favour everyone but you
    b) VXX, UVXY and TVIX have lost me more money than I care to remember – clearly completely dishonest and in no way representative of anything other than an arbitary ball that you think is going one way and then slaps you in the face in minutes big style
    c) We're all fighting the Fed here with our shorts and ultimately until the market direction changes we're all going to continue to get scr*wed and be doubling down at every corner to try and get out. They are hell bent on keeping the market up either for electoral purposes or just because the alternative is too frightening. Only way to play is to run very quick shorts and get out (similar to TZA Option today) as they'll rip you off if you hang around for more than 30 or 40 minutes in a short position
    d) Draghi, Bernanke and even Merkel are all playing a game, we all believe that they'll be caught with their pants down but you know when it is about to happen the other one makes some positive statement about how they're going to fix it all and guess what? By the time you've looked back, the original miscreant has managed to get his pants back up . .
    We are being scr*wed and until this whole ungodly affair comes crashing around their arrogant and dishonest little skulls, we may as well drink the Coolaid as Phil says and make some money!
    e) Why did I ever put my money on the Stock market and why can't I walk away?!!!!
     
    Damn
     
    Mark

  137. Phil

    At the close: Dow -0.16% to 13104. S&P -0.09% to 1409. Nasdaq +0.14% to 3078.

    Treasurys: 30-year +0.21%. 10-yr +0.12%. 5-yr +0.06%.

    Commodities: Crude +0.75% to $96.19. Gold -0.34% to $1667.65.

    Currencies: Euro +0.54% vs. dollar. Yen -0.29%. Pound -0.19%.

    Market recap: Stocks finished flat in another quiet session, as an upbeat reading on home prices offset a gloomy report on consumer confidence. With Bernanke's potential market-moving action at the end of the week, investors are just biding time. Energy stocks rose along with crude oil prices as Isaac gathered strength en route to Gulf Coast rigs and refineries. NYSE gainers led losers seven to five. 

    Home prices may be rising, but there's still no need to rush in and buy, says Robert Schiller. There's upward momentum, Schiller says, but "there are a lot of clouds on the horizon too." He points to boilerplate issues of the day such as continued turmoil in Europe, a weak global economy and the looming fiscal cliff, but also notes that neither President Obama nor Mitt Romney have bothered to pay the topic any lip service whatsoever insofar as addressing any long-term fix to the problem. (Video

    Why Home Prices Are Rising: The ‘Distressed Share’ (WSJ

    Real House Prices, Price-to-Rent Ratio (Calculated Risk)

     Look for the Chairman to reiterate last week's FOMC minutes, but go no further at Jackson Hole, says Mohamed El-Erian, i.e., the Fed is edging closer to action with a listing of the possible measures. El-Erian asserts the Fed must surely be aware of the "collateral damage" its policies are causing for money market and pension funds, along with the insurance industry

    Howard Davies: Economics in Denial (Project Syndicate)

    Avoiding the worst of the EU slowdown for some time, the German economy has converged with its troubled neighbors. Germany's recent PMI read included Export Orders at the "strikingly low" print of 39.5, notes JPMorgan. The country is also the most highly exposed of the EU to slowing China. A negative quarterly GDP print is only a matter of time, writes Sober Look

    Is the relentless fall in Chinese shares a leading indicator for the rest of the world or buying opportunity? Already bearish, Doug Kass notes Shanghai rolling over in October 2007 preceded the meltdown elsewhere. Foreign investors, however, see bargains, becoming net buyers of Chinese shares in consecutive weeks for the first time since February.

    Why is Beijing strangely unresponsive to clear signs of a sharp economic slowdown, including the evaporation of demand for bank loans. Could it be the its study of Japan and the realization the days of an export-led growth model are finished? The transition to a consumer-led economy, writes Henny Sender, will be time consuming. In the meantime, bank profits will suffer.

    California Governor Brown and legislators agree on a pension overhaul promising to lower benefits and increase costs for future state employees. Among the reforms is the capping of salary that will be considered for pension purposes, and no more "pension holidays" allowing both employee and employer to skip contributions during flush times.

    Bank earnings of $34.5B in Q2 were up about 21% Y/Y, but thank the release of loan-loss reserves for that. The business of borrowing short and lending long - what banks are supposed to be doing for profits – is weak, thanks to net interest margin of just 346 bps combining with low loan growth. "Cheap" valuations are likely to remain so.

    Gold futures settled a bit lower today to snap a three-session winning streak as traders took profits after the metal gained 3.3% last week. But Mark Hulbert says gold timers have been a bit too eager in jumping on the bullish bandwagon, which tells contrarians that the rally has gotten ahead of itself.

    The G-7 lays down the gauntlet to the longs, its finance ministers saying they're monitoring the oil market "closely," and ready to call on the IEA to "take appropriate action." Of course, IEA chief Maria van der Hoeven was on the wires earlier saying the market is well supplied and not in need of an emergency stockpile release.

    Hurricane Isaac and the Venezuelan refinery explosionincrease the chances of a release from the U.S. strategic oil reserves, analysts say, possibly by early next week. Without a release, gasoline prices may approach $4/gallon and open up Pres. Obama to criticism from consumers, but the reserve "was never intended as a buffer against high gasoline prices,” a former Shell exec says.

    Molycorp (MCP +13%) is among today's top gainers on news that its California facility had begun to produce heavy rare-earth concentrate from freshly mined ore and is on track to achieve full Phase 1 production rates in Q4. But Paul Ausick reminds that by next year, the supply of rare earths will more than double the amount now on the market, and some companies are developing substitutes.

    The smart money is selling some upwardly mobile industrial names right now, says Seeking Alpha contributor Kapitall. The firm screened for industrial stocks trading near their highs that were impacted by significant net institutional sales over the last quarter of at least 5% of their share float. Those Kapitall anticipates to underperform over the near term include: Avery Dennison (AVY+0.2%), Emerson Electric (EMR +0.2%), Honeywell (HON +0.4%), Lockheed Martin (LMT +0.3%), Northrop Grumman (NOC -0.2%) and Snap-on (SNA -0.1%).

    In a rare move, Google (GOOG) has placed an ad on itshome page. It's for the company's Nexus 7 tablet, which has sold wellthus far, but is expected to receive fresh competition soon from a new Kindle Fire and the iPad Mini. Also, it was just yesterday that Lenovo (LNVGY.PK) launched a new Android tablet. At $300, the IdeaPad A2109 is more costly than the Nexus 7, but it also offers a 9" display. Both devices use Nvidia's (NVDATegra 3 processor. 

    Be skeptical of Christie touting his accomplishments (Reuters)

    The (Economic) Pros and Cons of Longer Life Spans (WSJ)

    When firms pay CEOs more than Uncle Sam, the tax system is broken (LA Times)

  138. markilus

    Thanks Phik,

    Will try GLL and ABX options as suggested. You're neutral on QE probability then?

  139. Phil

    Not neutral – as I said earlier about 70% they don't do it but that's why we hedge our bets.  To me, owning some ABX cheap is not a downside.  

  140. markilus

    I agree :-)

  141. scottmi

    YHOO/Phil – any vibe on this former juggernaut down here in the 14.5 area? Marissa's  new Chief Marketing Officer is someone who has had great success selling her own companies.

  142. shadowfax

    markilus
    Why we trade? I think many fall behind my reason for less reason!
    I goined this group about 2 years ago, at the time I told all especially Phil, I could not work, or do much anything and was going broke fast. I also could not stand noting to do and no control over destiny. My last and only thing was trade.  I tried to do options and medical problems caused me to lose control and loose enough to not have the margin. I bought parts and built a monster computer with 6 screens to do the JRW thing, one watch IWM 2 stocks TNA/TZA. To this day I have not net lost on that although if I don't pay attention to how I feel I blow 4 months of good in 2 weeks. To avoid that and get back with knowing I am sticking to a set goal that will come some day as this is a house of cards. The stock a tripple will pay big when the market goes down and as today I evaluate every day to make sure the status is the same. Basic premmis, market top, no real reason, and downs are most intense and very hard to tell if this is it or are you chasing jumping in about to get burned. I hold TZA because to me this is when not if and I am out of business and should not day trade until I turn the pain control back on.
    Sorry drug control freaks it makes a possitive for people in pain, it is not addictive unless abbused, just proved again.
    Goal is TZA $23, under $20 hold. Between hang onto gains. Buy my meds, I have the prescriptions but short property tax without tipping into my trade accounct, never when down again. My living account is $1,600 with all food and fuel on a charge card. It is very scary on the edge! I live alone and see people about 2 times a week, that sucks more!
    Fuel yesterday $4.399 per gallon, higher than when oil was $140, highest ever and $95. nobody on the roads again, they just don't get it. It will drop and I have enough gas to wait till after the holiday. I still have buy beer Fridays!

  143. shadowfax

    scottmi
    Yahoo is a very unpopular search machine. Some day google will fade if the country wakes up and realizes this crowd behavior is not good for the masses. The light at the end of the tunnel is the iphone is fading. Nobody will believe it but around here it is hated because it just doesn't come close to expectations. Verizon and ATT flat fail for hunders of miles. I know a few that I talked into dumping GOOG unless all fail then search goog. None went back. The world order needs to be stopped. I use Yahoo and they are best for business news. 

  144. stjeanluc

  145. stjeanluc

    About time….

    http://www.wired.com/autopia/2012/08/2025-mpg-regulation/

    Consumer costs aside, the regulations are projected to cut U.S. oil consumption by 12 billion barrels, or 2 million barrels a day by 2025 – approximately half of the United States’ OPEC imports. For the environmental benefit, the Obama Administration estimates an emission reduction to the tune of 6 billion metric tons by 2025, and a growth of domestic jobs in the auto industry.

    Seems a better idea than drill, drill….

  146. stjeanluc

    Let's not forget Portugal…

    http://soberlook.com/2012/08/ecbs-bond-purchases-should-start-with.html

    JPMorgan: – The case for ECB intervention to aid monetary transmission [to Portugal] is clear. The case for action in other program countries is less clear: Irish yields are relatively low, while Greek compliance with program conditionality remains in doubt ahead of the Troika’s latest review. Action based on the rationale of repairing monetary transmission arguably has the best prospect of sustaining a majority on the Governing Council. And on that basis, we expect intervention in Portugal to begin after the Governing Council meeting has concluded.

  147. stockbern

    Shadowfax.      Why create a blog?   With so many reporters in Jackson Hole covering the Economic Policy Symposium, why dont you go into town and get one  to listen to your story.  Better yet, perhaps you could interest one of the reporters in buying the secrets you hold from the past. You know, the things they keep breaking into your house to find. You would'n have to type a thing, just look or sound credible.  From everything you have said the past few days, you don't have much to lose, but possibly a great story to tell.  

  148. shadowfax

    Thanks stockbern
    I know back in the Channey days you could not even get close, the war made things worse. It may work and I am going to give it a shot. I do have a few pills to make me a safer driver and I don't need to carry anything, I can cover distances on cruches until armpit burn out. I have lots of experience with real politicians etc. Nothing like Phil, I have been on TV a bunch of times even an ad. That is a great idea. I doubt a sales opertunity but  medical problems or just a chance to expose lies. Talk politics or hopefully economics that would be total fun!I am sure I will return laughing to myself as I am one of the best at detecting a lie.

  149. shadowfax

    Any info on where to find where things are happening and when will help. I will report here first, bring my laptop, maybe find a place to get on line. I know the locations and times are covered for "security reasons" excusses. Anything may help me. Only issue is I will need gas that could not be higher I hope.

  150. stjeanluc

    And China is still hiding its bad debt:

    http://ftalphaville.ft.com/blog/2012/08/28/1134361/chinas-bad-debt-nightmare/

    There is also a structural element in China’s NPL cycle. As we pointed out last week, many industries have massive excess capacity after years of aggressive expansion that ran way ahead of demand growth. Eventually, China has to eliminate these inefficient capacities. This process will take some time, during which faster depreciation in the form of deleveraging and consolidation will be unavoidable

  151. Pharmboy

    StJ – Plz stop putting bad news up here.  It only makes me want more QE!  My band is tightened, my needle is ready….more more more

  152. Phil

    YHOO/Scott – Just a dead company I lost interest in.   They are crumbling like the Roman Empire – still electing emperors hundreds of years after they've effectively died.  They'll stagger along like this for years but I wouldn't count on them for growth.  We liked them at $12 and we'll like them again if they go on a drastic sales but $15 only looks good because they were recently at $16 – otherwise, it's no major bargain.

    Big Chart – Keep in mind you have to shift all those lines up 2.5% so we have the Dow stopping at it's 200 dma but below the 5% down line, the S&P is holding the Must Hold for now but failed their 50 dma, the Nas is right on the Must Hold line (3,075), the NYSE is resting on the -2.5% line and the Russell failed the Must Hold line and is stuck between the 50 and 200 dmas so very telling which way the RUT breaks and that explains the desperate after hours pump job on them (up about 2 points while other indexes are flat) as they must get back over that 50 dma to keep the TA people bullish.  

    Of course volume is very low again.  On NYSE we're hitting lower lows and this does not bode well for Friday if Bernanke disappoints at the same time we have end of month volume.  

    Mileage/StJ – Now we just have to hope the Reps don't reverse it between now and 2025!  

    China/StJ – If that country bursts into flames tomorrow I would not be shocked.  

    Commodity prices have only begun to drop, writes Michael Pettis (not yet available on web), attributing nearly the entirety of increased demand over the past decade to "incredibly unbalanced growth" in China (now coming to an end). Recently, it's gotten even more unwholesome, with much of Chinese demand going to build mountains of inventory. Expect the country to soon become a net seller of a number of commodities

    It's a question of when, not if, we get a third round of easingfrom the Fed, observes PIMCO Managing Director Neel Kashkari. All ears will be tuned in to Mr. Bernanke at Jackson Hole in the hope that he'll give some clarity, but it's not likely he will. Nevertheless, Kashkari says, more easing is already being priced in.

  153. Phil

    Needle/Pharm:  

  154. 1020

    Woops – The real Romney – reported earlier, sorry….

  155. scottmi

    YHOO/Shadow, Phil – thanks

  156. scottmi

    Music/Phil – love that neil young.  here is something different just heard tonight..  Hanggai – Wuji
    http://www.youtube.com/watch?v=MMrjcJpxSlo

  157. markilus

    Hi Shadowfax,
     
    Sorry not to respond sooner – I live in the UK and so went to bed (as it was late here :-) )
    Your health situation doesn't sound good – what exactly 'hit' you to get you to this position – I mean medically?
    On the market front, I fear (no matter how galling) that we may still be going up (and yes I am short) and the best we're going to get is small corrections to the short side.
    I've been following Phil for a while and when the market is descending and on a bear phase he's just incredible, these trading conditions however are very hard and each time we've entered a bullish phase, I've noticed that we don't make as much/any money! I'm thinking of just watching until we see the market direction flip and then buying up everything Phil has in the shop!!
    Take care
     
    Mark

  158. Phil

    Hanggai/Scott – Mongolian?  This is my favorite song from Asia: 

  159. jacalynm

    Phil since we have had such a long period of Bad News being Good News, when will the tides turn and Good News turns into Bad? 

  160. Phil

    Not as much money/Markilus – We're in a wealth preservation mode here.  My biggest regret in 2008 was not hammering the bear case and, despite essentially the same warnings I'm making now, people still got caught in the drop so, despite it making me sound like a curmudgeon, I will make damned sure no one here gets caught with their pants down.  I am a bullish guy by nature but there is a very real possibility that you wake up on morning with your entire portfolio down 10% and not a buyer in sight as some country or other (or major US state) declares bankruptcy.  

    Hopefully it never happens and $1Tn+ of QE will allow me to flip bullish for 6 more months and then we'll be doing this again but now, after we had a 32% run from the last time I was very bullish (at the bottom where there were guys just like you who thought I was too bullish and we weren't making enough money on the bear side) last fall.  I'm sorry you missed that bottom but that doesn't mean you should bet a top as if it's a bottom (or a middle) because you think you are missing something.  

    If Bernanke comes through, it will be a game-changer and, as evidenced by our last two Tuesday's aggressive long picks – it's very, very easy to make spectacular returns in a bull rally so I don't really consider being prepared to be "missing" anything – and neither do most hedge funds and corporations – who are sitting on record cash positions at the moment.  

    The Shanghai gave back the 1% it gained yesterday, the Hang Seng was off a bit, India fell 1% and Japan was up 0.3% with the Yen at 78.6.  

    Europe is down again, 0.6% and that's now down 1.5% from yesterday with no reaction from us (because we believe Europe is "fixed" – even though they clearly do not).  Unless Europe turns back up and the Dollar fails 81.50 – it's going to be a down day for us.  RUT is the most overbought Future (/TF) at 814 – same as yesterday and that was good for 6 points!

    ECB Chief Mario Draghi writes that fulfilling the ECB's mandate of ensuring price stability and a single monetary policy "sometimes requires us to go beyond standard monetary policy tools" and "may at times require exceptional measures." Draghi's comments, made in an article in Germany's Die Ziet, may well turn up ECB bond-buying speculation to fever pitch. EU markets, though, shrug and stay lower.

    U.S. stock index futures hug the flatline in what promises to be another scintillating day of trade as markets await The Chairman in Jackson Hole on Friday. European shares post moderate losses even as Mario Draghi makes clear the ECB is ready to act.

    This MSM interpretation of what Draghi is doing doesn't sound right to me.  To me it seems more like he has failed to make his case with his German counterparts and is now desperately trying to sway public opinion (as well as lay the entire blame for a possible failure on the Germans).  This is a typical GS strong-arm tactic that Draghi is well-trained in but the Germans are the wrong people to pull it on – especially Merkel, who can't afford to have people think Draghi's pulling her chain.  

    Monti is also trying to sway the Germans, saying "Blocking ECB could be an "own goal" for Germany."  That too is no way to get the Germans on your side – intimating they are bad at soccer…  Would Monti be making a statement like that if the reason Draghi stayed home this weekend was because they are about to announce a major, unified EU bailout?

    The debate over European Central Bank action to intervene in the bond markets to ‘maintain the transmission mechanism for monetary policy’ remains moot in financial markets with the German opposition remaining firm in some official corners.

     

    More money is much less likely to be made available than an extension of the package, but that may well be enough to relieve the pressure of a ‘Grexit’ (Greek exit of the Eurozone) in the near term. In fact the suggestion that the ECB is determined to aid short term sovereign yields lower saw successful Spanish and Italian Bill auctions yesterday with significantly lower borrowing costs. Stronger Eurozone M3 money supply data yesterday is also a moderate EUR positive.

    “European crisis is halfway through; second half will not be any easier” - Erkki Liikanen

     Dollar is creeping back up to 81.50 with the Euro down to $1.255 but the Pound is  holding yesterday's high at $1.583 and EUR/CHF is 1.2009 on the dot.  

    Commodities have been weak with oil at 95.69, gold $1,665, silver $30.68, copper $3.43, not gas $2.62 and gasoline way down at $2.89 and worth an upside play if they cross over 2.90 with, of course, a very tight stop below it (/RB).  

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:30 GDP Q2

    8:30 Corporate Profits

    10:00 Pending Home Sales

    10:30 EIA Petroleum Inventories

    1:00 PM Results of $35B, 5-Year Note Auction

    2:00 PM Fed's Beige Book

    2:24 AM Asian shares are mixed as some in the market lower their expectations about what Ben Bernanke might say at Jackson Hole. "Bernanke may use the opportunity to highlight the limitations of what central banks can do. Thus, there is a risk that markets will react with disappointment," SocGen says. Japan +0.4%, Hong Kong flat, China-0.8%, India -0.3%.

    3:34 AM European stocks open mostly flat to lower as investors await not just Jackson Hole, but also an ECB meeting a week tomorrow, when the bank might announce some bond buying. Or not. Euro Stoxx 50 -0.1%, London -0.3%, Paris -0.2%, Frankfurt flat, Milan +0.1%, Madrid flat.

    6:00 AM Overseas: Japan +0.40%;. Hong Kong -0.12%. China-0.96%. India -0.77%. London -0.43%. Paris -0.45%. Frankfurt-0.54%.

    MBA Mortgage Applications: -6.0% vs. -7.4% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 3.80% from 3.86% - Down again???  At least we're getting close to zero so maybe the slide will slow down

    More on Mortgage Applications: Off 5.7% last week, the refinance index has fallen for 4 consecutive weeks, though interest rates stopped going (barely) up 2 weeks ago, and is now at its lowest level since early May. A longer-term chart shows the purchase index essentially sideways for the last 2 years despite the purported housing recovery. 

    Hurricane Isaac hits New Orleans seven years to the day that Katrina struck, although Isaac is less powerful. Still, hundreds of thousands are without power, while nearly all oil output and two-thirds of gas production in the Gulf of Mexico have been shut down. Isaac represents the first major test of the $15B of flood defenses that have been built for New Orleans since Katrina in 2005.

    After a 1-day rally, Shanghai (-1%) resumes its downtrend, the composite index falling to its lowest level since early February 2009. It's earnings seasons in China and the reports continue to disappoint even lowered expectations. Air China (AIRYY.PK) said profit fell 77% in H1 as rising fuel costs combined with the slumping economy.

    The high spread between German and Italian bond yields could lead to a "potential rise in inflation for Germany," Mario Monti tells Il Sole 24 Ore ahead of a meeting today with Angela Merkel. With high inflation a touchy subject for the Germans, the comments appear to be part of Monti's efforts to persuade them of the necessity of bond-buying by the ECB and eurozone.

    Mario Draghi's Zeit op-ed in which he tipped the ECB is set to take "extraordinary measures" is apparently the speech he was set to give at Jackson Hole (he cancelled the trip yesterday). 

    Due to good behavior over cutting its external deficit, the Troika may let Portugal get away with a budget deficit of just above 5% of GDP this year rather than the 4.5% the country was supposed to achieve under its €78B bailout terms, the Economico newspaper reports (Google's mangled translation). Troika inspectors yesterday arrived in Lisbon for their fifth review of the government's efforts.

    Joy Global (JOY): FQ3 EPS of $1.82 misses by $0.06. Revenue of $1.4B (+22% Y/Y) in-line. (PR)

    More on Joy Global (JOYFQ3: income from continuing ops +12.8% to $194M, bookings -25% to $1.1B. Says there is evidence that the U.S. and Chinese markets have bottomed, but expects sluggish recovery. Will continue to cut costs, incurring charges of $20M in Q4. Cuts FY 2012 revenue guidance by $100M to $5.45B-$5.55B vs. consensus of $5.56B. Sees adjusted EPS at $7.05-$7.20 vs. $7.26. (PR)

    Despite the drought, the net income of U.S. farmers is set to hit a record $122.2B, the USDA has forecast. Farmers inside the "drought belt" are filing insurance claims to offset the damage to their corn and soybean crops, while those outside in the northern plains could earn 39% more due to record prices. Equipment makers such as Deere (DE) and Kubota (KUB) could also benefit.

    This would be a market shocker:  The chances that Glencore's $70B merger with Xstrata will fail increase after NBIM, which manages Norway's sovereign wealth fund, joins Qatar in opposing the terms of the deal. With NBIM recently increasing its stake in Xstrata, as Qatar has, the two shareholders have a de facto veto power over the transaction.

    Apple (AAPL) and Qualcomm (QCOMreportedly offeredTSMC (TSM) more than $1B apiece to secure chip production capacity, only to have TSMC reject them in the name of maintaining flexibility. Qualcomm, which is expected to provide a baseband chip for the next iPhone that uses TSMC's 28nm process, has struggled to deal with TSMC's 28nm supply constraints, and has begun eying alternate sources. Apple has been reportedly planning to shift production of its app processors from Samsung to TSMC.

  161. Phil

    When/Jacalyn – Very suddenly.  

  162. zeroxzero

    I'm the last guy to be recommending option trades, much less commenting on their pricing.  But the [lightly traded] FXA [Australia ETF] October $103s at @ $1.5, FXA now $103.9, seems a good way to play a China tank, a commodities tank, and a "Australia isn't looking too hot in general" tank at a reasonable price.  Just saying.  Post hoc criticism always welcome.

  163. zeroxzero

    OK, full confession, I confused it with EWA.  Like I said, "the last guy…"

  164. escohen5

    ZZ — FXA — I think I've tried that.  Thinly-traded options. I believe the consensus on this board was that if you're going to speculate on currencies, you might as well have a FX account.  Or, if you're going with FXA puts, carefully offset with something else.

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