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40 Point Friday – Up 2.8% Since Last Expiration Day!

Click to View2.8% – that's what QE3 has bought us so far.  

Last Options Expiration Day was August 17th and the S&P was at 1,420 and a month later we're testing 1,460 – 2.8% higher after Bernanke pledges to spend at least $600Bn and, of course, the ECB pitched in their own $600Bn and China dropped $400Bn and the BOJ added $200Bn of their own.  All that for 40 points.  

So what's the problem?  Of course there was front-running, QE2 had front-running as well, with the S&P running up from 1,040 to 1,250 (20%) ahead of the actual announcement.  That didn't stop us from heading up to 1,361 the next year – up another 9% before collapsing all the way back to 1,100 last fall (down 20%) into Operation Twist, which took us all the way to 1,422 (29%) before falling back to 1,266 this June (down 11%) when the Fed announced Twist would be extended and rumors of QE3 did the rest, running us all the way to 1,440 just ahead of the announcement (up 14%) and, as I mentioned, up to 1,460 now (up 1.4%). 

As John Lennon would say, we need to give QEs a chance but clearly this is a little disappointing so far – especially with such massive, coordinated central bank action AND, did I forget to mention, the new IPhone is here!  That's right, today is new IPhone day and, in the Appleconomy, what could possibly be more important than that?  

Lines like the one on the left are in front of almost every AAPL store on the planet as getting a new phone on the first day it's shipped is really, Really, REALLY important to some people.  We discussed the potential for upside in AAPL (we're already long) in yesterday's Member Chat and there seems little likelihood that AAPL will be holding back the Nasdaq NEXT Quarter, but this Quarter (AAPL's 4th) ends on the 29th and it remains to be seen how and when AAPL chooses to recognize these early revenues.  

Earnings are on Oct 15th so we'll see what they have to say but, of course, we'd see any dip as another buying opportunity there.  We took the dip in gasoline (/RB) to $2.80 as a buying opportunity as well and buying gas futures into the weekend is often a good bet and, at $420 per penny, per contract – an exciting one as well.  Longer-term, gold and silver are getting interesting as we're having a very bullish breakout on GLD at $172.50.  

I'm not a big fan of gold (and we have some GLL short plays on it here) but, long-term, if it runs, it can be lucrative and, rather than buying 10 ounces of gold for $17,750, you can buy 10 GLD June $145/170 bull call spread for $16.70 ($16,700) and all GLD has to do is hold $170 (now $171.50) and you make $8,300 or about 50%.  Buying physical gold, it would have to move to $2,600 an ounce for you to get the same bang for your bullion bucks.  Break-even on that trade is $161.70 so it has built-in protection as well.  

AGQ is an ultra-ETF that tracks silver and is currently at $58.91.  That one can be used as an inflation hedge by picking up the March $58/75 bull call spread for $5 and they just released 2015 options on ABX, which can be used as a bullish offset to AGQ or the above GLD play by selling the 2015 $33 puts for $5.05 which turns the AGQ spread into a .05 credit with a $17 potential upside (34,100% on cash) and the worst case is owning ABX at net $32.95, which is 22% below the current price of $42.46.

As I keep saying, there are lots of ways to make money in a bull market – so far, this week, we seem to be in one.  Notice I'm not talking about fundamentals, as they still suck, but the Central Banksters seem very intent on buying us a rally and who are we to stand in their way.  Earnings season is upon us and we have lots of fun with those bets as well so tune in next week, once we get past today's quad witching moves for lots of ways to make some quick money on those as well.

Have a nice weekend,

- Phil


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  1. amitshenoy174

    Good morning Everyone

  2. 1020

    Good Morning!

  3. rainman

    "When California Governor Jerry Brown came into office last year, he said he found a "wall of debt" of $28B. That wall is actually a much bigger $167B-$335B, says the State Budget Crisis Task Force, which was co-founded by Paul Volcker. The task force includes lots of off-book items in its calculations such as pledges to provide pensions to public workers and healthcare for retirees, and $40B to improve drinking water. "
     
    $40B?!?  No wonder the pizza & bagles suck.  At least they have Volcker on the job!

  4. stjeanluc

    Oil Lines

    R3 – 96.10
    R2 – 94.66
    R1 – 93.83
    PP – 92.40
    S1 – 91.56
    S2 – 90.12
    S3 – 89.29

    I was surprised we made it to PP yesterday.

  5. Savi

    Good Morning—-snooze and loose on /RB—great call Phil

  6. 1020

    Cali water – Yeah, just remember, it's what you can't taste that will kill ya…… ;)

  7. stjeanluc

    The demographics don't look good in China:

    http://soberlook.com/2012/09/chinas-shifting-demographics-and-their.html

    As someone said, they will get older before they get rich. It's not a good recipe for growth!

  8. stjeanluc

    A lot of new jobs created by 2020 will be in healthcare:

    http://www.ritholtz.com/blog/2012/09/where-will-the-jobs-be-in-2020/

  9. Pharmboy

  10. rainman

    Surcharge for US mortgages proposed
    US borrowers in states where home foreclosures are costly and time-consuming will have to pay more for their mortgages, the top housing regulator has proposed.
    Lenders originating new loans in New York, New Jersey, Illinois, Florida and Connecticut will be forced to pay US-backed mortgage giants Fannie Mae and Freddie Mac up to 30 basis points extra for their credit guarantee, the Federal Housing Finance Agency said in its proposal.
     
    Unreal.

  11. 1020

    I wonder why "Masonry Contractors" are in that group…..living with your in-laws?….. :)

  12. nicha

    OMG, Barry charging $600 for his conference. Boy, are we lucky, or what!!!

  13. Jbur

    Phil- Happy to hear you're safely back and had a nice trip.

  14. jabobeast

    is this what you are saying?
     
    http://www.youtube.com/watch?v=jllJ-HeErjU

  15. Pharmboy

    Interesting….P/C ratio is at its second lowest signal reading in a decade.

  16. Phil

    I have a friend who needs about $15M in short-term (6 months) financing to do a quick roll-up of a staffing company (sw engineering) plus a consulting company (sw engineering) into another sw consulting company which then turns into a SPAC that's got $50M approved already so it's really a question of coordinating the closings, which my friend is good at.   Let me know if you are interested or know someone who would be.  

  17. hoss18

    The masons build booby hatches for the rest of us…..oh, and good morning!  

  18. Pharmboy

    Masons are going to be needed for all of these….

  19. Pharmboy

    GLD – by EOD, GLD calendar…I am selling the Sept 12 quarterly 175s for 75c or greater. I will also roll to those if GLD goes up. 

  20. stjeanluc

    60% gains on the short puts. Do we risk that over the weekend?

  21. Burrben

    Pharm – Pretty amazing.  I hope it works, my friend just died from B.Cancer last night.
    http://www.huffingtonpost.com/2012/09/19/marijuana-and-cancer_n_1898208.html?utm_hp_ref=mostpopular

  22. jomptien

    I just took a 0% interest rate and 0% transfer fee from Chase for 15 months – I feel like GS now

  23. newt

    Hi Pharm- I am following the GLD calendar. Is the above post for the 173's

  24. 1020

    Sorry for your loss Burrben…..

  25. stjeanluc

    The PCLN puts are now below 1/2 our net – do we DD?

    A shame the TNA calls stopped out yesterday….

  26. stjeanluc

  27. 1020

    Pharm/mason  That picture made me laugh!…… ;)

  28. stjeanluc

  29. Phil

    Good morning!

    130M traded at the opening bell and we're up about 0.3-0.5% so a good start to the day but sellers coming in now – we'll see if they come in with volume or if it's just some people cashing that opening pop…  

    MON making new highs so someone isn't worried about GM food bans.  

    Cali/Rain – LOL, they've got some serious problems.  

    Snoozing/Savi – Don't worry, they may be round-tripping from $2.827, down to $2.807 already.  

    China/StJ – So, in 2050, they'll have more old people than we have people total.

    Surcharge/Rain – They are just nickle and diming people to death.  

    Barry/Nicha – That's a normal price for a one-day conference.  Ours is a give-away by comparison.  

    Thanks Jbur one of the things I like about going away is coming home.  

    BTFD/Jabob – Yep, it looks like we're back in one of those markets again.  

    Put-call/Pharm – Another sign of total complacency.  

    FAS Money/StJ – I guess we have to take that money and run as it's not worth the risk.  Better to go clean into the weekend and reposition next week so buying back the short Sept $107 puts.  

    Condolences Burr.  

    0%/Jomp – Nice!  

    PCLN/$25KP, StJ – Yes, let's DD on the Oct $595 puts for $4.80

    TNA/$25KP, StJ – Better safe than sorry. 

    Dollar bounced off 79.15 so far, now 79.30.  

  30. stjeanluc

    Interesting comparison of what happened before and after the last 3 QE announcements:

    http://ftalphaville.ft.com/blog/2012/09/21/1172331/qes-compared/

    Yes, yes, this QE ain’t the last QE and heaven knows the outcomes aren’t straightforward and depend on a shed load of variables. But a comparison is always worthwhile — or, at least, fun. So, here’s a relatively straightforward one from Deutsche Bank’s Alan Ruskin comparing the effects of QEs 1, 2 and 3.

    The chart start at -90 days so before QE.

    Looks like we could be in for another rally in equities and commodities!

  31. jjennings

    Pharm – I'm looking to establish a position in BMY for my IRA account.  Was thinking about buying the stock at $33.25, selling the 2014 30/20 put spread for $2 and then start selling covered calls.  Would appreciate your thoughts and if you have any better pharma's to add instead.  I'm mainly in cash in this account, so need to start putting money to work…..and unfortunately chasing yield.  TIA

  32. villashaka

    Is APPL going to pin 700 today ? Feedback

  33. Pharmboy

    Burr – I am sorry for your loss…and I hope it works as well.  The problem right now with these type of trials is they are long, and VERY expensive.  We had a compound that did something to this effect as well in cancer, and speaking with Pharma, they were unwilling to do such a trial due to what I note above.  It will happen eventually, but it will take time.  The other issue is …. will the cancer change and find a 'go around' so that it can escape this route of suppression.  My focus on ADC-mAbs is the best chances for now, as they are targeted and kill on the spot (if they work).

    GLD/newt – yes, sorry 173s.

    1020/masons….yeah, in addition, our houses may be beachfront property soon if the ice caps continue to melt as fast as they are, then we will need those masons to build our inter-connecting bridge.

    BMY/jj – I have to admit, there are better things to do right now…..like waiting.  Sell a few puts that would capture that dividend for the time being, and maybe get you a better price.  I also like a risky, small position in SGEN Mar 30/35 BCS, selling the 20s to pay for all but 20c of the spread.  I note that someone has 1K in the Mar 30 Ps, so are they betting on a rise up?

  34. newt

    Villa: looking at vol & open int. on 700s

  35. newt

    Pharm- Thanks.

  36. jjennings

    Thanks Pharm

  37. Pharmboy

    Well, the EU regulatory agency may do something sensible and reject VVUS.  Bit too late for me, but good for ARNA.

  38. jr_mints

    Pharm, looks like we would have been better off buying back those Sept 173's yesterday when they were really cheap.  They sure shot up this am.  Thanks for all your help, it is really appreciated.

  39. Pharmboy

    jr – why, we are still up on them, and they will most likely hold 173ish.  So, hindsight is better, but we will get a better price for the 175s then yesterday, no? :)

  40. jr_mints

    Pharm,  touch'e  good points.

  41. Laddoo

    SLW Crazy Play/mrmocha


    Per your comment from 9/12:


    "mrmocha 
    September 12th, 2012 at 1:15 pm
    SLW – One Crazy Play I do several times a week is to watch SLW and if it drops or rises more the $1 rapidly in a day, I play for the opposite direction.  $1 up = go short, $1 down = go long.  So today it ran from 36.30 to 35.10 in 1 hour, that was my trigger.  I bot a bunch of weekly 35 calls with tight stops, and one hour later I'm out at 35.90 with an easy double.  Note that I rarely hold these plays overnight, although I do also play SLW long-term in other accounts."


    Been attempting to paper-trade, but have not seen the setup many times recently.
    Am curious, do you count premarket activity in your $1 move?
    Thanks!

  42. 1020

    Pharm – I'm afraid with the possibility of an El Nino Winter, we'll be losing a bit more of the coastal bluff….
     
    But Hey!!  We'll invite you and the family over for some fun, when the beach reaches the backyard~!…. :)  

  43. rexx

    Maybe small  opportunity in Apple Maps. It's a dog. Just yesterday morning I used google maps to avoid traffic jams and got from downtown NYC to LaGuardia in half an hour. I dowloaded IOS6. Now I have Apple maps and it's …awful. 
    Twitter is a-flame http://www.pcmag.com/article2/0,2817,2409944,00.asp

  44. shadowfax

    pharm
    Thanks for the put/call chart. Didn't expect it quit so low.

  45. lflantheman

    AAPL portfolio trade:   BTC 15  Sept 22 700 AAPL calls for 5.00     STO 20  Sept 22 705s for 1.55

  46. Amalfi

    Happy Friday! MON is evil BTW

  47. lflantheman

    The AAPL map &*%#up is unusual for them;  I suspect they have a huge bunch of programmers trying to get this corrected asap. 

  48. scottmi

    AAPL map fails > phone sales hesitate > aapl  dives to 685 > since aapl is the only money in town FAS craters to 97 > fas/banks drives panic GOLD which spikes to $2000.  it's gonna be a wild day!!  ;-)

  49. villashaka

    Pharm- So based on the P/C ratio chart- shouldn't we be buying cheap insurance, it seems prudent. Thanks for all !

  50. stuman

    CRM – Ok Dreamforce is winding up and the stock seemed to peak just prior to the session and now has lost some momentum (although it could be a bull flag forming).  It is near a resistance level at about $160.  Any thoughts on best plays for the stock not breaking resistance in $160 range.  I am thinking of selling next week $160 calls to fund an Oct or Nov put spread.    

  51. neetcorp

    Pharmboy,
    buying Astex because of Dacogen, which should see European approval any day in acute myelogenous leukemia (AML).  What do you think?

  52. stjeanluc

    Apple Map / lflan – From what I read this morning in tech web sites it's likely that it will take some time to correct. It's not just programming, it's data collection and analysis and that requires time. Remember, Google has been at it for many years now and Google Maps had many of the same problems originally. 

  53. rainman

    Smart phones reach tipping point

  54. rainman

    stj / maps — Yes but GOOG has always released beta quality software (even if it isn't beta anymore) and AAPL does not. I think this is a first for AAPL, no?  The quality of releases from AAPL seems to be what makes it attractive to many. 

  55. Kwan

    rexx/all – google says they've already submitted their maps app to the app store for approval

  56. newt

    Pharm- Just moved on to 173 Sept Q's

  57. rainman

    kwan / goog — That's just too funny. How long does the approval process take?

  58. newt

    Flan- Appl 105's didn't fill at 1.55.  How hard do you chase these MoMos?

  59. rustle123

    Did anyone catch this SNL making of fun of Fox News last night?  I was laughing my ass off when I saw this, SNL is getting very good again.
     
    http://www.mediaite.com/tv/snl-mocks-fox-friends-for-romneys-comments-and-on-air-corrections/

  60. rainman

    The devil is in the numbers :)
     
    The president raised $84.8 million last month, while Romney raised $66.6 million and borrowed an additional $20 million secured by general-election campaign donations — most already in the bank — to pay expenditures until he became the nominee.
     
    Obama Raises More Than Romney Dependent on Super-PAC Edge

  61. scottmi

    AAPL/newt – if you had short 700s already, it was an easy roll (for a little bit at least) at net 3.45. i even filled one at 3.40 for the roll. then sold extra 705s to fully cover my 700s and got 1.65 for those.

  62. newt

    Scottmi- i had the 700's but sold thinking I might get better pricing splitting up the trade. 

  63. newt

    Correction- BTC

  64. newt

    my knee jerk on it is you grab a couple gr's for 5 hours of work. but I have seen it where the trade is held for a few hours then cashed in…..

  65. Phil

    Great comparison charts StJ. 

    AAPL/Villa – As we're over $700 already, I'd look for $702.50.

    AAPL Maps/Rexx, Lflan – I assume you can use GOOG maps as another App or is there no choice?  

    And what Kwan said!

    At the open: Dow +0.3% to 13638. S&P +0.44% to 1467. Nasdaq +0.60% to 3195.
    Treasurys: 30-year -0.29%. 10-yr -0.03%. 5-yr +0.02%.
    Commodities: Crude +0.98% to $93.33. Gold +0.85% to $1782.85.
    Currencies: Euro +0.37% vs. dollar. Yen +0.02%. Pound -0.43%.

    10:00 AM On the hour: Dow +0.3%. 10-yr +0.02%. Euro +0.27% vs. dollar. Crude +1.31% to $93.63. Gold +0.95% to $1784.65.

    11:00 AM On the hour: Dow +0.16%. 10-yr +0.08%. Euro +0.14%vs. dollar. Crude +0.64% to $93.01. Gold +0.33% to $1773.55.

    Market preview: Stock futures follow European markets higher amid optimism that Spain has started working with the EU on apotential bailout. S&P futures +0.4%. Apple shares move back above $700 as iPhone 5 global sales kick off to big crowds, but RIMM's BlackBerry suffers from service problems. It's also quadruple witching day, which could spark activity. 

    Aug Mass Layoffs: 1267 mass layoff events (at least 50 workers), resulting in 127K job losses (seasonally adjusted).

    More on the Fed's Kocherlakota "changing his plumage": "You have to learn from the data," says the man who not long ago was talking about raising rates. He now sees less evidence the high unemployment rate is structural, and believes easy money can play a role in lowering it. PhD standard? "Kocherlakota (is) a University of Chicago PhD who spent his entire career in academia until taking the Fed post."

    Despite the government's best efforts at pushing them to boost lending, flush U.K. banks find it easier (and less risky) to profit by paying a premium to buy back their bonds. Why make a loan and be forced to reserve precious capital against it when you can be assured of a gain by cutting interest expense?

    Nothing to see here, move along. The near-instant 1% dive in the FTSE 100 this morning was no flash crash, but instead just the result of "quadruple witching," with a host of futures and options contracts expiring at once.

    Spain's Banco Popular gets downgraded to BB+ - junk status – by Fitch, which notes the bank needs to generate capital but current conditions make it unlikely. Madrid sits near session highs,+1.3%.

    More on Greece (previous): Greece's lenders aren't waiting for the Troika report and are already getting set for another haircut on the country's debt, reports the FT Deutschland. "In the end … all creditors will take part," says Commerzbank chairman Martin Blessing.

    The U.S. is headed for an industrial revival, a new Boston Consulting Group report says, driven by lower energy costs, higher labor expenses in competitors such as China and the potential to use idle U.S. port capacity for pushing up exports. "As a result, the U.S. has the potential to increase goods exports by up to $130B by 2020, [and] add 5M jobs to the U.S. economy."

    Shares of Tesla Motors (TSLA -0.8%) dip after CEO Elon Musk tells Bloomberg TV that a secondary offering is possible. He notes the demand is hot for the Model S, but doesn't confirm details on the crucial question of whether or not production is on target.

    Tesla Motors (TSLAplans to open 10 new retail locations across North America. The company will have 24 locations in North America and 34 worldwide after the latest round of expansion.

    Nissan (NSANY.OBbeats out Ford in New York City to land a contract to replace 13K taxi cabs in the city as they age and need to be replaced. The Taxi and Limousine Commission voted 5 to 2 to go with the Nissan NV200 model.

    Tampa real estate brokers are about to find themselves in high cotton as Blackstone (BX) continues its leap into the single-family rental business with plans to spend about $1B buying 15K homesthere over the next three years. "It's a land grab unlike anything I've ever seen," says a property manager. "You're going to drive through parts of town and all of it is going to be institutionally owned."

    The mortgage REIT sector is lit up green following Western Asset Mortgage's (WMC +7.3%) big dividend increase last night and the upping of its book value by 12% since June 30. That jump in book value could have investors wondering what other mREITs might be harboring such good news.

    More on KB Home (KBH): Home deliveries of 1,720, +7% Y/Y. Average selling price of $245.1K, +8% Y/Y. Gross profit margin +60 bps Y/Y to 17.5%. Net orders +3% Y/Y to 1,900 homes. Cancellation rate of 29%, unchanged Y/Y. Backlogs +18% Y/Y to 3,142 homes. Net income of $3.3M was assisted by an income tax benefit of $10.7M. Shares -2.4% premarket. (PR)

    Hopefully setting a trend, Genworth (GNW)  acting CEO Martin Klein says Moody's can go ahead and cut away because it'smore costly for the firm to try and defend its investment-grade status. A downgrade won't alter the firm's bond spreads, he says, and it's better for investors to understand "what this means … it's not the end of the world." 

    Southern Europe faces a "10-15 year managed depression," is the quote making headlines from a Ray Dalio interview on CNBC this morning. The best moment, however, came when Dalio – bullish on gold – is told by Andrew Sorkin that Warren Buffett won't touch the metal. "Tell somebody who cares," seems to be the look Dalio gives Sorkin in response.

    The surge in gold prices has led to a golden cross, the technical indicator that's often bullish for many markets. But gold is a different story, in the short term: In gold's 12 other golden crosses since 1976, gold prices have averaged a 1% decline over the next week and 2.5% over the next month. “From a technical perspective and based on historical analysis, it’s hard plowing into gold here,” Justin Walters says.

    Unrest is spreading in South Africa's gold sector as workers go on strike at AngloGold Ashanti's (AU +0.7%) Kopanang mine, which accounts for ~4% of AU's total gold output and employs ~5,000 people. AU says workers haven't submitted demands, but strikes over higher wages have shut four mines at Anglo American (AAUKY.PK) and one at Gold Fields (GFI)

    After a steep drop in oil production in the wake of the 2010BP spill, the Gulf of Mexico is poised for an energy boom as ExxonMobil (XOM) and Chevron (CVX) and others invest billions of dollars in a new wave of deepwater projects and learn to adjust to an increased regulatory environment. As for BP itself, its Gulf drilling is approaching pre-Macondo levels. 

    Quebec is "swimming against the tide" with its move to ban shale gas exploration and production "without weighing the implications," Claudia Cattaneo writes. Extraction is in its infancy and technology and industry practices are improving quickly, but there's no appeasing Quebecers more concerned that fracking used to unlock shale gas deposits could contaminate drinking water. 

    Tire makers Goodyear (GT -4.8%) and Cooper (CTB-8.5%) slide after Keybanc downgrades shares to Hold from Buy on uncertainty over the expiration of the Chinese tariff concerning the ultimate impact on pricing and volumes. Tire pricing is declining more than the firm had expected, which will narrow the positive price/mix vs. raw material spread for GT and CTB in Q4.

    Shares of Darden Restaurants (DRI +4.8%) trade higher after the company records a narrow earnings beat with its FQ2 results. Nothing was spectacular from the report, but reaffirmed guidance and a pickup in traffic late in the quarter buoyed the spirit of investors.

    Green Mountain Coffee Roasters (GMCR -5.6%) trades lower as yesterday's announcement by Starbucks that its Verismo coffee/espresso machine is available for online purchase and will be in major stores soon still resonates with investors. Though the fundamental case for GMCR is weakened by Starbucks edging further into its turf, SA author William Rudder says money can be made by trading the wild volatility.

    Lululemon (LULU) could see more competitive pressure with Adidas (ADDYY.PK) indicating that it wants to jump into the yoga pants game. More broadly defined as womens active wear, the category is the fastest growing in the apparel sector and has caught the eye of both Gap and Target.

    Research In Motion (RIMM -2.7%) slips after BlackBerry data services get hit with an outage affecting the EMEA region. Service was restored after a few hours, but the PR damage is done. RIM's network was hit with a major outage last October.

    The first iPhone 5 teardowns are out, courtesy of iFixit andChipworks. Parts found include Qualcomm (QCOM +0.7%) baseband, power management, and transceiver chips, Elpida (MU+1.6%) DRAM, two Avago (AVGO +2.2%) 4G power amplifier modules, Skyworks (SWKS +3% - previous) 2G and 3G amplifier modules, a TriQuint (TQNT +5.2%) 3G amplifier module, two STMicroelectronics (STM -1.3%) motion sensors, and a Broadcom (BRCM +2.2%) touchscreen controller and Wi-Fi/Bluetooth combo chip.

    A German court rules Samsung (SSNLF.PK) and Motorola Mobility's (GOOG) phones don't infringe an Apple (AAPL) patent that covers the disabling of multi-touch on certain parts of a display to prevent unwanted input. Macworld notes Android implements this feature in a somewhat different way than iOS. Last week, a German court claimed Motorola is infringing Apple's "overscroll bounce" patent. And the IP wars go on… 

  66. 2can

    Anyone have a feeling about where oil will peak today?    You nailed the R1 to the penny so far today STJ.

  67. Phil


    Giant 
    iPhone 5 lines have Gene Munster giddy with excitement: the Piper analyst estimates lines at Boston, New York, and Minneapolis Apple Stores were 83% larger than they were for the 4S (ed: is he sure it's not 84%?), and predicts Apple (AAPL +0.8%) will sell 8M iPhone 5 units through Sunday. Topeka's Brian Whitepredicts "only" 6M-6.5M launch weekend sales, though that's well above the 4M posted last year by the 4S. (FQ4 estimates) (pre-orders) (wait times)

  68. Savi

    Iflan—missed the aapl call—would you roll to next week 710 ?
    Thanks

  69. Phil

    Speaking of oil – Gasoline (/RB) hit $2.80 again but already $2.8045. 

    SNL/Rustle – I heard they were good this season.  Haven't seen them yet but that clip is funny, especially The McDonalds…

    Fundraising/Rain – Most Romney money goes to Super Pacs – free speech, you know…

    Oil/2Can – Bear premise is shot long time to roll and they can play the Iran card again this weekend.

  70. Phil

    Speaking of oil – Gasoline (/RB) hit $2.80 again but already $2.8045. 

    SNL/Rustle – I heard they were good this season.  Haven't seen them yet but that clip is funny, especially The McDonalds…

    Fundraising/Rain – Most Romney money goes to Super Pacs – free speech, you know…

    Oil/2Can – Bear premise is shot long time to roll and they can play the Iran card again this weekend.

  71. rexx

    AAPL Maps – You can use Google Maps and even create an icon for it.  But its not as good as the google maps app in IOS5. 

  72. stjeanluc

    I wonder what Steve Jobs would feel like looking at that Map screw up! Heads would be rolling I think… 

  73. Burrben

    Phil / LFlan – AAPL
    I want to make 10% on my money.  What if I bought the Jan13 550-600 Bull CS for 45.  I spend 45,000 for 10 contracts.  I would make 5000 if AAPL is over 600.  
     
    Dumb idea if I want a relativly low risk trade that makes 10%?

  74. rainman

    Interesting: Poll Shows Distrust In Media At Record High

  75. 2can

    Oil / Phil, That's the way I've been playing it today, but I'm behind the 8 ball with 8 longs at a breakeven of 93.32.  The buyers seem to have gone home early today.  It's just bouncing off 93.  Well some you win some you loose.  I was just sure they were going for 94 this am so I DDed  the dips all the way down from 93.60 to 92.70.  Only time will tell, but it seems like I should hang in for another hour or so anyway.  Sure does get expensive though.

  76. rainman

    Bespoke: S&P 500 Average Daily Change By Weekday: 2012
     
    While Tuesdays and Fridays have been the best day of the week for equities so far this year, Monday has been a day to avoid.

  77. Pharmboy

    ASTX – that's fine now, as they are cash rich.  I would buy the Jan 3/4 BCS, and fund it by selling the Oct 3 puts.  that is a nickle for the dollar spread.  Risky, of course, as one does not know how much is built in.

     

    ACAD still catching a bid.  Watching the Dec 5/7.5 BCS selling the Oct 2.5s to fund it.

  78. shadowfax

    The poor do have jobs
    http://finance.yahoo.com/news/poor-jobs-100300397.html
    Romney should fact check!

  79. lflantheman

    newt….I don't chase the MoMos.  I see a trade and put in the price I want to do it for.  If it doesn't go through, then I do something else.  So, no, don't chase the 705 weekly sale now.  It's already under $1.00 (38% gain)
    Savi…AAPL next week 710s.  That's a good roll.
    Burrben.  Quite frankly, boring as hell trade to me.  I want to make no less than 10% a month.  But if you insist on a safe safe trade at 10% in 4 months, then sure. 

  80. rainman

    Bespoke: 61 Days Without a 1%+ Decline
     
    While Tuesdays and Fridays have been the best day of the week for equities so far this year, Monday has been a day to avoid.

  81. rainman

    Oops: At 61 trading days, this is the Dow's longest streak without a 1%+ decline since it went 94 trading days from July 13th through November 24th of 2006.

  82. newt

    Flan- Thanks.. How about CMG?

  83. lflantheman

    CMG…newt…Don't play it right now.

  84. traderd

    LFlan/Phil – AAPL
    I want to make new aggressive trade on AAPL. What would you recommend if starting today?

  85. escohen5

    Burr/AAPL — Why not just sell 10 Jan 13 555 puts for $5?  The margin is a lot less than $45,000.

  86. Burrben

    LFlan / APPL boring trade
    I hear you, totally boring, but I have to do something with some capital I got when my mom passed away.  I'm looking for something safe that I don't have to worry about much.  If you have another idea to generate 10% in a month without that much added risk, I'd love the advice.  With QE3 now, and IPhone5, it almost seems like a sure thing.

  87. shadowfax

    rainman
    The odds for a moon shot keep going down. QE3 is a bust because all currencies are printing at once, no math will make this work, infinite QE was all the fed could do after Europe, Japan, and China. Going to take a long time to work this time.

  88. newt

    Flan/CMG: i am short weekly $340 puts. Roll out?

  89. lflantheman

    MoMo trade:   BTClose 10 of the 20 705s on AAPL for 1.10.   "

  90. Burrben

    Spread Scanner?
    Does anyone know if TOS or IB has a way to look at the price of a spread across various months?  For example I want to look at the AAPL 575-625 Bull CS across all the different months.  Anyway to do that?

  91. lflantheman

    That's about +30% on those 10 contracts, and AAPL is acting like it may not stay under 705…..volume is decent, trend is up.  So we take a bit of profit on these 10 contracts and reduce our short exposure for a possible move up. 

  92. Inkarri19

    Hi Pharm – Do you follow HEB at all?  TIA

  93. lflantheman

    Disclosure…I sold some  PCLN this weekly 650 calls this am for .50.  Looks like they will expire worthless.  Sorry I forgot to post this trade, so it's not a MoMo entry. 

  94. Phil

    AAPL/Burr – You can sell 10 2015 $400 puts for $26,000 ($26 each) and that should be about $40,000 of ordinary margin and then you make 65% on margin if AAPL holds $400.  You can use the $26,000 to buy a $480 call and then sell an Oct $720 for $1,100 which you can roll along for 20 months or, if things work out, you can hopefully make about $10,000 over that time frame in addition to whatever value the $480s end up with.  So, short answer is, I think there are better ways to make 10% in 4 months with AAPL – just the 2015 $480s with the short front-months could be good for $4K on $26K (15%) in the same time-frame.  The 2015 $400/550 bull call spread is $106 and pays $44 (41.5%) at $550 or – my favorite way to play – you can pick up 3 2015 $570/800 bull call spread for $100 ($300) and sell 2 Jan $730s for $30.50 ($61) and that's 20% on the first 4-month sale and you drop you longs' basis to $239 and that's your break-even at $650 with PLENTY of time to adjust.  

    That's the kind of trade we can allocate a nice chunk of patient money to!  

    Poll/Rain – But how can we trust that?  8)   The MSM has become a total joke (see SNL for example) and it's good people don't believe them – sad that 40% still do.  I wonder to what extent it's a reflection of what you read or listen to.  It says Democrats have a higher level of trust and I do, in the sources that I read, like the NYTimes so it all depends on how the question was framed.  

    Gasoline rejected at $2.81.  Dollar rejected at 79.40.  Gold spiked down to $1,770 and now back at $1,778.  Silver at $34.67 so very easy fills on our metal hedges today.  

    Oil/2Can – Gasoline is more reliable on a Friday but hopefully you get a pop into 2:30 but I'd take that $93 line very seriously (now $93.14) and, of course, don't forget that, when you get behind and DD – your only goal is to get back to your original size even asap.  

    Daily changes/Rain – Interesting:

    Poor jobs/Shadow – That's the point – he just hasn't got a clue and neither do most of the people reporting on it because the story shouldn't be that Romney said 47% of the people don't pay taxes but how outrageously misleading that 47% figure is.  The untrustable MSM, by failing to go after the 47% number, is letting it become a "political fact" and that gives the Conservatives the ability to say "well sure he shouldn't have said that about the 47% who don't pay taxes…"  This is Joe Goebbels 101 – Keep repeating such an outrageous and offensive lie that even if parts of it are dismantled, the parts that remain still taint the group you are attacking.  It's a hate crime – hate for people who don't make enough money to have it taken by the Government by the people who do.  

    AAPL/Traderd – I hope the above is aggressive enough.   Very tricky with earnings coming otherwise.  

  95. Burrben

    escohen5 -  When I put that trade into IB, they want $74K in margin with Port margin

  96. Inkarri19

    AT&T – Hello All.  AT&T has "throttled" my web speed on my iPhone to dial-up speeds because I used much data on my "unlimited" data plan.  Their solution is for me to swtich to a "limited" data plan and pay them $15 more per month.  Anyway, for those of you who might be heavy data users, the only useful solution they had was to download a free data compression app called Onavo. 

  97. lflantheman

    Burrben/Phil/AAPL trade….Or, alternatively, you can buy a truckload of new iPhone 5s, get some techies to remove the iMaps and put Google Maps back in, mark them up 10% and sell them on the street in 1/2 hour.    :)

  98. escohen5

    Burr — TOS shows the margin with PM at just under $20,000.  That might be affected by my other AAPL positions, but it sounds about right. But $45K is a lot of cash for that trade, in any event.

  99. lflantheman

    newt/CMG/ 12:48 pm.  That's a difficult call, because I think CMG more likely down than up from here, so you may be chasing it.  I just don't like being in that stock right now.  I don't know where it's going to go!    So If I had that position I'd likely get out and move on to something else. 

  100. 2can

    Oil / Phil   Thanks for the good advise on a stop at 93, and of course selling half at breakeven.  I've killed it the last two days on oil, so my mental stop is 92.90, (the low at 11;40).  what's strange about today is the volume.  ave. 250 a minute for the last hour +, with nothing above 500.  I don't remember seeing this kind of extended low volume in the middle of the day, so you?  Especially with the crap happening in the mid east.  Is there some kind if news "they're" waiting to hear?

  101. newt

    Flan- yea!  I got out right after I posted.

  102. lflantheman

    traderd…..new, aggressive play on AAPL.   Hmmmmmmm……Keep your money on hold and ask me again on Oct ll or 12. 

  103. 2can

    sorry, I meant 12:10 eastern for the 92.90 low

  104. rainman

    Phil / MSM — You can trust it about as much as you can trust any news I suppose. I turned off the MSM around 2000 when it appeared that most of the news paralleled Entertainment Tonight and I started hearing highly biased stories on NPR as well. It wasn't worth a 1/2 hour of time to watch the local news for what amounted to about 3 minutes of "real" news even if I could see through the bias.
     
     
    Since then, I've mainly used the internet to get my news where I can at least hear multiple views on news stories although a lot of it is propagated through cut and paste. Even so, the internet is biased as well and you have to be diligent when finding content.
     
     
    For example, I had heard on a TED talk about the massive die off of hemlocks going on in the Smokey mountains and the speaker commented that it was amazing that the media hadn't picked up on this story. So of course I googled it ("death of hemlocks in Smokey mountains") under the "news" tab in google and found one, yes, one hit and that was from a .gov site. However if change that to a web query, you end up with 116K hits. So, there is something biased there too. Maybe that tab should read "MSM".
     
     
    More and more, I find myself relying on news sources outside the U.S. for U.S. news. Quite depressing/disturbing really.

  105. Burrben

    Phil / Ouch, my head hurts from trying the figure that AAPL trade out.
    -I like the first part, since selling the 10 2016 $400 puts for $26,000 only costs me $26,000 in margin (not $40K) so that would be a 100% return.
    - The 2015 400/550 that pays 41.5%, has to wait about 28months though to pay it.  With my trade, I only have to wait 4mo.  So my percentage per month is around 2%, but the 2015 5 400/550 is less than that.
    - I like this, but it's betting that AAPL doesn't hit 730 by Jan, and I'm not too sure of that.
    my favorite way to play – you can pick up 3 2015 $570/800 bull call spread for $100 ($300) and sell 2 Jan $730s for $30.50 ($61) and that's 20% on the first 4-month sale and you drop you longs' basis to $239 and that's your break-even at $650 with PLENTY of time to adjust. 
     
    My apologies for being slow, I have to get back into the trader mindset.

  106. traderd

    lflan – OK, Thought you would have recommended the Oct 700 calls if not a new trade. 

  107. augrusot

    Phil, what do you think about selling puts on CLF? Anything there that you like?

  108. shadowfax

    http://finance.yahoo.com/blogs/daily-ticker/bernanke-weak-dollar-agenda-won-t-boost-growth-145917019.html
    Worth a listen, Better pile of crap theory!

  109. Jbur

    APPL/Phil: Great AAPL trade ideas. I found it interesting that the 2015 570/800 Bull Call costs about 10% LESS than the same Bull Call in 2014. What's up with dat?
     
    I'm working the Jan15 400 put at $26.00. The mark is 25.775 and there is only 28 contracts open.

  110. shadowfax

    Crazy volume but BOT selling can't be hidden today. No buyers for a week. Buy Apple until consumers spend that last buck.
    How many working poor buying the phone? Only $100 per month to use it.

  111. morxlntway

    Phil, are you still content with the bullish hedge (sept 11) on HPQ? Jan 16/18, sell 16s. better entry today for some reason.
    Thank you

  112. Inkarri19

    Shadow – $120/month and in my case, soon to be $135 to switch to the limited data plan from my current unlimited data plan.

  113. mrmocha

    Laddoo / SLW - No, I don't count overnight action, just during trading hours.  And new QE has appeared to have smoothed out some of the sharpness of the bounces in this one.  However, you can still find opportunities.  Note the swings up, down, and back up on the 17th; they didn't match the $1 rule but if you were willing to modify the rule to .60 swings you could have made some coin on the zig-zag.

  114. stocksandbondage

    RIMM reports 9/27.  Anybody playing it and if so how?  Citi just reiterated their sell and $5 target price.  They have been correctly bearish since last summer.  TIA

  115. Jbur

    APPL/Phil: The 2015 put has a probability analysis of finishing OTM of about 90%, and with a put to price of $374.00, I'll take that over an Iron Condor trade any day.!

  116. Jbur

    All: Where the heck is our old friend Yodi? Haven't heard from him in a while.

  117. terrapin22

    Phil / FDO – any thoughts on this one?  looks like it is building a nice base here.  

  118. newt

    I just found a moving linear regression" indicator for AAPL-- WOW! Set to one minute……. .. . . .

  119. Savi

    Romney decided not to claim all of his charitable deductions so as to keep his tax rate higher—he is so unbelievable

  120. nicha

    newt/regression – how do i do that?

  121. rainman

    Jbur / yodi — In Europe on a bad Internet connection I believe.  I think he's headed home to the head hunters soon.

  122. jabobeast

    FU VXX!!!

  123. livingfull

    Keep your eye on the ILA negotiations on the US East coast.  We don't expect a strike…for 50 years rehtoric ramps up on both sides- the closer they get to inking an agreement.  Ironically ramped up rehtoric is a good sign. 
    However laywers negotiating for the shipping companies have recently threatened to divert ships from US East coast ports to West coast ports. Kind of a standard ploy. But ILA on the east coast and ILWU on the west coast are infuriated by that.  Even if it is ramped up rehtoric, not a good idea to hit a hornets nest with a big stick.  Yer too close!  A coast wise strike although unlikely could be very negative…if it isn't short term.  Worth monitoring just in case. 
    After hours reading….well written article on labor implications world wide…albiet prejudiced as Strike Insurers wrote the article.  http://www.worldcargonews.com/htm/w20120919.589026.htm

  124. newt

    NIcha- First – sit down- its RAD. Its is also called  time series forecast.  The Charting area in your trading platform should have it.  But that said- I found a service for charting called Worden's.  Might get a subscription- Unless someone has a better one???

  125. shadowfax

    inkari
    I was using a round figure with taxes added I found it to be close to $150 here but I see adds on TV for $75 unlimited data forget who, not available here.

  126. Pharmboy

    GLD – Sept 173.5 q calls STO for the calendar…..$1.  I bought back the 173s for 5c as I don't have the margin to float it in the IRA.

  127. Jbur

    Rain: LOL. Thanks. And headhunters are why I can't bring myself use my Mx timeshares.

  128. Pharmboy

    RIG….going bananas…go go bananas.

  129. Pharmboy

    QCOR – buying back the puts sold yesterday……65% gain.

  130. Phil

    T/Ink – That's really obnoxious.  I have T on my IPhone but don't use it much (I'm here all day) but my IPad has VZ and I am shocked only when I don't have a great LTE signal with good speed.  Likely I'll be moving to VZ when I get the new IPhone (once the lines die down).  

    IPhone/Lflan – Good plan!

    CMG/Newt – I still don't like them.  We were shorting them at $400+ and last earnings the proved they weren't even worth $300.  Now back at $350 is only a sign that people have forgotten their last earnings report – not that they have changed anything to increase their value.  Even at $350, the p/e is 41 – where is the growth in a fast food restaurant that's going to justify 41?   Slowing growth was the big issue in July and that was only the beginning of Taco Bell's attempt to move upscale to challenge CMG.  Also, food costs are up and margin pressure = death in this business and what the Hell ever happened to the Shop House?  That was supposed to be their next big thing but now it's just weird that nothing is going on there.  It seems like they still only have the "test" restaurant in DC – after a whole year???

    Oil/2Can – You have to think of the big picture.  These guys just had their asses handed to them at the NYMEX and, now that they finally dumped out of Oct contracts (not even 20,000 end up being delivered out of 400,000 peak) they are "resting" and just taking pokes to keep Nov (where they just rolled) over $93 while they figure out if they'll be forced to take another loss or if they can find some excuse next week to jack it back to $100 and recoup some of this week's losses.  Notice the 30 days prior to this week, WTIC was never below $94 and mostly around $97.50 so, at $92.50, a lot of people lost a lot of money – figure 100,000 contracts is 100M barrels of oil with $5 losses so $500M – nobody likes to lose that much in a month….

    News/Rain – On my IPad, I read the NYTimes, Bloomberg, the Telegraph, the Economist, Financial Times, the Guardian, WaPo, People's Daily, PressEurope (a nice app for EU news) and the Times of India so, yes, mostly foreign but it's the NYTimes I read cover to cover every day.  

    AAPL/Burr – Yes, less per month but better protected is trade-off.  As to my favorite one – we're only 2/3 sold with 2 years to roll so don't think of it as a static bet.  It's the first of many sales and, ideally, you'll collect the full $230 on the bull spread plus make $6,000 much more often than you lose it (or have to roll it) on the short side.  Keep in mind you are only paying net $80 for the $230 bull spread so you have 3x $150 upside ($450) covering the 2 short calls which are already $30 out of the money so, unless AAPL flies up to $980 and never pulls back – you are in good shape on this trade.  

    CLF/Aug – I like them long-term but they may crash on China melt-down or just the global melt-down the Central Banks don't seem to be preventing at the moment.  I find it very concerning that the Financials aren't moving yet.  CLF bottomed out at about $20 in 2009 and you can sell the 2015 $25 puts for $6.50 – that's a play I can certainly get behind.  In fact, we should sell 10 of those for the Income Portfolio and we'll just sell more if they crash.  

    The release of 2015 puts has opened up a lot of nice trades again.  I'll try to do a review over the weekend.  

    2015/Jbur – They are new contracts and haven't had much price discovery yet.  That's why I like looking for opportunities like that.  Also, think trades so far so it does take a while to fill.

    IPhone/Shadow – Only $100 a month?  Joking, I assume…

    HPQ/Morx – I just can't give up on those guys.  Every time I'm thinking about it and go over their numbers – I end up wanting to buy more.  

    AAPL hits my $702.50 target.  We'll see if they hold it…

    RIMM/Stocksand – Dead company walking at this point.  Just a stay away these days.  

    90%/JBur – I think I'd take that bet against the other 10%!  

    Yodi/JBur – Traveling the World (Hi Yodi!) – I imagine he's reading but has better things to do as he's out and about. 

    LOL – NOW Romney's people put out some of his tax data.  Anything to shift focus away from his elitist pomposity.  

    FDO/Terra – If the economy is improving, that's not so good for them.  They sure aren't cheap at $64 so not one I'd be interested in without a massive pullback.  

    Shipping strike/Living – Isn't this a normal pre-Christmas event?

  131. newt

    Phil: Thank you.

  132. mrmocha

    VRTX / Pharm - thanks for that one, monster lately…

  133. rpme

    Phil, ShopHouse has revamped the menu, people said it was too spicy, new unit opening in Georgetown.

  134. Jbur

    APPL: Just got my first fill on the 2015 400P at 26.00

  135. livingfull

    No this is the long term coast wise contract.  Should have had a deal inked a few months ago.  5-7 year contract depending on the final concessions form the shipping companies…

  136. Savi

    thx Phil /RB worked again

  137. villashaka

    I know its not APPL, but I use Republic Wireless for my smart phone ( Android/Motorola ) and love it- has a backbone of Sprint for when wifi not available and I pay $20/month unlimited- Use Apple at home but otherwise I am a piker !

  138. Phil

    Tranports down 1% again and below 5,000 again (4,918), SOX failed 400.  No wonder I'm having trouble getting bullish.  

    AAPL with a quick spike to $700, back to $702 now. 

    RIG/Pharm – That's interesting. 

    You're welcome Newt. 

    Thanks Rpme.   

    Nice Jbur.  

    Strike/Living – Let us know how that develops.  Could be big deal if things fall apart. 

    /RB/Savi – Excellent!  Gotta love that pop into the close.  

  139. villashaka

    Phil- I think you will hit the nose on APPL today at 702.5! I just closed my 705 weekly covers, so thanks !

  140. 2can

    Oil / Phil  Half a billion in losses is an awesome figure for a month.  Serves the bastards right.   but it's all relative.  I lost a bundle today.  But next week, I'll make it back.  It's only money.  : )

  141. denlundy

    Transports/Phil:  I thought you kicked that addiction!
    shhhh!  AMZN    shhh AMZN    I guess somebody doesn't like WMT disowning them?

  142. harip

    Phil,
    What do you think of buying jan puts on ibn?

  143. Pharmboy

    AUXL – Dec $25 Cs.

  144. Pharmboy

    BMRN! 

  145. stjeanluc

    Not a good sign for Europe…

    http://www.bloomberg.com/news/2012-09-20/porsche-daimler-indicate-europe-s-car-crisis-spreading.html

    Looks like QE forever now… no way out of it!

  146. stjeanluc

    Gas prices inflation adjusted:

  147. yodi

    Phil, Rainman Hi nice you still remember an old member! Yes still in Europe but today I am in Karlsruhe where I receive good reception as well I need to be present at witching day. Have follow more or less your ups and downs. Still looking over my shoulder when this ride will end. Do have a very unsecure feeling about the bull market.Yes will be back with the head hunters after the 15th Oct, until than I will still enjoy the good life here.
    Saludos to all
    Yodi

  148. deano

    closed AAPL 700 Sep/Oct calendar – 17% in two days – was looking for 25%, but I'll take it

  149. Phil

    You're welcome Villa.  Just have to figure they are going to try to screw the max number of option-holders.  

    Only money/2Can – Yep, all relative but you can see why they might want to take a day off before getting back into it.  

    Transports/Den – I know but I haven't had my ETrade charts since last week and coming home and running through those – it's really hard to ignore my 10-day hourly chart of the Transports – Yikes!!!

    IBN/Harip – Wow, haven't looked at them since the last crash.  I don't think I'd short them with all this QE floating around.  Any particular reason you're bearish on them?  

    EU car sales/StJ – Yes, those are some horrific numbers.  

    Uneasy/Yodi – What's your feeling re. the local economies out there?  

    Good move Deano.  

    Maybe wrong on AAPL – jamming back to $700 into the close.  

  150. Pharmboy

    QCOR – STO $25 Oct Ps.  1.85 or better.

  151. 1020

    Space Shuttle coverage on KTLA.COM….. will be landing at LAX shortly….

  152. scottmi

    so ready for today to just close..!

  153. stocksandbondage

    AAPL $700 :)
    have a great weekend everyone.  

  154. jromeha

    FTR is looking decent today :)

  155. rainman

    Phil / Vegas — See anything new worth mentioning Vegas? Heading there for several days tomorrow.

  156. villashaka

    Lflan wins on the 700 call for APPL!

  157. Phil

    11:00 AM On the hour: Dow +0.16%. 10-yr +0.08%. Euro +0.14%vs. dollar. Crude +0.64% to $93.01. Gold +0.33% to $1773.55.

    11:41 AM European shares close with moderate to sharp gains as aSpanish bailout deal (triggering ECB bond buys) could be announced within days. Greece is as big of a mess as ever, but has lost its ability to move markets. Stoxx 50 +0.9%, Germany +0.9%, France +0.6%, Italy +0.8%, Spain +2.5%, U.K flat. The euro +0.2% to $1.2991.

    12:00 PM On the hour: Dow +0.31%. 10-yr +0.05%. Euro +0.19%vs. dollar. Crude +0.78% to $93.14. Gold +0.47% to $1776.05.

    1:00 PM On the hour: Dow +0.2%. 10-yr +0.11%. Euro +0.29% vs. dollar. Crude +0.75% to $93.11. Gold +0.51% to $1776.85.

    2:00 PM On the hour: Dow +0.23%. 10-yr +0.19%. Euro +0.25% vs. dollar. Crude +0.53% to $92.91. Gold +0.51% to $1776.85.

    3:00 PM On the hour: Dow +0.1%. 10-yr +0.17%. Euro +0.17% vs. dollar. Crude +0.71% to $93.08. Gold +0.32% to $1773.45.

    An exchange between Dallas Fed President Fisher and an audience member (an investment professional) following a NYC speech makes crystal clear just how embedded the idea of the Fed put has become in Wall Street thinking, and how frustrated the Fed (at least Fisher) is with the political scene in D.C. 

    Manipulation Possible in Benchmarks Around the World (Businessweek)

    Stung by Losses, Main Street Investors Fail to Notice Market’s Rebound (Businessweek)

    Shiller: The Narrative Structure of Global Weakening (Project Syndicate)

    Look for a deluge of special dividends over the next quarter, says Goldman Sachs, as corporations rush to return cash to shareholders before taxes go higher in 2013. Choice Hotels CEO Steve Joyce sums it up: "Tax rates on dividends are never going to be better … I don't know how much worse they are going to get, but they are going to get worse."

    An outstanding set of charts (IIIIII) from Deutsche (h/tMicroFundy) tracks the S&P, CRB, and the dollar index before and after the Fed's (now 3) QE programs. If it's true – as the charts suggest – that the effect of the drug wears off with each successive application, stocks, commodities, and currencies may not have much more in gains ahead of them. 

    With Pimco's Total Return ETF (BONDtorching its benchmark (AGG) since its April launch, Bill Gross cautions his investors this can't be continued. "The target is 100-200 basis points over the index," he says. He's giving the Fed a 70-75% chance its reflation moves will succeed and has titled the fund toward TIPS, shorter-duration paper, and developing countries.

    HulbertStocks’ future return: Just 5.6% annualized (Market Watch)

    Funds Leap Beyond Their Benchmarks (WSJ)

    As the U.S. hammers on China’s front door to open up its economy, U.S. officials are negotiating a potential back alley to the same end: a trade agreement with 10 other Asian nations they hope will challenge China. The pact would unite large portions of Asia and the Americas in a trading bloc of lowered tariffs and common rules, a tidal pull the Chinese could find hard to resist.

    "I couldn't even read the whole application," says John Paulson of a 500-page SEC filing hedge funds are to complete as part of Dodd-Frank reforms. "It's a complete waste of time … they don't know what they wanted, they just asked for everything in every possible way." Yes, but Paulson (and everyone else) surely hired a team of lawyers to take care of it. Mission Accomplished.

    Trading revenue at U.S. commercial banks fell 73% Y/Y(from $7.4B to $2B), says the OCC, which lays the bulk of the blame on the fallout from JPMorgan's "London Whale" loss. A separate measure of credit risk tracked by the OCC, the so-called "net current credit exposure," rose 9% to $410B

    Eisinger: Distortion in Tax Code Makes Debt More Attractive to Banks (DealBook)

    Big Bank Execs Just Don’t Get It: FDIC’s Hoenig (American Banker)

    Sheila Bair and the bailout bank titans (Fotune)

    Canceled contracts dog real-estate recovery (Forbes)

    JPMorgan’s mortgage-backed migraine (Reuters)

    National Retail Federation spokesperson Kathy Grannis connects the dots to see a big Halloween for major retailers. Though pop-up Halloween stores are increasingly popular, they can't keep up the surge in spending on costumes that's been seen in the last few years. Add in to the mix the upcoming presidential election with the tantalizing temptation to dress up as a political figure and it all adds up to a potentially nice October boost for Target (TGT -0.1%), Wal-Mart (WMT -0.3%), and Costco (COST +0.4%) amongst others.

    Wal-Mart (WMT -0.1%announces that it will add hours for existing associates and bring in 50K seasonal workers to meet the holiday season crunch. Though the company says the figure is higher than last year, it declined to provide specifics. The bigger issue: Seasonal hiring may understate the expectations for sales after more retailers hired on workers full-time last year than in previous years.

    KB Home (KBH +16.8%) reverses an early pre-open dip to ramp markedly higher on a solid bottom-line FQ3 report this morning. Net earnings swung to a surprise profit as the home-building company delivered more homes at higher prices. The company also reafirms that it expects to achieve profitability by Q412 and for FY13.

    Federal regulators open a formal probe into JPMorgan's electricity trading operations, and may reportedly suspend the bank's right to sell power  in California. A preliminary finding says JPM may have submitted misleading or omitted material information in an earlier informal investigation.

    Union Drilling (UDRL +10.3%) shares have powered higherall day to six-month highs without any apparent news. UDRL provides contract land drilling services and equipment primarily to independent oil and natural gas producers in the U.S.

    AK Steel (AKS -0.8%) is placed on review for a possible downgrade by Moody's, which cites weak operating performance and ongoing losses. The ratings service expects AKS's weak results to continue, noting headwinds facing the steel industry, pressure on steel prices and slowing economic factors. Moody's currently rates AKS at B1, four levels into junk territory.

    Peabody Energy (BTU -1.6%) is downgraded to Hold from Buy at Brean Murray, which cites a lack of clear catalysts moving forward. While increasing efficiency and lowering costs in Australia have the greatest potential to enlarge BTU's returns, the firm expects these potential advancements will be offset by seaborne met coal price weakness.

    Expedia (EXPE +4.6%) pops after Deutsche upgradesshares to Buy, citing an improving bookings conversion rate. Also, Cantor started coverage yesterday afternoon with a Buy, as part of a broader sector launch. The firm argues Expedia is reasonably priced at 9x estimated 2012 EBITDA, and thinks the online travel services firm "is still in the early stages of a business turnaround."

    Green Mountain Coffee Roasters (GMCR -4.6%appoints a couple of executives into key new positions. Michael Jacobs will be the Chief Logistics Officer, while former Kraft Foods exec Michael Cunningham takes on the CIO position. While bulls and bears try to hash out if the announcement is forward-thinking strategy or a news dodge, trading volume on GMCR stays at elevated levels.

    Old favorite from way back:  New Oriental Education (EDU +6.6%) spikes on bullish intraday comments from Wells Fargo, which says EDU "provides a high-value, culturally-prized product" as it raises its target price on the shares to $31 from $24 and reiterates its Overweight rating. The firm also expects the SEC-related overhang due to an accounting issue to be resolved favorably.

    While making a bullish call on EMC, Peter Misek offers a fairly cautious take on IBM. While impressed with Big Blue's cloud strategy and software/services arsenal, Misek argues its services business "has lackluster prospects" due to macro trends and cloud adoption. He also thinks IBM's weak storage hand could force it to "pay up significantly" for a large storage firm such as NetApp (NTAP). Misek thinks NetApp will lose NAS storage share to EMC's Isilon, but might draw M&A interest from IBM, Cisco, or Oracle.

    EMC (EMC +1.8%) outperforms a bit after Jefferies' Peter Misek starts coverage with a Buy and praises the storage giant's product line. EMC is benefiting from quality flash storage solutions and a recent high-end refresh, Misek argues, and it's Isilon unit should continue gaining share in the growing NAS segment thanks to new hardware that will result in broader enterprise interest.

  158. Phil


    Seagate (
    STX +3%) rallies after using its analyst day (webcast) to guide for FQ1 (Sep. quarter) revenue of $3.7B-$3.8B, below prior guidance of $4B. That's better than was feared given soft PC sales and Western Digital's (WDC +3.2%recent warning. Also, Seagate is leaving its gross margin guidance unchanged at 30%, and says pricing is stable. However, it expects the FQ2 hard drive market to amount to just 150M-155M units, well below initial expectations (per Stifel) of 185M. (analyst day slides - 90MB PDF)

    Though Seagate (STX +2.6%) and Western Digital (WDC+2.8%) are up following the former's analyst day guidance, hard drive controller chip suppliers LSI (LSI -1.1%) and Marvell (MRVL -1.8%) have ticked lower. That's a sign the Street is less pleased with Seagate's unit shipment guidance than it is with its pricing and margin commentary. The shipment guidance arguably has negative implications for PC sales.

    Microsoft (MSFT) is accusing 4 state-owned Chinese firms of using pirated copies of its software, and has asked the government to put an end to it. 84% of China Railway Construction's copies of Office are unlicensed, Microsoft alleges, as are 97% of its Windows Server copies. Rampant piracy has made it hard for Microsoft to profit from China, now the world's biggest PC market. The Business Software Alliance claims China's illegal software market is 3x the size of its legal software market.

    Google (GOOG) is shutting down a free Chinese online music service due to a lack of interest. The service, launched in '09 and relying on licensed downloads from local music provider Top100.cn, failed to gain traction against a rival service from Baidu (BIDU). Like Google Maps' Chinese share losses, Google's music woes have much to do with the company's decision to abandon Google.cn rather than censor search results.

    France Telecom (FTE +0.6%) CEO Stephane Richardreaffirmed his company's €8B ($10.39B) 2012 operating cash flow target at a Paris conference, and said FT's Q3 performance had been "fine" in spite of a poor macro backdrop and tough mobile competition. Richard declined to provide new details about FT's dividend plans: the carrier has already said its 2012 dividend will be lower than 2011's €1.40/share. 

    Citi's Jim Suva is pouring salt on Research In Motion's (RIMM -6.3%) wounds, providing a list of reasons to be bearish on the one-time smartphone leader right after it was hit by a BlackBerrynetwork outage. Among Suva's reasons: no new products for the holiday season, a deteriorating cash position, and RIM's unwillingnessto either sell or break itself up

    After getting bludgeoned yesterday due to disappointingguidance, analyst day comments, and rumors of iPhone 5 content loss, Skyworks (SWKS +5.5%) is bouncing after teardowns reveal the chipmaker is supplying 2 of the 5 power amplifier modules found in Apple's latest phone, along with a Wi-Fi front-end chip. That's not a best-case result, but better than many feared. Barclays estimates Skyworks will generate ~$3 per iPhone 5 unit, Avago (AVGO +5.6%) $2.40-$2.70/unit, and TriQuint (TQNT -0.6%) ~$1.40/unit. 

    The iPhone 5 is already sold out at many East Coast Sprint (S +4.1%) stores, a company rep tells AllThingsD. That could be helping Sprint, which has committed to buying $15.5B worth of iPhones through 2015, rally. 4G partner Clearwire (CLWR +4.2%) is also up, even though the iPhone 5 won't use Clearwire's network for now. The phone's LTE modem and 4" display could make Sprint's unlimited data plans more appealing. But Sprint's LTE coverage is a work-in-progress. (early sales)

    Google is working on a new iOS 6 Maps app (Gigaom)

    Ending Its Summer Melt, Arctic Sea Ice Sets a New Low That Leads to Warnings (NYT)

    Newsweek: Is Asking Inane Questions the Future of Journalism? (American Prospect)

    Project S.H.A.M.E.: Megan McArdle, a Covert Republican Party Activist Trained by the Billionaire Koch Brothers (Naked Capitalism)

    A Conservative History of the United States (New Yorker)

  159. lflantheman

    My first intuition a few days ago was correct.  AAPL is pinning 700!.   I'll see you Monday and we'll see if we can milk some MoMos.    Have a great weekend! 

  160. davidkordack

    Pharm/ did you post a recent trade on BMRN?

  161. Phil

    What a funny way to flat-line to end the week.  AMZN is a bright spot.  

    Shuttle/1020 – Damn, missed it by a day.  Would have gone early for that….

    Vegas/Rain – Actually I was working, didn't have time for exploring outside of City Center.  I like Masa in Aria though and their Poker Room was very nice.  Didn't even see a show…

    FTR/Jrom – Wow, hitting $5.

    AAPL $700 – Congrats to the players but what a ride to get there.  

    Have a great weekend everyone – I've got a lot of reading to catch up on.  

  162. Phil

    Barry's succinct summation of week’s events:

    Positives:

    1) Sept NAHB builder sentiment rises to 40 from 37, the best since June ’06.
    2) Existing home sales in Aug totals 4.82mm annualized, well above est of 4.56mm and the most since Nov ’09 with months supply falling to 6.1 from 6.4.
    3) Single family housing starts at most since Apr ’10 tax credit boost.
    4) Philly mfr’g remains negative but less so at -1.9 from -7.1 and est of -4.5. 6 mo outlook rises to 41.2 from 12.5 but with caveat that production in Q4 will see “continued deceleration.”
    5) Spain sells 4.8b euros of 3′s and 10′s, above 4.5b euro target with 82% being cheaper 3′s.
    6) German ZEW 6 month economic outlook still negative but improves to -18.5 from -25.5 helped out by ECB talk.
    7) For asset prices only, BoJ joins printing party.

    Negatives:

    1) Initial Jobless Claims total 382k, 7k more than expected and 4 week avg at most since late June.
    2) NY mfr’g in Sept falls to -10.4 from -5.9, the weakest since Nov ’10.
    3) Multi family starts fall by 11k and permits drop by 9k.
    4) Notwithstanding Fed’s MBS QE, avg 30 yr mortgage rate falls just 1 bp on the week to 3.51%, refi apps rise only .8% and purchase apps drop 3.8%.
    5) Euro zone mfr’g and services index falls to lowest since June ’09.
    6) German ZEW current conditions drops to weakest since June ’10.
    7) HSBC China mfr’g PMI remains below 50 for 11th straight month at 47.8 vs 47.6 in Aug, Shanghai index at lowest since Mar ’09.
    8) China FDI falls for 9th month in past 10, although not as much as expected in Aug.
    9) BoJ should know better than most that printing way to prosperity doesn’t work.

  163. rainman

    Strong volume @ 319M.  Usually strong on expiration but that seems stronger than  normal.

  164. i zega

    Lflan, great call on AAPL $700!
    Have a great weekend all!

  165. 1020

    I guess these folks figured out that gay people and fellow human beings, enjoy the occasional chicken sandwich as well….
    http://bottomline.nbcnews.com/_news/2012/09/21/14009108-chick-fil-a-waffles-on-gay-marriage-rights-fries-brand-image?lite

  166. rainman

    Phil / Vegas — Thanks, may check that out.

  167. 1020

    Have a good weekend everyone!

  168. denlundy

    Wal-Mart Takes a Swipe at Amazon

    Wal-Mart (WMT) announced yesterday that it will stop selling Amazon’s (AMZN) Kindle tablet computers. It’s possible that Amazon’s price point for the Kindle doesn’t allow enough margin for Wal-Mart. Our analysts believe more is going on though. Amazon’s strategy for the device is to get it into consumer’s hands so they can use it to make purchases from Amazon. Is it possible that Wal-Mart has noticed that people who buy Kindles spend less money at Wal-Mart? Click Here to read our full analysis.

     

  169. deano

    Pharm – do you have a write up on QCOR somewhere? Thanks!

  170. diamond

    Phil – How did you know? "Getting a new phone on the first day it's shipped is really, Really, REALLY important to" me! :-)
     
    FedEx delivered my 64GB Black & Slate iPhone 5 just prior to the close of the market. It is gorgeous, thin and very light! WOW!!! :-)
     
    Phil, you NEED one of these!

  171. Rms5114

    What's up with WFT, anyone seen any news?

  172. Pharmboy

    QCOR/Deano – no.  We played them a few years ago and last year, but when they were at $45, I thought it was a bit overdone.  They have one product, and if anything goes wrong…you see what happens.

     

    BMRN trade was yesterday.  Nov 42/45 BCS, selling the 32 Ps  Net was 10c debit.

  173. yodi

    Phil Re. Uneasy,
    Where I have visited it was very difficult to find any depression. Shops are full people are buying. Restaurants are full even that I find the prices a bit steep. Germany is up and going, even that southern countries seem to be suffering from unemployment.
    Looking at the market and my own portfolios I never had  just a high liquidity in my accounts. With the exceptions of a few, stocks are up and call options are exceeding expectations. Many times I feel just to close all positions and change for cash. Many of my positions are up to 2013 and 14 and I feel why pay premium by closing a call and selling the stock, which is still well on the way to bring fruit. I know you are a believer in selling verticals rather than selling the calls on stock. But to me a stock has no time limit as the long call is always limited to time. I have not come across local traders trading in Europe as we are trading in the US. 
    The knowledge of option trading specially the selling of options is much more unknown here. People mostly buy stock. 
    People have more confidence in Property in Germany. Even that I have become very negative to property living in Mexico.
    Deduction on salaries are about 35% where there is 19% going for your retirement if the next generation ever gets it. The older group of people is growing very much faster than the following generations, corsing problems in minimum retirement payments which they want to raise here from 775 to 850 Euro. Doctors want to have a salary increase of 11%. 
    Car production will be reduced to reduced demands. Fiat intends closing plants in northern Italy due to falling sales.
    We see lots of news about the Mohamed film. Daily riots in the so called liberated countries. My opinion give them shovels not money or food.
    As a German with German number plates on car and RV I would be not to comfortable visiting countries like Spain, Greece Portugal and even Italy..
    Obviously it is a personal feeling. 
    In general it will be a very difficult question to know where the markets will be heading to.
    Sorry I do not have a better picture to paint.
    Saludos
    Yodi

  174. pstas

    Yodi- curious about what the average person in Germany & elsewhere in Europe thinks of the free speech/Muslim/unrest issue?

  175. pstas

    PCYC- Pharm- any opinion on this one? Considering a short position base on chart- volume up on the recent pullback.

  176. diamond

    Charts from Springheel Jack:
     
    S&P 500
     
    Dow Jones Transportation

  177. yodi

    Pstas Free speech.
    As much as the Governments in Europe try to show a more leaniend autlook on muslims, the man in the street can not warm up to the for us strange type of religion. Especially the radical outlook of muslims. Looking back at the catholic religion they had as well their problems during the past say at the 15th century, but today no one gets upset if some one makes fun of Jesus. The free speach is generally very much supported but no one likes to have his house burned down, by supporting free speech so as you can see some countries including Germany restrains publication of material which on the otherside can course riots and unrest, as we have enough of it in the world. The uneveness of treatment of women in the muslim religion (head covers, black ropes, very striced living conditions) are not well looked upon and further more less understood.
    The men can do as they like but the women has to hide under the table, possible no one else will see their beauty so they do not get stolen.
    So muslims are tolorated but in no way loved. It is like you missing an arm or a leg you have to live with it.
    Even that the German Government tries to make a good face called multiculty, the right groups are very much against them.

  178. terrapin22

    election could be closer then people think….In 1980 (the last time an incumbent Democrat was beaten), for example, the Gallup Poll of October 27th had Carter ahead by 45-39. Their survey on November 2nd showed Reagan catching up and leading by three points. In the actual voting, the Republican won by nine. The undecided vote broke sharply — and unanimously — for the challenger.

  179. 1020

    A real-life story on a government "handout" that I'm more than happy to pay for…..
    http://www.nytimes.com/2012/09/23/opinion/sunday/taking-responsibility-on-welfare.html?pagewanted=1

  180. 1020

    Yodi/Germany   Yeah, sounds a little like the U.S. in 2007……
     
     
    My family in the Friuli region of Italy (north) have been feeling the pinch of a slowing economy, falling real estate prices and services trimmed……and state and local pensions are on the table…..tick tock…….

  181. Pharmboy

    PCYC/pstas – this one behaves like MDVN or even VVUS.  I think they come back to earth, but I don't know when.  Unlike SGEN, CRIS, etc, they are still in Phase 2 trials.  Their lead drug is very interesting, and may well work, but the rich valuations is a bit over done, I agree.  If you short, I would do very small lots.

  182. jfawcett

    StJean / Phil – Concerning the BBBY calendar from Wednesday, adding to my education if you get a chance to answer some questions.  1st Post:
     
    BBBY / Phil – Actually this huge IV  on the Sept options could be an opportunity for a calendar play! The Sept options are almost as expensive as the Oct ones with 30 days to go.
     
    Next Post
     
    BBBY/StJ – Great idea!   We can sell 10 Sept $70 calls for $1.95 ($1,950) and buy 8 Oct $72.50 calls for $1.60 ($1,280) for a net $670 credit in both $25KPs and see how that goes
     
    Earlier postings indicated IV high due to the miss on last earnings.  Since you suggested a calendar with selling the 70 sept call, you were expecting BBBY being flat since the underlying was trading 68.80 at the time of the 1st post, correct?  If flat, then pocket $1950 and the Oct 72.50's are in play for an ('expected') upside move to and past 72.50, correct?
     
    Regardless of the eventual outcome, the above questions and why leave 2 Sept 70's naked by buying only 8 Oct calls?

  183. jfawcett

    Also interesting to see that as long as BBBY held 70 on the close Friday, the house would pocket $670.00

  184. pstas

    If you are a trader, it always pays to be nimble but Alan Abelson's Baron's column points out some sage advice:
    http://online.barrons.com/article/SB50001424053111904706204578002284020239900.html?mod=BOL_hps_mag#articleTabs_article%3D0

    But our sense that the stall in the upswing in stock prices isn't an ominous precursor of a drastic change in market direction is based largely on the vibes we get from investor sentiment. While bullishness may be on the rise, it has yet to reach those maniacally torrid levels that set the stage for a real swoon.
    A less sanguine view is that of the savviest market watcher we've had the great good luck to know whose wise words we've passed along more than once….

     
    He notes that the Street's response to the Fed's recent action has been that it's the start of a new ballgame. In market terms, he explains, "new ballgames" generate upside breadth extremes and investment stampedes.
    ….

    He allows that end-of-the quarter buying may support the market awhile longer, but he can't envision "lasting strength at this juncture." Nor does he rule out the possibility that the Fed's action induced a surge on top of an already overbought market that paves the way for a "blowoff ending to this phase of the rise."

  185. rdn4evr

    Hi guys – TOS technical configuration question – In their latest update, TOS has widened the columns shown on the Options Chain view, and now I can't see all the columns I have included on my customized view, and can't even scroll over.  Is there a way to adjust the column widths, especially the Expiration and Strike columns, which are now too wide?  When I click on the little wrench it shows me that the option chain is locked.  
    Thanks.

  186. barfinger

    rdn4evr: not sure if it helps, but you can always Ctl-Minus to shrink the font. I use OX, and that's what I now have to do on some screens because the idiots that design things never think through the ergonomics.

  187. barfinger

    Sorry, I had a rage moment there… My company did data processing work, and although I worked on all aspects of my software, eventually, I had to design all the reporting and screens because nobody understood the importance of compression and proper spacing. One character sometimes spilled off the line and created a mostly blank next line which meant less lines on the screen, and so on. 
     
    Once, we won a big contract, and I faced designing a monthly report that actually ran 780 pages and weighed several pounds of tissue-light paper. It was useless. After several tries, I compressed and reformatted the output and removed wasted space while ADDING information and cut the output to 56 pages.
     
    I despise the cavalier attitude of today's data screen designers who obviously do not care about the experience of the user. I have discussed screens with the OX management, and although they agree with my criticism, nothing changes. Apparently, I am the only person on the planet who cares :)

  188. Canuck

    Phil/Anybody – anyone following ZNGA?  Thoughts going forward?

  189. drmtv10

    ZNGA – Small positions Jan 2.5/3.5 DS (entered for $0.4, about flat so far) and also sold some Jan $5P (down $1.1), so I am looking for the stock to be above $3.5 in Jan.  After that, I may roll puts out longer term, unless there is a spike and ZNGA trades above $5.  I like stock enough as a trading vehicle but not for investing. I think casual, free gaming is a good "target" market opportunity for ZNGA and company could become a "consolidator" in that area.  I entered DS when Phil recommended a speculative trade and sold puts earlier (hence the loss on puts!).

  190. rdn4evr

    Thanks Barfinger, I tried that, but I just got the same wide columns with print that's now too small to read.  I agree with you, it's always 2 steps forward and 1 or 3 steps back with these upgrades.

  191. zeroxzero

    Yodi:  Interesting comments.  On the Muslim issue, it is often pointed out, and true, that Christianity experienced the same virulent and even murderous intolerance in, and prior to, the 15th Century  commencement of  the Spanish Inquisition [finally supressed in 1834].  This point — that Islam was founded 622 years [the Hijra] after Christianity — is somehow intended to exculpate Muslims from violence and executions in the name of their faith, as if Muslims today actually live in the year 1390 within the chronology of a parallel universe.
     
     Given that the Islamic world was far more scientifically and technologically sophisticated than the west for at least the first 1000 years of its history, this is an invidious canard.Without launching a tedious dissertation on why Muslims have regressed from being the most to the least tolerant of the major religions, it is sufficient to say that there is nothing in the history of Islamic teachings that requires murder and violence in response to real or imagined insults to the Prophet Muhammad.   Social and political developments among Islamic nations are to blame, and to be deplored, but do not in my view fairly represent Islamic religious practices, which have historically been light years ahead of most other major religions in terms of tolerance and rationality.   
     
    Columbus might have had some doubts as to whether the world was flat in 1492 , but  Muslim scholars had already calculated the circumference of a [spherical] earth to 7% accuracy in the 9th century, and were centuries ahead in medical studies, astronomy, engineering, chemistry, zoology, trigonometry, botany, geography and cartography, and had adopted paper-making from the Chinese by 800 AD and built 50,000 volume libraries while Europeans were still scraping animal skins for the purpose.  The "House of Wisdom" in Baghdad had translated most Greek texts into Arabic, including Ptolemy's Almagest [the Arabic name it was given].  
     
    In fact, we would be having quite a hard time calculating option prices, or anything else, had not al-Khwarizmi adopted the place system and zero from India and developed Hindu-Arabic algebra [another Arabic word].  He developed algorithms [a derivative of his name], solving linear and quadratic equations in the 9th century, and wrote a book whose system was not fully incorporated into European usage unti the 16th century, beginning with a translation of his book by Leonard of Pisa, "figlio de Bonacci" in 1200. [Fibonacci]. Vasco da Gama "discovered" India when brought there by a Muslim pilot; Muslims already understood that the world was enveloped by oceans.  Alcohol, azimuth, alchemy, algebra, alembic, zenith, nadir and elixir are all Arabic derivatives.  There is much misunderstanding among cultures.

  192. Phil

    Good morning!

    Barron's finally arrived at my initial price target for FB this weekend.  Took them a while…

    Of course, the only things more ridiculous than FB are AMZN and LNKD — at least it made the chart but no mention of the insanity there.  

    Also good reads:

    While the ever-rising DJIA is up ~11% this year and hovers not far off five-year highs, the Dow Transports dropped 5.9% this week, hitting its lowest level since June and down 2.2% YTD. “This is a major divergence that should not be ignored,” Peter Boockvar says. “It tells me the risks of being in the market at these levels are growing."

    Quantitative easing will do little to boost the U.S. economy, says economist Joseph Stiglitz. Instead, it risks triggering currency and trade wars that will leave the world worse off. Rather than unilateral action, the world needs a “growth compact” aimed at spurring economic expansion around the world. He had hoped that G20 leaders would have started addressing the topic at the summit in Seoul, but now he feels the meeting will be spent dealing with the unintended consequences of the Fed’s action.

    QEs compared (FT.com 

    Fed’s QE3 Turns Safe Investments Into Losers (Fiscal Times)

     The euro will survive, says Bridgewater Associates Ray Dalio. However, he does predict a “10 to 15 year managed depression” in Southern Europe, which he feels could be very dangerous. “I worry about another leg down in the economies causing social disruption because deleveragings can be very painful," Dalio says. “For example, Hitler came to power in 1933, which was the depth of the Great Depression, because of the social tension between the factions. So I think it very much is dependent on how the people work this through together and worry about the social elements.”

    An unmistakable trend is under way as investors cash intheir bond ETF holdings and pour the money into stock funds. "A lot of fixed-income oriented people have decided to start chasing equities," says an ETF trader, as they fear being left behind by an equity market juggernaut (they already have been). Also seeing a rush are precious metals ETFs – the physical and the miners.

    More on the shift from fixed income to equities: Jason Goepfert's "smart money/dumb money" indicator tells him stock prices could be set to crack. Currently, 67% of the "dumb money" expects a rally, he says, against just 50% expecting it in August when prices were 10% lower. A 3-8% correction (chart) typically follows when sentiment moves to such an extreme. 

    The Senate yesterday authorized a $500B spending bill that will finance the government for half a year from October 1, adding toapproval from the House. Congress has now broken up ahead of the elections on Nov. 6, leaving plenty of unfinished business. That includes measures to forestall the "fiscal cliff" and a renewal of the farm bill. 

    In addition to authorizing a spending bill, the Senate has also passed a measure that would give the transportation secretary the authority to stop U.S. airlines from complying with an EU scheme to cut carriers' carbon emissions. The bill, which now has to be reconciled with a House measure, ups the pressure on the UN's aviation organization to formulate a global alternative to the EU law.

    GOP retreat on taxes likely if Obama wins (Washington Post)

    Despite reducing pension benefits for their public-sector retirees and compelling workers to make bigger contributions, states have cut just $100B of the $900B funding crater in their pension plans, the WSJ reports. One problem is that assumed investment returns have been reduced because of market volatility, while another is that many states are introducing the changes for new hires only. 

    Recent online service interruptions at Bank of America (BAC) and JPMorgan Chase (JPM) are believed to have beencaused by Iranian hackers who have targeted big U.S. banks repeatedly during the past year. It's not known if Iran's cyber attacks can cause significant damage, but "It's like the nuclear program: It isn't particularly sophisticated but it makes progress every year."

    Coinstar (CSTR) and Verizon's (VZ) Redbox Instantstreaming JV will launch somewhere between mid-November and mid-December, Verizon exec Eric Bruno tells Bloomberg. Bruno adds the service will offer monthly rentals and purchases in addition to subscriptions, and (like Netflix) will support non-PC devices. Verizon and Coinstar have suggested in the past their service would differentiate itself from Netflix (NFLX), mocked as "rerun TV" by some, through a greater focus on movies. 

    Facebook (FB) roundup: 1) Having pleased iOS users byboosting the performance of its core app, Facebook is now promising to update its mobile apps – secondary apps such as Messenger and Camera included – every 4-8 weeks. 2) Facebook is testing theautomatic syncing of pictures taken with Android phones to a private Facebook folder, as the company tries to strengthen its photo-sharing lead. 3) A week after Mark Zuckerberg suggested Facebook will build a search engine, it has rolled out a search activity log feature.

    Though Apple's run to $700 has garnered more headlines, Google (GOOG +0.8%) has also been on a tear in recent weeks. Shares made new highs today, and are now up 27% from their June lows. Bullish remarks from Deutsche contributed to today's gains: the firm argued international search growth should remain healthy; that display, mobile, and YouTube are become meaningful growth contributors; and that a valuation of 12x estimated 2013 EPS (exc. cash) is appealing.

    Google (GOOG) is flying high right now, but fears are growing among the technorati that the embrace of mobile apps and "closed" social networking platforms will gradually diminish the value of the company's search empire. John Battelle recently summed up this view. "Google’s core model – built on the open, linked world of the web – is under threat from the advance of the iPhone and the app, the Facebook and the Path … and countless other “unlinked” digital artifacts."  (also) 

    Nokia (NOK) doesn't pass up the chance to gloat over the harsh response (III) to Apple's (AAPL) iOS 6 Maps app. "Unlike our competitors … we completely own, build and distribute mapping content, platform and apps," the company proclaims. A Google Maps (GOOG) exec also takes aim at Apple, declaring "it takes a long time and effort to figure out how to do this right." BI notes Google has 1,100 full-time employees and 6K contractors working on Maps. (Nokia Maps deals: III) 

    VZ had IPhones in stock yesterday in the mall.  AAPL store only had Sprint ones left:  AT&T (T) accounted for 68% of U.S. iPhone 5 pre-orders from Sep. 14-16, estimates comScore. Verizon Wireless (VZVOD) is believed to account for 24%, and Sprint (S), whose stores are apparently selling out of iPhones, just 8%. AT&T benefits from having a much larger iPhone base, and comScore cautions Verizon grew its share of iPhone 4S orders over time. But the numbers are still encouraging for Ma Bell, given fears Verizon's superior LTE coverage would help it take share. 

  193. pstas

    TOS- apparently another "upgrade" – just signed back on and find that under the Analyze and Trade tabs the entire section above the option chain scrolls along with the options? Very annoying and slow. Does anyone know if there is a setting which can be changed to return to the "old" set up where only the option chain scrolled?

  194. Phil

    Chick-fil/1020 – I can't believe people still care.  

    WMT/Den – Very interesting.  I imagine it's more the margin thing.  I doubt WMT believes that not carrying the kindle will stop people from buying it.

    IPhone/Diamond – I checked it out at the mall yesterday and it is damned nice but then I went to BBY Mobile and looked at Samsungs that were bigger and faster and that stopped me from pulling the trigger until I have some time to really play with some other phones.  I will say though, that bigger is not always better – there were plenty of phones with bigger screens but they were not as nice to read a web page with as the IPhone – It's a superior screen that handles the fonting much better and gives you a nice, crisp text image.  Resolution on video was amazing too, as was the camera – especially the built-in IMovie function.  It's kind of funny really because if you would have asked me 3 years ago if I would pay $999 for a hi-def video camera that's as small and light as an IPhone – I would have grabbed that.  Now it's just one of many features…

    WFT/Rms – That's an odd one as the Swiss are investigating the company.  It's over disclosure issues, which isn't a big deal so something else must be up – maybe an offer….

    Thanks for your views Yodi – nothing like a little first-person narrative to give us color on the situation.  

    Jack chart/Diamond – Thanks:

    Close election/Terra – Yes, but mostly because of rampant voter intimidation that is being coordinated nationally by our friends the Kochs and the GOP.  

    This is how it works today: In an ostensible hunt for voter fraud, a Tea Party group, True the Vote, descends on a largely minority precinct and combs the registration records for the slightest misspelling or address error. It uses this information to challenge voters at the polls, and though almost every challenge is baseless, the arguments and delays frustrate those in line and reduce turnout.

    The thing that’s different from the days of overt discrimination is the phony pretext of combating voter fraud. Voter identity fraud is all but nonexistent, but the assertion that it might exist is used as an excuse to reduce the political rights of minorities, the poor, students, older Americans and other groups that tend to vote Democratic.

    In The Times on Monday, Stephanie Saul described how the plan works. True the Vote grew out of a Tea Party group in Texas, the King Street Patriots, with the assistance of Americans for Prosperity, a group founded by the Koch brothers that works to elect conservative Republicans. It has developed its own software to check voter registration lists against driver’s license and property records. Those kinds of database matches are notoriously unreliable because names and addresses are often slightly different in various databases, but the group uses this technique to challenge more voters.

    True the Vote, now active in 30 states, hopes to train hundreds of thousands of poll watchers to make the experience of voting like “driving and seeing the police following you,” as one of the group’s leaders put it. (Not surprisingly, the group is also active in the voter ID movement, with similar goals.) 

    This is really sick.  If it were happening in a 3rd World country, the UN would step in and monitor the elections…

    Good article 1020. 

    BBBY/Jfaw – It wasn't a neutral play.  I did not think BBBY would hold $70 but I was not so certain that I wanted a naked put play.  That trade allowed us to collect a $670 credit on the spread and the 4/5 coverage seemed reasonably adequate to keep us out of serious trouble if things had gone the other way.   We'll do plenty of these during earnings season and the ones that will make the strategy clear will be the ones that don't go our way that we have to work out of.

    Bull market/Pstas – There was bound to be some pullback off the announcement and, so far, it isn't much – it's amazing to me how people must have instant answers, whether right or wrong, rather than waiting for a situation to develop.  

    TOS/RDn – I'm terrible at that stuff but mine fits.  Their tech support it really good, you should call them.  

    Caring/Barf – I know what you mean.  My father was a systems analyst who learned on punch-cards and he wrote really tight code and taught me the value of it as well.  The kids who write modern bloatware these days couldn't even hack it back in the day when memory mattered.  It's the same with the interfaces and output.  

    ZNGA/Canuck – I liked them when they cratered around $2.50 but that was only because it was an over-reaction.  At $3.23 I don't see them as a big bargain but they'll rise with the Nas if we shoot up next week.  Not much to the company overall…

    Good point, ZZ.  

    TOS/Pstas – You mean that you can't see the headers anymore when you scroll?  That is kind of annoying.  

  195. jelutuck

    Phil, trying to understand your frequently-recommended BCS plays offset with a put sale.  As in the GLD example in your morning post on Friday, you usually recommend selling a put in the same or related position to pay for the spread.  But (as I've learned the hard way this year), if the position moves against you, the BCS evaporates quickly and the put loses value too.  Would it make sense, for example, to buy the GLD BCS and sell a GLL OTM put to pay for it?  That way if GLD flatlines, you collect on the BCS and the put, but if GLD drops the BCS loss is offset by the put expiring worthless.  Only if GLD goes up a lot, then you start losing $ on the GLL put, but can still roll, etc.   With this combination, you never lose on both sides of the trade. and are selling premium in both directions. 

  196. jerconn

    Here's Andy Zaky's (bullishcross.com) take on the iphone 5…granted he's biased but still this is interesting, and he thinks AAPL is over $800 by the end of the year: 
         "I’m totally shocked by how incredible this iPhone 5 is. Wow. This is something that Steve Jobs would be incredibly proud of. I’m sure his finger prints are on this device and if it so happens that it wasn’t, then holy crap does Apple have an incredibly bright future. I think John Gruber’s characterization of the iPhone 5 is spot on. For its class of device, it is the nicest thing out there. In this sense, it is going to be the nicest thing anyone can own. It’s just so far ahead of the curve. Like I don’t know what Samsung or anyone else is going to be able to do to compete with this thing. Apple not only has the best mobile platform with iOS 6, but it now has by far the best piece of hardware available. And I don’t see how this can be outdone. I just don’t…".

  197. stjeanluc

    iPhone / Jerconn – A little biased is an understatement. The iPhone 5 is certainly a very nice (and needed) update of the most successful phone but more evolutionary than revolutionary. In some aspects, Apple is actually catching up to others like Samsung with this phone – 4G, larger screen, better camera. The ecosystem is stronger, no doubt, but to say that no one will be able to compete or that it can't be outdone is a stretch….

  198. jabobeast

    quarterly window dressing this week…
     
    vxx reverse split… POS

  199. stjeanluc

    Time to sell some October premium!

  200. stjeanluc

  201. jerconn

    StJ – I agree, I use a Samsung Galaxy S2 and I'm quite okay with it, but I've never used an iPhone so I thought maybe there's some sort of "wow factor" involved…anyway Zaky's clearly in heaven with his iPhone 5…and AAPL has a tendency to soar…

  202. stjeanluc

    iPhone / jerconn – My kid has an iPhone (not a 5 though) and I have a Galaxy S2 as well but I would not switch. The iPhone screen is too small and makes it hard for me to type messages (and you can't change keyboard). And reading on that small screen is not that comfortable. Making it higher and not wider doesn't seem to be a solution for me unless you are going to read in landscape. And of course, she doesn't have 4G and it's absolutely amazing to download stuff at the speed a cable connection!

    But Apple will sell tons of these new iPhone as they have a very loyal customer base. No doubt a well run business…

  203. stjeanluc

    The difference between the Fed and the ECB:

    http://www.businessinsider.com/the-ecbs-breakthrough-2012-9

     

    But to say that the ECB "eased" policy at its last meeting is actually a gigantic understatement. What Mario Draghi did is almost nothing like what Bernanke did.

    Sure, both are using the central banks' unlimited balance sheet to buy bonds, but whereas the Fed is buying up bonds in order to (in part) push money into riskier areas of the market, the ECB is hoping to buy up bonds to bring a bid back into the peripheral sovereign bond market.

    More broadly, as stated above, the Fed is trying to influence the market and the economy through fairly technical channels (reduce yields, hope money then goes into riskier areas), whereas the ECB is offering to backstop weak European governments, so that they can keep spending without fear of completely busto.

  204. stjeanluc

    Speaking of Apple:

    http://www.nytimes.com/2012/09/22/opinion/nocera-has-apple-peaked.html?_r=0

     

    And you can see it in the decision to replace Google’s map application. Once an ally, Google is now a rival, and the thought of allowing Google to promote its maps on Apple’s platform had become anathema. More to the point, Apple wants to force its customers to use its own products, even when they are not as good as those from rivals. Once companies start acting that way, they become vulnerable to newer, nimbler competitors that are trying to create something new, instead of milking the old. Just ask BlackBerry, which once reigned supreme in the smartphone market but is now roadkill for Apple and Samsung.

    Even before Jobs died, Apple was becoming a company whose main goal was to defend its business model. Yes, he would never have allowed his minions to ship such an embarrassing application. But despite his genius, it is unlikely he could have kept Apple from eventually lapsing into the ordinary. It is the nature of capitalism that big companies become defensive, while newer rivals emerge with better, smarter ideas.

    “Oh my god,” read one Twitter message I saw. “Apple maps is the worst ever. It is like using MapQuest on a BlackBerry.”

    MapQuest and BlackBerry.

    Exactly.

    A little too pessimistic though…

  205. jerconn

    For Phil:  "Square" founder was also founder of "Twitter" – still not clear if his 2.75% per swipe is in addition to the credit cards…http://online.wsj.com/article/SB10000872396390444433504577652134241536696.html?mod=WSJ_Tech_MIDDLETopNews

  206. yodi

    zeroxzero,
    Very interesting commends on Muslims. I must admit not having the background knowledge you presented above.
    I can only say that all the violent  actions presented by mostly Muslims on a daily basis are all contrary to what you say the religion presents. I personally can not understand the fanatic outburst of anger and killer instinct these people have in their blood. And this comes from a German who's past country's history is much to be said about. Again one should give these raving mops of people, Muslims or no Muslims, shovels instead of food and money.

  207. jerconn

    Zero and Yodi, the claims of Islamic contributions to general culture may or may not be accurate, but Obama's claims that Islam contributed to America and American culture ring hollow.  Here's some food for thought: http://www.jpost.com/Opinion/Columnists/Article.aspx?id=285736

  208. kongen

    jerconn \ thanks for the typical Likud propaganda

  209. jabobeast

    eah, thanks for the Likud propaganda jerconn. Jerconn, isn't Israel an apartheid state?
     
    http://www.youtube.com/watch?v=Ns2Fi2Jesg0

  210. Pharmboy

    lvmoda – u still around?  If so, can you send me an email plz.  Thx. 

    pharmboy123 gmail.

  211. wappler

    Phil/Last week's oil drop,
    On EliteTrader I ran across a guy who strongly disagrees with your explanation of last week's drop in oil.  Since he seems to be a fairly seasoned trader, I was wondering if you could comment on his statement (and maybe translate it into plain English for the benefit of people like myself, LOL!):
     
    " 09-20-12 06:06 AM
    Alright let's walk through this, conspiracy theories aside. All the monthly strips are trading at .30 to the tick through the end of the year. The calendars trade at a significant liquidity to the outright market. You can move all the size in the world right now by selling the Sept/Oct strip for .30.

    Next, all the 2011 strips are in contango!!!!! When specs are getting squeezed the market is not in contango, it goes into backwardation and they blow out the front end of the curve. This is NOT happening. In fact, the curve is very smooth and quiet and trading in perfect alignment. If someone wanted to move 1 million contracts right this minute at midnight, they could execute the trade in one second with Phibro giving them a tick or two in edge on the strip. Nobody is "trapped".

    The oil market is driven by the physicals, not the futures. The physical market dwarfs the futures by magnitudes. There is more then enough liquidty in the cash market to accommodate any spec. This is not the Hunt brothers corner of silver in 1979. The physical supply of oil currently around the world is huge. The physical players will lay off anything in the futures market in a second with the slightest bit of edge.

    The main driver in oil right now is Brent, not WTI and the Brent/WTI spread is very heavily traded as well. The oil market is probably one of the hardest markets in the world to manipulate because of the liquidity in the cash market and the fact that nobody has a monopoly on supply. There are a lot of factors driving crude. QE, geo-poltical risks, the dollar, and the distillates."
    Here's the link:
    http://www.elitetrader.com/vb/showthread.php?s=a027e5a8d3d78c9247efd5f9d99b833b&threadid=170318&perpage=40&pagenumber=165

  212. stjeanluc

    I guess having to work 12 hours a day, 6 days a week for $192 a month is not making everybody happy at Foxconn:

    http://www.engadget.com/2012/09/23/foxconn-taiyuan-riot/

     

    News just came in that workers at Foxconn's Taiyuan plant have started a riot in the wee hours in China, and that police forces are on site to control the crowd. While the motive isn't clear, Sina Weibo user Li Tian reports that the riot isn't related to the recent anti-Japan protests, though judging by his photos, much damage has been done in the process. The same site suffered from a strike back in March over salary dispute — the front-line workers failed to receive the promised pay rise. On a similar note,Foxconn's Chengdu plant also had a riot in June, but that was apparently due to an argument between some workers and a local restaurant owner.

    Update: We are seeing unofficial reports claiming the "2,000-people" riot was triggered by security guards hitting a worker at 10pm local time.

    Update 2: According to a provincial website, Foxconn's Taiyuan industrial park focuses on magnesium alloy components for consumer electronics, heat conduction products, LED lighting products, mobile phone products and magnesium alloy automotive components.

    Update 3: An undercover report from August mentioned that the Taiyuan plant processed the back casing of the iPhone 5. It also highlighted the company's harsh management as well as "practically compulsory" over-time work. We don't doubt that this riot escalated due to dissatisfaction over working conditions.

  213. stjeanluc

  214. stjeanluc

    As with last week, not much data until Friday but then we get GDP numbers from Great Britain, the US and France as well as PMI numbers from China and Japan. Not of these numbers are supposed to be very good, but who cares, we got ourselves a rally….

  215. shadowfax

    WOW AAPL
    Anyone but me saying a question on apple but Phil, WOW!!!!!!!!!!

  216. grenowoods

    shadow – I'm waiting for his final decision because I'm trying to make the same one

  217. Savi

    Good Morning—-anyone around

  218. wappler

    Phil,
    Reposting from yesterday, this may be something for after hours:
    Phil/Last week's oil drop,
    On EliteTrader I ran across a guy who strongly disagrees with your explanation of last week's drop in oil.  Since he seems to be a fairly seasoned trader, I was wondering if you could comment on his statement (and maybe translate it into plain English for the benefit of people like myself, LOL!):
     
    " 09-20-12 06:06 AM
    Alright let's walk through this, conspiracy theories aside. All the monthly strips are trading at .30 to the tick through the end of the year. The calendars trade at a significant liquidity to the outright market. You can move all the size in the world right now by selling the Sept/Oct strip for .30.
    Next, all the 2011 strips are in contango!!!!! When specs are getting squeezed the market is not in contango, it goes into backwardation and they blow out the front end of the curve. This is NOT happening. In fact, the curve is very smooth and quiet and trading in perfect alignment. If someone wanted to move 1 million contracts right this minute at midnight, they could execute the trade in one second with Phibro giving them a tick or two in edge on the strip. Nobody is "trapped".
    The oil market is driven by the physicals, not the futures. The physical market dwarfs the futures by magnitudes. There is more then enough liquidty in the cash market to accommodate any spec. This is not the Hunt brothers corner of silver in 1979. The physical supply of oil currently around the world is huge. The physical players will lay off anything in the futures market in a second with the slightest bit of edge.
    The main driver in oil right now is Brent, not WTI and the Brent/WTI spread is very heavily traded as well. The oil market is probably one of the hardest markets in the world to manipulate because of the liquidity in the cash market and the fact that nobody has a monopoly on supply. There are a lot of factors driving crude. QE, geo-poltical risks, the dollar, and the distillates."

    Here's the link:
    http://www.elitetrader.com/vb/showthread.php?s=a027e5a8d3d78c9247efd5f9d99b833b&threadid=170318&perpage=40&pagenumber=165

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