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Thursday’s Fed Folly – Time for Bernanke to Put Up or Shut Up

What will Ben Bernanke do?

I've been predicting nothing so this will be a great day for all the Phil bashers if he does.  My logic is that, although clearly insane, the Fed Chairman is not so irrational that he will engage in any form of additional Quantitative Easing while stocks and commodities are near all-time highs.  

The FOMC will announce their decision at 12:30 and lack of QE language there (which would be a huge change from last to add it) may, by itself, cause the market to drop until 2:15 just after we get the Fed's GDP outlook and then Uncle Ben's press conference, when it's almost a sure thing that he will leave the door open for more QE but, without specific discussions of targets, time-frames and triggers – I'm not sure the same old song and dance is going to do it for markets – who have already had such a huge run-up in anticipation of this event.

As you can see from the chart on the left, QE has come at S&P 800 (no arguing with that one) in November of '08, S&P 1,200 in November of '10 and S&P 1,100 in November of last year, which was extended this June at S&P 1,300.  

Now the S&P is up 10% from June and jobs and housing are somewhat improving – do we really feel the Fed now feels the NEED to support S&P 1,430 and, are things so dire that the Fed will now act to ease for the 3rd time in 12 months?  They didn't do that 600 points ago and they didn't do that 300 points ago but, if you listen to the MSM – now they HAVE to.  Really? 

Of course, Central Banksters can remain irrational longer than their countries can remain solvent.  Take the Swiss, for example, who just this morning pledged to support the Euro with "unlimited quantities" of currency purchases in order to keep the Franc low – even while cutting both their inflation and growth forecasts.  There are just so many things wrong with this combination statement that I don't know where to start…

The SNB's benchmark interest rate is already zero so, unless they are going to pay us to borrow money (and, if they are, I'll take $30Bn please), there's nowhere to go from there. The Swiss make Bernanke look like a tightwad at 0.25%.  What the SNB is illustrating, however, is what a joke money is.  It's nothing, it's meaningless and even more so when a small country like Switzerland (GDP $635Bn) tells you they have "unlimited" firepower to fight the $4Tn PER DAY Forex markets.

"Print as many Euros (GDP $16Tn), Dollars (GDP $15Tn), Yen (GDP $6Tn) and Yuan (GDP $7.5Tn) as you want,"  say the Swiss – "we'll buy them all!"  While this sounds awfully nice of the Swiss – it's a lot like if the banker in Monopoly just keeps handing out $500 Bills for no reason – what's the point of playing the game if the money is meaningless?  This is the end game of the Global economy if we keep heading down this road – eventually someone is going to knock over the board in frustration and we'll all be very, very screwed.

This morning, we got a couple of signs that all this easy money sloshing around is already pushing inflation to uncomfortable levels.  First of all, NYC's Apartment Vacancy Rate has hit a 3-year high as renters are being driven out of the market by rising prices.  Then we got the PPI report, which jumped a stunning 1.7% from 0.3% in July.  Ex food and energy, the core PPI is "only" rising 0.2% per month (still faster than wages) but somewhere between 0.2% and 1.7% per month is reality and you can ask the 382,000 people who lost their jobs last week which one they feel is closer….

Given this data, tomorrow's CPI Report is likely to be about 0.6% – a 7.2% annualized rate of inflation.  Is this the environment for more QE?  We'll find out this afternoon.


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  1. stjeanluc

    Oil Lines

    R3 – 99.74
    R2 – 98.9
    R1 – 98
    PP – 97.15
    S1 – 96.24
    S2 – 95.4
    S3 – 94.5

  2. Pharmboy

  3. Savi

    Good Morning—
    Pharm—interesting letter of the alphabet!!!!!

  4. Savi

    I guess you changed it—all I saw was the letter f on my screen  ;-)

  5. 1020

    Good Morning!

  6. zeroxzero

    I am short oil.  Given "Middle East Tensions" [yawn], should I bail?  Or wait for $100+ and double down.  Just asking.

  7. zeroxzero

    I guess the corollary question is, does "no QE" pop the dollar?  Euro's had quite a run, for no particularly good reason excepting the pathetic U.S. deficit bubble, which appears to be reason enough.

  8. zeroxzero

    And while I'm engaging in idle speculation, what would be the cool play on betting that Steve Ballmer gets fired?

  9. 1020

    Ballmer will retire for "personal reasons" at worst.  No way is he ever fired…..

  10. 1020

    Come to think of it, have we ever seen a Billionaire get "fired"?

  11. gerryf

    1020
    Carly Fiorina?

  12. Pharmboy

    QE:  Rigggghhhhtttt

    U.S. wholesale prices jumped a seasonally adjusted 1.7% in August, mainly because of higher fuel prices, the Labor Department said Thursday. Excluding the volatile categories of food and energy, so-called core wholesale prices rose a much smaller 0.2%. Economists surveyed by MarketWatch had predicted a 1.5% increase in the overall producer price index and a 0.2% rise in core PPI. The energy index surged 6.4%, led by a 13.6% increase in gasoline and an 11.9% rise in natural gas. The wholesale cost of food, meanwhile, rose a sharp 0.9%, as the price of eggs and dairy went up. Over the past year wholesale prices have risen an unadjusted 2.0%, or 2.5% at the core level.

  13. gerryf

    OOPS only a multi-millionair

  14. dclark41

    Unemployment up, PPI up. Not making the decision any easier for Ben.

  15. jfawcett

    /CL WOW!

  16. jasu1

    Dollar up, Oil up?????

  17. villashaka

    Strip all the BS away and we have stealth inflation- the question is whether  the evils of Bendora's box shall come out in the open.

  18. 1020

    If you're a betting contrarian, Phil will be moving and eggs, bacon and toast will become a luxury for many…..
     
    Phil, call the movers….. ;)

  19. aaronc

    Pharm/ ARRY – ASTX , Pharm, I received a recommendation to go long these two stocks yesterday, are you familiar with either? My apologies if you've already covered them.

  20. Pharmboy

    ARRY – I like them, and they are now in the zone of….either up or down from here.  Their lead compounds are in later stages for cancer, and if they work (or one works – SNY and NVS own the rights), then they could be a $6-10 stock. 

     

    ASTX – don't know much about them, but from first glance, a starter position looks ok.  I need to dig into the science a bit, as they have several things in the early stages that look interesting. 

  21. aaronc

    Thanks Pharm.

  22. lflantheman

    Virtual MoMo portfolio trade:   Buy to close 5 Jan 650 calls for 59.80

  23. stjeanluc

  24. dclark41

    Phil
    Re-Cover the AAPL longs?

  25. Phil

    Good morning!

    Watching AAPL closely, of course for the re-cover in the $25KP, we're past $15 already so let's set a stop for selling 5 more covers (for 10 total) at $16 (now $16.75) so a $1 trailing stop on the way up until we get to $22, then we go to $2 trailing stop.  

  26. Pharmboy

    I love these type of studies!

    There is shocking news about one of the most popular dietary supplements in the U.S. A new study says fish oil does not benefit your heart.

    The good news for patients is that this article in the Journal of the American Medical Association shows no evidence fish oil is harming anyone, except perhaps in their wallets.

    Americans spend $740 million a year on fish oil. Researchers reviewed 20 studies on heart disease involving 70,000 patients and found that it didn't make a difference, at least in the patients in these studies. Whether a patient took the pills or not, both groups had equal instances of heart disease and stroke.

    "There's a lot of claims that are made about diets and supplements that just don't have the evidence behind them," said Dr. Harlan Krumholz with the Yale Medical School.

    Many doctors are saying not to stop taking fish oil based on this news. Critics say the patients weren't followed long enough to draw conclusions about benefits, and that the types of fish oils and patients varied from study to study.

  27. lflantheman

    dclark,,,,,yes, in due time

  28. jfawcett

    SCO play from yesterday… I executed at 2.15 vs. yesterday's 2.45.

  29. stjeanluc

  30. rustle123

    Pharm/fish oil
     
    I've been taking it for years.  Hope it at least helps brain function or something else to feel I got at least something out of it.
     
    Reminds me of this:
     
    https://www.youtube.com/watch?v=gs4b3Fm5ymI

  31. stjeanluc

  32. davidkordack

    Not totally understanding the aapl trade we want to sell to open for $15 versus 16.75?

  33. rainman

    Pharm / fish oil — Never knew it was supposed to be a heart food.  Always thought it was brain food.

  34. stjeanluc

  35. dclark41

    Thanks iflan. I covered at $16.

  36. lflantheman

    dclark…sorry I answered that post.  It was meant for Phil.  I was referring to the MoMo portfolio and he to another I think.  Anyway, looks like we all want to be in AAPL  right now.  Who doesn't?  

  37. dclark41

    Iflan:
    No worries. I had completed the trade before your response.

  38. 1020

    TM will do a heckuva lot more for you than fish oil…..
    http://www.tm.org/
     
    :)

  39. Pharmboy

    Fish oil – Omega 3 was for cardiovascular health….hence our not so recent investment in AMRN….

    Vascepa is a fish oil drug, which was approved in July for the treatment of high levels of triglycerides in the blood.

    Now, there are clinical studies out there which note higher levels for Omega-3 help in depression…not saying that those that take it for the brain have that horrible disease, but it is food for the brain to some extent.

  40. rainman

    rogue / aapl — Well said last night.  I haven't been able to figure out what the hype of the last few releases has ben about but not being an apple fan, I thought I wasn't seeing something. I think what it was is that most aapl fans have blinders on and see the new features as unique to the iPhone when many have been around on other phones for some time.  You can fool some of the people all of the time…  I'm getting the sense the rats are starting leave the ship. 
     
    Oh, and biometric sensors have been available in bluetooth form for quite some time now. I've been using a heart monitor for close to 2 years and I know there are other devices available as well.

  41. neetcorp

    Pharmboy
    How about flax seed; does it help cardiovascular health and high levels of triglycerides in the blood?

  42. 1020

    neetcorp – In the past for me, flax has always provided better results (based on blood tests) for me than the fish oil…..

  43. Amalfi

    Go AAPL!!

  44. Pharmboy

    neet – flax seed oil is similar to fish oil IMHO.  There are clinical trials that have been carried out with mixed results.  Anything that gives these type of results are a flip of the coin……there are people who will benefit mind you, but most will not.

  45. stockbern

    you guys move markets,  AMRN just jumped .50

  46. zeroxzero

     Rain / rats:  I bailed on a very nice AAPL call profit at the open today, entered before the dog&pony yesterday, based on last evening's colloquy.  I'm done.  Verizon, which was a Phil pairing with the AAPL announcement, also did well, and off the table.  Take the money and run, look for a fresh horse.  Or dog.  Thanks again for those comments.

  47. shadowfax

    Water is fine, come on in.
    Big Ben is is moneyguard today.
    Big blocks in red!

  48. pat_swap

    Hi
    does anyone like this cheap craps roll if (worst case) there is some sort or QE and QQQ shoots up with the help of AAPL.
    tomorrow QQQ 70C @0.06
    thanks

  49. Phil

    Oil/ZZ  - I would bail if we get through next week without a sell-off.  

    AAPL $25KP done (fully re-covered) at $16 but, since we bought at less than $12 average and sold at $16, a nice $2K add to the position still in progress is very helpful.

    Whole market selling off since the open.  Dollar only 79.85 and, of course, oil holding up a major sector. 

    No QE/ZZ – Should send the Dollar instantly back to 82, which is 2.5% and we can expect a sell-off to match.   As to Ballmer – I missed that rumor but I'd be bullish on MSFT because Clint Eastwood's chair could do a better job running that company.

    By the way, I can't get volume on the road so I would appreciate occasional updates.

    Inflation/Villa – Not that stealthy to people trying to live on fixed incomes. 

    Moving/1020 – Why am I moving?  Did Obama drop out of the race?

    Good call on AAPL, DC.  ALWAYS sell into the excitement.  AAPL may move back to $685 and we can regret it at our leisure but the goal of this trade was to bet $4,500 to make $5,500 and now we've dropped our bet to $2,500, which makes for cheap insurance and that's all we ever wanted.  

    Fish oil/Pharm – LOL, I wonder who comes up with these things in the first place.  It's only one step removed from eating eagle eyes so you can see better or having a bite out of the heart of a stag so you can run faster.  

    SCO/Jfaw – Pays to wait as often as not.

    Brain food/Rain – Well they did a different studies and almost 100% of the patients taking fish oil did have brains – so still some hope there…  8)

    AAPL driving the Nas.  AMZN got a $15 pop off the new Kindle so it would be a real sin if AAPL can't get $35 off the IPhone (to $695 – our goal). 

    AAPL/Rain – It's not about hype, now it's a business model in which AAPL has a steady business model that sells tons of phones and, of course, Billions of Apps.  Unlike their competitors, they do so at huge margins because they exercise strong control over their manufacturers (and their size gives them the clout to do so) and they have been properly leveraging their base to negotiate advantageous music, TV and Film content deals as well and, if you think that's not a big deal – look at cable companies and NFLX – those acontent deals are not so easy to compete with.  I think people are missing the picture to look at phone features to value AAPL.  Do we look at laptop specs to value IBM, DELL, HPQ – no, they matured their market and they compete by market share and bottom line profits – what they make specifically is not that important.  With IPhone still accounting for 70% of AAPL's revenues, it will be a while before they move past it's importance but IPad is already another 15% and should be 30% next year and who knows where the IPad mini will fit in – or AAPL TV.  AAPL is not an expensive company – it is priced for a misstep that simply hasn't happened yet.  AMZN, on the other hand, is priced for perfection they are miles from achieving.  

    Good conservative exits ZZ – especially into the Fed uncertainty.

    Rich – poor/Rain – Very sad. 

  50. rainman

    Virgin births discovered in wild snakes -- I wonder if abortions would be allowed for virgin pregnancies or if we would worship these snakes? :)

  51. rainman

    DJI volume 19.9M

  52. Rms5114

    Phil,
     
    SHLD , corporate action on the J14 Ps this morning, any thoughts?  Should I buy back  Ps or sit tight?

  53. 1020

    Phil – How soon we forget….. :)
     
    "QEfinity and beyond/Rogue – If the Fed eases next week, not only will I throw in the towel on short positions (of course) but I will also be looking to move very soon because this country is doomed. We're like a banana republic, printing currency as fast as the presses will run and trying to maintain an air of prosperity at the palace while the people starve in the jungles. So don't be surprised if you start having to pay your subscription in Aussie Dollars or CDN or something with a modicum of stability because it's time to blow this popsicle stand."
     
    Just check'n facts….. Enjoy Vegas – Late summer is the best…..

  54. nicha

    rain/snake worship – quite common in India. Now that we have virgin snakes I wonder if the devotion goes up?

  55. Pharmboy

    Well, if home builders own all that land, and QE is coming…then they are giving up all of those gains yesterday…GLD, SLV are also down.  TLT held 122……Ladies and Gents, start your engines…..

  56. rainman

    Phil / AAPL — I agree but even as attractively priced as AAPL is and even though they haven't misstepped, they are now entering uncharted capitalization territory where the laws of large numbers seem to take over which gives me pause on any bullish trades. The ecosystem may be leverage but that leverage will magnify both directions. Seeing fans opting out also gives me pause. I've been wrong in the past about AAPL and there is no reason to believe I'll be right this time so I'll sit out and watch from the sidelines.

  57. Peter D

    stjeanluc,
    Just a quick comment on your post last night regarding the melt-up, while we wait for the Fed.  Yes, these melt-up are annoying for the short calls, but it wouldn't kill our accounts as VIX would be decreasing and we have time to make adjustments.  A down draft is much more damaging as VIX would jump, squeezing available margin a lot faster.  Plus down draft can feel "bottom less" for days, making it tough on the minds.  Luckily, we still have cushion on the callers to handle the melt-up this time.  The difference between greed and bleed is just a few RUT points!

  58. zeroxzero

    Virgin Snakes –   Well, Paul Ryan looks  like Steve Carell in "The 40 Year Old Virgin", and Ryan's kind of a snake, so there's that abortion position explained!! http://www.imdb.com/title/tt0405422/

  59. dclark41

    Great advice Peter D..

  60. Maya1

    Lflan/AAPL/Momo Portfolio
    instead of uncovering the Jan 650's, why not purchase some Nov ITM calls?….same effect on margin etc
    would love to know your thoughts!
    and how are you?

  61. dclark41

    Phil
    Would it make any sense to set a stop on the FAS spread (long side) in the event that the QE master gets cold feet?

  62. zeroxzero

    Phil — how do you explain the execrable performance of the U.S. dollar [U.S. debt @ 72% of GDP] versus Japan's strong Yen [Japanese govt. debt est. 208% of GDP]?   Japan does hold about a $1.1 Trillion of U.S. bonds [as does China] but that just confuses me further.  Yes, I know that Japanese pensioners hold a lot of it — is that part of the answer?

  63. Amalfi

    What's going on w SHLD? I had sold the Jan 2014 32.50 Puts and was up 20% or so. Now the position appears as is if has been closed out.

  64. Amalfi

    Cramer just issued an alert instructing his faithful followers to buy on any weakness after the Fed announcement today. That makes me think there is definitely going to be some type of disappointment. 

  65. Pharmboy

    zero – Japan is a net exporter (besides energy)….we are not…Japanese people save….we do not, hell 10% of Americans don't have a bank account….that about sums it up.

  66. stjeanluc

    Meltup / Peter – Thanks. It is true that it's a lot less damaging especially in your strangle portfolio as it is also much easier to adjust than the condor portfolio where rolling is sometimes just impossible when you run out of time!

  67. dclark41

    Amalfi
    I believe there exist a SHLD position in the Income Portfolio.

  68. rainman

    Meet the TPP: A Worldwide Corporate Power Grab of Enormous Proportions
     
    While 600 corporate lobbyists have been granted access and input on the draft texts from the beginning, even high-ranking members of Congress have been denied access to the most basic content of what US negotiators are proposing in our names.
     
    The TPP is called a ‘trade agreement,’ but in actuality it is a long-dreamed-of template for implementing a binding system of global corporate governance as bold as anything the world’s wealthiest elite has attempted before. Of the 26 chapters under negotiation, only a few have to do directly with trade. The other chapters enshrine new rights and privileges for major corporations while weakening the power of nation states to oppose them. The TPP essentially proposes to establish a parallel system of justice where companies can sue countries in a tribunal of judges composed of unaccountable international trade lawyers with little to no process for appeal.
     
    This isn’t just a bad trade agreement, it’s a wish list of the 1%—a worldwide corporate power grab of enormous proportions.
     
    The TPP was conceived under the second Bush administration, but it has been embraced and nurtured into maturity under Obama’s watch. The widespread belief among people here opposing it is that the current Administration is in a race to finish much of the negotiations while they can bank on the fact that labor leaders and environmental and human rights advocates will shy away from challenging a democratic president in an election year.

  69. qcmike

    Pharmboy
     IRWD is it worth .85 to roll the Sept 15 to OCT 12.5?
    From the trade early this month?
    Thanks

  70. lflantheman

    Hello Maya!    I've actually changed my tack a bit.  I'm going to sell the January 600s if we can get a bit more pop from AAPL, rather than covering them, then I'll look for the next play.  

  71. dclark41

    Amalfi:
    Ooops. I might have mis-understood your question.

  72. snow

    Fish oil/Phil – I think that whole business got started from observations that people eating traditional diets in the far north, ie lots of whale, seal, and fish fat with no plants to speak of, nevertheless had really good serum lipids. Must be the fish oil, eh, never mind that they work their butts off gathering the food. Something similar happened with the mediterranean diet – must be the wine/olive oil/whatever else. There likely is something to it, but it's a whole package, not something you can extract into a pill. Rather like the people who live in the high Andes and chew coca leaves to prevent altitude sickness, enhance endurance, and so forth.

  73. jerconn

    What happened here, someone telegraph Ben's QE3 intentions?  Market on viagra…

  74. Amalfi

    dclark41 / no worries. just trying to figure out what's going on w SHLD. Something fishy with my options contract.

  75. angelcur

     im starting to think bove is on all big banks' payrolls…he talks about how bad it would be to break up the big banks every single day…when it is so glaringly obvious that is the ONLY solution.

  76. txchili

    They had a spin off which changed the options. Don't know the final outcome, but options don't go away.
     
    http://seekingalpha.com/article/861111-sears-spinning-off-sears?source=yahoo

  77. newt

    CNBC- Fed will deliver, question is how much

  78. angelcur

     Handelsblatt:

        Germany's govt debt will rise to EU2.2t by the end of 2012, a record 83% of GDP, citing a study by IfW Kiel economic institute. Debt as a percentage of GDP will rise 2.4 percentage points this year compared with 2011.
     i long for day when a politician steps up that is so popular that he can tell the banks and their political puppets to go fuck themselves…not take any money from them and break them into tiny pieces…never to be bailed out again

  79. txchili

    SHLD had the spin off
     
    http://seekingalpha.com/article/861111-sears-spinning-off-sears?source=yahoo

  80. rkyroma

    DJI volume 28.2 MM

  81. dclark41

    10:14 AM "The business fell off. The CEO was too confident in the business. I don't like the stock, and I'm not going to recommend it." Those comments from Jim Cramer, made during yesterday's Mad Money broadcast, are enough to produce a selloff in Frontier (FTR -2.5%). Shares have mostly tread water in recent weeks after taking off on a better-than-expected Q2 report. [Tech, On the Move, Quick Ideas] Comment!
     
    Must be the time to add to the position!

  82. angelcur

    bloomy ran article saying china may want to follow up fed with their own cut…that is so wrong…qe makes china rate cut much less likely…not saying they wont eventually do it if they keep hard landing, but odds are much less likely now..OUR QE HELPED CAUSE THEIR CURRENT PROBLEMS!!!

  83. rainman

    Watched "The Koch Brothers Exposed", pretty interesting (albeit sick) how they use their money to capture the media and elections.

  84. rainman

    DJI vol 29M

  85. rainman

    Who needs bitcoins when you have bacon? One man traveling cross-country using only bacon as barter.  Would make for an interesting poker game if used instead of chips :)

  86. lflantheman

    Virtual MoMo portfoio:  Buy to open QCOM  20 October 60 calls for 3.70

  87. 1020

    "The Koch Brothers Exposed"
     
    Just the title gives me the creeps……. ;)

  88. dflam

    Rainman: I remind you of Phil's request  not to show political comments during tradiing day.thanks

  89. stjeanluc

    Bove / Angel – This guy has been wrong so many times it's a wonder they still have him on TV… No better than Cramer in my book!

  90. lflantheman

    Virtual MoMo trade:   Sell to close 10 of the 20 GMCR October 31 calls at 4.50, GTC.  

  91. zeroxzero

    Phil:  I don't dispute that Japanese are savers and Japan a net exporter — but how does that run up a debt to GDP ratio of over 200%?  My suspicion is that they p*ss away huge sums on bridges to nowhere and other return-less public works projects, and that all those "savings" just get sucked up into government bonds which are spent on the foregoing.  Hence their "external" debt may be low, but I suspect they don't have any real savings, either — building a 10,000 ft. pyramid in the center of Kansas may be counted as an "asset", but if tourists from around the world in vast numbers aren't paying $1000 per ticket to climb the thing, I'm not sure we're really talking about a healthy economy.  And we are most certainly talking about an aging population.  I may be dead wrong on this, I pose it as a question.

  92. rainman

    1020 / creeps — I found out it's pronounced like "coke" although they act more like cocks.

  93. zeroxzero

    Germany & France bicker while Spain burns? http://www.bloomberg.com/news/2012-09-13/schaeuble-cautions-spain-against-aid-request-in-poke-at-france.html

  94. biodieselchris

    TLT movin'

  95. rainman

    dflam / politics — Sorry, I thought everything I posted was capitalism related.  Well, except for the snakes and fish oil.  I'll retire to my hole now…

  96. kongen

    MOMO: CRM  I am short far out calls on CRM, and long Sept calls.  CRM has a beautiful C&H forming on 10 min scan and chart is generally bullish for quick trades.  

  97. rainman

    lflan / GMCR — I have the high on those options as $3.25.

  98. Jbur

    Morning All!
    Regarding the VXX: this helps explain why this is such a crazy assed product. I'm not sure I'll ever trade it again judging by my tally of losses in it.
     
    Why is VXX trading at 9.93 when the September VIX Future is trading at 16.45 and October VIX Future at 18.30 (prices were mid-day on September 11)?
     
    The performance of VXX is based on an index that tracks a portfolio holding the front two month VIX futures contracts.  However, the absolute price of VXX has nothing to do with the prices of the two futures contracts that comprise the underlying index.  Much like the S&P 500 index at 1430 does not have a direct relationship to the prices of the stocks that comprise the S&P 500.
    http://communities.cboe.com/t5/What-s-On-Our-Minds/bg-p/OfficialBlog

  99. stjeanluc

    MoMo / lflan – GMCR will need a healthy move to get to that price on the option…

  100. lflantheman

    rainman/GMRC….yes, but we won't let the first 1/2 go from the MoMo port for less than 4.50

  101. stjeanluc

    VXX / Jbur – We have had plenty of discussion about that before… Just a bad instrument!

  102. Jbur

    A fun diversion!

    Option Trading Terminology – by Peter B. Lusk
    by peterblusk on 09-10-2012 04:15 PM

     
    A market maker who stood next to me in the pit for 10 years here at CBOE used to always say option trading is the closest thing to professional sports.  With the NFL football season now underway I thought it would be a good time to review option terminology to see if his assessment is really true.
     
    Hang Time – Waiting for the market to open.
    Artificial Turf – Synthetic
    Ineligible Receiver – Not approved for complex strategies.
    Down – How you feel after a losing trade.
    First Down – First losing trade.
    Punt – The act of closing out a losing trade.
    Intentional Grounding – Throwing mouse at flat screen after punt.
    Pooch Kick – Don’t do that.
    Franchise Player – Trades CMG, MCD, SBUX
    Back Judge – Second guessing spouse.
    Play Clock – Time decay.
    Pylon – What some pit traders try to do.
    Roll-Out – You calendar spread traders do this all of the time.
    Stiff Arm – Overtrading.
    Delay of Game – 3 year paper trader.
    Too Many Men on the Field – Margin Call
    Pump Fake – Thought short…going long.
    In the Flat – Delta Neutral
    Fair Catch – Breakeven
    Long Snapper – LEAPS trader
    Cheap Shot – Buying out-of-the-money weeklys.
    Safeties – Puts
    Hand off – Friend watching your position while you’ve gone fishin’.
    Home Field Advantage – Trading out of your house.
    Personal Foul – Trading out of your house in boxer shorts.
    Man in Motion – Constantly changing your market forecast.
    Nickel Back – Buying back your short options for a plain nickel.
    Offside – Opening option position placed too early.
    In the Pocket – Taking money out of your trading account.
    Snap – If you trade out of your comfort zone you will.
    Cover 2 – Trading 2 covered calls.
    Clipping – Cutting your losses.
    Coin Toss – Penny wide market.
    Audible – Adjusting a losing trade.
    Double Coverage – Two protective puts.
    1st Round Pick – A trade that never lived up to lofty expectations.  (In Chicago this is called a “Benson”…He’s all yours now Green Bay!)  Also commonly referred to as a “Leaf” or “Bosworth” trade.)
     
    Yep, he was right!  Trading is just like professional sports.  Enjoy the football season and I hope all your trades are good ones!

  103. lflantheman

    stjealuc/GMCR/ Any time before the third week in October will be fine.
    kongen/CRM/ I think it's a good momentum long.

  104. biodieselchris

    AMZN's current price is predicting the kindle fire goes parabolic. Any small miss there and a big pullback is inevitable.
     
    That's all good, but when is my question??

  105. rainman

    DJI vol 33.2M

  106. biodieselchris

    Phil – good call on PCLN by the way (wherein, you had said after their earnings miss that you'd like to see them at 650 before shorting them again). I wasn't expecting to see it melt up like that. I'm now holding out for that 650, but I'll probably test the waters at 635.

  107. lol730

    @Pharm:
    Fish oil/vitamins
    I'm reading "The End of Illness" by David Agus now.
    He is mentioning some studies implying that this stuff may have much more risks than we expect

  108. livingfull

    CCL:  We mariners can't take our eyes off this tragedy….legal implications are mind boggling….for after hours read. 
    http://maritime-executive.com/article/costa-concordia-passengers-giglio-island-businesses-continue-to-threaten-carnival-corp-with-lawsuits

  109. 1020

    That was great Jbur! – Thanks for reminding me about "Benson"…… ;(

  110. rkyroma

    Bio – Let's hope that iPad Mini shows up soon and kicks butt.

  111. stjeanluc

    It has been a pretty big rally. Look at all these ETF way over their 50 DMA:

    http://www.bespokeinvest.com/thinkbig/2012/9/13/overbought-and-oversold-etfs.html

  112. Pharmboy

    Ah, the irony….

    Republican vice presidential nominee Paul Ryan is returning to the U.S. Congress today to cast a vote that goes against what he has sought as House budget chairman since 2011.

    Ryan, chosen as Mitt Romney’s running mate Aug. 11, will endorse federal spending at higher levels than the stripped-down government he has been advocating. The House late this afternoon is set to adopt the stopgap measure to keep the government operating in the fiscal year that begins Oct. 1.

  113. biodieselchris

    I've got some dry powder for anther round of AMZN, PCLN, and AAPL puts but I'm waiting. Patience is key in this round of the game.

  114. dclark41

    12:04 PM Europe closes with solid losses on a slow news day, but with Italy joining Spain in looking at rising stock and bond prices and deciding maybe they can ease back on the austerity throttle. Were ECB promises enough to stem the crisis? Stoxx 50 -0.8%, Germany -0.4%, France -1.2%, Italy -1.1%, Spain -0.7%, U.K. +0.7%. The euro flat at $1.2905.
    Bad day over there.

  115. 1020

    livingfull -  Yes, I'm afraid for CCL, the "Schettino" has yet to hit the fan……

  116. lflantheman

    In preparation for uncle B and possible effect on the markets……I think AAPL is the one stock that will hold well, even if we get a drop.   I'm prepared to buy more on a dip and to take profits on longs on a pop.   We could get both in the same day, drop and pop.   And PCLN…if B says the right things it could get much closer to that 650 mark today.   

  117. Pharmboy

    lol – End of Illness — he was on Colbert…and I agree with him.  Personalized medicine is on its way, and if I were young going to med school, this is exactly where I would position myself.  Going to the homes of people….and listening to them, trying different things to meet the needs of those individuals.  Heck, I would go back to med school if I did not have 2 kids. 

  118. scottmi

    ETFs/Stj -  Happy Days are Here again!

  119. dclark41

    Did Phil check out to a poker game?

  120. lol730

    oil is giving up all gains

  121. angelcur

    fxe blk sales leak?

  122. Inkarri19

    Morning All – Gold dropped too.  I guess someone got the minutes early.

  123. 1020

    Pharm/home  A great (European) idea starts in the Bay Area…..
    http://www.eastbayexpress.com/ebx/doctors-making-house-calls-er-direct-does/Content?oid=3157069
     
    As always, what's old is new again…..

  124. rainman

    Doesn't look like minutes unless the parse bots got it wrong.  /GC /HG /DX and indices reversing.

  125. 1020

    dclark/poker   Yeah, I wondered why Phil has been having bi-monthly "business" meetings in Vegas….. ;)

  126. Phil

    QQQQ/Pat – That's a long way to go (about 2.5%) in a day but, as you say, a craps roll. 

    Virgin births/Rain – We already have snake worshipers.  Of course, if the snakes are wild, how do we know they are virgins?  Are we just taking their word for it or do we have reliable snakes who will vouch for their chastity?

    SHLD/RMS – They did some special dividend thing, not sure what it is but may take a  couple of days to re-establish outstanding options. Hopefully someone can get the scoop from their broker.  

    Oil topped out nicely at $98.50 (so far).   Hopefully we'll hit $97.50 again.

    AAPL/Rain – Still a stock I would not bet against.

    FAS/DC – It's insurance we plan to lose and, don't forget, the rising VIX should give us a decent exit but, if we get QE, you can't beat the protection.  Of course if we don't get  QE and the market tanks – we will pull the plug, at least buy buying back the long calls.

    Japan/ZZ – I think it's mainly because, to anyone over 40, there are 3 global currencies – Dollars, Yen and Euros.  The global currency markets are 60% Dollars, 20% Euros and 5% Yen but that's not how people diversify.  Since most diversification is out of weak dollars and scary Euros – it's very easy for the Yen to get disproportionately bought, making it much stronger than it should be.  That's all there is to it – supply and demand.  It's what also keeps the Swiss stronger than they want to be – no matter how much they print because they can print their whole GDP ($600Bn) in new currency and it's only a drop in the bucket in Global currency.  But God help them if they fall out of favor and people begin selling their entire GDP in Francs.  

    And what Pharm said, being an exporter is always helpful too. 

    Cramer/Amalfi – Buy on any weakness?  Is he nuts?  If we have disappointment on the Fed it could quickly spin out of control.

    TPP/Rain – The last great Global trade agreements shipped about 20M US jobs overseas and gave companies who outsourced huge tax breaks.  Can we be that stupid twice?  Sure we can…

    Fish oil/Snow – I know, it's crazy how people latch on to one thing and just decide that's going to fix them.

    FTR/DC – How does this man have so much power?

    Wow, Fed time already…

  127. lflantheman

    One more standing order for the MoMo then I'm outta here for the rest of the day, for another commitment.   QCOM October 60 calls, sell 10 of them (1/2)  for 5.50, GTC.

  128. rkyroma

    37.5 MM DJI volume a few minutes before Fed.  Phil – we need you here to hold our collective hands!

  129. dclark41

    1020
    :)

  130. rustle123

    Rainman/Koch Brothers
     
    Saw the documentary after you mentioned it online on Netflix.  It's available for free streaming there.  Great documentary and very sad that this happens.  Thanks for posting info about film.

  131. rainman

    lflan / QCOM — adding GTC helps. thanks.

  132. rainman

    Ok, so maybe the parse bots DID get it wrong.

  133. 1020

    There's your 500b……

  134. dclark41

    rkyroma
    I'm sure the reaction won't be anything like anyone expects. As the last few times.

  135. Inkarri19

    qe

  136. roguetrader13

    TNA baby…up huge in a few seconds…beat the HFTers…bahahaha

  137. Phil

    China/Angel – They cannot afford more inflation.  I really doubt they do more QE here.  Not in the above chart, their balance sheet is completely out of control vs. US or Europe.  It's the story nobody ever hears about.  

    Kochs/Rain – Do not get me started on them!

    Barter/Rain – Ever watch Barter Kings on TV.  Fascinating to see how may people are willing to trade things.  Talk about spreads you can take advantage of!

    Fed site crashing from hits.  

    $85Bn a month in additional purchases!  Big move!!!!!  Rates also extended to 2015 – huge move!  So much for short positions..

  138. rpme

    Quit flipping that switch…..

  139. stjeanluc

    Sugar boost time….

  140. Phil

    Hang on though – We are not getting much reaction to this.  This is MASSIVE easing.  Maybe because they are buying MBS and it will get sucked up so fast.

  141. stjeanluc

    But calming down already!

  142. Pharmboy

    Treasuries don't like it one bit….and now the market will reverse….not what they wanted and bonds are in control.

  143. angelcur

    hey my guess of 50 (per month) billion was light wow

  144. Inkarri19

    Open ended QE?  Wow!

  145. scottmi

    DX, FAS, CL… WILD!

  146. 1020

    Look at that ES candle!

  147. scottmi

    VIX – and the VIX drops! LOLROFL!

  148. dflam

    Fas $110 C: outrageous spreads

  149. lol730

    oil up $1 down $2 WOW

  150. stjeanluc

    Or not…. bronco ride so far.

  151. 1020

    Phil – http://www.newjerseymovers.com/   ;)

  152. Amalfi

    GO FAS!!!!

  153. roguetrader13

    Phil/wee- Out of TNA for $1 in less than two minutes…made up the last 4 week short losses in 2 freaking minutes…GOD I live the Fed!  Not bad for having just sit down to trade 15 minutes ago.  Holding half till close just for the hell of it.  Also I know that Etrade isn't the best trading platform, but I can say that I have tried all the CNBC mediums (XM radio, Cable TV, Dish TV) and have timed them all and Etrade is many seconds ahead of the rest in terms of signal delay.  I bought all my TNA before the HFT bots even began to react somehow, after I heard "Additional QE" over CNBC.  And got all my fill in less than two seconds…which is rare.    

  154. rainman

    For immediate release
    Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.
    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.
    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.
    The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted.
     

    Statement Regarding Transactions in Agency Mortgage-Backed Securities and Treasury Securities (195 KB PDF)

  155. stjeanluc

    TLT getting crushed…. TBT anyone?

  156. stjeanluc

    Our shorts are going to be around our ankles soon!

  157. livingfull

    stjean…..I'll take two helpings thank you….

  158. angelcur

    you know what i mean

  159. rainman

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
     
    Define "strengthens".

  160. 1020

    stjean – Glad I've been wearing pants….. ;)

  161. lol730

    SPX 1500 by the end of the week?

  162. Inkarri19

    Rain – Forever

  163. livingfull

    Thank you Phil for the DIA Oct 134 hedge amoung others! 

  164. Pharmboy

    IRWD/qc – I was in the Sept 15/10 C/P.  They are both dead, but we had a net credit on it.  Rolling forward, sure, but with tight stops.

  165. roguetrader13

    Phil/SLV $33 calls – sitting on a bunch of SLV weekly $33 calls…move half now at 137% up, or more?  Thanks!

  166. roguetrader13

    Make that 157%…weeee

  167. biodieselchris

    Man this is great, I can't wait to refi at 3.125% fixed.

  168. gandhjo

    so glad that I stayed bullish :-)  

  169. samz3700

    ?How big is the MBS market?

  170. rustle123

    McClellan was pos 110 coming into today, should be around 150 after today.  If we have an up day tomorrow, will be very overbought on that indicator and RSI.

  171. roguetrader13

    IF we fail 85.02 on IWM, selling another half of my half on TNA.  Don't like the action much here, not enough euphoria…

  172. rustle123

    RUT is currently 73 RSI

  173. Phil

    Japan/ZZ – Not sure what the question is.  They simply run deficits all the time and have since they first had a financial crisis.  Essentially, they have the same problem the US has that they also refuse to talk about – they don't tax their Corporations or their top 1% adequately.  Like the US, Japan is run for the sole benefit of the top 1% and those Trillions of Dollars Japan goes into debt allows their banks to dominate Global markets and allows their exporters to thrive despite the huge disadvantages of relatively high labor costs and, of course, no commodities.  

    LOL Jbur.  

    So far, were not getting a very big reaction to QE.  I'd say the Fed outlook at 2pm must suck for them to make such a massive move.  

    NOW we need to eat those FAS calls in FAS Money and we'll see what we have to re-sell when the music stops.

    Fed Text:

     

    "Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Growth in employment has been slow, and the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, albeit from a depressed level. Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Futhermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely wouldl run at or below its 2-percent objective.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. The Committee also will continue through the end of the year its program to extend the average maturing of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee's holdings of longer term securities by about $85 billion each month through the end of the year, should put downward pressure on longer term interest rates, support mortgage markets, and to help make broader financial conditions more accommodative.

    The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid 2015.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and prreferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted."

    Wow, how much more bullish can the Fed be for the markets?  Why are we not flying higher?  Why is the Dollar getting stronger (79.89).  Why is oil getting weaker?  This is really, really strange.  

  174. japarikh

    Hey Phil- what do you think about the MT 2014 13.0 Puts for $2.48? Look pretty tempting to me. Not sure what the Fed decision will do today, but getting into it for $10.52 doesn't sound bad for a long term investment.

  175. samz3700

    The FED is out of ammunition. 
    The best they can do is buy more bonds to force down rates.
    Last time I checked low rates seemed to be doing Jack!

  176. rebelscum

    STJ-roflmao omg

  177. Pharmboy

    Obama must be pleased….he has just won the re-election.

  178. rainman

    So they went from QE2 To QEInfinity.   
     
    samz / size — $5.5T I think.
     
    So the fed is going to buy up the rest of the mortgage debt on the banks books and/or create enough demand to shore them up, right?  All in order to make lending appealing to the banks again, no?

  179. roguetrader13

    Phil/IWM - Attempting breakout of 85.02 on IWM…well never mind, blew past it just in the last 10 seconds!

  180. Peter D

    You guys are correct that TLT drops and TNX rises, meaning mortgage rate jumped in reaction to the Fed, who tries to lower rates.  Any or all may be reversed tomorrow.

  181. lflantheman

     Virtual MoMo portfolio:  2 of the 5 AAPL Jan 600 calls sold for 96.00.  

  182. rainman

    Phil / strange — With the promise of free money and asset purchases past the point of strengthening, why wouldn't this be a rocketship to the moon?  We can't possibly have baked this in already could we have?  Are we really going to start paying attention to fundamentals NOW?

  183. roguetrader13

    Fed isn't out of options…next he can buy stocks, oil, corn, etc.  Heck, buy land and houses next.  Buy your firstborn if you allow him!  Actually, he has already sold your/my firstborn, second, etc with infinite debt…

  184. lflantheman

    Next stop 97.00 for the remaining 3 AAPL Jan 600s, not there yet

  185. Amalfi

    Just paid for another quarter of PSW in 15 minutes on 1 trade! Thx Freddie McFeddie!

  186. lionel

    Roguetrader/ So true.
    The Fed has just warned us that if we dont invest our dollars ans start employing people, inflation will eat our savings so fast that we wont have any left!
    Phil/ bailing out of V, MA shorts since our premises were wrong?
    Fed did QE and it will support this market until Obama get reelected. After that who knows…

  187. jromeha

    I hope the Fed members are tried for crimes against humanity sometime in the future. How many poor people in 3rd world countries are going to starve b/c of this sh!t? FU BERNANKE!

  188. rustle123

    Hello $4.50 or $5.00 gas.  This is why I held off oil, will wait till it gets into the 100's again which is probably likely now.  And about 3-4 months of this till big correction from oil if it holds.

  189. Savi

    ooooohhhhhh  was watching /si and traded some—-wheeeeee and wow

  190. shadowfax

    Fixed?
    This is not going to fix anything, people don't have the money to buy a house. I see this new action as a boost to reelect Obama. That also means the Fed doesn't want any of the Romney republicant tea party platform. They know tax cuts have to expire and that will really put little strain on those middle class families. Inflation may kill them more but right now it is under control, which I doubt in the long run.
    I have heard too many little people say they will pay a share to solve the deficit. Only the top refuse and they can try to buy the election but 1% can't carry the vote.

  191. lflantheman

    You can sell the QCOM calls we bought earlier in the virtual MoMo for 4.20 or +13%, or you can hold them for 4.50, or more. 
    stjeanluc…I will update you this evening.   I have a committment and must leave the board.  

  192. shadowfax

    IWM must get over and hold 85.65 to 86 today or this is a weak reaction to the news. By correcting for the dollar drop the line is 85.61 and so far it is a miss.

  193. villashaka

    Phil- What do you think about selling LEAPs puts in all the precious metals- it seems that the central banks have given the green ?

  194. Phil

    Poker – If it were just for poker, AC is much closer.  I have a real estate deal I'm working on in Vegas and we just launched the Opesbridge Fund (BBBW) so meetings in LA as well.

    I think funds, by the way, are repositioning their bullish bets but the money will come in – we will have to take our bearish losses and move on as we break over our adjusted watch levels. 

    TNA/Rogue – Nice play.  See, there's plenty of money to be made AFTER we get the facts. 

    You're welcome Living, Rogue and I hope everyone took those upside hedges seriously because being all short here would really suck. 

    XLF testing $16 – very big breakout when they pop that.  

    MT/Japar – I like X better.  Europe still a disaster, no one is fixing that. 

    I'm very disappointed by this response so far some people seem to be taking this money and running on longs – perhaps because it was so baked in.  Gold going nuts at $1,776 and silver huge at $34.40 (that was our first bullish offset over a month ago).   

    Mortgages/Rain – They will take another $1Tn worth of crap loans off the bank's hands and saddle the American people with the losses – that's the plan.

    Baked in Rain – I don't think so I think it's just repositioninig.  Tomorrow Asia and Europe gap up at the open and we get more fuel.  

    Go Amalfi! 

  195. rainman

    DJI vol 61M

  196. Savi

    Phil—would you go long /NKD

  197. lflantheman

    Virtual MoMo trade :  3  AAPL Jan 600s STC for 97.00.  I'm really leaving now. 

  198. williex

    so cramer was right buy the dips

  199. roguetrader13

    Phil/Dollar – seems strong for an "infinite" QE day…what gives?  Priced in already?

  200. Pharmboy

    Now the Repubs can let the 'Fiscal Cliff' happen. 

  201. roguetrader13

    Anyone have IWM levels above 85.02?  I have not history above this level…running blind, although do charts even matter now???

  202. gucci

    hi phil — do we close our bearish bet today or tomorrow thx

  203. 1020

    Phil/poker   Just bust'n chops Phil, just bust'n chops……. :)

  204. shadowfax

    My lines are IWM 85.25 85.70 86.36 86.70. How long will this hold? 20 minute test first. The price is rising on small lots and still the gbigger ones I have seen are red. Sell signal at 13:24.

  205. l4real

    IWM R4 is 86.60

  206. samz3700

    Once you have introduced unlimited QE – i.e. crack for the market, what's the next catalyst up?

  207. rustle123

    RUT is over a 76RSI and will probably be towards 80  RSI tomorrow which is insane.  McClellan will be towards 200 after today.  Hoping we open up high tomorrow so I can go short.

  208. Phil

    Shouldn't be a problem now but our officially bullish levels, with the Dollar back at 79.50  are:

    Must Holds are Dow 14,400, S&P 1,440, Nas 3,150, NYSE 8,400 and RUT 840

    We had the EWJ Oct $8s at $1.12 the other day and they are $1.33 now so past goal but still good upside plays.  

    AAPL is flying over $680 already and XLF just popped $16.  Thank goodness for our FAS play in the $25KP.

    Our other bullish upside plays from Tuesday are still worth a look but I don't have time to update pricing.  They were:

     

    • BA 2014 $60/72.50 bull call spread for $7.50, selling $60 puts for $5.10 for net $2.40 on the $12.50 spread that's 90% in the money. 
    • FB Jan $18/22 bull call spread for $1.90, selling 2014 $13 puts for $1.60 for net .30 on the $4 spread that's $1.30 in the money.  
    • HPQ Jan $16/18 bull call spread for $1.25, selling $16 puts for .75 for net .50 on the $2 spread that's $1.85 in the money.  
    • X 2014 $13/18 bull call spread at $3.30, selling $13 puts for $1.75 for net $1.55 on the $5 spread that's 100% in the money.
    • FAS Jan $120/129 bull call spread at $2.50, selling $60 puts for $1.85 for net .65 on the $9 spread. 

    We also had another half dozen bull plays on specific stocks during chat.  That can be looked at.  Next I'll get to the $25KP.

  209. stjeanluc

    Even if it's only temporary, a lot of bear will throw in the towel in the face of all this free money. This might fuel the rally a bit more before we flame out…

  210. rainman

    IWM 86 and 86.84 are peaks in Apr '11

  211. 1020

    Pharm/ryan   Wouldn't it be great, ryan rushes to D.C. to cast a vote…..and the stopgap still goes down in flames…..

  212. jromeha

    Phil – could you give me some long term bearish bets please…DIA puts or? Figuring now is a cheap time to load up before we attack Iran…

  213. roguetrader13

    Almost feel sorry for the MM that sold me those $33 SLV weekly calls for .12, sitting now at .70.  On second thought, naaaaah!  All I had to get was a 3% pop, seemed liked a absolutely crazy risk for the guy/gal on the other side…
     
    Gotta watch here as we may get a very quick reversal as no more sugar high left until Nov!

  214. dclark41

    Phil/Poker:
    Knew you'd be here for the event. :)
    …and what an event it was. Way more than I thought he'd do!
    Thanks for the FAS and AAPL trades. It took some of the sting away from SQQQ, PCLN, and V flops. Every time I lean to an unbalanced position I get kicked in the shin. But its not the knockouts I used to get from being a goof! Thanks.

  215. rainman

    samz / catalyst — Fundamental improvement.  i.e. exit the recession.  Until then party like it's 1999 or Ben gets canned.

  216. stjeanluc

    Updated 25KPA to make it easier….

  217. roguetrader13

    Down to 33% TNA…don't like this volume-less pause, looks like a test of 1450 coming???

  218. cdel360

    SCO – does this decision move the oil markets?  DD on SCO now at $2.25 for those who didn't get filled yesterday…

  219. roguetrader13

    1/3 TZA…simply a gamble with large profits.

  220. Inkarri19

    I'm sure this move by the Fed will upset the Reps big time which means they will put even more of a fight when it comes time to deal with the fiscal cliff, no? 

  221. stjeanluc

    Looks like low rate for a long time…

    http://www.slate.com/blogs/moneybox/2012/09/13/qe_3_is_here_federal_reserve_announced_40_billion_per_month_in_new_asset_purchases_.html

    This isn't my dream of super-clear forward guidance, but it's a huge step in the direction of Krugman/Woodford style precommitment. The key thing is that they're no longer saying that accommodative monetary policy is conditional on the recovery being weak. Instead, interest rates will stay low for a while even after the economy recovers. In other words,build that apartment building right now.

  222. 1020

    Fiscal fight – I sure hope ryan has been taking his probiotics…lol…… :)

  223. Phil

    I'm a little hesitant ahead of Bernanke but the general plan on the $25KPs are:

    • SVU – Yay!
    • JRCC – Let's just take .80 and close those. 
    • AMZN -Those I want to keep.  Oct $245 puts down to $3.75 and not worth changing yet.  
    • SQQQ – They are down to $1 with SQQQ at $35.64, still very much in reach by Oct but let's sell the $40s for .85 and then we collect $1.85 if we're lucky and .85 if we're not so we risk .15 to make $1.
    • VXX – Time to take the hint and never play them again!  Not worth closing at .14 on the off chance something happens. 
    • SCO I still believe in.  Nothing the US, China or Europe has done is good for oil demand nor is this kind of easing (buying mortgages) good for commodity speculation.  
    • PCLN – I am not impressed by this move and we only have 5 so let's wait.  
    • V – This one is in trouble with the Fed.   Down to .64 I don't want to take the loss until we see the Fed outlook and get tomorrow's data. 
    • TZA – Ouch!   Pointless to sell at .14.  Virtually no chance they recover over weekend. 
    • FAS – Thank god for those!
    • AGQ – Puts dropped to .20 already.   Let's kill those. 
    • GLL – As they are Oct, I'm inclined to give them the weekend. 
    • AAPL – Also looking good.

    So, not a total disaster but it will take a while for the FAS spread to realize it's value (FAS now $113) because of the premium held by the caller.   Currently, that spread is showing $6 even though we are only $5 in the money so we're actually ahead of the game for the moment and halfway to goal.

    Now we'll see what the Fed Report has to say but things must really suck for such drastic Fed action.  

  224. Jordan

    I am just very surprised at the reaction.  Basically, they are saying that this is QE for an infinite amount of time, which puts a lot of questions at play as in what level of employment will make them start raising rates back up.  So on net I see this as the best possible announcement.  The alternative could have been, QE, but only until March next year, etc.  So, I wonder why we're not through the roof…

  225. 1020

    Phil/suck    Proof Positive someone at the Fed reads PSW……  How's that?  :)

  226. dclark41

    Inkarri 19
    The Repubs. didn't have much of a chance (President) without FED action. But with it, they have been effectively neutered by the FED. The fight now moves to the Senate seats. God help us if they win that and keep the House--and I am a Conservative (with a brain) that just wants better leadership. I would have rather had a divided legislative branch with Romney than an undivided Senate and House with Obama. Regardless the current environment is crap. Hopefully it gets better.

  227. zeroxzero

    This has really simplified my positions.  Long XLF, short oil, short hedge Amazon, head to the beach, pray that WW 2.5 doesn't break out in the Middle East.

  228. jasu1

    Phil,
    Would you do the SCO Oct 2012, 37 call today at oil near $ 98?
    Thanks for your input…..

  229. Phil

    Fed/Rogue – They just committed at least another $600Bn with no real top to more easing, pushing their balance sheet towards $4.5Tn.  Something is just terrible wrong somewhere so it's hard to get enthusiastic about long positions.  

    V & MA/Lionel – I want to see tomorrow's data and hear the Fed forecast.  The free money dosn't go to consumers, it goes to the banks – no help for V and MA there but, since our premise is wrong – we also don't want to throw good money after bad – just give them a day or so to see what's real.  

    Fed/Lionel, Jrom – Actually what they just said to Big Business is that – if they don't start employing more people – they are going to throw more and more free money at them until they do and, when they do start hiring, then they will stop giving them free money. 

    Fed projecting 8% unemployment through next year and 7% in 2014.  GDP projections only down very slightly but those projections include this Fed move so hard to say what the hell that means….  

    Now we wait for Bernanke. 

  230. roguetrader13

    Out TZA for small gain…

  231. kustomz

    Knew this was coming, what a crazy SOB.

  232. rainman

    Jordan / roof — I'm guessing that like Phil, humans are waiting to see what Uncle BB has to say since this is a drastic change in policy.  The bots might be responsible for the run up so far.  I think he's going to have to say something pretty drastic to reverse things.

  233. Inkarri19

    For those of you smarter than myself, doesn't an extra $40B in QE per month also mean that we will have to borrow an extra $40B per month and add to the deficit? 

  234. rainman

    Phil / employment — I guess with companies coffers full, that's a nice threat to get that money in play.
     
    Ben: http://www.ustream.tv/federalreserve

  235. shadowfax

    IWM held for 20 minutes but niether the RUT or /TF every crossed the line. This spike was built on a few sheeple and now all volume has dried up, second sell signal at 14:00. Now will Ben goose things when the reason to do it was bad employment? This action won't fix that even if they buy every bond and then how will that look from any outside?

  236. roguetrader13

    Shadowfax/IWM – what are your levels above 85.02?  Thanks!  

  237. rainman

    inkarri / $40B — The fed creates that money out of thin air.

  238. Phil

    Romney/Shadow – I wonder how much of this was a bribe to the Banksters to stop supporting Romney.  He's clearly against Bernanke so now Bernanke is saying "as long as I'm here, I'll buy your distressed assets" if Romney boots Bernanke, they have no guarantees the next Fed Chair will be so generous. 

    Leaps/Villa – It's tempting but, at the moment, there's no indication of any actual demand.  Certainly today would be chasing, let's give it the weekend before we start repositioning aggressively bullish. 

    61M/Rain – That's very low considering.

    NKD/Savi – I like those EWJs but the futures very risky until they pop 9,000, then that's a good line to go bull off. 

    Cramer/Willie – He said if the Fed disappoints but yes, that dip was a good pickup after the announcement.

    Dollar/Rogue – Don't forget everyone is easing but we should drop back to 79 or even 78.50 on this news. 

    Poker/1020 – Oh I'll certainly play some but not while the market's open.

    Unlimited QE/Samz – If they "fix" the fiscal cliff, that would be a good one.  Maybe a lot of bullish outlooks in earnings now that CEOs can count on unlimited QE – especially from the Banksters.  

    Heeeeeeeeeeere's Benny!

  239. gandhjo

    Phil
    Thanks for the FAS/AAPL trades. Do you think that they will go higher or should I just take my profit and run

  240. lionel

    Rainman/
    Companies will invest only if they will have fiscal certainty. Bernanke is clearing the field for Obama intervention.
    Euro almost at 1.30!
    That helps to compensate for my short losses :(

  241. roguetrader13

    "continue MBS purchases…and include additional asset purchases" – DId he just say he would buy more other stuff beyond MBS???

  242. Phil

    StJ – I would very much appreciate and updated $25KP at the end of the day.  Lots of decisions still to make. 

    Bear/Jrom – Those TZAs will be the best if we do crash but we can still go up for months first.  Do not underestimate what the Fed is doing here – they are throwing gasoline on the fire and promising they have another can ready to go.  

    Bernanke saying they will begin buying other assets too until they see "sustained" growth in employment but the Fed just forecast no improvement for 2 more years so we're talking about TRILLIONS of Dollars he's committing to.  BUYBUYBUY!!!

  243. 1020

    XHB has not been this high since Sept. 07…..

  244. rperi

    What is going on with SHLD options?

  245. Savi

    Phil--did you have an EWJ play —I missed it--could you point me to it—thank you

  246. villashaka

    Phil- What do you think about selling 700AAPL calls as cover rather than 695s?

  247. biodieselchris

    Wow, SPY going ballistic. This is nuts.

  248. rainman

    DJI vol 83M, 22M in 1:10.

  249. roguetrader13

    Banks must have a boat load of bad MBS that the fed needed to offload to taxpayers.  Seems to me he is "Saving" the TBTF Banks.  Makes a nice emotional cover story about decaying skill sets of unemployed workers…not buying it Bennie, and neither with those who will now pay more for everything due to inflation going forward.   And how much does it cost per Fed job "created/saved"…roughly in my head isn't it at $12M/job at this point?

  250. chuckerd

    I guess Ben spent so much time reading about the Depression that he skipped over the science section at the library
     
    Insanity: doing the same thing over and over again and expecting different results.
    Albert Einstein

  251. roguetrader13

    Ben/Comment  - "THis is a main street policy because what we are about is getting jobs here….that is the policy"….BAHAHAHAHAHAAA…just choked on my drink, and almost pissed my pants!

  252. rustle123

    If you ever study the tells on the characteristics someone displays when they are lying when speaking, Bernanke just displayed them all on the last question.

  253. stjeanluc

    Portfolios / Phil – I'll post all the portfolios tonight as I am sure Peter might need to adjust some positions.

  254. morxlntway

    ORLY not responding to the news. Is that one that might come back as time goes by?

  255. 1020

    BAHAHAHAHAHAAA…..passes towel……

  256. bdybdy2

    inkarri / $40B —

    >> The fed creates that money out of thin air

    and then buys up MBA (mortgage backed assets) from PIMCO, banks, etc.  Once banks unload MBAs to the FED, they could buy more debt issued by the US Treasury, so in a convoluted way the end result could be more federal debt.

    And remember "federal deficit" refers to the annual budget shortfall, "federal debt" is how much is owed. :)

  257. rainman

    chuckerd / insanity — That assumes they WANT a different result.  Seems the .01% and the banks the Fed works for are doing just fine under this "insanity".

  258. zeroxzero

    This really is free money forever, amazing!!  Competitive devaluations?  Take that, ECB!!!

  259. 1020

    rustle123 – I KNOW I KNOW!…... his lips moved?…..

  260. scottmi

    just how far CAN the markets run today?!

  261. 1020

    …..and Obama won't fire me….

  262. Pharmboy

    F'in Japan on this side of the Pacific…..not good at all.

  263. sparky123

    Did anyone else hear him say "I personally don't think this will work"?

  264. chuckerd

    I am almost convinced that we won't have a market down day the rest of the year.  And if we do everyone will scream bloody murder and blame the Fed for not doing anything to stop it that day.

  265. Pharmboy

    10 yr note has recovered…….wow….this is gonna get ugly.

  266. Phil

    Your welcome DC.  We went for it that time and it went the other way on us but, as noted by StJ's update – we'ere still up $5,000 with all the time in the World to rebalance.  As I've said before – making money for the next three months should be very easy now – just buy calls….

    Reps/Ink – This is a big slap in the face to the austerity crowd.  The fed is spending Trillions to stimulate the economy and it's not even on tax breaks (even though it is a continued bail-out for the Banksters). 

    I can't believe no one asks Bernanke what the hell this is going to do to help the average American.

    Through the roof/Jordan – I think we're on the road to 1,600 now – just not today.

    Fed/1020 – I hope they do, maybe they'll think about what they are doing.

    Uh oh, someone saying to Bernanke that this may be their last hail mary to boost the economy.  Ben falls back on "well, we could improve our communications" – what the hell kind or answer is that?

    A house divided cannot stand, DC. 

    Nice simple plan, ZZ.  Despite this move going against us, I feel good about the clarity and now we can get back to fundamentals – hopefully…

    SCO/Jasu – Yes, I still like that target, which would be about oil at $94 to break even but this is a play on a sell-off next week, not one we intend to hold past that. 

    Dollar 79.31.

    Additional Assets/Rogue – Yes, this will never end.  If you have an old big-screen TV, just drive it down to the Fed and they'll pay you the full, original retail price!

    $40Bn/Ink – No, they just print money that we don't have to borrow but, if all the crap they buy turns out to be worthless, then Treasury takes the hit.   And it's $85Bn a month, not $40Bn.  

    Employment/Rain – It's the opposite of a threat.  The threat is IF they begin to hire, THEN the Fed will stop easing.  So what is there to motivate them to hire?  If I'm a big company with $10Bn worth of debt to roll over and I'm thinking of hiring 30,000 people – I'd rather not hire the people and get a better rollover rate, right?

    FAS and AAPL/Gandhjo – No, they should go to full value now.  At this point it will be surprising if we don't finish the month up 5% from here.  The Fed just pledged $1Tn a year through 2015 – it's only a $15Tn economy….

    SHLD/Rperi – They spun something off and declared a special dividend and made a big mess but it doesn't really change the position as it should still expire worthless but very thinly traded now as it's no longer the "normal" contract. 

    EWJ/Savi – It was the Oct $8s from Tuesday.  I mentioned this morning they were still good.

    AAPL/Villa – I think you have to allow for APPL to get rejected at $700 and give it a buffer to finish below so, short answer is greedy.

    Thanks StJ.

    Good point Rain.  It's not  insanity when you are getting away with murder over and over and over again.  They are just doing what works for their goals.

    Wow and Ben calling for more stimulus from Congress – Dow 20,000 or bust (make that AND bust)!

  267. Inkarri19

    $40B/ DIdn't mean deficit, meant add $40b to the debt pile.
    Exactly Phil.  Over three years into the "recovery" and he doesn't expect us getting out of this for at least another few years. 

  268. rustle123

    Bernanke/Phil
     
    He would say and kind of has said indirectly that this will help the average American by creating jobs for them and keeping housing low so they can afford to buy a house.  He also said that their current house will go up in value and then started stammering by implying this would create wealth again, but did not want to go as far as saying because people could take home equity loans out to pay for things which would start the bust phase all over again.

  269. roguetrader13

     Out last 1/3 TNA at 66.20 range.  IWM might hold 85.60…but will take 5% and run.  Long fall back to 85.02…if that happens, QE3 has already failed!

  270. millcreek

    phil,
    im short 5 fas sep 103 and long 5 108-120 oct spread.
     
    would appreciate your thoughts on best approach at this time.  tks

  271. rainman

    chuckerd — Gotta go with Capt Broccoli on that one:  BTFD

  272. rustle123

    And moron is talking about housing being a big part of the economy and even mentioned it's new housing that really does it but doesn't address the issue that with the glut of housing and the amount of foreclosures still on deck, new housing won't be at needed levels for years.

  273. scottmi

    "My logic is that, although clearly insane, the Fed Chairman is not so irrational that he will engage in any form of additional Quantitative Easing while stocks and commodities are near all-time highs."  we are so doomed.

  274. rainman

    Dow vol 92M – 9M in 0:20

  275. Inkarri19

    Wait, he said he wants to keep/make housing affordable but yet at the same time discussed rising home prices?

  276. lflantheman

    I have a window of time here so I want to wrap up my input for the day.   I have gone completely to cash, having taken profits on all positions.  I believe the push upward we've had today may carry through tomorrow, but because I cannot easily monitor and trade tomorrow, coupled with the highly profitable day, I need to let it rest for a day.  The only exception is that I might re-enter AAPL or QQQ before EOD, if we get a nice pullback before close. 
    stjeanluc, here are the trades in the virtual MoMo for the day.   This a.m. we bought back the 5 Jan 650  AAPL calls for 59.80.  You've already removed that one from the portfolio.  Later I sold 2 of the Jan 600 AAPL calls for 96.00 then the other 3 for 97.00.  I bought QCOM 20 Oct 60 calls for 3.70, then sold 10 for 4.25 and the last 10 for 4.60.  Finally, I sold the 20 GMCR October calls bought earlier in the week, for 3.05, as I did not like their action today. 
     
    So cash it is, for now.  I will watch EOD action, and post if I see any significant opportunities. 
    And fellows, shake that bear off your back and make some $$$$$  !!!

  277. Savi

    Thanks Phil

  278. rainman

    Phil / employment — I was referring to corps that have record levels of cash on hand.  Won't QE erode the purchasing power of that money?  So, spend it or lose it. 
     
    rustle / housing — Won't those foreclosures be part of the MBS's and be cleared from the banks books by the Fed purchases?  I was under the impression that was part of the reason we stalled — because the banks had a backlog of foreclosures but couldn't put them on the market in fear of driving down the remaining good assets.

  279. Laddoo

    TLT/Pharmboy, zeroxzero
     
    "Pharmboy 
    September 12th, 2012 at 11:55 am  
    If the Fed continues OpTwist, the 30s will fall a bit more, b'f 'they' start buying them in droves to push the long curve down even more."


    So, the TLT Oct 121/122 bcs can be had for .40 or .45. Operation Twist extended thru December. Thoughts?

  280. rainman

    ink / affordable — In fed speak that means low interest rates, not absolute value of the homes. He want's to restart the housing ATM bubble.

  281. lol730

    Phil

    85 in the month until end of the year only
    40 in the month – undefinetely

  282. Pharmboy

    TLT….buying Dec 125s….

  283. escohen5

    Pharm — interesting how TLT got rejected again around 120.50…that's the fourth time….also on 8/16, 820, and 8/21…I sold my long puts at that level today.

  284. shadowfax

    roguetrader13
    I saw your question and doesn't seem my levels were actually posted.
    85.25 85.70 86.36 86.70 And I just see no more up because this bounce was weak
    Benanke sounds like "more" same policy until things get better and communication tools.
    What has not worked and bull shit talk. Congress needs to act!

  285. Pharmboy

    lol – TLT, I am buying the 125s, as well as making it a calendar spread, 1/2 sept 125 Cs sold.  I will hold these.  If TLT breaks 115, I may exit, but if bonds yields rise, so does the rates for houses….I don't see that.

  286. lionel

    Pharm/ Great call on TLT!
    I will buy the JAN callers at $2.6 instead

  287. Pharmboy

    LIFE – Nov 50s for 1.20.

  288. Pharmboy

    XRT Jan 58s from one of the portfolios, I am rolling those up to the Jan 60s, and selling the Oct 60s.  I sold the Sept 58s at the time Phil put that trade on, and it has held well as a calendar, although this move has eaten a bit into it. The cost for the roll is about 11c in total.

  289. rpme

    I particularly liked the part about the Fed being apolitical, almost spit out my drink. Lets see, if I can prevent the guy who says he will fire me from becoming my boss, hmmmm…what should I do?

  290. Phil

    BAC back to $9.35 already but you can still pick up the Jan $7.50/10 bull call spread for $1.55 and sell the $9 puts for .60 for net .95 on the $2.50 spread that gains 150% in 127 days if BAC holds $10.  Otherwise, the short $9s can roll to the 2014 $7 puts (.72) and that's a good entry anyway (net about $7.75).  Don't forget, way back in Jan, BAC was my "One Trade" for 2012 – I said we could just make that spread with all of our money and make 56% for the year.  Our target was $5!  

  291. zeroxzero

    Laddoo:  I'm sort of agnostic on bonds.  I can make arguments both ways.  The Fed might be buying, but an awful lot of foreigners [China, Japan, etc.] might be sellers.  The Fed can certainly move the short end of the curve, but I would be wary of the long end, because, while in theory the Fed can print unlimited amounts of money to buy it, the U.S. can also suffer [another] downgrade, so I'm not sure the trade is a slam dunk.
     
     I prefer "inflatable" assets, i.e. equities, where the Fed can always make them go up in nominal terms,  allowing one to preserve purchasing power, rather than actually "making money."   My principal objective, in other words, not getting poorer  in real terms.  I think that's the best youu can hope for with any assurance , although  Phil will weigh in on this at some point, I would think.

  292. stocksandbondage

    Disgusting!
    So the plan is to stimulate for ever until either the economy improves or we fall into an inflationary spiral.  What could possibly go wrong with that?  I would call him a whore, but that would be an insult to whores everywhere. 

  293. Pharmboy

    Sept/Dec 173 GLD spread is a nice one as well to hedge things up.  I Do believe god, er Gold is going to 'go for it'.

  294. roguetrader13

    LOL…CNBC called it QE FOREVER…LOL!  VIX under 14!

  295. rainman

    DJI vol 112M

  296. CaFords

    It seems to me that the economic data tomorrow is completely irrelevant, Uncle Ben just told us so.

  297. Pharmboy

    EXEL – Nov 5 Synthetic Combo, buy calls, sell puts for 13c debit.

  298. Pharmboy

    EXEL on the daily chart has the 5 d, 50d and 200d MA all converging.  It goes up through it and $6 is going to be the target…Dr. Ben told me so.

  299. Pharmboy

    YMI…buying more stock.  Buying and selling the Jan 2.5 calls 1/2 cover.

  300. Laddoo

    TLT/Pharmboy, zeroxzero
    Thanks guys!

  301. shadowfax

    Ben's 2 tools!
    1 Continueing accomidation.
    2 Communication tools.
    He finally admits the market hangs on his words how can anyone see this as anything but we have no other plan but have not run out of bullets in this battle.
    IWM closes @85.61 exactly my computed dollar corrected level now lower. WEAK!!

  302. Phil

    Damn, just lost my comments!  

    Catching up quick….

    Housing/Rustle – I think he means "affordable" as in low mortgages although that's BS as increasing property taxes are offsetting those savings and a big reason housing will not recover without jobs (that increase the local tax bases).  This is how the death of the middle class is destroying the country.

    That's also why I said I would get out of the country if Ben did what he did.  I can't keep getting paid in Dollars – they're not even a real currency anymore.  I think I'll spend next year working from different time-zones and checking out places to live because really – this will all end very badly for America (but a great party until it does). 

    FAS/Mill – You have 5 shorts at $12 and 5 at $4 is $16 and 5 longs at $10 and I assume you paid $2 for the spread.  How about buying 5 more $108s for $10 and rolling the short calls to to 10 $111s at $8.20 as I think you are netting out into a $3 spread for roughly net $3 that way.  

    Great idea Lflan – nice winners, why push it?

    Spend it or lose it/Rain – That does make sense to some extent but they won't do M&A at these valuations and they won't invest in capital improvements in this economy.  What to spend it on?  As to foreclosures – that's what the Fed can do for the banks – they can buy back the bad assets and hold them on their own books for ages. 

    $40Bn a month/Lol – Until the Jan meeting….

    A bit of profit taking at the close but that's the 12/31/07 high for the S&P!

  303. rainman

    DJI vol 148M only about 28M at the bell.  Not as high as I would have expected.

  304. kongen

    Lot's of sour grapes on Bernanke here.  I think he's doing a good job.  He has the problem that the obstructionist tea-baggers in Congress won't do anything to promote jobs.  I also think the political accusations here are pure crap.  He has a job waiting for him back in academia, and I am virtually certain that that plays no role in his thinking or actions.  As for helping Obama, he is a republican, but probably (hopefully) not of the new school.

  305. CaFords

    shadow – would it be possible for you to post your IWM lines in the morning? They are very helpful, and I have yet to duplicate them myself. TY

  306. newt

    Pharm: Can you please clarify Sept/Dec 173 GLD spread? Thanks

  307. dpastramas

    Indeces post QE2 / Just found in another site, a chart of SPY with a clear mark of the date that QE2 that was announced. What followed two days after  was the start of a 5% retracement in S&P before the march upwards.  Just a hedge up, maybe this scenario will repeat also this time.

  308. Pharmboy

    newt – sell the Sept, buy Dec.  Then sell the Sept Q.  Then Oct, then Nov.  I want these to be paid for and some.  I will mark it out.

  309. snow

    Outta here/Phil – I agree, I'm making my  move to Korea within a month. Been planning it for about 6 months, and this latest settles my mind completely. I'd recommend Korea to the rest of you with itchy feet as well, but that language is a ball-buster.

  310. zeroxzero

     FWIW, I think the BOE is going to have to take down Sterling a notch, I've added an FXE short at the money just in case.  The following quote from The Times was not the inspiration for the trade, but the sentiments expressed are the basis for it.  
     
     
    "RBS predicts the pound will weaken to $1.54 by year-end due to “low growth” in the U.K. and expectations for further quantitative easing from the Bank of England, Burgess said.
    Britain’s gross domestic product has contracted in the last three quarters, choked by the euro-area sovereign-debt crisis and an austerity program implemented by Chancellor of the Exchequer George Osborne.
    The U.K. economy shrank 0.5 percent in the second quarter, the Office for National Statisticssaid Aug. 24. The Bank of England downgraded its growth forecasts last month and said the outlook was “unusually uncertain.”
    “Upside potential for pound-dollar is nearing its limitations, and we expect the pound to come back under pressure in the coming months,” Ian Stannard, head of European foreign- exchange strategy at Morgan Stanley in London, wrote in a note today. “Many of our market-based leading indicators for pound- dollar are already giving renewed negative signals, and the domestic U.K. fundamentals remain far from inspiring.”

  311. newt

    Pharm: Thanks- I will need a little hand holding so marking it out is kind.  What is the strategy called?

  312. scottmi

    G. Edward Griffin – The Federal Reserve is a Cartel. whole thing is good, but key point starts here:
    http://www.youtube.com/watch?feature=player_detailpage&v=-X5ISQJEpV0#t=679s

  313. Inkarri19

    QUESTION: My question is — I want to go back to the  transmission mechanism, because speaking to people on the sidelines of the Jackson Hole conference, that seemed to be the concern about the remarks that you made, is that they could clearly see the effect on rates and they could see the effect on the stock market, but they couldn't see how that had helped the economy.
     
     
     
    So I think there's a fear that over time this has been a policy that's helping Wall Street, but not doing that much for Main Street. So could you describe in some detail, how does it really different — differ from trickle-down economicswhere you just pump money into the banks and hope that they lend?
     
     
     
    BERNANKE: Well, we are — this is a Main Street policy, because what we're about here is trying to get jobs going. We're trying to create more employment. We're trying to meet our maximum employment mandate, so that's the objective. Our tools involve — I mean, the tools we have involve affecting financial asset prices, and that's — those are the tools of monetary policy.
     
     
     
    There are a number of different channels — mortgage rates, I mentioned other interest rates, corporate bond rates, but also the prices of various assets, like, for example, the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they'll feel more — more disposed to spend. If house prices are rising, people may be more willing to buy homes because they think that they'll, you know, make a better return on that purchase. So house prices is one vehicle.
     
     
     
    Stock prices -- many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend.
     
     
     
    One of the main concerns that firms have is there's not enough demand. There are not enough people coming and demanding their products. And if people feel that their financial situation is better because their 401(k) looks better or for whatever reason — their house is worth more — they're more willing to go out and spend, and that's going to provide the demand that firms need in order to be willing  to hire and to invest.

  314. zeroxzero

     Expatriating /  I've been an expatriate almost all my life,, mostly for working reasons rather than any particular distaste for the U.S..  From an economic standpoint, who knows, Phil, Snow and others here might have it right.  But I've lived the geopolitics of living abroad for a long time, and being a stranger in a strange land isn't as easy as one might hope [although Phil's island of Jersey does sound like Middle Earth].  I would only say that, when the guns start to go off, make sure you kept a U.S. passport handy.  And they will — with the doubling of the world's population in a generation, and over 150 countries in Europe, Asia and Africa, a great many of them characterized by centuries of internecine conflict [and, as I alway point out, 87% of the global population among them], I'm resigned to keeping a bolthole in the Rocky Mountains and leaving the exotic stuff to the more adventurous.  Bon chance.

  315. roguetrader13

    Phil/QE Fovever - SP500 1491, then 1521, then if we are lucky a fiscal cliff 20% correction.  Keep an eye on foreign real estate for relocation but don't move yet as the greatest show on the Earth has just begun!

  316. stjeanluc

    Dollars / Phil – The problem as I see it is that the Fed is not acting any differently than the rest of the CB. The SNB basically just said this week that they are ready to extend their balance sheet forever to prop the Franc, Draghi pretty much said that he is willing to do anything to save the eurozone, the BoE is already way over 100% of England's GDP in assets, China's central bank has actually more assets in its books than the Fed with a GDP half the size and who knows what they are on the hook for with state enterprises and bad loans. In effect, they are filling up a money bathtub and all the currency ducks get lifted at the same time! There is nothing concrete to prop up the euro against the dollar or the British pound or the yen or the yuan. They are all artificially deflated. There might be variations here and there on news or numbers but there is not one currency that could be considered safe anymore. Something really bad (war, country blow up) could still have some consequences though.

    It's a new world out there with free money as long as we have paper and there are still plenty of trees around here. We all have to adjust our trading around it. Fundamentals need to be adjusted for the rate of returns on bonds which will be negative for years to come. It might end badly but it doesn't mean we can't make money in the meantime.

  317. Peter D

    Virtual Short strangle portfolio – I'm still in meetings and missing out on the fun.  Will look for adjustments tomorrow.  The closest callers, RUT Sep 875 calls, went from $0.95 in the last update to $1.525, so no disaster yet.  RUT Sep 880 callers went from $0.6 to $0.875 – not too bad either.   If the market opens down 1% tomorrow morning, then the adjustments may be very different.

  318. stjeanluc

    Bold green border for the free money…..

  319. stjeanluc

    I'll post an update Peter with the other portfolios in a bit.

  320. drmtv10

    Any targets for tomorrow's close?  I sold some TNA 65P Fri – weekly.  However, I am not at all confident that TNA will hold 65 and in retrospect, it's a pure gamble.  My entry price (its a credit spread) is about $0.4, so it's already underwater, but all premium.  Besides just taking the "loss", what should be in a "day trader's" gambling tool-chest that can be deployed here?
    Phil, feel free to make an example of "what NOT to do".  I saw my short term "hedges" being eviscerated and panicked.

  321. stjeanluc

    That has to be the best endorsement:

     

    "The most interesting man in the world," the iconic spokesman from Dos Equis beer commercials, might not seem like an overtly political character. Giving his thoughts on the "two-party system" in one ad, the bearded gentleman advised in his gruff voice, "the after party is the one you want to attend."

    But Jonathan Goldsmith, the actor who plays "the most interesting man," appears more willing to get involved in party politics. He'll be holding a fundraiser for President Barack Obama's reelection campaign on Tuesday in Burlington, Vt. Tickets for the event range from $20 to $500.

    I don't always vote, but when I do I prefer Democrats …. Stay cashy my friend!

  322. gerryf

    Pharm.
    YMI…buying more stock.  Buying and selling the Jan 2.5 calls 1/2 cover
    Does this mean  for example: Buying  500 YMI at around $1.75 selling  500 Jan calls for 2.5, also buying  250 Jan 2.5 calls?  

  323. stjeanluc

    Some takes on QE3:

    Felix

    http://blogs.reuters.com/felix-salmon/2012/09/13/qe3-arrives/

     

    And so while the headlines are all about QE3, the real innovation here is that the Fed is moving aggressively into the world of words rather than deeds. Buying bonds isn’t enough any more: the Fed is now trying to boost the economy by promising to continue buying bonds, in a zero-interest-rate environment, for many, many quarters to come. It’s the promise, rather than the purchases themselves, which is the main difference between QE3 and its predecessors.

    In his Jackson Hole speech, Ben Bernanke had a whole section on “Communication Tools”, talking about the “use of forward guidance as a policy tool”, and saying that it has been pretty effective up until now. Today’s announcement is a huge bet on those tools, basically using them to a degree unprecedented in recent history.

    Derek Thompson:

    http://www.theatlantic.com/business/archive/2012/09/qe3-the-feds-new-stimulus-is-a-monster-but-how-will-it-help-the-economy/262351/

     

    Two weeks ago, Michael Woodford, a monetary economist, presented a very celebrated and wonky paper making a simple point.  The Federal Reserve's greatest power isn't the ability to buy bonds. It's the ability to make promises. 

    In a world where the Fed makes stimulus contingent on bad economic news, it creates a start-stop psychology for businesses. When a jobs report is bad, people expect more QE. But when a jobs report is good, people expect less QE. That's weird! In an ironic way, it makes good economic reports bad for the long-term economy because it makes the Fed less likely to offer further support.

    Today's announcement changes that. Bernanke essentially said: I'm going to keep my foot on the gas even after the economy starts to recover. Good economic reports or bad, the Federal Reserve will be working to keep interest rates low "for a considerable time after the economic recovery strengthens." We don't know what impact this will have on the housing and jobs market. But we're all about to learn the value of a Ben Bernanke promise.

    Pretty much agreeing. 

  324. hoss18

    Check my math on this, but didn't Ben just unleash something like $4T in QE?  Unlimited purchases of $85Bln/yr, forecasting out four years:  85*12= 970 Bln/yr over 4 years = $3,880Bln….or $3.88Trillion
     
    That's over 25% of our $15Tn economy?
     
    Wow….not quite sure what to think about that one…….stunning really….dumped my shorts and reversed my DIA puts into DIA calls and ended up UP for the day.  So went from leaning bearish with bullish hedges, to leaning bullish with one little bear hedge.  And shaking my head about what the hell just happened……

  325. stjeanluc

    The FAS calls were at $8.80 when Phil pulled the plug, a $1300 loss. But made up by the longs we are holding. A bad day, but could have been worse!

  326. stjeanluc

    Balance sheet / Hoss – Check Phil's chart in his post today. The Bank of China's balance sheet is close to 100% of their GDP! The Bank of England is past that as well. Like I said earlier, we live in a different world

  327. stjeanluc

    The MoMo virtual portfolio is all in cash with a P&L of around $43,000.

  328. stjeanluc

  329. stjeanluc

  330. snow

    Expats/ZZ – you make some good points, zero, but I have a lot of family (in law) in Korea, and they have really taken me in.
    Koreans were really poor from the 50's through the mid 80s – they know how to survive in tough times and they've been farming that peninsula, about the size of the state of Indiana, for nearly 4000 years, mostly without any chemicals (unless you consider nightsoil chemical) and without any dustbowls.

    The North is a worry, but only because it might collapse – the oligarchs running things (very badly) like their luxury and realize they'll lose it all if they start an actual war. And things may be moving……I am aware that Clinton has selected someone to be ambassador to N. Korea should that opening occur.

  331. stjeanluc

    In the "old" days you had to buy puts for protection, in this new age, you have to buy calls… 

    Phil – Let me know if you need me to update the Income portfolio as well… If not, I'll do it this weekend as usual.

  332. Canuck

    Bear / Omen – I should have known to close my short positions the other week when my dog chased a black bear away while out for a walk.

  333. diamond

    stjeanluc – "Bold green border for the free money …"
     
    I like it!!!
     
    However, you forgot the moon at the top right of each chart! ;-)

  334. rj_jarboe

    Rockies/ZZ
    I bought 38 acres in the front range last fall myself.

  335. Phil

    Income Portfolio/StJ – I think we're fine ther. The hedges are crushed but were well on the way to crushing our 10% goal for the year on that one.    Later we Cavan take another look at the TWIL list and see who's still cheap besides HPQ.  

  336. stjeanluc

    Moon / Diamond – I am waiting for the 10% lines…

  337. zeroxzero

    Stj:  Very interesting point about Bernanke removing the fear that a few good economic numbers will change his course – the new Infinity Model Bernanke Put, now a near-permanent fixture.  As for those U.S., European, British [not quite as European, sorry] and Chinese debt numbers, I find it amusing that Phil considers the Japanese, with debt equal to 200% of their GDP, our most prudent trading partner, because they owe it all to their own [rapidly aging] population.  It's a Brave New World, alright, and I'm happier than ever to be located on the half of the planet with no active wars and only 13% of the global population.
     
     Although Snow is definitely correct about the tough and resilient Korean culture.  I knew some Vietnam vets than ran into Korean Tiger squads over there, and they would occasionally put aside their weapons and attack a village bare-handed just for some martial arts practice.  The Japanese are equally tough, same genetics, Japanese denials to the contrary.

  338. Inkarri19

    Diamond/Moon – StJ, don't forget Newt's moon base too

  339. hoss18

    Pathetically stupid logic IMO.  So I can run my credit card debt up to 
    100% of my income because my cousin ran his up to 200%?  Didn't we play that game in housing just a few years ago?  Stupid, idiotic, moronic…..I dunno, but sadly, I believe it's mostly because the FOMC took a hard look at the economy and the "fiscal cliff" and feel they must act boldly, and immediately because we are(in their opinion) going over the cliff and that's going to hurt.  Better to shoot their wad now, cushion the blow and remove the ability to blame the Fed.
     
    Just crazy…..

  340. stjeanluc

    New World/ Zero – I, for one, am not moving either. But having 2 passports does give you that extra flexibility that might come in handy eventually. This country is politically f'ed up, but there is still hope I think and it still has more resources (natural and human) than most. Could be a lot worse….

  341. stjeanluc

    Look at them losers utilities:

    http://www.bespokeinvest.com/thinkbig/2012/9/13/bespokes-sector-snapshot.html

    Can't the be overbought like the rest?

  342. stjeanluc

    The rally seems to be broadening…

    http://www.bespokeinvest.com/thinkbig/2012/9/13/breadth-finally-makes-a-higher-high.html

  343. barfinger

    OK, I feel pretty stupid right about now – went into today's news almost perfectly balanced and even though I dumped some bear positions immediately, and set up new bull positions, I still got beaten pretty soundly. No disaster because I was so heavily into cash, which now shall be deployed.
     
    If I read the statement correctly, Ben has promised us a semi-permanent bullish tailwind for the future, and it will persist until he sees clearcut inflation, even reaching into the core. I don't know where I read it, but it's nice to know that there is no appreciable inflation for people who don't eat and don't drive. Well, once inflation reaches the core, it ignites a fire that is darned hard to extinguish. 
     
    I think the chartists can go burn whatever materials they use, because those charts were built using mathematical relationships which may not apply any longer. I always believed there was no free lunch, which is why I expected Ben to speak loudly and carry a small stick. I was wrong. In the short term, there can be free lunch, and I am going to line up tomorrow for mine.

  344. Inkarri19

    I don't know if maybe I am imagining things but during the press conference, I clearly recall someone asking Ben about the effects of ZIRP on savers and those dependent on interest income.  I also recall Ben's response being something along the lines of the need for everyone to sacrifice.  I went back to listen to the press conference again and that question seems to have been cut out because I am not finding it. Strange.

  345. zeroxzero

    Barf:  I did, too, but I've learned the hard way [is there any other way?] to take the losses when your wrong and turn on a dime.  Bernanke's dime, in this case.  It would have been worse if I hadn't moved fast and didn't have some balance, per Phil's preaching, to begin with.  Tonight I'm going to look at the dividend yields on those laggard utilities and see if I'm missing something.
     
     Bernanke promised today not to take away the punch bowl when the party gets rocking — he's going to create some kind of "wealth effect" if it costs him his job, which lasts another 16 months in any case.  If the next President appoints a successor on February 1, 2014 with a plan to raise rates, the Senate might not confirm the guy in any case.   We have been told there is a government-sponsored bull market in our future, and I guess we'd better go with the flow.  

  346. dclark41

    TWIL Update {FROM 6/22/12/ (UPDATED 9/14/12-using mid-price)}
    Bold = may still be playable.

    AA price: (8.5/now 9.63) 2014 8 puts sold (1.5/now.84)
    ABX price: (35.91/now 41.63) 2014 30 puts sold (4.5/now 2.14)
    ALU price: (1.45/now 1.22) 2014 2 puts sold (1/now 1)
    BAC price: (6.97/now 9.40) 2014 7 puts sold (1.75/now.70)
    BTU price: (25/now 24.84) 2014 20 puts sold (4.1/now 3.2)
    CCJ price: (19.37/now 21.97) 2014 17 puts sold (3.3/now 1.80)
    CHK price: (13.83/now 19.90) 2014 13 puts sold (5/now 1.73)
    CSCO price: (16.7/now 19.36) 2014 15 puts sold (2.05/now 1.18)
    FTR price: (3.2/now 4.79) 2014 3.5 puts sold (1.3/now.48)
    GLW price: (12.86 (DATE 6/22)/now 12.86) 2014 15 puts sold (3.9/now 3.5)
    GNW price: (5.02/now 5.89) 2014 5 puts sold (1.75/now 1.09)
    HMY price: (8.88/now 8.89) 2014 8 puts sold (1.4/now 1.22)
    HOV price: (1.83/now 3.79) 2014 2 puts sold (1/now .38)
    HPQ price: (22.04/now 18.24) 2014 23 puts sold (5/now 6.60)
    MT price: (14.3/now 16.39) 2014 15 puts sold (5/now 3.22)
    JPM price: (34.59/now 41.40) 2014 30 puts sold (5/now 1.02)
    OIH price: (35.90/now 42.61) 2014 30 puts sold (4/now 1.90)
    SVU price: (5.15/now 2.37) 2014 5 puts sold (1.85/now 3.15)
    WFR price: (2.05/now 3.08) 2014 3 puts sold (1.4/now 1.03)
    X price: (22.25/now 22.34) 2014 20 puts sold (5.1/now 4.05)
     
    http://www.philstockworld.com/2012/06/22/tgif-hail-to-the-cash/#comment-2101071
    Pretty good list if you did nothing but played the list. Notice the decay on the plays that had little price movement.

  347. zeroxzero

     I've spent the evening thinking about the Bernanke move, and it occurs to me that it was not decided in a vacuum.  There is a shrinking pool of capital available worldwide, not much is likely to move into China, leaving the U.S. and Europe as the major investment choices.  By declaring "infinite  QE", the Fed has stolen a march on Europe by giving investors what they crave most — certainty.  The devil you know.  Whatever you think of a cheap dollar and the threat of U.S. inflation it will eventually precipitate, the variables are on the table
     
    Not so in Europe.  Europe may have a better ratio of debt to GDP, or may be judged to have a more prudent and sober leadership in Germany and it's Bundesbank, but, at this moment in time, Europe's trajectory is more uncertain.  Will Spain ask for a bailout?  When, and how much?  Is Greece going to be in or out?  And, the elephant in the room, what about France and it's 2.16%-yielding 10 year government bond?  Any takers at 80 bp more than a 10 year Bund? Anyone believe France is in a position to bail out anyone else?  And Italy — not as bad as Spain, perhaps, but certainly not in any shape to contribute to a Spanish bailout, with the Italian 10 year yielding 5.8% just a month ago, now an optimistic 4.9%.  We now hear that the UK is also fading fast, so no safe harbor in those islands.
     
    Instead of judging Bernanke's easy-money-over-the-horizon in a vacuum, consider it's impact on the decision making of nervous bondholders worldwide.  A large, profligate, overly-indebted country with a bloated military establishment and a fiscal cliff to scale has committed to a years-long strategy of lowering wages and reducing both its consumption and the price of its products, including it's unparalleled information technologies, through devaluation.  Not as a temporary expedient, but as at least a medium-term strategy to get itself back to work.  Done deal.  Even it's Presidential election will be decided within eight weeks or so.  
     
    Not a happy story, but a reasonably clear and predictable one.  To paraphrase the punk rock group Wire"s "Pink Flag", "we don't know where we're going but we know how to get there."  I think it may end up working, and put paid to all the moaning and teeth-gnashing in the popular press.

  348. diamond

    Apparently, not only are most Samsung product owners unable to locate or use the internet, but also those same individuals do not particularly like the "POS" products that the copyist Samsung pollutes the world with.
     
    Apple on the other hand produces original high quality works of art that sophisticated, well educated, high IQ people revere. Or something like that. ;-)
     
    Apple tops JD Power rankings for tablet customer satisfaction

  349. gandhjo

    Hi Phil
    Couple of questions?
    Considering that QE3 has been done, do you think long FCX is a good trade. If yes, could please recommend one?
    Also, what do you think is gonna happen to USD with respect to AUD in the short and long term. Do you think that USD will be considerably weaker as compared to AUD. I have some money in AUD and need to decide whether to convert to USD now or wait in the hope that USD goes lower against AUD.
    Thanks for your help,
    gandhjo

  350. diamond

    Full Disclosure:
     
    I just pre-ordered the iPhone5
     
    OK … I just HAD to have one!!! :-)

  351. Phil

    Good morning!

    OK – so thinking things over I think that we still have a globally weak and precarious economic situation but, of course, we can't ignore $85Bn a month in stimulus either.  So I certainly like the Financials but materials are still very iffy – even with oil screaming to $100 this morning.  

    The Dollar tested 79 and held it so far and the BOJ is already talking about Yentervention to top the rise in the Yen (now 77.50) as they downgrade their own economic forecast due to weak Global demand:

    Japan Cuts Economic View Again on Weak Global DemandJapan's government cut its assessment of the economy for the second straight month and warned that growth is pausing, signaling growing concern over the pain from the global slowdown and keeping the central bank under pressure to provide further monetary stimulus.

    S&P: China's Top Corporates Have Significant Financial RisksStandard & Poor's Ratings Services cautions that the financial risks of the top 107 companies in China could deteriorate as economic growth slows.

    Meanwhile, China and Japan are going to war over the oil islands:

    Chinese Ships Enter Waters Near Islands Disputed With JapanSix Chinese government ships entered what Japan sees as its territorial waters close to islands disputed by the two nations, heightening nationalist sentiment in a standoff that damping trade and tourism. Two ships have since left the area and the other four are being urged to do so, Japan’s coast guard said in a statement. Another two vessels were seen in nearby waters, Japanese broadcaster NHK reported. China’s official Xinhua News Agency said two Chinese surveillance fleets are patrolling around the islands, which are in areas rich in gas and fishing grounds. “The fact that there has been an incursion into our territorial waters is extremely regrettable,” said Chief Cabinet Secretary Osamu Fujimura. “We are strongly urging the Chinese side to withdraw immediately.”

    Japan Sees a 20% Drop in China Tourists as Islands Spat Heats Up. Chinese visitor numbers to Japan may decline as much as 20 percent because of a dispute over uninhabited islands in the East China Sea, according to the Japan National Tourism Organization. “We are very worried,” Mamoru Kobori, the tourism agency’s overseas marketing manager, said by phone yesterday. “There will surely be an impact on the numbers and the only question is how much — 10 percent or 20 percent is possible.”

    This did not stop Asia from rallying on the Fed news with the Hang Seng up over 550 points but the Shanghai not as impressive.  Europe is also in fine shape this morning with $400Bn in the works for Spain:

    Asian and European shares are higher on the Fed's plan to buy bonds forever. "The open-ended nature of the plan is just extraordinary," says Sydney based analyst James White. Japan+1.8%, Hong Kong +2.8%, China +0.6%, India +2.1%. Euro Stoxx 50 +1.7%, London +1.3%, Paris +1.8%, Frankfurt +1.4%, Madrid+2.2%, Milan +1.8%.

     The ECB and the IMF are negotiating a €300B rescue package for Spain that would open the way for the central bank to buy the country's sovereign debt, Holland's Het Financieele Dagbladreports - without mentioning whether any Spanish government representatives are involved in the talks. Eurozone finance ministers are due to discuss the plan at a meeting in Cyprus today.

    Schaeuble Cautions Spain Against Aid Bid as Cyprus Talks BeginGerman Finance Minister Wolfgang Schaeuble discouraged Spain from seeking a full international bailout, saying another request for outside aid risked a new round of financial-market turmoil. “I’m not in the camp that says ‘take the money,’” Schaeuble, 69, said in an interview in Berlin when asked about moves to press Prime Minister Mariano Rajoy’s government to seek more aid. Spain “would be daft” to ask for a bailout on top of the 100 billion euros ($130 billion) for its banks if it didn’t need it, he said.

    So still a lot of cross-currents but I do like BRK.B, AA, BA, F, CSCO, HPQ, GE, XLF, BAC, BK, HOV, WFR…  we've got plenty of things to look at so I'm not worried there but I'd feel better making entries AFTER the BOJ makes their move – certainly not chasing things today but, next week – if we're still rallying – it will be a no-brainer, even to chase a bit.  Don't forget the low VIX also makes long calls cheap.

    Don't forget, we had a run-up into QE2, a pop on the announcement and then we dropped hard and fast the following week – into options expirations, which do happen to be next Friday.

  352. Phil

    It's been a while since we went bottom fishing with our Twice in a Lifetime list.  The premise back on 5/17 was to pick up blue-chip stocks that were trading at or near their 2009 lows because, as with the Income Portfolio, we are still long-term bullish – we just didn't expect the Fed to act so soon in the short run.   Our last major update to the list was June 22nd – so it's been almost 3 months since we were uber-bullish.  I guess now you can see what I meant by "Twice in a Lifetime" because, now that the Fed has acted, it doesn't seem like we'll ever see them again but let's see what's still playable (prices in brackets are from 6/22, now prices are updated, puts after the dashes are new, ignore the bold, those were my picks from 6/22 and they won't unbold):

    • AA (original entry $8.50) 2014 $8 puts can be sold for $1.50, now .86 – $10 puts can be sold for $1.77

      ABX ($35.91) 2014 $30 puts can be sold for $4.50, now $2.12 – $35 puts can be sold for $3.75

      ALU ($1.45) 2014 $2 puts can be sold for $1, now $1.05

      BAC ($6.97) 2014 $7 puts can be sold for $1.75, now .70 – $10 puts can be sold for $2.02

      BTU ($25) 2014 $20 puts can be sold for $4.10, now $3.25 

      CCJ ($19.37) 2014 $17 puts can be sold for $3.30, now $1.80 – $20 puts are $3.10 

      CHK ($13.83) 2014 $13 puts can be sold for $5, now $1.75 – $18 puts can be sold for $3.60 

      CSCO ($16.70) 2014 $15 puts can be sold for $2.05, now $1.20 – $18 puts are $2.30 

      FTR ($3.20) 2014 $3.50 puts can be sold for $1.30, now .50

      GLW 2014 $15 puts at $3.90, now $3.60

      GNW ($5.02) 2014 $5 puts at $1.75, now $1.12

      HMY ($8.88) 2014 $8 puts can be sold for $1.40, now $1.25

      HOV ($1.83) 2014 $2 puts can be sold for $1, now .45 – $4 puts are $1.50

      HPQ ($22.04) 2014 $23 puts can be sold for $5, now $6.60

      MT ($14.30) 2014 $15 puts can be sold for $5, now $3.25

      JPM ($34.59) 2014 $30 puts can be sold for $5, now $2.15 

      OIH ($35.90) 2014 $30 puts can be sold for $4, now $2.10 – $37 puts are $4 

      SVU ($5.15) 2014 $5 puts can be sold for $1.85, now $3.05 – I feel better about the $3 puts at $1.45

      WFR ($2.05) 204 $3 puts can be sold for $1.40, now $1.03

      X ($22.25) 2014 $20 puts can be sold for $5.10, now $4.10 

    No surprise SVU is still in play but so is X, BTU, HPQ and GLW and CHK is, of course, still undervalued.

    Our original premise was to spread $100K across that list and that would have done very well already.  I mentioned a few stocks I like above and, while certainly not in 2009 territory, we can also make some short put leaps on them as well.  Keep in mind though, that if the low VIX changes, these will look painful so make sure you REALLY want to own these stocks at the net strike and also, I don't think I need to convince you of the value of a good hedge – no matter how bullish or bearish you are.  In fact, June 22nd was when we began our $25KP, as a way to hedge, short-term, our very bullish, much larger TWIL list, as well as our very bullish Income Portfolio.  Had Bernanke not acted, we would have been thrilled with the pay-off on our short-term protections.  As it was, it became extremely cheap insurance….

    • AA – Above
    • BA ($71.58) – 2014 $60 puts can be sold for $4.85.  $70/80 bull call spread also nice at $4.15. 
    • BAC – Above
    • BK ($23.45) – 2014 $20 puts can be sold for $2.10
    • BRK.B ($88.56) – 2014 $80 puts can be sold for $4.45.  $100 calls can be bought for $2.50.
    • CSCO ($19.36) – Above
    • F ($10.34) – 2014 $10 puts can be sold for $1.44.  $10/12 bull call spread can be bought for .80
    • GE ($22.02) – 2014 $20 puts can be sold for $1.95.  $22/25 bull call spread can be bought for .81
    • HOV – Above
    • HPQ – Above
    • WFR – Above
    • XLF ($16.15) – 2014 $15 puts can be sold for $1.45.   2014 $15/17 bull call spread can be bought for $1.02 

    Notice how I keep going back to a lot of the same stocks.  That's because there are certain stocks I feel are fundamentally under-valued and that doesn't change much unless they rally ahead of the markets.  

    Also, don't let the time-frame freak you out.  Look how fast we made 50% on the first list.  The length PROTECTS YOU from short-term sell-offs (providing you don't margin out, of course) and we can make momentum covers in the short-term to lock in gains or protect against possible bad outcomes (see $25KP).  These are the kinds of trades you can commit to – short-term trades are for PLAYING with money you can afford to lose but they are never to be confused with investing.  

    Notice how little we miss staying in cash while waiting for an event like this.  There's plenty of things to buy.  Sure, some things "get away" but we just move on to what's still cheap.  Had the market gone 15% the other way (since June) the VIX would be way up and there would be tons of things to buy but it's always better to have the flexibility in the long run.

  353. Inkarri19

    Morning all.  There goes another US embassy.

  354. gandhjo

    Hi Phil
    Couple of questions?
    Considering that QE3 has been done, what do you think of getting into long FCX trade. If yes, could please recommend one?
    Also, I would really appreciate your opinion on USD with respect to AUD in the short and long term. Do you think that USD will be considerably weaker as compared to AUD. I have some money in AUD and need to decide whether to convert to USD now or wait in the hope that USD goes lower against AUD.
    Thanks for your help,
    gandhjo

  355. Laddoo

    AH Question for Anyone:
    Am interested in anyone's input on their favorite (or least favorite) security (anti-virus) software.  I need to be able to trade in realtime, and follow PSW.  Am also confused about what's a virus, malware, rootkit, etc.  I want to be protected from malicious software, but not be the sucker who pays too much for TOO much protection.  Am also aware that there are some free products (AVG, for eg.) which might be just fine.  Looking for the best value without overkill.  I do not game, nor do I download from any site that looks suspicious to me.  Many thanks…

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