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Monday Monetary Madness – More Harm Than Good

The US has been put on negative credit watch.

Small but respected Egan-Jones' Vice-President, Bill Hassiepen said "We are not receiving QE3 positively.  The fiscal situation is a nightmare.  While the Fed is seeking to support economic growth through its quantitative easing, the central bank’s massive monetization is instead causing sluggish to stagnant economic growth.”  In fact, he expects growth to become stagnant within six months as a result of the Fed’s policy.  The reason the country does not have a weaker rating, he said, is that it remains “the only viable reserve currency in the world.”

Does any of that sound wrong to you?  Hassiepen is just the first of many who are lining up to point out that the US economy has no clothes.  Retail sales data was terrible,  industrial production was terrible but consumer confidence was unnaturally boosted by a 10% rally in the stock market due to QExpectations.  Which report does the MSM latch on to?  Consumer Confidence – of course!  Why bother going over silly data facts when people have opinions we can discuss?

The Federal Reserve’s “money printing,” Hassiepen said, has not “really contributed to the improvement in the general economy” so far.  Instead, all it has done is increase inflation and the cost structure in the general economy, as will the new round of QE just announced Thursday.  “We actually think this is going to cause unemployment, not employment,” he said. the Fed’s policy will reduce household’s disposable income and raising costs will also “lead companies to lay off people,” he said.

I'm not saying we shouldn't enjoy our free money that the Fed is doling out but let's take it with a grain of salt and not assume it's going to be a cure-all.  As you can see from the chart above, after a VERY brief moment of euphoria post QE2, we did drop 5% the following two weeks.  While we did get a nice pop last week – this week is the expiration of September options contracts and, as you can see from our Global Economic Calendar (thanks StJ!),  it's a major data week with lots of Fed speak as well as potential economic mine-fields.

KBE WEEKLYAs noted in Friday morning's post, we shifted our short-term positions to neutral in the face of overwhelming monetary easing (see post for updated $25KP positions) but, during Friday's Member Chat, not only were we unable to find things to get bullish about, but we found new ways to short oil at $100 (DUG) and added a general TZA hedge as it hit a very attractive $13.50, dropping the Jan $10/14 bull call spread down to $1.50, which gives you a nice 133% upside without even selling any offsets.

That was our last trade for Friday, a bearish one.  As offsets, we updated our Twice in a Lifetime list and there were many good long-term bullish candidates there but, short-term, we're just not convince the Dollar can move below 78.50 and we've yet to see the market make any actual progress on its own so it remains to be seen if any actual capital will move into equities or if this "rally" has all been nothing more than a repricing of stocks and comodities against a Dollar that our own Federal Reserve is doing everything in it's power to destroy the value of.

IYT WEEKLYAs noted in Dave Fry's chart, we think the Financials are the prime beneficiaries of QE3 but, like Egan Jones, we see no reason this will help the broader economy.  Nor will the new IPhone 5 help the non-AAPL retail sector as we all know what the big present under everyone's tree will be this year (hint, not a kindle) and thee things are not cheap – those are discretionary consumer bucks being drained away by AAPL this Christmas!   

We already call the Nasdaq the AAPLDaq as AAPL is back to 20% of the index and accounts for 75% of the indexe's gains this year as the move from $400-$700 is 75% and 20% of that is 15% and the whole Nasdaq "only" went from 2,650 to 3,200 – up 20%.  So the other 99 stocks that make up the Nasdaq composite have only combined to add 5% to the index  - and that INCLUDES a couple of AAPL suppliers, who have been flying as well.  The United States of America is becoming a one-industry country – the very definition of a Banana Republic – it's the Appleconomy!

The Big Apple doesn't make any AAPL products and the Empire State Manufacturing Index came in at -10.41 this morning and that's the lowest reading since April of 2009, before there was ANY QE.  That's almost double the negative 5.85 logged last month and over 400% worse than the -2% expected by leading economorons.  As noted this morning by ZeroHedge:

The components painted a dire picture for jobs, with the employment index sliding from 16.47 to 4.26, New Orders tumbling from -5.50 to -14.03, while, wait for it, prices rose, from 16.47 to 19.15. Re-stagflation here we come.

Market for now seems confused – since QE is priced into infinity, it is unclear if this latest datapoint confirming a recessionary economy, QE can't be more-er infiniter. Best to not respond to this, or any other macro news at all, which is precisely what the market has done.

For those who missed it, not only has Bernanke doomed the global economy to stagflation and imminent food riots, while making the richest 0.001% richer than ever, he has completely broken any linkage between the economy and the market.

We're already seeing global riots breaking out and it's convenient to blame a YouTube video for setting them off rather than the US policy of exporting inflation at the same time as we cut our crop exports, causing Global food prices to skyrocket.  Is this the first time an American video has made fun of Muslims?  Of course not!  Then why are we so uncritical listening to the BS the MSM is feeding us now?  

Not to worry though, pre-orders of the IPhone 5 were over 2M in the first 24 hours, that's $1Bn in sales for AAPL in a single day and double what the 4S did on its release so things are looking up, Up, UP in the Appleconomy.  As Mick Jagger once said:  

This towns full of money grabbers.go ahead, bite the big apple, don't mind the maggots… Life is just a cocktail party on the street – Big Apple – This town's been wearing tatters, it's been shattered, shattered yeah!


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  1. stjeanluc

    Oil Lines

    R3 – 102.07
    R2 – 101.25
    R1 – 100.15
    PP – 99.32
    S1 – 98.23
    S2 – 97.40
    S3 – 96.31

  2. roguetrader13

    Empire Manufacturing Index Prints At Lowest Since April 2009
     
    Today's horrible piece of news, which at least on the surface was supposed to send the market soaring, comes courtesy of the Empire Fed Manufacturing Index, which printed at -10.41, the lowest print since April 2009, down from -5.85, and well below expectations of -2.0. The Index print confirmed the biggest 6 month drop since records began. The components painted a dire picture for jobs, with the employment index sliding from 16.47 to 4.26, New Orders tumbling from -5.50 to -14.03, while, wait for it, prices rose, from 16.47 to 19.15. Re-stagflation here we come. Market for now seems confused – since QE is priced into infinity, it is unclear if this latest datapoint confirming a recessionary economy, QE can't be more-er infiniter. Best to not respond to this, or any other macro news at all, which is precisely what the market has done. For those who missed it, not only has Bernanke doomed the global economy to stagflation and imminent food riots, while making the richest 0.001% richer than ever, he has completely broken any linkage between the economy and the market.

  3. kustomz

    US DATA: Sept NY Fed Empire State Survey -10.41 vs -5.85 Aug. Text
    says “conditions for New York manufacturers continued to weaken. The
    general business conditions index slipped another five points to -10.4,
    its second consecutive negative reading. The new orders index fell nine
    points to -14.0, its third straight negative reading. Both of these
    measures reached their lowest levels in almost two years. The shipments
    index was little changed at 2.8. The prices paid index edged up to 19.2,
    suggesting moderate increases in input prices, while the prices received
    index hovered a little above zero for a fourth consecutive month. The
    index for number of employees fell noticeably but remained just above
    zero at 4.3, suggesting a slower pace of hiring.”

  4. Pharmboy

  5. amitshenoy174

    Hello Team,
     
    Phil mentioned about a TZA hedge which portfolio is he talking about. Still trying to get used to the member posts. Spent the whole weekend reading the thursday and friday posts. i am new here . So help here is appreciated.
     
    Cheers
    Amit

  6. 1020

    Good Morning!

  7. stjeanluc

    TZA / Amit – The TZA hedge that you mention is not part of a portfolio. Phil was just mentioning a potential trade in case you didn't have a hedge yet. Not all the trades go to a portfolio.

  8. Savi

    Good Morning
    Burr—--so sorry to hear about your Mom -my deepest sympathies
    Amit—-welcome   —https://docs.google.com/spreadsheet/ccc?key=0Anwf9je9MizqdGQzN2NZUjNfdjhrbjFwWlc1eDYtWnc#gid=22
    try this link for the  portfolios

  9. roguetrader13

    13 very negative consequences of QE Infinity:
     
    There She Blows!!!……………….Evil Plan 83.0 (by BDI from Slope of Hope)

  10. 1020

    It's great to see the chinese government has figured out a way to put a few of it's many unemployed to work; PROTEST JAPAN!
     
    It's sad to see the many "faux" protests around the world by the mostly unemployed and uninformed, manipulated by the powers that be…… :(

  11. stjeanluc

    Some good comments from the Economist last week on QE3:

    http://www.economist.com/blogs/freeexchange/2012/09/federal-reserve-launches-qe3

     

    That will depend on whether the policy seems to be working. So far, investors like what they see. The broader stock market jumped 1.5% with the S&P 500 hitting its highest close since 2007. Treasury bond yields actually edged lower (they typically sell off when investors are flocking to stocks) and the yield on the 30-year mortgage backed security plunged 15 basis points. The real test will be the behavior of spending, income and employment. The economy faces several strong headwinds, notably a recession in Europe and the threat of severe fiscal tightening at home through year-end. For that reason alone, a near term improvement in employment seems unlikely.

    But thereafter, things look better. Between the ECB’s action last week and the Fed’s today, the world’s two most important central banks are bringing unprecedented resolve to bear on economic growth. The world may one day look back and conclude the first half of September was either a turning point for the global economy, or the final nail in the coffin of the doctrine of central bank omnipotence.

  12. newt

    AMIT- TZA/Sank – The decay is not insurmountable.  With TZA at $13.50, you can pick  up the Jan $10/14 bull call spread for $1.50 and, if TZA goes lower, you can sell the $10 puts (now .25) for $1 (price of the $12 puts) and either keep the cheap protection or roll to improve. 

  13. amitshenoy174

    Thank you  stjeanluc, Savi,newt Appreciate it .
     
    Cheers Amit

  14. lflantheman

    Good Morning!   

  15. Opesbridge

    Morning Everyone

  16. rainman

    Whoops, there goes 79 on DX.

  17. stjeanluc

  18. stjeanluc

  19. stjeanluc

  20. jromeha

    Don't they have to roll a lot of contracts this week? How the hell is oil still up!?!? Fu mid-east turmoil!!!!!! 

  21. jasu1

    jromeha,
    patience my good fellow….patience…..

  22. stjeanluc

    Doubled our money in 4 months…. Good job lflan!

  23. davidkordack

    What is going on with Klac?

  24. Jbur

    Rogue: Excellent article by Knight. Thanks for posting.

  25. rainman

    DJI vol 20M

  26. Burrben

    Thanks guys for the thoughts.  What a time to be "out of comission"

  27. roguetrader13

    Phil/QE3 MAIN street value – $5B/year mortgage savings per every 25 basis point drop….$500B/year loss on savings yields (from previous actual 3% yields prior to 2008).  100 fold loss in discretionary spending per my numbers.  What am I missing here? 

  28. villashaka

    Iflan- What about selling 715 calls against the 700s ?

  29. rustle123

    dipping my toe on the short side today, still holding out on oil but starting to look at BCS spreads.

  30. stjeanluc

    This year is starting to look very much like 2010 now…  Strong beginning, weak middle and strong finish. We'll see if that carries over.

  31. Laddoo

    amitshenoy174:
    Welcome! I recommend checking out the New Member's Guide at the top of the main page.

  32. Phil

    Good morning!

    Very churney action this morning. 

    Dollar diving back to Friday's low (79.85) and we'll see if they hold if.  BOJ meets tomorrow and they've already indicated strong measures will be taken to get the Yen back down (and the Dollar up).  This is where it gets interesting because, while YOU may not be able to fight the Fed, that may not be true of other Central Banksters. 

    The Dollar may be weak but materials are still going down as total lack of demand trumps stimulus so far. 

    NFLX falling hard on a downgrade from Macquarie.  Not a big firm but doesn't take much to spook people out at these price-points.  Check this out:

    J.P. Morgan downgrades (IIIIII) AK Steel (AKS -5.8%) and U.S. Steel (X -4.4%), as well as Cliffs Natural Resources (CLF-4.8%), saying it doesn’t think steel fundamentals are supportive of a continued move higher beyond recent short covering after China’s infrastructure spending news and the latest QE round in the U.S., and that it expects steel prices to decline soon.

    Shares of OpenTable (OPEN -5.4%) slump after Piper Jaffray downgrades the name to Neutral from Overweight. The outlook for upside earnings surprises for the company is getting a bit cloudier with its iPhone 5 visibility now a known quantity.

    Now maybe they are pushing out weak hands so their clients can accumulate or maybe this is the truth – it's so hard to tell these days….

    At first this morning, CNBC was dismissing the Occupy Group in Wall Street and saying today's 1-year anniversary rally was a failure – already it's become too big for them to ignore any further – should be an interesting day…

    At the open: Dow -0.19% to 13568. S&P -0.19% to 1463. Nasdaq -0.26% to 3176.

    Treasurys: 30-year +0.04%. 10-yr +0.06%. 5-yr +0.01%.

    Commodities: Crude +0.27% to $99.6. Gold +0.1% to $1771.85.

    Currencies: Euro +0.04% vs. dollar. Yen +0.52%. Pound -0.16%.

    Market preview: Stocks look to open a bit lighter, as S&P futures -0.1% on renewed worries over the eurozone and rising tensions between China and Japan. Plunging NY factory activity is the latest sign of a weakening U.S. economy. Apple +1.2% after AT&T said sales of the new iPhone 5 set a record over the weekend.

    Richmond Fed President Jeffrey Lacker has explained that he opposed QE3 because it's unlikely to boost growth, but if it does, it will lead to higher inflation. The FOMC's sole dissenter added that any improvement in unemployment appears to be held back by impediments that monetary policy can't offset. Finally, buying MBS's, or providing credit to particular economic sectors, "is an inappropriate role" for the Fed and is "the province of the fiscal authorities."

    Bankers say QE3 could be limited by delays in processing mortgage applications, with banks reluctant to cut mortgage rates without the staff to process any increase in business. “In the very near term [QE3] has virtually no transfer mechanism whatsoever to the customer,” said one executive at a top lender. “Originators are massively backlogged in terms of origination volumes.” - What total BS, volume is not even 25% of what it was when they were making Trillions in bad loans at high rates.  

    Capital One (COF) saw delinquencies rise in August even as charge-offs declined somewhat. The bank's 30-day delinquency rate rose to 3.37% from 3.09% for U.S. credit cards while charge-offs dropped to 2.58% from 2.62%. 

    Tens of thousand of people marched in Madrid and Lisbon yesterday to protest austerity measures in Spain and Portugal, where demonstrations were held in 40 cities altogether. The 65,000-strong protest in Madrid followed a rally of over a 1M in Barcelona four days earlier and after the government said on Friday that further austerity measures were imminent.

    The dollar regains a bit of composure after last week’s rout, as escalating tensions between Japan and China trigger profit-taking on last week’s Fed-induced gains by the euro and other currencies. Japan-related stocks fall sharply in Shanghai and Hong Kong, as anti-Japanese protests erupt in China amid a territorial dispute that threatens to hurt trade ties between Asia's two largest economies.

    The U.S. plans to announce today that it will file new WTO complaints against China over export subsidies and duties on U.S. auto products. Though the announcement is politically tinged with President Obama in Ohio today, the case against China accuses the nation of over $1B worth of unfair subsidies in the auto industry. 

    Tyco updates its Q4 outlook after figuring some aged China receivables may not be collectible. The company's taking a charge of $40M-$60M to increase reserves and cut its revenue guidance by $25M. The firm also reduced operating margin expectations in the Fire & Security segment to 11.2%-12% rather than 13.5%, and in the ADT residential/small business segment to 23.5%-23.75%. 

     With rave reviews already in for the Model S, the name of the game with Tesla Motors (TSLA) is its ability to meet production targets. On that note, Elon Musk tips off that the company produced 100 vehicle bodies in a week for the first time in its history. TSLA +8.0% premarket. (Earlier: Morgan Stanley lifts Tesla 2 notches to Overweight) 

    Morgan Stanley lifts Tesla Motors (TSLA) two notches to Overweight after having the electric vehicle maker slotted at Underweight. The key part of the comments out from the investment firm is that it thinks fears that Tesla is having a manufacturing slowdown are "overdone." TSLA +7.9% premarket.

     If Starbucks was able to improve its margins with coffee input prices rising, SA author Mathias Holmstrom can't help but wonder will it be able to do after lower coffee prices cycle throughto its forward purchase contracts? It's this juicy proposition that has Starbucks looking attractive for another run higher.

  33. stjeanluc

    Interesting:

    What’s interesting is that despite the higher valuations, the S&P 500’s Price/Earnings Ratio is still lower now that it was at any point from March 1995 to October 2008. And except for some brief periods, the market’s P/E Ratio is currently lower than it was during the vast majority of the time from 1991 to 2010.

    The big questions – what the E in the coming quarters!

  34. pstas

    ARNA
    DEPO
    Pharm- any comment on this post on SA?
    http://seekingalpha.com/article/870511-heroes-and-zeros-arena-pharmaceuticals-and-avanir-pharmaceuticals?source=email_investing_ideas&ifp=0
    Also, DEPO has been creeping back up – wondering if there is anything new driving this or just trading noise? I am within spitting distance of b/e on this position and waffling on whether I should hang in.

  35. villashaka

    Pharm- Do you know anything about DUSA and their kerastick treatment- long term value or acquisition target?

  36. lflantheman

    villashaka….I want to see how the day goes.

  37. RangeTrader

    Phil/SPG,
    Morning, just want to re-ask the question on Friday.   What is your opinion on this stock?  My thought "155/160 Oct put credit vertical for $1" was a good and safe play on Friday. 
    Thanks.

  38. lionel

    YMI/ Pharm are you interested in Apr 2.5 callers or do you just accumulate the stock at this level?

  39. roguetrader13

    Spanish Yields per ZH:
     Spain's 10Y spread has risen a very notable 36bps and the 10Y yield has just broken back above 6% for the first time in over two weeks. However, the seemingly impregnable short-dated market has started to crack. Spain's 2Y has also broken back above 3% - up over 50bps in the last 3 days!

  40. lflantheman

    villashaka…AAPL…there is a soft pattern of retracement after 2 pm or so.  If we sold calls it would be to protect the long side gain and / or to garner some profits from the covers, and after 2 pm would be the logical time to do that.  Did you see how we peeled $1800 off those 18 AAPL covers on Friday, then got rid of them?  

  41. scottmi

    Mortgage delays/phil – Laura Greene was laid off.. of course things are taking longer.

  42. villashaka

    Iflan- Thanks- So it is a rinse and repeat cycle- I like that ( I missed the friday move though !) Will watch for your post on timing.

  43. lflantheman

    MoMo trade:   Sell to open 20 Sept 57.50 NFLX calls for 1.47.  

  44. amitshenoy174

    This trade is naked on NFLX right ? or is there a call bought in a future month please

  45. lflantheman

    amitshenoy/NFLX…naked calls.

  46. amitshenoy174

    lflantheman--thank you

  47. malsg

    Now. I know many at PSW might be shocked by the reverlation that certain Chinese firms who have borrowed money against Steel did not in fact own it but … well you can read it here.
    http://www.reuters.com/article/2012/09/16/us-china-steel-warehouse-idUSBRE88F0EJ20120916
    Obviously this is not the same as lending someone money to buy a house when then did not in fact have an income (remember self cert mortages) so it absolutly will not end badly for the second largest economy in the world…. Tick tock.

  48. nicha

    Amit – you should go back and read past 1 months posts. This will help you to get the lingo. The above post by Iflan (sell Sep 57.5 calls) will take up over 30k of non PM margin. If you don't understand what is being said you can lose a lot of money. 

  49. amitshenoy174

    Nicha-- thanks will do wanted to make sure we dont have a previous week NFLX somewhere so wanted to make sure but you make a good pt.
     
    thanks
    Amit

  50. Amalfi

    lflan / can you buy naked puts on NFLX if you can't sell calls? TIA.

  51. rainman

    Dow vol 31M

  52. villashaka

    Amit- Also don't try to make every trade posted- get in the rhythm of your own comfort zone in relation to the risk of each position- great people here and you will learn a lot !

  53. lflantheman

    Amalfi…Usually, yes

  54. lflantheman

    Amit/    nicha's advice good.  I trade aggressively in the MoMo virtual portfolio.   Watch and paper trade for awhile if you are new. 

  55. stjeanluc

    Paul Volcker tells it like it is:

    http://www.thedailybeast.com/newsweek/2012/09/16/paul-volcker-on-greedy-bankers-the-ryan-plan-and-the-fed.html

    Regulators obviously have an enormous challenge. These complexities were always a challenge; now they’re more so. But I think the regulators and markets and government have been imbued with the idea that markets left alone will discipline themselves. In a way, the regulators are outgunned. They do need the support of the senior executives of the institutions. If the talent at the top is forgiving of bad practices, or even encourages these practices, it’s going to be very hard for the regulators to do anything. It comes back to this: what is the punishment when wrongdoing is found?

    And

    Well if you’re just aiming for a balanced budget—it would be extremely difficult to achieve without some significant reform in the entitlement area. We’ve also got to take some look at the defense area, where expenditures are so large relative to the rest of the world that there might be some room for savings. But on top of that, you’re going to need some additional revenues. It’s not possible right now, but we need a real structural reform in our tax system if we’re going to approach equilibrium between spending and taxation. In addition, we’ve got great budget pressure on state and local governments.To put it bluntly, we have to move more toward a consumption tax. There are different ways you could do that, but that’s what we ought to be doing.

    I wish he was still in charge….

  56. Pharmboy

    ARNA – I agree with the article now that they have the approval they needed.\

    AVNR – don't like them at all.

    DEPO – their technology will continue to catch on.  Just a long(er) term accumulation to sell premium against.

    YMI – Stock, selling 3 mo calls against at 1/2 positions.

    DUSA – well, I think they are fine, but I have to put a disclaimer that I am an owner of a competitor of which I like better (private co.).  Their therapy works ok, but with the cream and blue light, other light sources are cleaner and more efficacious (IMHO) than this. 

  57. rpme

    Phil, if you want to trade Copper, but not futures, what is the best vehicle?

  58. roguetrader13

    Phil/"Wealth Effect "-  Oil to $130 by EOY 2013 chart.  Bottom 80% own only 7% of financial wealth pie graph.  My hope of an "idiot savant" Fed is now coming to the reality of simply "idiot".  Ben is obviously long stocks and the Mayan Prophecy Dec 21st, 2012…=o

  59. biodieselchris

    this is good: the run-up in CMG and PCLN may give us another great quarterly miss.

  60. Phil

    TZA/Amit – Welcome!  TZA was just the spread described in the above post ($10/14) and you can sell a put in a stock you really want to own for the net strike to offset it (see Thursday's chat for TWIL list).  As Savi says, this is not in the Portfolios (most of our trade ideas are not) – just a good overall hedge.   

    DB/ZZ – That's not good.

    AAPL $699.08!

    Income & $25KPs – Way too uncertain to do anything at the moment. 

    Oil/Jrom, Jasu – With all this tension talk and QE – they may be finding buyers in longer months easier than usual.

    Fantastick Momos Lflantheman!

    KLAC/Davidor – They are just lumped in with the general semi weakness (non-AAPL, of course).

    Main street/Rogue – People don't instantly refinance, it takes ages for those savings to be realized – if at all.  In the current environment, it's so hard to qualify that very few are getting done – even with government incentives.

    P/E Ratio/StJ – That's why this will be a make or break earnings quarter.  If those Es come down, that ratio can change very quickly.  Still too optimistic I think and, like all things, way too much AAPL in the mix to be reliable. 

    SPG/Range – You were supposed to remind me on the weekend!  I'll check soon.

    LOL Scott.

  61. rdn4evr

    Reading between the lines, I'd say John Hussman doesn't really like this market: http://www.hussmanfunds.com/wmc/wmc120917.htm

  62. biodieselchris

    Phil, since you're bullish on DUG can you sell me the Apr13 – 14 puts for 0.35? I can't a bite here.

  63. Pharmboy

    from dshort

  64. Pharmboy

    Velocity of Money….no 'inflation' here…except staples….

  65. Pharmboy

    GAS!

  66. jasu1

    phil,
    please explain:
    Oil/Jrom, Jasu – With all this tension talk and QE – they may be finding buyers in longer months easier than usual.
    What happens to the 119,005 contracts they have open in Oct….how is that resolved…Thanks

  67. stocksandbondage

    Phil and Lflan,
    Does it makes sense to buy an AAPL Jan 2013 890/900 BCS for $.55 as an upside play, or is it too far out of the money?
    Thanks

  68. biodieselchris

    Anyone notice the BDI is at 663?
     
    I think that's within a couple of points of the 2008 low (which was immediately prior to the mega crash)
     
    Just sayin'

  69. jromeha

    Phil – I bought a couple of /CL puts expiring in Oct. Was curious if you had any insight as to what's going on. Crude is only up around .25 cents but my $96 put has fallen over 40 cents today! It's strange…

  70. biodieselchris

    Pharm, they won't be happy until the M2 velocity is negative! It's like the square root of -1, it's an imaginary number. Maybe little George Washington One dollar bills will start producing goods and services like little Santa elves…

  71. rainman

    BDC / BDI — Capacity has increased since then: Meanwhile, further new capacity, equivalent to 22.7% of the existing fleet, is due to be delivered this year, according to Macquarie calculations.  It should probably be lower than 2008.

  72. lflantheman

    stock…….That play would not make sense.  It would mean AAPL would have to get to 890.55 by Jan 2013 for you to make money.   Won't happen.  Not even remotely possible.  You need to think about something more sensible for a long-term play, like perhaps doing a Jan 2014  750/850 and selling some far out puts to help defray the cost of the spread. 

  73. Phil

    Europe closing already?  Just 8:30 in LA – seems too early.  Not a great day over there, down .05-1%

    Steel/Malsg – So much fake demand in China, if they ever stop with their stimulus, many sectors will drop like rocks.

    Volker/StJ – The Reps would chop him faster than Bernanke.

    Copper/Rpme – FCX is best to trade copper.  They are not pure (25% gold) but that's not a bad thing.  I like to stick with efficient operators over time (like ABX), as they tend to weather a downturn much better.

    Mayans/Rogue – I wonder how many people are going to wake up on 12/22 and suddenly realize they are going to live and have way too many debts.

    PCLN/BDC – Big boost for them from Euro recovery.  Depends when they book the exchange but if they keep the money in Euros until EoQ – look out for a major pop (then they'll be a great short).  CMG I think is good for another disappointing Q.

    Hussman/RDN – You picked up on that, did you?  ;)

    As of Friday, our estimates of prospective return/risk for the S&P 500 have dropped to the single lowest point we’ve observed in a century of data. There is no way to view this as something other than a warning, but it’s also a warning that I don’t want to overstate. This is an extreme data point, but there has been no abrupt change; no sudden event; no major catalyst. We are no more defensive today than we were a week ago, because conditions have been in the most negative 0.5% of the data for months. This is just the most negative return/risk estimate we've seen. It is what it is.

    DUG/BDC – Too far out – causes decay worries. 

    Velocity/Pharm – I keep seeing that down 20% estimate and I don't get it.  If supply is up 300% and velocity is down 20% – why would our GDP be essentially stagnant?  Clearly money is not moving that fast – where are the refis, the M&A activity, the infrastructure spending, capital equipment purchases, construction?  Down 20%?  I don't think so..

    Contracts/Jasu – Just like a short put option you don't really want to own, NYMEX traders must roll the contracts to longer months to avoid taking delivery of the oil on expiration day.  Also like underwater short puts, they can pay a premium to completely cancel the contract as well but then they take the loss and it's a big loss at 1,000 barrels per contract so they'd much rather roll.  The more they can spike oil now, the more speculators begin lining up in longer months and that makes it easier to roll their contract.  By Thursday, they need to be below 30M contracts.

    AAPL/Stocksand – That's crazy dude!  AAPL is a $700Bn company at $700 so you are going to bet they add $200Bn in markets cap (30%) between now and Jan expiration?  Don't you think that's a bit overly ambitious?  There's a reason that spread pays 20:1, the odds are 20:1 against it happening – actually, much more so but guys like you pile into a 100:1 bet and drop the odds 80% from what they should be (parimutuel betting at it's finest).

    Dollar 78.995

    BDI/BDC – Mostly the result of a massive glut of cargo capacity as we're right at 5 years after 2007, when the ships being delivered right now started being built.  Not only were many new ships ordered but they never decomissioned the old ones as the economy turned sour so – huge glut of capacity.

    Oil/Jrom – Haven't you heard?  Israel is about to attack Iran!  Same old BS scaring people out of short oil positions across the board.  One day, they might be right but, since 1973 – not yet. 

  74. biodieselchris

    MLNX puts have huge spreads. It's like fishing. BITE BITE BITE

  75. rainman

    DJI vol 40M. 

  76. jromeha

    Pharm – Wanted to accumulate some more AVEO, is your reco still the Nov 10/12.5 bull call spread?

  77. lflantheman

    stocksand…..Did Phil tell you how he feels about that trade?       :)     

  78. ksone88

    YHOO/Phil – any thoughts on a turnaround with Marissa Mayer as a long term upside play?

  79. rdn4evr

    Shouldn't there be a long AAPL/short AT&T trade?  I mean, if IPhone 5 sales just set a record for them, that means that the highest number of profitable accounts (old iPhones out of contract)  ever just converted to loss leaders for the next 24 months.  For example, I've been holding off for the last year replacing my old iPhone 3gs, waiting for the iPhone 5.  That means that T has been getting about $35/mo in pure profit from my monthly phone bill.  Of course I'm going to get a new phone now, because it doesn't make economic sense for me not to.

  80. jasu1

    Phil,
    Thanks….took your advice and cut the play short…a few egg mac muffins for today's lunch….

  81. lflantheman

    I see a trade I like, but will NOT be putting in the MoMo (it would use too much margin).   CMG has been pushed upward today by a favorable ITG research report, and I think that will keep it above 340 over the next four days.  Selling some weekly puts on the stock at about 340 or 335 makes sense.   

  82. newt

    CMG/ LFLAN: Thank you.

  83. edro00

    Good description of rolling oil contracts …
    http://www.zerohedge.com/article/oil-market-speculation-argument-be-tested-wti-rollover-cycle

  84. 490union

    Phil…WHR …What the FU…up 37% in 60 days. SLD 10 sept 75c and 10 sept 77.50c at 3.65..now 13.50. Still believe in the position,but waited too long.FU QE3. Got any DD thoughts on a DD out? or did I just fall in love with my hand? Keep up the good work.

  85. jasu1

    edro00
    Thanks for the article from ZH on Rolling Oil contracts

  86. amitshenoy174

    anyone going long intc i think its at significant support . Maybe sell some 23 puts

  87. Winston

    Hussman – he is a fantastic commentator, unfortunately the same cannot be said for the returns in his funds. For market forecasters, predicting frequently and posting incessantly means that at certain moments in time you will be able to refer back to the time when 'I told you so' will come true. Perhaps better to make money than be right. 

  88. Peter D

    Virtual Short Strangle portfolio updates for SPX – Whee, the callers are devastated this morning.  For the 8 SPX Sep 1485 short calls, let's roll them to Sep Quarterlys:
    - Buy To Close 5 SPX Sep 1485 calls at $1.15, Sell 6 SPX Sep4 (Quarterlys) 1510 calls at $1.225
    - Buy to Close 3 SPX Sep 1485 calls at $1.15, Sell 6 SPX Sep4 (Quarterlys) 1360 puts at $0.725

  89. scottmi

    RIMM – i think Marissa owns some RIMM puts.

  90. Peter D

    Virtual Short Strangle portfolio updates for RUT:
    - Buy To Close 15 RUT Sep 875 calls at $0.95, sell 10 RUT Oct 910 calls for $1.7, netting a small credit.  Note that we have reduced the callers from 15 to 10.
    - Buy To Close 3 RUT Sep 880 calls at $0.475, sell 1 RUT Oct 780 put for $2.125 (This 3 Sep 880 callers was part of the set of 8 callers, 5 of which was flip to Oct 770 putters last Friday)
    - Now we have 13 RUT Sep 880 callers and 11 RUT Sep 890 long calls remaining.  Buy to Close 8 RUT Sep 880 calls at $0.475, sell 4 RUT Oct 915 calls at $1.3.  That leaves 5 Sep 880 callers and 11 890 long calls in September.

  91. villashaka

    Phil- I am thinking of doing a hedge Dec BCS for SQQQ, strikes 35 and 36- good, bad or ugly ?

  92. scottmi

    INTC/amit – i've been short since it failed to hold over 25 after losing 24.50. it might have support here, but i wouldn't go long unitl it proves it.

  93. jromeha

    Phil – do you like any solar/alt energy plays going into the election (with the assumption O will be re-elected)?

  94. lflantheman

    scottmi….I agree with you on this one.  I actually studied it a bit last week as a possible short. 

  95. Phil

    YHOO/Ksone – Does she have a time machine?  That's what it will take to fix YHOO at this point.  They should have sold to MSFT when they had the chance.

    T/RDN – I think at this point they've proved the model..  The down move T once had was investors not believing that they could turn a profit off the investment — certainly not even in question anymore. 

    Congrats Jasu!

    Great oil article, Edro – thanks…

    WHR/490 – 20 naked short calls?  Ouch!  I sure wouldn't DD with QE3 in play on durables.   Well, you're down about $7 x 20 and you could roll to 20 short March $90s at $5.10 and sell 20 $67.50 puts for $3.05 and buy 20 2014 $95/105 bull call spreads for 3.20 –  to make sure you don't get burned again.

    INTC/Amit  - I wish they were cheaper but good idea.

    Hussman/Winston – Pity the fundamental traders in this market.

    SQQQ/Villa – It's a good spot but you have to be righter than you think because there is some decay over that length of time.

    Appeal/Ink – Oh come on, what next – due process?  These liberals are out of control…

    Solar/jrom – WFR springs to mind.  Very iffy in general over the short run but, long-term, a great sector..

  96. rainman

    DJI vol slowing at 45.7M

  97. Phil

    SPG/Range – The dividend is now a whopping $4.20 a year and the low rates should really drive their cash flow.   It's a little worrying that they have started diversifying internationally as it stretches out management but generally they have been great and I do agree with their assessment that the pickings are slim in the states by comparison.  So, I certainly like them but $165 is a bit steep to collect $4.20 and I'd rather not buy the stock and sell the 2014 $119.80 puts for $6.40 and worst case is you own them for net $113.40.  As to the put spread – If that's a short spread I wouldn't waste my time and, if it's a bear spread – I wouldn't bet against them. 

    Volume/Rain – Thanks.

    Oil $92.75.  Dollar 79.04, Yentervention tonight. 

  98. chasw

    Phil,
    To clarify will Yentervention result in a stronger Dollar?

  99. rkyroma

    Pharm / TRGT – how do you feel about this one after today's news?  I'm short Jan $5 puts, and back to even from when I entered position, so could be worse.

  100. shadowfax

    IWM has stopped trtading today after last weeks end produced large blocks going at or below bid. That is getting out nomatter what the price. Why would anyone do that?

  101. lflantheman

    Virtual MoMo trade:    STO 10 this weekly 705 calls for 4.00

  102. Savi

    Phil—your thoughts on /RB?  thanks

  103. aaronc

    Iflan/STO – What strike?

  104. jasu1

    Phil,
    How would you position for the Yenintervention? /NKD perhaps??
    Thanks

  105. villashaka

    Lflan- Hold out for 4 or settle for 3.85 ?

  106. stjeanluc

    Strike / Aaronc – He meant AAPL!

  107. shadowfax

    Does anyone have the current put/call ratio? I am wondering if the premise of we will hold this week for OEX is basicly a bull trap. Low VIX makes options seem reasonable until all those calls become worthless. This is the week that long profits should be taken or well hedged.
    Apple Shares Closing in on $700: It’s Not Too Late to Buy! Says Sozzi
    http://finance.yahoo.com/blogs/breakout/apple-shares-closing-700-not-too-buy-says-161640335.html
    Apple will not hold the world!

  108. aaronc

    StJ/STO/AAPL – Much obliged.

  109. Phil

    Yentervention/Chas – Yes, that's the BOJ looking to weaken the Yen, usually by buying dollars.   

    IWM/Shadow – That is a concern.   

    Gasoline/Savi – I just think it's unaffordable an also unjustifiable with considerably less demand in the US.  If they manage to justify oil over $100, then gas will go up too but I just paid $70 for a full tank at the Rent a car in Vegas (to return empty) as it saved .50 over LA prices.  This is a ridiculous amount of money for working people to have to spend – it just can't last.

    Yentervention/Jasu – Well it's the short oil, short gold play on the Dollar getting stronger.  You can play NKD or EWJ but I'd get out on the initial excitement.  

  110. Pharmboy

    TRGT – I would exit stage left for now.

    AVEO/jro – that is fine.  I would also sell the 10 puts.

  111. Pharmboy

    EXEL running.  Nicey.

    YMI, just playing the channel.

    Yeah on LIFE….BMY is teaming up with them in the diagnostics.  There is going to be a ton more of this in the coming years, so keep you reading glasses on for device co's. 

  112. Inkarri19

    SCO??

  113. jromeha

    I dont know what happened with oil Strategic reserves release but Im loving it!!!!!!!!!!!!!

  114. jromeha

    Damn, that was crazy, oil spiked down almost 5$ and then bounced back in like 20 seconds…. Wish I wouldve sold!!!

  115. scottmi

    Stick – hmm. DJIA down about 0.3% (so far) today.. so looking for a 0.5% stick for a green close. all that QE is going to be spent, you know.

  116. jromeha

    What the hell is going on with oil, it is like a yo-yo!?

  117. jasu1

    Yeeeeccchhhh! right after I got off the down elevator…..the few muffins could have been a Mcdonalds store…..Oh well, ya live and learn

  118. stocksandbondage

    Phil and Lflan,
    Thanks for shining the harsh light of reality on my overly ambitious AAPL trade.  

  119. amitshenoy174

    Crude did what Phil asked for nice!!!

  120. Pharmboy

    Will the German Public pick up the Tabs on Deutsche bank? Do they have a choice?

  121. Phil

    Wheeee on oil!  You just gotta have faith….

    Dollar jumping back over 79.

    Oil/Jrom – $95.80 now.  I didn't hear any rumors, may be just the sellers getting nervous into NYMEX close with not enough buyers out there.   Gold and other commodities off too.  Fun!  

  122. jromeha

    Dear 7lb 8oz baby Jesus, Id like to thank you for oil dropping…  

  123. rkyroma

    Well I sold into the excitement on that 2nd oil spike down.  Thanks, Phil's voice in my head telling me not to be greedy!
    Also, AMZN looks like it made one of those spinning tops thingys on Friday.  That's bearish, right?

  124. denlundy

    Selling BBY Oct 18 puts @$1.34 and greater.  IF BBY holds $18,  7% return otherwise an owner at $16.66.  Yearly low is $16.24.  Will continue to accommulate more puts if price drifts lower.

  125. stjeanluc

    Wow, oil is now outside the lines…. 

  126. stjeanluc

    $94.50 seems like the next support line for oil looking back at the charts! 

  127. jromeha

    Let's see if they can bounce down to 95 ONE MORE TIME! 5 minutes left…Do it. Do it.

  128. stjeanluc

    A good case for being bearish in hard commodities:

    http://www.mpettis.com/2012/09/16/by-2015-hard-commodity-prices-will-have-collapsed/

     

    Third, and more importantly, as China’s economy rebalances towards a much more sustainable form of growth, this will automatically make Chinese growth much less commodity intensive. It doesn’t matter whether you agree or disagree with my expectations of further economic slowing. Even if China is miraculously able to regain growth rates of 10-11% annually, a rebalancing economy will demand much less in the way of hard commodities.

    And fourth, surging Chinese hard commodity purchases in the past few years supplied not just growing domestic needs but also rapidly growing inventory. The result is that inventory levels in China are much too high to support what growth in demand there will be over the next few years, and I expect Chinese in some cases to be net sellers, not net buyers, of a number of commodities.

    This combination of factors – rising supply, dropping demand, and lots of inventory to work off – all but guarantee that the prices of hard commodities will collapse. I expect that certain commodities, like copper, will drop by 50% or more in the next two to three years.

  129. newt

    CMG/ Flan:  Will you keep us updated on your moves?

  130. stjeanluc

    Why fuel economy standards make sense – especially given the current price of oil!

    http://blogs.reuters.com/felix-salmon/2012/09/12/why-fuel-economy-standards-make-sense/

     

    The fact is that fuel-economy standards are a pretty good way of ensuring that carmakers can plan for a more fuel-efficient future, without worrying about competitors undercutting them with gas-guzzlers. If the US government ever comes to its senses and increases the gas tax, or if it — wonder of wonders — actually implements a broader carbon tax, then at that point you would have three different forces conspiring to make America’s fleet more efficient. You’d have the tax, you’d have the fuel-economy standards, and you’d have the general global increase in fuel efficiency.

    Without new taxes, we’re down to two; and without new fuel-efficiency standards either, we’d be down to just one. And that’s dangerous, because the US market is big enough that at that point there’s always a risk that we could replay the era of SUVs and Hummers, with manufacturers of small, efficient cars running a risk that they might get crushed if oil prices fall.

    Fuel-efficiency standards are a way of preventing car companies from being forced to hedge their bets by working on gas guzzlers as well as efficient runabouts. As a result, those companies can take the money they’d otherwise spend on developing six-ton monsters, and invest it instead in the efficient cars of the future. Everybody wins, and the cost — contra Porter — is negligible. He’s absolutely right that higher gas taxes are a very good idea. But that’s no reason at all not to implement higher fuel-economy standards as well.

    economy.tiff

  131. Phil

    10:00 AM On the hour: Dow -0.15%. 10-yr +0.15%. Euro +0.14%vs. dollar. Crude +0.31% to $99.64. Gold -0.01% to $1769.95

    11:00 AM On the hour: Dow -0.16%. 10-yr +0.17%. Euro +0.07%vs. dollar. Crude +0.38% to $99.71. Gold -0.03% to $1769.65.

    12:00 PM On the hour: Dow -0.26%. 10-yr +0.2%. Euro -0.03% vs. dollar. Crude +0.25% to $99.58. Gold -0.01% to $1769.85.

    1:00 PM On the hour: Dow -0.26%. 10-yr +0.15%. Euro -0.08% vs. dollar. Crude +0.02% to $99.34. Gold -0.05% to $1769.15

    2:00 PM On the hour: Dow -0.3%. 10-yr +0.11%. Euro -0.18% vs. dollar. Crude -2.08% to $97.26. Gold -0.43% to $1762.45.

    Morningstar says U.S.-stock funds and ETFs tallied yet another month of outflows in August, losing $22.4B during the month, making it the worst in two years for the asset class, and its fifth worst over the past five years. On the fixed income side investors were bullish, pouring $26.4B into taxable-bond funds and another $5.6B into municipal-bond funds in August.

    China files a trade complaint with the WTO challenging a new U.S. law allowing tariffs on subsidized goods from China, swiftly responding after the U.S. said it would launch a complaintagainst Beijing's support for car exports. Products involved in China's action include steel, tires, magnets, chemicals, kitchen appliances, wood flooring and wind towers.

    ArcelorMittal (MT -2.7%) says it will close two blast furnaces and a foundry in Belgium rather than invest over $180M to save the plant. The operation has been bleeding money away from the company for over a year. 

     Patriot Coal (PCXCQ.PK -6.4%) says it's temporarily suspending about 85K tons of steelmaking coal production per month, citing a continued deterioration in market demand. The production cuts will occur at three Southern West Virginia mine complexes over the next 60 days.

    Shares of Valero Energy (VLO -3.6%) slide after Citigroup cut its rating to Neutral on valuation after the shares hit a new 52-week high of $34.35 last week. - Are we seeing a trend here?

    Moody's cuts its forecast for 2013 growth in the auto industry to 2.9% with downwards revisions to sales in Europe and China pushing the overall global projection lower. The ratings agency maintains a stable outlook on the sector for the next year to 18 months, needing an outlook of 5% growth or better to move to a positive outlook.

    Negotiations continue in Canada between the Big Three automakers and the Canadian Auto Workers with a strike deadline set for midnight tonight. The CAW sent an update to members telling them to stay on the job for the day as it hopes to strike a deal first with Ford (F -1.9%) before bringing it to General Motors (GM -1.4%) and Chrysler 

    profit warning from Swedish clothing seller Hennes & Mauritz (HMRZF.PKHNNMY.PK) appears to have crossed the pond to taint select retail names in the U.S. Foreign exchange headaches and unseasonably warm weather contributed to a 4% decline in H&M's same-store sales after analysts had called for a gain, raising some questions on the sector only a week after Burberry's own warning rattled luxury names. Feeling the heat: NWY -2.7%CBK -2.2%BODY -1.6%BONT -1.8%SKS -2.5%.

    Shares of Deckers Outdoor (DECK -4.2%) trade lower after Sterne Agee analyst Sam Poser warns that channel checks show sales of Ugg sales are off to a sluggish start to the season. If the fashion boots don't keep their fad status, Oxen Group notesthat making the bull case for the stock gets a bit tricky.

    Better late than never: McDonald's (MCD +0.4%) plans topush back the annual launch of its McRib sandwich to late December in order to maximize sales of the limited-time wonder hit. Industry insiders say that the timing of the change so close to the original release date slated for late October could be a sign the company is worried about Q4 sales

    Chipotle (CMG +3.6%) gets a little momentum going its way after channel checks from ITG Research reveal that Q3 same-store sales are tracking in a brisk 5.5%-7.5% range. The company is seeking to beat back a challenge from Taco Bell's newly-styled Cantina Bell menu and improve its customer turnaround time in order keep its growth story fully in play.

    In a PR-heavy interview with the Seattle Times, Steve Ballmer suggests Microsoft Surface tablets will sell for "probably $300 to about $700 or $800," declaring that area to be the "sweet spot" of the PC/tablet market. Ballmer, who seems intent on remaining Microsoft's (MSFT) CEO for now even though many want him to leave, also belittles Google (GOOG) as "just another big company at this stage."

     Intel (INTC -0.5%) and AMD (AMD +0.5%) have each been downgraded to Neutral by Longbow on accountof PC-related worries. But it doesn't look as if the Street cares much, given how bad news has already arrived and been baked in.

    Shares of OpenTable (OPEN -5.4%) slump after Piper Jaffray downgrades the name to Neutral from Overweight. The outlook for upside earnings surprises for the company is getting a bit cloudier with its iPhone 5 visibility now a known quantity.

    LinkedIn (LNKDbrags it now has over 10M registered U.K. users, or 4 out of every 5 professionals in the country. The business social networking giant recently claimed 62% of its 160M+ registered users, but only 1/3 of its revenue, now come from international markets.

    More on Evercore's bearish call on Groupon (GRPN-6.6%): In addition to re-hashing his cash flow concerns, analyst Ken Sena claims Groupon's marketing expenses are once again rising as the company tries to combat "daily-deal fatigue." Groupon's marketing spend fell 58% Y/Y in Q2, and was the main reason its EPS beat estimates even though revenue missed.

    Macquarie adds to Netflix (NFLX -5.4%) slide this morning after initiating coverage with a tepid underperform rating and a downside price target of $50, nearly 17% off current levels. The firm says that increasing content costs and greater competition are continuing to wick away at its bottom line.

    Netflix (NFLX -5.3%) could lose access to content from A&E Networks as soon a this Friday with negotiations still ongoing over a content contract. If a deal isn't struck, look for another major digital player such as Amazon, Time Warner, or Hulu to step in to land an exclusive deal for the stable of channels that include A&E 

    Square is now handling transactions at an $8B/year run rate thanks to its millions of card readers. That's up from $6B/year in June, and is a figure that has to strike fear into VeriFone's (PAY) heart. And perhaps also PayPal's (EBAY), given how it'sscrambling to catch up to Square's lead in the card reader andmobile pre-pay fields. The news comes as Square closes a $200M round at a $3.25B valuation, and its COO predicts iPads will soon make cash registers a relic. 

    Three lunchtime reads:
    1) By 2015 hard commodity prices will have collapsed
    2) QE: Now we wait
    3) The end of China's easy growth
     

  132. Inkarri19

    What a surprise…the White House says no SPR release.

  133. scottmi

    Now we wait… right. For a fat stick at the end of every day, especially with grossly overvalued MoMos..the PPP and FOMC guys really love these. Makes them feel all hip and cool to be 'playing' them.

  134. aaronc

    Lflan/AAPL –  Got filled at $4, thanks for this and the NFLX.

  135. rainman

    DJI vol 59M

  136. stjeanluc

    The international situation is really interesting – big protests in front of the US embassies in Muslim countries because of a movie. But Assad kills 10's of thousands of his citizens in Syria (most of them Muslims) and yet, no protests in front of Syrian embassies! I guess my problem comes in trying to use logic to understand people.

  137. angelcur

    ST JEAN// OR THE MARKET
    gm wants to buy government stake back and they wont let it due to massive loss taxpayers would take before election….SMART!

  138. mrmocha

    Pharm / VVUS - you were on vacation a few weeks ago when I called an audible for you and suggested here that people get out of their VVUS shorts around 22.  Later, I actually nibbled at some longs when it hit 21 and that's working out, so with today's bullish engulfing candle do you think I should pick up some more?  Anything interesting on the horizon for them?

  139. jromeha

    St Jean – the problem is religion. All religions…SOme are just crazier than others. Besides our supposed allies (afghan miltary/police) killing us daily things are pretty calm here. I see the headlines on CNN but besides a small group throwing rocks (not outside our embassy like CNN said but outside Camp Phoenix a few miles away), things in Kabul have been very calm. At least in this area we just have to make it another month and then it starts getting colder and all the crazies decide to hibernate for the winter…
    It's been a good day. SOld 1/2 oil shorts and have made 300 or so shorting oil in the 96.4-96.5 range and covering after it falls 10 cents or so. Time to call it a night. Hopefully tomorrow is as eventful!  

  140. biodieselchris

    in a show of imbeccible inverse timing I bought DUG puts a half hour before oil dropped $3 in 1-minute.
     
    And the rest of the market is down but AAPL/PCLN/CMG are all up?
     
    FU WORLD!!!

  141. Gingbaum

    lflan,
    Are you holding the NFLX calls overnight, or liquidating before day end?
    Thanks

  142. roguetrader13

    Phil/WTF?  - Soybeans and corn dropped over 5% today, oil around 4.5% from peak almost instantly…better go fill up your gas tank and grocery cart peasants, quick before it reverses!  And they wonder why people like me do not trade more than a few hours at a time at this rigged casino anymore.  Instead, I just closed another land deal today, making a six figure profit, a 46% return, on a two year land flip mostly because of your crazy free money system that is driving big money into land speculation.  There is more than one way to skin the Fed without risking it all in a flash crash!  Yet what good is all the money we in the know are accumulating if 99% of the rest of the globe is left behind for broke!  

  143. Amalfi

    lflan / I'm an aspiring Jedi and must thank you for your insight into NFLX and AAPL. Do we hold these positions or let them go before close? Whats the plan? TIA. 

  144. Pharmboy

    VVUS/mrm – apologies… they have nothing….if they sell their ED drug, then they could have an inflow of cash, but I still do not see a market for their drug, and they will have to do it all on their own.

  145. nicha

    Amalfi – mkt trending down. Iflan usually looks at trades like NFLX on the Friday of expiration. I think AAPL sold. Apps are safe too since they are OTM and we only sold half our longs. 

  146. nicha

    *Apps = calls. 

  147. Pharmboy

    SCO/Phil – holding those puts. We have rolled and are still down about $2 or so one them, correct?

  148. mrmocha

    Pharm / VVUS - thanks.  That's why I didn't post my buy here, was purely speculative.  Will run with tight stops.
    On SGEN, do you have any feel for when this blow-off will bottom?  I made a great exit on my SEP calls at 29 but want to get back in with some DEC spreads when this downtick ends….

  149. Phil

    You're welcome Stocksand.

    Crude/Amit – This is the one we've been waiting for all summer.

    DB/Pharm – No choice at all.

    Good job Rkyroma.  I think they may fall further but, if you make good money – no reason not to take it.

    BBY/Den – I do still like that one.

    No SPR/Ink – That had nothing to do with it.  Was just a NYMEX excuse to distract people from fact that they routinely order 20x more contracts then they could possibly want delivered to jack up prices and, sometimes, it bites them in the ass.

    Logic/StJ  - Assad is no immediate threat to them but US is driving up the cost of commodities worldwide and making their families suffer and threatening their ability to put food on the table – so who are they going to protest?

    Land/Rogue – I feel the same way about land, very good time to make some good deals with play money from the Fed.  Speculation drove up commodities already and I'm not sure the Fed did enough to support that lunacy and, more importantly, there is nothing the Fed or the ECB did that in any way is going to promote sustainable increases in actual commodity use and speculators aren't quite as dumb as you may think – down the road – at some point – they do want to see a light at the end of the low-demand tunnel.  It's just not there are the moment.

    Stocks are equally over priced for the same reason but, unlike commodities, it take an earnings report to slap people back to reality.

    SCO/Pharm – I do think we can do much better.  Hopefully oil fails $94.50.

  150. amitshenoy174

    Pharm-- i think we had SCO calls right not puts

  151. Pharmboy

    SGEN/mrm – I am in the Mar 30/35s.  selling the puts to pay for it.

  152. Pharmboy

    Oops, SCO calls.  Yes.

  153. stjeanluc

    Commodities / Phil – I don't think that the people protesting see it that way. And besides, China and Europe are also in the QE binge and it could be said that China is more responsible about commodities prices than anyone else and yet no protest in front of the Chinese embassies. There is always a latent anti-America sentiment (and Iraq didn't help) and crazy people ready to throw gasoline on that fire. 

  154. qcmike

    Phil
    Good time to enter SCO 37 calls 
    Thanks

  155. Phil

    Plosser/Kustomz – It amazes me that there are guys at the Fed who do "get it" but then the vote is near unanimous to ease (less 1) anyway.

    Little stick action into the close.  BOJ decision not until Weds (meeting starts tomorrow) will be fun.   Lots of US home data tomorrow and Weds too and then we're back to global PMI.

  156. rainman

    DJI vol 74M

  157. Phil

    Commodities/StJ – The film is a spark, the resentment simmers against those you fear and those who are causing you pain. They read the same papers we do, hear the same commentary on our cutting back corn and soybean shipments, that our Fed just keeps printing money and causing inflation, that our President want to drive down the price of oil, sanction Iran for wanting to develop an alternate-energy program (their version), etc.   Those things simmer and don't need much of a spark to boil over.  

    SCO/QC – This morning would have been better but I do still like them (risky though).

    They are working AAPL right back up to save Nas and S&P.

  158. Phil

    $699.75!  Wow, that was fun.

    Later all.

  159. rainman

    DJI vol 119M.

  160. RangeTrader

    Phil,
    Thanks for your input on SPG.  I am 100% TA.  Long way to catch up.  Appreciate sharing your thoughts.

  161. amitshenoy174

    Thanks everyone great day today hope to have a great day tomorrow too.
    cheers
    Amit

  162. zeroxzero

    Stj:  We're in a giant global downturn, and religion has always been the opiate of the people, and I wouldn't confine that to Islam by any means.   Christianity is currently responsible for a substantial percentage of Americans voting against their own economic interest, leaving aside any mention of Catholic and Protestant  harmony since the 1400s.  Irrational beliefs drive a terrifyingly large percentage of human behavior, of which my option trading practices are a shining example.  

  163. danny3399

    Saw this a twitter a little bit ago pretty crazy stuff.
    http://www.motherjones.com/politics/2012/09/secret-video-romney-private-fundraiser?mrefid=twtter

  164. dpastramas

    IBM / Do you guys also see the inverse H&S in IBM (daily close) forming since May? Whats the upside potential usually on these setups? Cheers

  165. wappler

    Zerox.
    LOL on the option practices!  Mine too, it seems that I can stay irrational longer than I can stay liquid!

  166. stjeanluc

    Religion / Zero – I agree and I am against all organized religions myself – I don't discriminate! LOL on the human behavior! 

  167. lflantheman

    Sorry for having to leave the site abruptly at about 1:35 p.m.
    newt…yes
    aaronc….yw
    Gingbaum/Amalfi…..holding all positions overnight
    The strategy on AAPL is to maintain a long position, with now 1/2 covers.  This will allow us to profit as the stock goes up.  If it goes down, we repurchase the covers and purchase more longs.
    NFLX acting well.   As long as it remains below 58.97 by friday close, we make money.  I would likely repurchase the calls  beforehand if we got enough profit squeezed out of the trade……50%?
    CMG…this is not in the MoMo, but I did sell some weekly 340 puts, and look for this to hold 340 .  

  168. deano

    Nanex view on today's oil drop:
     
    http://www.nanex.net/aqck2/3586.html

  169. lflantheman

    Just a few of my trading rules….. for contemplation……
    Trade just a few stocks, and know them all well. 
    Ride winners, cut losers quickly
    Never get emotionally involved.  These are stocks, not your girlfriend!
    Never sell naked calls or puts around an event.
    Never sell naked calls on any company that could be bought by another company.
    Listen to other traders.  You can always learn something useful.
    Trade according to your own psychological makeup.
    Unless you have done the 10,000 hours, don't try this at home.
    Don't get too confident.  That's when you will get nailed .
    Position sizing is important.
    Name your own price.  Pay what you want, not what they want.
    Listen to your instincts.  That is your brain thinking subconsiously.
    And on that note, I would say….it is my instinct that "AAPL ain't done yet!"
    See you tomorrow. 

  170. biodieselchris

    Iflan – add "take some time to contemplate the other side of the trade", that is, whoever is selling (or buying) the position from you thinks they are making money too. 
     
    PS – I hope your intuition is wrong on AAPL … sorry!

  171. stjeanluc

    IBM / Dpas – I would first worry about $210 which was a resistance line in the spring. And we are only $3 from there. Historically speaking, they are not cheap at about 15x earnings. So we might need to see their earnings next month (10/16) to provide more ammo to the next move! 

  172. dpastramas

    IBM / StJ – Thanks for your response. I was just looking at the chart, was planning for a Bull Call spread, so that i can release the short caller in case of a pull back (possible cup and handle forming if it gets rejected at 210$).  Cheers again!

  173. rustle123

    I never used a swear word on this site before but Romney has FUCKED his chances on winning the Presidency.  This is what he said when he didn't know tape was still rolling:
     
    “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what. These are people who pay no income tax.”
    Romney goes on to say;
    My job is not to worry about those people. (cmphasis added) I’ll never convince them they should take personal responsibility and care for their lives.”
    So much for the notion of the President of the United States being the president of all the people.
     
    Romney and all Republicans still love to use that 47 percent number not distinguishing the fact that half that number are retirees and a portion of those people are self employed who pay 15.3% in payroll taxes which is 2% more than Romney paid on 20 mill a year.

  174. stjeanluc

    Romney / Rustle – This guy (and his friends) are just so out of touch with reality… It's just unreal. Here is from TPM:

    http://talkingpointsmemo.com/archives/2012/09/devastating.php

     

    So the country is divided in two: on one side, the self-sufficient and high-achieving Republicans and on the other side the losers who think government needs to take care of them.

    This is the caricature of Mitt Romney, who was born on 3rd base (in Ann Richards memorable phrase), thinks he hit a triple and thinks the broad middle class who've relied on government for student loans or social security or anything else are losers who can't get their act together and take responsibility for themselves. Only this tape says that caricature Mitt Romney is the real Mitt Romney.

    Big problem.

    I don't know how you recover from that! I guess Christmas came early for Obama this year.

  175. stjeanluc

    Speaking of holiday, Shana Tova to all…. 

  176. lflantheman

    stjeanluc….Thanks for that (secretly taped?) tape of the real Romney telling us how he really feels.  Incredible.  Absolutely incredible.   

  177. stjeanluc

  178. stjeanluc

    Thanks to Rustle for bringing the news lflan… 

    It's just unreal how entitled people like Romney can actually feel that way. It just blows my mind! We have talked about that before but every time I have a conversation about life with my 2 daughters I always remind them how much luck has played a part in our collective lives – where we were born, what physical and intellectual gifts we inherited, what people we encountered who help us and so on. And that SOB who was born in one of the best environment possible is not even capable of recognizing that fact and the fact that many others have not been so lucky or gifted and might need help… Some of these "entitled" people work 2 jobs and barely make ends meet. And who can speak of entitlement when you pay 15% taxes on all the money you make – that carried interest loophole has to be the biggest entitlement program in the US. It boggles the mind! It's just sick.

  179. stjeanluc

    Good tweet on Romney secret tape:

    That awkward moment when the guy who is running to give himself millions in tax breaks says you want free stuff.

  180. rj_jarboe

    Romney should do very well in states where he is the only one on the ballot.

  181. stjeanluc

    And one more thing – under the Ryan plan (I encourage all to read it) dividend and capital gains are not taxed so someone like Romney would pay no taxes. Is he mooching then? Would all his friends be entitled lazy bums? I guess it is different when you pay no taxes on millions. If you pay no taxes on $20k you are lazy. If you pay no taxes on $1 million you are a job creator.

  182. 1020

    How about a young and arrogant one percenter who has a home at the end of my street…….
    http://www.washingtonpost.com/sports/olympics/shaun-white-charged-with-public-intox-vandalism-in-nashville-accused-of-breaking-hotel-phone/2012/09/17/ad8a8734-0127-11e2-bbf0-e33b4ee2f0e8_story.html
     
     
    Dum Azz….. :)

  183. lionel

    Happy Jewish New Year to all members.
    As a head up,
    14 Nov Islamic NY
    1 Jan Gregorian NY
    14 Jan Orthodox NY
    21 Jan Chinese & Vietnamese NY
    14 Mar Sikh NY
    20 Mar Iranian NY
    26 Mar Balinese NY

    In April Hindu/Sindhi/Tamil/Punjab NY
    and much more to celebrate :)

  184. zeroxzero

    Stj:  You're spinning it, and Romney's advisors will spin it.  Romney will try a "judo throw" on this one:  use the large-scale press coverage of the  "secret Romey recordings"  to prove the candid sincerity of his message: that 47% of the population are on the dole, want handouts, aren't interested in working, and will vote for Obama to keep the Obama/Bernanke Deficit Party going at the expense of America's Future.
     
     It may not work, but the attacks on U.S. embassies abroad, including the first killing of an American ambassador in 20 years, which appeared to have been met by Obama with only tolerant appeasement in condemning anyone who "hurt the feelings of Muslims," is not doing him any favors either.  It looks like Obama has the edge for now, but U.S. embassies have been attacked in Libya, Egypt, Yemen,  Sudan and Tunisia without a noticeable U.S. response, and today  Hassan Nasrallah, the leader of Hezbollah ["Party of God" in Lebanon, gave his first public speech since 2008 condemning "the film," so this story still has legs.
     
    Bottom line, the American people are feeling particularly embattled both politically and economically right now, somewhere between 16 and 24%  of American voters  already think Obama is a Muslim, so this is still a horse race that can be lost by either candidate.  The debates will be crucial, and it isn't clear that either of them is more persuasive or articulate than the other.  The incumbent traditionally has the edge, but I wouldn't be buying calls on either of them right now.

  185. crussell14

    Thanks Zeroxzero. Very troubling indeed.

  186. jromeha

    Zero – Romney didnt really even win the debates against other republican contenders.
    Attacks on embassies without a visible response? What are we supposed to do? He sent Marines out to reinforce the embassies. No one will be climbing fences anymore. I thought it was an appropriate (abeit a little slow) response.  

  187. yodi

    Hi Everyone still crusing in Germany. Just having a hard time with the internet. It is sometimes hard to follow you guys as sometimes the internet stick I purchased gives only 20 to 60kb/sec pending location so doing a single roll can take 5 to 10 min. 
    Meanwhile I do not see any type of recession in Germany, Switzerland, Holland or Austria. Restaurants are full hardly can get a free table to eat, RV parks are full up to now but getting better not so full after the schools have started again.
    News are full of Mohamed reporters and topless Kate. I can only say do not give the bastards food but shovels, so they do not waist their time rioting and killing people but plant things to eat!!!!!
    Topless has she got any boobs at all?
    All good luck in trading, Will be back in the head hunting country after the 15th of Oct. Regret to say however I do not miss the place. There are to many beautiful things and places to see in Europe.
    Regards Yodi

  188. revtodd64

    From the Atlantic Monthly - http://www.theatlantic.com/politics/archive/2012/09/where-are-the-47-of-americans-who-pay-no-income-taxes/262499/  Almost all the states with most of the non-taxpaying citizens are below the Mason Dixon line and firmly in the Republican camp.  The highest percentage of full taxpayers is my liberal state of Massachusetts.  And we sure are getting tired of those lazy Republicans in the band from Texas to Florida living off our hard work!  All kidding aside, what a senseless campaign we are having.  Imagine what the debates are going to be like.  

  189. deano

    Spain’s benchmark borrowing costs have climbed back above the 6 per cent mark again as investors start to grow impatient with Madrid’s delays in applying for help from the eurozone’s rescue vehicles and central bank.
    After a strong rally since the European Central Bank unveiled its plans to support the sovereign bond markets of the currency union’s embattled members, Spanish and Italian borrowing costs started to rise once more on Friday and continued their rise on Monday.
    Spain’s benchmark 10-year borrowing costs peaked at 7.75 per cent in July before dipping to 5.55 per cent last week.
    But on Monday the 10-year yield rose as much as 22 basis points to a shade over 6 per cent again and was at 5.99 per cent late in London, according to Bloomberg data.

  190. jomptien

    Also, remember in Lebanon when a suicide bomber killed all those marines? Reagan was pres. and pulled them out. Did the Repubs think he was weak then?

  191. stjeanluc

    You have to be kidding Zero – in 2004 when Bush was running for re-election, kids were being blown out every day in Iraq for a war that a lot of people didn't support. And we never found the vaunted WMDs. And Bush got re-elected anyway. So getting people killed in war is a sign of strength? And BTW, I don't think Al Qaeda think that Obama is that weak. You are giving in that appeasement spin yourself there… 
    But insulting 1/2 the people in the country, including a big portion of your electorate (retired white folks for example) is not that easy to spin… 

  192. scottmi

    Spin/Stj – ah but Romney didn't insult 1/2 the people in the country. it is a statistical fact* that 90% of the 47% believe they are part of the 53%
    ..
    * lies, damn lies and statistics

  193. stjeanluc

    That's true Scott and that's the reason they keep voting against their best interest!

  194. stjeanluc

    Here are the oil lines today:

    R3 – 104.56
    R2 – 102.04
    R1 – 99.69
    PP – 97.17
    S1 – 94.82
    S2 – 92.30
    S3 – 89.95 

  195. jelutuck

    Debates/zero  --  I'll second Stj "you've got to be kidding!" Romney is very unpredictable when speaking without a script.Corporations are people, I like to fire people, the $10,000 bet, and so many more hits!  You can bet Obama will come prepared to catch Mitt in some of his many contradictory positions and Obama's real world diplomatic experience will give him a HUGE advantage in the foreign policy debates. Plus the likeability factor will be very obvious side by side.

  196. lionel

    Thanks StJ for the oil lines early in the morning.
    We failed S3 yesterday (3 days before last trading day)
    I bet we will revisit S1 before drifting higher towards PP
    Oct-Nov spread is quite large at 31c

  197. stjeanluc

    The trend is not bullish now Lionel. In addition, the dollar is a bit stronger this morning.

    As I said yesterday, I see some strong support around $94.50 for oil but in between, who knows. Things might blow up somewhere!

  198. lionel

    StJean/ all agreed I am short CLX2 at this level hoping for a retracement towards S1 (yesterday lows)

  199. 1020

    "Hurt the feelings of the muslims"  Come on zero, don't tell me you too have bought in to the "Obama is always apologizing"  right wing clap trap.
     
    Obama is a cool cat who does not show a temper. I really have a hard time remembering any President telling anyone to "get over it"  Or  "What do you expect?.. it's the Middle East….
     
    Or call out detractors as "Cry Babies"….
     http://www.youtube.com/watch?v=N3rEfw25PjY
     
    Diplomacy
    http://en.wikipedia.org/wiki/Diplomacy

  200. lionel

    96.30 touched all in…

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